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EXHIBIT (d)(3)
SECURITIES PURCHASE AND CONTRIBUTION AGREEMENT
THIS IS A SECURITIES PURCHASE AND CONTRIBUTION AGREEMENT (the
"Agreement"), dated as of November 15, 2000, as amended as of January 9, 2001,
by and among Manhattan Acquisition Corp., a Delaware corporation (the
"Company"), Bruckmann, Xxxxxx, Xxxxxxxx & Co. II, L.P., a Delaware limited
partnership ("BRS"), and the entities and individuals other than BRS set forth
on Schedule I hereto (the "Xxxxx Investors" and, together with BRS, the
"Investors"). As used herein, the term "Management Investor" means any of the
Xxxxx Investors so designated as a Management Investor on Schedule I hereto.
Background
A. The Investors as a group desire to invest an aggregate of $40
million in the Company and/or the Surviving Corporation referred to below.
B. The Investors entered into the Securities Purchase and
Contribution Agreement, dated as of November 15, 2000 (the "Original
Agreement"), in connection with the execution and delivery of the Agreement and
Plan of Merger, dated as of November 15, 2000 (the "Original Merger Agreement"),
between the Company and Il Fornaio (America) Corporation, a Delaware corporation
("Xxxxx"). The parties to the Original Agreement desire to amend the Original
Agreement to add an additional Investor and to add certain additional terms and
provisions. In connection with the parties' entry into this Agreement, the
parties to the Original Merger Agreement are entering into an amendment thereof
(as so amended and as it may hereafter be amended, the "Merger Agreement") to
add certain additional terms and provisions thereto. Pursuant to the Merger
Agreement, the Company will be merged with and into Xxxxx (the "Merger"), and
Xxxxx will be the surviving corporation in such Merger (the "Surviving
Corporation").
C. Subject to the terms hereof, the investment will be effected (i)
in the case of any Xxxxx Investor, through such Investor's exchange of shares of
Xxxxx Common Stock (as defined herein) for shares of Xxxxx Preferred Stock (as
defined herein), which securities will remain outstanding as, or be converted in
the Merger into, Surviving Corporation Securities (as defined herein) or the
cancellation of Xxxxx Options (as defined herein) in exchange for options to
purchase Surviving Corporation Securities, or (ii) in the case of certain Xxxxx
Investors, through the purchase immediately prior to the Merger of shares of
Xxxxx Preferred Stock (as defined herein), which securities will remain
outstanding as, or be converted in the Merger into, Surviving Corporation
Securities or (iii) in the case of any Investor, through the purchase of shares
of the Company, which securities will be converted in the Merger into Surviving
Corporation Securities, as provided in the Merger Agreement.
Terms
In consideration of the mutual representations, warranties and
covenants contained herein, and intending to be legally bound hereby, the
parties hereto agree as follows:
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ARTICLE I
PURCHASE OF SECURITIES
1.1. Rollover of Shares and Options by Xxxxx Investors.
(a) Immediately prior to the Effective Time, each of the
Xxxxx Investors who owns shares of common stock, par value $.001 per share
("Xxxxx Common Stock"), of Xxxxx will exchange the number of shares of Xxxxx
Common Stock set forth opposite his name on Schedule II hereto for the number of
shares of Series A Preferred Stock, par value $.001 per share ("Xxxxx Series A
Preferred Stock"), of Xxxxx, Series B Preferred Stock, par value $.001 per share
("Xxxxx Series B Preferred Stock"), of Xxxxx and Series C Preferred Stock, par
value $.001 per share ("Xxxxx Series C Preferred Stock", and together with the
Xxxxx Series A Preferred Stock and the Xxxxx Series B Preferred Stock, the
"Xxxxx Preferred Stock"), of Xxxxx (such Xxxxx Preferred Stocks having the
respective terms, rights and preferences set forth in Schedule VI hereto), in
each case as set forth opposite his name on Schedule II hereto.
(b) Upon the Effective Time, each of the Xxxxx Investors who
owns options to purchase shares of Xxxxx Common Stock ("Xxxxx Options") will
accept the cancellation of the number of Xxxxx Options set forth opposite his
name on Schedule III hereto having the fair market value set forth opposite his
name on Schedule III hereto in exchange for (i) an option ("Surviving
Corporation Series A Option") to purchase the number of shares of Series A
Cumulative Compounding Preferred Stock, par value $.001 per share ("Surviving
Corporation Series A Preferred Stock") of the Surviving Corporation (such series
having the same terms, rights and preferences of the Xxxxx Series A Preferred
Stock) set forth opposite his name on Schedule III hereto and (ii) an option
("Surviving Corporation Series B Option") to purchase the number of shares of
Series B Cumulative Compounding Preferred Stock, par value $.001 per share
("Surviving Corporation Series B Preferred Stock") of the Surviving Corporation
(such series having the same terms, rights and preferences of the Xxxxx Series B
Preferred Stock) set forth opposite his name on Schedule III; provided, however,
that the number of shares subject to any option canceled, and the number of
shares subject to any substitute options received, may be varied pursuant to the
terms of footnote 1 to Schedule III hereto. It is agreed that the "fair market
value" of an option will equal the difference between $14.00 and the exercise
price times the number of shares for which such option is exercisable. The
Surviving Corporation Series A Options and the Surviving Corporation Series B
Options issued to Xxxxx Investors, as provided in this Section 1.1(b), shall
have the same aggregate economic spread and term as the Xxxxx Options that have
been cancelled and, reflecting the acceleration of vesting occurring upon the
Merger under the terms of the Xxxxx Options that have been cancelled, shall be
fully vested.
(c) Upon the Effective Time, each of the Xxxxx Investors set
forth on Schedule IV hereto will purchase, with cash received in consideration
for the cancellation pursuant to Section 1.11 of the Merger Agreement of any
Xxxxx Options held by each of the Xxxxx Investors set forth on Schedule IV
hereto that are not cancelled in exchange for substitute options, pursuant to
Section 1.1(b) of this Agreement, to acquire the number of shares of
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common stock, par value $.001 ("Surviving Corporation Common Stock", and
together with the Surviving Corporation Series A Preferred Stock, the Surviving
Corporation Series B Preferred Stock, the Surviving Corporation Series A Options
and the Surviving Corporation Series B Options, the "Surviving Corporation
Securities") of the Surviving Corporation set forth opposite his name on
Schedule IV hereto for the purchase price set forth opposite his name on
Schedule IV hereto.
1.2. Purchase By Investors Other than Xxxxx Investors. Subject to
Section 2.2, prior to the Effective Time, BRS will purchase equity securities of
the Company ("Company Securities") for the aggregate purchase price set forth on
Schedule V hereto, which Company Securities will be converted upon the Effective
Time into Surviving Corporation Series A Preferred Stock, Surviving Corporation
Series B Preferred Stock and Surviving Corporation Common Stock as set forth on
Schedule V hereto.
1.3. Closing. The closing of the purchase and sale of the Xxxxx
Preferred Stock and the Company Securities contemplated hereby (the "Closing")
will take place immediately preceding the closing of the Merger as determined by
Section 1.12 of the Merger Agreement or on such other date as may be determined
by the Company upon not less than 5 days prior written notice to the Investors
(the date such Closing occurs, the "Closing Date"). At the Closing, each of the
Investors will execute a Securities Holders Agreement (the "Securities Holders
Agreement") and a Registration Rights Agreement (the "Registration Rights
Agreement") having the terms set forth on Schedule VII hereto.
1.4. Xxxxx Securities. In order to facilitate any cancellation or
exchange of any shares of Xxxxx Common Stock and any Xxxxx Options by the Xxxxx
Investors contemplated hereby, if requested by the Company, each Xxxxx Investor
shall deliver within five business days after such request one or more
certificates representing all of the shares of Xxxxx Common Stock and any
granting instruments with respect to all of the Xxxxx Options in either case to
be cancelled or exchanged in accordance with this Agreement, together with stock
powers or other instruments duly endorsed or otherwise sufficient for transfer
of such certificates or instruments, as the case may be. The Company shall hold
such instruments in escrow pending the Closing Date. On the Closing Date, the
Company is authorized to present such instruments to the transfer agent for
Xxxxx and instruct the transfer agent to register the shares of Xxxxx Common
Stock in the name of the Company or its designee (or, in the case of the
certificates representing Xxxxx Options, to xxxx and record such options as
cancelled, as contemplated by the Merger Agreement).
1.5. Representations, Warranties and Covenants of the Management
Investors, the Xxxxx Investors and the Company.
(a) Each of the Management Investors, the Xxxxx Investors
and the Company shall use reasonable efforts to cooperate to enhance the tax
efficiency of the purchase of Securities contemplated hereby and to achieve
treatment of the transactions contemplated by the Merger Agreement as a
recapitalization for financial reporting purposes.
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(b) Each of the Management Investors and the Xxxxx Investors
represent and warrant to the Company that no registration rights that may
pertain to any of the securities of Xxxxx that are tendered by such Management
Investor or such Xxxxx Investor, as the case may be, as consideration under this
Agreement shall survive the Closing and no such registration rights shall
pertain to any of the Xxxxx Preferred Stock or Surviving Corporation Securities.
(c) Each of the Management Investors and the Xxxxx Investors
acknowledges that (i) an affiliate of BRS will be receiving from the Surviving
Corporation following the Merger a per annum management fee equal to the greater
of (x) $150,000 or (y) 1% of the Company's or the Surviving Corporation's EBITDA
(as such term is defined in the Company's or the Surviving Corporation's senior
credit agreement) and (ii) the Company or the Surviving Corporation may create a
stock option plan or other employee incentive program, with the number and type
of securities subject to any such plan to be determined by BRS .
