THIS DEBENTURE (AND THE SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION HEREOF)
HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, TRANSFERRED OR ASSIGNED
UNLESS SO REGISTERED OR AN EXEMPTION FROM REGISTRATION UNDER SAID ACT IS
AVAILABLE.
BOSTON RESTAURANT ASSOCIATES, INC.
Variable Rate Convertible Subordinated Debenture
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$___________ Boston, Massachusetts
Debenture No. ____ December __, 1996
FOR VALUE RECEIVED, Boston Restaurant Associates, Inc., a corporation
organized and existing under the laws of the State of Delaware with its
principal office at 000 Xxxxxxxx, Xxxxx 000, Xxxxxx, XX (herein the "Company"),
hereby promises to pay to the order of ___________________ the principal sum of
_____________ Dollars $_________, together with interest thereon as hereafter
provided.
Interest on the principal sum shall accrue at the rate of eight percent
(8%) per annum from the date hereof through December ___, 1997; ten percent
(10%) per annum from December __, 1997 through December __, 1998; twelve percent
(12%) per annum from December __, 1998 through December __, 1999; and fourteen
percent (14%) per annum thereafter. Interest only shall be payable in cash in
semiannual installments on June 30 and December 31 of each year commencing on
June 30, 1997. A final payment of the principal sum (or the then outstanding
principal balance, if less), together with all accrued but unpaid interest as of
the date thereof shall be due and payable on December 31, 2011.
This Convertible Subordinated Debenture is one of a series of a duly
authorized issue of debentures of the Company designated as its Convertible
Subordinated Debentures, all of like tenor, except as to the identifying number
and principal amount thereof. This Convertible Subordinated Debenture is
hereinafter referred to as this "Debenture," and the Convertible Subordinated
Debentures issued as part of the series of the Company's Convertible
Subordinated Debentures are hereinafter referred to as the "Debentures."
ARTICLE 1. SUBORDINATION
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1.1 Subordination to Senior Indebtedness. The indebtedness evidenced by the
Debentures, and the payment of the principal of (and premium, if any), and
interest on the Debentures, is wholly subordinated, junior and subject in right
of payment, to the extent and in the manner
hereinafter provided, to the prior payment of all Senior Indebtedness. "Senior
Indebtedness" means the principal of, and premium, if any, and interest on (i)
any and all indebtedness owing by the Company, whether outstanding on the date
hereof or hereafter created, for money borrowed from banks and other financial
institutions which debts are evidenced by instruments stating that such
indebtedness is superior in right of payment to the Debentures, (ii) any and all
extensions or renewals of any of the foregoing, and (iii) any other indebtedness
of the Company which the Company and the holders of more than 75% of the unpaid
principal amount of the Debentures then outstanding may hereafter from time to
time expressly and specifically agree in writing shall constitute Senior
Indebtedness.
1.2 No Payment if Default in Senior Indebtedness. No payment on account of
principal of or interest on the Debentures shall be made, and no Debentures
shall be redeemed or purchased directly or indirectly by the Company if at the
time of such payment or purchase, or immediately after giving effect thereto,
(i) there shall exist a default in any payment with respect to any Senior
Indebtedness or (ii) there shall have occurred an event of default (other than a
default in the payment of amounts due thereon) with respect to any Senior
Indebtedness, as defined in the instrument under which the same is outstanding,
permitting the holders thereof to accelerate the maturity thereof, and such
event of default shall not have been cured or waived or shall not have ceased to
exist.
1.3 Payment upon Dissolution, Etc. Upon payment or distribution of assets of the
Company of any kind or character, whether in cash, property or securities, to
creditors upon any dissolution or winding-up or total or partial liquidation or
reorganization of the Company, whether voluntary or involuntary, in bankruptcy,
insolvency, receivership or other proceedings, all principal and interest due
upon any Senior Indebtedness and other sums due under the instrument under which
the same is outstanding shall first be paid in full, or payment thereof in full
duly provided for, before any holders of the Debentures shall be entitled to
receive or, if received, to retain any payment or distribution on account of the
Debentures; and upon any such dissolution or winding-up or liquidation or
reorganization, any payment or distribution of assets of the Company of any kind
or character, whether in cash, property or securities, to which any holders of
the Debentures would be entitled except for the provisions of this Article 1
shall be paid by the Company or by any receiver, trustee in bankruptcy,
liquidating trustee, agent or other person making such payment or distribution,
or by any holders of the Debentures who shall have received such payment or
distribution, directly to the holders of the Senior Indebtedness (pro rata to
each such holder on the basis of the respective amounts of such Senior
Indebtedness held by such holder) or their representatives to the extent
necessary to pay all such Senior Indebtedness in full after giving effect to any
concurrent payment or distribution to or for the holders of such Senior
Indebtedness, before any payment or distribution is made to any holders of the
Debentures. In the event of any such dissolution, winding-up, liquidation or
reorganization of the Company, the holders of the Debentures shall be entitled
to be paid 100% of the principal amount thereof and accrued interest thereon
before any distribution of assets shall be made among the holders of any class
of shares of the capital stock of the Company in their capacities as holders of
such shares.
