Exhibit 1
PREFERRED STOCK PURCHASE AGREEMENT
between
Benihana Inc.
and
BFC FINANCIAL CORPORATION
June 8, 2004
TABLE OF CONTENTS
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1. PURCHASE AND SALE OF PREFERRED SHARES....................................................................1
(a) Serial Purchases of Preferred Shares..............................................................1
(b) (i) Initial Funding.............................................................................1
(ii) Additional Fundings.........................................................................1
(c) Form of Payment...................................................................................2
(d) Stand By Fee......................................................................................2
2. PURCHASER'S REPRESENTATIONS AND WARRANTIES...............................................................2
(a) Investment Purpose................................................................................2
(b) Accredited Investor Status........................................................................2
(c) Reliance on Exemptions............................................................................2
(d) Information.......................................................................................3
(e) No Governmental Review............................................................................3
(f) Transfer or Resale................................................................................3
(g) Legends...........................................................................................3
(h) Organization and Qualification....................................................................3
(i) Authorization; Enforcement; Validity..............................................................3
(j) Residency.........................................................................................3
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY............................................................4
(a) Organization and Qualification....................................................................4
(b) Authorization; Enforcement; Validity..............................................................4
(c) Capitalization....................................................................................4
(d) Issuance of Securities............................................................................5
(e) No Conflicts......................................................................................5
(f) Compliance with Laws, Regulations.................................................................6
(g) SEC Documents; Financial Statements...............................................................6
(h) Absence of Certain Changes .......................................................................7
(i) Absence of Litigation.............................................................................7
(j) Insurance.........................................................................................7
(k) Patents and Other Proprietary Rights..............................................................7
(l) Labor Relations...................................................................................8
(m) Employee Benefits.................................................................................8
(n) Taxes.............................................................................................8
(o) Environmental Matters.............................................................................8
(p) No General Solicitation...........................................................................8
(q) No Integrated Offering............................................................................9
(r) Application of Takeover Protections...............................................................9
(s) Investment Company................................................................................9
(t) No Market Manipulation............................................................................9
(u) Full Disclosure...................................................................................9
4. COVENANTS................................................................................................9
(a) Operate in Ordinary Course........................................................................9
(b) Form D and Blue Sky...............................................................................9
(c) Reporting Status.................................................................................10
(d) Use of Proceeds..................................................................................10
(e) Financial Information............................................................................10
(f) Reservation of Shares............................................................................10
(g) Listing..........................................................................................10
(h) Access to Records................................................................................10
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(i) Board of Director Resolutions....................................................................10
(j) Deferral of Right to Elect Additional Director...................................................10
(k) Right to Purchase Securities.....................................................................11
(l) Certificate of Designations......................................................................12
(m) Consents and Approvals...........................................................................12
5. CONDITIONS TO THE COMPANY'S OBLIGATIONS.................................................................12
(a) Conditions to the Company's Obligations at the First Funding.....................................12
(b) Conditions to Company's Obligations at Additional Fundings.......................................12
6. CONDITIONS TO PURCHASER'S OBLIGATION TO PURCHASE........................................................13
(a) Conditions to Purchaser's Obligations at First Funding...........................................13
(b) Conditions to the Purchaser's Obligations at Additional Fundings.................................14
7. TERMINATION.............................................................................................15
(a) Termination......................................................................................15
(b) Effect of Termination............................................................................15
8. GOVERNING LAW; MISCELLANEOUS............................................................................16
(a) Governing Law; Jurisdiction; Jury Trial..........................................................16
(b) Counterparts.....................................................................................16
(c) Headings.........................................................................................16
(d) Severability.....................................................................................16
(e) Entire Agreement; Amendments.....................................................................16
(f) Notices..........................................................................................16
(g) Successors and Assigns...........................................................................17
(h) No Third Party Beneficiaries.....................................................................17
(i) Survival; Indemnification........................................................................17
(j) Publicity........................................................................................18
(k) Further Assurances...............................................................................18
(l) Placement Agent..................................................................................18
(m) Form, Registration, Transfer and Exchange of Preferred Stock;
Lost Preferred Stock.............................................................................18
(n) Definitions......................................................................................19
EXHIBITS:
Exhibit A Form of Certificate of Designations, Preferences and Rights
of the Series B Convertible Preferred Stock
Exhibit B Form of Registration Rights Agreement
ii
PREFERRED STOCK PURCHASE AGREEMENT
PREFERRED STOCK PURCHASE AGREEMENT (the "Agreement"), dated as of June
8, 2004, by and between Benihana Inc., a Delaware corporation, with headquarters
located at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ (the "Company"),
and BFC Financial Corporation with headquarters located at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ ("Purchaser").
RECITALS
The Board of Directors of the Company has approved the creation of a
series of the Company's preferred stock, par value $1.00 per share, denominated
as the Company's Series B Convertible Preferred Stock (the "Series B Preferred
Stock"), which shall be convertible into shares of the Company's Common Stock,
par value $0.10 per share (the "Common Stock"), in accordance with the terms of
the Company's Certificate of Designations, Preferences and Rights of Series B
Convertible Preferred Stock, substantially in the form attached hereto as
Exhibit A (the "Certificate of Designations").
Subject to the terms and conditions set forth in this Agreement, the
Purchaser agrees to purchase from the Company and the Company agrees to sell to
the Purchaser, an aggregate of 800,000 shares of the Series B Preferred Stock
(the "Preferred Shares"), at a purchase price per share of $25 (the "Purchase
Price"). All of the shares of Common Stock which are issuable upon conversion of
the Preferred Shares or PIK Shares (as defined herein) are referred to herein as
the "Conversion Shares." The Preferred Shares, the Conversion Shares, and,
unless the context otherwise requires, all Common Stock and Preferred Stock, as
applicable, issuable by the Company under the provisions of Section 1(d) of this
Agreement or under the Certificate of Designations, are hereinafter sometimes
referred to collectively as the "Securities". The shares of Preferred Stock
issuable b the Company under Section 4 of the Certificate of Designations are
hereinafter referred to as the "PIK Shares."
The Company is issuing the Preferred Shares in reliance upon the
exemption from securities registration afforded by Section 4(2) of the
Securities Act of 1933, as amended (the "Securities Act").
NOW THEREFORE, the Company and the Purchaser hereby agree as follows:
1. PURCHASE AND SALE OF PREFERRED SHARES.
(a) SERIAL PURCHASES OF PREFERRED SHARES. Subject to the terms and
conditions of this Agreement, the Company shall issue and sell to Purchaser, and
Purchaser shall purchase from the Company, from time to time in accordance with
the provisions of Section 1(b) below, and at a purchase price per share equal to
the Purchase Price, an aggregate of 800,000 Preferred Shares.
(b) (i) INITIAL FUNDING. The purchase and sale of the first 400,000
Preferred Shares (the "First Funding") shall take place at the offices of the
Company at 10:00 am, Eastern Time, on July 6, 2004 (the "First Funding Closing")
or at such other time and place as may be mutually agreed to by the parties.
(ii) ADDITIONAL FUNDINGS. The purchase and sale of the
remaining 400,000 Preferred Shares (each such purchase being referred to herein
as an "Additional Funding") shall take place at the offices of the Company at
10:00 a.m., Eastern Time, on the date so specified by the Company in its Funding
Notice (as hereinafter defined) (provided that if such date is not a Business
Day, the closing shall take place on the next Business Day thereafter), subject
to the satisfaction (or waiver) of the conditions applicable to each Additional
Funding as set forth in Sections 5 and 6 below. The Company shall specify the
date of each Additional Funding and the number of Preferred Shares to be
purchased or sold thereat,
on not less than ninety (90) days prior written notice to the other party (each
a "Funding Notice"); provided, however, that no Additional Funding shall occur
prior to the first, or later than the third anniversary of the date hereof
(provided, however, that a purchase and funding can occur after the third
anniversary if a Funding Notice is duly given prior to the third anniversary);
and provided, further, that no fewer than 100,000 Preferred Shares may be sold
at any Additional Funding (unless the number of Preferred Shares sold thereat
constitutes all of the remaining Preferred Shares required to be sold pursuant
to the terms of this Agreement); and provided, further, that in the event that
the Company shall fail to give Funding Notices with respect to all of the
400,000 Preferred Shares remaining for sale hereunder on or prior to the third
anniversary of the date hereof, the Purchaser may elect to purchase such
remaining Preferred Shares by providing notice of such election to the Company
within ten (10) days after the third anniversary of the date hereof (and such
notice shall also set forth the date of the closing of such purchase, which
shall be a Business Day within ninety (90) days of such third anniversary).
(c) FORM OF PAYMENT. At the First Funding Closing and at the closing of
each Additional Funding (each, an "Additional Funding Closing"), (i) Purchaser
shall pay the Purchase Price to the Company for the number of Preferred Shares
being purchased by wire transfer of immediately available funds in accordance
with the Company's written wire instructions (to be delivered not less than two
(2) Business Days prior to such closing), and (ii) the Company shall deliver to
Purchaser stock certificates (in such denominations as Purchaser shall request)
(the "Preferred Stock Certificates") representing such number of the Preferred
Shares which Purchaser is then purchasing hereunder, duly executed on behalf of
the Company and registered in the name of Purchaser or its designee, together
with any accrued and unpaid stand by fee payable with respect to the Preferred
Shares being purchased pursuant to Section 1(d) below.
(d) STAND BY FEE. The Company shall pay to the Purchaser a stand by fee
at the rate of $0.25 per share per year for each of the additional 400,000
Preferred Shares to be sold pursuant to this Agreement which shall accrue from
the date hereof until each such share is issued and sold in accordance with the
terms of this Agreement. The stand by fee shall be payable on the last day of
each calendar quarter commencing with the calendar quarter ending on September
30, 2004 (with any accrued and unpaid stand-by fee payable with respect to the
shares sold at any Additional Funding to be paid at the applicable Additional
Funding Closing). At the option of the Company, the stand by fee may be paid in
cash or in Common Stock having an equivalent market value. For these purposes,
the market value of any Common Stock issued in payment of the stand by fee shall
be its VWAP (as such term is defined in the Certificate of Designations) for the
thirty (30) day period immediately preceding the date of payment.
2. PURCHASER'S REPRESENTATIONS AND WARRANTIES.
Purchaser represents and warrants that:
(a) INVESTMENT PURPOSE. All of the Securities acquired or to be
acquired by it hereunder have been or will be acquired for its own account and
not with a view towards, or for resale in connection with, the distribution
thereof, except for sales registered or exempted under the Securities Act.
(b) ACCREDITED INVESTOR STATUS. Purchaser is an "accredited investor"
as that term is defined in Rule 501(a) of Regulation D promulgated under the
Securities Act.
(c) RELIANCE ON EXEMPTIONS. Purchaser understands that the Securities
are being offered and sold to it in reliance on specific exemptions from the
registration requirements of the United States federal and state securities laws
and that the Company is relying in part upon the truth and accuracy of, and
Purchaser's compliance with, the representations, warranties, agreements,
acknowledgments and understandings of Purchaser set forth herein in order to
determine the availability of such exemptions and the eligibility of Purchaser
to acquire the Securities.
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(d) INFORMATION. Purchaser and its advisors, if any, have been
furnished with all materials relating to the business, finances and operations
of the Company and materials relating to the offer and sale of the Securities
which have been requested by Purchaser. Purchaser and its advisors, if any, have
been afforded the opportunity to ask questions of the Company. Purchaser
understands that its investment in the Securities involves a high degree of
risk. Purchaser has sought such accounting, legal and tax advice as it has
considered necessary to make an informed investment decision with respect to its
acquisition of the Securities.
(e) NO GOVERNMENTAL REVIEW. Purchaser understands that no court,
administrative agency or commission or other governmental or quasi-governmental
authority or instrumentality, domestic or foreign, Federal, state, county or
local (each a "Governmental Entity") has passed on or made any recommendation or
endorsement of the Securities or the fairness or suitability of the investment
in the Securities nor have such authorities passed upon or endorsed the merits
of the offering of the Securities.
(f) TRANSFER OR RESALE. Purchaser understands that except as provided
in the Registration Rights Agreement: (i) the sale of the Securities has not
been and will not be registered under the Securities Act or any state securities
laws, and that the Securities may not be offered for sale, sold, assigned or
transferred unless (A) subsequently registered thereunder, (B) the Purchaser
shall have delivered to the Company an opinion of counsel (or such other
evidence reasonably acceptable to the Company), in a generally acceptable form,
to the effect that such Securities to be sold, assigned or transferred may be
sold, assigned or transferred pursuant to an exemption from such registration,
or (C) the Purchaser provides the Company with reasonable assurance that such
Securities can be sold, assigned or transferred pursuant to Rule 144 or Rule
144A promulgated under the Securities Act, as amended (or a successor rule
thereto) (collectively, "Rule 144"); and (ii) neither the Company nor any other
person is under any obligation to register the Securities under the Securities
Act or any state securities laws or to comply with the terms and conditions of
any exemption thereunder.
(g) LEGENDS. Purchaser understands that all stock certificates
representing the Securities shall bear a restrictive legend in substantially the
following form (in addition to any legend required under applicable state
securities laws):
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES
LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED
(I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES
LAWS OR (B) AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS UNDER SAID ACT OR
(II) UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID ACT.
The legend set forth above shall be removed and the Company shall issue
a certificate without such legend to the holder of the Securities upon which it
is stamped, if, unless otherwise required by state securities laws, (i) such
Securities are registered for resale under the Securities Act, (ii) in
connection with a sale transaction, such holder provides the Company with an
opinion of counsel, in a generally acceptable form, to the effect that a public
sale, assignment or transfer of the Securities may be made without registration
under the Securities Act, or (iii) such holder provides the Company with
reasonable assurances that the Securities can be sold pursuant to Rule 144
without any restriction as to the number of securities acquired as of a
particular date that can then be immediately sold.
(h) ORGANIZATION AND QUALIFICATION. The Purchaser is a corporation duly
organized and validly existing in good standing under the laws of the
jurisdiction in which it is incorporated or formed, and has the requisite
corporate power and authorization to own its properties and to carry on its
business as now being conducted.
(i) AUTHORIZATION; ENFORCEMENT; VALIDITY. The Purchaser has the
requisite corporate power and authority to enter into and perform its
obligations under this Agreement and the Registration Rights Agreement (as
hereinafter defined) (collectively, the " Transaction Documents"). The execution
and
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delivery of the Transaction Documents by the Purchaser and the consummation by
it of the transactions contemplated hereby and thereby, including, without
limitation, the purchase of the Preferred Shares, have been duly authorized by
the Purchaser's Board of Directors and no further consent or authorization is
required by the Purchaser, its Board of Directors or its stockholders. This
Agreement has been, and upon its execution and delivery, the Registration Rights
Agreement will be, duly executed and delivered by the Purchaser, and (subject to
the due execution and delivery thereof by the Company) constitute the valid and
binding obligations of the Purchaser enforceable against it in accordance with
their terms.
(j) RESIDENCY. Purchaser has its principal executive offices located in
the State of Florida.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to the Purchaser as follows in this
Section 3:
(a) ORGANIZATION AND QUALIFICATION. The Company and its "Subsidiaries"
(which for purposes of this Agreement means any Person in which the Company,
directly or indirectly, owns securities representing fifty percent (50%) or more
of the outstanding voting power of all voting securities of such Person) are
corporations, limited partnerships, or limited liability companies duly
organized and validly existing in good standing under the laws of the
jurisdiction in which they are incorporated or formed, as applicable, and have
the requisite corporate, limited partnership, or limited liability company power
and authorization to own their respective properties and to carry on their
respective business as now being conducted. Each of the Company and its
Subsidiaries is duly qualified to do business and is in good standing in every
jurisdiction in which its ownership of property or the nature of the business
conducted by it makes such qualification necessary, except to the extent that
the failure to be so qualified or be in good standing would not have a Material
Adverse Effect. As used in this Agreement, "Material Adverse Effect" means any
material adverse effect on the business, properties, assets, operations,
prospects, results of operations or financial condition of the Company and its
Subsidiaries taken as a whole, or on the authority or ability of the Company to
perform its obligations under the Transaction Documents (as hereinafter defined)
or the Certificate of Designations.
(b) AUTHORIZATION; ENFORCEMENT; VALIDITY. The Company has the requisite
corporate power and authority to enter into and perform its obligations under
the Transaction Documents, to execute and file the Certificate of Designations,
and to issue the Securities in accordance with the terms hereof and thereof. The
execution and delivery of the Transaction Documents by the Company and the
execution and filing of the Certificate of Designations by the Company and the
consummation by it of the transactions contemplated hereby and thereby,
including, without limitation, the issuance of the Preferred Shares and the
reservation for issuance and the issuance of all Conversion Shares, have been
duly authorized by the Company's Board of Directors and except as otherwise
expressly provided herein, no further consent or authorization is required by
the Company, its Board of Directors or its stockholders. Additionally, the
issuance of the PIK Shares and any shares of Common Stock issuable under this
Agreement does not and will not require the approval of the Company's
stockholders. This Agreement has been, and upon its due execution and delivery
the Registration Rights Agreement will be, duly executed and delivered by the
Company, and (subject to the due execution and delivery thereof by the
Purchaser) constitute the valid and binding obligations of the Company
enforceable against the Company in accordance with their terms. The Certificate
of Designations will be filed with the Secretary of State of the State of
Delaware prior to the First Funding Closing and will be in full force and effect
on the First Funding Closing, enforceable against the Company in accordance with
its terms.
(c) CAPITALIZATION.
(i) The authorized capital stock of the Company consists of
(A) 12,000,000 shares of Common Stock, 20,000,000 shares of Class A Common
Stock, and 5,000,000 shares of Preferred Stock of which 40,000 shares have been
designated Series A-1 Junior Participating Preferred Stock and 30,000 shares
have been designated as Series A-2 Junior Participating Preferred Stock) and as
of the close of business on June 7, 2004, 3,018,979 shares of Common Stock are
issued and outstanding and 23,575
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shares thereof are reserved for issuance under the Company's equity compensation
plans and upon the exercise or conversion of outstanding warrants, options or
other convertible securities or pursuant to other contractual obligations of the
Company; 6,134,225 shares of Class A Common Stock are issued and outstanding and
2,754,925 shares thereof are reserved for issuance under the Company's equity
compensation plans and upon the exercise or conversion of outstanding warrants,
options or other convertible securities or pursuant to other contractual
obligations of the Company; and no shares of Preferred Stock are issued and
outstanding. All of the shares of the Company's capital stock that are issued
and outstanding or reserved for issuance have been, or upon issuance in
accordance with the terms of the instruments pursuant to which they may be
issued, will be, validly issued and fully paid and non-assessable and were or
will be offered, sold and issued in compliance with all applicable federal and
state securities laws.
(ii) No shares of the Company's capital stock are subject or
entitled to preemptive rights or any other similar rights except to the extent
provided in this Agreement. Except as set forth herein or otherwise disclosed in
Section 3(c)(i) above, or as provided in this Agreement, there are (A) no
outstanding options, warrants, scrip, rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities or rights
convertible into or exercisable for, any shares of capital stock of the Company
or any of its Subsidiaries, or contracts, commitments, understandings or
arrangements by which the Company or any of its Subsidiaries is or may become
bound to issue additional shares of capital stock of the Company or any of its
Subsidiaries or options, warrants, scrip, rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities or rights
convertible into or exercisable for, any shares of capital stock of the Company
or any of its Subsidiaries; (B) no outstanding securities or instruments of the
Company or any of its Subsidiaries which contain any redemption or similar
provisions, and there are no contracts, commitments, understandings or
arrangements by which the Company or any of its Subsidiaries is or may become
bound to redeem a security of the Company or any of its Subsidiaries; (C) there
are no securities or instruments containing anti-dilution or similar provisions
that will be triggered by the issuance of the Securities as described in this
Agreement; and (D) no stock option, stock appreciation rights or "phantom stock"
plans or agreements or any similar plan or agreement of the Company.
