Exhibit 10.45
SECURED LOAN AGREEMENT
This secured loan agreement (the "Agreement") is made and entered into this
31st day of January, 1997 by and between HFMI Acquisition Corporation, a
Delaware corporation (the "Company"), and Boston Chicken, Inc., a Delaware
corporation ("Boston Chicken").
Recitals
--------
The Company intends to engage in the business of owning and operating,
outside the states of Georgia and Alabama, megastores, supermarkets, or other
retail or convenience stores specializing in perishable food products, including
by way of example and not by limitation, fresh fruits and vegetables, fresh
meats, poultry and seafood; fresh bakery goods; freshly made ready-to-eat,
ready-to-heat and ready-to-xxxx prepared foods; deli, cheese and dairy products;
and/or specialty; hard-to-find; and gourmet nonperishable food products,
kitchen-oriented housewares, floral items, grocery items, natural health and
beauty aids, wines and imported and domestic beers. In order to facilitate
implementation of its business plan, the Company desires to enter into this
Agreement and to borrow up to $17,000,000 from Boston Chicken, and Boston
Chicken desires to enter into this Agreement and to make such loan to the
Company, upon the terms and subject to the conditions set forth herein.
Covenants
---------
In consideration of the mutual representations, warranties, and covenants
set forth herein, and in consideration of any advances made hereunder to or for
the benefit of the Company by Boston Chicken, the parties hereto agree as
follows:
ARTICLE I
The Loan
--------
1.1 The Loan; Promissory Note. Boston Chicken agrees, on the terms
and subject to the conditions hereinafter set forth, including, but not limited
to the limitation on the amount available from time to time to be borrowed
hereunder set forth in Section 1.2 hereof, to advance at any time and from time
to time during the period commencing on the date hereof and ending on the last
day of the second Retail Period (defined below) in Boston Chicken's fiscal year
2000 (the "Draw Loan Termination Date"), amounts requested by the Company in an
aggregate principal amount not to exceed $17,000,000 (the "Loan"). Each advance
of the Loan (an "Advance") shall be in a minimum amount of $100,000, and shall
be made by wire transfer of Boston Chicken to the account of the Company. The
Loan shall be evidenced by a promissory note (the "Note") of even date herewith
in the form attached hereto as Exhibit A.
1.2 Maximum Principal Balance. The maximum aggregate principal
balance of the Loan at any time outstanding shall not exceed $17,000,000, less
the principal amount of conversions under Section 1.7 and option exercises under
Section 1.8 ("Maximum Principal Balance"), provided that, notwithstanding the
foregoing, at the time of each Advance hereunder, and after giving effect
thereto, the ratio of the outstanding principal balance of the Loan to the
funded cash equity of the Company shall not exceed 1.31 to 1 (the "Borrowing
Ratio"). In the event the Company receives the proceeds of an Advance on a day
when, after giving effect to such Advance, the Borrowing Ratio is exceeded, the
Company shall repay to Boston Chicken such amount of the Loan as is necessary to
cause compliance with the Borrowing Ratio.
1.3 The Loan Account. Boston Chicken shall maintain a loan account
on its books in which shall be recorded all Advances made by Boston Chicken to
the Company pursuant to this Agreement, and all payments made by the Company
with respect to the Loan; provided, however, that failure to maintain such
account or record any Advances therein shall not relieve the Company of its
obligations to repay the outstanding principal amount of the Loan, all accrued
interest thereon, and any amount payable with respect thereto in accordance with
the terms of this Agreement and the Note.
1.4 Interest Rate and Payment. (a) Interest shall accrue daily on
the aggregate outstanding principal balance of the Loan, for the period
commencing on the date the Loan is made until the Loan is paid in full, at a per
annum rate equal to the rate designated and announced by Bank of America
Illinois or its successor in interest (the "Bank") from time to time as its
"reference rate" in effect at its principal office in Chicago, Illinois, plus
1%. The interest rate shall be adjusted, from time to time, on the same day on
which the Bank adjusts its "reference rate." Interest on the outstanding
principal amount of the Loan shall be payable in arrears on the dates set forth
herein and at maturity (whether at stated maturity, by acceleration or
otherwise).
(b) During the Interest Payment Period (as defined below) the
Company shall pay to Boston Chicken interest only on the outstanding principal
balance of the Loan on the first day of each Retail Period, commencing on the
first day of the Retail Period immediately following the first Retail Period in
which the Company initially draws on the Loan under this Agreement through and
including the Draw Loan Termination Date (the "Interest Payment Period").
Thereafter the Company shall pay principal and interest as provided in Section
1.5.
(c) Interest shall be computed on the basis of a 360-day year
and the actual number of days elapsed.
(d) Any principal payment due under the Note not paid when due,
whether at stated maturity, by notice of repayment, by acceleration or
otherwise, shall, to the extent permitted by applicable law, thereafter bear
interest (compounded monthly and payable upon demand) at a rate which is 2% per
annum in excess of the rate of interest otherwise payable under this Agreement
in respect of such principal amount until such unpaid amount has been paid in
full (whether before or after judgment).
2
1.5 Repayment of the Loan. If not earlier paid or if not accelerated
for payment, the outstanding principal amount of the Loan shall, at the close of
business on the Draw Loan Termination Date, thereafter become an amortized term
Loan payable as follows: the principal balance of the Loan shall be payable to
Boston Chicken in 65 substantially equal periodic installments of principal (the
amount of which periodic installments of principal shall be determined at the
close of business on the Draw Loan Termination Date based on a schedule
amortizing such outstanding principal balance of the Loan as of such date in 130
substantially equal periodic installments of principal), plus accrued but unpaid
interest, on the first day of each of Boston Chicken's 13 consecutive four-week
periods used for accounting purposes (each a "Retail Period"), commencing on the
first day of the third Retail Period in Boston Chicken's fiscal year 2000 and
continuing until the first day of the third Retail Period in Boston Chicken's
fiscal year 2005, when the entire remaining principal balance of the Loan and
all interest accrued thereon shall be due and payable.
1.6 Term of this Agreement. This Agreement and all covenants and
agreements of the Company hereunder shall be effective as of the date of its
execution (the "Closing Date") and shall continue in effect until the last to
occur of (i) the exercise, expiration, or other termination of all remaining
option rights granted in Section 1.8 hereof, (ii) the exercise, expiration, or
other termination of all of the remaining conversion rights granted in Section
1.7 hereof, (iii) the date on which there is no amount (principal or interest)
remaining outstanding under the Note, and (iv) the date on which Boston Chicken
no longer has an obligation to make any Advances hereunder if the Company were
to make a valid request for an Advance pursuant to and in accordance with
Article III hereof.
1.7 Convertibility. (a) On the terms and subject to the conditions
set forth in the Note, any portion of the outstanding principal balance of the
Loan is convertible at the election of the holder of the Note into shares of
voting common stock of the Company (herein called the "Common Stock"), at any
time and from time to time after both of the following have occurred: (i)
February 1, 1998, and (ii) the earlier to occur of (A) completion of an initial
public offering of shares of Common Stock of the Company registered pursuant to
the Securities Act of 1933, as amended, with the Securities and Exchange
Commission, pursuant to which the Company receives gross proceeds of not less
than $15,000,000 (a "Qualified Public Offering"), or (B) the Tangible Net Worth
(as defined below) of the Company equals or exceeds $25,000,000 as of the end of
any fiscal quarter of the Company ending after February 1, 1998, and up to the
later of (x) the date on which the Company has properly repaid the outstanding
principal balance of the Loan and all accrued interest thereon in full or (y)
the first day of the ninth Retail Period in the Company's fiscal year 2005;
provided, however, that nothing herein shall impair, restrict or prohibit the
exercise of remedies, including exercise of the conversion right, under Section
8.2 hereof upon the occurrence of a Default. Upon such conversion, that portion
of principal so converted shall be deemed to be paid in full upon the delivery
to the holder of the Note of a certificate or certificates representing the
proper number to be issued to the holder of the Note upon such conversion.
Conversion of any portion of the principal balance of the Loan shall not relieve
the Company of its obligation to pay any accrued but unpaid interest through the
date of conversion on the portion of the principal balance of the Loan so
converted. In no event shall interest be convertible into Common Stock in the
Company. For purposes hereof, "Tangible
3
Net Worth" of the Company shall mean, as of any date, (a) the amount of any
capital stock, paid in capital and similar equity accounts plus (or minus in the
case of a deficit) the capital surplus and retained earnings of the Company,
less (b) the net book value of all items of the following character which are
included in the assets of such person: (i) goodwill, including, without
limitation, the excess of cost over book value of any asset, (ii) organization
or experimental expenses, (iii) unamortized debt discount and expense, (iv)
patents, trademarks, trade names and copyrights, (v) deferred taxes and deferred
charges, (vi) franchises, licenses and permits, and (vii) other assets which are
deemed intangible assets under generally accepted accounting principles.
(b) Upon any conversion under this Section 1.7, Boston Chicken's
obligation to make additional advances to the Company under this Agreement shall
be reduced by an amount equal to such conversion amount.
1.8 Option. (a) Boston Chicken shall have the option, at any time
and from time to time after both of the following have occurred: (i) February
1, 1998, and (ii) the earlier to occur of (A) completion of a Qualified Public
Offering, or (B) the Tangible Net Worth of the Company equals or exceeds
$25,000,000 as of the end of any fiscal quarter of the Company ending after
February 1, 1998, and up to the later of (x) the date on which the Company has
properly repaid the outstanding principal balance of the Loan and all accrued
interest thereon in full or (y) the first day of the ninth Retail Period in the
Company's fiscal year 2005, to purchase at the Conversion Price (as defined in
the Note) up to that number of Shares equal to (A) the Option Amount, divided by
(B) the Conversion Price (the "Option"); provided, however, that nothing herein
shall impair, restrict or prohibit the exercise of remedies, including exercise
of the Option, under Section 8.2 hereof upon the occurrence of a Default. For
purposes of this Section 1.8, the Option Amount shall mean (x) the Maximum
Principal Balance (without giving effect to any borrowing limitation set forth
in this Agreement), less (y) the sum of (1) the dollar amount of the outstanding
principal balance of the Loan (whether such amount is the result of a reduction
in principal due to the repayment of the Loan or the failure by the Company to
request advances hereunder or otherwise) and (2) the dollar amount of all
previous conversions under Section 1.7 hereof and exercises of the Option under
this Section 1.8, in each case on the date Boston Chicken notifies the Company
of its intention to exercise the Option.
(b) Upon exercise of any portion of the Option under this
Section 1.8, Boston Chicken's obligations to make additional Advances to the
Company under this Agreement shall be reduced by an amount equal to the amount
of such Option exercise.
1.9 One Obligation. All Advances made hereunder, and all interest
accrued thereon, shall constitute one obligation of the Company secured by the
security interests granted by this Agreement and by all other security
interests, liens, claims, and encumbrances from time to time hereafter granted
to Boston Chicken by the Company.
1.10 Credit Resources. The Company acknowledges that Boston Chicken
has informed it that Boston Chicken does not currently and may not from time to
time in the future have cash, cash equivalents, and credit resources sufficient
to permit Boston Chicken to necessarily make all requested Advances under this
Agreement and all other similar agreements with financed
4
area developers and franchisees while maintaining sufficient working capital for
Boston Chicken's operating needs. The Company agrees that in the event Boston
Chicken shall fail to fund the Loan as and to the extent required hereby solely
as a result of the unavailability to Boston Chicken of cash and/or credit
resources to fund the Loan and not as a result of any failure of the Company to
satisfy the conditions precedent to Advances or of the occurrence of a Default
or Event of Default hereunder (a "Funding Default"), such Funding Default shall
not (a) constitute fraud (by any person or entity, including Boston Chicken and
its successors and assignees) or (b) give rise to any liability of any person or
entity (other than Boston Chicken and its successors and assignees) in any other
tort, and the Company further agrees that it shall be limited to its remedies in
contract and in tort as specified in clause (b) above against Boston Chicken.
Boston Chicken and the Company agree that this Section 1.10 shall not diminish
or otherwise affect in any way the amount of damages for which Boston Chicken
may be liable to the Company in a contract or non-fraud tort action for a
Funding Default.
1.11 Payment Method. (a) All payments to be made by the Company
hereunder shall be made in lawful money of the United States, in immediately
available funds, without setoff, counterclaim, deduction or withholding of any
type.
(b) So long as funds are available to be borrowed by the Company
hereunder, the Company authorizes Boston Chicken (i) to make daily Advances on
behalf of the Company under the Loan Agreement in accordance with Boston
Chicken's customary practices and procedures to provide funds to the Company to
cover payables, intercompany charges, and other charges previously approved by
the Company, and regardless of whether the Company has specifically requested
such Advance and without waiver of any rights of Boston Chicken hereunder, and
(ii) to make Advances hereunder from time to time to pay interest on the Loan if
the Company does not pay interest when due.
ARTICLE II
Security and Collateral
-----------------------
2.1 Security Interest. To secure payment and performance of the
Company's obligations hereunder and under the Note, and all other obligations of
the Company to Boston Chicken, whether now existing or hereafter arising, the
Company hereby grants to Boston Chicken a continuing security interest in and to
the following property and interests in property, whether now owned or hereafter
acquired by the Company and wheresoever located:
(a) all of the Company's real estate, accounts, equipment
(including, but not limited to machinery, furniture, fixtures, tools, vehicles,
and other tangible property), inventory, leasehold improvements, contract rights
(including its rights as lessee under all leases of real property), general
intangibles, trademarks, service marks, trade names, logos, trade secrets,
copyrights, patents, licenses, intellectual property, deposit accounts, tax
refunds, chattel paper, instruments, notes, letters of credit, documents,
documents of title, and equity interests in any Subsidiary (as defined in
Section 6.11 hereof) of the Company;
5
(b) all insurance proceeds of or relating to any of the
foregoing;
(c) all of the Company's books, records, and computer programs
and data relating to any of the foregoing; and
(d) all accessories and additions to, substitutions for, and
replacements, products, and proceeds of, any of the foregoing (all of the
foregoing, and all of the security described in Sections 2.2, being referred to
collectively as the "Collateral").
2.2 Subsidiary Security Documents. The Company shall cause each
person or entity becoming a Subsidiary of the Company from time to time to
execute and deliver to Boston Chicken, within five days after such person or
entity becomes a Subsidiary, a security agreement substantially in the form
attached hereto as Exhibit D, together with all financing statements and other
related documents (including real estate mortgages) as Boston Chicken may
request and such closing documents with respect to such Subsidiary of the type
described in Article VII as Boston Chicken may request, sufficient to grant to
Boston Chicken liens and security interests in all assets of each Subsidiary of
the type described in Section 2.1. The Company shall from time to time execute
and deliver to Boston Chicken, within five days after a person or entity becomes
a Subsidiary of the Company, a pledge agreement substantially in the form of
Exhibit C and modified appropriately (or other agreement collaterally assigning
all equity interest in such Subsidiary), pursuant to which the Company shall
grant a security interest in favor of Boston Chicken in and to all shares of
capital stock (or other equity interests) of such Subsidiary, together with the
stock certificates or other evidence of ownership and accompanied by a stock
power executed in blank. Any such pledge or other collateral agreements
executed by the Company and security agreements and other documents executed by
a Subsidiary of the Company from time to time shall be included in the term
"Security Instruments" used herein and the stock and assets of such Subsidiary
covered by such Security Instruments shall be included in the term "Collateral"
used herein.
2.3 Preservation of Collateral and Perfection of Security Interests
Therein. (a) The Company shall execute and deliver to Boston Chicken,
concurrently with the execution of this Agreement, and shall execute and deliver
or cause any Subsidiary of the Company to execute and deliver to Boston Chicken
at any time or times hereafter at the request of Boston Chicken or the Agent (as
defined below), all financing statements or other documents, including mortgages
on real estate owned by the Company or its Subsidiaries, intellectual property
security agreements and Subsidiary security agreements (the "Security
Instruments") (and pay the cost of filing or recording the same in all public
offices deemed necessary by Boston Chicken), as Boston Chicken or the Agent may
request, in forms satisfactory to Boston Chicken, and take all further action
that Boston Chicken or the Agent may request, or which may be reasonably
necessary or desirable, to perfect and keep perfected the security interest in
the Collateral granted by the Company to Boston Chicken, to create and perfect
the security interests in the assets of any Subsidiaries of the Company provided
in Section 2.2 hereof, or otherwise to protect and preserve the Collateral and
Boston Chicken's security interest therein. Should the Company fail to do so,
Boston Chicken is authorized to sign any such Security Instruments as the
Company's agent.
6
(b) The Company will furnish to Boston Chicken from time to time
statements and schedules further identifying and describing the Collateral and
such other reports in connection with the Collateral as Boston Chicken may
reasonably request, all in reasonable detail.
(c) The Company shall notify Boston Chicken, within five days
after the occurrence thereof, of the acquisition by the Company or any
Subsidiary of any property that is not subject to the existing liens and
security interests, in favor of Boston Chicken, of any person or entity's
becoming a Subsidiary, and of any other event or condition that may require
additional action of any nature in order to create, preserve, or perfect the
liens and security interests of Boston Chicken.
(d) The Company shall, and shall cause each Subsidiary to, cause
all tangible Collateral to be maintained and preserved in the same condition,
repair and working order as when new, ordinary wear and tear excepted, and in
accordance with any manufacturer's manual.
2.4 Alternate Security and Pledge Agreements. If requested by Boston
Chicken in order for the transactions contemplated by this Agreement to comply
with the limitations and restrictions of that certain Facilities Agreement,
dated as of December 9, 1996 among Boston Chicken, Bank of America Illinois, as
agent ("Agent") and General Electric Capital Corporation, for itself and as
agent for certain participants, as amended and as it may be further amended from
time to time (the "BC Credit Line"), or to obtain a waiver therefrom, the
Company hereby agrees that a security interest as referred to in Section 2.1
hereof, and the additional security interests described in Section 2.2 hereof
may be granted directly to the Agent in lieu of or in addition to such grants to
Boston Chicken, in which event appropriate alterations may be made to this
Article II, and references herein to such security, pledges, and deliveries
thereof to Boston Chicken may be deemed to refer to the Agent, as appropriate.
ARTICLE III
Conditions of Advances
----------------------
Notwithstanding any other provisions contained in this Agreement, the
making of any Advance (including the initial Advance) provided for in Section
1.1 shall be conditioned upon the following:
3.1 The Company's Written Request. Boston Chicken shall have
received, at least five (5) business days prior to the day an Advance is to be
made hereunder, (a) a written request from an authorized officer of the Company
for an Advance in a specific amount, (b) with respect to the initial Advance
hereunder, a certificate of the Company in the form attached hereto as Exhibit
B-1, which shall be signed by a duly authorized officer of the Company, and with
respect to subsequent Advances hereunder, a certificate of the Company in the
form attached hereto as Exhibit B-2, which shall be signed by a duly authorized
officer of the Company, and (c) copies of all other documents required to be
delivered to Boston Chicken under Section 5.1 below or otherwise reasonably
requested.