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For purposes of this Section 1.3, the words "assets" and the phrase
"cash, property or securities" shall not be deemed to include shares of Common
Stock (as defined below) of the Company as reorganized or readjusted, or
securities of the Company or any other person provided for by a plan of
reorganization or readjustment, the payment of which is subordinated at least to
the extent provided in this Article 1 with respect to the Debentures to the
payment of all Senior Indebtedness which may at the time be outstanding;
provided that (i) the Senior Indebtedness is assumed by the new person, if any,
resulting from any such reorganization or readjustment, and (ii) the rights of
the holders of Senior Indebtedness are not, without the consent of such holders,
altered by such reorganization or readjustment.
1.4 Rights of Holders Unimpaired. The provisions of this Article 1 are for the
purposes of defining the relative rights of the holders of the Debentures and
the holders of Senior Indebtedness and nothing in this Article 1 shall impair,
as between the Company and any holders of the Debentures, the obligation of the
Company, which is unconditional and absolute, to pay to the holders of the
Debentures the principal thereof and interest thereon, in accordance with the
term of the Debentures, nor shall anything herein prevent any holders of the
Debentures from exercising all remedies otherwise permitted by applicable law or
hereunder upon default, subject to the rights set forth above of holders of
Senior Indebtedness to receive cash, property, or securities otherwise payable
or deliverable to the holder of the Debentures.
1.5 Holders of Senior Indebtedness. These provisions regarding subordination
will constitute a continuing offer to all persons who, in reliance upon such
provisions, become holders of, or continue to hold, Senior Indebtedness; such
provisions are made for the benefit of the holders of Senior Indebtedness, and
such holders are hereby made obligees under such provisions to the same extent
as if they were named therein, and they or any of them may proceed to enforce
such subordination. The holder of this Debenture shall execute and deliver to
any holder of Senior Indebtedness (i) any such instrument as such holder of
Senior Indebtedness may request in order to confirm the subordination of this
Debenture to such Senior Indebtedness upon the terms set forth in this
Debenture, and (ii) any powers of attorney specifically confirming the rights of
holders of Senior Indebtedness to enforce such subordination and all such proofs
of claim, assignments of claim and other instruments as may be requested by the
holders of Senior Indebtedness or their representatives to enforce all claims
upon or in respect of this Debenture.
1.6 Payments on Debentures. Subject to Section 1.3, the Company may make
payments of the principal of, and any interest or premium on, this Debenture, if
at the time of payment, and immediately after giving effect thereto, (i) there
exists no default in any payment with respect to any Senior Indebtedness and
(ii) there shall not have occurred an event of default (other than a default in
the payment of amounts due thereon) with respect to any Senior Indebtedness, as
defined in the instrument under which the same is outstanding, permitting
holders thereof to accelerate the maturity thereof, other than an event of
default which shall have been cured or waived or shall have ceased to exist.
ARTICLE 2. CONVERSION
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2.1 Definitions. For the purposes of this Article 2, the following
definitions shall apply:
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(i) "Average Bid Price" per share of Common Stock on any date shall
mean the average of the closing bid prices on NASDAQ, or any comparable system
(as adjusted for any stock dividend, split, combination or reclassification that
takes effect after the date hereof) for the applicable measurement period.
(ii) "Board of Directors" shall mean the Board of Directors of
this Company.
(iii) "Common Stock" shall mean the Common Stock of the Company,
$.01 par value.
(iv) "Conversion Price" shall mean the amount set forth in Section
2.2, as adjusted pursuant to Sections 2.9 and 2.10.
(v) "Original Issue Date" shall mean the date on which a Debenture
was first issued.
2.2 Right of Conversion.
(a) Optional Conversion. The holder of each Debenture shall have
the right from time to time and at any time after the date hereof to convert the
whole or any part of the principal balance thereof unpaid and outstanding from
time to time into shares of fully paid and nonassessable Common Stock of the
Company, at the conversion price in effect at the time of conversion, determined
as hereinafter provided.