(iii) The Company has furnished or made available to Purchaser
true and correct copies of the Company's Certificate of Incorporation, as
amended and as in effect on the date hereof (the "Certificate of
Incorporation"), and the Company's Amended and Restated Bylaws, as amended and
as in effect on the date hereof (the "Bylaws").
(d) ISSUANCE OF SECURITIES. The Securities have been duly authorized
and, upon issuance in accordance with the terms hereof (or in the case of the
Conversion Shares and the PIK Shares, in accordance with the terms of the
Certificate of Designations), will be validly issued, fully paid and
non-assessable and will be free of any liens, claims, charges or encumbrances
and not subject to any preemptive rights. Subject only to the accuracy of the
representations set forth in Section 2, the issuance by the Company of the
Securities is exempt from registration under the Securities Act and all
applicable state securities laws.
(e) NO CONFLICTS.
(i) The execution, delivery and performance of the Transaction
Documents by the Company, the performance by the Company of its obligations
under the Certificate of Designations and the consummation by the Company of the
transactions contemplated hereby and thereby (including, without limitation, the
reservation for issuance and issuance of the Conversion Shares and issuance of
the PIK Shares) will not: (A) result in a violation of the Certificate of
Incorporation or the Bylaws; (B) conflict with, result in a breach of, or
constitute a default (or an event which with notice or lapse of time or both
would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, or incremental, additional or varied
rights under, any material agreement, indenture or instrument (including,
without limitation, any stock option, employee stock purchase or similar plan or
any employment or similar agreement) to which the Company or any of its
Subsidiaries is a party (including, without limitation, triggering the
application of any change of control or similar provision) or to
5
which any property or assets of the Company or any of its Subsidiaries is bound
or affected; (C) result in a violation of any law, rule, regulation, order,
judgment or decree (including federal and state securities laws and regulations
and the rules and regulations of the Principal Market (as hereinafter defined))
applicable to the Company or any of its Subsidiaries or by which any property or
asset of the Company or any of its Subsidiaries is bound or affected; or (d)
result in the creation or imposition of any liens, claims, charges or
encumbrances upon any of the properties or assets of the Company or any of its
Subsidiaries.
(ii) Neither the Company nor its Subsidiaries is in violation
of any term of its Certificate of Incorporation or Bylaws or, in the case of
Subsidiaries, their organizational charter or bylaws, respectively.
(iii) The business of the Company and its Subsidiaries is not
being conducted, and shall not be conducted, in violation of any law, ordinance
or regulation of any Governmental Entity, including, without limitation, those
related to employment, employment practices, labor, building, zoning and safety
and health, except where such violations would not result, either individually
or in the aggregate, in a Material Adverse Effect.
(iv) Except for the filing of the Certificate of Designations
with the Secretary of State of the State of Delaware, the filing of appropriate
notices to various state liquor authorities, and the securing of the consent of
Wachovia Bank, N.A., the Company is not required to obtain any consent,
authorization or order of, or make any filing or registration with, any
Governmental Entity in order for it to execute, deliver or perform any of its
obligations under or contemplated by the Transaction Documents or to perform its
obligations under the Certificate of Designations, in each case in accordance
with the terms hereof or thereof. All consents, authorizations, orders, filings
and registrations which the Company is required to obtain or make as described
in the preceding sentence shall have been obtained or made on or prior to the
First Funding (to the extent required to be made prior thereto) and shall remain
in effect through each Additional Funding and shall not be the subject of any
pending or, to the knowledge of the Company, threatened attack by appeal, direct
proceeding or otherwise. The Company is not, and as of the First Funding and
each Additional Funding will not be, in violation of the listing requirements of
the Principal Market, and the Conversion Shares and all other shares of the
Company's Common Stock issuable pursuant to the terms of this Agreement and the
Certificate of Designations are, and shall be authorized for listing thereon.
(f) COMPLIANCE WITH LAWS, REGULATIONS. The Company and each of its
Subsidiaries has all permits, licenses, certificates of authority, orders and
approvals of, and has made all filings, applications and registrations with
applicable Governmental Entities that are required in order to permit each to
carry on its business as presently conducted and the absence of which could have
a Material Adverse Affect on the Company. All such permits, licenses,
certificates of authority, orders and approvals the absence of which could have
a Material Adverse Effect are in full force and effect and no suspension or
cancellation of any of them is threatened; and all such filings, applications
and registrations are current. The Company knows of no facts which could result
in its loss of any permits, licenses, certificates of authority, orders,
approvals or registrations the loss of which could have a Material Adverse
Effect.
(g) SEC DOCUMENTS; FINANCIAL STATEMENTS.
(i) Since March 30, 2003, the Company has timely filed all
reports, schedules, forms, statements and other documents required to be filed
by it with the United States Securities Commission (the "SEC") pursuant to the
reporting requirements of the Securities Act and the Exchange Act (all of the
foregoing (including all exhibits included therein and financial statements and
schedules thereto and documents incorporated by reference therein) and all
forms, documents and instruments filed by the Company with the SEC pursuant to
the Securities Act (including all exhibits included therein and financial
statements and schedules thereto and documents incorporated by reference
therein) being hereinafter referred to as the "SEC Documents"). As of their
respective dates, the SEC Documents complied in all material respects with the
requirements of the Securities Act or Exchange Act and the rules and regulations
of the SEC promulgated thereunder applicable to the SEC Documents. None of the
SEC Documents, at the time they were filed with the SEC, contained any untrue
statement of a material fact or
6
omitted to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading.
(ii) As of their respective dates, the financial statements of
the Company included in the SEC Documents complied as to form in all material
respects with U.S. generally accepted accounting principles ("GAAP") and the
published rules and regulations of the SEC with respect thereto. Such financial
statements have been prepared in accordance with GAAP, consistently applied,
during the periods involved (except (A) as may be otherwise specifically
indicated in such financial statements or the notes thereto, or (B) in the case
of unaudited interim statements, to the extent they may exclude footnotes or may
be condensed or summary statements or as otherwise, in each case, may be
permitted by the SEC on Form 10-Q under the Exchange Act) and fairly present in
all material respects the consolidated financial position of the Company as of
the dates thereof and the consolidated results of its operations and cash flows
for the periods then ended (subject, in the case of unaudited statements, to
normal year-end audit adjustments) and are consistent with the books and records
of the Company. Deloitte & Touche, LLP, which has examined certain of such
financial statements, is an independent certified public accounting firm within
the meaning of the Securities Act. As of the date of this Agreement, the Company
meets the requirements for use of Form S-3 for registration of the resale of
Registrable Securities (as defined in the Registration Rights Agreement). The
Company has no liabilities or obligations (whether accrued, absolute, contingent
or otherwise, and whether known or unknown), except (i) liabilities and
obligations reflected on or reserved against in the financial statements
included in the SEC Documents, or (ii) liabilities and obligations incurred in
the ordinary course of business consistent with past practice since March 31,
2004, which individually or in the aggregate do not have a Material Adverse
Effect, or (iii) obligations under executory contracts not required to be
disclosed in the Company's financial statements under GAAP.
(h) ABSENCE OF CERTAIN CHANGES. Except as otherwise described in the
SEC Documents, since March 31, 2003, there has been no event constituting, or
which could reasonably be expected to cause or give rise to, a material adverse
change or material adverse development in the business, properties, assets,
operations, prospects, results of operations or financial conditions of the
Company and its Subsidiaries taken as a whole. Neither the Company nor any of
its Subsidiaries has taken any steps, and does not expect to take any steps, to
seek protection pursuant to any bankruptcy law. Except as otherwise described in
the SEC Documents, since January 1, 2004, the business of the Company and its
Subsidiaries has been conducted in the ordinary course consistent with past
practice and, without limiting the generality of the foregoing, neither the
Company nor any of its Subsidiaries has taken or agreed or committed to take any
of the actions specified in Section 7 of the Certificate of Designations
requiring a class vote by the holders of the Series B Preferred Stock had such
shares been outstanding during such period.
(i) ABSENCE OF LITIGATION. There is no action, suit, proceeding,
inquiry or investigation before or by any court, public board, Governmental
Entity or self-regulatory organization or body pending or, to the knowledge of
the Company or any of its Subsidiaries, threatened against or affecting the
Company, the Common Stock or any of its Subsidiaries, nor is the Company or any
of its Subsidiaries subject to any order, writ, injunction or decree of any
court, public board Governmental Entity or self-regulatory organization or body,
except where any of the foregoing could not reasonably be expected to result,
either individually or in the aggregate, in a Material Adverse Effect.
(j) INSURANCE. The Company and each of its Subsidiaries carry, or are
covered by, insurance in such amounts and covering such risks as is customary
for companies engaged in similar businesses in similar industries.
(k) PATENTS AND OTHER PROPRIETARY RIGHTS. The Company and each of its
Subsidiaries own or possess adequate rights to use all material patents, patent
applications, trademarks, service marks, trade names, trademark registrations,
service ▇▇▇▇ registrations, copyrights and licenses necessary for the conduct of
their respective businesses and the conduct of their respective businesses does
not and would not conflict with or constitute an infringement on the material
rights of others.
7
(l) LABOR RELATIONS. Neither the Company nor any of its Subsidiaries
has been or is a party to any collective bargaining or other labor agreement.
There is not presently pending or existing and, to the knowledge of the Company,
there is not threatened, (a) any strike, slowdown, picketing, work stoppage, or
employee grievance process, (b) any proceeding against or affecting the Company
or any of its Subsidiaries relating to the alleged violation of any legal
requirements pertaining to labor relations or employment matters or other labor
disturbance, or (c) any application for certification of a collective bargaining
agent, in each case, to the extent that any of the same could reasonably be
expected to result in a Material Adverse Effect.
(m) EMPLOYEE BENEFITS. The Company and its Subsidiaries are in
compliance in all material respects with all presently applicable provisions of
the Employee Retirement Income Security Act of 1974, as amended, including the
regulations and published interpretations thereunder ("ERISA"); no "reportable
event" (as defined in ERISA) has occurred with respect to any "pension plan" (as
defined in ERISA) for which the Company would have any material liability; the
Company has not incurred and does not expect to incur liability under (i) Title
IV of ERISA with respect to termination of, or withdrawal from, any "pension
plan" or (ii) Sections 412 or 4971 of the Internal Revenue Code of 1986, as
amended, including the regulations and published interpretations thereunder (the
"Code"); and each "pension plan" for which the Company would have any liability
that is intended to be qualified under Section 401(a) of the Code is so
qualified in all material respects and, to the best of the Company's knowledge,
nothing has occurred, whether by action or by failure to act, which would cause
the loss of such qualification.
(n) TAXES. The Company and its Subsidiaries have filed all federal,
state and local income and franchise tax returns required to be filed through
the date hereof. All such tax returns are true, complete and correct in all
material respects. All taxes due and payable by the Company and its Subsidiaries
have been paid or accrued on the balance sheet included in the latest filed SEC
Document. No tax deficiency has been determined adversely to the Company or any
of its Subsidiaries which has had (nor does the Company have any knowledge of
any tax deficiency which, if determined adversely to the Company or any of its
subsidiaries, would reasonably be expected to have) a Material Adverse Effect.
(o) ENVIRONMENTAL MATTERS. There has been no storage, disposal,
generation, manufacture, refinement, transportation, handling or treatment of
toxic wastes, medical wastes, hazardous wastes or hazardous substances by the
Company or any of its Subsidiaries (or, to the knowledge of the Company, any of
their predecessors in interest) at, upon or from any of the property now or
previously owned, leased or used by the Company or its Subsidiaries in violation
of any applicable law, ordinance, rule, regulation, order, judgment, decree or
permit or which would require remedial action under any applicable law,
ordinance, rule, regulation, order, judgment, decree or permit, except for any
violation or remedial action which could not have, or would not be reasonably
expected to have, singularly or in the aggregate with all such violations and
remedial actions, a Material Adverse Effect; there has been no material spill,
discharge, leak, emission, injection, escape, dumping or release of any kind
onto such property or into the environment surrounding such property of any
toxic wastes, medical wastes, solid wastes, hazardous wastes or hazardous
substances due to or caused by the Company or any of its Subsidiaries or with
respect to which the Company or any of its Subsidiaries have knowledge, except
for any such spill, discharge, leak, emission, injection, escape, dumping or
release which would not have or would not be reasonably likely to have,
singularly or in the aggregate with all such spills, discharges, leaks,
emissions, injections, escapes, dumpings and releases, a Material Adverse
Effect; and the terms "hazardous wastes", "toxic wastes", "hazardous substances"
and "medical wastes" shall have the meanings specified in any applicable local,
state, federal and foreign laws or regulations with respect to environmental
protection.
(p) NO GENERAL SOLICITATION. Neither the Company, nor any of its
affiliates, nor any person acting on its or their behalf, has engaged in any
form of general solicitation or general advertising (within the meaning of
Regulation D under the Securities Act) in connection with the offer or sale of
the Securities.
8
(q) NO INTEGRATED OFFERING. Neither the Company, nor any of its
affiliates, nor any person acting on its or their behalf has, directly or
indirectly, made any offers or sales of any security or solicited any offers to
buy any security, under circumstances that would require registration of any of
the Securities under the Securities Act or cause this offering of the Securities
to be integrated with prior offerings by the Company for purposes of the
Securities Act or any applicable stockholder approval provisions, including,
without limitation, under the rules and regulations of any Principal Market on
which any of the securities of the Company are listed or designated, nor will
the Company or any of its Subsidiaries take any action or steps (other than by
compliance with the Registration Rights Agreement) that would require
registration of any of the Securities under the Securities Act or cause the
offering of the Securities to be integrated with other offerings.
(r) APPLICATION OF TAKEOVER PROTECTIONS. The Company and its Board of
Directors have taken all necessary action, if any, in order to render
inapplicable any control share acquisition, business combination, poison pill
(including any distribution under a rights agreement) or other similar
anti-takeover provision under any agreement binding upon the Company or under
the Certificate of Incorporation or the laws of the State of Delaware or the
State of Florida which is or could become applicable to Purchaser or any of its
affiliates as a result of the transactions contemplated by this Agreement,
including, without limitation, the Company's issuance of the Securities, the
Purchaser's ownership or voting of the Securities or the Purchaser's conversion
of the Series B Preferred Stock.
(s) INVESTMENT COMPANY. The Company is not, and after giving effect to
the offering and sale of the Securities hereunder and the application of the
proceeds thereof as described in this Agreement will not be, an "investment
company" as such term is defined in the Investment Company Act of 1940, as
amended.
(t) NO MARKET MANIPULATION. Neither the Company nor its Subsidiaries
nor, to the knowledge of the Company, any of such entities' directors, officers,
employees, agents or controlling persons have taken, directly or indirectly, any
action designed, or that might reasonably be expected, to cause or result, under
the Securities Act or otherwise, in, or that has constituted, stabilization or
manipulation of the price of the Common Stock.
(u) FULL DISCLOSURE. Neither the representations and warranties of the
Company in this Agreement nor any certificate, instrument or statement furnished
or made to Purchaser by or on behalf of the Company in connection with the
Transaction Documents contains a misstatement of material fact or omit to state
a material fact necessary to make the statements herein, in light of the
circumstances under which they were made, not misleading.
4. COVENANTS.
(a) OPERATE IN ORDINARY COURSE. From the date of execution of this
Agreement until the First Funding, the businesses of the Company and its
Subsidiaries shall be conducted in the ordinary course consistent with past
practice and further, without the written consent of the Purchaser, the Company
shall not, and shall cause its Subsidiaries not to, take or agree or commit to
take any of the actions specified in Section 7 of the Certificate of
Designations that would have required a class vote thereunder by the holders of
the Series B Preferred Stock if such shares had been outstanding. Since the
close of b usiness on June 7, 2004 and until First Funding, the Company shall
not take or agree to commit to take, and shall not have taken or agreed or
committed to take, any action that would have resulted in an adjustment of the
Conversion Price (as defined in the Certificate of Designations) under Section
6(d) of the Certificate of Designations if the Shares of Series B Preferred
Stock had been outstanding as of that date.
(b) FORM D AND BLUE SKY. The Company agrees to file a Form D with
respect to the Securities as required under Regulation D. The Company shall, on
or before the First Funding and each Additional Funding, take such action as the
Company shall reasonably determine is necessary in order to obtain an exemption
for or to qualify the Securities for sale to the Purchaser at the First Funding
and each
9
Additional Funding pursuant to this Agreement under applicable securities or
"Blue Sky" laws of Florida, and shall provide evidence of any such action so
taken to the Purchaser on or prior to the First Funding Closing and each
Additional Funding Closing. The Company shall make all filings and reports
relating to the offer and sale of the Securities to the Purchaser required under
applicable securities or "Blue Sky" laws of the states of the United States
following the First Funding and each Additional Funding.
(c) REPORTING STATUS. So long as the Preferred Shares are outstanding
(the "Reporting Period"), the Company shall file all reports required to be
filed with the SEC pursuant to the Securities Act and the Exchange Act, and the
Company shall not terminate its status as an issuer required to file reports
under the Exchange Act even if the Exchange Act or the rules and regulations
thereunder would otherwise permit such termination, other than as the result of
a merger or consolidation or sale or transfer of all or substantially all of the
Company's assets in compliance with the Certificate of Designations.
(d) USE OF PROCEEDS. The Company will use the proceeds from the sale of
the Preferred Shares for the repayment of outstanding indebtedness, capital
expenditures, and general working capital. No portion of the proceeds from the
issuance of Preferred Shares shall be used in any manner which would violate
Regulation U, T or X of the Board of Governors of the Federal Reserve System or
any other regulation of such Board or to violate the Exchange Act, as in effect
on the First Funding Closing or any Additional Funding Closing on which such
proceeds were received.
(e) FINANCIAL INFORMATION. The Company agrees to send the following to
the Purchaser during the Reporting Period (A) unless the following are filed
with the SEC through ▇▇▇▇▇ and are available to the public through ▇▇▇▇▇, within
two (2) Business Days after the filing thereof with the SEC: a copy of its
Annual Reports on Form 10-K, its Quarterly Reports on Form 10-Q, any Current
Reports on Form 8-K and any registration statements (other than on Form S-8) or
amendments filed pursuant to the Securities Act; (B) on the same day as the
release thereof, copies of any notices and other information made available or
given to the stockholders of the Company generally, contemporaneously with the
making available or giving thereof to the stockholders; and (C) from time to
time, such other financial data and information relating to the Company and its
Subsidiaries as Purchaser may reasonably request (subject to appropriate
confidentiality procedures).
(f) RESERVATION OF SHARES. The Company shall take all action necessary
to at all times have authorized, and reserved for the purpose of issuance, the
number of shares of Common Stock needed to provide for the issuance of the
Conversion Shares.
(g) LISTING. The Company shall file an application for the listing of
the Conversion Shares on the Principal Market and shall use it best efforts to
cause such listing to be approved prior to the First Funding Closing. The
Company shall use its best efforts to maintain the Common Stock's authorization
for quotation of the Common Stock on NASDAQ or to obtain and maintain a listing
on The New York Stock Exchange, Inc. or another national securities exchange
(collectively, as applicable, the "Principal Market"). The Company shall pay all
fees and expenses in connection with satisfying its obligations under this
Section 4(g).