7
3.2 No Material Adverse Change. No material adverse change in the
financial condition, results of operations, assets, or business of the Company
and its Subsidiaries, taken as a whole, shall have occurred at any time or times
subsequent to the date hereof.
3.3 No Default. Neither a Default (as that term is defined in
Article VIII hereof) nor any event which, through the passage of time or the
service of notice or both, would mature into a Default (an "Event of Default")
shall have occurred and be continuing.
3.4 Representations and Warranties. The representations and
warranties contained in Article IV hereof and the other Security Instruments
shall be true and correct on and as of the date such Advance is made.
3.5 Borrowing Ratio. After giving effect to the Advance, the Company
is in compliance with the Borrowing Ratio.
3.6 Other Requirements. Boston Chicken shall have received, in form
and substance satisfactory to it, all certificates, consents, affidavits,
schedules, instruments, and other documents which the Company is obligated to
provide to Boston Chicken hereunder or which Boston Chicken may at any time
reasonably request.
3.7 Amount of Advances. Boston Chicken shall have received a
certificate of the Company, which shall be signed by an authorized officer of
the Company and which shall certify that the amount of the requested Advance is
the amount the Company reasonably expects (and which Boston Chicken reasonably
believes is necessary) to expend within the 30-day period immediately following
the receipt of the Advance for working capital purposes.
ARTICLE IV
Representations and Warranties
------------------------------
The Company represents and warrants that:
4.1 Financial Statements. The financial statements to be furnished
to Boston Chicken or the Agent in accordance with Section 5.1 below will be
prepared in conformity with generally accepted accounting principles
consistently applied throughout the periods involved, and will fairly present
the financial condition of the Company and its Subsidiaries at the dates thereof
and its results of operations for the periods indicated (subject, in the case of
financial statements covering less than one full fiscal year, to normal,
recurring year-end adjustments).
4.2 Capital Stock. The Company's authorized capital stock (subject
to increases in accordance with Section 5.8 hereof) consists solely of 100,000
shares of Common Stock, $.01 par value per share and 50,000 shares of preferred
stock, $.01 par value per share. As of the date hereof, of the Company's
authorized capital stock, (i) 9,379.0416 shares of Common Stock are issued and
outstanding, (ii) 14,782.6087 shares of Common Stock are reserved for issuance
upon the conversion of the Note or exercise of the Option, and (iii) 0 shares
of
8
Common Stock are reserved for issuance upon the exercise of options granted
under the Company's 1997 Employee Stock Option Plan (the "Stock Option Plan").
Such issued and outstanding shares of Common Stock are fully paid and non-
assessable and are free and clear of all liens, claims, and encumbrances of any
kind, other than those arising hereunder. The shares of Common Stock to be
issued and delivered to the holder of the Note upon any conversion of the Note
or exercise of the Option, when so issued and delivered, will be fully paid and
non-assessable and free and clear of all liens, claims, and encumbrances of any
kind. Except for options granted under the Stock Option Plan and except as
otherwise provided herein and in the Note, there are no outstanding options,
warrants, rights, contracts, or agreements of any kind for the issuance or sale
of any shares of capital stock of the Company or for the issuance or sale of any
other securities or obligations of the Company or for the purchase by the
Company of any of its shares.
4.3 No Material Adverse Change. Since the date hereof, there has
been no material adverse change in the financial condition, results of
operations, assets, or business of the Company and its Subsidiaries, taken as a
whole.
4.4 No Pending Material Litigation or Proceedings. There are no
actions, suits, investigations or proceedings pending or, to the knowledge of
the Company or its Subsidiaries, threatened against or affecting the Company or
its Subsidiaries or the business or properties of the Company or its
Subsidiaries, in any court or before or by any governmental department,
commission, board, agency or instrumentality, or any arbitrator. Neither the
Company nor any of its Subsidiaries is in default with respect to any order,
writ, injunction, or decree of any court or arbitrator or governmental agency.
4.5 Valid Organization; Due Authorization; Valid and Binding
Agreement. (a) The Company is a corporation duly organized, validly existing,
and in good standing under the laws of the State of Delaware, with corporate
power and authority to enter into and perform this Agreement and to issue the
Note and incur the indebtedness to be evidenced thereby. The Company is
qualified to do business and is in good standing in each jurisdiction in which
failure to so qualify could have a material adverse affect on its property,
business, operations, or prospects.
(b) This Agreement and the Note have each been duly authorized by
all required corporate action on the part of the Company, and each of this
Agreement and the Note have been duly executed and delivered by the Company and
constitutes the legal, valid, and binding obligation of the Company enforceable
in accordance with its terms.
(c) The execution and delivery of this Agreement and the Note and
the performance by the Company of its obligations hereunder and thereunder will
not conflict with or result in any breach of any of the provisions, or
constitute a default under or result in the creation or imposition of any lien
or encumbrance (except as expressly provided herein) upon any of the property of
the Company pursuant to any of the provisions of the certificate of
incorporation of the Company or the bylaws of the Company or any agreement or
instrument to which the Company is a party or by which it or its assets is
bound.
9
(d) No consent, authorization, approval, or other action by, and
no notice to or filing with, any governmental authority or regulatory body or
any other person, which has not been obtained or taken, is required for the
execution and delivery of, or the performance by the Company of its obligations
under, this Agreement or the Note.
4.6 Intentionally Omitted.
4.7 Absence of Material Liabilities. Neither the Company nor any
Subsidiary has any material liabilities or obligations, either accrued,
absolute, contingent, or otherwise, except (a) as set forth in its most recent
unaudited balance sheet, (b) normal liabilities and obligations incurred in the
ordinary course of business since the date of its most recent unaudited balance
sheet, and (c) obligations under contracts and agreements entered into in the
ordinary course of business.
4.8 Tax Matters. The Company and its Subsidiaries have filed all
federal, state, and local tax returns which are required to be filed, except for
extensions duly obtained, and has paid, or made provisions for the payment of,
all taxes which have become due pursuant to such returns or pursuant to any
assessment received by the Company or any Subsidiary, except such taxes, if any,
as are being contested in good faith and as to which adequate reserves have been
provided.
4.9 Ownership of Collateral; Security Interest Priority. At the time
any Collateral becomes subject to a security interest of Boston Chicken
hereunder, unless Boston Chicken shall otherwise consent, (a) the Company or a
Subsidiary shall be the lawful owner of such Collateral and have the right and
authority to subject the same to the security interest of Boston Chicken, (b)
none of the Collateral shall be subject to any lien or encumbrance other than
that in favor of Boston Chicken, and (c) there shall be no effective financing
statement covering any of the Collateral on file in any public office, other
than in favor of Boston Chicken. This Agreement creates in favor of Boston
Chicken a valid and perfected first-priority security interest in the Collateral
enforceable against the Company or its Subsidiary, as the case may be, and all
third parties and secures the payment of the Company's obligations hereunder and
under the Note, and all other obligations of the Company to Boston Chicken,
whether now existing or hereafter arising, and all filings and other actions
necessary or desirable to create, preserve, or perfect such security interest
have been duly taken.
4.10 Location of Offices, Records, and Facilities. The Company's
chief executive office and chief place of business and the office where the
Company keeps its records concerning its accounts, contract rights, chattel
papers, instruments, general intangibles, and other obligations arising out of
or in connection with the operation of its business or otherwise
("Receivables"), and all originals of all leases and other chattel paper which
evidence Receivables, are located in the State of Colorado, at the address of
the Company set forth in Section 9.4 hereof (as such address may be changed from
time to time in accordance therewith). The federal tax identification number of
the Company has been applied for. The name of the Company is "HFMI Acquisition
Corporation" and the Company operates under no other names.
10
4.11 Location of Inventory, Fixtures, Machinery, and Equipment. (a)
All Collateral consisting of inventory, fixtures, machinery, or equipment is and
will be located in the State of Colorado, and at no other locations without the
prior written consent of Boston Chicken.
(b) If the Collateral described in clause (a) is kept at leased
locations, the Company has used its best efforts to obtain appropriate landlord
lien waivers or subordination satisfactory to Boston Chicken, unless such has
been waived in writing by Boston Chicken for the particular instance.
(c) If the Collateral described in clause (a) is warehoused, the
Company has sent appropriate warehousemen's notices, each satisfactory to Boston
Chicken, unless such has been waived by Boston Chicken for the particular
instance.
4.12 Investment Company Act. The Company is not an "investment
company", or a company "controlled" by an "investment company", within the
meaning of the Investment Company Act of 1940, as amended.
4.13 Public Utility Holding Company Act. The Company is not a
"holding company", or an "affiliate" of a "holding company" or a "subsidiary
company" of a "holding company", within the meaning of the Public Utility
Holding Company Act of 1935, as amended.
4.14 Subsidiaries. The Company has no Subsidiaries as of the date of
this Agreement.
4.15 Intellectual Property Agreements. Each of the intellectual
property agreements described on Schedule 4.15 hereto (the "Intellectual
Property Agreements") is in full force and effect and has not been amended,
modified or terminated.
ARTICLE V
Affirmative Covenants
---------------------
The Company covenants and agrees that so long as this Agreement
remains in effect:
5.1 Financial Statements. (a) The Company shall cause to be
furnished to Boston Chicken and, at Boston Chicken's request, to the Agent: (i)
as soon as practicable and in any event within 20 days after the end of each
Retail Period, statements of income and cash flow of the Company and its
Subsidiaries for such period and for the period from the beginning of the then
current fiscal year to the end of such quarter and a balance sheet of the
Company and its Subsidiaries as of the end of such quarter, setting forth in
each case, in comparative form, figures for the corresponding periods in the
preceding fiscal year; (ii) as soon as practicable and in any event within 20
days after the end of each interim calendar quarter, statements of income and
cash flow of the Company and its Subsidiaries for such period and for the period
from the beginning of the then current fiscal year to the end of such quarter
and a balance sheet of the Company and its
11
Subsidiaries as of the end of such quarter, setting forth in each case, in
comparative form, figures for the corresponding periods in the preceding fiscal
year, certified as accurate by the chief financial officer or treasurer of the
Company, subject to changes resulting from normal, recurring year-end
adjustments; (iii) as soon as practicable and in any event within 60 days after
the end of each fiscal year, statements of income and cash flows of the Company
and its Subsidiaries for such year, and a balance sheet of the Company and its
Subsidiaries as of the end of such year, setting forth in each case, in
comparative form, corresponding figures for the preceding fiscal year and as of
the end of the preceding fiscal year, audited by independent certified public
accountants selected by Boston Chicken and reasonably satisfactory to the
Company; and (iv) as soon as practicable (but in any event not more than five
business days after the president or chief financial officer of the Company
obtains knowledge of the occurrence of an event or the existence of a
circumstance giving rise to an Event of Default or a Default), notice of any and
all Events of Default or Defaults hereunder.
(b) All financial statements delivered to Boston Chicken, and if
applicable, the Agent pursuant to the requirements of Section 5.1(a) shall be
prepared in accordance with generally accepted accounting principles
consistently applied. Together with each delivery of financial statements
required by Section 5.1(a)(ii) and (iii), the Company shall deliver to Boston
Chicken an officer's certificate stating that there exists no Default or Event
of Default, or, if any Default or Event of Default exists, specifying the nature
thereof, the period of existence thereof and what action the Company proposes to
take or has taken with respect thereto. Together with each delivery of
financial statements required by Section 5.1(a)(iii) above, the Company shall
deliver to Boston Chicken a certificate of the accountants who performed the
audit in connection with such statements stating that in making the audit
necessary to the issuance of a report on such financial statements, they have
obtained no knowledge of any Default or Event of Default, or, if such
accountants have obtained knowledge of a Default or Event of Default, specifying
the nature and period of existence thereof. Such accountants shall not be
liable by reason of any failure to obtain knowledge of any Default or Event of
Default which would not be disclosed in the ordinary course of an audit. The
Company authorizes Boston Chicken to discuss the financial condition of the
Company with the Company's independent public accountants and agrees that such
discussion or communication shall be without liability to either Boston Chicken
or the Company's independent public accountants.
5.2 Inspection. Boston Chicken, or any person designated from time
to time by Boston Chicken, shall have the right, from time to time hereafter, to
call at the Company's or its Subsidiaries' place or places of business during
ordinary business hours, and, without hindrance or delay, (a) to inspect, audit,
check, and make copies of and extracts from the Company's and its Subsidiaries'
books, records, journals, orders, receipts, and any correspondence and other
data relating to the business of the Company or its Subsidiaries or to any
transactions between the parties hereto, and (b) to discuss the affairs,
finances, and business of the Company and its Subsidiaries with the officers of
the Company and its Subsidiaries.
5.3 Conduct of Business. (a) The Company shall, and shall cause
each Subsidiary to (i) maintain its corporate or other entity existence and
qualification to do business in good standing in each jurisdiction where the
failure to be so qualified would have a material adverse effect on the financial
condition of the Company or its Subsidiaries, (ii) maintain in full
12
force and effect all licenses, bonds, franchises, leases, patents, contracts,
and other rights necessary to the conduct of its business, and (iii) comply with
all applicable laws and regulations of any federal, state, or local governmental
authority, including those relating to environmental matters, labor and
employment laws and employee benefit matters.
(b) The Company shall, and shall cause its Subsidiaries to, duly
pay and discharge (i) all lawful claims, whether for labor, materials, supplies,
services, or anything else, which might or could, if unpaid, become a lien or
charge upon its property or assets, unless and to the extent only that the
validity thereof is being contested in good faith and by such appropriate
proceedings, (ii) all of its trade bills when due in accordance with their
original terms, and (iii) all taxes unless and to the extent that the validity
thereof is being contested by the Company in good faith and by appropriate
proceedings and for which the Company has provided adequate reserves.
(c) The Company shall not, and shall not permit any Subsidiary
to, engage in any business other than the business of owning and operating,
outside the states of Georgia and Alabama, megastores, supermarkets, or other
retail or convenience stores specializing in perishable food products, including
by way of example and not by limitation, fresh fruits and vegetables or fresh
meats, poultry and seafood; fresh bakery goods; freshly made ready-to-eat,
ready-to-heat and ready-to-xxxx prepared foods; and deli, cheese and dairy
products; and/or specialty; hard-to-find; and gourmet nonperishable food
products, kitchen-oriented housewares, floral items, grocery items, natural
health and beauty aids, wines and imported and domestic beers.
5.4 Insurance. (a) The Company shall keep and maintain, and shall
cause its Subsidiaries to keep and maintain, at their sole cost and expense, (i)
insurance on their assets for at least 80% of the full replacement value thereof
against loss or damage by fire, theft, explosion, and all other hazards and
risks ordinarily insured against by other owners or users of such properties in
similar businesses; and (ii) public liability insurance relating to the
Company's and its Subsidiaries' ownership and use of their assets.
(b) All such policies of insurance shall be in such form and in
such amounts as is customary in the case of other owners or users of like
properties in similar businesses, with insurers as shall be reasonably
satisfactory to Boston Chicken. Upon demand, the Company shall deliver to Boston
Chicken the original (or certified) copy of each policy of insurance, and
evidence of payment of all premiums for each such policy. Such policies of
insurance (except those of public liability) shall contain an endorsement in
form and substance acceptable to Boston Chicken, showing Boston Chicken as an
additional insured. Such endorsement, or an independent instrument furnished to
Boston Chicken, shall provide that all insurance companies will give Boston
Chicken at least 30 days prior written notice before any such policy or policies
of insurance shall be altered or canceled. The Company and each Subsidiary
hereby directs all insurers under such policies of insurance (except those of
public liability) to pay all proceeds payable thereunder for claims in excess of
the aggregate amount of $50,000 directly to Boston Chicken, and the Company and
each Subsidiary irrevocably appoints Boston Chicken (and all officers,
employees, or agents designated by Boston Chicken), as the Company's and the
Subsidiaries' true and lawful agent (and attorney-in-fact) for the purpose of
endorsing the name of the Company or such Subsidiary on any check, draft,
instrument, or other item of payment for such proceeds. Any
13
proceeds received by Boston Chicken shall be applied to the Company's
obligations hereunder, and any overage shall be paid to the Company. The Company
and each Subsidiary irrevocably appoints Boston Chicken, from and after a
Default or an Event of Default, as the Company's and each Subsidiary's true and
lawful agent (and attorney-in-fact) for the purpose of making, settling, and
adjusting claims under such policies of insurance and for making all
determinations and decisions with respect to such policies of insurance. In the
event the Company or any Subsidiary at any time or times hereafter shall fail to
obtain or maintain any of the policies of insurance required above or to pay any
premium in whole or in part relating thereto, then Boston Chicken, without
waiving or releasing any Default or Event of Default hereunder, may at any time
or times thereafter (but shall be under no obligation to do so) obtain and
maintain such policies of insurance and pay such premium and take any other
action with respect thereto which Boston Chicken deems advisable. All sums so
disbursed by Boston Chicken, including reasonable attorneys' fees, court costs,
expenses, and other charges relating thereto, shall be part of the Company's
obligations hereunder, payable by the Company to Boston Chicken on demand.
5.5 Notice of Suit or Adverse Change in Business. The Company shall
give written notice to Boston Chicken of the following (a) as soon as possible,
and in any event within five business days after the Company receives actual
notice of any material proceeding(s) being instituted or threatened to be
instituted by or against the Company or any Subsidiary in any federal, state, or
local court or before any commission or other regulatory body (federal, state,
or local), and (b) as soon as possible and in any event within five business
days after the Company learns of any material adverse change in the financial
condition, results of operations, business, or assets of the Company or any
Subsidiary.
5.6 Use of Proceeds. Except as otherwise authorized in writing by
Boston Chicken, the Company shall use the net proceeds from the Loan solely for
general working capital. The Company will not, directly or indirectly, use any
part of such proceeds for the purpose of purchasing or carrying any securities
of another entity (including options and warrants to purchase securities) and
margin stock within the meaning of Regulation U of the Board of Governors of the
Federal Reserve System or to extend credit to any person for the purpose of
purchasing or carrying any such margin stock.
5.7 Reservation of Common Stock. The Company covenants that it will
at all times reserve and keep available, solely for the purpose of issuance upon
conversion of the Note or exercise of the Option, or both, such number of shares
of Common Stock as would be issuable upon the conversion of, or exercise of the
Option for, $17,000,000. The initial Conversion Price (subject to adjustment as
provided in the Note) is $1,150.00 per share. The Company covenants that if any
shares of its Common Stock required to be reserved for issuance upon conversion
of the Note or exercise of the Option require registration with or approval of
any governmental authority under any Federal or state law before such shares may
be issued upon such conversion of exercise, the Company will, at its expense and
as expeditiously as possible, cause such shares to be duly registered or
approved, as the case may be.