(b) Mandatory Conversion. In the event the Average Bid Price of the
Company's Common Stock for any sixty (60) consecutive trading days after the
date hereof shall have been equal to or greater than $3.00, then all of the
Debentures then outstanding shall automatically convert into shares of Common
Stock at the then effective Conversion Price, as hereinafter provided. Notice of
such mandatory conversion shall be sent by certified mail, postage prepaid, to
each holder of Debentures at such holder's address appearing in the records of
the Company specifying that a mandatory conversion has occurred. On or before
the date so fixed in such notice, each holder of Debentures shall surrender his
or her Debentures to the Company at the place designated for the number of
shares of Common Stock to which such holder is entitled. The mechanics for
conversion and other provisions relating to conversion of Debentures into Common
Stock and payments in lieu of fractions set forth elsewhere in this Article 2
shall apply to the mandatory conversion of the Debentures.
(c) Conversion Price. The initial Conversion Price shall be $1.25
per share. All calculations under this Article shall be made to the nearest
cent.
2.3 Effect of Merger or Acquisition. In the event of a sale by the Company of
all or substantially all of its assets or a merger or consolidation of the
Company with or into another corporation or entity, and in the case of
successive such sales, mergers and consolidations, thereafter the Debentures
then outstanding shall be convertible into the number and kind of securities of
the acquiring or surviving corporation (or such other entity whose securities
are delivered in exchange for the Common Stock of the Company) to which the
holders of the
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Debentures would have been entitled if such holders had converted their
Debentures into Common Stock or the common stock of any successor to the Company
upon the consummation of such sale, merger or consolidation; and the Debentures
shall thereafter be subject to adjustment in the manner and to the extent set
forth herein.
2.4 Mechanics of Conversion. No fractional shares of Common Stock shall be
issued upon conversion of the Debentures. In lieu of any fractional share to
which a holder of Debentures would otherwise be entitled, the Company shall pay
cash equal to such fraction multiplied by the then effective Conversion Price.
Before any holder of Debentures shall be entitled to convert the whole or any
portion of the principal amount then outstanding into full shares of Common
Stock, the holder shall surrender the Debenture at the office of the Company or
of any transfer agent for the Debentures, and shall give written notice to the
Company at such office that he or she elects to convert the same. The Company
shall, as soon as practicable thereafter, issue and deliver at such office to
such holder of Debentures a certificate or certificates for the number of shares
of Common Stock to which he or she shall be entitled as aforesaid and a check
payable to the holder in the amount of any cash amounts payable in order to
avoid a conversion into fractional shares of Common Stock. Except as provided in
Section 2.3, such conversion shall be deemed to have been made immediately prior
to the close of business on the date of such surrender of the Debentures to be
converted, and the person or persons entitled to receive the shares of Common
Stock issuable upon such conversion shall be treated for all purposes as the
record holder or holders of such shares of Common Stock on such date.
2.5 No Impairment. The Company will not, by amendment of its Charter or through
any reorganization, transfer of assets, consolidation, merger, dissolution,
issue or sale of securities or any other voluntary action, avoid or seek to
avoid the observance or performance of any of the terms to be observed or
performed hereunder by the Company, but will at all times in good faith assist
in the carrying out of all the provisions of this Article 2 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 Debentures against impairment.
2.6 Notices of Record Date, etc. In the event that the Company shall
propose at any time to:
(i) declare any dividend or distribution upon its Common Stock
payable in Common Stock or other securities of the Company;
(ii) subdivide or combine its outstanding shares of Common Stock;
(iii) effect any reclassification or recapitalization of its Common
Stock (other than a subdivision or combination of its outstanding shares of
Common Stock or a stock dividend or stock distribution thereon), or merge or
consolidate with or into any other corporation, or sell all or substantially all
of its assets, or liquidate, dissolve or wind up;
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then, in connection with each such event, the Company shall send to the holders
of the Debentures:
(1) at least twenty (20) days' prior written notice of
the date on which a record shall be taken for such dividend, distribution,
subdivision or combination or, if a record is not to be taken, the date as of
which the holders of Common Stock of record to be entitled to such dividend,
distribution, subdivision or combination are to be determined; or
(2) at least twenty (20) days' prior written notice of
the date on which such reclassification, consolidation, merger, sale,
dissolution, liquidation or winding-up is expected to become effective, and the
date as of which it is expected that holders of Common Stock of record shall be
entitled to exchange their shares of Common Stock for securities or other
properties deliverable upon such reclassification, consolidation, merger, sale,
dissolution or winding-up.