(h) ACCESS TO RECORDS. Subject to appropriate agreements of
confidentiality and limitations of interference, the Company shall afford
Purchaser and its employees, counsel and other authorized representatives full
access, during normal business hours, upon reasonable advance notice, with due
regard to its ongoing operations, to the assets, properties, offices and other
facilities, books and records of the Company and its Subsidiaries, and to the
outside auditors of the Company and their work papers relating thereto, in each
case, as Purchaser may from time to time reasonably request. The parties hereto
agree that no investigation by Purchaser or their representatives shall affect
or limit the scope of the representations and warranties of the Company
contained herein or in any Transaction Document delivered pursuant hereto or
limit liability for breach of any such representation or warranty.
(i) BOARD OF DIRECTOR RESOLUTIONS. The Board of Directors shall not
amend, rescind or repeal the resolutions authorizing the issuance of the Series
B Preferred Stock, the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby.
10
(j) DEFERRAL OF RIGHT TO ELECT ADDITIONAL DIRECTOR. So long as
Purchaser (or any of its Affiliates) is the holder of a majority of the
outstanding Preferred Shares, Purchaser will not (and Purchaser will cause any
such Affiliate not to) exercise its right to elect a director of the Company
pursuant to the first sentence of Section 7(d) of the Certificate of
Designations if, at the time, ▇▇▇▇ ▇. ▇▇▇▇ (i) is serving as an officer or
director of Purchaser, and (ii) has been elected as a director by the holders of
the Company's Common Stock or Class A Common Stock and is serving as such.
(k) RIGHT TO PURCHASE SECURITIES.
(i) Except as provided in Section 4(k)(iv) below, the Company
shall not issue, sell or transfer any of its equity securities or any options,
warrants or other rights to purchase or subscribe for its equity securities,
including without limitation any securities convertible into or exchangeable for
equity securities (the "Offered Shares") unless the Company provides the
Purchaser written notice (the "Sale Notice") at least thirty (30) days prior to
the proposed issuance date specifying the prices at which the Offered Shares are
proposed to be issued and sold and all other material terms of the issuance. The
restrictions set forth in the preceding sentence shall terminate and be of no
further force and effect upon the Termination Date (as defined below).
(ii) Purchaser shall have the right to purchase, during the
period set forth in this Section, at the prices and on the terms specified in
the Sale Notice, up to the number or amount of the Offered Shares (together, the
"Maintenance Securities") as are necessary for the Purchaser to maintain its
Percentage Ownership in the Company as it existed immediately prior to such
issuance. As used in this Section 4(k): (A) "Percentage Ownership" means, at any
time, (i) the Base Number divided by (ii) the total number of shares of the
Company's Common Stock and Class A Stock then outstanding or reserved for
issuance pursuant to any then outstanding securities or other contractual
obligations of the Company (including the Conversion Shares), (B) "Base Number"
means the sum of the number of shares of Common Stock issued or issuable upon
conversion of the 800,000 Preferred Shares subject to the provisions of this
Agreement (assuming for these purposes that all of such Preferred Shares had
been issued and were outstanding) plus the number of shares of Common Stock
issued or issuable upon the conversion of any PIK Shares then outstanding or
previously issued; provided, however, that there shall be excluded from the
foregoing calculation any shares of Common Stock previously issued to Purchaser
and which are not then beneficially owned by Purchaser and (C) "Termination
Date" means the date on which the Purchaser and its Affiliates cease to own at
least 25% of the total number of Preferred Shares outstanding.
(iii) Purchaser may exercise its right to purchase Maintenance
Securities by delivering written notice of acceptance of any offer made in a
Sale Notice within thirty (30) days after its receipt thereof. A delivery of
such a written notice of acceptance, which shall specify the number of shares
(or amount) of Maintenance Securities that Purchaser desires to so purchase,
shall constitute a binding agreement by Purchaser to purchase such Maintenance
Securities specified in such written acceptance notice, at the prices and on
substantially the same terms and conditions as set forth in the Sale Notice. The
Company shall have ninety (90) days from the date it sends the Sale Notice to
consummate the proposed issuance of Maintenance Securities. On the date of such
consummation, the Company shall issue certificates representing the Maintenance
Securities to be purchased, registered in the names and in the denominations as
specified by the Purchaser in its applicable written acceptance notice, against
payment of the purchase price for such Maintenance Securities by Purchaser as
provided in the Sale Notice. If the Company proposes to issue Offered Shares
after such 90-day period, it shall again comply with the foregoing procedures.
(iv) Notwithstanding the foregoing, Purchaser shall not be
entitled to purchase Maintenance Securities as contemplated by this Section 4
(and no Sale Notice shall be required in connection with) the Company's issuance
of securities that are (i) Excluded Securities as such term is defined in the
Certificate of Designations or (ii) issued pursuant to an underwritten public
offering, or (iii) issued pursuant to any stock split, stock dividend or other
similar stock recapitalization.
11
(v) If Offered Shares are being issued by the Company in
connection with the issuance of other securities of the Company, then Purchaser
may only exercise its rights under this Section 4(k) by purchasing a pro rata
share of both the Offered Shares, and the other securities being issued. The
foregoing terms and conditions applicable to the purchase of Maintenance
Securities shall also apply to the purchase of such other securities.
(l) CERTIFICATE OF DESIGNATIONS. The Company shall file the Certificate
of Designations with the Secretary of State of the State of Delaware.
(m) CONSENTS AND APPROVALS. The Company shall use its reasonable best
efforts to obtain all consents and approvals and to file all notices, necessary
to consummate the transactions contemplated hereby, including but not limited to
obtaining Wachovia Bank, N.A.'s consent and the filing of all notices with the
various state liquor licensing authorities.
5. CONDITIONS TO THE COMPANY'S OBLIGATIONS.
(a) CONDITIONS TO THE COMPANY'S OBLIGATIONS AT THE FIRST FUNDING. The
obligation of the Company to issue and sell the applicable Preferred Shares to
Purchaser at the First Funding is subject to the satisfaction, at or before the
First Funding Closing, of each of the following conditions, it being understood
that these conditions are for the Company's sole benefit and may be waived by
the Company at any time in its sole discretion by providing Purchaser with prior
written notice thereof:
(i) Purchaser shall have executed and delivered this Agreement
and a Registration Rights Agreement substantially in the form of that attached
hereto as Exhibit B.
(ii) Purchaser shall have delivered to the Company the
Purchase Price for the Preferred Shares being purchased by Purchaser on the
First Funding Closing by wire transfer of immediately available funds pursuant
to the wire instructions provided by the Company.
(iii) The representations and warranties of Purchaser
contained herein shall be true and correct in all material respects as of the
date when made and as of the First Funding Closing as though made at that time,
and Purchaser shall have performed, satisfied and complied in all material
respects with the covenants, agreements and conditions required by the Purchaser
Transaction Documents to be performed, satisfied or complied with by Purchaser
at or prior to that date.
(iv) No statute, rule, regulation, order, decree, ruling or
injunction shall have been enacted, entered, promulgated or endorsed or
otherwise be in effect by any Governmental Entity of competent jurisdiction
which enjoins, restricts, or prohibits the consummation of any of the
transactions contemplated by this Agreement or any other Transaction Documents.
(v) The Conversion Shares shall have been approved for listing
on the Principal Market, upon official notice of issuance.
(vi) Wachovia Bank, N.A. shall have consented to the Company's
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby, which consent shall not be subject to any
unduly burdensome conditions.
(b) CONDITIONS TO COMPANY'S OBLIGATIONS AT ADDITIONAL FUNDINGS. The
obligation of the Company to issue and sell the applicable Preferred Shares to
Purchaser at any Additional Funding is subject to the satisfaction, at or before
such Additional Funding Closing, of each of the following conditions, it being
understood that these conditions are for the Company's sole benefit and may be
waived by the Company at any time in its sole discretion by providing Purchaser
with prior written notice thereof:
12
(i) Purchaser shall have delivered to the Company the Purchase
Price for the Preferred Shares being purchased by such Purchaser at the
Additional Funding by wire transfer of immediately available funds pursuant to
wire instructions provided by the Company.
(ii) The representations and warranties of Purchaser contained
herein shall be true and correct in all material respects as of the date when
made and as of such Additional Funding Closing as though made at that time, and
such Purchaser shall have performed, satisfied and complied in all material
respects with the covenants, agreements and conditions required by the
Transaction Documents to be performed, satisfied or complied with by Purchaser
at or prior to that date.
(iii) No statute, rule, regulation, order, decree, ruling or
injunction shall have been enacted, entered, promulgated or endorsed or
otherwise be in effect by any Governmental Entity of competent jurisdiction
which enjoins, restricts, or prohibits the consummation of any of the
transactions contemplated by this Agreement or any other Transaction Documents.
6. CONDITIONS TO PURCHASER'S OBLIGATION TO PURCHASE.
(a) CONDITIONS TO PURCHASER'S OBLIGATIONS AT FIRST FUNDING. The
obligation of Purchaser hereunder to purchase the applicable Preferred Shares
from the Company at the First Funding Closing is subject to the satisfaction, at
or before the First Funding Closing, of each of the following conditions. These
conditions are for Purchaser's sole benefit and may be waived by Purchaser at
any time in its sole discretion.
(i) The Company shall have delivered:
(A) an executed counterpart of this Agreement and the
Registration Rights Agreement.
(B) the opinion of ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇▇, LLP counsel to the Company, dated as of the date of the First Funding
Closing, in form, scope and substance reasonably satisfactory to such Purchaser.
(C) a copy of resolutions adopted by Board of
Directors of the Company in a form reasonably acceptable to Purchaser (the
"Resolutions") authorizing the transactions contemplated by the Transaction
Documents.
(D) a certificate evidencing the incorporation and
good standing of the Company in Delaware issued by the Secretary of State of the
State of Delaware as of a date within five (5) days of the First Funding
Closing, together with a certificate evidencing the good standing of the Company
as a foreign corporation in the State of Florida issued by the Secretary of
State of the State of Florida.
(E) A secretary's certificate, dated as of the First
Funding Closing, certifying as to (A) the Resolutions, (B) the Certificate of
Incorporation and (C) the Bylaws, each as in effect as at the date of the First
Funding Closing.
(F) A certificate executed by the Company's chief
executive officer certifying as to the satisfaction of the conditions set forth
in Section 6(a)(ii) - (vii).
(G) Preferred Stock Certificates (in such
denominations as Purchaser may request) representing the Preferred Shares
purchased by Purchaser on the date hereof.
(ii) The Certificate of Designations shall have been filed
with the Secretary of State of the State of Delaware.
(iii) The representations and warranties of the Company shall
be true and correct in all material respects (except for representations and
warranties which are qualified by materiality or Material Adverse Effect, which
shall be true and correct in all respects) as of the date when made and as of
the First Funding Closing as though made at that time.
13
(iv) The Company shall have performed, satisfied and complied
in all material respects with the covenants, agreements and conditions required
by the Transaction Documents to be performed, satisfied or complied with by the
Company at or prior to such First Funding Closing.
(v) No statute, rule, regulation, order, decree, ruling or
injunction shall have been enacted, entered, promulgated or endorsed or
otherwise be in effect by any Governmental Entity of competent jurisdiction
which enjoins, restricts, or prohibits the consummation of any of the
transactions contemplated by this Agreement or any other Transaction Documents.
(vi) The Conversion Shares shall have been approved for
listing on the Principal Market, upon official notice of issuance and the
Company shall provide to Purchaser upon written request evidence of such
listing.
(vii) No event or condition constituting, or which could
reasonably be expected to cause or give rise to, a material adverse change or
material adverse development in the business, properties, assets, operations,
prospects, results of operations or financial condition of the Company and its
Subsidiaries taken as a whole shall have occurred.
(b) CONDITIONS TO THE PURCHASER'S OBLIGATIONS AT ADDITIONAL FUNDINGS.
The obligation of the Purchaser hereunder to purchase the applicable Preferred
Shares from the Company at the Additional Fundings is subject to the
satisfaction, at or before the each Additional Funding Closing, of each of the
following conditions. These conditions are for Purchaser's sole benefit and may
be waived by the Purchaser at any time in its sole discretion.
(i) (A) The representations and warranties of the Company
shall be true and correct in all material respects (except for representations
and warranties which are qualified by materiality or Material Adverse Effect,
which shall be true and correct in all respects) as of the date when made and as
of such Additional Funding Closing as though made at that time.
(B) The Company shall have performed, satisfied and
complied in all material respects with the covenants, agreements and conditions
required by the Transaction Documents to be performed, satisfied or complied
with by the Company at or prior to such Additional Funding Closing.
(ii) The Purchaser shall have received the updated opinion of
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, LLP, counsel to the Company, dated as of
such Additional Funding Closing, in form, scope and substance reasonably
satisfactory to such Purchaser.
(iii) The Company shall have executed and delivered to the
Purchaser the Preferred Stock Certificates (in such denominations as such
Purchaser shall request) for the Preferred Shares being purchased by such
Purchaser at such Additional Funding Closing.
(iv) The Board of Directors of the Company shall not have
amended or rescinded the Resolutions.
(v) The Company shall have delivered to Purchaser a
certificate evidencing the incorporation and good standing of the Company in
Delaware issued by the Secretary of State of the State of Delaware as of a date
within five (5) days of such Additional Funding Closing.
(vi) The Company shall have delivered to Purchaser a
secretary's certificate certifying as to any amendment or modification since the
Initial Funding to (A) the Resolutions, (B) the Certificate of Incorporation, or
(C) the Bylaws.
14
(vii) No statute, rule, regulation, order, decree, ruling or
injunction shall have been enacted, entered, promulgated or endorsed or
otherwise be in effect by any Governmental Entity of competent jurisdiction
which enjoins, restricts, or prohibits the consummation of any of the
transactions contemplated by this Agreement or any other Transaction Documents.
(viii) A certificate executed by the Company's chief executive
officer certifying as to the satisfaction of the conditions set forth in Section
6(b)(i) and (iv) through (vii) and (ix).
(ix) No event or condition constituting, or which could
reasonably be expected to cause or give rise to, a material adverse change or
material adverse development in the business, properties, assets, operations,
prospects, results of operations or financial conditions of the Company and its
Subsidiaries taken as a whole shall have occurred.
7. TERMINATION.
(a) TERMINATION.
(i) This Agreement may be terminated by mutual consent of the
parties.
(ii) The Purchaser may terminate its obligation under this
Agreement to purchase the Preferred Shares at the First Funding and/or to
purchase the applicable Preferred Shares at any Additional Funding by giving
written notice to the Company at any time:
(A) in the event that the Company has breached any
representation, warranty, or covenant contained in this Agreement or in any
other Transaction Document in any material respect, the Purchaser has notified
the Company of the breach, and the breach has continued without cure for fifteen
(15) days after the notice of breach, or
(B) If Purchaser has failed to purchase all of the
Preferred Shares by the third anniversary of the date hereof by reason of the
failure of any condition precedent under Section 6(b) hereof or if satisfaction
of any such condition by such date is or becomes impossible (unless the failure
results primarily from any Purchaser itself breaching in any material respect
any representation, warranty, or covenant contained in this Agreement or any
other Transaction Document).
(iii) The Company may terminate its obligation under this
Agreement to sell the Preferred Shares at the First Funding and/or to sell any
additional Preferred Shares hereunder at any time:
(A) in the event that Purchaser has breached any
representation, warranty, or covenant contained in this Agreement in any
material respect, the Company has notified the Purchaser of the breach, and the
breach has continued without cure for fifteen (15) days after the notice of
breach, or
(B) if the Purchaser has not purchased all of the
Preferred Shares by the third anniversary of the date hereof by the outside
date, by reason of the failure of any condition precedent under Section 5(b)
hereof or if satisfaction of any such condition by such date is or becomes
impossible (unless the failure results primarily from the Company breaching in
any material respect any representation, warranty, or covenant contained in this
Agreement or any other Transaction Document).
(b) EFFECT OF TERMINATION. Each party's right of termination under
Section 7(a) is in addition to any other rights it may have under this Agreement
or otherwise, and the exercise of such right of termination will not be an
election of remedies. If this Agreement is terminated pursuant to Sections
7(a)(i) or (ii) or (iii) the Purchaser's obligation to purchase and the
Company's obligation to sell any additional Preferred Shares hereunder shall
also terminate.
15
8. GOVERNING LAW; MISCELLANEOUS.
(a) GOVERNING LAW; JURISDICTION; JURY TRIAL. The corporate laws of the
State of Delaware shall govern all issues concerning the relative rights of the
Company and its stockholders. All other questions concerning the construction,
validity, enforcement and interpretation of this Agreement shall be governed by
the internal laws of the State of Delaware, without giving effect to any choice
of law or conflict of law provision or rule (whether of the State of Delaware or
any other jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of Delaware. Each party hereby irrevocably
submits to the non-exclusive jurisdiction of the state and federal courts
sitting in the State of Florida for the adjudication of any dispute hereunder or
in connection herewith or with any transaction contemplated hereby or discussed
herein, and hereby irrevocably waives, and agrees not to assert in any suit,
action or proceeding, any claim that it is not personally subject to the
jurisdiction of any such court, that such suit, action or proceeding is brought
in an inconvenient forum or that the venue of such suit, action or proceeding is
improper. Each party hereby irrevocably waives personal service of process and
consents to process being served in any such suit, action or proceeding by
mailing a copy thereof to such party at the address for such notices to it under
this Agreement and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing contained herein shall be deemed
to limit in any way any right to serve process in any manner permitted by law.
EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO
REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN
CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION
CONTEMPLATED HEREBY.
(b) COUNTERPARTS. This Agreement may be executed in two or more
identical counterparts, all of which shall be considered one and the same
agreement and shall become effective, with respect to a particular party, when
counterparts have been signed by such party and delivered to the other party;
provided that a facsimile signature shall be considered due execution and shall
be binding upon the signatory thereto with the same force and effect as if the
signature were an original, not a facsimile signature.
(c) HEADINGS. The headings of this Agreement are for convenience of
reference and shall not form part of, or affect the interpretation of, this
Agreement.
(d) SEVERABILITY. If any provision of this Agreement shall be invalid
or unenforceable in any jurisdiction, such invalidity or unenforceability shall
not affect the validity or enforceability of the remainder of this Agreement in
that jurisdiction or the validity or enforceability of any provision of this
Agreement in any other jurisdiction.
(e) ENTIRE AGREEMENT; AMENDMENTS. This Agreement and the other
Transaction Documents and the instruments referenced herein or therein
supersedes all other prior oral or written agreements, negotiations or
correspondence between Purchaser, the Company, their affiliates and persons
acting on their behalf with respect to the matters discussed herein (including
the term sheet related hereto), and this Agreement and the other Transaction
Documents and the instruments referenced herein or therein contain the entire
understanding of the parties with respect to the matters covered herein and
therein and, except as specifically set forth herein or therein, neither the
Company nor the Purchaser makes any representation, warranty, covenant or
undertaking with respect to such matters. This Agreement may only be amended,
waived or modified by an instrument in writing signed by the Company and the
Purchaser.
(f) NOTICES. Any notices, consents, waivers or other communications
required or permitted to be given under the terms of this Agreement must be in
writing and will be deemed to have been delivered: (i) upon receipt, when
delivered personally; (ii) upon receipt, when sent by facsimile (provided
confirmation of transmission is mechanically or electronically generated and
kept on file by the sending party); (iii) one (1) Business Day after deposit
with a nationally recognized overnight delivery service, in each case properly
addressed to the party to receive the same; or (iv) five (5) days after deposit
in the U.S. Mail. The addresses and facsimile numbers for such communications
shall be:
16
If to Purchaser: BFC Financial Corporation
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Executive Officer
FACSIMILE: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, P.A.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
FACSIMILE: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Company: Benihana Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Executive Officer
FACSIMILE: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
FACSIMILE: (▇▇▇) ▇▇▇-▇▇▇▇
(g) SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the parties and their respective successors and assigns,
including any purchasers of the Preferred Shares. The Company shall not assign
this Agreement or any rights or obligations hereunder without the prior written
consent of the Purchaser. The Purchaser shall not assign this Agreement or any
of its rights hereunder including its rights to purchase Preferred Shares, to
any third party without the prior written consent of the Company; provided,
however, that Purchaser may assign any or all of its rights hereunder to an
affiliate, including the right to purchase the Preferred Shares.