5.8 Rights with Respect to Additional Debt Financing and Equity
Issuances. The Company grants to Boston Chicken a continuing right, on the
terms and subject to
14
the limitations described below, to (i) supply additional debt financing to the
Company, (ii) purchase (the "Preemptive Right") a portion of any Common Stock of
the Company that the Company from time to time proposes to issue and sell to
third parties ("Subject Shares"), (iii) purchase additional Common Stock in the
event Common Stock is issued by the Company pursuant to its Stock Option Plan,
and (iv) in certain circumstances, purchase additional Common Stock if the
voting power of Boston Chicken's Common Stock is reduced below a designated
percentage of the aggregate voting power of the Company's voting securities.
(a) If the Company determines that it requires additional debt
financing (including, but not limited to, financing provided by means of any
capital-type transaction or sale/leaseback transaction) ("Debt Financing"), the
Company agrees (i) to negotiate in good faith with Boston Chicken for a period
of 60 days with regard to any portion or the entire amount (at the option of
Boston Chicken) of such Debt Financing prior to negotiating with any other
entity with regard thereto; and (b) in the event the Company has engaged in good
faith negotiations under this paragraph (a) of this Section 5.8 and such
negotiations have been unsuccessful, to notify Boston Chicken of the existence
of any other Debt Financing arrangement it proposes to consummate and the terms
and conditions contained therein and upon receipt of such notice (setting forth
in detail all relevant terms and conditions of such financing), Boston Chicken
shall have 30 days thereafter in which to agree to assume all of the Debt
Financing on substantially the same terms and conditions. Boston Chicken
acknowledges that the right of first negotiation as set forth in this paragraph
(a) does not preclude the Company from making inquiries in the relevant
marketplace to obtain information regarding the terms of a financing solely for
purposes of comparison.
(b) Prior to the Termination Time (as defined in paragraph (h)
of this Section 5.8), if the Company proposes to issue any Subject Shares to any
person other than Boston Chicken, except as provided in paragraph (f) of this
Section 5.8, and such issuance would cause Boston Chicken to have less than
Majority Beneficial Ownership (as defined below) of the Company immediately
after such issuance, the Company shall deliver to Boston Chicken written notice
of such intention to sell such Subject Shares (the "Offer"), which notice shall
include a reasonably detailed term sheet specifying (i) the number of the
Subject Shares, (ii) the proposed sale price or other applicable pricing terms
of the Subject Shares and (iii) any other material terms of the Subject Shares
and their issuance. Boston Chicken shall then have 30 days from receipt of the
Offer in which to elect by written notice to the Company (i) to accept such
Offer with respect to some or all of that portion of the Subject Shares that
will, after such issuance, allow Boston Chicken to maintain Majority Beneficial
Ownership of the Company (a "Purchasable Portion"), or (ii) to reject the Offer.
The failure by Boston Chicken to elect to accept an Offer, or the delivery of an
acceptance that is late, shall be deemed an election by Boston Chicken to reject
the Offer. As used herein, "Majority Beneficial Ownership" means Ownership (as
defined below) by Boston Chicken of Common Stock of the Company both (x)
representing not less than 51% of the common equity of the Company (the "Common
Equity") and (y) possessing not less than 51% of the voting power ("Voting
Power") of all securities of the Company having the power generally (and not
merely upon the happening of a contingency) to vote in the election of the
Company's directors ("Voting Stock"), the calculation of such Common Equity and
Voting Power to include all Common Stock and other capital stock and
15
voting securities of the Company subject to outstanding options, rights and
warrants of the Company, whether or not then exercisable, including Common Stock
of which Boston Chicken has Ownership hereunder, either through its conversion
rights pursuant to Section 1.7 or its Option pursuant to Section 1.8 hereof or
under any Top-Up Option (as hereinafter defined), but specifically excluding any
Common Stock subject to options granted under the Stock Option Plan. For
purposes of this Section 5.8, Boston Chicken will be deemed to have "Ownership"
of all Common Stock it owns of record, either directly or through a nominee, or
Common Stock that it currently has or has had the right to acquire under this
Agreement (without regard to the satisfaction, waiver, expiration, or
termination of any conditions to the consumation of such acquisition and other
than rights to acquire which expired unexercised by any person) regardless of
whether it shall have transferred such Common Stock or the right to acquire such
Common Stock hereunder to any other person or entity; provided, however, that,
except for Common Stock acquired or that may be acquired pursuant to this
Agreement, Boston Chicken shall in no event be deemed to have "Ownership" for
purposes of this Section 5.8 of (i) any securities of the Company held by
affiliates, officers, directors or employees of Boston Chicken and its
subsidiaries or (ii) any securities of the Company held by any person or entity
that would not be counted under generally accepted accounting principles for
determining whether Boston Chicken holds a majority of the Voting Stock for
consolidated financial reporting purposes.
(c) If Boston Chicken accepts an Offer with respect to a
Purchasable Portion of the Subject Shares, the price to be paid by Boston
Chicken for each of the Subject Shares shall be equal to the price per share
(net of any underwriting discount or commission, selling commission, brokerage
commission or other similar selling expense payable in connection therewith)
received by the Company (or if there is more than one such price, the average of
the prices so received) in connection with the issuance and sale thereof by the
Company. If the purchase price received by the Company is in a form of
consideration other than cash, the value of such consideration will be
determined as follows: (i) if such consideration includes securities which are
freely tradeable and as to which an active trading market exists, such
securities will be valued in as nearly as practicable the same manner as the
Fair Market Value of the Common Stock is to be determined in such circumstances
as set forth in Section 5.8(l) and (ii) if such consideration includes any other
securities or other property or assets, such securities or other property or
assets shall be valued as agreed between Boston Chicken and the Company or if no
such agreement can be reached, by an investment banking or other appraisal firm
chosen by Boston Chicken and reasonably acceptable to the Company based on a
valuation methodology deemed appropriate by such firm.
(d) Upon acceptance by Boston Chicken of any Offer for a
Purchasable Portion of the Subject Shares, the parties shall consummate the sale
of such Purchasable Portion contemporaneously with the closing of the sale of
the Subject Shares to other purchasers thereof (or if there is more than one
such closing contemplated, contemporaneously with the first such closing). At
such closing Boston Chicken shall:
(i) either pay to the Company (i) Approved Consideration (as defined
in Section 5.8(n)) or (ii) if the other purchasers of the Subject Shares
shall have paid for the Subject Shares with consideration that is other
than Approved
16
Consideration, then at the election of Boston Chicken, substantially the
same type of consideration as has been paid by such purchasers, in either
case (i) or (ii) in an amount equal to the purchase price for the Subject
Shares to be purchased as provided in Section 5.8(c); and upon payment by
Boston Chicken of the purchase price, the Company shall deliver to Boston
Chicken (or any nominee, Subsidiary or Affiliate of Boston Chicken
designated by it) certificates evidencing the purchased Subject Shares free
and clear of any liens or other security interests; or
(ii) increase the Maximum Principal Balance by the dollar amount that,
when such amount is converted into Common Stock upon exercise of Boston
Chicken's conversion or Option rights at a conversion price equal to 115%
of the purchase price that would have been payable in cash for such Subject
Shares, will result in Boston Chicken acquiring upon such exercise a number
of shares of Common Stock equal to such Purchasable Portion.
(e) After Boston Chicken exercises its rights with respect to a
Purchasable Portion of the Subject Shares or rejects an Offer, the Subject
Shares described in the Offer (or such portion thereof that is not being
purchased by Boston Chicken) may be sold by the Company to any person for such
price as the Company shall determine and upon other terms not materially more
favorable to the purchaser (either individually or in the aggregate) from those
set forth in the Offer at any time within 120 calendar days following Boston
Chicken's exercise of its right to purchase the Purchasable Portion or Boston
Chicken's non-acceptance of such Offer. If the Subject Shares are not sold by
the Company within the time and on the terms set forth in the preceding
sentence, any subsequent sale shall again be subject to the right of Boston
Chicken to purchase such securities pursuant to this Section 5.8.
(f) The rights of Boston Chicken under paragraphs (b) through
(e) this Section 5.8 shall not apply to (i) any issuances of securities of the
Company pursuant to the Stock Option Plan, as to which Boston Chicken shall have
the rights set forth in paragraph (g) of this Section 5.8, and (ii) any issuance
by the Company of any securities as part of, or following, a Qualified Public
Offering, as to which Boston Chicken shall have the rights set forth in
paragraph (i) of this Section 5.8.
(g) On the terms and subject to the conditions set forth herein,
the Company hereby grants to Boston Chicken, at each time prior to the
Termination Time that (i) an option is exercised pursuant to the Stock Option
Plan and (ii) immediately after the exercise of such option Boston Chicken would
have less than 51% of the Fully Diluted Ownership (as defined below) of the
Company, an option (each, a "Top-Up Option") to purchase such number of shares
of Common Stock as may be necessary, when added to all other shares of Common
Stock as to which Boston Chicken has Ownership, to enable Boston Chicken to have
Ownership, immediately after such option exercise under the Stock Option Plan,
of Majority Fully Diluted Ownership. As used herein, "Majority Fully Diluted
Ownership" means Ownership by Boston Chicken of Common Stock both (x)
representing not less than 51% of the Common Equity and (y) possessing not less
than 51% of the Voting Power, in each case on a fully diluted basis (the
calculation of such Common Equity and Voting Power on a fully diluted basis to
include all
17
Common Stock and other capital stock and voting securities of the Company
subject to outstanding options, rights and warrants of the Company, whether or
not exercisable, including shares of Common Stock of which Boston Chicken has
Ownership hereunder, either through its conversion rights pursuant to Section
1.7 or its Option pursuant to Section 1.8 hereof or under any outstanding Top-Up
Option, and specifically including all Shares subject to options granted under
the Stock Option Plan).
(h) If at any time Boston Chicken shall be entitled to, but
shall fail to, exercise a Preemptive Right hereunder, it shall cease to have any
(i) Preemptive Right with respect any issuances thereafter by the Company of any
Common Stock, (ii) Top-Up Options granted thereafter hereunder; provided,
however, that all then outstanding Top-Up Options shall continue to be
outstanding and shall remain exercisable until the thirtieth day following a
Qualified Public Offering, and (iii) Public Company Options (as defined below).
The Preemptive Right of Boston Chicken shall also terminate immediately prior to
the Company having completed a Qualified Public Offering (the "Termination
Time"), and commencing at the Termination Time, no further Top-Up Options shall
be granted hereunder; provided, however, that all then outstanding Top-Up
Options shall continue to be outstanding and shall remain exercisable until the
thirtieth day following a Qualified Public Offering.
(i) The following provisions shall apply only to the issuance by
the Company of Voting Stock coincident with, or at any time following, a
Qualified Public Offering. On the terms and subject to the conditions set forth
herein, if at any time the Company issues shares of Voting Stock either in a
Qualified Public Offering or otherwise and such issuance causes Boston Chicken
to have Ownership of less than 51% of the Voting Power of the aggregate of (x)
the then outstanding Voting Stock plus (y) any unissued Voting Stock that is
then issuable pursuant to this Agreement (the "Primary Voting Stock"), the
Company hereby grants to Boston Chicken an option (each, a "Public Company
Option") to purchase such number of shares of Common Stock (the "Requisite
Shares") as may be necessary, when added to all other Common Stock as to which
Boston Chicken then has Ownership, to enable Boston Chicken to have Ownership of
Voting Stock of the Company possessing not less than 51% of the Voting Power of
the Primary Voting Stock. Each Public Company Option shall be deemed to be
granted by the Company on the date that the Company issues the shares of Voting
Stock that creates the Public Company Option. Each Public Company Option shall
be exercisable for a period of 120 days from its date of grant, at which time
such Public Company Option shall expire. Each Public Company Option shall be
exercisable, at the price and on the other terms provided below, in whole or in
part from time to time during the period during which it may be exercised.
(j) Each outstanding Public Company Option shall terminate:
(i) if as a result of any voluntary sale or transfer of Voting Stock,
Boston Chicken has Ownership of less than 51% of the Voting Power of the
Primary Voting Stock (based on the most recent information given in writing
by the Company to Boston Chicken regarding the number of such shares
outstanding prior to such sale); or
18
(ii) if Boston Chicken fails to exercise any outstanding Public
Company Option for the Requisite Shares prior to its expiration or
otherwise fails to acquire the Requisite Shares prior to its expiration.
(k) For purposes of determining the amount of Voting Stock as to
which Boston Chicken has Ownership pursuant to Section 5.8(j) in connection with
a transaction in which there occurs a voluntary sale or transfer of Common Stock
simultaneously with an issuance of Voting Stock by the Company, such Common
Stock shall be deemed to have sold or transferred prior to the Company's
issuance. The Public Company Options and the Top-Up Options are sometimes
referred to collectively herein as the "BC Options."
(l) The purchase price payable upon each exercise of a BC Option
shall be an amount equal to the Fair Market Value (as hereinafter defined) of
the Common Stock to be issued pursuant to such BC Option. As used herein, "Fair
Market Value" as of a particular date (the "valuation date"), shall mean an
amount equal to (i) the average of the closing sale price of the Common Stock on
the Nasdaq National Market or, if the Common Stock is not then listed on the
Nasdaq National Market, on the principal securities exchange or other securities
market, if any, on which the Common Stock is then listed for trading, on the
five consecutive trading days ending with (and inclusive of) the second trading
day prior to the valuation date, as reported in the Wall Street Journal (Western
Edition), or, (ii) if no sales take place on any one or more of such days on the
Nasdaq National Market or (as the case may be) such principal securities
exchange or securities market, the average of the closing bid and asked prices
on such day or days as officially reported or listed on the Nasdaq National
Market or such other principal securities exchange or securities market, or,
(iii) if the Common Stock is not then listed or admitted to trading on the
Nasdaq National Market or other principal securities exchange or securities
market, the last sale price on such days if reported by a reputable entity or
system engaged in the regular reporting of securities prices. If there is no
such entity or system or the Common Stock is not publicly traded, "Fair Market
Value" shall be determined in good faith as of the valuation date by the board
of directors of the Company. The valuation date for purposes of determining the
Fair Market Value of a Top-Up Option shall be the date of the transaction
pursuant to which the Option is granted. The valuation date for purposes of
determining the Fair Market Value of a Public Company Option is the date of the
exercise of such Public Company Option.
(m) Boston Chicken shall exercise any BC Option by delivery of a
written exercise notice to the Company designating a date (the "Issue Date"),
which date shall be not less than five nor more than 25 business days from the
date of such exercise notice. On the Issue Date, provided that all applicable
regulatory approvals shall have been obtained and all applicable waiting periods
have expired, and there are no injunctions outstanding prohibiting such transfer
or any other regulatory or governmental impediments to such transfer
(collectively, "Governmental Impediments"), the Company shall issue to Boston
Chicken the number of Shares as to which the BC Options have been exercised
against payment of the purchase price therefor as determined pursuant to Section
5.8(l). If there is any Governmental Impediment, the Issue Date shall be
postponed until the tenth business day after the first day on which no
Governmental Impediment remains outstanding (and references herein to the Issue
Date shall be
19
construed accordingly), unless Boston Chicken and the Company agree on some
other date. Boston Chicken's obligation to purchase the Common Stock on an Issue
Date pursuant to the exercise of a BC Option is conditioned, in its discretion,
on no material adverse change having occurred in the financial condition,
results of operations, assets or business of the Company since the date of
Boston Chicken's exercise notice; provided, however, that if Boston Chicken
determines not to purchase Common Stock as a result of the occurrence of a
material adverse change, such 120 day exercise period shall be tolled during the
pendency of such material adverse change and such failure to purchase shall not
be deemed to be a failure by Boston Chicken to have exercised any right for
purposes of this Agreement. Notwithstanding any contrary provision contained
herein, no outstanding BC Option shall expire until such material adverse change
has either ceased to exist (or has been waived by Boston Chicken) and Boston
Chicken has elected to nevertheless forgo exercise of such option or the
applicable 120 day exercise period has expired after tolling ceases.
(n) (i) The purchase price payable upon any exercise of any BC
Option (the "Option Exercise Price") shall be payable by, at the option of
Boston Chicken, (x) in check or wire transfer in immediately available funds to
an account designated by the Company, or (y) in that number of registered shares
of common stock, $.01 par value per share, of Boston Chicken ("Boston Chicken
Shares") equal to the fair market value of the Common Stock to be issued
pursuant to the Option divided by the average closing sales price per share of
Boston Chicken Shares quoted on the Nasdaq National Market, as reported in the
Wall Street Journal (Western Edition), for the five consecutive trading days
ending with (and inclusive of) the second trading day prior to the Issue Date,
rounded up to the nearest whole share, or (z) if the Company shall agree, with
such other tangible or intangible assets or services, valued as agreed between
the Company and Boston Chicken (any of the foregoing, "Approved Consideration").
Notwithstanding the foregoing, Boston Chicken's right to pay the Option Exercise
Price in Boston Chicken Shares is subject to any restriction on the Company
contained in the documents then governing any loan the Company has with a bank
or banks; provided, however, that the Company agrees to use its reasonable best
efforts to obtain any necessary waivers or consents requested by Boston Chicken
to allow the Option Exercise Price to be paid in Boston Chicken Shares.
(ii) If the Option Exercise Price with respect to a particular BC
Option exercise is paid in Boston Chicken Shares and (x) the Company sells
all of Boston Chicken Shares received by it with respect to such exercise
within that number of trading days commencing on the first trading day on
which the Nasdaq National Market is open for business following the Issue
Date and ending on the day that is that number of days thereafter
determined by dividing the number of such Boston Chicken Shares so received
by 100,000 (rounding up to the next whole day), plus two additional days
(the "Guarantee Period") for cash in one or more bona fide broker's or
market maker transactions through or to Xxxxxxx Lynch, Pierce, Xxxxxx &
Xxxxx Incorporated ("Xxxxxxx Xxxxx") or as otherwise provided in any
prospectus pursuant to which the sale and the Company's resale of the
Boston Chicken Shares is registered (the "Purchaser Prospectus") to one or
more persons not affiliated with, related to, or associated with the
Company, (y) the
20
aggregate proceeds from the sale of such Boston Chicken Shares received by
the Company, net of broker's commissions, is less than the dollar amount of
the Option Exercise Price (the "Shortfall"), and (z) Boston Chicken
receives notice from the Company within 14 days of the expiration of the
Guarantee Period of the amount of the Shortfall with copies of applicable
confirmation slips or other evidence reasonably satisfactory to Boston
Chicken attached thereto, Boston Chicken shall, within three business days
of the receipt of such notice, in it sole discretion, either (A) pay to the
Company an amount in cash equal to the Shortfall, or (B) deliver that
number of Boston Chicken Shares determined in the manner provided in
subparagraph (n)(iv) below.