(d) Each of the Xxxxx Investors represents and warrants that
he has sufficient control over the shares of Xxxxx Common Stock set forth
opposite his name on Schedule I hereto to consummate the transactions to be
consummated by him in this Agreement.
1.6. Conditions to Investor's Obligations. The obligation of each
Investor to consummate the transactions contemplated hereby is subject to the
satisfaction on or prior to the Closing of the following conditions:
(a) The Company shall have delivered to each of the
Investors which is purchasing Company Securities hereunder certificates for the
Company Securities so purchased.
(b) No preliminary or permanent injunction or order, decree
or ruling of any nature issued by any court or governmental agency of competent
jurisdiction, nor any statute, rule, regulation or executive order promulgated
or enacted by any United States federal, state or local governmental authority,
shall be in effect, that would prevent the consummation of the transactions
contemplated by this Agreement or the Merger Agreement.
(c) All of the conditions to effecting the Merger under
Article VI of the Merger Agreement (including the debt financing condition set
forth in Section 6.2(e), but excluding the conditions set forth in Section 6.3)
shall have been fulfilled or waived in accordance with the Merger Agreement;
provided, however, that Section 6.2(e) of the Merger Agreement shall be deemed
to have been satisfied if the debt financing referred to therein is not
available solely because of the refusal or inability of the Investors to provide
in the aggregate $40,000,000 of equity financing to the Company (including by
delivery of Xxxxx Common Stock or Xxxxx Options as permitted by Section 1.1(b)).
1.7. Conditions to the Company's Obligations. The obligations of
the Company to issue and sell the Company Securities or Surviving Corporation
Securities, as the
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case may be, to each Investor as set forth herein at the Closing are subject to
the satisfaction on or prior to the Closing of the following conditions:
(a) Each of the Investors purchasing Company Securities or
Surviving Corporation Securities, as the case may be, hereunder shall have
delivered the consideration provided for herein for the securities to be
acquired by him or it pursuant to this Article I.
(b) No preliminary or permanent injunction or order, decree
or ruling of any nature issued by any court or governmental agency of competent
jurisdiction, nor any statute, rule, regulation or executive order promulgated
or enacted by any United States federal, state or local governmental authority,
shall be in effect, that would prevent the consummation of the transactions
contemplated by this Agreement or the Merger Agreement.
(c) All of the conditions to effecting the Merger under
Article VI of the Merger Agreement (including the debt financing condition set
forth in Section 6.2(e), but excluding the conditions set forth in Section 6.3)
shall have been fulfilled or waived in accordance with the Merger Agreement;
provided, however, that Section 6.2(e) of the Merger Agreement shall be deemed
to have been satisfied if the debt financing referred to therein is not
available solely because of the refusal or inability of the Investors to provide
in the aggregate $40,000,000 of equity financing to the Company (including by
delivery of Xxxxx Common Stock or Xxxxx Options as permitted by Section 1.1(b)).
(d) Each of the Investors shall have executed the Securities
Holders Agreement and the Registration Rights Agreement.
ARTICLE II
MISCELLANEOUS
2.1. Definitions. Capitalized terms used but not otherwise defined
in this Agreement have the meanings assigned to such terms in the Merger
Agreement.
2.2. Amendment and Modification.
(a) It is understood and agreed that the Company shall have
the right, following execution of this Agreement, to amend this Agreement by
adding additional parties to this Agreement (and Schedule I hereto) who desire
to receive shares of the Surviving Corporation pursuant to the Merger, and,
effective upon any such amendment, such additional parties will be considered
"Investors" for all purposes of this Agreement; provided, however, that no such
party will be deemed to be a "Xxxxx Investor" unless such party owns shares of
Xxxxx Common Stock or Xxxxx Options on or after the date hereof (but prior to
the Closing), and no such party will be deemed to be a "Management Investor"
unless such party (i) is an employee or director of Xxxxx on or after the date
hereof (but prior to the Closing) and (ii) owns shares of Xxxxx Common Stock or
Xxxxx Options on or after the date hereof (but prior to the Closing). In the
event any such party is added as an Investor under this Agreement, the
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aggregate amount reflected on Schedule IV as being invested in the Company by
BRS will be reduced by the amount proposed to be invested or rolled over by such
additional Investor, with such reduction being allocated from and among the
types of Surviving Corporation Securities as agreed between BRS and such party,
and Schedule IV will be deemed to have been amended accordingly. Notwithstanding
the immediately preceding sentence, BRS will be permitted to reduce its
investment in Company Securities or Surviving Corporation Common Stock, as the
case may be, in amounts to be agreed between BRS and certain Management
Investors (other than Messrs. Xxxxxxx, Xxxxxxxxxx and Xxxxxxx) and allocate the
amount of such reduction to such Management Investors as agreed between BRS and
such Management Investors.
(b) Except for amendments contemplated by paragraph (a)
above, which may be unilaterally effected by the Company in its discretion, any
of the provisions of this Agreement may be amended or modified pursuant to a
writing executed by the Company and those Investors who together will be
purchasing a majority of the equity interests of the Company to be purchased
hereunder (based on the total dollar amounts committed by such Investors as
reflected on Schedule I); provided, however, that (i) Sections 1.6, 2.3,
2.2(b)(i), 2.2(b)(ii) and 2.12 cannot be amended in a manner adverse in any
material respect to the Management Investors, and (ii) no amendment of the terms
set forth on Schedule VI or Schedule VII that adversely affects the Management
Investors in a manner different from other Investors will be effective, in
either case without the written consent of those Management Investors (as such
group is constituted on the date of this Agreement) who will be purchasing a
majority of the equity interests of the Company to be purchased hereunder by the
Management Investors (based on the total dollar amounts committed by such
Management Investors as reflected on Schedule I).
(c) Any party hereto may (i) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(ii) waive any inaccuracies in the representations and warranties of the other
parties hereto contained herein or in any document delivered pursuant hereto and
(iii) waive compliance by the other parties hereto with any of their agreements
or conditions contained herein. Any agreement on the part of a party hereto to
any such extension or waiver shall be valid only as against such party and only
if set forth in an instrument in writing signed by such party.
(d) The failure of any party hereto to exercise any right,
power, or remedy provided under this Agreement or otherwise available in respect
hereof at law or in equity, or to insist upon compliance by any other party
hereto with its obligations hereunder, any custom or practice of the parties at
variance with the terms hereof shall not constitute a waiver by such party of
its right to exercise any such or other right, power or remedy or to demand such
compliance.
2.3. Termination. This Agreement will terminate and be of no
further force and effect (i) by the written mutual consent of the parties
hereto, (ii) upon termination of the Merger Agreement in accordance with its
terms or (iii) unless otherwise determined by BRS, on
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May 31, 2001. No such termination of this Agreement shall relieve any party
hereto from any liability for any breach of this Agreement prior to termination.
2.4. Assignment; Successors and Assigns; Entire Agreement. This
Agreement and all of the provisions hereof shall be binding upon and inure to
the benefit of the parties hereto and their respective successors, assigns,
executors and administrators, but no party hereunder may assign its rights or
obligations hereunder without the prior written consent of BRS. This Agreement
constitutes the entire agreement and supersedes any and all other prior
agreements and undertakings, both written and oral, among the parties, or any of
them, with respect to the subject matter hereof, including the Original
Agreement, and this Agreement is not intended to confer upon any person other
than the parties hereto any rights or remedies hereunder.
2.5. Severability. In the event that any provision of this
Agreement or the application of any provision hereof is declared to be illegal,
invalid or otherwise unenforceable by a court of competent jurisdiction, the
remainder of this Agreement shall not be affected except to the extent necessary
to delete such illegal, invalid or unenforceable provision unless that provision
held invalid shall substantially impair the benefits of the remaining portions
of this Agreement.
2.6. Notices. All notices provided for or permitted hereunder shall
be made in writing by hand-delivery, registered or certified first-class mail,
telex, fax or air courier guaranteeing overnight delivery to the other party at
the following addresses (or at such other address as shall be given in writing
by any party to the others):
If to the Company:
c/o Bruckmann, Xxxxxx, Xxxxxxxx & Co., L.P.
000 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxx XX
Fax: 000-000-0000
with a copy to:
Dechert
4000 Xxxx Atlantic Tower
0000 Xxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxx, Esq.
Xxxxx X. Xxxxxxx, Esq.
Fax: 000-000-0000
If to any Investor to its address as listed on the signature pages
hereof.
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All such notices shall be deemed to have been duly given: when
delivered by hand, if personally delivered; five business days after being
deposited in the mail, postage prepaid, if mailed; when answered back, if
telexed; when receipt acknowledged, if faxed; and on the next business day, if
timely delivered to an air courier guaranteeing overnight delivery.
2.7. Governing Law. The validity, performance, construction and
effect of this Agreement shall be governed by and construed in accordance with
the substantive laws of the State of New York, regardless of the laws that might
otherwise govern under principles of conflicts of law applicable thereto.
2.8. Headings. The headings in this Agreement are for convenience
of reference only and shall not constitute a part of this Agreement, nor shall
they affect its meaning, construction or effect. Unless otherwise specified,
section references herein refer to sections of this Agreement and schedules and
exhibits refer to schedules and exhibits attached hereto.
2.9. Counterparts. This Agreement may be executed in two or more
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original, and all of which taken
together shall constitute one and the same instrument.
2.10. Further Assurances. Each party shall cooperate and take such
action as may be reasonably requested by another party in order to carry out the
provisions and purposes of this Agreement and the transactions contemplated
hereby.