(h) NO THIRD PARTY BENEFICIARIES. This Agreement is intended for the
benefit of the parties hereto and their respective permitted successors and
assigns, and is not for the benefit of, nor may any provision hereof be enforced
by, any other person.
(i) SURVIVAL; INDEMNIFICATION.
(i) The representations and warranties of the Company and the
Purchaser contained in Sections 2 and 3, and the agreements and covenants set
forth in Sections 4 and 8 shall survive any termination of this Agreement.
(ii) The Company agrees to indemnify, defend and hold
Purchaser and the officers, directors, employees, agents and affiliates of
Purchaser (collectively, a "Purchaser Indemnitee") harmless from and against,
for and in respect of any and all damages, losses, obligations, liabilities,
claims, actions or causes of action, encumbrances, costs, or expenses, including
without limitation reasonable costs and expenses of investigation, expenses and
disbursements of counsel, consultants and other experts, and interest and
penalties (collectively, "Losses") suffered, sustained, incurred or required to
be paid by a Purchaser Indemnitee arising out of or in connection with or as a
result of (i) the breach by the Company of any representation, warranty,
covenant or agreement made by it contained in this Agreement or any other
Transaction Document and (ii) any third party claim made or asserted against a
Purchaser
17
Indemnitee in whole or in part in respect of any of the transactions
contemplated by this Agreement or any of the other Transaction Documents
(regardless of whether such claim is made or asserted before or after the First
Funding Closing).
(iii) The Purchaser agrees to indemnify, defend and hold the
Company harmless from and against, for and in respect of any and all actions or
losses suffered, sustained, incurred or required to be paid by the Company
arising out of or in connection with or as a result of the breach by the
Purchaser of any representation, warranty, covenant or agreement made by it
contained in this Agreement or any other Transaction Document.
(iv) Any party (the "Indemnified Party") entitled to indemnity
from any other party (the "Indemnifying Party") shall give the Indemnifying
Party prompt written notice of the assertion of any third party claim (a "Third
Party Claim") that may serve as a basis for indemnity hereunder; provided,
however, that failure to notify the Indemnifying Party will not relieve the
Indemnifying Party of any liability that it may have to any Indemnified Party,
except to the extent that the Indemnifying Party demonstrates that the defense
of such action is materially prejudiced by the Indemnified Party's failure to so
notify. The Indemnifying Party shall be entitled to assume the defense of any
such Third Party Claim by providing written notice no later than ten (10) days
from receipt of notice of the assertion of any Third Party Claim unless the
Indemnified Party shall in good faith determine that such representation would
result in a conflict of interest. In the event, the Indemnifying Party shall
fail to assume the defense of the Third Party Claim within the ten-day period
set forth above or the defense by the Indemnifying Party would result in a
conflict of interest, the Indemnifying Party shall be entitled to retain its own
counsel, at the Indemnifying Party's expense, and to control the defense of any
Third Party Claim. If the Indemnifying Party shall assume the defense, it shall
not compromise or settle any Third Party Claim without the Indemnified Party's
consent unless (A) the sole relief provided is monetary damages that are paid in
full by the Indemnifying Party and (B) the Indemnified Party receives an
unconditional full release.
(j) PUBLICITY. The Company and the Purchaser shall have the right to
approve before issuance any press releases or any other public statements with
respect to the transactions contemplated hereby; provided, however, that either
party shall be entitled, without the prior approval of the other party, to make
any press release or other public disclosure with respect to such transactions
as is required by applicable law and regulations (although the non-disclosing
party shall be consulted by the other party and given a reasonable opportunity
to comment in connection with any such press release or other public disclosure
prior to its release and shall be provided with a copy thereof).
(k) FURTHER ASSURANCES. Each party shall do and perform, or cause to be
done and performed, all such further acts and things, and shall execute and
deliver all such other agreements, certificates, instruments and documents, as
the other party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
(l) PLACEMENT AGENT. The Company has engaged ▇▇▇▇▇▇ ▇▇▇▇▇▇ & Co. as its
placement agent or broker in connection with the sale of the Preferred Shares.
The Company shall be solely responsible for the payment of any placement agent's
fees or broker's commissions payable to that firm relating to or arising out of
the transactions contemplated hereby.
(m) FORM, REGISTRATION, TRANSFER AND EXCHANGE OF PREFERRED STOCK; LOST
PREFERRED STOCK. The Company shall keep at its principal office a register in
which the Company shall provide for the registration of Series B Preferred Stock
and of transfers of Series B Preferred Stock. Upon surrender for registration of
transfer of any share of Series B Preferred Stock at the principal office of the
Company, the Company shall, at its expense, promptly execute and deliver one or
more new shares of Series B Preferred Stock of the like tenor and number,
registered in the name of such transferee or transferees. At the option of the
holder of any share of Series B Preferred Stock, such share may be exchanged for
other Series B Preferred Stock of like tenor and of a like number, upon
surrender of the share of Series B Preferred Stock to be exchanged at the
principal office of the Company. Whenever any shares of Series B Preferred Stock
are so surrendered for exchange, the Company shall, at its expense, execute and
18
deliver the shares of Series B Preferred Stock which the holder making the
exchange is entitled to receive. Every share of Series B Preferred Stock
surrendered for registration of transfer or exchange shall be duly endorsed, or
be accompanied by a written instrument of transfer duly executed by the holder
of such share of Series B Preferred Stock or such holder's attorney duly
authorized in writing. Any share of Series B Preferred Stock issued in exchange
for any share of Series B Preferred Stock or upon transfer thereof shall carry
the rights to unpaid dividends to accrue which were carried by the share of
Series B Preferred Stock so exchanged or transferred, so that neither gain nor
loss of interest shall result from any such transfer or exchange. Upon receipt
of written notice from the holder of any share of Series B Preferred Stock of
the loss, theft, destruction or mutilation of such share of Series B Preferred
Stock and, in the case of any such loss, theft or destruction, upon receipt of
such holder's unsecured indemnity agreement, or in the case of any such
mutilation upon surrender and cancellation of such share of Series B Preferred
Stock, the Company will make and deliver a new share of Series B Preferred
Stock, of like tenor, in lieu of the lost, stolen, destroyed or mutilated share
of Series B Preferred Stock.
(n) DEFINITIONS. In addition to the words and terms defined elsewhere
in this Agreement, the following words and terms shall have the following
meanings, respectively, unless the context clearly requires otherwise:
"Business Day" means any day other than Saturday, Sunday or
another day on which commercial banks in the State of Florida are authorized or
required by law to remain closed.
"NASDAQ" means The Nasdaq Stock Market, Inc.
"Person" means any partnership, corporation, association,
joint stock company, trust, limited liability company, joint venture or
unincorporated organization.
IN WITNESS WHEREOF, the Purchaser and the Company have caused this
Stock Purchase Agreement to be duly executed as of the date first written above.
COMPANY:
Benihana Inc.
By: /s/▇▇▇▇ ▇▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: President
PURCHASER:
BFC Financial Corporation
By: /s/▇▇▇▇ ▇. ▇▇▇▇
-------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇
Title: Vice Chairman
19
EXHIBIT A
CERTIFICATE OF DESIGNATIONS
CERTIFICATE OF DESIGNATIONS, PREFERENCES AND RIGHTS OF
SERIES B CONVERTIBLE PREFERRED STOCK
of
BENIHANA INC.
Pursuant to Section 151 of the General Corporation Law
of the State of Delaware
I, the undersigned, President of Benihana Inc., a Delaware corporation
(hereinafter called the "Corporation"), pursuant to the provisions of Sections
103 and 151 of the General Corporation Law of the State of Delaware, do hereby
make this Certificate of Designations and do hereby state and certify that
pursuant to the authority expressly vested in the Board of Directors of the
Corporation by the Certificate of Incorporation of the Corporation, as amended,
the Board of Directors duly adopted the following resolutions:
RESOLVED, that, pursuant to Article V of the Amended and Restated
Certificate of Incorporation of the Corporation, as amended (which authorizes an
aggregate of 5,000,000 shares of preferred stock, $1.00 par value ("Preferred
Stock")), the Board of Directors hereby fixes the powers, designations,
preferences and relative, participating, optional and other special rights, and
the qualifications, limitations and restrictions, of a series of Preferred
Stock.
RESOLVED, that each share of such series of Preferred Stock shall rank
equally in all respects and shall be subject to the following provisions:
1. NUMBER AND DESIGNATION. 800,000 shares of the Preferred Stock of the
Corporation shall be designated as Series B Convertible Preferred Stock (the
"Series B Preferred Stock").
2. DEFINITIONS. In addition to the capitalized terms elsewhere defined
herein, the following terms, when used herein, shall have the meanings
indicated, unless the context otherwise requires.
"Additional Funding" has the meaning specified in the Stock Purchase
Agreement.
"Adjusted Conversion Price" means, with respect to any share of Series
B Preferred Stock, at any time, the Initial Conversion Price of such share of
Series B Preferred Stock, as adjusted from time to time pursuant to Section 6(d)
hereof.
"Affiliate" means, with respect to any specified Person, any other
Person which, directly or indirectly, controls, is controlled by or is under
direct or indirect common control with, such specified Person. For the purposes
of this definition, "control" when used with respect to any Person means the
power to direct the management and policies of such Person, directly or
indirectly, whether through the ownership of voting securities, by contract or
otherwise, and the terms "affiliated," "controlling," and "controlled" have
meanings correlative to the foregoing.
"Board of Directors" means the Board of Directors of the Corporation.
"Business Day" means any day except Saturday, Sunday and any day which
shall be a legal holiday or a day on which banking institutions in Miami,
Florida generally are authorized or required by law or other governmental
actions to close.
"Class A Common Stock" means the Corporation's Class A Common Stock,
par value $0.10 per share.
"Common Stock" means the Corporation's Common Stock, par value $0.10
per share and unless otherwise expressly provided, excludes reference to the
Corporation's Class A Common Stock.
"Common Stock Equivalent" means any security or obligation which is by
its terms convertible, exchangeable or exercisable into or for shares of Common
Stock or Class A Common Stock, including, without limitation, the Series B
Preferred Stock and any option, warrant or subscription right with respect to
any Common Stock, Class A Common Stock or Common Stock Equivalent.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
or any successor statute, and the rules and regulations promulgated thereunder.
"Excluded Securities" means Common Stock, Class A Common Stock or
Common Stock Equivalents issued:
(i) pursuant to the Corporation's stock option plans (or any options
issued thereunder) or pursuant to any other stock related employee compensation
or equity incentive plans or arrangements of the Corporation approved by the
Corporation's Board of Directors or its predecessors (including such plans under
Section 423 of the Internal Revenue Code of 1986, as amended),
(ii) pursuant to (A) the conversion of convertible notes or other debt
instruments outstanding as of the date of the Stock Purchase Agreement, (B) the
exercise of options or warrants outstanding (or reserved for issuance under the
Corporation's equity incentive plans in effect) as of the date of the Stock
Purchase Agreement and (C) other obligations of the Corporation which are
existing as of the date of the Stock Purchase Agreement, provided that with
respect to (A), (B) and (C) all of which shall have been disclosed in the Stock
Purchase Agreement,
(iii) as consideration in connection with (A) acquisitions by the
Corporation or its subsidiaries of a business enterprise or (B) mergers,
consolidations, joint ventures or other business combinations by the Corporation
with third Persons, provided that with respect to (A) and (B) any such
acquisitions, mergers, consolidations, joint ventures or other business
combinations are approved by the holders of a majority of the Series B Preferred
Stock pursuant to Section 7 hereof (to the extent any such approval is required
thereunder),
(iv) upon exercise or conversion of any security the issuance of which
caused an adjustment under Section 6(d)(v) or 6(d)(vi) hereof, or
(v) pursuant to a stockholder rights plan (i.e., a "poison pill" plan)
pursuant to which any acquisition by the Purchaser of shares of capital stock of
the Corporation (or any options, rights, warrants or convertible securities) is
treated as a "Triggering Event" or "Distribution Event" (or other similar event
which would cause ownership of capital stock by the Purchaser or any such entity
to cause a distribution event, flip-over event or flip-in event).
"First Funding" has the meaning specified in the Stock Purchase
Agreement.
"Initial Conversion Price" means $19.00 per share, subject to
adjustment from time to time pursuant to Section 6(d) hereof.
2
"Liquidation Preference" means, with respect to each share of Series B
Preferred Stock, the sum of (i) $25.00 per whole share of Series B Preferred
Stock (as adjusted for stock splits, reverse stock splits, stock dividends and
similar transactions with respect to the Series B Preferred Stock) plus (ii)
accrued and unpaid dividends on such share of Series B Preferred Stock through
the date of determination or payment.
"Market Price" means, with respect to the Common Stock, on any given
day, (i) the closing price per share on the principal securities exchange on
which the Common Stock may at the time be listed, or (ii) the price of the last
trade, as reported on the Nasdaq National Market, not identified as having been
reported late to such system, or (iii) if the Common Stock is so quoted, but not
so traded, the average of the last bid and ask prices, as those prices are
reported on the Nasdaq National Market, or (iv) if the Common Stock is not
listed or authorized for trading on the Nasdaq National Market or any comparable
system, the average of the closing bid and asked prices as furnished by two
members of the National Association of Securities Dealers, Inc. selected from
time to time by the Corporation for that purpose and reasonably acceptable to
the holders of a majority of the outstanding Series B Preferred Stock. If the
Common Stock is not listed on any securities exchange or listed and traded in a
manner that the prices or quotations referred to above are available for the
period required hereunder, the Market Price per share of Common Stock shall be
deemed to be the fair value per share of such security as mutually agreed upon
by the Corporation and the holders of a majority of the outstanding Series B
Preferred Stock.
"Outstanding", when used with reference to shares of stock, means
issued and outstanding shares, excluding shares held by the Corporation or a
subsidiary.
"Person" means an individual, corporation, partnership, limited
liability company, association, trust and any other entity or organization,
including a government or political subdivision or an agency or instrumentality
thereof.
"Principal Market" means the principal securities exchange on which the
Common Stock may at the time be listed, or if at such time the Common Stock is
not so listed, the Nasdaq National Market, or if the Common Stock is not traded
on the Nasdaq National Market, then the principal securities exchange or trading
market for the Common Stock.
"Purchaser" means BFC Financial Corporation or any other Person who, at
the time, is the beneficial owner of 50% or more of the then outstanding Series
B Preferred Stock.
"Significant Assets" means assets having a value of more than 25% of
the total consolidated assets of the Corporation and its subsidiaries.
"Stated Value" means, with respect to each share of Series B Preferred
Stock, an amount equal to $25.00 per whole share of Series B Preferred Stock (as
adjusted for stock splits, reverse stock splits, stock dividends and similar
transactions with respect to the Series B Preferred Stock).
"Stock Purchase Agreement" means that certain Preferred Stock Purchase
Agreement, dated June 8, 2004 between the Corporation and the Purchaser as in
effect from time to time in accordance with its terms.
"Voting Percentage" means the number of votes entitled to be cast at
any time by the holders of the Series B Preferred Stock divided by the total
number of votes then entitled to be cast by the holders of all outstanding
shares of the Company's Common Stock, Class A Common Stock and Series B
Preferred Stock, in each case, with respect to matters on which all such classes
vote together as a single class.
"VWAP" means, for any security, the dollar volume-weighted average
price for such security on the Principal Market during any specified period
beginning at 9:30 a.m., New York City Time, on the first trading day of the
applicable period and ending at 4:00 p.m., New York City Time, on the last
trading day in the applicable period as reported by Bloomberg Financial Markets,
or any successor thereto
3
("Bloomberg"), through its "Volume at Price" functions or, if the foregoing does
not apply, the dollar volume-weighted average price of such security in the
over-the-counter market on the electronic bulletin board for such security
during the period beginning at 9:30 a.m., New York City Time, on the first
trading day of the applicable period and ending at 4:00 p.m., New York City
Time, on the last trading day of the applicable period, as reported by
Bloomberg. If the VWAP cannot be calculated for such security on any of the
foregoing bases, the VWAP of such security shall be the Market Price on the last
day in the applicable period. All such determinations shall be appropriately
adjusted for any stock dividend, stock split or other similar transaction during
such period.
3. RANK. The Series B Preferred Stock shall, with respect to dividend
rights and rights on liquidation, winding-up and dissolution, rank senior to all
classes of common equity of the Corporation and to all other classes of equity
securities of the Corporation, including any other class or series of any class
of Preferred Stock of the Corporation, whether now outstanding or issued
hereafter. Other than as permitted by Section 7(b) hereof, the Corporation shall
not create any class or series of preferred stock or any convertible debt
securities ranking pari passu with or senior to the Series B Preferred Stock
with respect to dividend rights or rights on liquidation, winding-up and
dissolution without the approval of holders of a majority of the outstanding
shares of Series B Preferred Stock.
4. DIVIDENDS.
(a) The holders of outstanding shares of Series B Preferred Stock shall
receive cumulative quarterly dividends, out of the assets of the Corporation
legally available therefor, prior and in preference to any declaration or
payment of any dividend on the Common Stock, Class A Common Stock or any other
equity securities of the Corporation (including other Preferred Stock), at an
annual rate equal to $1.25 per share, payable on the last day of each calendar
quarter commencing September 30, 2004, whether or not declared. Such dividends
shall accumulate from the date of original issuance. With the consent of both
the Corporation and the holders of a majority of the then outstanding shares of
the Series B Preferred Stock, dividends may be paid in a number of additional
shares of Series B Preferred Stock calculated by dividing the amount of the cash
dividends which would be otherwise payable by the Stated Value of the Series B
Preferred Stock. To the extent that the foregoing calculation of the number of
shares payable in respect of a dividend would, after aggregating all such
dividends payable to a holder of Series B Preferred Stock, result in the payment
of a fractional share to such holder, cash in an amount equal to the Stated
Value multiplied by such fractional portion shall be paid to such holder in lieu
thereof.
(b) In the event that the Corporation, with the consent of the holders
of a majority of the then outstanding shares of the Series B Preferred Stock,
determines to pay dividends in additional shares of Series B Preferred Stock,
the Corporation shall take all such actions as may be reasonably necessary or
required to authorize the issuance of such additional shares and all shares of
Common Stock issuable upon conversion thereof, including but not limited to the
amendment of this Certificate of Designation to increase the authorized number
of shares of Series B Preferred Stock, and, if required, the listing of shares
of Common Stock issuable upon conversion thereof on the Principal Market.
(c) So long as any shares of Series B Preferred Stock shall be
outstanding, no dividend, whether in cash or property, shall be paid or
declared, nor shall any other distribution be made, on the Common Stock, Class A
Common Stock or any other equity securities (including other Preferred Stock) of
the Corporation nor shall the Corporation, directly or indirectly, purchase,
redeem or otherwise acquire any Common Stock, Class A Common Stock or any other
equity securities (including other Preferred Stock) of the Corporation, until
all dividends (set forth in Section 4(a) above) on the Series B Preferred Stock
shall have been paid or declared and set apart.