(iii) Notwithstanding anything herein to the contrary, Boston Chicken
may not exercise its right to pay the Option Exercise Price through the
issuance of Boston Chicken Shares at any time that the distribution of
Boston Chicken Shares by Boston Chicken or the resale of Boston Chicken
Shares by the Company during the Guarantee Period would be prohibited by
law, including pursuant to Rule 10b-6 under the Securities Exchange Act of
1934, as amended (the "1934 Act").
(iv) In the event Boston Chicken elects to pay the Shortfall in
Boston Chicken Shares, the number of Boston Chicken Shares to be delivered
to the Company shall be determined by dividing the Shortfall by the average
closing per share sales price of Boston Chicken Shares quoted on the Nasdaq
National Market, as reported in the Wall Street Journal (Western Edition),
for the five consecutive trading days ending with (and inclusive of) the
second trading day prior to the date on which Boston Chicken delivers
Boston Chicken Shares to the Company in payment of the Shortfall. In the
event Boston Chicken elects to pay the Shortfall in Boston Chicken Shares,
the provisions of this Section 5.8(n), as applicable, shall apply for
purposes of determining the length of a new Guarantee Period, which shall
commence on the trading day immediately following the date on which the
Company (or its representative) receives such Boston Chicken Shares, and
other terms relating to the sale of such Boston Chicken Shares, including,
without limitation, any additional Shortfall.
(v) In the event Boston Chicken pays the Option Exercise Price
hereunder with Boston Chicken Shares, the Company agrees that (i) during
any trading day during the Guarantee Period the Company will not sell more
than 100,000 Boston Chicken Shares; provided, that, notwithstanding the
limitations on sales set forth in this paragraph, on any day during the
Guarantee Period, Boston Chicken may permit the Company to sell all, or
more than 100,000, Boston Chicken Shares received in payment of the Option
Exercise Price subject to the volume limitations contained from time to
time in the Purchaser Prospectus, and (ii) it will not sell any Boston
Chicken Shares during any period when Boston Chicken has notified the
Company that the resale of the Boston Chicken Shares may be prohibited by
Rule 10b-6 under the 1934 Act or that such resale may
21
violate other applicable securities laws, rules or regulations; provided,
that if such prohibition occurs during the Guarantee Period the Guarantee
Period shall be extended one full day for each day that the Company is
prohibited from selling as a result of the limitations in this Section
5.8(n).
(vi) Boston Chicken agrees that in the event the Company is unable
to trade all or part of Boston Chicken Shares permitted to be traded by the
Company on any trading day during the Guarantee Period through no fault of
the Company, the Guarantee Period shall be extended by one trading day for
each such trading day on which the Company is so unable to trade. The
Company will notify Boston Chicken of such extension of the Guarantee
Period by the close of business on the third trading day following the date
on which the Company is so unable to trade.
(vii) The provisions of this Section 5.8(n) shall apply, mutatis
mutandis, to the payment of the purchase price by Boston Chicken upon any
exercise of its Preemptive Right.
(o) The Common Stock to be issued on each exercise of a BC
Option or the Preemptive Right shall rank pari passu in all respects with the
Company's Common Stock outstanding on the date of issuance thereof, save only as
to any dividend, rights or distribution the record date for which shall have
occurred before such date. All Common Stock issued upon an exercise of a BC
Option or the Preemptive Right shall be subject to such limitations, and shall
have such rights and privileges, under the Company's charter and bylaws, as are
applicable generally to the Common Stock. Each share of Common Stock issued
pursuant to an exercise of a BC Option or the Preemptive Right shall be duly
authorized, validly issued and fully paid and nonassessable, and will not be
subject to any restriction under the Company's charter or bylaws, as such may be
amended from time to time, that is not applicable to shares of Common Stock of
the Company generally.
(p) The Company shall, promptly after the Issue Date applicable
to an exercise of a BC Option, cause a certificate for the Common Stock issued
on such exercise to be delivered to Boston Chicken or as it may direct. The
Company shall, as soon as reasonably practicable after the issue of Common Stock
pursuant to the exercise of an BC Option or the Preemptive Right, cause the
Common Stock so issued to be listed on the Nasdaq National Market or principal
securities exchange on which the Common Stock is then listed for trading.
(q) The Company shall maintain reserved for issuance at all
times during the period that BC Options are exercisable hereunder that number of
authorized but unissued Common Stock issuable upon exercise of such BC Options
from time to time.
(r) (i) Boston Chicken agrees to reimburse, to the extent
permitted by law, the Company, its directors, officers, employees and agents,
and each person, if any, who controls the Company within the meaning of the
Securities Act of 1933, as amended (the "1933 Act") for any and all losses,
claims, damages, expenses and liabilities to which they or any of them may
become subject under the 1933 Act or any other statute or common law or
otherwise by reason of its offer and sale of Boston Chicken Shares pursuant to
this Section 5.8, and to
22
reimburse the Company for any reasonable legal or other expenses actually and
reasonably incurred in connection with investigating any claims and defending
any actions, insofar as such losses, claims, damages, expenses, liabilities, or
actions arise out of, or are based upon:
(x) any untrue statement of a material fact or any alleged
untrue statement of a material fact contained in or incorporated by
reference in the registration statement which contains the Purchaser
Prospectus (the "Purchaser Registration Statement") or any post-
effective amendment thereto, or the omission or alleged omission to
state therein 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; or
(y) any untrue statement of a material fact or any alleged
untrue statement of a material fact contained or incorporated by
reference in the Purchaser Prospectus (as amended or supplemented if
Boston Chicken shall have filed with the Securities and Exchange
Commission any amendment or supplement thereto), if used within the
period during which Boston Chicken is required to keep the Purchaser
Registration Statement in which such Purchaser Prospectus is contained
current, or the omission or alleged omission to state therein a
material fact necessary in order to make the statements contained
therein, in light of the circumstances under which they were made, not
misleading;
provided, however, that Boston Chicken's obligations contained herein shall
not apply to losses, claims, damages, expenses, liabilities, or actions
arising out of, or based upon any such untrue statement or any such
omission or alleged omission, if such statement or omission was made in
reliance upon, and in conformity with, information relating to the Company
furnished to Boston Chicken by the Company expressly for use in connection
with the preparation of the Purchaser Registration Statement or any
prospectus contained in the Purchaser Registration Statement or any such
amendment or supplement thereto.
(ii) The Company shall (in the same manner and to the same extent as
set forth in subparagraph (r)(i) above), reimburse, to the extent permitted
by law, Boston Chicken, its directors, officers, employees and agents, and
each person, if any, who controls Boston Chicken within the meaning of the
1933 Act, if such statement or omission was made in reliance upon and in
conformity with information relating to the Company furnished to Boston
Chicken by the Company expressly for use in connection with the preparation
of the Purchaser Registration Statement or the Purchaser Prospectus or any
amendment or supplement thereto.
(iii) Any person entitled to reimbursement hereunder will (x) give
written notice to the reimbursing party of any claim with respect to which
it seeks
23
reimbursement within 14 days of the person entitled to reimbursement paying
the reimbursable amount (provided, however, that any failure by a person
entitled to reimbursement hereunder to give such prompt written notice
shall not adversely affect such person's rights hereunder unless and then
only to the extent that such failure prejudices the rights of the
reimbursing party hereunder) and (y) unless in such party's reasonable
judgment a conflict or interest between such party and the reimbursing
parties may exist with respect to such claim, permit such reimbursing party
to assume the defense of such claim with counsel reasonably satisfactory to
the party being reimbursed. If such defense is assumed, the reimbursing
party will not be subject to any liability for any settlement made by the
party being reimbursed without its consent (but such consent will not be
unreasonably withheld). A reimbursing party who is not entitled to, or
elects not to, assume the defense of a claim will not be obligated to pay
the fees and expenses of more than one counsel for all parties being
reimbursed by such reimbursing party with respect to such claim, unless in
the reasonable judgment of such counsel a conflict of interest may exist
between such party being reimbursed and any other of such reimbursed
parties with respect to such claim.
(iv) If the reimbursement provided for in Sections 5.8(r)(i) and
(ii) is unavailable to or insufficient to hold harmless the party being
reimbursed under such subparagraphs in respect of any losses, claims,
damages, expenses or liabilities referred to therein, then each applicable
reimbursing party, in lieu of reimbursing such party, shall contribute to
the amount paid or payable by such party being reimbursed as a result of
such losses, claims, damages, expenses, or liabilities in such proportion
as is appropriate to reflect the relative fault of Boston Chicken and the
Company in connection with the statements or omissions which resulted in
such losses, claims, damages, expenses, or liabilities. The relative fault
of Boston Chicken and the Company shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a
material fact or the omission to state a material fact relates to
information supplied by Boston Chicken or by the Company, and the parties'
relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The amount paid or payable
by a party as a result of the losses, claims, damages, expenses, and
liabilities referred to above shall be deemed to include any legal or other
fees or expenses reasonably incurred by such party in connection with
investigating or defending any action or claim. The Purchaser and the
Company agree that it would not be just and equitable if contribution
pursuant to this Section 5.8(r) were determined by pro rata allocation or
by any other method of allocation which does not take account of the
equitable considerations referred to in the immediately preceding
paragraph. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the 0000 Xxx) shall be entitled to contribution
from any person who was not guilty of such fraudulent misrepresentation.
24
(s) Boston Chicken agrees to reimburse the Company, within 14
days after receipt of written evidence of payment thereof, for the reasonable
legal fees and expenses incurred by the Company in connection with the sale of
any Boston Chicken Shares received pursuant to Section 5.8(n).
(t) The rights of Boston Chicken under this Section 5.8 shall be
automatically transferred in their entirety to any successor to Boston Chicken
by merger, consolidation or transfer of all or substantially all of Boston
Chicken's assets. Boston Chicken may assign or transfer any of its rights under
this Section 5.8 to any other person or entity at any time without the Company's
consent. Any reference herein to Boston Chicken shall be deemed to mean its
assignee or transferree to the extent that such rights are assigned or
transferred thereto.
(u) Except as expressly provided herein, Boston Chicken and the
Company shall bear their own expenses in connection with the transactions
contemplated by this Section 5.8.
(v) In order to prevent dilution of the rights granted to Boston
Chicken under this Section 5.8, the exercise price of and number of shares of
Common Stock subject to any Top-Up Option shall be adjusted in the event the
Company shall at any time (i) make a subdivision of or combine shares of Common
Stock outstanding or (ii) pay a dividend or make a distribution in cash, in
kind, or in securities of any kind (including, but not limited to, any stock
split). In the event the Company makes a subdivision of shares of Common Stock
or pays a dividend or makes a distribution in cash, in kind, or in securities of
any kind, the exercise price of any Top-Up Option in effect immediately prior to
such action shall be appropriately decreased, and in the event that Company
shall at any time combine the shares of Common Stock outstanding, the exercise
price of any Top-Up Option in effect immediately prior to such combination shall
be appropriately increased. An adjustment made pursuant to this Section 5.8(v)
shall, in the event of a subdivision or combination, become effective
retroactively immediately after the effective date thereof, and shall, in the
event of a dividend or distribution, become effective retroactively immediately
after the record date for the determination of stockholders entitled thereto.
(w) The Company covenants that it will at all times reserve and
keep available out of its authorized Common Stock, solely for the purpose of
issuance upon exercise of any Top-Up Option as herein provided, such number of
shares of Common Stock as shall be issuable upon the exercise of all Top-Up
Options. The Company covenants that all shares of Common Stock which shall be so
issuable shall be duly and validly issued and fully-paid and non-assessable upon
payment of the exercise price therefor as provided for herein.
5.9 BC Credit Line Compliance. The Company agrees that, at the time
that it becomes a "Subsidiary" (as defined in the BC Credit Line), if ever, it
will not incur any additional indebtedness or create any additional lien which
would cause Boston Chicken to be in default of the BC Credit Line.
25
5.10 BC Credit Line Representations. The Company agrees that, at the
time that it becomes a "Subsidiary" (as defined in the BC Credit Line), if ever,
it will conduct its business and take such action (or refrain from taking such
action) as to cause to be true and correct at all relevant times the
representations or warranties applicable to a "Subsidiary" contained in the BC
Credit Line.
5.11 Company Subsidiaries. Each corporation or other entity becoming
a Subsidiary of the Company after the date hereof will be duly organized,
validly existing, and in good standing under the laws of its jurisdiction of
organization and will be duly qualified to do business in each additional
jurisdiction where such qualification is or may be necessary under applicable
law. Each Subsidiary of the Company will have all requisite power to own or
lease the properties used in its business and to carry on its business as now
being conducted and as proposed to be conducted. All outstanding shares of
capital stock or other units of ownership interest of each class of each
Subsidiary of the Company will be validly issued and will be fully paid and
nonassessable and will be owned, beneficially and of record, by the Company or
another Subsidiary of the Company free and clear of any liens.
5.12 Place of Business. The Company will provide Boston Chicken with
60 days' prior written notice of any proposed change in the location of its
chief executive office. The Company shall not change its name without the prior
written consent of Boston Chicken.
5.13 Location of Inventory, Fixtures, Machinery, and Equipment. (a)
All Collateral consisting of inventory, fixtures, machinery, and equipment shall
at all times be located in the State of Colorado and at no other locations
without the prior written consent of Boston Chicken.
(b) If the Collateral described in clause (a) is at any time
kept at leased locations, the Company shall use its best efforts to obtain
appropriate landlord lien waivers or subordination satisfactory to Boston
Chicken, unless such has been waived in writing by Boston Chicken for a
particular instance.
(c) If the Collateral described in clause (a) is at any time
warehoused, the Company shall send appropriate warehousemen's notices, each
satisfactory to Boston Chicken, unless such has been waived by Boston Chicken
for the particular instance.
5.14 HSR Act Compliance. In the event Boston Chicken determines that
any filing is required under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended (the "HSR Act") in connection with any exercise of the
conversion rights pursuant to Section 1.7 hereof or of the Option pursuant to
Section 1,8 hereof, the Company agrees to prepare and file with the Federal
Trade Commission and the United States Department of Justice within 10 business
days from the date of notice from Boston Chicken any notification required to be
filed under the HSR Act or any rules or regulations promulgated thereunder.
Boston Chicken shall pay any filing fees required under the HSR Act in
connection with such filing. Any such filing shall be true and accurate in all
material respects and responsive to the requirements of the HSR Act and any such
rules and regulations. Each of the Company and Boston Chicken shall make
26
available to the other party such information as may be required for the
preparation of any such notification or related reports.
5.15 Company's Fiscal Year. The Company shall adopt a fiscal year
consistent with the fiscal year adopted by Boston Chicken from time to time. As
of the date of this Agreement, the Company acknowledges that Boston Chicken's
fiscal year is the 52/53-week period ending on the last Sunday in December and
consists of 13 four-week periods.
5.16 Annual Budget. The Company shall deliver to Boston Chicken, as
soon as practicable and in any event no later than the last day of the first
Retail Period of each fiscal year, an operating budget for the Company for such
fiscal year.
ARTICLE VI
Negative Covenants
------------------
The Company covenants and agrees that, so long as this Agreement
remains in effect (unless Boston Chicken shall give its prior written consent
thereto):
6.1 Guarantees; Loans; etc. The Company shall not, and shall not
permit any Subsidiary to (a) guarantee, endorse or otherwise in any way become
or be responsible for obligations of any other person, whether by agreement to
purchase the indebtedness of any other person or through the purchase of goods,
supplies, or services, or by agreement to maintain net worth, working capital,
or other balance sheet covenants or conditions, or by way of stock purchase,
capital contribution, advance, or loan for the purpose of paying or discharging
any indebtedness or obligation of such other person or otherwise, except
endorsements of negotiable instruments for collection in the ordinary course of
business, or (b) make loans or advances to any person, other than a loan by the
Company to Harry's Farmers Markets, Inc. ("Harry's") pursuant to loan documents
the terms and conditions of which are satisfactory to Boston Chicken (the
"Harry's Loan Documents").
6.2 Disposal of Property. The Company shall not, and shall not
permit any Subsidiary to, sell, lease, transfer, or otherwise dispose of any of
its properties, assets, and rights (or agree to sell, lease, transfer, or
otherwise dispose of any of its properties, assets, and rights) (including the
Collateral) to any party except in the ordinary course of business.
6.3 Compensation to Stockholders and Related Parties. Other than
reasonable salaries and normal benefits (including options pursuant to the Stock
Option Plan), the Company shall not pay any compensation, bonuses, fees,
options, or other amounts to any Stockholder or to any of the stockholders,
affiliates or immediate family members of any such Stockholder. The Company
shall not, without the prior written consent of Boston Chicken, amend its Stock
Option Plan.
27
6.4 Dividends and Stock Redemptions. The Company shall not, directly
or indirectly, (a) redeem, purchase, or otherwise retire any of its shares of
capital stock, (b) declare or pay any dividends in any fiscal year on any of its
shares of capital stock or make any distributions of or with respect to its
shares of capital stock or (c) return capital of the Company to its
stockholders.
6.5 Additional Indebtedness. The Company shall not, and shall not
permit any Subsidiary to, incur additional indebtedness in excess of $5,000 as
to any one item and $50,000 in the aggregate without the consent of Boston
Chicken, other than (a) as provided in Section 5.8 and (b) trade payables in the
ordinary course of business.
6.6 Mergers, Consolidations, Acquisitions, etc. The Company shall
not, and shall not permit any Subsidiary to (a) be a party to any consolidation,
reorganization, or merger; (b) sell or otherwise transfer any part of its assets
(except in the ordinary course of business and except as part of a financing as
to which Boston Chicken has waived its rights pursuant to and in accordance with
Section 5.8 hereof); (c) except as provided in Sections 5.8 hereof, effect any
change in its capital structure or in any of its business objectives, purposes,
and operations; (d) acquire any capital in or equity ownership of another
corporation, partnership, or other business organization; (e) engage in any
other business than the business described in Section 5.3(c) hereof; or (f)
liquidate or dissolve or take any action with a view toward liquidation or
dissolution.
6.7 Certificate of Incorporation and Bylaws. The Company shall not
make any changes in or amendments to its certificate of incorporation or bylaws
as they are in effect as of the date hereof; except that the Company may amend
the certificate of incorporation solely to increase the number of authorized
shares of its common stock by the amount necessary to consummate any financing
as to which Boston Chicken has waived its rights pursuant to and in accordance
with Section 5.8 hereof.
6.8 Issuance of Stock. Except for (a) shares of Common Stock of the
Company which may be issued upon (i) exercise of options granted under the Stock
Option Plan, (ii) exercise of the Option, (iii) conversion of any portion of the
outstanding principal balance of the Loan as provided in the Note, (iv)
consummation of any financing or offering as to which Boston Chicken has waived
its rights pursuant to and in accordance with Section 5.8 hereof, and (b)
options granted under the Stock Option Plan, the Company will not issue any
additional shares of any class of its capital stock, issue any convertible debt
to any person or entity other than Boston Chicken, create any additional classes
of capital stock, whether common or preferred, or grant any option, warrant, or
similar right to acquire shares of any class of its capital stock.