Each such written notice shall be given by certified or registered
mail, postage prepaid, addressed to the holders of the Debenture, at the address
for each such holder as shown on the books of the Company.
2.7 Reservation of Common Stock. The Company shall, at all times when the
Debentures shall be outstanding, reserve and keep available out of its
authorized but unissued stock, for the purpose of effecting the conversion of
the Debentures, such number of its duly authorized shares of Common Stock as
shall from time to time be sufficient to effect the conversion of all
outstanding Debentures.
2.8 Cancellation of Debentures. If a Debenture shall have been converted in part
the holder shall be entitled to a new Debenture representing the unpaid
principal balance of such Debenture remaining after deducting the principal
amount converted. All Debentures which shall have been surrendered for
conversion as herein provided shall no longer be deemed to be outstanding and
all rights with respect to such Debentures shall forthwith cease and terminate
except only the right of the holders thereof to receive shares of Common Stock
in exchange therefor and payment of any accrued and unpaid dividends thereon.
Any Debentures so converted shall be retired and cancelled, and shall not be
reissued.
2.9 Adjustment of Conversion Price.
(a) Adjustment of Conversion Price. The Conversion Price shall be
adjusted as set forth in this Section 2.9 with the intent that the rights of
holders of the Debentures to convert shall not be impaired.
(b) Adjustments for Combination or Consolidation of Common Stock.
In the event the outstanding shares of Common Stock shall be combined or
consolidated, by reclassification or otherwise, into a lesser number of shares
of Common Stock, the Conversion Price in effect immediately prior to such
combination or consolidation shall, concurrently with the effectiveness of such
combination or consolidation, be proportionately increased.
-6-
(c) Stock Dividends and Subdivisions. In the event the Company at
any time or from time to time after the Original Issue Date shall declare or pay
any dividend on the Common Stock payable in Common Stock, or effect a
subdivision of the outstanding shares of Common Stock into a greater or lesser
number of shares of Common Stock by reclassification or otherwise than by
payment of a dividend in Common Stock, then and in any such event, the
Conversion Price in effect immediately prior to such subdivision or stock
dividend shall forthwith be proportionately reduced.
(d) Certificate as to Adjustments. Upon the occurrence of each
adjustment or readjustment of the Conversion Price pursuant to this Section 2.9,
the Company at its expense shall promptly compute such adjustment or
readjustment in accordance with the terms hereof and furnish to each holder of
Debentures a certificate setting forth such adjustment or readjustment and
showing in detail the facts upon which such adjustment or readjustment is based.
The Company shall, upon the written request at any time of any holder of
Debentures, furnish or cause to be furnished to such holder a like certificate
setting forth (i) such adjustments and readjustments, (ii) the Conversion Price
at the time in effect, and (iii) the number of shares of Common Stock and the
amount, if any, of other property which at the time would be received upon the
conversion of the Debentures.
2.10 Validity of Shares. The Company agrees that all shares of Common Stock
which may be issued upon conversion of the Debentures will, upon issuance, be
legally and validly issued, fully paid and nonassessable and free from all
taxes, liens and charges with respect to the issue thereof. Without limiting the
generality of the foregoing, the Company agrees that it will from time to time
take all such action as may be requisite to assure that the par value per share,
if any, of the Common Stock is at all times equal to or less than the current
Conversion Price of the Debentures. Before taking any action which would cause
an adjustment reducing the Conversion Price below the then par value of the
shares of Stock issuable upon conversion of the Debentures, the Company will
take any corporate action which may, in the opinion of its counsel, be necessary
in order that the Company may validly and legally issue fully paid and
nonassessable shares of such Common Stock at such adjusted Conversion Price.
ARTICLE 3. RIGHT OF FIRST REFUSAL
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3.1 Voluntary Transfers. No Debenture Holder may sell, assign, pledge or
otherwise dispose of the Debenture or any shares of Common Stock into which the
Debentures are convertible, or any interest therein now held or hereafter
acquired, in a private transaction, as opposed to a trade consummated on NASDAQ
or comparable system, without first giving written notice to the Company (the
"Notice of Proposed Transfer"). The Notice of Proposed Transfer shall include
the name of the proposed transferee and all material terms of the proposed
transfer and, shall be accompanied by a copy of the bona fide written offer to
purchase the Debenture or such Common Stock, as the case may be, upon the terms
set forth in the Notice of Proposed Transfer. The Notice of Proposed Transfer to
the Company shall be deemed for all purposes to give the Company a first right
of purchase (sometimes referred to as a right of first refusal) as provided
herein. If the Company declines or fails to exercise its first right of purchase
within 10 days after such Notice of Proposed Transfer, the Debenture Holder
proposing to effectuate such transaction
-7-
may, within 30 days from the date said right terminates, transfer the Common
Stock to the proposed transferee upon the terms set forth in the Notice of
Proposed Transfer.