2.11. Pronouns. Whenever the context may require, any pronouns used
herein shall be deemed also to include the corresponding neuter, masculine or
feminine forms.
2.12. Maximum Liability. The maximum liability of any Investor for
a breach of this Agreement shall be limited to the amount set forth next to its
name on Schedule I hereto.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the day and year first above written.
MANHATTAN ACQUISITION CORP.
By: /s/ XXXXXX X. XXXXXX
-----------------------------------
Name: XXXXXX X. XXXXXX, XX
Title: PRESIDENT
BRUCKMANN, XXXXXX, XXXXXXXX & CO. II, L.P.
By BRSE, L.L.C., its general partner
By: /s/ XXXXXX X. XXXXXX
-----------------------------------
Name: XXXXXX X. XXXXXX, XX
Title: MANAGING DIRECTOR
/s/ XXXXXXXX X. XXXXXX
-------------------------------------
Xxxxxxxx X. Xxxxxx
Address: 00 Xxx Xxxxxx Xxx.
Xxxxxxxxx, XX 00000
/s/ XXXXXXX X. XXXXXX
-------------------------------------
Xxxxxxx X. Xxxxxx
Address: 00 Xxxxxx Xxxxx
Xxx Xxxxxx, XX 00000
/s/ XXXXXXX X. XXXXXXXX
-------------------------------------
Xxxxxxx X. Xxxxxxxx
Address: 00 Xxxxxxxx Xxxxx
Xxx Xxxxxx, XX 00000
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/s/ XXXXX X. XXXXXXXX
-------------------------------------
Xxxxx X. Xxxxxxxx
Address: 0000 Xxxxxxx Xx.
Xxxxxxx, XX 00000
/s/ F. XXXXXX XXXXXXX
-------------------------------------
F. Xxxxxx Xxxxxxx
Address: 0000 Xxxxxxx Xxx.
Xxx Xxxxxxxxx, XX 00000
/s/ XXXX X. XXXXXXXXXX
-------------------------------------
Xxxx X. Xxxxxxxxxx
Address: 00000 X. Xxxxxx Xx.
Xxxxxxxx, XX 00000
/s/ W. XXXXX XXXXXXX
-------------------------------------
W. Xxxxx Xxxxxxx
Address: X.X. Xxx 0000
Xxxx, XX 00000
/s/ CARLO VEGGETTI
-------------------------------------
Carlo Veggetti
Address: c/o Xxx. Xxxxxx Xxxxxxx
X.X.X.X.
Xxxxxxx Xxxxxxx 0000
XX-0000 Xxxxxx Suisse
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SCHEDULE I
Investors and Purchase Price
Name of Investor Purchase Price
---------------- --------------
Bruckmann, Xxxxxx, Xxxxxxxx & Co. II, L.P. $29,553,723
Xxxxxxxx X. Xxxxxx(1)(2) $2,000,000
Xxxxxxx X. Xxxxxx(1)(2) $2,900,000
Xxxxxxx X. Xxxxxxxx(1)(2) $396,398
Xxxxx X. Xxxxxxxx(1)(2) $25,000
F. Xxxxxx Xxxxxxx(1)(2) $2,007,581
Xxxx X. Xxxxxxxxxx(1)(2) $1,740,241
W. Xxxxx Xxxxxxx(1)(2) $260,431
Carlo Veggetti(1) $1,116,626
(1) Denotes Xxxxx Investor
(2) Denotes Management Investor
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SCHEDULE II
Section 1.1(a)
Shares of Xxxxx Shares of Xxxxx Shares of Xxxxx
Shares of Xxxxx Series A Series B Series C
Name of Xxxxx Common Stock Preferred Stock Preferred Stock Preferred Stock
Investor Being Exchanged Being Received Being Received Being Received
-------- --------------- -------------- -------------- --------------
Xxxxxxxx X. Xxxxxx 96,677 71,429 7,391 17,857
F. Xxxxxx Xxxxxxx 137,854 71,699 48,230 17,925
Xxxx X. Xxxxxxxxxx 117,794 62,151 40,105 15,538
W. Xxxxx Xxxxxxx 14,879 9,301 3,253 2,325
Carlo Veggetti 79,759 39,880 29,910 9,970
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SCHEDULE III
Section 1.1(b)
Number of Shares Number of Shares
of Surviving of Surviving
Corporation Corporation
Series A Series B
Preferred Stock Preferred Stock
for which the for which the
Surviving Surviving
Xxxxx Options Value of Corporation Corporation
Name of Xxxxx Being Options Series A Option Series B Option Average Exercise
Investor Exchanged Being Exchanged is Exercisable(2) is Exercisable(2) Price
-------- --------- --------------- ----------------- ----------------- ----------------
Xxxxxxxx X. Xxxxxx(1) 97,278 $646,525 0 97,278 $7.35
Xxxxxxx X. Xxxxxx(1) 267,105 $2,537,500 152,632 114,474 $4.50
Xxxxxxx X. Xxxxxxxx(1) 38,539 $346,848 22,022 16,517 $5.00
Xxxxx X. Xxxxxxxx(1) 2,407 $21,875 1,375 1,032 $4.91
F. Xxxxxx Xxxxxxx 10,500 $77,625 0 10,500 $6.61
Xxxx X. Xxxxxxxxxx 12,000 $91,125 0 12,000 $6.41
W. Xxxxx Xxxxxxx 7,500 $52,125 0 7,500 $7.05
(1) The number of options being exchanged, but not the aggregate value, may
vary, which would cause (i) the number of shares of Surviving Corporation Series
A Preferred Stock for which the Surviving Corporation Series A Option is
exercisable and the number of shares of Surviving Corporation Series B Preferred
Stock for which the Surviving Corporation Series B Option is exercisable to be
adjusted so that the number of options being exchanged and the number of shares
for which the options to be received are exercisable would maintain a ratio of
1:1 and (ii) the average exercise price set forth above to be adjusted so that
it would represent a weighted average of the exercise prices of the options
actually being exchanged.
(2) A right to payment from the Surviving Corporation shall accrue with respect
to each of the Surviving Corporation Series A Options and the Surviving
Corporation Series B Options (collectively, "Options") (such accrual, the
"Special Accrual") at a rate equal to the dividend rate (as set forth for the
applicable series of preferred stock in the certificate of incorporation of the
Surviving Corporation) per share of the applicable series of preferred stock of
the Surviving Corporation (an "Option Share") issuable upon exercise of such
Option on the amount equal to (i) the Liquidation Preference (as defined in the
certificate of incorporation of the Surviving Corporation) for each such Option
Share less (ii) the exercise price of such Option, in each case as in effect
from time to time. The Special Accrual will accrue at the same time and in the
same manner as the dividends which accrue after the date hereof on each
outstanding share of Surviving Corporation Series A Preferred Stock or of Series
B Preferred Stock, as the case may be, as set forth in the certificate of
incorporation of the Surviving Corporation. Subject to the terms of any loan,
indenture, or other credit agreement for indebtedness for borrowed money
incurred by the Surviving Corporation, the Special Accrual for each Option shall
be paid to the holder upon the exercise of such Option, such payment to be made,
at the option of the Surviving Corporation, in the form of cash or a reduction
in the exercise
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price otherwise payable by the holder to the Surviving Corporation, in
connection with such exercise. For the avoidance of doubt, the amount of the
Special Accrual on any Option shall not exceed the amount theretofore paid on
the underlying share of preferred stock.
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SCHEDULE IV
Section 1.1(c)
Shares of Surviving
Corporation Common Stock Aggregate
Name of Xxxxx Investor Being Purchased Purchase Price
---------------------- --------------- --------------
Xxxxxxx X. Xxxxxx 25,893 $362,500
Xxxxxxx X. Xxxxxxxx 3,539 $49,550
Xxxxx X. Xxxxxxxx 223 $3,125
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SCHEDULE V
Section 1.2
Shares of Surviving
Shares of Surviving Corporation Series B
Corporation Series A Preferred Stock Shares of Surviving
Preferred Stock Received upon Corporation Common
Received upon Conversion of Stock Received upon
Conversion of Certain Certain Company Conversion of Certain Aggregate
Name of Other Company Securities Securities Being Company Securities Purchase
Investors Being Purchased Purchased Being Purchased Price
--------- --------------- --------- --------------- -----
BRS(1) 1,055,490 791,618 263,873 $29,553,723
(1) It is currently expected that, subject to the satisfaction of
certain conditions, BancBoston Capital, Inc. or its affiliate will invest
$2,000,000 in the Surviving Corporation, which investment would consist of
71,429 shares of Surviving Corporation Series A Preferred, 53,571 shares of
Surviving Corporation Series B Preferred and 17,857 shares of Surviving
Corporation Common. If such investment is completed, BRS' holdings in the
Surviving Corporation, which arise upon conversion of the securities listed
above in the Merger, and the purchase price therefor, would be reduced
accordingly.
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SCHEDULE VI
CERTIFICATE OF DESIGNATION, PREFERENCES AND RIGHTS OF
SERIES A 13.0% CUMULATIVE COMPOUNDING PREFERRED STOCK,
SERIES B 13.5% CUMULATIVE COMPOUNDING PREFERRED STOCK AND
SERIES C PREFERRED STOCK
OF
IL FORNAIO (AMERICA) CORPORATION
Il Fornaio (America) Corporation, a Delaware corporation (the
"Corporation"), pursuant to the provisions of Section 151 of the General
Corporation Law of the State of Delaware, does hereby make this Certificate of
Designation under the corporate seal of the Corporation and does hereby state
and certify that pursuant to the authority expressly vested in the Board of
Directors of the Corporation by the Certificate of Incorporation, the Board of
Directors has duly adopted the following resolutions:
RESOLVED, that pursuant to Article IV of the Certificate of
Incorporation, as amended (which authorizes 5,000,000 shares of Preferred Stock,
par value $.00l per share, none of which shares is issued and outstanding), the
Board of Directors hereby fixes the designations and preferences and relative
participating, optional and other special rights, qualifications, limitations
and restrictions of three series of Preferred Stock, consisting of 2,000,000
shares to be designated Series A 13.0% Cumulative Compounding Preferred Stock
and 1,500,000 shares to be designated Series B 13.5% Cumulative Compounding
Preferred Stock and 1,000,000 shares to be designated Series C Preferred Stock.