6.9 Liens. The Company shall not, and shall not permit any
Subsidiary to, create, incur, or suffer to exist any lien on any of the assets,
rights, revenues or property, real, personal, or mixed, tangible or intangible,
whether now owned or hereafter acquired, of the Company or any Subsidiary, other
than liens in favor of Boston Chicken.
6.10 Transactions with Affiliates. The Company shall not, and shall
not permit any Subsidiary to, become a party to, or become liable in respect of,
any contract or undertaking
28
with any affiliate except as otherwise expressly permitted under this Agreement
and except in the ordinary course of business and on terms not less favorable to
the Company or such Subsidiary than those which could be obtained if such
contract or undertaking were an arms length transaction with a person other than
an affiliate.
6.11 Subsidiaries. The Company shall not, and shall not permit any
Subsidiary to, create or otherwise invest in any corporation, partnership, or
other entity unless the Company or such Subsidiary owns directly 100% of the
issued and outstanding equity interests therein (such 100% owned entity to be
referred to herein as a "Subsidiary").
6.12 Intellectual Property Agreements. The Company shall not amend
the Intellectual Property Agreements without Boston Chicken's prior written
consent.
6.13 Harry's Loan Documents. The Company shall not amend the Harry's
Loan Documents, or waive any provision of, or default under, the Harry's Loan
Documents, without Boston Chicken's prior written consent.
ARTICLE VII
Conditions of Closing
---------------------
Boston Chicken's obligations hereunder shall be subject to (a) the
performance by the Company prior to or on the Closing Date of all of its
covenants theretofore to be performed under this Agreement, (b) the accuracy of
the Company's representations and warranties contained in this Agreement on the
Closing Date, and (c) the satisfaction, prior to or on the Closing Date, of the
following further conditions:
7.1 Opinion of Counsel. Boston Chicken shall have received on the
Closing Date from Xxxxxxxxxx, Xxxxxx & Xxxxxxx an opinion, dated the Closing
Date, in form and substance satisfactory to Boston Chicken.
7.2 Proceedings and Documents. All proceedings to be taken in
connection with the transaction contemplated by this Agreement and all documents
incident to such transaction shall be satisfactory in form and substance to
Boston Chicken and its counsel, and Boston Chicken shall have received all
documents or other evidence which it and its counsel may reasonably have
requested in connection with such transaction, including copies of records of
all corporate proceedings in connection with such transaction and compliance
with the conditions set forth in this Article VII, in form and substance
satisfactory to Boston Chicken and its counsel.
7.3 Executed Documents. The Company shall have duly executed the
following documents to which it is a party, and shall have delivered to Boston
Chicken the following:
(a) this Agreement;
29
(b) the Note;
(c) any intellectual property security agreement and related
security documents as may be required by the Company;
(d) such financing statements or other documents for filing with
public officials with respect to the Security Instruments as
Boston Chicken may reasonably request;
(e) original promissory note or notes from Harry's to the
Company, duly endorsed in blank;
(f) original warrants to acquire shares of common stock in
Harry's, together with transfer documents executed in blank.
7.4 No Defaults. There shall exist no Event of Default or Default.
7.5 Additional Deliveries. Boston Chicken shall have received, in
form and substance satisfactory to it, the following:
(a) the Company's certificate of incorporation certified as true
and correct by the Secretary of State of Delaware, dated within five days prior
to the Closing Date, and certified as true and correct as of the Closing Date by
a duly authorized officer of the Company;
(b) the Company's bylaws, as in force and effect on the Closing
Date, certified as true and correct by the Secretary of the Company;
(c) certificate of good standing of the Company from the
Secretary of State of the States of Delaware and Colorado dated within five days
prior to the Closing Date;
(d) authorizing resolutions of the board of directors and
stockholders of the Company and evidence satisfactory in form and substance to
Boston Chicken of other corporate action taken by the Company to authorize,
among other things, the execution, delivery, and performance by the Company of
this Agreement, the Note and the Security Instruments and the consummation of
the transactions contemplated hereby, including the reservation of shares of
common stock for issuance upon the conversion of the Loan and the exercise of
the Option, and consummation of the transactions with Harry's, certified as true
and correct as of the Closing Date by a duly authorized officer of the Company;
(e) copies, in form and substance satisfactory to Boston
Chicken, of the executed Transaction Agreement between the Company and Harry's
dated as of January 31, 1997 (the "Transaction Agreement"), the executed
Intellectual Property Agreements, the executed Harry's Loan Documents, and such
other executed documents relating to the Transaction Agreement, the Harry's Loan
Documents and the Intellectual Property Agreements as are required to be
delivered thereunder or as Boston Chicken shall reasonably request; and
30
(f) copy of an executed Registration Rights Agreement between
the Company and Boston Chicken, in form and substance satisfactory to Boston
Chicken.
7.6 Opinion of Auditors. Boston Chicken shall have received on the
Closing Date from Boston Chicken's independent public accountants an opinion,
dated the Closing Date, in form and substance satisfactory to Boston Chicken, to
the effect that the Note and the obligations incurred hereunder are deemed to be
debt, and not equity, in accordance with generally accepted accounting
principles.
7.7 Stockholders' Equity. Boston Chicken shall have received
evidence satisfactory to it that the Company has, on the Closing Date, cash or
cash equivalents of at least $8,666,667, and stockholders' equity of at least
$8,666,667.
7.8 Compliance with BC Credit Line. Boston Chicken shall (a)
determine in good faith that this Agreement complies with applicable
restrictions or limitations under the BC Credit Line, (b) obtain a written
waiver of noncompliance of the transactions contemplated hereby with the BC
Credit Line, or (c) deliver to Agent from the Company such pledges, collateral,
and other documentation as may be required to evidence compliance of the
transactions contemplated hereby with the BC Credit Line.
ARTICLE VIII
Default, Rights and Remedies of Boston Chicken
----------------------------------------------
8.1 Default. The occurrence of any of the following events or acts
shall constitute a default ("Default"):
(a) Default in the payment when due of any portion of the
principal on the Note and the continuance of such default for a period of three
days;
(b) Default in the payment when due of any portion of the
interest on the outstanding principal of the Note and the continuance of such
default for a period of 10 days;
(c) any representation or warranty now or hereafter made in this
Agreement, the Note, any Security Instrument, or any certificate hereunder or
thereunder shall not be true, or any certificate, statement, report, financial
data, or notice furnished at any time by the Company to Boston Chicken shall be
materially inaccurate;
(d) any breach of, or failure to perform or observe, any
covenant, condition, or agreement contained in any Security Instrument, which in
each case shall continue unremedied for a period of 10 calendar days following
notice thereof from Boston Chicken, provided that such grace period shall not
apply, and the Company shall be in Default immediately
31
upon such breach, if, in Boston Chicken's judgment, such breach may not be
reasonably cured by the Company during such cure period;
(e) the breach of, or failure to perform or observe, any
covenant, condition, or agreement contained in Sections 5.6, 6.1, 6.2, 6.4, 6.6,
6.8, 6.10, or 6.11 of this Agreement;
(f) any breach of, or failure to perform or observe, any other
covenant, condition, or agreement contained in this Agreement or the Note which
shall continue unremedied for a period of 10 calendar days following notice
thereof from Boston Chicken, provided that such grace period shall not apply,
and the Company shall be in Default immediately upon such breach, if, in Boston
Chicken's judgment, such breach may not reasonably be cured by the Company
during such cure period;
(g) the Company or any Subsidiary shall (i) generally not, or
shall be unable to, or shall admit in writing its inability to pay its debts as
such debts become due, (ii) make an assignment for the benefit of creditors,
petition or apply to any tribunal for the appointment of a custodian, receiver,
or trustee for it or a substantial part of its assets, (iii) commence any
proceeding under any bankruptcy, reorganization, arrangements, readjustment of
debt, dissolution, or liquidation law or statute of any jurisdiction, whether
now or hereafter in effect, (iv) have any such petition or application filed or
any such proceeding commenced against it in which an order for relief is entered
or adjudication or appointment is made and which remains undismissed for a
period of 60 days or more, (v) by any act or omission, indicate its consent to,
approval of, or knowing acquiescence in any such petition, application, or
proceeding, or order for relief, or the appointment of a custodian, receiver, or
trustee for all or any substantial part of its properties, or (vi) suffer any
such custodianship, receivership, or trusteeship to continue undischarged for a
period of 60 days or more;
(h) dissolution or liquidation of the Company;
(i) there occurs a material adverse change in the financial
condition, results of operations, assets, or business of the Company and its
Subsidiaries taken as a whole;
(j) the Company or any Subsidiary shall (a) fail to pay any
indebtedness for borrowed money (other than the Note) of the Company or such
Subsidiary, or any interest or premium thereon, when due (whether by scheduled
maturity, required prepayment, acceleration, demand, or otherwise) and any
applicable grace periods shall have expired, or (b) fail to perform or observe
any term, covenant, or condition on its part to be performed or observed under
any agreement or instrument relating to any such indebtedness, when required to
be performed or observed, if the effect of such failure to perform or observe is
to accelerate, or to permit the acceleration, after the giving of notice, of the
maturity of such indebtedness, or (c) default in the performance or observance
of any obligations under leases or subleases of real property;
(k) one or more judgments, decrees or orders for the payment of
money in excess of $100,000 in the aggregate shall be rendered against the
Company or any of its
32
Subsidiaries, and such judgments, decrees, or orders shall continue unsatisfied
and in effect for a period of 20 consecutive days without being vacated,
discharged, satisfied, escrowed, stayed or bonded pending appeal or covered in
full by insurance;
(l) any Security Instrument, or the security interests created
under this Agreement shall be terminated, invalidated, or set aside or be
declared ineffective or inoperative or in any way cease to give or provide to
Boston Chicken the benefits purported to be created thereby;
(m) there occurs a default under the Intellectual Property
Agreements, or the Intellectual Property Agreements shall be terminated,
canceled, materially modified or amended to the detriment of the Company or
otherwise cease to be in full force and effect.
8.2 Default; Remedies. (a) In the event a Default shall exist or
occur Boston Chicken may:
(i) terminate its obligations under this Agreement and cease
to make any further advances under Section 1.1, and shall have the right to
declare the Note due and payable in full, without demand, presentment, or
notice of any kind;
(ii) in its sole and absolute discretion, exercise any one or
more of the rights and remedies accruing to a secured party under the
Uniform Commercial Code with respect to the Collateral and any other
applicable law upon default by a debtor;
(iii) exercise its rights under the Security Instruments;
(iv) convert any portion of the outstanding principal balance
of the Loan into shares of Common Stock in the Company as provided in the
Note;
(v) exercise all or a portion of the Option;
provided, however, that in the case of any event or condition described in
Section 8.1(g) with respect to the Company or any Subsidiary, Boston Chicken's
obligations under this Agreement shall automatically terminate forthwith and all
amounts owed by the Company hereunder and under the Note shall automatically
become immediately due and payable without notice, demand, presentment, protest,
diligence, notice of dishonor, or other formality, all of which are hereby
expressly waived.
(b) In connection with the exercise of Boston Chicken's rights
and remedies provided in Section 8.2(a)(ii), the Company hereby agrees to
assemble the Collateral and make it available to Boston Chicken at a place to be
designated by Boston Chicken which is reasonably convenient to both parties,
authorizes Boston Chicken to take possession of the Collateral with or without
demand and with or without process of law and to sell and dispose of the same at
public or private sale and to apply the proceeds of such sale to the costs and
expenses thereof (including reasonable attorneys' fees and disbursements
incurred by Boston Chicken) and then to the payment and satisfaction of the
Loan. Any requirement of reasonable notice shall be
33
met if Boston Chicken sends such notice to the Company, by registered or
certified mail, at least five days prior to the date of sale, disposition, or
other event giving rise to a required notice. Boston Chicken may be the
purchaser at any such sale. The Company expressly authorizes such sale or sales
of the Collateral in advance of and to the exclusion of any sale or sales of or
other realization upon any other collateral securing the Loan. Boston Chicken
shall have no obligation to preserve rights against prior parties. The Company
hereby waives as to Boston Chicken any right of subrogation or marshaling of
such Collateral and any other collateral for the Loan. To this end, the Company
hereby expressly agrees that any such collateral or other security of the
Company or any other party which Boston Chicken may hold, or which may come to
any of them or any of their possession, may be dealt with in all respects and
particulars as though this Agreement were not in existence. The parties hereto
further agree that public sale of the Collateral by auction conducted in any
county in which any Collateral is located or in which Boston Chicken or the
Company does business after advertisement of the time and place thereof shall,
among other manners of public and private sale, be deemed to be a commercially
reasonable disposition of the Collateral. The Company shall be liable for any
deficiency remaining after disposition of the Collateral.
(c) All of Boston Chicken's rights and remedies under this
Agreement are cumulative and nonexclusive. Any conversion of, or exercise of the
Option with respect to, less than all of the principal balance outstanding under
the Note shall not affect Boston Chicken's rights and remedies with respect to
any portion not so converted or exercised.
8.3 No Waiver. Boston Chicken's failure, at any time or times
hereafter, to require the Company's strict compliance with or performance of any
provision of this Agreement shall not waive, affect, or diminish any right of
Boston Chicken thereafter to demand such strict compliance or performance
therewith. Any suspension or waiver by Boston Chicken of a Default or an Event
of Default by the Company under this Agreement or the Note shall not suspend,
waive, or affect any other Default or Event of Default by the Company under this
Agreement or the Note, whether the same is prior or subsequent thereto and
whether of the same or of a different kind or character. None of the
undertakings, agreements, warranties, covenants, and representations of the
Company contained in this Agreement or the Note and no Default or Event of
Default by the Company under this Agreement or the Note shall be deemed to have
been suspended or waived by Boston Chicken unless such suspension or waiver is
in writing signed by an officer of Boston Chicken.
ARTICLE IX
Miscellaneous
-------------
9.1 No Oral Change. This Agreement may not be changed orally, but
only by an agreement in writing and signed by the party against whom enforcement
of any waiver, change, modification, or discharge is sought.
9.2 Assignment. The Company may not assign any of its rights or
delegate any of its obligations under this Agreement without Boston Chicken's
written consent. Boston Chicken
34
may assign (including any participation in) any of its rights or delegate any of
its obligations under this Agreement (including assignment of or participation
in this Agreement, the Note, and the Security Instruments), (a) without notice
to the Company, (i) to any Affiliate of Boston Chicken (except the Company) or
(ii) in connection with any pledge of its assets under the BC Credit Line or
similar credit agreement and (b) with notice, but without any requirement of
consent or approval, to any other person or entity (except the Company);
provided, however, that Boston Chicken shall not make any such assignment of its
obligations unless at the time thereof Boston Chicken reasonably believes the
assignee is able to perform such obligations. Any such assignment shall vest in
the assignee all of the benefits under the documents so assigned. For purposes
of this Agreement, the term Affiliate shall mean any person or entity which
directly or indirectly controls or is controlled by, or is under common control
with, Boston Chicken.
9.3 Costs and Attorneys' Fees. (a) Except as provided in Section
2.4 hereof and subsection (b) or (c) of this Section 9.3, each of the parties
hereto shall pay its own expenses (including accounting fees) incident to the
negotiation and execution of this Agreement and to the consummation of the
transactions contemplated hereby.
(b) The Company shall pay all reasonable attorneys' fees and any
costs and charges relating to or arising out of (1) the negotiation and drafting
of this Agreement and all related documents and (2) the enforcement by Boston
Chicken of its rights to collect any portion of the Loan.
(c) In any action not founded solely on grounds covered by
subsection (b) of this Section 9.3, the party to the action who does not prevail
shall pay to the prevailing party the court costs and reasonable attorneys fees
and other expenses (including, but not limited to, fees and expenses of expert
witnesses or consulting experts) incurred directly or indirectly by the
prevailing party in connection with its prosecution or defense of the action, as
the case may be.
9.4 Communications and Notices. All communications and notices
provided for in this Agreement or under the Note shall be in writing and shall
be deemed to have been duly given if delivered personally to the party to whose
attention the notice is directed or sent by overnight express, facsimile
transmission, express mail delivery service, or registered or certified mail,
return receipt requested, postage prepaid, and properly addressed as follows:
If to the Company:
HFMI Acquisition Corporation
00000 Xxxxxx Xxxx Xxxxxxx
Xxxxxx, XX 00000
Attention: President
Facsimile: 000-000-0000
If to Boston Chicken:
Boston Chicken, Inc.
35
00000 Xxxxxx Xxxx Xxxxxxx
Xxxxxx, Xxxxxxxx 00000
Attention: General Counsel
Facsimile: (000) 000-0000
with a copy to:
Xxxx, Xxxx & Xxxxx
00 Xxxx Xxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxx X. Xxxxxxx
Facsimile: (000) 000-0000
Any party may change the address to which notices hereunder are to be sent to it
by giving written notice of such change of address in the manner herein provided
for giving notice. Any notice delivered personally shall be deemed to have been
given when so delivered. Any notice delivered by facsimile transmission shall
be deemed to have been given on the earlier of the date it is actually received
or one day after such transmission. Any notice delivered by overnight express
courier will be deemed to have been given on the next succeeding business day
after the day it is sent to the intended recipient at the address set forth
above, and any notice delivered by registered or certified mail or express mail
delivery service shall be deemed to have been duly given on the earlier of the
date it is actually received or three business days after it is sent to the
intended recipient at the address set forth above.
9.5 GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE
WITH AND GOVERNED BY THE LAWS OF THE STATE OF COLORADO APPLICABLE TO CONTRACTS
MADE AND TO BE PERFORMED THEREIN WITHOUT REGARD TO THE CONFLICTS OF LAW
PROVISIONS THEREOF.
9.6 Headings. The headings of the sections of this Agreement are
inserted for convenience only and shall not be deemed to constitute a part of
this Agreement.
9.7 Severability. If any provision of this Agreement or the
application thereof to any person or circumstance is held invalid or
unenforceable, the remainder of this Agreement and the application of such
provision to other persons or circumstances shall not be affected thereby, and
the provisions of this Agreement shall be severable in any such instance.
9.8 Avoidance. To the extent that Boston Chicken receives any
payment on account of the Company's obligations hereunder, and any such
payment(s) and/or proceeds or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside, subordinated, and/or
required to be repaid to a trustee, receiver, or any other party under any
bankruptcy law, state or federal law, common law, or equitable cause, then, to
the extent of such payment(s) or proceeds received, the Company's obligations
hereunder, or part thereof intended to
36
be satisfied, shall be revived and continue in full force and effect, as if such
payment(s) and/or proceeds had not been received by Boston Chicken.