5. LIQUIDATION PREFERENCE AND REDEMPTION.
(a) In the event of any liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary (a "Liquidation"), before any
payment or distribution of the assets of the Corporation (whether capital or
surplus) shall be made to or set apart for the holders of the Common
4
Stock, Class A Common Stock or any other equity securities (including other
Preferred Stock) of the Corporation, the holders of the shares of Series B
Preferred Stock shall be entitled to receive with respect to each share of
Series B Preferred Stock held thereby an amount in cash equal to the Liquidation
Preference of such share of Series B Preferred Stock. If, upon any Liquidation
of the Corporation, the assets of the Corporation, or proceeds thereof,
distributable among the holders of the shares of Series B Preferred Stock shall
be insufficient to pay in full the preferential amount aforesaid, then such
assets, or the proceeds thereof, shall be distributed among the holders of
shares of Series B Preferred Stock ratably in accordance with the respective
amounts that would be payable on such shares of Series B Preferred Stock if all
amounts payable thereon were paid in full.
(b) Upon the completion of the distribution required by Section 5(a)
and any other distribution that may be required with respect to any other series
of Preferred Stock that may from time to time come into existence, subject to
the rights of any other series of Preferred Stock that may from time to time
come into existence, if assets remain in the Corporation, the holders of the
Common Stock and the Class A Common Stock of the Corporation shall receive the
distribution of the remaining assets, or the proceeds thereof.
(c) Notwithstanding anything else in this Certificate of Designations,
a Liquidation of the Corporation shall also be deemed to include the acquisition
of the Corporation by another Person or Persons who are not Affiliates of the
Corporation by means of any transaction or series of related transactions,
including, without limitation, any reorganization, merger, consolidation or
similar transaction, whether of the Corporation with or into any other Person or
Persons or of any other Person or Persons with or into the Corporation, or a
sale of all or substantially all of the assets of the Corporation; provided that
a consolidation or merger as a result of which the holders of capital stock of
the Corporation immediately prior to such merger or consolidation possess (by
reason of such holdings) 50% or more of the voting power of the corporation
surviving such merger, consolidation or similar transaction (or other Person
which is the issuer of the capital stock into which the capital stock of the
Corporation is converted or exchanged in such merger or consolidation) shall not
be treated as a Liquidation of the Corporation within the meaning of this
Section 5,
(d) (i) The Corporation shall redeem all shares of Series B Preferred
Stock outstanding on the Redemption Date (and may so redeem all shares of Series
B Preferred stock outstanding on the Early Redemption Date, if any, as such term
is defined below) at an amount per share (the "Redemption Price") equal to the
Liquidation Preference of such Share. The Redemption Date shall be July 2, 2014
or such later date as may be specified by the holders of more than 50% of the
then outstanding shares of Series B Preferred Stock by written notice given to
the Corporation not more than sixty (60) nor less than thirty (30)days prior to
such tenth anniversary, but in no event shall the Redemption Date be later than
July 2, 2024.
(ii) The Early Redemption Date shall be the date specified in a
notice (the "Early Redemption Notice") given to the holders of the Series B
Preferred Stock by the Corporation. The Early Redemption Notice may be given by
the Corporation (x) only if at any time on or after July 2, 2007, the VWAP of
the Common Stock for a sixty (60) consecutive trading day period (the "Measuring
Period") exceeds $38.00 per share (subject to adjustment for stock splits,
reverse stock splits, stock dividends and similar transactions with respect to
the Common Stock), and (y) only within sixty (60) days after the end of the
first Measuring Period after July 2, 2007 where the VWAP exceeds $38.00 per
share, and if not given within such sixty-day period, the Corporation shall no
longer have a right to redeem the Series B Preferred Stock under the provisions
of this Section (d)(ii). In no event shall the Early Redemption Date be more
than sixty (60) or less than thirty (30) days after the date of such notice.
(iii) On the Redemption Date or the Early Redemption Date, as
the case may be, the Corporation shall deposit the Redemption Price (in cash or,
in the case of the Redemption Date and at the election of the Corporation,
shares of the Corporation's Common Stock as hereinafter provided) of all shares
of Series B Preferred Stock then outstanding, with a bank or trust corporation
having aggregate
5
capital and surplus in excess of $100,000,000 as a trust fund for the benefit of
the respective holders of the shares to be redeemed and not yet redeemed, with
irrevocable instructions and authority to the bank or trust corporation to pay
the Redemption Price for such shares to their respective holders on or after the
Redemption Date or the Early Redemption Date, as the case may be, upon receipt
of notification from the Corporation that such holder has surrendered his share
certificate to the Corporation. From and after the Redemption Date, or the Early
Redemption Date, as the case may be, the shares so called for redemption shall
be redeemed and shall be deemed to be no longer outstanding, and the holders
thereof shall cease to be stockholders with respect to such shares and shall
have no rights with respect thereto except the rights to receive the Redemption
Price of the shares, without interest, upon surrender of their certificates
therefor. Such instructions shall also provide that any moneys or other property
deposited by the Corporation for the redemption of shares which shares are
thereafter converted into shares of the Corporation's Common Stock prior to the
Redemption Date shall be returned to the Corporation forthwith upon such
conversion. The balance of any moneys or property deposited by the Corporation
pursuant to this Section 5(d) remaining unclaimed at the expiration of two (2)
years following the Redemption Date, or the Early Redemption Date, as the case
may be, shall thereafter be returned to the Corporation upon its request
expressed in a resolution of its Board of Directors.
(iv) The Redemption Price payable on the Redemption Date shall
be paid in cash or, at the election of the Corporation, in shares of Common
Stock which for these purposes shall be deemed to have a value per share equal
to the VWAP of a share of Common Stock during the twenty (20) consecutive
trading days immediately preceding the Redemption Date; provided, however, that
the Corporation may only elect to pay the Redemption Price in shares of Common
Stock if (i) the Common Stock are at the Redemption Date traded on a national
securities exchange or the Nasdaq National Market and (ii) the aggregate market
value of the Common Stock and any other common equity of the Corporation so
traded or quoted (including for this purpose the Conversion Shares) exceeds $75
million. The Redemption Price payable on any Early Redemption Date must be paid
entirely in cash.
(v) Any shares of Series B Preferred Stock redeemed pursuant to
this Section or otherwise acquired by the Corporation in any manner whatsoever
shall be canceled and shall not under any circumstances be reissued; the
Corporation may from time to time take such appropriate corporate action as may
be necessary to reduce accordingly the number of authorized shares of the
Corporation's capital stock.
(vi) The Corporation will not, and will not permit any
subsidiary of the Corporation to, purchase or acquire any shares of Series B
Preferred Stock otherwise than pursuant to (1) the terms of this Section 5(d),
or (2) an offer made on the same terms to all holders of Series B Preferred
Stock at the time outstanding.
(vii) Anything contained in this Section 5(d) to the contrary
notwithstanding, the holders of shares of Series B Preferred Stock to be
redeemed in accordance with this Section shall have the right, exercisable at
any time up to the close of business on the Redemption Date (or any Early
Redemption Date) to convert all or any part of such shares to be redeemed as
herein provided into shares of Common Stock pursuant to Section 6 of this
Certificate of Designations; provided, however, that if the Corporation defaults
on the payment of the Redemption Price thereof, and without prejudicing any
other rights or remedies that the holders of Series B Preferred Stock may have,
the holders of Series B Preferred Stock shall have the right to convert all or
any part of such shares to be redeemed up to the date upon which the Corporation
duly pays the Redemption Price.
(viii) There shall be no sinking fund for the payment of
dividends, or liquidation preferences on the Series B Preferred Stock or the
redemption of any shares thereof.
6
6. CONVERSION.
(a) (i) Shares of Series B Preferred Stock shall be convertible into
Common Stock on the terms and conditions set forth in this Section 6.
(ii) Subject to the provisions of this Section 6, each holder
of outstanding shares of Series B Preferred Stock shall have the right, at any
time, at such holder's option, to convert any or all outstanding shares (and
fractional shares) of Series B Preferred Stock, in whole or in part, into fully
paid and non-assessable shares of Common Stock.
(iii) The number of shares of Common Stock deliverable upon
the conversion hereunder of a share of Series B Preferred Stock as of any date
shall be an amount equal to (A) the Liquidation Preference divided by (B) the
Adjusted Conversion Price of such share of Series B Preferred Stock.
(b) CONVERSION REQUIREMENTS.
(i) In order to exercise the conversion right, the holder of
the shares of Series B Preferred Stock to be converted shall surrender the
certificate representing such shares of Series B Preferred Stock (or a lost
stock affidavit therefor reasonably acceptable to the Corporation) at the office
of the Corporation, with a written notice of election to convert completed and
signed, specifying the number of shares of Series B Preferred Stock to be
converted. Unless the shares issuable on conversion are to be issued in the same
name as the name in which such shares of Series B Preferred Stock are
registered, each share surrendered for conversion shall be accompanied by
instruments of transfer, in form satisfactory to the Corporation, duly executed
by the holder or the holder's duly authorized attorney.
(ii) As promptly as practicable after the surrender by a
holder of certificates for shares of Series B Preferred Stock as aforesaid, the
Corporation shall issue and shall deliver to such holder, or on the holder's
written order to the holder's transferee, (w) a certificate or certificates for
the whole number of shares of Common Stock issuable upon the conversion of such
shares in accordance with the provisions of this Section 6, (x) any cash
adjustment required pursuant to Section 6(c) hereof and (y) in the event of a
conversion in part, a certificate or certificates for the whole number of shares
of Series B Preferred Stock not being so converted.
(iii) Each conversion shall be deemed to have been effected
immediately prior to the close of business on the date on which the certificates
for shares of Series B Preferred Stock shall have been surrendered to the
Corporation for conversion and such notice received by the Corporation as
aforesaid, and the person in whose name or names any certificate or certificates
for shares of Common Stock shall be issuable upon such conversion shall be
deemed to have become the holder of record of the shares of Common Stock
represented thereby at such time on such date. All shares of Common Stock
delivered upon conversion of the Series B Preferred Stock will upon delivery be
duly and validly issued and fully paid and non-assessable, free of all liens and
charges and not subject to any preemptive rights. Upon the surrender of
certificates representing shares of Series B Preferred Stock, such shares shall
no longer be deemed to be outstanding and all rights of a holder with respect to
such shares surrendered for conversion shall immediately terminate except the
right to receive the Common Stock and other amounts payable pursuant to this
Section 6 and a certificate or certificates representing shares of Series B
Preferred Stock not converted.
(iv) The Corporation covenants that the Corporation will at
all times reserve from its authorized and unissued Common Stock a sufficient
number of shares of Common Stock to permit conversion in full of the outstanding
shares of Series B Preferred Stock at the Adjusted Conversion Price from time to
time in effect. The Corporation agrees that its issuance of Series B Preferred
Stock shall constitute full authority to its officers and agents who are charged
with the duty of executing stock certificates to execute and issue promptly the
necessary certificates for shares of Common Stock upon the conversion of Series
B Preferred Stock.
7
(c) In connection with the conversion of any shares of Series B
Preferred Stock, no fractions of shares of Common Stock shall be issued, but in
lieu thereof the Corporation shall pay a cash payment in respect of such
fractional interest in an amount equal to such fractional interest multiplied by
the Market Price per share of Common Stock on the business day on which such
shares of Series B Preferred Stock are deemed to have been converted.
(d) ADJUSTMENTS.
(i) If the Corporation shall at any time after the date of the
Stock Purchase Agreement (A) declare a dividend or make a distribution on Common
Stock payable in Common Stock or Class A Common Stock, (B) subdivide or split
the outstanding Common Stock, (C) combine or reclassify the outstanding Common
Stock into a smaller number of shares, or (D) issue any shares of its capital
stock in a reclassification of Common Stock (including any such reclassification
in connection with a consolidation or merger in which the Corporation is the
continuing corporation), the Adjusted Conversion Price in effect at the time of
the record date for such dividend or distribution or of the effective date of
such subdivision, split, combination, consolidation, merger or reclassification
shall be proportionately adjusted so that the conversion of the Series B
Preferred Stock after such time shall entitle the holder to receive the
aggregate number of shares of Common Stock or other securities of the
Corporation (or shares of any security into which such shares of Common Stock
have been combined, consolidated, merged or reclassified pursuant to clause
(d)(i)(C), or (d)(i)(D) above of this Section 6) which, if the Series B
Preferred Stock had been converted immediately prior to such time, such holder
would have owned upon such conversion and been entitled to receive by virtue of
such dividend, distribution, subdivision, split, combination, consolidation,
merger or reclassification.
(ii) If the Corporation shall issue or sell any Common Stock
or Class A Common Stock (other than Excluded Securities) at any time without
consideration or for a consideration per share less than the Adjusted Conversion
Price then in effect, then the Adjusted Conversion Price to be in effect after
such issuance or sale shall be determined by multiplying the Adjusted Conversion
Price in effect immediately prior to such issuance or sale by a fraction, (A)
the numerator of which shall be the aggregate number of shares of Common Stock
and Class A Common Stock outstanding or reserved for issuance immediately before
such issuance or sale, plus the aggregate number of shares of Common Stock that
the aggregate consideration received by the Corporation upon such issuance or
sale would purchase at the Adjusted Conversion Price then in effect and (B) the
denominator of which shall be the aggregate number of shares of Common Stock and
Class A Common Stock outstanding or reserved for issuance immediately before
such issuance or sale, plus the aggregate number of shares of Common Stock and
Class A Common Stock so issued or sold.
(iii) For purposes of making any adjustment required under
Sections 6(d)(ii), the value of the consideration received by the Corporation
for any issuance or sale of securities shall:
(A) insofar as it consists of cash, be computed as
the aggregate of cash received by the Corporation;
(B) insofar as it consists of property other than
cash (subject to clause (C) below), be computed at the fair market value thereof
at the time of such issue, as agreed upon in good faith by the Board of
Directors and the holders of a majority of the outstanding shares of Series B
Preferred Stock;
(C) insofar as it consists of securities, be computed
as follows:
(1) the market price thereof (computed in a
manner similar to the definition of "Market Price" of Common Stock) averaged
over a period of fifteen (15) consecutive trading days consisting of the day as
of which the current fair market value of such securities is being determined
(or if such day is not a trading day, the trading day next preceding such day)
and the fourteen
8
(14) consecutive trading days prior to such day, or (2) if on the date for which
the current fair market value is to be determined such securities are not listed
on any securities exchange or quoted on the Nasdaq National Market or the
over-the-counter market, the current fair market value of such securities shall
be as agreed upon in good faith by the Board of Directors and the holders of a
majority of the outstanding shares of Series B Preferred Stock; or
(D) if shares of Common Stock or Class A Common Stock
are issued together with other shares or securities or other assets of the
Corporation for consideration which covers both, be the proportion of such
consideration so received, computed as provided in clauses (A) through (C)
above, as determined in good faith by the Board of Directors; provided, however,
that in the case of (B), (C) and (D) if the holders of a majority of the
then-outstanding shares of Series B Preferred Stock shall object to any such
determination (or the Board of Directors and the holder of a majority of the
outstanding shares of Series B Preferred Stock shall be unable to agree on a
fair market value determination), the Board of Directors shall retain an
independent appraiser reasonably satisfactory to such holders to determine such
fair market value. The holders shall be notified promptly of any consideration
other than cash to be received by the Corporation and furnished with a
description of the consideration and the fair market value thereof, as
determined by the Board of Directors.
(iv) Except for and with respect to Excluded Securities, in the
event that the Corporation fixes a record date for the issuance of rights,
options or warrants to the holders of its Common Stock or Class A Common Stock
or other securities entitling such holders to subscribe for or purchase shares
of Common Stock or Class A Common Stock (or securities convertible or
exchangeable into shares thereof) at a price per share (or having a conversion
or exercise price per share) less than the Adjusted Conversion Price in effect
on such record date, the maximum number of shares of Common Stock or Class A
Common Stock issuable upon exercise of such rights, options or warrants (or
conversion or exchange of such convertible securities) shall be deemed to have
been issued and outstanding as of such record date and the Adjusted Conversion
Price then in effect shall be adjusted in the manner provided in Section
6(d)(ii) hereof, as though such maximum number of shares had been so issued for
the aggregate consideration payable by the holders of such rights, options,
warrants or convertible securities upon the exercise, conversion or exchange
thereof. In case any portion of such consideration shall be in a form other than
cash, the fair market value of such noncash consideration shall be determined as
set forth in Section 6(d)(iii) hereof. Such adjustment shall be made
successively whenever such record date is fixed; and in the event that such
rights, options or warrants are not so issued or expire unexercised, or in the
event of a change in the number of shares of Common Stock or Class A Common
Stock to which the holders of such rights, options or warrants are entitled
(other than pursuant to adjustment provisions therein comparable to those
contained in this Section 6(d) which adjustment is also made on the Series B
Preferred Stock pursuant to this Section 6(d)), the Adjusted Conversion Price
then in effect shall again be adjusted to be the Adjusted Conversion Price which
would then be in effect if such record date had not been fixed, in the former
event, or the Adjusted Conversion Price which would then be in effect if such
holder had initially been entitled to such changed number of shares of Common
Stock, in the latter event.
(v) Except for and with respect to Excluded Securities, in the
event that the Corporation issues rights, options or warrants entitling the
holders thereof to subscribe for or purchase Common Stock or Class A Common
Stock (or securities convertible or exchangeable into shares thereof) or shall
issue securities that are convertible or exchangeable, directly or indirectly,
into Common Stock or Class A Common Stock, and the price per share of Common
Stock or Class A Common Stock payable upon the exercise, conversion or exchange
thereof of such rights, options, warrants or convertible securities (including
the price paid for such rights, options, warrants or convertible securities
attributable to a share of Common Stock or Class A Common Stock, as applicable)
is less than the Adjusted Conversion Price then in effect, the maximum number of
shares of Common Stock or Class A Common Stock issuable upon exercise of such
rights, options or warrants or upon conversion or exchange of such convertible
securities shall be deemed to have been issued and outstanding as of the date of
such sale or issuance, and the Adjusted Conversion Price shall be adjusted in
the manner provided in Section 6(d)(ii) hereof, as though such maximum number of
shares of Common Stock or Class A Common Stock had
9
been so issued for an aggregate consideration equal to the aggregate
consideration paid for such rights, options, warrants or convertible securities
and the aggregate consideration payable by the holders of such rights, options
warrants or convertible securities upon the exercise, conversion or exchange
thereof. In case any portion of such consideration shall be in a form other than
cash, the fair market value of such noncash consideration shall be determined as
set forth in Section 6(d)(iii) hereof. Such adjustment shall be made
successively whenever such rights, options, warrants or convertible securities
are issued; and in the event that such rights, options or warrants expire
unexercised, or in the event of a change in the number of shares of Common Stock
or Class A Common Stock to which the holders of such rights, options, warrants
or convertible securities are entitled (other than pursuant to adjustment
provisions therein comparable to those contained in this Section 6(d) which
adjustment is also made on the Series B Preferred Stock pursuant to this Section
6(d)), the Adjusted Conversion Price shall again be adjusted to be the Adjusted
Conversion Price which would then be in effect if such rights, options, warrants
or convertible securities had not been issued, in the former event, or the
Adjusted Conversion Price which would then be in effect if such holders had
initially been entitled to such changed number of shares of Common Stock or
Class A Common Stock, in the latter event. No adjustment of the Adjusted
Conversion Price shall be made pursuant to this Section 6(d)(v) to the extent
that the Adjusted Conversion Price shall have been adjusted pursuant to Section
6(d)(iv) hereof upon the setting of any record date relating to such rights,
options, warrants or convertible securities and such adjustment fully reflects
the number of shares of Common Stock and Class A Common Stock to which the
holders of such rights, options, warrants or convertible securities are entitled
and the price payable therefor.