3.2 First Right of Purchase. Upon receipt of the Notice of Proposed Transfer of
intent to make a voluntary transfer under Section 3.1, the Company shall have a
right to purchase the Debenture or the shares of Common Stock, as the case may
be, to which such Notice relates at the price and in the manner specified herein
before any other action is taken to sell, assign, transfer, pledge, or otherwise
dispose of the Debenture or Common Stock, as the case may be. Such right shall
continue for a period of 10 days from the receipt of the Notice of Proposed
Transfer of a proposed transfer under Section 3.1. If the Company elects to
exercise its first right of purchase, it shall so notify the holder of the
Debenture or shares of Common Stock, as the case may be, and purchase the
Debenture or shares of Common Stock, as the case may be, on the terms and
conditions as are specified in such notice and shall specify the time and place
for tender of the Debenture or certificates representing such shares of Common
Stock.
3.3 Transfers in Violation of Debenture. If any transfer of the Debenture or
shares of Common Stock is made or attempted contrary to the provisions of this
Debenture, or if the Debenture or shares of Common Stock are not offered to the
Company as required herein, the Company shall have the right to purchase said
Debenture or shares from the owner thereof or his transferee at any time before
or after the transfer, as herein provided. In the event that the Company elects
to exercise its first right of purchase, it may do so by cancelling the
Debenture or certificate(s) representing the Common Stock, as the case may be,
and depositing the purchase price determined hereunder in an interest bearing
bank account for the benefit of Debenture Holder, whereupon such Debenture or
shares of Common Stock shall be, for all purposes, cancelled and neither the
Debenture Holder nor any transferee shall have any rights as one of its
Debenture Holders with respect to such Debenture or Common Stock for any
purpose, including without limitation dividend and voting rights, until there
has been compliance with all applicable provisions of this Debenture. In
addition to any other legal or equitable remedies which it may have, the Company
may enforce its rights by actions for specific performance (to the extent
permitted by law).
ARTICLE 4. DEFAULT
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4.1 Rights upon Default. The entire unpaid principal of this Debenture and the
interest then accrued on this Debenture shall become and be immediately due and
payable upon written demand of the holder of this Debenture, without any other
notice or demand of any kind or any presentment or protest, if any one of the
events set forth in Section 4.2 (each an "Event of Default") shall occur and be
continuing at the time of such demand, whether voluntarily or involuntarily, or,
without limitation, occurring or brought about by operation of law or pursuant
to or in compliance with any judgment, decree or order of any court or any
order, rule or regulation of any governmental body.
4.2 Events of Default. It shall be an Event of Default if:
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(a) default shall be made in the payment of any installment of
interest or principal on any of the Debentures as and when due that is not cured
within 90 days; or
(b) there shall be a failure on the part of the Company duly to
observe or perform any of the other covenants and agreements by the Company
contained in this Debenture, which continues for a period of 90 days after the
date on which written notice of such failure, requiring the Company to remedy
the same, shall have been given to the Company; or
(c) the Company (i) makes a general assignment for the benefit of
creditors, (ii) applies for, consents to, acquiesces in, files a petition or an
answer seeking, or admits (by answer, default or otherwise) the material
allegations of a petition filed against it seeking the appointment of a trustee,
receiver, liquidator or assignment in bankruptcy or insolvency of itself or of
all or a substantial portion of its assets, or a reorganization, arrangement
with creditors or other remedy, relief or adjudication available to or against a
bankrupt, insolvent or debtor under any bankruptcy or insolvency law or any law
relating to relief of debtors, or (iii) admits in writing its inability to pay
its debts generally as they become due; or
(d) a decree, order or judgment shall have been entered adjudging
the Company a bankrupt or insolvent, or appointing a receiver, liquidator,
trustee or assignee in bankruptcy or insolvency for it or for all or a
substantial portion of its assets, or approving a petition seeking a
reorganization, arrangement, or the winding-up or liquidation of its affairs on
the grounds of insolvency or nonpayment of debts, and such decree, order or
judgment shall remain undischarged and unstayed for a period of 90 days; or if
any substantial part of the property of the Company is sequestered or attached
and shall not be returned to the possession of the Company or such subsidiary or
released from such attachment within 90 days.