9.9 Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original, but all of which together shall
constitute but one and the same instrument.
9.10 Entire Agreement. This Agreement, the Note, the Security
Instruments and the exhibits to each of the foregoing contain the entire
agreement of the parties hereto with respect to the transactions contemplated
herein, and collectively supersede all prior understandings and agreements of
the parties with respect to the subject matter hereof.
9.11 General Indemnity. In addition to the payments pursuant to
Section 9.3, the Company agrees to indemnify, pay, and hold Boston Chicken and
any holder of the Note, and the officers, directors, employees, agents, and
affiliates of Boston Chicken and any such holder (collectively, the
"Indemnitees"), harmless from and against any and all other liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, claims,
costs, expenses, and disbursements of any kind or nature whatsoever (including,
without limitation, the reasonable fees and disbursements of counsel for any of
such Indemnitees in connection with any investigative, administrative, or
judicial proceeding commenced or threatened, whether or not any of such
Indemnitees shall be designated a party thereto) that may be imposed on,
incurred by, or asserted against any Indemnitee, in any manner relating to or
arising out of this Agreement, the Note, the Security Instruments and the
exhibits or any other agreements or document executed and delivered by the
Company in connection therewith, the Company's operation of its business
(including any damage to public or worker health and safety or the environment),
Boston Chicken's agreement to make the Loan hereunder, or the use or intended
use of the proceeds of the Loan (the "indemnified liabilities"); provided that
the Company shall have no obligation to an Indemnitee hereunder with respect to
indemnified liabilities arising from the gross negligence or willful misconduct
of such Indemnitee. To the extent that the undertaking to indemnify, pay, and
hold harmless set forth in the preceding sentence may be unenforceable because
it violates any law or public policy, the Company shall contribute the maximum
portion that it is permitted to pay under applicable law to the payment and
satisfaction of all indemnified liabilities incurred by the Indemnitees or any
of them. The provisions of the undertakings and indemnification set out in this
Section 9.11 shall survive satisfaction and payment of the Company's obligations
hereunder and termination of this Agreement.
9.12 Limitation on Damages. Notwithstanding anything to the contrary
herein no party hereto shall be liable for consequential, indirect, incidental,
special, speculative, or punitive damages (including, but not limited to, loss
of revenue or profit) whether such claim alleges breach of contract, tortious
conduct including, but not limited to, negligence, or any other theory.
9.13 Submission to Jurisdiction. The Company agrees that any legal
action or proceeding with respect to this Agreement, the Note, or any Security
Instrument or the transactions contemplated hereby may be brought in any court
of the State of Colorado, or in any court of the United States of America
sitting in Colorado, and the Company hereby submits to and accepts
37
generally and unconditionally the jurisdiction of those courts with respect to
their respective person and property, and irrevocably consents to the service of
process in connection with any such action or proceeding by personal delivery to
the Company or by the mailing thereof by registered or certified mail, postage
prepaid to the Company at the address for the Company set forth in Section 9.4.
Nothing in this paragraph shall affect the right of Boston Chicken to serve
process in any other manner permitted by law or limit the rights of Boston
Chicken to bring any such action or proceeding against the Company or property
in the courts of any other jurisdiction. The Company hereby irrevocably waives
any objection to the laying of venue of any such suit or proceeding in the above
described courts.
9.14 Waiver of Jury Trial. No party to this instrument, which
includes any assignee, successor, heir or personal representative of a party,
shall seek a jury trial in any lawsuit, proceeding, counterclaim, or any other
litigation procedure based upon, or arising out of this Agreement, the Note, any
Security Instrument, any related instrument, or the dealings or the relationship
between the parties. If the subject matter of any such litigation is one in
which the waiver of a jury trial is prohibited, if at all, under the controlling
law of the applicable jurisdiction, by constitutional or statutory provision, no
party hereto will present as a defense or counterclaim in such litigation any
claim which would reduce or offset any amount or rights claimed under the
provisions of this Agreement. No party will seek to consolidate any such
action, in which a jury has been waived, with any other action in which a jury
trial cannot or has not been waived.
THE PROVISIONS OF THIS SECTION 9.14 HAVE BEEN FULLY DISCUSSED BY THE
PARTIES HERETO, AND THESE PROVISIONS SHALL BE SUBJECT TO NO EXCEPTIONS. NO
PARTY HAS IN ANY WAY AGREED WITH OR REPRESENTED TO ANY OTHER PARTY THAT THE
PROVISIONS OF THIS PARAGRAPH WILL NOT BE FULLY ENFORCED IN ALL INSTANCES. THIS
PROVISION IS A MATERIAL INDUCEMENT FOR BOSTON CHICKEN IN ENTERING INTO THIS
AGREEMENT.
38
IN WITNESS WHEREOF, the parties have executed this Agreement to be
effective as of the date and year first above written.
HFMI ACQUISITION CORPORATION
By: /s/ Xxxx X. Xxxxxx
-------------------
Title: President
---------
BOSTON CHICKEN, INC.
By: /s/ Xxxxxxxxxx X. Xxxxxxx
-------------------------
Title: Vice President
39
EXHIBIT A
CONVERTIBLE SECURED NOTE
CONVERTIBLE SECURED NOTE
$17,000,000 January ___, 1997
FOR VALUE RECEIVED, HFMI Acquisition Corporation, a Delaware
corporation (the "Company"), promises to pay to the order of Boston Chicken,
Inc., a Delaware corporation ("Boston Chicken"), pursuant to the Loan Agreement
(as hereinafter defined) at such place as Boston Chicken may from time to time
designate in writing, in lawful money of the United States of America and in
immediately available funds, the principal sum of SEVENTEEN MILLION DOLLARS
($17,000,000) and any interest thereon, or, if less, the aggregate unpaid amount
of the Loan made pursuant to Section 1.1 of the Loan Agreement and any interest
thereon.
This Note evidences the Loan made under, and is referred to in and is
executed and delivered pursuant to, a Secured Loan Agreement dated of even date
herewith between the Company and Boston Chicken (the "Loan Agreement"), to which
reference is hereby made for a statement of the terms and conditions under which
this Note may be repaid and accelerated and for a description of the collateral
and security securing this Note. Capitalized terms not otherwise defined herein
shall have the meanings ascribed to them in the Loan Agreement.
Interest shall accrue daily on the aggregate outstanding principal
balance of the Loan for the period commencing on the date the Loan is made until
the Loan is paid in full, at a per annum rate equal to the rate designated and
announced by Bank of America Illinois or its successor in interest (the "Bank")
from time to time as its "reference rate" in effect at its principal office in
Chicago, Illinois, plus 1%. The interest rate shall be adjusted, from time to
time, on the same day on which the Bank adjusts its "reference rate." Interest
on the outstanding principal amount of the Loan shall be payable in arrears on
the first day of each Retail Period during the Interest Payment Period, as
otherwise provided herein in connection with principal payments, and at maturity
(whether by acceleration or otherwise).
Interest shall be computed on the basis of a 360-day year and the
actual number of days elapsed.
Any principal payment due under this Note not paid when due, whether
at stated maturity, by notice of repayment, by acceleration or otherwise, shall,
to the extent permitted by applicable law, thereafter bear interest (compounded
monthly and payable upon demand) at a rate which is 2% per annum in excess of
the rate of interest otherwise payable under this Note in respect of such
principal amount until such unpaid amount has been paid in full (whether before
or after judgment).
During the Interest Payment Period the Company shall pay to Boston
Chicken interest only on the outstanding principal balance of the Loan on the
first day of each Retail Period, commencing on the first day of the Retail
Period immediately following the first Retail Period in which the Company
initially draws on the Loan under this Agreement through and including the last
day of the second Retail Period in Boston Chicken's fiscal year 2000.
Thereafter the Company shall pay principal and interest as provided below.
Except as otherwise provided in the Loan Agreement, unless
accelerated, the outstanding principal amount of the Loan shall be payable to
Boston Chicken in 65 substantially equal periodic installments of principal (the
amount of which periodic installments of principal shall be determined at the
close of business on the Draw Loan Termination Date based on a schedule
amortizing such balance in 130 substantially equal periodic installments of
principal), plus accrued but unpaid interest, on the first day of each Retail
Period, commencing on the first day of the third Retail Period in Boston
Chicken's fiscal year 2000 and continuing until the first day of the third
Retail Period in Boston Chicken's fiscal year 2005, when the entire principal
balance of the Loan and all interest accrued thereon shall be due and payable.
This Note may be prepaid at any time without premium or penalty. All
payments made hereunder shall be applied first to interest and then to
outstanding principal.
If payment hereunder becomes due and payable on a Saturday, Sunday, or
legal holiday, under the laws of the State of Colorado, the due date thereof
shall be extended to the next succeeding business day.
Demand, presentment, protest, diligence, notice of dishonor, and any
other formality are hereby expressly waived by the Company and any endorser or
guarantor.
ARTICLE I
Conversion of Note
------------------
1.1 The holder of this Note shall have the right, at such holder's
option, to convert, subject to the terms, conditions and provisions of this
Article I, the outstanding principal balance of this Note or any portion thereof
into shares of common stock, $0.01 par value per share, of the Company (the
"Common Stock") at the price of $1,150.00 per share for any conversion of (or
Option exercise (as provided in the Loan Agreement) for) the principal amount of
the Loan, or, in the event an adjustment of such price has occurred pursuant to
the provisions of Section 1.3, then at the price as last adjusted (referred to
herein as the "Conversion Price"), at any time after both of the following have
occurred: (i) February 1, 1998, and (ii) such time as the earlier to occur of
(A) completion of a Qualified Public Offering, or (B) the Tangible Net Worth of
the Company equals or exceeds $25,000,000 as of the end of any fiscal quarter of
the Company ending after February 1, 1998, and up to the later of (x) the date
on which the Company has properly repaid the outstanding principal balance of
the Loan and all accrued interest thereon in
2
full or (y) the first day of the ninth Retail Period in the Company's fiscal
year 2005; provided, however, that nothing shall impair, restrict or prohibit
the exercise of remedies, including the exercise of the conversion right, under
Section 8.2 of the Loan Agreement upon the occurrence of a Default. In the event
the outstanding principal balance of this Note is to be converted, the holder
shall surrender this Note to the Company at any time during usual business hours
together with written notice (hereinafter referred to as "Conversion Notice")
that the holder elects to convert this Note into such shares of Common Stock in
accordance with the provisions of this Article I, and specifying the name or
names in which the certificate or certificates evidencing the shares of Common
Stock issuable upon such conversion shall be registered, together with the
addresses of the persons so named, and, if so required by the Company,
accompanied by a written instrument or instruments of transfer in form
satisfactory to the Company duly executed by the registered holder or his
attorney duly authorized in writing. In the event this Note is to be converted
in part only, the Company shall, upon surrender of this Note, execute and
deliver to the holder thereof, at the expense of the Company, a new Note in
principal amount equal to the unconverted portion of this Note. In no event
shall accrued interest be convertible into shares of Common Stock.
1.2 As promptly as practicable after the surrender, as herein
provided, of this Note for conversion and the receipt of the Conversion Notice
relating thereto, the Company shall deliver to or upon the written order of the
holder of this Note a certificate or certificates, representing the number of
fully-paid and non-assessable shares of Common Stock of the Company into which
this Note may be converted in accordance with the provisions of this Article I
and a new Note for any unconverted portion of the principal amount hereof.
Subject to the following provisions of this Section 1.2, such conversion shall
be deemed to have been made immediately before the close of business on the date
that this Note shall have been surrendered for conversion together with the
Conversion Notice, so that the rights of the holder of this Note as a Noteholder
shall cease at such time and the person or persons entitled to receive the
shares of Common Stock upon conversion of this Note shall be treated for all
purposes as having become the record holder or holders of such shares of Common
Stock at such time, and such conversion shall be at the Conversion Price in
effect at such time. If the last day for the exercise of the conversion right
shall not be a business day, then such conversion right may be exercised on the
next succeeding business day.
1.3 (a) In case of any reclassification or change of outstanding
shares of Common Stock issuable upon conversion of this Note, or in case of any
consolidation or merger of the Company with or into any partnership,
corporation, limited liability company, or other entity (other than a merger in
which the Company is the surviving corporation and which does not result in any
reclassification or change of outstanding shares of Common Stock, other than a
change in number of shares issuable upon conversion of this Note) or in case of
any sale or conveyance to any partnership, corporation, or other entity of the
property of the Company as an entirety or substantially as an entirety, then the
holder of this Note shall have the right thereafter to convert this Note into
the kind and amount of shares of stock and other securities and property
receivable upon such reclassification, change, consolidation, merger, sale, or
conveyance by a holder of the number of shares of Common Stock of the Company
issuable upon conversion of this Note immediately prior to such
reclassification, change, consolidation, merger, sale, or conveyance, subject to
3
adjustments which shall be as nearly equivalent as may be practicable to the
adjustments provided for herein.
(b) The Conversion Price shall be adjusted in the event the Company
shall at any time (i) make a subdivision of or combine shares of Common Stock
outstanding or (ii) pay a dividend or make a distribution in cash, in kind, or
in securities of any kind (including, but not limited to, any stock split). In
the event the Company makes a subdivision of shares of Common Stock or pays a
dividend or makes a distribution in cash, in kind, or in securities of any kind,
the Conversion Price in effect immediately prior to such action shall be
appropriately decreased, and in the event the Company shall at any time combine
the shares of Common Stock outstanding, the Conversion Price in effect
immediately prior to such combination shall be appropriately increased. An
adjustment made pursuant to this Section 1.3(b) shall, in the event of a
subdivision or combination, become effective retroactively immediately after the
effective date thereof, and shall, in the event of a dividend or distribution,
become effective retroactively immediately after the record date for the
determination of stockholders entitled thereto. Whenever the Conversion Price
is adjusted, pursuant to this Section 1.3(b), the Company shall promptly cause a
notice to be given to such holder of this Note which will state the adjusted
Conversion Price.
(c) The Company covenants that it will at all times reserve and keep
available out of its authorized Common Stock, solely for the purpose of issuance
upon conversion of this Note as herein provided, such number of shares of Common
Stock as shall be issuable upon the conversion of the entire Maximum Principal
Balance of the Loan. The Company covenants that all shares of Common Stock
which shall be so issuable shall be duly and validly issued and fully-paid and
non-assessable.
(d) The Company covenants that if shares of Common Stock to be issued
upon conversion of this Note require registration with or approval of any
governmental authority under any federal or state law before such shares may be
issued upon conversion, the Company will, at its expense and as expeditiously as
possible, cause such shares to be duly registered or approved, as the case may
be.
(e) The issuance of certificates for shares of Common Stock upon the
conversion of this Note shall be made without charge to the converting
Noteholder for any tax in respect of the issuance of such certificates shall be
issued in the respective names of, or in such names as may be directed by, the
holder of this Note; provided, however, that the Company shall not be required
to pay any tax which may be payable in respect of any transfer involved in the
issuance and delivery of any such certificate in a name other than that of the
holder of this Note, and the Company shall not be required to issue or deliver
such certificates unless and until the person or persons requesting the issuance
thereof shall have paid to the Company the amount of such tax or shall have
established to the reasonable satisfaction of the Company that such tax has been
paid.
4
(f) Conversion of any portion of the principal balance of this
Note shall not relieve the Company of its obligation to pay any accrued but
unpaid interest on the portion of the principal balance of this Note so
converted.
(g) To the extent that any portion of this Note is not converted
into shares of Common Stock, such portion shall remain a secured debt of the
Company payable in accordance with the terms of the Loan Agreement.
ARTICLE II
Advances
--------
2.1 Loan advances may be made from time to time by Boston Chicken to
the Company in the manner and on the terms and subject to the conditions set
forth in the Loan Agreement. Upon granting each loan advance, Boston Chicken
shall record the making and amount of such advance on its books in a separate
loan account, and shall also record in the loan account all payments made by the
Company with respect to the Loan. The aggregate amount of all loan advances
recorded in the loan account, less the amounts of payment of principal made by
the Company and recorded in such account, shall be the principal amount
outstanding under this Note. The loan account shall be prima facie evidence of
the unpaid amount of principal outstanding under this Note; provided, however,
that failure to maintain such account or record any advances therein shall not
relieve the Company of its obligations to repay the outstanding principal amount
of the Loan, all accrued interest thereon, and any amount payable with respect
thereto in accordance with the terms of this Note.
ARTICLE III
Default, Rights and Remedies of Holder
--------------------------------------
3.1 The occurrence of a Default shall be a default under this Note.
Upon any default under this Note, the holder of this Note may declare this Note
due and payable in full and exercise such other rights and remedies as are
available to the holder under the Loan Agreement or applicable law.
3.2 If there is any default under this Note, and this Note is placed
in the hands of an attorney for collection, or is collected through any court,
including any bankruptcy court, the Company promises to pay to the order of the
holder hereof such holder's reasonable attorneys' fees and court costs incurred
in collecting or attempting to collect or securing or attempting to secure this
Note or enforcing the holder's rights with respect to the Collateral, to the
extent allowed by the laws of the State of Colorado or any state in which any
Collateral is situated.
5
ARTICLE IV
Miscellaneous
-------------
4.1 THIS NOTE HAS BEEN DELIVERED IN, AND SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF, THE STATE OF COLORADO APPLICABLE TO
CONTRACTS MADE AND TO BE PERFORMED THEREIN WITHOUT REGARD TO THE CONFLICTS OF
LAW PROVISIONS THEREOF.
4.2 The holder of this Note may, with or without notice to any party,
and without affecting the obligations of any maker, surety, guarantor, endorser,
accommodation party, or any other party to this Note (i) extend the time for
payment of either principal or interest from time to time, (ii) release or
discharge any one or more parties liable on this Note, (iii) suspend the right
to enforce this Note with respect to any persons, (iv) change, exchange, or
release any property in which the holder has any interest securing this Note,
(v) justifiably or otherwise, impair any of the Collateral or suspend the right
to enforce against any such Collateral, and (vi) at any time it deems it
necessary or proper, call for and, should it be made available, accept, as
additional security, the signature or signatures of additional parties or a
security interest in property of any kind or description or both.