RESOLVED, that the holders of Series A 13.0% Cumulative Compounding
Preferred Stock, Series B 13.5% Cumulative Compounding Preferred Stock and
Series C Preferred Stock, except as otherwise provided by law, shall have and
possess the following rights and preferences. Certain capitalized terms used in
this Certificate of Designation are defined in paragraph D hereof.
A. Series A 13.0% Cumulative Compounding Preferred Stock.
1. Designation of Series, Number of Shares. The first series
of Preferred Stock shall be designated as Series A 13.0% Cumulative Compounding
Preferred Stock ("Series A Preferred Stock"), and the number of shares which
shall constitute such series shall be 2,000,000. The par value of Series A
Preferred Stock shall be $.001 per share.
2. Rank. With respect to dividend rights and rights on
liquidation, winding up and dissolution of the Corporation, Series A Preferred
Stock shall rank (a) senior to (i) all classes of Common Stock of the
Corporation; (ii) the Series B 13.5% Cumulative Compounding Preferred Stock, par
value $.001 per share ("Series B Preferred Stock"); (iii) the
18
Series C Preferred Stock, par value $.001 per share ("Series C Preferred
Stock"); and (iv) each other class of capital stock or class or series of
preferred stock issued by the Corporation after the date hereof the terms of
which specifically provide that such class or series shall rank junior to Series
A Preferred Stock as to dividend distributions or distributions upon the
liquidation, winding up and dissolution of the Corporation (each of the
securities in clauses (i), (ii), (iii) and (iv) collectively referred to as
"Series A Junior Securities"), (b) on a parity with each other class of capital
stock or class or series of preferred stock issued by the Corporation after the
date hereof the terms of which do not specifically provide that they rank junior
to Series A Preferred Stock or senior to Series A Preferred Stock as to dividend
distributions or distributions upon liquidation, winding up and dissolution of
the Corporation (collectively referred to as "Series A Parity Securities"), and
(c) junior to each other class of capital stock or other class or series of
preferred stock issued by the Corporation after the date hereof the terms of
which specifically provide that such class or series shall rank senior to Series
A Preferred Stock as to dividend distributions or distributions upon the
liquidation, winding up and dissolution of the Corporation (collectively
referred to as "Series A Senior Securities").
3. Dividends.
(a) Each Holder of Series A Preferred Stock shall be
entitled to receive, when, as and if declared by the Board of Directors, out of
funds legally available therefor, cash dividends on each share of Series A
Preferred Stock at a rate per annum equal to 13.0% of the Liquidation Preference
of such share. All dividends shall be cumulative, whether or not earned or
declared, and shall accrue on a daily basis from the date of issuance of Series
A Preferred Stock, and shall be payable annually in arrears on each Dividend
Payment Date, commencing on the first Dividend Payment Date after the date of
issuance of such Series A Preferred Stock. Each dividend on Series A Preferred
Stock shall be payable to the Holders of record of Series A Preferred Stock as
they appear on the stock register of the Corporation on such record date as may
be fixed by the Board of Directors, which record date shall not be less than ten
nor more than 60 days prior to the applicable Dividend Payment Date. In the
event of the repurchase of any shares of Series A Preferred Stock, dividends
shall cease to accrue in respect of shares of Series A Preferred Stock on the
date of their repurchase by the Corporation unless the Corporation shall have
failed to pay the relevant repurchase price on the date fixed for repurchase.
Notwithstanding anything to the contrary set forth above, unless and until such
dividends are declared by the Board of Directors, there shall be no obligation
to pay such dividends in cash; provided, that such dividends shall continue to
cumulate and shall be paid at the time of repurchase, in the event of their
repurchase, as provided herein if not earlier declared and paid.
(b) All dividends paid with respect to shares of Series A
Preferred Stock pursuant to paragraph A(3)(a) shall be paid pro rata to the
Holders entitled thereto.
(c) Dividends on account of arrears for any past Dividend
Period may be declared and paid at any time, without reference to any regular
Dividend Payment Date, to the
19
Holders of record on any date as may be fixed by the Board of Directors, which
date is not more than 30 days prior to the payment of such dividends.
(d) No full dividends shall be declared by the Board of
Directors or paid or funds set apart for the payment of dividends or other
distributions on any Series A Parity Securities for any period, and no Series A
Parity Securities may be repurchased, redeemed or otherwise retired, nor may
funds be set apart for such payment, unless (i) full Accumulated Dividends have
been paid or set apart for such payment on the Series A Preferred Stock and
Series A Parity Securities for all Dividend Periods terminating on or prior to
the date of payment of such full dividends or distributions on, or such
repurchase or redemption of, such Series A Parity Securities (the "Series A
Parity Payment Date") and (ii) an amount equal to a prorated dividend on the
Series A Preferred Stock and Series A Parity Securities at the customary
dividend rates for such securities for the period from the Dividend Payment Date
immediately prior to the Series A Parity Payment Date to the Series A Parity
Payment Date have been paid or set apart for payment. In the event that such
dividends are not paid in full or set apart for payment with respect to all
outstanding shares of Series A Preferred Stock and of any Series A Parity
Securities and funds available for payment of dividends shall be insufficient to
permit payment in full to the holders of all such stock of the full preferential
amounts to which they are then entitled, then the entire amount available for
payment of dividends shall be distributed ratably among all such holders of
Series A Preferred Stock and of any Series A Parity Securities in proportion to
the full amount to which they would otherwise be respectively entitled.
(e) The Holders of Series A Preferred Stock shall be
entitled to receive the dividends provided for in paragraph A(3)(a) hereof in
preference to and in priority over any dividends upon any of the Series A Junior
Securities, so that if at any time full Accumulated Dividends on all shares of
Series A Preferred Stock then outstanding have not been paid for all Dividend
Periods then elapsed and a prorated dividend on the Series A Preferred Stock at
the rate aforesaid from the Dividend Payment Date immediately preceding the
Series A Junior Payment Date (as defined below) to the Series A Junior Payment
Date have not been paid or set aside for payment, the amount of such unpaid
dividends shall be paid before any sum shall be set aside for or applied by the
Corporation to the purchase, redemption or other acquisition for value of any
shares of Series A Junior Securities (either pursuant to any applicable sinking
fund requirement or otherwise) or any dividend or other distribution shall be
paid or declared and set apart for payment on any Series A Junior Securities
(the date of any such actions to be referred to as the "Series A Junior Payment
Date"); provided, however, that the foregoing shall not (i) prohibit the
Corporation from repurchasing shares of Series A Junior Securities from a Holder
who is, or was, a director or employee of the Corporation (or an affiliate of
the Corporation) and (ii) prohibit the Corporation from making dividends, other
distributions, redemptions, repurchases or acquisitions in respect of Series A
Junior Securities payable in Series A Junior Securities and cash in lieu of
fractional shares of such Series A Junior Securities.
(f) Dividends payable on Series A Preferred Stock for any
period less than one year shall be computed on the basis of a 360-day year
consisting of twelve 30-day
20
months and the actual number of days elapsed in the period for which such
dividends are payable.
(g) The Corporation shall not claim any deduction from gross
income for dividends paid on Series A Preferred Stock in any Federal income tax
return, claim for refund, or other statement, report or submission made to the
Internal Revenue Service, and shall make any election or take any similar action
to effectuate the foregoing except, in each case, if there shall be a change in
law such that the Corporation may claim such dividends as deductions from gross
income without affecting the ability of the Holders to claim the dividends
received deduction under Section 243(a)(1) of the Internal Revenue Code of 1986,
as amended (the "Code") (or any successor provision). At the reasonable request
of any Holder (and at the expense of such Holder), the Corporation shall join in
the submission to the Internal Revenue Service of a request for a ruling that
the dividends paid on Series A Preferred Stock shall be eligible for the
dividends received deduction under Section 243(a)(1) of the Code (or any
successor provision). In addition, the Corporation shall cooperate with any
Holder (at the expense of such Holder) in any litigation, appeal or other
proceeding relating to the eligibility for the dividends received deduction
under Section 243(a)(l) of the Code (or any successor provision) of any
dividends (within the meaning of Section 316(a) of the Code or any successor
provision) paid on Series A Preferred Stock. To the extent possible, the
principles of this paragraph A(3)(g) shall also apply with respect to state and
local income taxes.
4. Liquidation Preference.
(a) Upon any voluntary or involuntary liquidation,
dissolution or winding up of the Corporation, the Holders of all shares of
Series A Preferred Stock then outstanding shall be entitled to be paid out of
the assets of the Corporation available for distribution to its stockholders an
amount in cash equal to the Liquidation Preference per share, plus an amount
equal to a prorated dividend from the last Dividend Payment Date to the date
fixed for liquidation, dissolution, or winding up, before any distribution is
made on any Series A Junior Securities. If upon any voluntary or involuntary
liquidation, dissolution or winding up of the Corporation, the application of
all amounts available for payments with respect to Series A Preferred Stock and
all other Series A Parity Securities would not result in payment in full of
Series A Preferred Stock and such other Series A Parity Securities, the Holders
of Series A Preferred Stock and holders of Series A Parity Securities shall
share equally and ratably in any distribution of assets of the Corporation in
proportion to the full Liquidation Preference to which each is entitled. After
payment in full pursuant to this paragraph A(4)(a), the Holders of Series A
Preferred Stock shall not be entitled to any further participation in any
distribution in the event of liquidation, dissolution or winding up of the
affairs of the Corporation.