ARTICLE 5. REGISTRATION RIGHTS
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5.1 Demand Registration. If at any one time after the date of this Debenture,
provided all of the Debentures have been converted into shares of Common Stock
of the Company (the "Shares"), the Company receives a written request executed
by the Holder(s) of at least sixty percent (60%) of the conversion shares
underlying the series of Debentures of which this Debenture is a part to file a
Registration Statement under the Securities Act of 1933, as amended (the "Act"),
for a public offering of such Shares, the Company will promptly, and in any case
not later than 75 days after receipt of the registration request, cause a
Registration Statement to be filed with the Securities and Exchange Commission
(the "Commission") with respect to the number of Shares specified in the request
and will use its reasonable best efforts to cause such Registration Statement to
become effective. The Company will not be required to cause more than one
Registration Statement to be filed pursuant to this Section 5.1.
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5.2. Piggyback Registration Rights. The Company agrees as follows:
(a) If the Company shall determine to register any shares of its Common
Stock under the Act at any time and in connection therewith the Company may
lawfully register any of the Shares, (other than pursuant to a registration
statement on Form S-4. S-8 or any comparable form or filed in connection with an
exchange offering of securities solely to the Company's existing shareholders)
the Company will promptly give written notice thereof to the Holder. Upon the
written request of the Holder within 30 days after receipt of any such notice
from the Company, the Company will, except as herein provided, cause all of the
Shares which the Holder has requested to be registered to be included in such
Registration Statement, all to the extent requisite to permit the sale or other
disposition of the Shares. However nothing herein shall prevent the Company from
at any time abandoning or delaying any registration.
(b) If any shares registered pursuant to this Section 5.2 shall be
included in an underwritten public offering in whole or in part, the Company may
require that the Shares requested for inclusion hereunder be included in the
underwriting on the same terms and conditions as the securities otherwise being
sold through the underwriters. If and in the event that the managing underwriter
of such public offering shall be of the opinion that inclusion of all of the
Shares would adversely affect the marketing of the securities to be sold by the
Company therein, then the number of Shares otherwise to be included in the
underwritten public offering may be reduced on a pro rata basis with the shares
proposed to be included in such offering by any other selling shareholder
(exclusive of the Company).
(c) The Holder hereof may not exercise the rights granted in this
Section 5.2 to effect the registration of the Shares under the Act prior to the
conversion of the Debentures into shares of Common Stock of the Company.
(d) Anything herein to the contrary notwithstanding, the Company shall
not be obligated to provide the foregoing so-called "piggyback" registration
rights on more than two occasions.
5.3 Registration Procedures. If and whenever the Company is required by
the provisions of Article 5 to effect the registration of the Shares under the
Act, the Company will:
(a) prepare and file with the Commission a Registration Statement with
respect to such securities, and use its best efforts to cause such Registration
Statement to become and remain effective for such period as may be reasonably
necessary to effect the sale of such securities, not to exceed nine months;
(b) prepare and file with the Commission such amendments to such
Registration Statement and supplements to the prospectus contained therein as
may be necessary to keep such Registration Statement effective for such period
as may be reasonably necessary to effect the sale of such Shares, not to exceed
nine months; provided, however, that in the event any amendment or supplement to
a Registration Statement is required to be filed pursuant to paragraph (g) of
this Section 5.3, and such filing results in the suspension of the effectiveness
of such Registration
-10-
Statement, such nine month period shall be extended by the period during which
the effectiveness of such Registration Statement has been suspended;
(c) furnish to the Holder participating in such registration and to the
underwriters of the securities being registered such reasonable number of copies
of the Registration Statement, preliminary prospectus, final prospectus and such
other documents as such underwriters may reasonably request in order to
facilitate the public offering of such securities;
(d) use its reasonable efforts to register or qualify the securities
covered by such Registration Statement under the state securities or blue sky
laws of such jurisdictions as the Holder may reasonably request within 20 days
following the original filing of such Registration Statement, except that the
Company shall not for any purpose be required to execute a general consent to
service of process or to qualify to do business as a foreign corporation in any
jurisdiction wherein it is not so qualified;
(e) notify the Holder promptly after it shall receive notice thereof, of
the time when such Registration Statement has become effective or a supplement
to any prospectus forming a part of such registration statement has been filed;
(f) notify the Holder promptly of any request by the Commission for the
amending or supplementing of such Registration Statement or prospectus or
for additional information;
(g) prepare and promptly file with the Commission and promptly notify
the Holder of the filing of such amendment or supplement to such Registration
Statement or prospectus as may be necessary to correct any statements or
omissions if, at the time when a prospectus relating to such securities is
required to be delivered under the Act, any event shall have occurred as the
result of which any such prospectus or any other prospectus as then in effect
would include an untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein, in the light of the
circumstances in which they were made, not misleading;
(h) advise the Holder promptly after it shall receive notice or obtain
knowledge thereof, of the issuance of any stop order by the Commission
suspending the effectiveness of such Registration Statement or the initiation or
threatening of any proceeding for that purpose and promptly use its best efforts
to prevent the issuance of any stop order or to obtain its withdrawal if such
stop order should be issued; and
(i) furnish on the effective date of the Registration Statement to the
Holder and any underwriters, at the closing provided for in the underwriting
agreement, an opinion of counsel for the Company and a letter from the
independent certified public accountants for the Company, in form and substance
customary for similar offerings.