4.3 Any provision herein, or in the Loan Agreement, or any other
document executed or delivered in connection herewith or therewith, or in any
other agreement or commitment, whether written or oral, expressed or implied, to
the contrary notwithstanding, neither Boston Chicken nor any holder hereof shall
in any event be entitled to receive or collect, nor shall any amounts received
hereunder be credited, so that Boston Chicken or any holder hereof shall be
paid, as interest, a sum greater than the maximum amount permitted by applicable
law to be charged to the person primarily obligated to pay this Note at the time
in question. If any construction of this Note or the Loan Agreement, or any and
all other papers, agreements or commitments, indicate a different right given to
Boston Chicken or any holder hereof to ask for, demand, or receive any larger
sum as interest, such is a mistake in calculation or wording which this clause
shall override and control, it being the intention of the parties that this
Note, the Loan Agreement, and all other documents executed or delivered in
connection herewith shall in all ways comply with applicable law and proper
adjustments shall automatically be made accordingly. In the event that Boston
Chicken or any holder hereof ever receives, collects, or applies as interest,
any sum in excess of the maximum amount permitted by applicable law, if any,
such excess amount shall be applied to the reduction of the unpaid principal
balance of this Note, and if this Note is paid in full, any remaining excess
shall be paid to the Company. In determining whether or not the interest paid
or payable, under any specific contingency, exceeds the maximum amount permitted
by applicable law, if any, the Company and any holder hereof shall, to the
maximum extent permitted under applicable law: (a) characterize any non-
principal payment as an expense or fee rather than as interest, and (b) "spread"
the total amount of interest throughout the entire term of this Note.
6
IN WITNESS WHEREOF, the Company has caused this Note to be executed in
its name by the undersigned officer, thereunto duly authorized.
HFMI ACQUISITION CORPORATION
By:___________________________
Title: __________________________
7
EXHIBIT B-1
FORM OF CERTIFICATE TO ACCOMPANY INITIAL ADVANCE
CERTIFICATE TO ACCOMPANY INITIAL ADVANCE
The undersigned, the _____________ of HFMI Acquisition Corporation (the
"Company"), borrower under that certain Secured Loan Agreement dated as of
January ___, 1997, as amended from time to time (the "Loan Agreement") between
the Company and Boston Chicken, Inc. ("Boston Chicken"), hereby requests an
Advance under the Loan Agreement in the amount of $_____________ to be made on
January ___, 1997. In support of this request, the Company hereby represents,
warrants and certifies to Boston Chicken as follows:
1. The representations and warranties contained in Article IV of the Loan
Agreement and in the Security Instruments delivered in connection therewith are
true and correct on and as of the date hereof, and will be true and correct on
the date the Advance is made pursuant to this Certificate.
2. No Default or Event of Default has occurred and is continuing.
3. There has been no material adverse change in the financial conditions,
results of operations, assets or business of the Company since January ___,
1997.
4. The amount of the Advance is required and will be used by the Company
for the purposes permitted under in the Loan Agreement and for no other purpose.
The amount of the Advance is the amount the Company reasonably expects to expend
within the 30-day period immediately following the date hereof for working
capital.
5. After giving effect to the Advance, the Company is in compliance with
the Borrowing Ratio.
Capitalized terms used but not defined herein have the meanings ascribed
thereto in the Loan Agreement.
HFMI ACQUISITION CORPORATION
By:__________________________________
Its: ________________________________
EXHIBIT B-2
FORM OF CERTIFICATE TO ACCOMPANY ADVANCES
CERTIFICATE
The undersigned, the ________________ of HFMI Acquisition Corporation (the
"Company"), borrower under that certain Secured Loan Agreement dated as of
_______________, 19__ (the "Loan Agreement") between the Company and Boston
Chicken, Inc. ("Boston Chicken"), hereby certifies to Boston Chicken as follows:
1. Loan proceeds in the aggregate amount of $_______________ were
disbursed by Boston Chicken for the benefit of the Company under the Loan
Agreement during the two-week borrowing period ended ____________, 199__ (the
"Borrowing Period"). The Company confirms that (a) Boston Chicken was authorized
to disburse such amount on behalf of the Company, and (b) such amount was
required and used by the Company for the purposes permitted under the Loan
Agreement and for no other purpose.
2. As of _______________, 199___, the outstanding principal balance of
the Loan is $____________________.
3. The representations and warranties contained in Article IV of the Loan
Agreement and in the Security Instruments delivered in connection therewith were
true and correct at all times during the Borrowing Period, are true and correct
on and as of the date hereof, and will be true and correct at all times during
the next succeeding two-week borrowing period.
4. No Default or Event of Default has occurred and is continuing.
5. There has been no material adverse change in the financial conditions,
results of operations, assets or business of the Company since ________________,
______.
6. After giving effect to the Advances during the Borrowing Period, the
Company is in compliance with the Borrowing Ratio.
7. Boston Chicken is entitled to rely on this Certificate and the
representations contained herein when disbursing loan proceeds during the next
succeeding two-week borrowing period.
Capitalized terms used but not defined herein have the meanings ascribed
thereto in the Loan Agreement.
HFMI ACQUISITION CORPORATION
By:_____________________________
Its: __________________________
EXHIBIT C
SUBSIDIARY STOCK PLEDGE AGREEMENT
SUBSIDIARY STOCK PLEDGE AGREEMENT
This Subsidiary Stock Pledge Agreement ("Pledge Agreement"), dated
____________, 1997 is made and entered into by and between
______________________, a Delaware corporation (the "Company") and Boston
Chicken, Inc., a Delaware corporation ("Boston Chicken").
Recitals
--------
1. The Company owns _______ shares of common stock of
_____________________________ a Delaware corporation (the "Pledged Subsidiary"),
which is 100% of the issued and outstanding capital stock thereof.
2. The Company has entered into a Secured Loan Agreement dated as of
January ___, 1997 (the "Loan Agreement") with Boston Chicken pursuant to which
Boston Chicken has agreed on the terms and subject to the conditions therein, to
make a Loan (as defined in the Loan Agreement) to the Company, which Loan is
evidenced by a promissory note of even date herewith from the Company to Boston
Chicken (the "Note").
3. As an inducement to Boston Chicken to enter into the Loan Agreement
and as a condition to the effectiveness of Boston Chicken's obligations under
the Loan Agreement, the Company has agreed, among other things, to pledge to
Boston Chicken, and grant a first-priority security interest to Boston Chicken,
in and to, 100% of the issued and outstanding capital stock of the Pledged
Subsidiary.
NOW, THEREFORE, the Company and Boston Chicken have agreed as follows:
1. Certain Definitions. The capitalized terms and phrases not otherwise
defined herein, shall have the meanings given them in the Loan Agreement, and
the following terms or phrases shall have the following meanings:
"Affiliate" shall mean, with respect to a specified person, any other
person that directly, or indirectly through one or more intermediaries, controls
or is controlled by, or is under common control with, the person specified.
"Collateral" shall mean the Pledged Shares and any other property in
which Boston Chicken acquires a security interest pursuant to this Pledge
Agreement to secure any indebtedness or other obligation of the Company to
Boston Chicken.
"Default" shall have the meaning given it in Section 10 of this Pledge
Agreement.
"Pledged Shares" shall mean all the issued and outstanding shares of
the capital stock of the Pledged Subsidiary owned by the Company, the
certificates representing those shares and any stock powers executed by the
Company in connection with those shares.
"Secured Obligations" shall mean the obligations secured by this
Pledge Agreement described in Section 3 of this Pledge Agreement.
2. Grant of Security Interest. (a) The Company hereby grants to Boston
Chicken a security interest in all of its right, title, and interest in and to
the Pledged Shares. The Company further grants to Boston Chicken a security
interest in any stock rights, rights to subscribe, liquidating dividends,
dividends paid in stock, new securities, or any other property to which the
Company is or may hereafter become entitled to receive whether on account of the
Pledged Shares or otherwise. If the Company receives additional property of
such nature, it shall immediately deliver such property to Boston Chicken to be
held by Boston Chicken in the same manner as the property held pursuant to this
Pledge Agreement.
(b) The Company grants a further security interest to Boston
Chicken in the proceeds or products of any sale or other disposition of the
Pledged Shares.
3. Obligations Secured. The security interest created hereby secures
payment and performance of (a) the indebtedness evidenced by the Note, and all
obligations contained in the Note, (b) all of the other obligations, agreements,
covenants, and representations of the Company under the Loan Agreement whether
or not, either on the date of this Pledge Agreement or thereafter, evidenced by
any note, instrument, or other writing, and (c) any and all other indebtedness,
obligation, or liability of the Company to Boston Chicken, however evidenced,
whether existing on the date of this Pledge Agreement or arising thereafter,
direct or indirect, absolute or contingent, joint and/or several.
4. Representations and Warranties. To induce Boston Chicken to enter
into this Pledge Agreement, the Company represents and warrants as follows:
(a) The Company has full right, power, and capacity to enter
into and perform this Pledge Agreement; and this Pledge Agreement has been duly
authorized, executed and delivered and constitutes a legal, valid, and binding
obligation of the Company enforceable in accordance with its terms.
(b) The Company has good and marketable title to the Pledged
Shares, and the Pledged Shares are not subject to any lien, charge, pledge,
encumbrance, claim, or security interest other than the security interest
created by this Pledge Agreement.
(c) The Pledged Shares constitute one hundred percent (100%) of
the issued and outstanding equity interest of the Pledged Subsidiary.
(d) The Pledged Shares are fully paid and nonassessable.
2
(e) The Company has not entered into any stock restriction or purchase
agreement with respect to the Pledged Shares which would in any way restrict the
sale, pledge, or other transfer of the Pledged Shares or of any interest in or
to the Pledged Shares.
5. Duration of Security Interest. Boston Chicken, its successors and
assigns, shall hold the Pledged Shares and security interest created hereby upon
the terms of this Pledge Agreement, and this security interest shall continue
until all the Secured Obligations have been paid in full.
6. Maintaining Freedom from Liens. The Company shall keep the Pledged
Shares and other Collateral free and clear of liens and shall pay all amounts,
including taxes, assessments, or charges, which might result in a lien against
the Pledged Shares or other Collateral if left unpaid. If any such lien,
assessment, claim, or charge shall nevertheless exist, and the Company fails to
pay such amounts promptly, Boston Chicken may, but is not obligated to, pay such
amounts, and such payment shall be conclusive evidence of the legality or
validity thereof. The Company shall promptly reimburse Boston Chicken for any
such payments, and until reimbursement, such payments shall be a part of the
Secured Obligations.
7. Certain Rights Respecting Pledged Shares.
(a) The Company shall continue to be the owner of the Pledged Shares
and other Collateral so long as no Default has occurred and is continuing and
may collect and retain all cash dividends now or hereafter payable on or on
account of the Pledged Shares and other Collateral which are permitted under the
Loan Agreement, and, so long as no Default has occurred, may exercise voting
rights with respect to the Pledged Shares and other Collateral.
(b) The Company shall not sell, transfer, or attempt to sell or
transfer the Pledged Shares or other Collateral, or any part thereof or interest
therein, without the prior express written consent of Boston Chicken. Any such
consent of Boston Chicken shall not constitute the release by Boston Chicken of
its interest in the Pledged Shares or other Collateral, and any such sale or
transfer consented to shall transfer the Pledged Shares or other Collateral
subject to the security interest of Boston Chicken. Any such transfer shall be
subject to the transferee stockholder's agreement to be bound by the terms and
subject to the conditions of this Pledge Agreement, such agreement to be
evidenced by the transferee stockholder's execution of this Pledge Agreement.
(c) Boston Chicken, at its option upon any Default, may exercise all
voting rights and privileges whatsoever with respect to the Pledged Shares and
other Collateral, including, without limitation, the right to receive dividends,
and to that end the Company hereby constitutes any officer of Boston Chicken as
its proxy and attorney-in-fact for all purposes of voting the Pledged Shares and
other Collateral after any Default at any annual regular or special meeting of
the Company, and this appointment shall be deemed coupled with an interest and
is and shall be irrevocable until all of the Secured Obligations have been fully
paid and terminated,
3
and all persons whatsoever shall be conclusively entitled to rely upon any oral
or written certification of Boston Chicken that it is entitled to vote the
Pledged Shares and other Collateral hereunder. The Company shall execute and
deliver to Boston Chicken any additional proxies and powers of attorney that
Boston Chicken may desire in its own name in order to exercise the rights
expressly granted to Boston Chicken under this Section 7(c). In addition to any
other voting rights, Boston Chicken may, upon any Default, vote the Pledged
Shares and other Collateral to remove the directors and officers of the Pledged
Subsidiary, or any of them, and to elect new directors and officers of the
Pledged Subsidiary, who may thereafter manage the affairs of the Pledged
Subsidiary, operate its properties and carry on its business and otherwise take
any action with respect thereto as it shall deem necessary and appropriate, and
may also liquidate its business, and may authorize the borrowing of money in the
name of the Pledged Subsidiary, and the pledge of its assets to secure such
borrowing.
8. Issuance or Acquisition of New Stock or Sale of Treasury Shares;
Mergers, Sales and Other Disposition of Assets. The Company shall not permit
the Pledged Subsidiary to (a) issue new shares of its capital stock, or any
options, subscription rights, or warrants with respect thereto, (b) sell any
treasury shares, (c) merge into or with or consolidate with any other entity,
(d) sell or otherwise transfer any part of its assets (except in the ordinary
course of business) or (e) liquidate or dissolve or take any action with a view
toward liquidation or dissolution, in each case without Boston Chicken's prior
written consent.
9. Delivery of Certificates and Stock Powers. Upon execution of this
Pledge Agreement, the Company shall deliver to Boston Chicken the share
certificates representing the Pledged Shares in form suitable for transfer
together with executed blank stock powers. If for any reason the Company
acquires any interest in any additional capital stock of the Pledged Subsidiary,
the Company shall immediately deliver certificates representing that stock in
form suitable for transfer and blank stock powers to Boston Chicken to be held
by Boston Chicken in the same manner as the Pledged Shares, and such stock shall
be pledged under this Pledge Agreement and constitute a part of the Collateral.
10. Default. At the option of Boston Chicken, the occurrence of any
Default (as defined in the Loan Agreement) under the Loan Agreement shall
constitute a default under this Pledge Agreement.
11. Remedies. (a) Upon the occurrence of any Default, Boston Chicken
shall have all of the rights and remedies provided by law and/or by this Pledge
Agreement, including but not limited to all of the rights and remedies of a
secured party under the Uniform Commercial Code, and the Company hereby
authorizes Boston Chicken to hold such Pledged Shares or to sell all or any part
of the Pledged Shares at public or private sale and to apply the proceeds of
such sale to the costs and expenses thereof (including the reasonable attorneys'
fees and disbursements incurred by Boston Chicken) and then to the payment of
the other Secured Obligations. Boston Chicken may be the purchaser at any such
sale. The Company expressly authorizes such sale or sales of the Pledged Shares
in advance of and to the exclusion of any sale or sales of or other
4
realization upon any other collateral securing indebtedness or other obligations
owed to Boston Chicken. Boston Chicken shall be under no obligation to preserve
rights against prior parties.
(b) The Company agrees and acknowledges that because there may be no
public market for the Pledged Shares and because of applicable securities laws,
a public sale of the Pledged Shares may not be possible or advisable and sales
at a private sale may be on terms less favorable than if such Pledged Shares
were sold at a public sale and may be at a price less favorable than a public
sale. The Company agrees that all such private sales made under the foregoing
circumstances shall be deemed to have been made in a commercially reasonable
manner.
12. Exercise of Remedies. The rights and remedies of Boston Chicken shall
be deemed to be cumulative, and any exercise of any right or remedy shall not be
deemed to be an election of that right or remedy to the exclusion of any other
right or remedy. Notwithstanding the foregoing, Boston Chicken shall be
entitled to recover by the cumulative exercise of all remedies no more than the
sum of (a) the Secured Obligations remaining outstanding at the time of the
exercise of remedies, plus (b) the costs, fees, and expenses Boston Chicken is
otherwise entitled to recover.
13. Return of Collateral. Boston Chicken may at any time deliver the
Pledged Shares or other Collateral, or any part thereof, to the Company. The
receipt by the Company of the Pledged Shares or other Collateral, or any part
thereof, shall be a complete and full discharge of Boston Chicken, and Boston
Chicken shall be discharged from any liability or responsibility with respect
thereto.
14. Communications and Notices. (a) Any requirement of the Uniform
Commercial Code of reasonable notice shall be met if such notice is given at
least five business days before the time of sale, disposition, or other event or
thing giving rise to the requirement of notice.
(b) All communications and notices shall be in writing and shall be
deemed to have been duly given if delivered personally to the party to whose
attention the notice is directed or sent by overnight express, facsimile
transmission, express mail delivery service, or registered or certified mail,
return receipt requested, postage prepaid, and properly addressed as set forth
in Section 9.4 of the Loan Agreement. Any party may change the address to which
notices hereunder are to be sent to it by giving written notice of such change
of address in the manner herein provided for giving notice. Any notice
delivered personally shall be deemed to have been given when so delivered. Any
notice delivered by facsimile transmission shall be deemed to have been given on
the earlier of the date it is actually received or one day after such
transmission. Any notice delivered by overnight express courier will be deemed
to have been given on the next succeeding business day after the day it is sent
to the intended recipient at the address set forth above, and any notice
delivered by registered or certified mail or express mail delivery service shall
be deemed to have been duly given on the earlier of the date it is actually
received or three business days after it is sent to the intended recipient at
the address set forth above.
5
15. Further Assurances. The Company shall sign any such other documents
or instruments, and take such other action, as Boston Chicken may request to
more fully create and maintain, or to verify, ratify, or perfect the security
interest intended to be created by this Pledge Agreement.
16. Multiple Counterparts. This Pledge Agreement may be executed in two
or more counterparts, each of which shall be deemed an original, and it shall
not be necessary in making proof of this Pledge Agreement or the terms thereof
to produce or account for more than one such counterpart.
17. Miscellaneous (a) Failure by Boston Chicken to exercise any right
shall not be deemed a waiver of that right, and any single or partial exercise
of any right shall not preclude the further exercise of that right. Every right
of Boston Chicken shall continue in full force and effect until such right is
specifically waived in writing signed by Boston Chicken.
(b) If any provision of this Pledge Agreement or the application
thereof to any person or circumstance is held invalid or unenforceable, the
remainder of the Pledge Agreement and the application of such provision to other
persons or circumstances shall not be affected thereby, and the provisions of
this Pledge Agreement shall be severable in any such instance.
(c) The headings of the sections of this Pledge Agreement are inserted
for convenience only and shall not be deemed to constitute a part of this Pledge
Agreement.
(d) This Pledge Agreement shall benefit Boston Chicken, its successors
and assigns, and all obligations of the Company shall bind their successors and
assigns. The Company acknowledges that Boston Chicken may assign or otherwise
transfer (in whole or in part) the Note, the Loan Agreement, or this Pledge
Agreement to any other person, and such other person shall thereupon become
vested with all of the benefits in respect thereof granted to Boston Chicken
thereunder (including the benefits under this Pledge Agreement).
(E) THIS PLEDGE AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE LAWS OF THE STATE OF COLORADO APPLICABLE TO CONTRACTS MADE AND
TO BE PERFORMED THEREIN WITHOUT REGARD TO THE CONFLICTS OF LAWS PROVISIONS
THEREOF.