(b) For the purposes of paragraph A(4)(a), neither the
voluntary sale, conveyance, exchange or transfer (for cash, shares of stock,
securities or other consideration) of all or substantially all of the property
or assets of the Corporation nor the consolidation, merger or other business
combination of the Corporation with one or more corporations shall be deemed to
be a voluntary or involuntary liquidation, dissolution or winding up of the
Corporation, unless
21
such sale, conveyance, exchange or transfer is in connection with a dissolution
or winding up of the business of the Corporation; provided, however, that any
consolidation or merger of the Corporation in which the Corporation is not the
surviving entity shall be deemed to be a liquidation, dissolution or winding up
of the business of the Corporation within the meaning of this paragraph A(4)(b)
if, (i) in connection therewith, the holders of Common Stock of the Corporation
receive as consideration, whether in whole or in part, for such Common Stock (1)
cash, (2) notes, debentures or other evidences of indebtedness or obligations to
pay cash or (3) preferred stock of the surviving entity (whether or not the
surviving entity is the Corporation) which ranks on a parity with or senior to
the preferred stock received by Holders of the Series A Preferred Stock with
respect to liquidation or dividends or (ii) the Holders of the Series A
Preferred Stock do not receive preferred stock of the surviving entity with
rights, powers and preferences equal to (or more favorable to the holders than)
the rights, powers and preferences of the Series A Preferred Stock.
5. Redemption. (a) The Company shall not have the right nor the
power to, and the Holders shall not have the right to require the Company to,
redeem any shares of Series A Preferred Stock. Notwithstanding the foregoing,
this paragraph A(5) shall not prohibit the Corporation from acquiring from any
Holder, with such Holder's consent, any shares of Series A Preferred Stock held
by such Holder.
(b) Subject to the proviso in paragraph A(3)(e), no sum
shall be set aside for or applied by the Corporation to the purchase,
redemption, or other acquisition for value of any shares of Series A Junior
Securities (either pursuant to any applicable sinking fund requirement or
otherwise) at any time when any shares of Series A Preferred Stock or any Series
A Parity Securities are outstanding unless, prior to the Corporation's setting
aside or applying such sum to the purchase, redemption, or other acquisition of
any shares of Series A Junior Securities, all shares of Series A Preferred Stock
and Series A Parity Securities shall have been purchased or otherwise acquired
for value by the Corporation (and the price in respect thereof paid or set aside
for payment).
6. Voting Rights.
(a) The Holders of Series A Preferred Stock shall not be
entitled or permitted to vote on any matter required or permitted to be voted
upon by the shareholders of the Corporation, except as otherwise required by
Delaware law or this Certificate of Designation and except that without the
written consent of the Holders of a majority of the outstanding shares of Series
A Preferred Stock or the vote of the Holders of a majority of the outstanding
shares of Series A Preferred Stock at a meeting of the Holders of Series A
Preferred Stock called for such purpose, the Corporation shall not (a) create,
authorize or issue any other class or series of stock entitled to a preference
prior to Series A Preferred Stock upon any dividend or distribution or any
liquidation, distribution of assets, dissolution or winding up of the
Corporation, or increase the authorized amount of any such other class or
series, or (b) amend, alter or repeal any provision of the Corporation's
Certificate of Incorporation so as to adversely affect the relative rights and
preferences of the Series A Preferred Stock; provided, however, that any such
amendment that
22
changes the dividend payable on, or Liquidation Preference of, the Series A
Preferred Stock shall require the affirmative vote of the Holder of each share
of Series A Preferred Stock at a meeting of such Holders called for such purpose
or the written consent of the Holder of each share of Series A Preferred Stock.
(b) In any case in which the Holders of Series A Preferred
Stock shall be entitled to vote, each Holder of Series A Preferred Stock shall
be entitled to one vote for each share of Series A Preferred Stock held unless
otherwise required by applicable law.
7. Conversion or Exchange. The Holders of Series A Preferred Stock
shall not have any rights hereunder to convert such shares into or exchange such
shares for shares of any other class or classes or of any other series of any
class or classes of Capital Stock of the Corporation.
8. Reissuance of Series A Preferred Stock. Shares of Series A
Preferred Stock which have been issued and reacquired in any manner, including
shares purchased, redeemed or exchanged, shall have the status of authorized and
unissued shares of Preferred Stock and may be reissued as part of a new series
of Preferred Stock to be created by resolution or resolutions of the Board of
Directors or as part of any other series of Preferred Stock, all subject to the
conditions or restrictions on issuance set forth in any resolution or
resolutions adopted by the Board of Directors providing for the issuance of any
series of Preferred Stock, it being understood that the Corporation may reissue
shares of Series A Preferred Stock which are reacquired by the Corporation from
a Holder who is, or was, an employee or director of the Corporation (or a
subsidiary of the Corporation) so long as such reissued shares of Series A
Preferred Stock are reissued to a person who is an employee or director of the
Corporation (or a subsidiary of the Corporation) at the time of such reissue.
B. Series B 13.5% Cumulative Compounding Preferred Stock.
1. Designation of Series, Number of Shares. The second series of
Preferred Stock shall be designated as Series B 13.5% Cumulative Compounding
Preferred Stock ("Series B Preferred Stock"), and the number of shares which
shall constitute such series shall be 1,500,000. The par value of Series B
Preferred Stock shall be $.00l per share.
2. Rank. With respect to dividend rights and rights on liquidation,
winding up and dissolution of the Corporation, Series B Preferred Stock shall
rank (a) senior to (i) all classes of Common Stock of the Corporation; (ii) the
Series C Preferred Stock; and (iii) each other class of capital stock or class
or series of preferred stock issued by the Corporation after the date hereof the
terms of which specifically provide that such class or series shall rank junior
to Series B Preferred Stock as to dividend distributions or distributions upon
the liquidation, winding up and dissolution of the Corporation (each of the
securities in clauses (i), (ii) and (iii) collectively referred to as "Series B
Junior Securities"), (b) on a parity with each other class of capital stock or
class or series of preferred stock issued by the Corporation after the date
hereof the terms of which do not specifically provide that they rank junior to
Series B Preferred Stock or senior to Series B Preferred Stock as to dividend
distributions or distributions upon
23
liquidation, winding up and dissolution of the Corporation (collectively
referred to as "Series B Parity Securities"), and (c) junior to (i) the Series A
Preferred Stock and (ii) each other class of capital stock or other class or
series of preferred stock issued by the Corporation after the date hereof the
terms of which specifically provide that such class or series shall rank senior
to Series B Preferred Stock as to dividend distributions or distributions upon
the liquidation, winding up and dissolution of the Corporation (collectively
referred to as "Series B Senior Securities").
3. Dividends.
(a) Each Holder of Series B Preferred Stock shall be
entitled to receive, when, as and if declared by the Board of Directors, out of
funds legally available therefor, cash dividends on each share of Series B
Preferred Stock at a rate per annum equal to 13.5% of the Liquidation Preference
of such share. All dividends shall be cumulative, whether or not earned or
declared, and shall accrue on a daily basis from the date of issuance of Series
B Preferred Stock, and shall be payable annually in arrears on each Dividend
Payment Date, commencing on the first Dividend Payment Date after the date of
issuance of such Series B Preferred Stock. Each dividend on Series B Preferred
Stock shall be payable to the Holders of record of Series B Preferred Stock as
they appear on the stock register of the Corporation on such record date as may
be fixed by the Board of Directors, which record date shall not be less than ten
nor more than 60 days prior to the applicable Dividend Payment Date. In the
event of the repurchase of any shares of Series B Preferred Stock, dividends
shall cease to accrue in respect of shares of Series B Preferred Stock on the
date of their repurchase by the Corporation unless the Corporation shall have
failed to pay the relevant repurchase price on the date fixed for repurchase.
Notwithstanding anything to the contrary set forth above, unless and until such
dividends are declared by the Board of Directors, there shall be no obligation
to pay such dividends in cash; provided, that such dividends shall continue to
cumulate and shall be paid at the time of repurchase, in the event of their
repurchase, as provided herein if not earlier declared and paid.
(b) All dividends paid with respect to shares of Series B
Preferred Stock pursuant to paragraph B(3)(a) shall be paid pro rata to the
Holders entitled thereto.
(c) Dividends on account of arrears for any past Dividend
Period may be declared and paid at any time, without reference to any regular
Dividend Payment Date, to the Holders of record on any date as may be fixed by
the Board of Directors, which date is not more than 30 days prior to the payment
of such dividends.