(vi) If a reorganization of the Corporation or a reclassification or
recapitalization of the capital stock of the Corporation or a consolidation or
merger of the Corporation with another Person or the sale of all or
substantially all of the assets of the Corporation to another Person shall be
effected in such a manner that holders of Common Stock shall be entitled to
receive stock, securities, cash or other property with respect to or in exchange
for Common Stock, then (except a transaction for which provision for adjustment
is otherwise made in this Section 6(d)) each share of Series B Preferred Stock
shall thereafter be convertible into such shares of stock, securities, cash or
other property which, if the Series B Preferred Stock had been converted
immediately prior to such reorganization, recapitalization, reclassification,
merger, consolidation of sale, a holder of the number of shares of Common Stock
deliverable upon conversion of such Series B Preferred Stock would have been
entitled; and, in any such case, appropriate adjustment shall be made in the
application of the provisions herein set forth with respect to the rights and
interests thereafter of the holders of the Series B Preferred Stock. The
Corporation shall not effect any such merger, consolidation or sale unless prior
to or simultaneously with the consummation thereof the successor corporation or
purchaser, as the case may be, shall assume by written instrument the obligation
to deliver to the holders of the Series B Preferred Stock such shares of stock,
securities, cash or other properties as, in accordance with the foregoing
provisions, each such holder is entitled to receive.
(vii) If the Corporation shall distribute to all holders of Common
Stock or Class A Common Stock evidences of its indebtedness or assets (other
than regular cash dividends payable out of earnings or surplus), then in each
such case the Conversion Price at which each share of Series B Preferred Stock
shall thereafter be convertible shall be determined by multiplying the
Conversion Price in effect immediately prior to the record date fixed for
determination of shareholders entitled to receive such distribution by a
fraction, the denominator of which shall be the Conversion Price determined as
of the record date mentioned above, and the numerator of which shall be such
Conversion Price on such record date less the then fair market value at such
record date of the portion of such assets or evidence of indebtedness so
distributed applicable to one outstanding share of Common Stock or Class A
Common Stock, as the case may be, as determined by the Corporation's independent
certified public accountants that regularly examines the financial statements of
the Corporation.
(viii) No adjustment to the Adjusted Conversion Price pursuant to
Sections 6(d)(i), 6(d)(ii), 6(d)(iv) or 6(d)(v) hereof shall be required unless
such adjustment would require an increase or decrease of at least $.01 in the
Adjusted Conversion Price; provided however, that any adjustments which by
reason of this Section 6(d)(viii) are not required to be made shall be carried
forward and taken into
10
account in any subsequent adjustment. All calculations under this Section 6(d)
shall be made to the nearest four decimal points.
(ix) In the event that, at any time as a result of the provisions of
this Section 6(d), the holder of Series B Preferred Stock upon subsequent
conversion shall become entitled to receive any shares of capital stock of the
Corporation other than Common Stock, the number of such other shares so
receivable upon conversion of Series B Preferred Stock shall thereafter be
subject to adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions contained herein.
(x) Notwithstanding anything to the contrary contained herein, no
adjustment shall be made pursuant to the provisions of Section 6(d) (ii) or
Section 6 (d) (v) above if, after giving effect to any such adjustment, the
Adjusted Conversion Price would be less than the Minimum Price. The Minimum
Price means $15.05 per share as appropriately adjusted to reflect (i) any stock
split, stock dividend or other event described in Section 6 (d) (i) above and
(ii) any of the other events described in adjustment to the Adjusted Conversion
Price pursuant to the provisions of Sections 6 (d) (iv), (vi) or (vii) above;
provided, however, that (i) the provisions of this Section 6 (d) (x) shall be of
no force and effect (and including that any adjustment of the Conversion Price
that would otherwise have been made hereunder but for the provisions of this
Section 6 (d) (x) shall retroactively be applied) in the event that, at any
time, the issuance and sale of the Preferred Shares to the Purchaser shall have
been approved by the affirmative vote of a majority of the votes entitled to be
cast on the matter at any duly called meeting of the shareholders of the
Corporation at which a quorum is present (or by the written consent of
shareholders entitled to vote thereon in accordance with Delaware law), and (ii)
prior to consummating any transaction that might give rise to an adjustment to
the Conversion Price that would not be given effect as a result of being
prohibited under the provisions of this Section 6 (d) (x), the Company shall use
its reasonable best efforts to obtain such shareholder approval.
(e) Upon the occurrence of each adjustment or readjustment of the
Initial Conversion Price or any subsequent Adjusted Conversion Price pursuant to
this Section 6, the Corporation at its expense shall promptly compute such
adjustment or readjustment in accordance with the terms hereof and furnish by
certified or registered mail to each holder, if any, of Series B Preferred Stock
outstanding at such holder's address shown in the Corporation's registry, a
certificate setting forth such adjustment or readjustment and showing in
reasonable detail the facts upon which such adjustment or readjustment is based
and shall file a copy of such certificate with its corporate records. The
Corporation shall also, upon the written request of any holder of Series B
Preferred Stock, furnish or cause to be furnished to such holder a similar
certificate setting forth (i) such adjustments and readjustments, (ii) the
Adjusted Conversion Price then in effect, and (iii) the number of shares of
Common Stock and the amount, if any, of other property which then would be
received upon the conversion of Series B Preferred Stock. Despite such
adjustment or readjustment, the form of each or all Series B Preferred Stock
certificates, if the same shall reflect the Initial Conversion Price or any
subsequent Adjusted Conversion Price, need not be changed in order for the
adjustments or readjustments to be valid in accordance with the provisions of
this Certificate of Designations, which shall control.
(f) The Corporation shall pay any and all documentary, stamp, issue or
transfer taxes, and any other similar taxes payable in respect of the issue or
delivery of shares of Common Stock upon conversion of shares of Series B
Preferred Stock pursuant hereto; provided, however, that the Corporation shall
not be required to pay any tax which may be payable in respect of any transfer
involved in the issue or delivery of shares of Common Stock in a name other than
that of the holder of the shares of Series B Preferred Stock to be converted and
no such issue or delivery shall be made unless and until the person requesting
such issue or delivery has paid to the Corporation the amount of any such tax or
has established, to the reasonable satisfaction of the Corporation, that such
tax has been paid or is not payable.
(g) No adjustment to the Initial Conversion Price or any subsequent
Adjusted Conversion Price shall reduce the Adjusted Conversion Price below the
then par value of the Common Stock.
11
(h) If any event occurs as to which the provisions of this Section 6
are not strictly applicable, or if strictly applicable would not fairly protect
the rights of the holders of the Series B Preferred Stock or the Corporation in
accordance with the essential intent and principles of such provisions, then the
Board of Directors shall make any adjustment in the application of such
provisions, in accordance with such essential intent and principles, so as to
protect such rights as aforesaid.
7. VOTING RIGHTS.
(a) Except as otherwise provided herein, or as otherwise provided by
applicable law, the holders of the shares of Series B Preferred Stock (i) shall
be entitled to vote with the holders of the Common Stock, as a single class, on
all matters submitted for a vote of holders of Common Stock, (ii) shall be
entitled to vote with the holders of the Common Stock and Class A Common Stock,
as a single class, on all matters on which the holders of Common Stock vote
together with the holders of Class A Common Stock as a single class (iii) shall
be entitled to notice of all stockholders' meetings in accordance with the
Certificate of Incorporation and bylaws of the Corporation and (iv) shall be
entitled to a number of votes equal to the votes represented by the number of
shares of Common Stock which would, at the time of any such vote, be issued to
such holder if all shares of Series B Preferred Stock then held by such holder
were converted into shares of Common Stock; provided, however, that in no event
shall the holders of the Series B Preferred Stock be entitled to cast more than
that number of votes represented by the number of shares of Common Stock equal
to the quotient obtained by dividing (A) 20,000,000 plus the aggregate
Liquidation Preference of all outstanding shares of Series B Preferred Stock
that were issued in lieu of cash dividends pursuant to Section 4 (a) hereof by
(B) $15.05, adjusted in each case for any stock split, stock dividend, reverse
stock split and other similar events with respect to the Common Stock (such
maximum number of votes to be allocated among the outstanding Series B Preferred
Stock on a pro rata basis), it being expressly understood and agreed that such
limitation on the voting power of the Series B Preferred Stock shall not affect
the number of shares of Common Stock issuable upon the conversion thereof or the
amounts payable in respect of the Series B Preferred Stock upon any redemption
or any Liquidation of the Corporation.
(b) The Corporation shall not, without first obtaining the approval of
the holders of not less than a majority of the total number of shares of Series
B Preferred Stock then outstanding, voting together as a single class:
(i) amend, add or repeal, including an amendment, addition or
repeal effected by merger, consolidation, reorganization or any other means, or
repeal any provision of, or add any provision to, the Corporation's Certificate
of Incorporation, as amended, or Bylaws if such action would alter or change
this Section 7 or otherwise adversely alter or change the preferences, rights,
privileges or powers of, or the restrictions provided for the benefit of, the
Series B Preferred Stock or otherwise adversely affect the holders of Series B
Preferred Stock as a class;
(ii) offer, sell, designate, authorize or issue, including by
merger, reclassification, consolidation, reorganization or any other means,
shares of any class or series of stock having any preference or priority as to
dividends or redemption rights, liquidation preferences, conversion rights or
voting rights, superior to or on a parity with any preference or priority of the
Series B Preferred Stock (or any options, warrants, rights, bond, debentures,
notes or other securities convertible, exchangeable or exercisable for any such
stock);
(iii) except as otherwise expressly authorized herein,
increase the number of shares of Series B Preferred Stock authorized pursuant to
this Certificate of Designations or, except upon an Additional Funding pursuant
to the Stock Purchase Agreement, issue any shares of Series B Preferred Stock;
(iv) directly or indirectly acquire or dispose of any
Significant Assets whether by purchase, sale, merger, consolidation or any other
means;
12
(v) merge or consolidate into or with any other Person other
than in connection with an acquisition or disposition of assets not constituting
Significant Assets or for the sole purpose of changing the Corporation's
domicile;
(vi) cause a Liquidation of the Corporation; or
(vii) except for Excluded Securities or securities offered and
sold in a bona fide underwritten public offering, issue or sell any Common Stock
or Class A Common Stock (or securities convertible into or exercisable for
Common Stock or Class A Common Stock) at a price less than the VWAP of such
Common Stock or Class A Stock, as the case may be, during the thirty-day period
immediately preceding the closing of any such issuance and sale if the
provisions of Section 6 (d) (x) would operate to limit any adjustment of the
Conversion Price that would (but for the provisions of Section 6 (d) (x))
otherwise be made hereunder as a result of such issuance and sale.
(c) The consent or votes required in Section 7(b) above shall be in
addition to any approval of stockholders of the Corporation which may be
required by law or pursuant to any provision of the Corporation's Certificate of
Incorporation or Bylaws, which approval shall be obtained by vote of the
stockholders of the Corporation in the manner provided in Section 7(a) above.
(d) The holders of a majority of the outstanding Preferred Stock,
voting as a single class, shall at all times be entitled to elect one member of
the Board of Directors. In addition, at any time that the Corporation has failed
for two (2) consecutive calendar quarters, to pay any dividends required to be
paid by it pursuant to Section 4(a) of this Certificate of Designations, the
holders of a majority of the outstanding Preferred Stock, voting as a single
class, shall be entitled to elect an additional member of the Board of
Directors. In the event that the holders of a majority of the Series B Preferred
Stock elect to exercise such right, the number of directors then constituting
the Board of Directors shall be increased, if necessary, in order to provide for
a total of one (or if applicable, two) additional Board seats. Whenever a
majority of the shares of Series B Preferred Stock issued and reserved for
issuance pursuant to the Stock Purchase Agreement has been converted into Common
Stock pursuant to this Certificate of Designations, then the right of the
holders of a majority of the Series B Preferred Stock to elect such additional
directors shall cease, and the term of office of any persons elected as a
director by the holder of the Series B Preferred Stock shall forthwith terminate
and the number of the Board of Directors shall be reduced accordingly.
8. REPORTS. The Corporation shall mail to all holders of Series B
Preferred Stock those reports, proxy statements and other materials that it
mails to all of its holders of Common Stock.
9. NO IMPAIRMENT. The Corporation will not, by amendment of its
Certificate of Incorporation, through any reorganization, recapitalization,
transfer of assets, consolidation, merger, dissolution, issue or sale of
securities, or any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms to be observed or performed hereunder by the
Corporation, but will at all times in good faith assist in the carrying out of
all the provisions of this Certificate of Designations and in the taking of all
such action as may be necessary or appropriate in order to protect the
conversion rights of the holders of the Series B Preferred Stock against
impairment. Notwithstanding the foregoing sentence, the Corporation shall not be
prohibited from undertaking any actions set forth in, and in strict compliance
with, Section 7(b) of this Certificate of Designations.
10. NOTICES OF RECORD DATE.
(a) If the Corporation shall propose at any time:
(i) to declare any dividend or distribution upon its Common
Stock or other equity securities, whether in cash, property, stock, or other
securities, whether or not a regular cash dividend and whether or not out of
earnings or earned surplus;
13
(ii) to offer for subscription pro rata to the holders of any
class or series of its stock any additional shares of stock of any class or
series or other rights;
(iii) to effect any reorganization, reclassification or
recapitalization of its Common Stock or other equity securities outstanding,
including any subdivision, combination or split, involving a change in the
Common Stock or other equity securities; or
(iv) to merge or consolidate with or into any other Person, or
sell, lease, or convey all or substantially all its property or business, or to
liquidate, dissolve, or wind up (as defined herein),
then, in connection with each such event, the Corporation shall provide to the
holders of the Series B Stock, at least ten (10) days' prior written notice of
the date on which a record shall be taken for such dividend, distribution, or
subscription rights (and specifying the date on which the holders of Common
Stock shall be entitled thereto) or for determining rights to vote in respect of
the matters referred to above.
(b) Each such written notice shall be delivered personally or given by
first class mail, postage prepaid, addressed to the holders of the Series B
Preferred Stock at the address for each such holder as shown on the books of the
Corporation.
11. NO REISSUANCE OF STOCK. No share or shares of Series B Preferred Stock
that are converted, purchased or otherwise acquired by the Corporation may be
reissued, and all such shares shall be canceled, retired and eliminated from the
shares that the Corporation is authorized to issue. The Corporation may from
time to time take such appropriate corporate action as may be necessary to
reduce the authorized number of shares of Series B Preferred Stock accordingly.
If shares of Series B Preferred Stock are not issued after the date hereof due
to the termination of the obligation of the purchasers under the Stock Purchase
Agreement to purchase shares of Series B Preferred Stock, or due to the
termination of the obligation of the Corporation to issue shares of Series B
Preferred Stock, the Corporation shall not issue any shares of Series B
Preferred Stock in excess of the number already issued, and the Corporation will
reduce the authorized number of shares of Series B Preferred Stock to the number
issued at the First Funding.
12. HEADINGS. The headings of the Sections, subsections, clauses and
subclauses of this Certificate of Designations are for convenience of reference
only and shall not define, limit or affect any of the provisions hereof.
13. OFFICE. The Corporation will, so long as any shares of Series B
Preferred Stock are outstanding, maintain an office or agency where such shares
may be presented for registration and where such shares may be presented for
conversion.
14
IN WITNESS WHEREOF, Benihana Inc. has caused this Certificate of
Designations to be signed and attested by the undersigned this 29th day of June,
2004.
BENIHANA INC.
By:
------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: President
15
EXHIBIT B
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as of July 1,
2004, is by and between BENIHANA INC., a Delaware corporation, with headquarters
located at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ (the "Company"),
and BFC FINANCIAL CORPORATION, a Florida corporation, with headquarters located
at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ (the "Purchaser").
RECITALS
In connection with, and pursuant to, that certain Stock Purchase
Agreement between the parties hereto, dated as of June 8, 2004 (the "Stock
Purchase Agreement"), the Company has agreed, upon the terms and subject to the
conditions of the Stock Purchase Agreement, to issue and sell to the Purchaser
at the First Funding and at each Additional Funding shares of Series B
Convertible Preferred Stock, par value $1.00 per share (the "Series B Preferred
Stock"), of the Company (the "Preferred Shares"), which shall be convertible
into shares of Common Stock, par value $0.10 per share (the "Common Stock"), of
the Company in accordance with the terms of the Company's Certificate of
Designations, Preferences and Rights of Series B Convertible Preferred Stock
(the "Certificate of Designations"). Preferred Shares shall also be deemed to
include any additional shares of Series B Preferred Stock issued to Investors
under the terms of the Certificate of Designations. Capitalized terms used
herein and not otherwise defined shall have the respective meanings set forth in
the Stock Purchase Agreement and the Certificate of Designations.
To induce the Purchaser to execute, deliver and perform the Stock
Purchase Agreement, the Company has agreed to provide certain registration
rights under the Securities Act of 1933, as amended, and the rules and
regulations thereunder, or any similar successor statute (collectively, the
"Securities Act"), and applicable state securities laws.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Company and the
Purchaser hereby agree as follows:
1
1. DEFINITIONS.
In addition to the capitalized terms elsewhere defined herein, the
following terms, when used herein, shall have the following meanings, unless the
context otherwise requires:
(a) "Agreement" has the meaning set forth in the preface above.
(b) "Allowable Grace Period" has the meaning set forth in Section
3(m).
(c) "Certificate of Designations" has the meaning set forth in the
recitals above.
(d) "Common Stock" has the meaning set forth in the recitals
above.
(e) "Company" has the meaning set forth in the preface above.
(f) "Company Indemnified Party" has the meaning set forth in
Section 6(b).
(g) "Conversion Shares" means all of the shares of Common Stock
into which the Preferred Shares are converted or are
potentially convertible, subject to adjustment from time to
time as a result of the adjustment provisions in the
Certificate of Designations and any shares or other securities
into which any Conversion Share may be exchanged or converted
as a result of any stock split, stock dividend,
recapitalization, exchange or similar event.
(h) "Demand Registration" has the meaning set forth in Section
2(a).
(i) "Effectiveness Deadline" has the meaning set forth in Section
2(a).
(j) "Exchange Act" has the meaning set forth in Section 3(b).
(k) "Filing Deadline" has the meaning set forth in Section 2(a).
(l) "Grace Period" has the meaning set forth in Section 3(m).
(m) "Inspectors" has the meaning set forth in Section 3(s).
(n) "Investor" or "Investors" means the Purchaser, any transferee
or assignee thereof to whom the Purchaser assigns its rights
under this Agreement and who agrees to become bound by the
provisions of this Agreement in accordance with Section 8(b)
and any transferee or assignee thereof to whom a transferee or
assignee assigns its rights under this Agreement
2
and who agrees to become bound by the provisions of this
Agreement in accordance with Section 8(b).
(o) "Investor Indemnified Person" has the meaning set forth in
Section 6(a).
(p) "Legal Counsel" has the meaning set forth in Section 2(b).
(q) "Liabilities" has the meaning set forth in Section 6(a).
(r) "Person" means any partnership, corporation, association,
joint stock company, trust, limited liability company, joint
venture or unincorporated organization.
(s) "Preferred Shares" has the meaning set forth in the recitals
above.
(t) "Purchaser" has the meaning set forth in the preface above.
(u) "Records" has the meaning set forth in Section 3(s).
(v) "Register," "registered," and "registration" refer to a
registration effected by preparing and filing one or more
Registration Statements in compliance with the Securities Act
and pursuant to Rule 415 under the Securities Act or any
successor rule providing for offering securities on a
continuous or delayed basis ("Rule 415"), and the declaration
or ordering of effectiveness of such Registration Statement(s)
by the SEC.
(w) "Registrable Securities" means (i) all Conversion Shares
issued or issuable upon conversion of the Preferred Shares,
(ii) any shares of capital stock issued or issuable with
respect to the Conversion Shares as a result of any stock
split, stock dividend, recapitalization, exchange or similar
event or otherwise, and (iii) any shares of Common Stock
issued or issuable to Purchaser or any Investor pursuant to
the terms of the Certificate of Designations or the Stock
Purchase Agreement other than the Conversion Shares; provided,
however, that Registrable Securities shall not include any
such shares (A) which have been disposed of pursuant to an
effective registration statement under the Securities Act, (B)
which have been sold or otherwise transferred in a transaction
in which the rights under the provisions of this Agreement
have not been assigned, or (C) which have been sold under Rule
144.