(f) This Pledge Agreement and the Loan Agreement constitute the entire
agreement of the parties with respect to the subject matter hereof and supersede
all prior understandings with respect to the subject matter hereof. No change,
modification, addition, or termination of this Pledge Agreement shall be
enforceable unless in writing and signed by the party against whom enforcement
is sought.
6
(g) The Company agrees that any legal action or proceeding with
respect to this Pledge Agreement or the transactions contemplated hereby may be
brought in any court of the State of Colorado, or in any court of the United
States of America sitting in Colorado, and the Company hereby submits to and
accepts generally and unconditionally the jurisdiction of those courts with
respect to its person and property, and irrevocably consents to the service of
process in connection with any such action or proceeding by personal delivery to
the Company or by the mailing thereof by registered or certified mail, postage
prepaid addressed to the Company at the address for notices as provided in
Section 14 hereof. Nothing in this paragraph shall affect the right of Boston
Chicken to serve process in any other manner permitted by law or limit the right
of Boston Chicken to bring any such action or proceeding against the Company or
property in the courts of any other jurisdiction. The Company hereby
irrevocably waives any objection to the laying of venue of any such suit or
proceeding in the above described courts.
18. Waiver of Jury Trial. No party to this instrument, which includes any
assignee, successor, heir or personal representative of a party, shall seek a
jury trial in any lawsuit, proceeding, counterclaim, or any other litigation
procedure based upon, or arising out of this Agreement, any related instrument,
or the dealings or the relationship between the parties. No party will seek to
consolidate any such action, in which a jury has been waived, with any other
action in which a jury trial cannot or has not been waived.
THE PROVISIONS OF THIS SECTION 18 HAVE BEEN FULLY DISCUSSED BY THE PARTIES
HERETO, AND THESE PROVISIONS SHALL BE SUBJECT TO NO EXCEPTIONS. NO PARTY HAS IN
ANY WAY AGREED WITH OR REPRESENTED TO ANY OTHER PARTY THAT THE PROVISIONS OF
THIS PARAGRAPH WILL NOT BE FULLY ENFORCED IN ALL INSTANCES. THIS PROVISION IS A
MATERIAL INDUCEMENT FOR BOSTON CHICKEN IN ENTERING INTO THIS AGREEMENT.
7
IN WITNESS WHEREOF, the parties hereto executed this Pledge Agreement to be
effective as of the date and year first above written.
____________________________________
By: ____________________________________
Its: ____________________________________
BOSTON CHICKEN, INC.
By: ___________________________________
Title: ___________________________________
8
EXHIBIT D
SUBSIDIARY SECURITY AGREEMENT
SUBSIDIARY SECURITY AGREEMENT
THIS SECURITY AGREEMENT, dated as of February __, 1997 (this "Security
Agreement"), is made by _________________________________ (the "Company"), in
favor of Boston Chicken, Inc., a Delaware corporation ("Boston Chicken").
WITNESSETH:
WHEREAS, Boston Market International, Inc., a Delaware corporation
(the "Borrower") has entered into a Secured Loan Agreement, dated as of January
__, 1997 (the "Loan Agreement"), with Boston Chicken and pursuant to which
Boston Chicken has agreed on the terms and conditions therein, to make a Loan
(as defined in the Loan Agreement) to the Borrower; and
WHEREAS, the Company is a wholly-owned subsidiary of the Borrower;
WHEREAS, as a condition to the effectiveness of Boston Chicken's
obligations under the Loan Agreement, the Company has agreed, among other
things, to grant to Boston Chicken a first-priority security interest in and to
the Collateral hereinafter described;
NOW, THEREFORE, to secure (a) the payment of the principal sum of
[Seventeen Million Dollars ($17,000,000)], together with interest thereon, in
accordance with the terms of a convertible secured promissory note dated January
__, 1997, issued by the Borrower pursuant to the Loan Agreement (the "Note"),
(b) the performance of the covenants herein contained and any monies expended by
Boston Chicken in connection therewith, (c) the payment of all obligations and
performance of all covenants of the Borrower under the Loan Agreement, the
Subsidiary Stock Pledge Agreement and all other Security Instruments (as defined
in the Loan Agreement) and any other documents, agreements or instruments
between the Borrower or the Company and Boston Chicken given in connection
therewith, and (d) any and all other indebtedness, obligations and liabilities
of any kind of the Borrower and/or the Company to Boston Chicken now or
hereafter existing, direct or indirect, absolute or contingent, joint and/or
several, secured or unsecured, arising by operation of law or otherwise, and
whether incurred by the Company as principal, surety, endorser, guarantor,
accommodation party or otherwise (all of the aforesaid indebtedness, obligations
and liabilities of the Borrower and/ or the Company being herein called the
"Secured Obligations", and all of the documents, agreements and instruments
between the Company and Boston Chicken evidencing or securing the repayment of,
or otherwise pertaining to the Secured Obligations being herein collectively
called the "Operative Documents"), for value received and pursuant to the Loan
Agreement, the Company hereby grants, assigns and transfers to Boston Chicken a
security interest in and to the following described property whether now owned
or
existing or hereafter acquired or arising and wherever located (all of which is
herein collectively called the "Collateral"):
(a) all of the Company's real estate, accounts, equipment (including, but
not limited to machinery, furniture, fixtures, tools, vehicles, and other
tangible property), inventory, chattel paper, leasehold improvements, contract
rights (including its rights as lessee under all leases of real property),
general intangibles, deposit accounts, tax refunds, instruments, notes, letters
of credit, documents, and documents of title;
(b) all insurance proceeds of or relating to any of the foregoing;
(c) all of the Company's books, records, and computer programs and data
relating to any of the foregoing; and
(d) all accessories and additions to, and substitutions for, and
replacements, products and proceeds of, any of the foregoing.
1. Representations, Warranties, Covenants and Agreements. The Company
further represents, warrants, covenants, and agrees with Boston Chicken as
follows:
(a) Ownership of Collateral; Security Interest Priority At the time
any Collateral becomes subject to a security interest of Boston Chicken
hereunder, unless Boston Chicken shall otherwise consent, the Company shall be
deemed to have represented and warranted that (i) the Company is the lawful
owner of such Collateral and has the right and authority to subject the same to
the security interest of Boston Chicken; (ii) none of the Collateral is subject
to any lien other than that in favor of Boston Chicken and there is no effective
financing statement covering any of the Collateral on file in any public office,
other than in favor of Boston Chicken. This Security Agreement creates in favor
of Boston Chicken a valid and perfected first-priority security interest in the
Collateral enforceable against the Company and all third parties and securing
the payment of the Secured Obligations and all filings and other actions
necessary or desirable to create, preserve or perfect such security interests
have been duly taken.
(b) Location of Offices, Records and Facilities. The Company's chief
executive office and chief place of business and the office where the Company
keeps its records concerning its accounts, contract rights, chattel paper,
instruments, general intangibles and other obligations arising out of or in
connection with the sale or lease of goods or the rendering of services or
otherwise ("Receivables"), and all originals of all leases and other chattel
paper which evidence Receivables, are located in the State of __________, County
of __________ at _____________ _________________. The Company will provide
Boston Chicken with prior written notice of any proposed change in the location
of its chief executive office and will not change the location of its chief
executive office without the prior written consent of Boston Chicken. The
federal tax identification number of the Company is __________________________.
The name of the Company is _____________________, and the Company operates
under no other names
2
[except for _______________]. The Company shall not change its name without the
prior written consent of Boston Chicken.
(c) Location of Inventory, Fixtures, Machinery and Equipment. All
Collateral consisting of inventory, fixtures, machinery or equipment is, and
will be, located within the States of ________________________________________,
and at no other locations without the prior written consent of Boston Chicken.
If the Collateral described in this paragraph 1(c) is kept at leased locations
or warehoused, the Company has obtained appropriate landlord's lien waivers or
appropriate warehousemen's notices have been sent, each satisfactory to Boston
Chicken, unless waived by Boston Chicken.
(d) Liens, Etc. The Company will keep the Collateral free at all times
from any and all liens, security interests or encumbrances other than those
described in paragraph 1(a)(ii) and those consented to in writing by Boston
Chicken. The Company will not, without the prior written consent of Boston
Chicken, sell or lease, or permit or suffer to be sold or leased, any of the
Collateral except inventory which is sold or, subject to Boston Chicken's
security interest therein, is leased in the ordinary course of the Company's
business, and tangible Collateral, which is disposed of in the ordinary course
of the Company's business as being obsolete. Boston Chicken or its attorneys may
at any and all reasonable times inspect the Collateral and for such purpose may
enter upon any and all premises where the Collateral is or might be kept or
located.
(e) Insurance. The Company shall keep the tangible Collateral insured at
all times against loss by theft, fire and other casualties and shall otherwise
comply with the insurance provisions set forth in Section 5.4 of the Loan
Agreement.
(f) Taxes, Etc. The Company will pay promptly, and within the time that
they can be paid without interest or penalty, any taxes, assessments and similar
imposts and charges, not being contested in good faith, which are now or
hereafter may become a lien, charge or encumbrance upon any of the Collateral.
If the Company fails to pay any such taxes, assessments or other imposts or
charges in accordance with this Section, Boston Chicken shall have the option to
do so and the Company agrees to repay forthwith all amounts so expended by
Boston Chicken with interest at the default rate set forth in the Loan
Agreement.
(g) Further Assurances. The Company will do all acts and things and will
execute all financing statements and writings requested by Boston Chicken to
establish, maintain and continue a perfected and valid security interest of
Boston Chicken in the Collateral, and will promptly on demand pay all reasonable
costs and expenses of filing and recording all instruments, including the costs
of any searches deemed necessary by Boston Chicken to establish and determine
the validity and the priority of Boston Chicken's security interests. A carbon,
photographic or other reproduction of this Security Agreement or any financing
statement covering the Collateral shall be sufficient as a financing statement.
(h) Maintenance of Tangible Collateral. The Company will cause the
tangible Collateral to be maintained and preserved in the same condition, repair
and working order as when
3
new, ordinary wear and tear excepted, and in accordance with any manufacturer's
manual, and shall forthwith, or, in the case of any loss or damage to any of the
tangible Collateral as quickly as practicable after the occurrence thereof, make
or cause to be made all repairs, replacements, and other improvements made in
connection therewith which are necessary or desirable to such end. The Company
shall promptly furnish to Boston Chicken a statement respecting any loss or
damage to any of the tangible Collateral.
(i) Maintenance of Intangible Collateral. The Company shall preserve and
maintain all rights of the Company and Boston Chicken in the intangible
Collateral, including without limitation the payment of all maintenance fees and
the taking of appropriate action at the Company's expense to halt the
infringement of any of the intangible Collateral.
(j) Special Rights Regarding Accounts Receivable. Boston Chicken or any of
its agents may, at any time and from time to time in its sole discretion and
irrespective of the existence of any event of default under this Security
Agreement, verify directly with the Company's account debtors the accounts
pledged hereunder in any manner. Boston Chicken or any of its agents may, at any
time from time to time in its sole discretion, notify the Company's account
debtors of the security interest of Boston Chicken in the Collateral and/or
direct such account debtors that all payments in connection with such
obligations and the Collateral be made directly to Boston Chicken in Boston
Chicken's name. If Boston Chicken or any of its agents shall collect such
obligations directly from the Company's account debtors, Boston Chicken or any
of its agents shall have the right to resolve any disputes relating to returned
goods directly with the Company's account debtors in such manner and on such
terms as Boston Chicken or any of its agents shall deem appropriate. The Company
directs and authorizes any and all of its present and future account debtors to
comply with requests for information from Boston Chicken, Boston Chicken's
designees and agents and/or auditors, relating to any and all business
transactions between the Company and the Company's account debtors. The Company
further directs and authorizes all of its account debtors upon receiving a
notice or request sent by Boston Chicken or Boston Chicken's agents or designees
to pay directly to Boston Chicken any and all sums of money or proceeds now or
hereafter owing by the Company's account debtors to the Company, and any such
payment shall act as a discharge of any debt of such account debtor to the
Company in the same manner as if such payment had been made directly to the
Company. The Company agrees to take any and all action as Boston Chicken may
request to assist Boston Chicken in exercising the rights described in this
Section.
2. Events of Default. The occurrence of any Default specified in the Loan
Agreement shall be deemed a default under this Security Agreement.
3. Remedies. Upon the occurrence of any such event of default, Boston
Chicken shall have and may exercise any one or more of the rights and remedies
provided to it under this Security Agreement or any of the other Operative
Documents or provided by law, including but not limited to all of the rights and
remedies of a secured party under the Uniform Commercial Code, and the Company
hereby agrees to assemble the Collateral and make it available to Boston Chicken
at a place to be designated by Boston Chicken which is reasonably convenient to
both parties,
4
authorizes Boston Chicken to take possession of the Collateral with or without
demand and with or without process of law and to sell and dispose of the same at
public or private sale and to apply the proceeds of such sale to the costs and
expenses thereof (including reasonable attorneys' fees and disbursements,
incurred by Boston Chicken) and then to the payment of the indebtedness and
satisfaction of other Secured Obligations. Any requirement of reasonable notice
shall be met if Boston Chicken sends such notice to the Company, by registered
or certified mail, at least 5 days prior to the date of sale, disposition or
other event giving rise to a required notice. Boston Chicken may be the
purchaser at any such sale. The Company expressly authorizes such sale or sales
of the Collateral in advance of and to the exclusion of any sale or sales of or
other realization upon any other collateral securing the Secured Obligations.
Boston Chicken shall have no obligation to preserve rights against prior
parties. The Company hereby waives as to Boston Chicken any right of subrogation
or marshaling of such Collateral and any other collateral for the Secured
Obligations. To this end, the Company hereby expressly agrees that any such
collateral or other security of the Company or any other party which Boston
Chicken may hold, or which may come to any of them or any of their possession,
may be dealt with in all respects and particulars as though this Security
Agreement were not in existence. The parties hereto further agree that public
sale of the Collateral by auction conducted in any county in which any
Collateral is located or in which Boston Chicken or the Company does business
after advertisement of the time and place thereof shall, among other manners of
public and private sale, be deemed to be a commercially reasonable disposition
of the Collateral. The Company shall be liable for any deficiency remaining
after disposition of the Collateral.
4. Remedies Cumulative. No right or remedy conferred upon or reserved to
Boston Chicken under any Operative Document is intended to be exclusive of any
other right or remedy, and every right and remedy shall be cumulative in
addition to every other right or remedy given hereunder or now or hereafter
existing under any applicable law. Every right and remedy of Boston Chicken
under any Operative Document or under applicable law may be exercised from time
to time and as is often as may be deemed expedient by Boston Chicken. To the
extent that it lawfully may, the Company agrees that it will not at any time
insist upon, plead, or in any manner whatever claim or take any benefit or
advantage of any applicable present or future stay, extension or moratorium law,
which may effect observance or performance of any provisions of any Operative
Document; nor will it claim, take or insist upon any benefit or advantage of any
present or future law providing for the valuation or appraisal of any security
for its obligations under any Operative Document prior to any sale or sales
thereof which may be made under or by virtue of any instrument governing the
same; nor will it, after any such sale or sales, claim or exercise any right,
under any applicable law to redeem any portion of such security so sold.
5. Conduct No Waiver. No waiver of default shall be effective unless in
writing executed by Boston Chicken and waiver of any default or forbearance on
the part of Boston Chicken in enforcing any of its rights under this Security
Agreement shall not operate as a waiver of any other default or of the same
default on a future occasion or of such right.
6. Governing Law; Definitions. This Security Agreement is a contract made
under, and the rights and obligations of the parties hereunder shall be governed
by and construed in
5
accordance with, the laws of the State of Colorado applicable to contracts made
and to be performed entirely within such State. Terms used but not defined
herein shall have the respective meaning ascribed thereto in the Loan Agreement.
Unless otherwise defined herein or in the Loan Agreement, terms used in Article
9 of the Uniform Commercial Code in the State of Colorado are used herein as
therein defined on the date hereof. The headings of the various subdivisions
hereof are for convenience of reference only and shall in no way modify any of
the terms or provisions hereof.
7. Notices. All notices, demands, requests, consents and other
communications hereunder shall be delivered and shall be effective in the manner
specified in Section 9.4 of the Loan Agreement.
8. Rights Not Construed as Duties. Boston Chicken neither assumes nor
shall it have any duty of performance or other responsibility under any
contracts in which Boston Chicken has or obtains a security interest hereunder.
If the Company fails to perform any agreement contained herein, Boston Chicken
may but is in no way obligated to itself perform, or cause performance of, such
agreement, and the expenses of Boston Chicken incurred in connection therewith
shall be payable by the Company under paragraph 11.
9. Amendments. None of the terms and provisions of this Security
Agreement may be modified or amended in any way except by an instrument in
writing executed by each of the parties hereto.
10. Severability. If any one or more provisions of this Security Agreement
should be invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions contained herein shall
not in any way be affected, impaired or prejudiced thereby.
11. Expenses. The Company agrees to indemnify Boston Chicken from and
against any and all claims, losses and liabilities growing out of or resulting
from this Security Agreement (including, without limitation, enforcement of this
Security Agreement), except claims, losses or liabilities resulting from the
Boston Chicken's gross negligence or willful misconduct.
12. Successors and Assigns; Termination. This Security Agreement shall
create a continuing security interest in the Collateral and shall (a) remain in
full force and effect until full payment and performance of the Secured
Obligations (b) be binding upon the Company, its successors and assigns and (c)
inure, together with the rights and remedies of Boston Chicken hereunder, to the
benefit of Boston Chicken and its successors, transferees and assigns. Upon the
full payment and performance of the Secured Obligations the security interests
granted hereby shall terminate and all rights to the Collateral shall revert to
the Company. Upon any such termination, Boston Chicken will, at the Company's
expense, execute and deliver to the Company such documents as the Company shall
reasonably request to evidence such termination.
IN WITNESS WHEREOF, the Company has caused this Security Agreement to be
duly
6
executed as of the day and year first set forth above.
__________________________________________
By:
______________________________________
Its:
______________________________________
7
SCHEDULE 4.15
INTELLECTUAL PROPERTY AGREEMENTS
. Transfer Agreement between and among Harry's Farmers Market, Inc., HFMI
Trust, and HFMI Acquisition Corporation, dated as of January 31, 1997; and
. HFMI License Agreement between HFMI Trust and Harry's Farmers Market, Inc.,
dated as of January 31, 1997; and
. Administration and Servicing Agreement between and among HFMI Acquisition
Corporation and Harry's Farmers Market, Inc., dated as of January 31, 1997;
and
. Newco License Agreement between HFMI Trust and HFMI Acquisition
Corporation, dated as of January 31, 1997; and
. Trust Agreement between and among Wilmington Trust Company, HFMI
Acquisition Corporation, and Harry's Farmers Market, Inc., dated as of
January 31, 1997.