(d) No full dividends shall be declared by the Board of
Directors or paid or funds set apart for the payment of dividends or other
distributions on any Series B Parity Securities for any period, and no Series B
Parity Securities may be repurchased, redeemed or otherwise retired, nor may
funds be set apart for such payment, unless (i) full Accumulated Dividends have
been paid or set apart for such payment on the Series B Preferred Stock and
Series B Parity Securities for all Dividend Periods terminating on or prior to
the date of payment of such full dividends or distributions on, or such
repurchase or redemption of, such Series B
24
Parity Securities (the "Series B Parity Payment Date") and (ii) an amount equal
to a prorated dividend on the Series B Preferred Stock and Series B Parity
Securities at the customary dividend rates for such securities for the period
from the Dividend Payment Date immediately prior to the Series B Parity Payment
Date to the Series B Parity Payment Date have been paid or set apart for
payment. In the event that such dividends are not paid in full or set apart for
payment with respect to all outstanding shares of Series B Preferred Stock and
of any Series B Parity Securities and funds available for payment of dividends
shall be insufficient to permit payment in full to the holders of all such stock
of the full preferential amounts to which they are then entitled, then the
entire amount available for payment of dividends shall be distributed ratably
among all such holders of Series B Preferred Stock and of any Series B Parity
Securities in proportion to the full amount to which they would otherwise be
respectively entitled.
(e) The Holders of Series B Preferred Stock shall be
entitled to receive the dividends provided for in paragraph B(3)(a) hereof in
preference to and in priority over any dividends upon any of the Series B Junior
Securities, so that if at any time full Accumulated Dividends on all shares of
Series B Preferred Stock then outstanding have not been paid for all Dividend
Periods then elapsed and a prorated dividend on the Series B Preferred Stock at
the rate aforesaid from the Dividend Payment Date immediately preceding the
Series B Junior Payment Date (as defined below) to the Series B Junior Payment
Date have not been paid or set aside for payment, the amount of such unpaid
dividends shall be paid before any sum shall be set aside for or applied by the
Corporation to the purchase, redemption or other acquisition for value of any
shares of Series B Junior Securities (either pursuant to any applicable sinking
fund requirement or otherwise) or any dividend or other distribution shall be
paid or declared and set apart for payment on any Series B Junior Securities
(the date of any such actions to be referred to as the "Series B Junior Payment
Date"); provided, however, that the foregoing shall not (i) prohibit the
Corporation from repurchasing shares of Series B Junior Securities from a Holder
who is, or was, a director or employee of the Corporation (or an affiliate of
the Corporation) and (ii) prohibit the Corporation from making dividends, other
distributions, redemptions, repurchases or acquisitions in respect of Series B
Junior Securities payable in Series B Junior Securities and cash in lieu of
fractional shares of such Series B Junior Securities.
(f) Dividends payable on Series B Preferred Stock for any
period less than one year shall be computed on the basis of a 360-day year
consisting of twelve 30-day months and the actual number of days elapsed in the
period for which such dividends are payable.
(g) The Corporation shall nor claim any deduction from gross
income for dividends paid on Series B Preferred Stock in any Federal Income tax
return, claim for refund, or other statement, report or submission made to the
Internal Revenue Service, and shall make any election or take any similar action
to effectuate the foregoing except, in each case, if there shall be a change in
law such that the Corporation may claim such dividends as deductions from gross
income without affecting the ability of the Holders to claim the dividends
received deduction under Section 243(a)(l) of the Internal Revenue Code of 1986,
as amended (the "Code") (or any successor provision). At the reasonable request
of any Holder (and at the
25
expense of such Holder), the Corporation shall join in the submission to the
Internal Revenue Service of a request for a ruling that the dividends paid on
Series B Preferred Stock shall be eligible for the dividends received deduction
under Section 243(a)(l) of the Code (or any successor provision). In addition,
the Corporation shall cooperate with any Holder (at the expense of such Holder)
in any litigation, appeal or other proceeding relating to the eligibility for
the dividends received deduction under Section 243(a)(1) of the Code (or any
successor provision) of any dividends (within the meaning of Section 316(a) of
the Code or any successor provision) paid on Series B Preferred Stock. To the
extent possible, the principles of this paragraph B(3)(g) shall also apply with
respect to state and local income taxes.
4. Liquidation Preference.
(a) Upon any voluntary or involuntary liquidation,
dissolution or winding up of the Corporation, the Holders of all shares of
Series B Preferred Stock then outstanding shall be entitled to be paid out of
the assets of the Corporation available for distribution to its stockholders an
amount in cash equal to the Liquidation Preference per share, plus an amount
equal to a prorated dividend from the last Dividend Payment Date to the date
fixed for liquidation, dissolution or winding up, before any distribution is
made on any Series B Junior Securities. If upon any voluntary or involuntary
liquidation, dissolution or winding up of the Corporation, the application of
all amounts available for payments with respect to Series B Preferred Stock and
all other Series B Parity Securities would not result in payment in full of
Series B Preferred Stock and such other Series B Parity Securities, the Holders
of Series B Preferred Stock and holders of Series B Parity Securities shall
share equally and ratably in any distribution of assets of the Corporation in
proportion to the full Liquidation Preference to which each is entitled. After
payment in full pursuant to this paragraph B(4)(a), the Holders of Series B
Preferred Stock shall not be entitled to any further participation in any
distribution in the event of liquidation, dissolution or winding up of the
affairs of the Corporation.
(b) For the purposes of paragraph B(4)(a), neither the
voluntary sale, conveyance, exchange or transfer (for cash, shares of stock,
securities or other consideration) of all or substantially all of the property
or assets of the Corporation nor the consolidation, merger or other business
combination of the Corporation with one or more corporations shall be deemed to
be a voluntary or involuntary liquidation, dissolution or winding up of the
Corporation, unless such sale, conveyance, exchange or transfer is in connection
with a dissolution or winding up of the business of the Corporation; provided,
however, that any consolidation or merger of the Corporation in which the
Corporation is not the surviving entity shall be deemed to be a liquidation,
dissolution or winding up of the affairs of the Corporation within the meaning
of this paragraph B(4)(b) if, (i) in connection therewith, the holders of Common
Stock of the Corporation receive as consideration, whether in whole or in part,
for such Common Stock (1) cash, (2) notes, debentures or other evidences of
indebtedness or obligations to pay cash or (3) preferred stock of the surviving
entity (whether or not the surviving entity is the Corporation) which ranks on a
parity with or senior to the preferred stock received by holders of the Series B
Preferred Stock with respect to liquidation or dividends or (ii) the holders of
the Series B Preferred Stock do not receive preferred stock of the surviving
entity with rights, powers and
26
preferences equal to (or more favorable to the holders than) the rights, powers
and preferences of the Series B Preferred Stock.
5. Redemption. (a) The Company shall not have the right nor the
power to, and the Holders shall not have the right to require the Company to,
redeem any shares of Series B Preferred Stock. Notwithstanding the foregoing,
this paragraph B(5) shall not prohibit the Corporation from acquiring from any
Holder, with such Holder's consent, any shares of Series B Preferred Stock held
by such Holder.
(b) Subject to the proviso in paragraph B(3)(e), no sum
shall be set aside for or applied by the Corporation to the purchase,
redemption, or other acquisition for value of any shares of Series B Junior
Securities (either pursuant to any applicable sinking fund requirement or
otherwise) at any time when any shares of Series B Preferred Stock or any Series
B Parity Securities are outstanding unless, prior to the Corporation's setting
aside or applying such sum to the purchase, redemption, or other acquisition of
any shares of Series B Junior Securities, all shares of Series B Preferred Stock
and Series B Parity Securities shall have been purchased or otherwise acquired
for value by the Corporation (and the price in respect thereof paid or set aside
for payment).
6. Voting Rights.
(a) The Holders of Series B Preferred Stock shall not be
entitled or permitted to vote on any matter required or permitted to be voted
upon by the shareholders of the Corporation, except as otherwise required by
Delaware law or this Certificate of Designation and except that without the
written consent of the Holders of a majority of the outstanding shares of Series
B Preferred Stock or the vote of the Holders of a majority of the outstanding
shares of Series B Preferred Stock at a meeting of the Holders of Series B
Preferred Stock called for such purpose, the Corporation shall not (a) create,
authorize or issue any other class or series of stock entitled to a preference
prior to Series B Preferred Stock upon any dividend or distribution or any
liquidation, distribution of assets, dissolution or winding up of the
Corporation, or increase the authorized amount of any such other class or
series, or (b) amend, alter or repeal any provision of the Corporation's
Certificate of Incorporation so as to adversely affect the relative rights and
preferences of the Series B Preferred Stock; provided, however, that any such
amendment that changes the dividend payable on, or Liquidation Preference of,
the Series B Preferred Stock shall require the affirmative vote of the Holder of
each share of Series B Preferred Stock at a meeting of such Holders called for
such purpose or the written consent of the Holder of each share of Series B
Preferred Stock.
(b) In any case in which the Holders of Series B Preferred
Stock shall be entitled to vote, each Holder of Series B Preferred Stock shall
be entitled to one vote for each share of Series B Preferred Stock held unless
otherwise required by applicable law.
7. Conversion or Exchange. The Holders of Series B Preferred Stock
shall not have any rights hereunder to convert such shares into or exchange such
shares for shares of
27
any other class or classes or of any other series of any class or classes of
Capital Stock of the Corporation.
8. Reissuance of Series B Preferred Stock. Shares of Series B
Preferred Stock which have been issued and reacquired in any manner, including
shares purchased, redeemed or exchanged, shall have the status of authorized and
unissued shares of Preferred Stock and may be reissued as part of a new series
of Preferred Stock to be created by resolution or resolutions of the Board of
Directors or as part of any other series of Preferred Stock, all subject to the
conditions or restrictions on issuance set forth in any resolution or
resolutions adopted by thc Board of Directors providing for the issuance of any
series of Preferred Stock, it being understood that the Corporation may reissue
shares of Series B Preferred Stock which are reacquired by the Corporation from
a Holder who is, or was, an employee or director of the Corporation (or a
subsidiary of the Corporation) so long as such reissued shares of Series B
Preferred Stock are reissued to a person who is an employee or director of the
Corporation (or a subsidiary of the Corporation) at the time of such reissue.