5.4 Expenses. All expenses in connection with, or incidental to, the preparation
and filing of any Registration Statement pursuant to this Article 5 hereof, any
registration or qualification under securities or blue sky laws of states in
which the offering will be made, and any filing fee of the National Association
of Securities Dealers, Inc. ("NASD") relating to such offering, shall
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be borne by the Company (the "Company Obligations"); provided, however, that the
Holder shall bear its pro rata share of the underwriting discount and
commissions, underwriting expense allowances and transfer taxes, all reasonable
documented fees and disbursements of Holder's counsel, and, to the extent
required by applicable state securities laws and NASD rules and regulations, all
legal fees and disbursements and other expenses of complying with state
securities or blue sky laws of any jurisdictions in which the Shares to be
offered are to be registered or qualified.
5.5 Indemnification.
(a) The Company will indemnify and hold harmless the Holder and any
underwriter (as defined in the Act) for such Holder and each person, if any, who
controls such Holder or such underwriter within the meaning of the Act, from and
against, and will reimburse such Holder and each such underwriter and
controlling person with respect to, any and all loss, damage, liability, cost
and expense to which such Holder or any such underwriter or controlling person
may become subject under the Act or otherwise, insofar as such losses, damages,
liabilities, costs or expenses are caused by any untrue statement or alleged
untrue statement of any material fact contained in any Registration Statement,
any prospectus contained therein or any amendment or supplement thereto, or
arise out of or are based upon the omission or alleged omission to state therein
a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances in which they were made, not
misleading; provided, however, that the Company will not be liable in any such
case to the extent that any such loss, damage, liability, cost or expense arises
out of or is based upon an untrue statement or alleged untrue statement or
omission or alleged omission so made in conformity with information furnished by
such Holder, such underwriter or such controlling person in writing specifically
for use in the preparation thereof.
(b) The Holder will indemnify and hold harmless the Company, its
directors and officers, any underwriter and any controlling person of such
underwriter from and against, and will reimburse the Company, underwriter or
controlling person with respect to, any and all loss, damage, liability, cost or
expense to which the Company, any underwriter or any controlling person thereof
may become subject under the Act or otherwise, insofar as such losses, damages,
liabilities, costs or expenses are caused by any untrue or alleged untrue
statement of any material fact contained in any Registration Statement, any
prospectus contained therein or any amendment or supplement thereto, or arise
out of or are based upon the omission or the alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances in which they were made, not misleading,
in each case to the extent, but only to the extent, that such untrue statement
or alleged untrue statement or omission or alleged omission was so made in
reliance upon written information furnished by such Xxxxxx specifically for use
in the preparation thereof. The maximum liability for indemnification hereunder
of the Holder shall not exceed, in the aggregate, the aggregate dollar amount of
gross proceeds received by the Holder on account of the Shares which are
included in a Registration Statement pursuant to this Article 5 hereof.
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5.6 Unregisterable Shares. Notwithstanding anything to the contrary contained
herein, the registration rights contained herein (both demand and "piggyback")
shall not apply to any Shares which may be sold without restriction pursuant to
Rule 144(k) of the Act.
ARTICLE 6. MISCELLANEOUS
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6.1 Voting Rights. This Debenture shall not confer upon the holder any voting or
other rights of a stockholder of the Company.