(x) "Registration Period" has the meaning set forth in Section
3(a).
(y) "Registration Statement" means a registration statement or
registration statements of the Company filed under the
Securities Act covering the Registrable Securities.
3
(z) "Rule 144" means Rule 144 promulgated by the SEC.
(aa) "SEC" means the United States Securities and Exchange
Commission.
(bb) "Securities Act" has the meaning set forth in the recitals
above.
(cc) "Series B Preferred Stock" has the meaning set forth in the
recitals above.
(dd) "Stock Purchase Agreement" has the meaning set forth in the
recitals above.
2. REGISTRATION.
(a) MANDATORY REGISTRATION. At any time holders of not less than 50% of
the Registrable Securities (on an as converted basis) may request the
registration of Registrable Securities under the Securities Act (a "Demand
Registration"). Notwithstanding the foregoing, but subject to Sections 2(d),
2(f) and 2(g) below, the Investor shall be entitled to request no more than one
Demand Registration. Upon the request to the Company of a Demand Registration,
the Company shall prepare and file with the SEC the Registration Statement on
Form S-3 covering the resale of all of the Registrable Securities. The Company
shall use its reasonable best efforts to file the Registration Statement as
promptly as practicable, but in no event later than ninety (90) days after the
receipt of a Demand Registration if Form S-3 is available for the Registration
Statement or one hundred twenty (120) days after receipt of a Demand
Registration if Form S-3 is unavailable for such registration.
The applicable deadline in clause (i) or (ii) is referred to herein as
the "Filing Deadline". In the event that Form S-3 is unavailable for such a
registration, the Company shall use such other form as is available for such a
registration, subject to the provisions of Section 2(c). The Registration
Statement prepared pursuant hereto shall register for resale at least that
number of shares of Common Stock equal to the aggregate number of Registrable
Securities issued and outstanding or deemed issued and outstanding on an as
converted basis as of the trading day immediately preceding the date the
Registration Statement is initially filed with the SEC (as if all of the
Preferred Shares then issuable under the Stock Purchase Agreement were issued
and outstanding on such date), subject to adjustment as provided in Section
2(d). The Registration Statement shall not include any provision or other
language exempting the Registration Statement from Rule 416 under the Securities
Act. The Company shall use its reasonable best efforts to have the Registration
Statement declared effective by the SEC as promptly as reasonably practicable,
but in any event no later than the date that is two hundred ten (210) days after
the receipt by the Company of a Demand Registration (the "Effectiveness
Deadline").
4
Upon receipt of a request for a Demand Registration, the Company shall
promptly send written notice to each Investor that has not participated in the
Demand Registration request, advising them of the Demand Registration and
inviting them to have their Registrable Securities included in the Registration
Statement.
(b) LEGAL COUNSEL. Subject to Section 5 hereof, Purchaser or Investors
holding a majority of the Registrable Securities (on an as converted basis)
shall have the right to select one legal counsel to review and oversee any
offering pursuant to this Section 2 ("Legal Counsel"). The Company shall
reasonably cooperate with Legal Counsel in performing the Company's obligations
under this Agreement.
(c) INELIGIBILITY FOR FORM S-3. In the event that Form S-3 is not
available for the registration of the resale of Registrable Securities
hereunder, the Company shall (i) register the resale of the Registrable
Securities on another appropriate form reasonably acceptable to the holder of a
majority of the Registrable Securities (on an as converted basis) and (ii)
undertake to register the Registrable Securities on Form S-3 as soon as such
form is available; provided that the Company shall maintain the effectiveness of
the other appropriate form used by the Company for registration pursuant to
clause (i) above then in effect until such time as a Registration Statement on
Form S-3 covering the Registrable Securities has been declared effective by the
SEC.
(d) SUFFICIENT NUMBER OF SHARES REGISTERED. In the event that the
number of shares available under the Registration Statement filed pursuant to
Section 2(a) is, or becomes, insufficient to cover all of the Registrable
Securities required to be covered by the Registration Statement, the Company
shall file a new Registration Statement (pursuant to Rule 462 of the Securities
Act if available or otherwise) so as to cover the aggregate number of the
Registrable Securities required to be registered hereunder as of the trading day
immediately preceding the date of the filing of such new Registration Statement
as soon as reasonably practicable, but in any event not later than twenty (20)
days after the necessity therefor arises. The Company shall use its reasonable
best efforts to cause such new Registration Statement to become effective as
soon as practicable following the filing thereof. For purposes of this
Agreement, such additional Registration Statement shall be deemed to be the
Registration Statement required to be filed by the Company pursuant to Section
2(a) hereof (and shall not be considered an additional Registration Statement),
and the Company and the Purchaser shall have the same rights and obligations
with respect to such additional Registration Statement as they shall have with
respect to the initial Registration Statement required to be filed by the
Company pursuant to Section 2(a).
(e) SELECTION OF UNDERWRITERS. The Investors holding a majority of the
Registrable Securities (on an as converted basis), in consultation with the
Company, shall have the right to elect to have an underwritten registration
hereunder and to select the managing/book-running underwriter(s), if any, for
the Registrable Securities to be registered pursuant to Section 2(a), subject to
the Company's written approval of such managing/book-running underwriter(s),
such written approval not to be unreasonably withheld or delayed.
5
(f) CERTAIN LIMITATIONS. In the event that a registration (or portion
thereof) hereunder is underwritten (at the election of the Investors as
described in Section 2(e)), and to the extent that the managing underwriter
shall be of the opinion (and shall state so in writing) that the inclusion of
all such securities would adversely affect the marketing of the securities
(including Registrable Securities) to be sold by the Company or any Investor,
then the number of securities that may be included in the underwriting shall be
allocated, first, to the Investors, allocated among the Investors on a pro rata
basis based on the total number of Registrable Securities held by the Investors
and second, only if the Investors are able to have all of their Registrable
Securities included, to the Company and other holders of registration rights to
the extent they are participating in such offering. Any Registrable Securities
or other securities excluded or withdrawn from such underwriting shall be
withdrawn from such registration. Notwithstanding any contrary provision in this
Section 2(f), in the event that there is an underwritten offering of securities
of the Company pursuant to a registration statement covering Registrable
Securities and a selling holder of Registrable Securities does not elect to sell
his, her or its Registrable Securities to the underwriters of the Company's
securities in connection with such offering, such holder shall refrain from
selling such Registrable Securities not registered pursuant to this Section 2(f)
during the period of distribution of the Company's securities by such
underwriters and the period in which the underwriting syndicate participates in
the after market; PROVIDED, HOWEVER, that such holder shall, in any event, be
entitled to sell its Registrable Securities commencing on the sixtieth (60th)
day after the effective date of such registration statement. In the event that a
registration, or portion thereof, is underwritten, and the managing underwriter
shall be of the opinion (and shall so state in writing) that it is advisable
that a new registration statement be filed with respect to the Registrable
Securities to be sold in such underwritten offering, then the Company's
obligation to prepare and file such additional registration statement in
accordance with Section 2(a) and the other provisions of this Agreement shall be
in addition to, and not in lieu of, its obligations to file and maintain the
effectiveness of a Registration Statement under Section 2(a) hereof.
Notwithstanding the foregoing, the Company shall only be obligated to file one
such additional registration statement pursuant to the previous sentence.
(g) ADDITIONAL DEMAND REGISTRATION. If (i) a Demand Registration
requested pursuant to Section 2(a) is deemed not to have been effected or (ii)
the Registration Statement filed pursuant to Section 2(a) does not remain
effective under the Securities Act until all Registrable Securities requested to
be registered have been sold under the Registration Statement, then the Company
shall continue to be obligated to effect an additional Demand Registration
pursuant to Section 2(a).
3. RELATED OBLIGATIONS.
At such time as the Company is obligated to file a Registration
Statement with the SEC pursuant to Sections 2(a), 2(c) or 2(d), the Company will
use its reasonable
6
best efforts to effect the registration of the Registrable Securities covered by
such Registration Statement in accordance with the intended method of
disposition thereof and, pursuant thereto, the Company shall have the following
obligations:
(a) The Company shall, as promptly as reasonably practicable,
prepare and file with the SEC a Registration Statement with respect to the
applicable Registrable Securities (but in no event later than the Filing
Deadline) and use its reasonable best efforts to cause such Registration
Statement relating to the applicable Registrable Securities to become effective
no later than the Effectiveness Deadline. The Company shall use its reasonable
best efforts to keep the Registration Statement continuously effective pursuant
to Rule 415 at all times until the date on which the Investors shall have sold
all the Registrable Securities covered by such Registration Statement (the
"Registration Period"), which Registration Statement (including any amendments
or supplements thereto and prospectuses contained therein), at the time it is
first filed with the SEC, at the time it is ordered effective by the SEC and at
all times during which it is required to be effective hereunder (and each such
amendment and supplement at the time it is filed with the SEC and at all times
during which it is available for use in connection with the offer and sale of
the Registrable Securities) shall not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein, or
necessary to make the statements therein, in light of the circumstances in which
they were made, not misleading.
(b) The Company shall prepare and file with the SEC such
amendments (including post-effective amendments) and supplements to the
Registration Statement and the prospectus used in connection with such
Registration Statement, which prospectus is to be filed pursuant to Rule 424
promulgated under the Securities Act, as may be reasonably requested by an
underwriter, if any, or Investors holding Registrable Securities being
registered as required by law or as may be necessary to keep such Registration
Statement continuously effective at all times during the Registration Period, to
add Investors as selling shareholders thereunder and, during such period, comply
with the provisions of the Securities Act with respect to the disposition of all
Registrable Securities of the Company covered by such Registration Statement
until such time as all of such Registrable Securities shall have been disposed
of in accordance with the intended methods of disposition by the seller or
sellers thereof as set forth in such Registration Statement. In the case of
amendments and supplements to a Registration Statement which are required to be
filed pursuant to this Agreement (including pursuant to this Section 3(b)) by
reason of the Company filing a report on Form 10-K, Form 10-Q or Form 8-K or any
analogous report under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), the Company shall have incorporated such report by reference
into the Registration Statement, if applicable, or shall file such amendments or
supplements with the SEC on the same day on which the Exchange Act report is
filed which created the requirement for the Company to amend or supplement the
Registration Statement.
(c) The Company shall permit Legal Counsel to review and
comment
7
upon (i) any Registration Statement prior to its filing with the SEC and (ii)
all other Registration Statements and all amendments and supplements to all
Registration Statements (except for Annual Reports on Form 10-K, Quarterly
Reports on Form 10-Q and Current Reports on Form 8-K and any similar or
successor reports) prior to their filing with the SEC. The Company shall not
submit a request for acceleration of the effectiveness of a Registration
Statement or any amendment or supplement thereto without the prior consent of
Legal Counsel, which consent shall not be withheld unless Legal Counsel has
reasonable objections to disclosures in the Registration Statement relating to
(I) the Registrable Securities or the Preferred Shares or the means of
distribution of same or (II) the Investors. The Company shall furnish to Legal
Counsel, without charge (i) any correspondence from the SEC or the staff of the
SEC to the Company or its representatives relating to any Registration
Statement, (ii) promptly after the same is prepared and filed with the SEC, one
copy of any Registration Statement and any amendment(s) thereto, including
financial statements and schedules, all documents incorporated therein by
reference and all exhibits and (iii) upon the effectiveness of any Registration
Statement, one copy of the prospectus included in such Registration Statement
and all amendments and supplements thereto. The Company shall reasonably
cooperate with Legal Counsel in performing the Company's obligations pursuant to
this Section 3.
(d) The Company shall furnish to each Investor whose
Registrable Securities are included in any Registration Statement, without
charge (i) promptly after the same is prepared and filed with the SEC, at least
one copy of such Registration Statement and any amendment(s) thereto, including
financial statements and schedules, all documents incorporated therein by
reference, all exhibits and each preliminary prospectus, (ii) upon the
effectiveness of any Registration Statement, such number of copies of the
prospectus included in such Registration Statement and all amendments and
supplements thereto as such Investor may reasonably request and (iii) such other
documents, including copies of any preliminary or final prospectus, as such
Investor may reasonably request from time to time in order to facilitate the
disposition of the Registrable Securities owned by such Investor.
(e) The Company shall use its reasonable best efforts to cause
such Registrable Securities to be registered with or approved by such other
governmental agencies or authorities as may be necessary to consummate the
disposition of such Registrable Securities pursuant to a Registration Statement;
provided, however, that the Company shall not be required in connection
therewith or as a condition thereto to (x) qualify to do business in any
jurisdiction where it would not otherwise be required to qualify but for this
Section 3(e), (y) subject itself to general taxation in any such jurisdiction,
or (z) file a general consent to service of process in any such jurisdiction.
(f) The Company shall notify Legal Counsel and each Investor
in writing of the happening of any event, as promptly as reasonably practicable
after becoming aware of such event, as a result of which the prospectus included
in a Registration Statement, as then in effect, includes an untrue statement of
a material fact
8
or omission to state a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading (provided that in no event shall such notice contain
any material, nonpublic information), and as promptly as practicable prepare a
supplement or amendment to such Registration Statement to correct such untrue
statement or omission, and deliver such number of copies of such supplement or
amendment to Legal Counsel and each Investor as Legal Counsel or such Investor
may reasonably request. The Company shall also as promptly as practicable notify
Legal Counsel and each Investor in writing (i) when a prospectus or any
prospectus supplement or post-effective amendment has been filed, and when a
Registration Statement or any post-effective amendment has become effective
(notification of such effectiveness shall be delivered to Legal Counsel and each
Investor by facsimile on the same day of such effectiveness and by overnight
mail), (ii) of any request by the SEC for amendments or supplements to a
Registration Statement or related prospectus or related information, and (iii)
of the Company's reasonable determination that a post-effective amendment to a
Registration Statement would be appropriate.
(g) The Company shall use its reasonable best efforts to
prevent the issuance of any stop order or other suspension of effectiveness of a
Registration Statement, or the suspension of the qualification of any of the
Registrable Securities for sale in any jurisdiction and, if such an order or
suspension is issued, to obtain the withdrawal of such order or suspension
promptly and to notify Legal Counsel and each Investor who holds Registrable
Securities being sold of the issuance of such order and the resolution thereof
or its receipt of actual notice of the initiation or threat of any proceeding
for such purpose.
(h) The Company shall cooperate with the Investors who hold
Registrable Securities being offered and facilitate the timely preparation and
delivery of certificates (not bearing any restrictive legend) representing the
Registrable Securities to be offered pursuant to a Registration Statement and
enable such certificates to be in such denominations or amounts, as the case may
be, as the Investors may reasonably request and registered in such names as the
Investors may request.
(i) The Company shall maintain a transfer agent and registrar
of all such Registrable Securities.
(j) The Company shall otherwise use its reasonable best
efforts to comply in all material respects with all applicable rules and
regulations of the SEC in connection with any registration hereunder and make
available to Investors holding Registrable Securities, as soon as reasonably
practicable, earnings statements (which need not be audited) covering a period
of twelve (12) months beginning within three months after the effective date of
the Registration Statement, which earnings statements shall satisfy the
provisions of Section 11(a) of the Securities Act.
9
(k) Within one (1) Business Day after a Registration Statement
(including any amendments or supplements thereto and the prospectuses contained
therein) is ordered effective by the SEC, the Company shall deliver, and shall
cause legal counsel for the Company to deliver, to the transfer agent for such
Registrable Securities (with copies to the Investors whose Registrable
Securities are included in such Registration Statement) confirmation that such
Registration Statement has been declared effective by the SEC.
(l) The Company shall take all other actions reasonably
necessary to expedite and facilitate disposition by Investors of Registrable
Securities pursuant to a Registration Statement.
(m) Notwithstanding anything to the contrary in Section 3(g),
at any time after a Registration Statement has been declared effective by the
SEC, the Company may suspend the use or effectiveness of any Registration
Statement (including any amendments or supplements thereto and the prospectuses
contained therein) (a "Grace Period") (and the Investors hereby agree not to
offer or sell any Registrable Securities pursuant to such Registration Statement
after receiving written notice thereof during such Grace Period) if there is
material, non-public information about the Company that the Company determines
would be detrimental to the Company if so disclosed or would adversely affect a
financing acquisition, disposition, merger or other material transaction;
provided, that the Company shall promptly (i) notify the Investors in writing of
such suspension and the date on which the Grace Period will begin and (ii)
notify the Investors in writing of the date on which the Grace Period ends; and,
provided further, that no individual Grace Period shall exceed sixty (60)
consecutive days and during any twelve-month period, all such Grace Periods
shall not exceed an aggregate of one hundred twenty (120) days (an "Allowable
Grace Period"). For purposes of determining the length of a Grace Period above,
the Grace Period shall begin on and include the date the holders receive the
notice referred to in clause (i) and shall end on and include the later of the
date the holders receive the notice referred to in clause (ii) and the date
referred to in such notice. The provisions of Sections 3(b) and 3(f) hereof with
respect to the information giving rise thereto unless such material non-public
information is no longer applicable, shall not be applicable during any
Allowable Grace Period.
(n) In the event of any underwritten public offering (at the
election of the Investors, as described in Section 2(e)), the Company shall
enter into and perform its obligations under an underwriting agreement, in usual
and customary form for primary underwritten offerings, with the managing
underwriter(s) of such offering. Each Investor participating in such
underwriting shall also enter into and perform its obligations pursuant to such
an agreement.
(o) The Company shall obtain opinions of counsel to the
Company and updates thereof (which counsel and opinions (in form, scope and
substance) shall be reasonably satisfactory to the managing underwriters, if
any) in customary form addressed to the Investors and the underwriters, if any,
covering such matters as are
10
customarily covered in opinions requested in underwritten offerings and such
other matters as may be reasonably requested by the Investors and such
underwriters (it being agreed that the matters to be covered by such opinion or
a written statement by such counsel delivered in connection with such opinions
shall include, without limitation, an opinion, subject to reasonable and
customary qualifications as of the date of the opinion and as of the effective
date of the Registration Statement relating to the registration or most recent
post-effective amendment thereto, as the case may be, regarding the absence from
such Registration Statement and the prospectus included therein, as then amended
or supplemented, including the documents incorporated by reference therein, of
an untrue statement of a material fact or the 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).
(p) The Company shall obtain "comfort letters" and updates
thereof from the independent public accountants of the Company (and, if
necessary, any other independent public accountants of any subsidiary of the
Company or of any business acquired by the Company for which financial
statements and financial data are, or are required to be, included in the
Registration Statement), addressed to the Investors and the underwriters, in
customary form and covering matters of the type customarily covered in comfort
letters in connection with primary underwritten offerings.
(q) The Company shall deliver such other customary documents
and certificates as may be reasonably requested by the Investors and the
managing underwriters, if any, including those to evidence compliance with any
customary conditions contained in the underwriting agreement or other agreement
entered into by the Company.
(r) The Company shall use its reasonable best efforts to
secure the listing of all of the Registrable Securities covered by such
Registration Statement upon each national securities exchange and automated
quotation system, if any, upon which shares of Common Stock shall be so listed
(subject to notice of issuance) and shall maintain, so long as any other shares
of Common Stock shall be so listed, such listing of such Registrable Securities.