C. Series C Preferred Stock.
1. Designation of Series, Number of Shares. The third series of
Preferred Stock shall be designated as Series C Preferred Stock ("Series C
Preferred Stock"), and the number of shares which shall constitute such series
shall be 1,000,000. The par value of Series C Preferred Stock shall be $.001 per
share.
2. Rank. With respect to dividend rights and rights on liquidation,
winding up and dissolution of the Corporation, Series C Preferred Stock shall
rank (a) senior to (i) all classes of Common Stock of the Corporation; and (ii)
each other class of capital stock or class or series of preferred stock issued
by the Corporation after the date hereof the terms of which specifically provide
that such class or series shall rank junior to Series C Preferred Stock as to
dividend distributions or distributions upon the liquidation, winding up and
dissolution of the Corporation (each of the securities in clauses (i) and (ii)
collectively referred to as "Series C Junior Securities"), (b) on a parity with
each other class of capital stock or class or series of preferred stock issued
by the Corporation after the date hereof the terms of which do not specifically
provide that they rank junior to Series C Preferred Stock or senior to Series C
Preferred Stock as to dividend distributions or distributions upon liquidation,
winding up and dissolution of the Corporation (collectively referred to as
"Series C Parity Securities"), and (c) junior to (i) the Series A Preferred
Stock, (ii) the Series B Preferred Stock and (iii) each other class of capital
stock or other class or series of preferred stock issued by the Corporation
after the date hereof the terms of which specifically provide that such class or
series shall rank senior to Series C Preferred Stock as to dividend
distributions or distributions upon the liquidation, winding up and dissolution
of the Corporation (collectively referred to as "Series C Senior Securities").
3. Dividends.
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(a) Each Holder of Series C Preferred Stock shall be
entitled to receive such dividends as may be declared from time to time by the
Board of Directors, out of funds legally available therefor. All dividends
declared with respect to shares of Series C Preferred Stock pursuant to this
paragraph C(3)(a) shall be paid pro rata to the Holders entitled thereto.
(b) The Holders of Series C Preferred Stock shall be
entitled to receive the dividends provided for in paragraph C(3)(a) hereof in
preference to and in priority over any dividends upon any of the Series C Junior
Securities, so that if at any time full Accumulated Dividends on shares of
Series C Preferred Stock then outstanding have been declared but not paid or set
aside for payment, the amount of such unpaid dividends shall be paid before any
sum shall be set aside for or applied by the Corporation to the purchase,
redemption or other acquisition for value of any shares of Series C Junior
Securities (either pursuant to any applicable sinking fund requirement or
otherwise) or any dividend or other distribution shall be paid or declared and
set apart for payment on any Series C Junior Securities (the date of any such
actions to be referred to as the "Series C Junior Payment Date"); provided,
however, that the foregoing shall not (i) prohibit the Corporation from
repurchasing shares of Series C Junior Securities from a Holder who is, or was,
a director or employee of the Corporation (or an affiliate of the Corporation)
and (ii) prohibit the Corporation from making dividends, other distributions,
redemptions, repurchases or acquisitions in respect of Series C Junior
Securities payable in Series C Junior Securities and cash in lieu of fractional
shares of such Series C Junior Securities.
(c) The Corporation shall not claim any deduction from gross
income for dividends paid on Series C Preferred Stock in any Federal Income tax
return, claim for refund, or other statement, report or submission made to the
Internal Revenue Service, and shall make any election or take any similar action
to effectuate the foregoing except, in each case, if there shall be a change in
law such that the Corporation may claim such dividends as deductions from gross
income without affecting the ability of the Holders to claim the dividends
received deduction under Section 243(a)(l) of the Internal Revenue Code of 1986,
as amended (the "Code") (or any successor provision). At the reasonable request
of any Holder (and at the expense of such Holder), the Corporation shall join in
the submission to the Internal Revenue Service of a request for a ruling that
the dividends paid on Series C Preferred Stock shall be eligible for the
dividends received deduction under Section 243(a)(l) of the Code (or any
successor provision). In addition, the Corporation shall cooperate with any
Holder (at the expense of such Holder) in any litigation, appeal or other
proceeding relating to the eligibility for the dividends received deduction
under Section 243(a)(1) of the Code (or any successor provision) of any
dividends (within the meaning of Section 316(a) of the Code or any successor
provision) paid on Series C Preferred Stock. To the extent possible, the
principles of this paragraph C(3)(c) shall also apply with respect to state and
local income taxes.
4. Liquidation Preference.
(a) Upon any voluntary or involuntary liquidation,
dissolution or winding up of the Corporation, the Holders of all shares of
Series C Preferred Stock then
29
outstanding shall be entitled to be paid out of the assets of the Corporation
available for distribution to its stockholders an amount in cash equal to the
Liquidation Preference per share, before any distribution is made on any Series
C Junior Securities. If upon any voluntary or involuntary liquidation,
dissolution or winding up of the Corporation, the application of all amounts
available for payments with respect to Series C Preferred Stock and all other
Series C Parity Securities would not result in payment in full of Series C
Preferred Stock and such other Series C Parity Securities, the Holders of Series
C Preferred Stock and holders of Series C Parity Securities shall share equally
and ratably in any distribution of assets of the Corporation in proportion to
the full Liquidation Preference to which each is entitled. After payment in full
pursuant to this paragraph C(4)(a), the Holders of Series C Preferred Stock
shall not be entitled to any further participation in any distribution in the
event of liquidation, dissolution or winding up of the affairs of the
Corporation.
(b) For the purposes of paragraph C(4)(a), neither the
voluntary sale, conveyance, exchange or transfer (for cash, shares of stock,
securities or other consideration) of all or substantially all of the property
or assets of the Corporation nor the consolidation, merger or other business
combination of the Corporation with one or more corporations shall be deemed to
be a voluntary or involuntary liquidation, dissolution or winding up of the
Corporation, unless such sale, conveyance, exchange or transfer is in connection
with a dissolution or winding up of the business of the Corporation; provided,
however, that any consolidation or merger of the Corporation in which the
Corporation is not the surviving entity shall be deemed to be a liquidation,
dissolution or winding up of the affairs of the Corporation within the meaning
of this paragraph C(4)(b) if, (i) in connection therewith, the holders of Common
Stock of the Corporation receive as consideration, whether in whole or in part,
for such Common Stock (1) cash, (2) notes, debentures or other evidences of
indebtedness or obligations to pay cash or (3) preferred stock of the surviving
entity (whether or not the surviving entity is the Corporation) which ranks on a
parity with or senior to the preferred stock received by holders of the Series C
Preferred Stock with respect to liquidation or dividends or (ii) the holders of
the Series C Preferred Stock do not receive preferred stock of the surviving
entity with rights, powers and preferences equal to (or more favorable to the
holders than) the rights, powers and preferences of the Series C Preferred
Stock.
5. Redemption. The Company shall not have the right nor the power
to, and the Holders shall not have the right to require the Company to, redeem
any shares of Series C Preferred Stock. Notwithstanding the foregoing, this
Paragraph C(5) shall not prohibit the Corporation from acquiring from any
Holder, with such Holder's consent, any shares of Series C Preferred Stock held
by such Holder.
6. Voting Rights.
(a) The Holders of Series C Preferred Stock shall not be
entitled or permitted to vote on any matter required or permitted to be voted
upon by the shareholders of the Corporation, except as otherwise required by
Delaware law or this Certificate of Designation and except that without the
written consent of the Holders of a majority of the outstanding shares of
30
Series C Preferred Stock or the vote of the Holders of a majority of the
outstanding shares of Series C Preferred Stock at a meeting of the Holders of
Series C Preferred Stock called for such purpose, the Corporation shall not (a)
create, authorize or issue any other class or series of stock entitled to a
preference prior to Series C Preferred Stock upon any dividend or distribution
or any liquidation, distribution of assets, dissolution or winding up of the
Corporation, or increase the authorized amount of any such other class or
series, or (b) amend, alter or repeal any provision of the Corporation's
Certificate of Incorporation so as to adversely affect the relative rights and
preferences of the Series C Preferred Stock; provided, however, that any such
amendment that changes the dividend payable on, or Liquidation Preference of,
the Series C Preferred Stock shall require the affirmative vote of the Holder of
each share of Series C Preferred Stock at a meeting of such Holders called for
such purpose or the written consent of the Holder of each share of Series C
Preferred Stock.
(b) In any case in which the Holders of Series C Preferred
Stock shall be entitled to vote, each Holder of Series C Preferred Stock shall
be entitled to one vote for each share of Series C Preferred Stock held unless
otherwise required by applicable law.
7. Conversion or Exchange. Except as otherwise set forth in the
Agreement and Plan of Merger between the Corporation and Manhattan Acquisition
Corp., dated as of November 15, 2000, as amended as of January , 2001, the
Holders of Series C Preferred Stock shall not have any rights hereunder to
convert such shares into or exchange such shares for shares of any other class
or classes or of any other series of any class or classes of Capital Stock of
the Corporation.
8. Reissuance of Series C Preferred Stock. Shares of Series C
Preferred Stock which have been issued and reacquired in any manner, including
shares purchased, redeemed or exchanged, shall have the status of authorized and
unissued shares of Preferred Stock and may be reissued as part of a new series
of Preferred Stock to be created by resolution or resolutions of the Board of
Directors or as part of any other series of Preferred Stock, all subject to the
conditions or restrictions on issuance set forth in any resolution or
resolutions adopted by thc Board of Directors providing for the issuance of any
series of Preferred Stock, it being understood that the Corporation may reissue
shares of Series C Preferred Stock which are reacquired by the Corporation from
a Holder who is, or was, an employee or director of the Corporation (or a
subsidiary of the Corporation) so long as such reissued shares of Series C
Preferred Stock are reissued to a person who is an employee or director of the
Corporation (or a subsidiary of the Corporation) at the time of such reissue.