6.2 Exchange or Replacement of Debentures. Upon receipt of evidence satisfactory
to the Company of the loss, theft, destruction or mutilation of this Debenture,
the Company, upon delivery of a bond of indemnity satisfactory to it (or in case
of mutilation upon surrender and cancellation of such Debenture), will issue a
new Debenture of like tenor in lieu of such lost, stolen, destroyed or mutilated
Debenture.
6.3 Place of Payment. The Company will pay the interest and premium on and any
prepayments of principal of the Debentures without any presentment thereof and
without notation of such payment being made thereon, notwithstanding any
contrary provisions of the Debentures, by check duly mailed to the holder at the
address shown in the records of the Company or in accordance with any unrevoked
written direction from the holder to the Company.
6.4 Securities Act of 1933. This Debenture has not been registered under the Act
and may not be sold, transferred or assigned unless so registered or an
exemption from registration under the Act is available. Upon conversion of this
Debenture, the holder may be required to execute and deliver to the Company an
instrument, in form satisfactory to the Company, representing that the shares of
Common Stock issuable upon conversion hereof are being acquired for investment
and not with a view to distribution within the meaning of the Act.
6.5 Amendment. With the consent of the holders of at least a majority in
aggregate principal amount of the Debentures then outstanding, the Company may
amend the Debentures to cure any ambiguity, to correct or supplement any
provision therein which may be inconsistent with any other provision therein, or
to make any other provisions with respect to matters or questions arising under
the Debentures which shall not be inconsistent with the provisions of the
Debentures; provided, however, that such action shall not adversely affect the
interest of the holders of the Debentures. The Company shall give prompt notice
of any such amendment to the holders of the Debentures.
With the consent of the holders of at least a majority in aggregate
principal amount of the Debentures then outstanding, the Company may amend the
Debentures for the purpose of adding any provisions to, or changing in any
manner or eliminating any of the provisions, of the Debentures; provided,
however, that no such amendment shall, without the consent of the holder of each
outstanding Debenture affected thereby,
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(a) change (i) the maturity of the principal of, or any installment
of interest on, any Debenture or (ii) the coin or currency in which the
principal of or interest on any Debenture is payable, or
(b) reduce the principal amount thereof or the interest rate
thereon, or
(c) change the Conversion Rate, or
(d) reduce the percentage in principal amount of the outstanding
Debentures, the consent of whose holders is required for any such amendment, or
the consent of whose holders is required for any waiver provided for in the
Debentures; or
(e) change the registration rights provisions contained in
Article 5.
Prompt written notice that this Debenture has been amended in
accordance with the terms of this Article 5 shall be given to each holder of
Debentures.
Upon amendment, the Debentures shall be modified in accordance
therewith, such amendment shall form a part of this Debenture for all purposes,
and every subsequent holder of Debentures shall be bound thereby.
5.6 Notice. All notices, requests, consents and demands shall be made in writing
and shall be given by certified or registered mail, postage prepaid, or
delivered by hand, to the Company or to the holder hereof at their respective
addresses set forth below or to such other address as may be furnished in
writing to the other party hereto:
If to the holder:
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If to the Company:
Boston Restaurant Associates, Inc.
c/o Xxxxxx X. Xxxxxxxxxxx, President
000 Xxxxxxxx, Xxxxx 000
Xxxxxx, XX 00000
Fax Number: (000) 000-0000
with a copy to:
Xxxxx, Xxxxxxx, Freed & Gesmer
One Financial Center
Boston, MA 02111
Attn: Xxxxxx X. Xxxxxx, Esquire
Fax Number: (000) 000-0000
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5.7 Successors and Assigns. This Debenture, and the obligations and rights of
the Company hereunder, shall be binding upon and inure to the benefit of the
Company, the holder of the Debenture, and their respective heirs, successors and
assigns.
5.8 Transfer of Debenture or Shares. Except as provided in Article 3, neither
this Debenture nor the shares of Common Stock into which this Debenture may be
converted, or any of them, may be sold, transferred, pledged or otherwise
conveyed, in whole or in part, by the Debenture Holder. Any attempted conveyance
by the Debenture Holder shall be deemed void and of no effect except as provided
in Article 3.
5.9 Governing Law. This Debenture shall be construed and enforced in accordance
with, and the rights of the parties shall be governed by, the laws of the State
of Delaware.
IN WITNESS WHEREOF, this Xxxxxxxxx has been executed and delivered
as a sealed instrument at the place and on the date set forth above by the duly
authorized representatives of the Company.
BOSTON RESTAURANT ASSOCIATES, INC.
[corporate seal]
ATTEST: By:
---------------------------------
Xxxxxx X. Xxxxxxxxxxx, President
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Secretary