(s) The Company shall make available for inspection by any
Investor, and any attorney (including Legal Counsel), any underwriter,
accountant or other agent retained by any such Investor (collectively, the
"Inspectors"), all pertinent financial and other records, pertinent corporate
documents and properties of the Company (collectively, the "Records"), as shall
be reasonably necessary to enable each Inspector to exercise its due diligence
responsibility, and cause the Company's officers, directors and employees to
supply all information which any Inspector may reasonably request for purposes
of such due diligence; provided, however, that each Inspector shall hold in
confidence and shall not make any disclosure (except to an Investor) of any
Record or other information which the Company determines in good faith to be
confidential, and of which
11
determination the Inspectors are so notified, unless (i) the release of such
Records is ordered pursuant to a subpoena or other order from a court or
government body of competent jurisdiction or (ii) the information in such
Records has been made generally available to the public other than by disclosure
in violation of this or any other agreement. The Company shall not be required
to disclose any confidential information in such Records to any Inspector until
and unless such Inspector shall have entered into confidentiality agreements (in
form and substance satisfactory to the Company) with the Company with respect
thereto, substantially in the form of this Section 3(s). Each Investor agrees
that it shall, upon learning that disclosure of such Records is sought in or by
a court or governmental body of competent jurisdiction or through other means,
give prompt notice to the Company and allow the Company, at the Company's own
expense, to undertake appropriate action to prevent disclosure of, or to obtain
a protective order for, the Records deemed confidential. The Company shall hold
in confidence and shall not make any disclosure of information concerning an
Investor provided to the Company pursuant to Section 4 hereof unless (i)
disclosure of such information is necessary to comply with Federal or state
securities laws, (ii) the disclosure of such information is necessary to avoid
or correct a misstatement or omission in any Registration Statement, (iii) the
release of such information is ordered pursuant to a subpoena or other order
from a court or governmental body of competent jurisdiction or (iv) such
information has been made generally available to the public other than by
disclosure in violation of this or any other agreement. The Company agrees that
it shall, upon learning that disclosure of such information concerning an
Investor is sought in or by a court or governmental body of competent
jurisdiction or through other means, give prompt notice to such Investor, at
such Investor's own expense, to undertake appropriate action to prevent
disclosure of, or to obtain a protective order for, such information.
(t) During the period that the Company is required to maintain
effectiveness of the Registration Statement pursuant to Section 3(a), the
Company shall not bid for or purchase any Common Stock or any right to purchase
Common Stock or attempt to induce any person to purchase any such security or
right if such bid, purchase or attempt would in any way limit the right of an
Investor to sell Registrable Securities by reason of the limitations set forth
in Regulation M under the Exchange Act or otherwise.
4. OBLIGATIONS OF THE INVESTORS.
(a) At least ten (10) Business Days prior to the first
anticipated filing date of a Registration Statement, the Company shall notify
each Investor in writing of the information the Company reasonably requires from
each such Investor if such Investor elects to have any of such Investor's
Registrable Securities included in such Registration Statement. It shall be a
condition precedent to the obligations of the Company to complete the
registration pursuant to this Agreement with respect to the Registrable
Securities of a particular Investor that such Investor shall furnish to the
Company such information regarding itself, the Registrable Securities held by it
and the
12
intended method of disposition of the Registrable Securities held by it as shall
be reasonably required to effect the registration of such Registrable Securities
and shall execute such documents in connection with such registration as the
Company may reasonably request.
(b) Each Investor, by such Investor's acceptance of the
Registrable Securities, agrees to cooperate with the Company as reasonably
requested by the Company in connection with the preparation and filing of any
Registration Statement hereunder, unless such Investor no longer holds any
Registrable Securities or has notified the Company in writing of such Investor's
election to exclude all of such Investor's Registrable Securities from such
Registration Statement.
(c) Each Investor agrees that, upon receipt of any notice from
the Company of the happening of any event of the kind described in Section 3(g),
the first sentence of Section 3(f) or Section 3(m), such Investor will
immediately discontinue disposition of Registrable Securities pursuant to any
Registration Statement(s) covering such Registrable Securities until such
Investor's receipt of the copies of the supplemented or amended prospectus
contemplated by Section 3(g) or the first sentence of Section 3(f) or receipt of
notice that no supplement or amendment is required or receipt of notice pursuant
to Section 3(m) and, if so directed by the Company, such Investor shall deliver
to the Company, or destroy all copies in such Investor's possession, any
prospectus covering such Registrable Securities current at the time of receipt
of such notice. Notwithstanding anything to the contrary, the Company shall
cause its transfer agent to deliver unlegended shares of Common Stock to a
transferee of an Investor in accordance with the terms of the Stock Purchase
Agreement in connection with any sale of Registrable Securities with respect to
which an Investor has entered into a contract for sale prior to the Investor's
receipt of a notice from the Company of the happening of any event of the kind
described in Section 3(g), the first sentence of Section 3(f) or Section 3(m)
and for which the Investor has not yet settled.
5. EXPENSES OF REGISTRATION.
All reasonable expenses, other than underwriting discounts and
commissions and transfer taxes if any, relating to the sale or disposition of an
Investor's Registrable Securities pursuant to a Registration Statement, incurred
in connection with registrations, filings or qualifications pursuant to Sections
2 and 3, including, without limitation, all registration, listing and
qualifications fees, printers and accounting fees, fees and disbursements of
Legal Counsel (up to an aggregate of $25,000) in connection with registration,
filing or qualification pursuant to Sections 2 and 3 of this Agreement and fees
and disbursements of counsel for the Company shall be paid by the Company.
6. INDEMNIFICATION.
In the event any Registrable Securities are included in a Registration
Statement under this Agreement:
13
(a) OBLIGATIONS OF THE COMPANY TO INDEMNIFY. The Company
agrees to indemnify, defend and hold harmless to the fullest extent permitted by
law, each Investor participating in the registration, and each of its partners,
members, managers, officers and directors and each Person who controls such
holders within the meaning of the Securities Act (each an "Investor Indemnified
Person") against all losses, claims, damages, liabilities and expenses
(including without limitation, reasonable attorneys' fees, whether arising out
of disputes between the parties or with third parties) ("Liabilities") caused by
(i) any untrue or alleged untrue statement of material fact contained in any
Registration Statement or any prospectus or preliminary prospectus or amendment
thereof or supplement thereto, (ii) any omission or alleged omission of a
material fact required to be stated therein or necessary to make the statements
therein not misleading or (iii) any violation or alleged violation by the
Company of the Securities Act, the Exchange Act, any state securities law or any
rule or regulation promulgated under the Securities Act, Exchange Act, or any
state securities law, in each case in connection with such registration, except
insofar as the same are caused by or contained in any information furnished in
writing to the Company by such Investor expressly for use therein or by such
Investor's failure to deliver a copy of the Registration Statement or prospectus
or any amendments or supplements thereof or thereto after the Company has timely
furnished such Investor with a sufficient number of copies of the same. The
payments required by this Section 6(a) will be made periodically during the
course of the investigation or defense, as and when bills are received or
expenses incurred. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of an Investor Indemnified
Person and shall survive the transfer of the Registrable Securities by an
Investor pursuant to Section 8(b).
(b) OBLIGATIONS OF THE INVESTORS TO INDEMNIFY. Each Investor
participating in the registration shall indemnify and hold harmless the Company,
its directors and officers and each Person who controls the Company within the
meaning of the Securities Act (each a "Company Indemnified Party") against any
Liabilities resulting from any untrue or alleged untrue statement of material
fact contained in such Registration Statement or any prospectus, preliminary
prospectus, amendment or supplement thereof or thereto, or any omission or
alleged omission of a material fact required to be stated therein or necessary
to make the statements therein not misleading, but only to the extent that such
untrue statement or omission related to such Investor and is contained in any
information or affidavit so furnished in writing by such Investor specifically
for use in such Registration Statement or any prospectus, preliminary
prospectus, amendment or supplement thereof or thereto; provided that the
obligation to indemnify hereunder will be several, not joint and several, among
the Investors holding such Registrable Securities, and the liability of each
such Investor under this Section 6 shall be limited to the net amount received
by such Investor from the sale of Registrable Securities pursuant to such
Registration Statement; provided, further, that the indemnity agreement
contained in this Section 6(b) shall not apply to
14
amounts paid in settlement of any Liabilities if such settlement is effected
without the prior written consent of such Investor, which consent shall not be
unreasonably withheld.
(c) PROCEDURE. Any Person entitled to indemnification
hereunder shall (i) give prompt written notice to the indemnifying party of any
claim with respect to which it seeks indemnification, provided any such failure
shall not relieve the indemnifying party of liability hereunder, except to the
extent that the indemnifying party is prejudiced or injured by such failure, and
(ii) unless in such indemnified party's reasonable judgment an actual or
potential conflict of interest between such indemnified and indemnifying parties
may exist with respect to such claim, permit such indemnifying party to assume
the defense of such claim with counsel reasonably satisfactory to the
indemnified party. If such defense is assumed, the indemnifying party will not
be subject to any liability for any settlement made by the indemnified party
without its consent (but such consent will not be unreasonably withheld). An
indemnifying 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 indemnified by such indemnifying party with respect to
such claim, unless in the reasonable judgment of any indemnified party an actual
or potential conflict of interest may exist between such indemnified party and
any other of such indemnified parties with respect to such claim. No
indemnifying party shall, without the prior written consent of the indemnified
party, effect any settlement of any pending or threatened proceeding in respect
to which (x) any indemnified party is or could have been a party and (y)
indemnity has or could have been sought hereunder by such indemnified party,
unless such settlement includes an unconditional release of such indemnified
party from all liability for claims that are the subject matter of such
proceeding.
(d) CONTRIBUTION. To the extent that any indemnification by an
indemnifying party provided for in this Section 6 is prohibited or limited by
law, the indemnifying party, in lieu of indemnifying such indemnified party,
shall contribute to the amount paid or payable by such indemnified party as a
result of such Liabilities in such proportion as is appropriate to reflect the
relative fault of the indemnifying party and the indemnified party in connection
with the statements or omissions which resulted in such Liabilities, as well as
any other relevant equitable considerations; provided that in no event shall an
Investor be required to contribute in excess of the net amount received by such
Investor from the sale of Registrable Securities in the transaction or
transactions at issue. The relative fault of such indemnifying party and
indemnified party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of material fact or omission or
alleged omission to state a material fact, has been made by, or relates to
information supplied by, such indemnifying party or indemnified party, and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 6(d) were determined solely by pro rata
allocation or by any
15
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 Securities Act) shall be entitled to contribution from any Person who was
not guilty of such fraudulent misrepresentation.
(e) SURVIVAL. The indemnification and contribution provided
for under this Agreement will remain in full force and effect regardless of any
investigation made by or on behalf of the indemnified party or any officer,
director or controlling Person of such indemnified party and will survive the
transfer of Series B Preferred Stock or any Registrable Securities.
7. REPORTS UNDER THE EXCHANGE ACT.
With a view to making available to the Investors all of the benefits of
Rule 144, the Company agrees to:
(i) make and keep public information available, as those terms
are understood and defined in Rule 144, (ii) file with the SEC in a timely
manner all reports and other documents required of the Company under the
Securities Act and the Exchange Act and (iii) furnish to each Investor so long
as such Investor owns Registrable Securities, as promptly as reasonably
practicable upon request, (A) a written statement by the Company that it has
complied with the reporting requirements of Rule 144 and the Exchange Act, (B) a
copy of the most recent annual or quarterly report of the Company and such other
reports and documents so filed by the Company and (C) such other information as
may be reasonably requested to permit the Investors to sell such securities
pursuant to Rule 144 without registration.
8. MISCELLANEOUS.
(a) OTHER REGISTRATION RIGHTS. The Company may hereafter grant
to any Person or Persons the right to request the Company to register any equity
securities of the Company, or any securities convertible or exchangeable into or
exercisable for such securities, without the prior written consent of the
holders of the Registrable Securities; provided, however, that the registration
rights of the securities held by such Person or Persons may not have priority
over, or be on parity with, the registration rights of the Registrable
Securities hereunder in any respect (including under Section 2(f)). The Company
represents that no securityholder of the Company is entitled to registration
rights which are prior to, or on parity with, any rights of the Investors
hereunder (including rights under Section 2(f)).
(b) ASSIGNMENT OF REGISTRATION RIGHTS. The registration rights
of the Purchaser under this Agreement with respect to any Registrable Securities
may be assigned to any Person who acquires such Registrable Securities. Upon any
such assignment (i) the Investor shall give the Company written notice at or
prior to the time
16
of such assignment stating the name and address of the assignee and identifying
the shares with respect to which the rights under this Agreement are being
assigned; (ii) such assignee shall agree in writing, in form and substance
reasonably satisfactory to the Company, to be bound to the same extent and in
the same capacity as the Investor by the provisions of this Agreement; and (iii)
such assignee acknowledges, immediately following such assignment, the further
disposition of such securities by such assignee may be restricted under the
Securities Act. In connection with any such transfer the Company shall, at its
sole cost and expense, as promptly as reasonably practicable after such
assignment take such reasonable actions as shall be reasonably acceptable to the
Investors and such permitted transferee to assure that the Registration
Statement and related prospectus are available for use by such permitted
transferee for sales of the Registrable Securities in respect of which the
rights to registration have been so assigned.
(c) SUCCESSORS AND ASSIGNS; THIRD PARTY BENEFICIARIES. Except
as otherwise expressly provided herein, all covenants and agreements contained
in this Agreement by or on behalf of any of the parties hereto will bind and
inure to the benefit of the respective permitted successors and assigns of the
parties hereto, whether so expressed or not.
(d) SEVERABILITY. Whenever possible, each provision of this
Agreement will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, such provision will be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of this Agreement.
(e) DESCRIPTIVE HEADINGS. The descriptive headings of this
Agreement are inserted for convenience of reference only and do not constitute a
part of, and shall not be utilized in interpreting, this Agreement.
(f) NOTICES. Any notices, consents, waivers or other
communications required or permitted to be given under the terms of this
Agreement must be in writing and will be deemed to have been delivered: (i) upon
receipt, when delivered personally; (ii) upon receipt, when sent by facsimile
(provided confirmation of transmission is mechanically or electronically
generated and kept on file by the sending party); (iii) one (1) Business Day
after deposit with a nationally recognized overnight delivery service or (iv)
five (5) days after deposit in the U.S. mail, return receipt requested, in each
case properly addressed to the party to receive the same. The addresses and
facsimile numbers for such communications shall be:
If to the Company:
Benihana Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facscimile:
Attention: President
17
With a copy to:
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ - ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
If to Purchaser:
BFC Financial Corporation
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Attention: Chief Executive Officer
With a copy to:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, P.A.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ - ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
If to an Investor, to such address and/or facsimile number and/or to
the attention of such other person as the recipient party has specified by
written notice given to each other party five (5) days prior to the
effectiveness of such change. Written confirmation of receipt or deposit in the
U.S. mail, (A) given by the recipient of such notice, consent, waiver or other
communication, (B) mechanically or electronically generated by the sender's
facsimile machine containing the time, date, recipient facsimile number and an
image of the first page of such transmission, (C) provided by a courier or
overnight courier service, which shall be rebuttable evidence of personal
service, receipt by facsimile or receipt from a nationally recognized overnight
delivery service or (D) by a signed return receipt in accordance with clause
(i), (ii), (iii), or (iv) above, respectively.
(g) GOVERNING LAW. The corporate laws of the State of Delaware
shall govern all issues concerning the relative rights of the Company and its
stockholders. All other questions concerning the construction, validity,
enforcement and interpretation of this Agreement shall be governed by the
internal laws of the State of Florida, without
18
giving effect to any choice of law or conflict of law provision or rule (whether
of the State of Florida or any other jurisdictions) that would cause the
application of the laws of any jurisdictions other than the State of Florida.
Each party hereby irrevocably submits to the non-exclusive jurisdiction of the
state and Federal courts sitting in the State of Florida, for the adjudication
of any dispute hereunder or in connection herewith or with any transaction
contemplated hereby or discussed herein, and hereby irrevocably waives, and
agrees not to assert in any suit, action or proceeding, any claim that it is not
personally subject to the jurisdiction of any such court, that such suit, action
or proceeding is brought in an inconvenient forum or that the venue of such
suit, action or proceeding is improper. Each party hereby irrevocably waives
personal service of process and consents to process being served in any such
suit, action or proceeding by mailing a copy thereof to such party at the
address for such notices to it under this Agreement and agrees that such service
shall constitute good and sufficient service of process and notice thereof.
Nothing contained herein shall be deemed to limit in any way any right to serve
process in any manner permitted by law. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY
RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION
OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT OF THIS
AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.
(h) AMENDMENTS AND WAIVERS. The provisions of this Agreement
may be amended upon the written agreement of the Company and the Investors
holding a majority of the Registrable Securities, determined as if all of the
Preferred Shares then outstanding have been converted into or exercised for
Registrable Securities without regard to any limitations on conversion of the
Preferred Shares. Any waiver, permit, consent or approval of any kind or
character on the part of any holders of any provision or condition of this
Agreement must be made in writing and shall be effective only to the extent
specifically set forth in writing.
(i) FINAL AGREEMENT. This Agreement constitutes the complete
and final agreement of the parties concerning the matters referred to herein and
supersedes all prior agreements and understandings.
(j) Counterparts. This Agreement may be executed in identical
counterparts, each of which shall be deemed an original but all of which shall
constitute one and the same agreement. This Agreement, once executed by a party,
may be delivered to the other party hereto by facsimile transmission of a copy
of this Agreement bearing the signature of the party so delivering this
Agreement.
(k) CONSENTS. All consents and other determinations to be made
by the Investors pursuant to this Agreement shall be made, unless otherwise
specified in this Agreement, by Investors holding a majority of the Registrable
Securities, determined as if all of the Preferred Shares then outstanding have
been converted into or exercised for Registrable Securities without regard to
any limitations on conversion of the Preferred Shares.
19
(l) CONSTRUCTION. The language used in this Agreement will be
deemed to be the language chosen by the parties to express their mutual intent
and no rules of strict construction will be applied against any party.
(m) TERMINATION OF AGREEMENT. This Agreement and all
registration rights granted to an Investor shall be suspended with respect to
that Investor during any period in which all Registrable Securities held by and
issuable to such Investor (and its affiliates, partners and former partners,
members and former members) may be sold under Rule 144 in a single transaction;
provided, however, that if such Investor shall no longer be able to sell all
such Registrable Securities under Rule 144 in a single transaction, other than
as a result of voluntary acquisitions of Common Stock by such Investor, then
such Investor shall thereupon again be entitled to all of the rights and
benefits under this Agreement. Notwithstanding the foregoing, this Agreement
shall terminate and be of no further force or effect after the date on which
there are no Registrable Securities held by or issuable to Investors.
(n) TIME OF THE ESSENCE. Time is of the essence in connection
with the Company's performance of its obligations under this Agreement.
(o) LIABILITY FOR DAMAGES. The Company acknowledges that any
failure by the Company to perform its obligations under this Agreement,
including, without limitation, the Company's obligations under Sections 2 and 3,
or any delay in such performance could result in damages to the Purchaser and
the Company agrees that, in addition to any other liability the Company may have
by reason of any such failure or delay, the Company shall be liable for all
damages caused by any such failure or delay (including, without limitation,
diminution in value and/or lost profits attributable to the failure or delay,
whether due to a decline in stock price, inability to sell shares at a profit or
otherwise). Notwithstanding the foregoing, in no event shall the Company be
liable under this Section 8(o) for indirect damages in the nature of foregone
profits which are specifically attributable to a Purchaser's hypothetical
inability, as a result of the failure or delay, to reinvest the proceeds of
Registrable Securities in another profit-generating investment opportunity.
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IN WITNESS WHEREOF, the Purchaser and the Company have caused this
Registration Rights Agreement to be duly executed as of the date first written
above.
COMPANY:
BENIHANA INC.
By:
-------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: President
PURCHASER:
BFC FINANCIAL CORPORATION
By:
-------------------------------------
Name:
Title:
21