D. Certain Additional Provisions.
1. Business Day. If any payment shall be required by the terms
hereof to be made on a day that is not a Business Day, such payment shall be
made on the immediately succeeding Business Day.
2. Reports. So long as any shares of Preferred Stock remain
outstanding, the Corporation shall send to the Holders of such Preferred Stock
at their addresses as set forth on
31
the stock register of the Corporation all quarterly and annual reports sent to
holders of Common Stock of the Corporation.
3. Method of Payment. Preferred Stock shall be payable as to
Liquidation Preference, dividends, redemption payments, cash in lieu of
fractional shares or other payments at the office of the Corporation maintained
for such purpose or, at the option of the Corporation, payment of dividends may
be made by check mailed to the Holders at their addresses set forth in the stock
register of the Corporation.
4. Prohibitions and Restrictions Imposed by Senior Securities and
Indebtedness. To the extent that any action required to be taken by the
Corporation under this Certificate of Designation shall be prohibited or
restricted by the terms of Series A Senior Securities, Series B Senior
Securities, Series C Senior Securities or any contract or instrument to which
the Corporation is a party in respect of the incurrence of indebtedness, such
Corporation's actions shall be delayed until such time as such prohibition or
restriction is no longer in force.
5. Reservation of Right. The Board of Directors of the Corporation
reserves the right by subsequent amendment of this resolution from time to time
to increase or decrease the number of shares which constitute the Preferred
Stock (but not below the number of shares thereof then outstanding) and in other
respects to amend this resolution within the limitations provided by law, this
resolution and the Certificate of Incorporation of the Corporation.
E. Definitions. As used in this Certificate of Designation, the
following terms shall have the following meanings (with terms defined in the
singular having comparable meanings when used in the plural and vice versa),
unless the context otherwise requires:
"Accumulated Dividends" means (i) with respect to any share of
Series A Preferred Stock, the dividends that have accrued on such share as of
such specific date for Dividend Periods ending on or prior to such date and that
have not previously been paid in cash, (ii) with respect to any share of Series
B Preferred Stock, the dividends that have accrued on such share as of such
specific date for Dividend Periods ending on or prior to such date and that have
not previously been paid in cash, (iii) with respect to any share of Series C
Preferred Stock, the dividends that have been declared on such share as of such
specific date and that have not previously been paid in cash and (iv) with
respect to any Parity Security, the dividends that have accrued and are due on
such security as of such specific date.
"Annual Dividend Period" means the annual period commencing on each
_______ and ending on the following Dividend Payment Date, respectively.
"Business Day" means any day except a Saturday, Sunday or other day
on which commercial banking institutions in New York City are authorized by law
or executive order to close.
32
"Capital Stock" means any and all shares, interests,
participations, rights, or other equivalents (however designated) of corporate
stock including, without limitation, partnership interests.
"Dividend Payment Date" means ________ of each year.
"Dividend Period" means the Initial Dividend Period and,
thereafter, each Annual Dividend Period.
"Holder" means a holder of shares of Preferred Stock.
"Initial Dividend Period" means the dividend period commencing on
the Issue Date and ending on the first Dividend Payment Date to occur
thereafter.
"Issue Date" means (i) with respect to the Series A Preferred
Stock, the date on which shares of Series A Preferred Stock are first issued by
the Corporation, and (ii) with respect to the Series B Preferred Stock, the date
on which shares of Series B Preferred Stock are first issued by the Corporation.
"Liquidation Preference" means, on any specific date, with respect
to any share of Preferred Stock, the sum of (i) $14.00 per share plus (ii) the
Accumulated Dividends with respect to such share.
"Person" means any individual, corporation, partnership, joint
venture, incorporated or unincorporated association, joint-stock company, trust,
unincorporated organization or government or other agency or political
subdivision thereof or any other entity of any kind.
"Preferred Stock" means Series A Preferred Stock, Series B
Preferred Stock and Series C Preferred Stock.
"Series A Junior Payment Date" has the meaning given to such term
in A(3)(e).
"Series A Junior Securities" has the meaning given to such term in
paragraph A(2).
"Series A Parity Payment Date" has the meaning given to such term
in A(3)(d).
"Series A Parity Securities" has the meaning given to such term in
paragraph A(2).
"Series A Preferred Stock" has the meaning given to such term in
paragraph A(1).
"Series A Senior Securities" has the meaning given to such term in
paragraph A(2).
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"Series B Junior Payment Date" has the meaning given to such term
in B(3)(e).
"Series B Junior Securities" has the meaning given to such term in
paragraph B(2).
"Series B Parity Payment Date" has the meaning given to such term
in paragraph B(3)(d).
"Series B Parity Securities" has the meaning given to such term in
paragraph B(2).
"Series B Preferred Stock" has the meaning given to such term in
paragraph B(1).
"Series B Senior Securities" has the meaning given to such term in
paragraph B(2).
"Series C Junior Securities" has the meaning given to such term in
paragraph C(2).
"Series C Parity Securities" has the meaning given to such term in
paragraph C(2).
"Series C Preferred Stock" has the meaning given to such term in
paragraph C(1).
"Series C Senior Securities" has the meaning given to such term in
paragraph C(2).
34
IN WITNESS WHEREOF, Il Fornaio (America) Corporation. has caused
this Certificate of Designation, Preferences and Rights of Series A 13.0%
Cumulative Compounding Preferred Stock, Series B 13.5% Cumulative Compounding
Preferred Stock and Series C Preferred Stock to be duly executed by its
President this ___ day of ___________, 2001.
By
-----------------------------------
Xxxxxxx X. Xxxxxx
President
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SCHEDULE VII
Terms of Securities Holders and Registration Rights Agreements
Restrictions on Transfer: Except for Permitted Transfers, securities of
the Surviving Corporation may not be transferred
(including by assignment, pledge, hypothecation,
by operation of law, proxy or voting agreement
or similar arrangement) without the prior
written consent of the holders of 50% of the
then outstanding Common Stock of the Surviving
Corporation (the "Requisite Holders").
Permitted Transfers: Permitted Transfers will include (i) sales
pursuant to an Approved Sale, (ii) sales
pursuant to the exercise of Tag-Along Rights,
(iii) sales or other transfers to affiliated
individuals or entities (in respect of
stockholders who are entities) or for estate
planning purposes or (iv) pursuant to exercise
of registration rights or, following an Initial
Public Offering, sales under Rule 144 under the
Securities Act.
Approved Sale: In the event the Requisite Holders approve the
sale of the Company, each holder of securities
of the Surviving Corporation will consent to and
cooperate with the sale and, if such sale is
structured as a sale of stock, will sell its
shares of stock and other equity securities on
the terms approved by the Requisite Holders.
Tag Along Rights: Subject to
customary exceptions, BRS will
not sell any shares of Common
Stock without offering other
stockholders of the Surviving
Corporation the opportunity to
sell shares on a pro rata basis
and on equal terms.
Voting Agreement: Each holder of securities will agree to vote all
shares of voting capital stock or other voting
securities so as to maintain a board of
directors of
36
the Surviving Corporation (and any subsidiaries)
having a majority of directors designated by BRS.
Vesting: Shares of Preferred or Common Stock (and/or
options to purchase such shares or other
securities) granted to employee investors (not
to include any shares or options purchased under
Section 1.1 of this Agreement) will be subject
to vesting restrictions to include, in the case
of restricted shares, a purchase option in favor
of the Surviving Corporation in the event of
termination of the investor's employment at a
price equal to the investor's original cost (or,
if lower, fair market value (determined by the
Surviving Corporation in good faith)) with
respect to unvested shares.
Management Buy-Back: The Surviving Corporation will have the option
to purchase any vested securities of an employee
investor following termination of employment for
a fair market value price (determined by the
Surviving Corporation in good faith, it being
understood that any such valuation will be
without any discount based on minority
ownership).
Right of First Refusal: The Surviving Corporation will have a right of
first refusal on any transfer of securities by
an employee investor, except for Permitted
Transfers.
Initial Public Offering: An Initial Public Offering will be defined as an
underwritten public offering of shares of Common
Stock by the Surviving Corporation (other than
an offering to employees or existing investors
or in connection with any acquisition or
business combination, or an offering of a
combination of debt and equity securities where
the aggregate consideration received by the
Surviving Corporation in respect of such equity
securities does not exceed 20% of the aggregate
consideration received by the Surviving
Corporation in such offering) where the
Surviving Corporation receives aggregate net
proceeds of not less than $30,000,000.
37
Demand Registration Rights: BRS will have demand registration rights.
Piggy-Back Registration Rights: Following an Initial Public Offering, all
Investors will have piggyback registration
rights having equal priority in the event of a
cutback by the managing underwriter (except that
if the managing underwriter determines such a
cutback is reasonably required for the success
of the offering, shares of employee investors
will be cutback before shares of other
investors).
Lock-Up: In the event of any public offering by the
Surviving Corporation, no investor will sell or
otherwise transfer (including by pledge, short
sale or other hedging transaction) any equity
securities for a period of 180 days or such
shorter period as is agreed to by the
underwriter for such offering.
Modifications for Financing: The foregoing shareholder arrangements may be
modified at the Company's discretion in
connection with any debt financing incurred by
the Company, including to provide for redemption
rights in respect of warrants issued to
lenders. It is understood that some of the
above provisions may not apply to equity
securities issued to the Company's lenders.
