1
BRAZIL FAST FOOD CORP.
STOCKHOLDERS' AGREEMENT
THIS AGREEMENT is made as of the 11th day of August, 1997, by and
among Brazil Fast Food Corp., a Delaware Corporation (the "Company"); AIG
Latin America Equity Partners, Ltd., a Bermuda company (the "Fund"); and the
Persons named in Schedule A hereto (each a "Management Group Stockholder" and,
collectively, the "Management Group Stockholders"). The Management Group
Stockholders and the Fund are collectively referred to herein as the
"Stockholders". Capitalized terms used herein, unless otherwise defined herein,
shall have the meanings ascribed to them in the Stock Purchase Agreement (as
such term is hereinafter defined).
W I T N E S S E T H
WHEREAS, the Management Group Stockholders are the beneficial
owners of the issued and outstanding shares of common stock, par value $0.0001
per share of the Company (the "Common Stock") set forth opposite their names on
Schedule A hereto;
WHEREAS, the Fund and the Company are simultaneously with the
entering into of this Agreement, entering into a certain Stock Purchase
Agreement (the "Stock Purchase Agreement") pursuant to which the Fund is
purchasing 1,500,000 shares of Common Stock and the Company has agreed to issue
to the Fund five-year warrants to purchase 250,000 shares of the Common Stock
(the "Warrants"); and
WHEREAS, one of the conditions to Closing (as defined in the
Stock Purchase Agreement) is the execution and delivery of this Agreement.
NOW, THEREFORE, in consideration of the premises and mutual
agreements set forth below, the parties intending to be legally bound agree,
effective on the date of this Agreement, to the following terms and conditions:
1. Transferees. For purposes of this Agreement, unless
otherwise provided herein, the term "Management Group Stockholders" shall
include any permitted transferees of a Management Group Stockholder, to the
extent of any such transfer. For the purposes of this Agreement, the term
"Investor Group" shall include the Fund and the following transferees of the
Fund: (i) the partners of the Fund; (ii) any affiliate of the Fund or a partner
thereof; and (iii) transferees of any of the foregoing holding more than 750,000
of the outstanding shares of Common Stock (including shares obtainable upon
exercise of the Warrants), which transferee has been approved by the Board of
Directors of the Company, which approval shall not be unreasonably withheld or
delayed; provided, however, that without the approval of the Board of Directors
of the Company, a transferee described in clause (iii) above shall nevertheless
be included in such definition for all purposes of this Agreement, except with
respect to Section 8(C), Sections 9(i), 9(ii), 9(iv), 9(vii), 9(x), 9(xi),
9(xii), and 9(xiii) and Section 10 hereof.
2
2. Stock. The Fund is the registered owner of an aggregate of
1,500,000 shares of Common Stock, and the Warrants and the Management Group
Stockholders are the registered owners of that number of shares of Common Stock,
stock options and warrants set forth opposite such Management Group Stockholders
name on Schedule B hereto (collectively, and together with any shares of Common
Stock acquired or over which beneficial ownership is obtained after the date
hereof, the "Shares"). Each Stockholder's Shares shall be subject to a number of
restrictions as set forth in this Agreement.
3. Representations and Warranties of the Company.
The Company hereby represents and warrants to the Fund as
follows:
(A) Organization. Each of the Company and its subsidiaries
is a corporation duly organized, validly existing and in good standing under the
laws of its jurisdiction of organization, and is qualified to do business as a
foreign corporation in each jurisdiction in which such qualification is
required, except where the failure to so qualify could not have a Material
Adverse Effect. Each of the Company and its subsidiaries has all required power
and authority (corporate and other) to own, operate and lease its properties and
assets and to carry on its business as presently conducted, and the Company has
all requisite power and authority (corporate and other) to enter into and
perform this Agreement and to carry out the transactions contemplated hereby.
Neither the Company nor any of its subsidiaries is in violation of any of the
provisions of its Certificate of Incorporation or By-Laws or equivalent
organizational documents. No consent, approval, order, license, permit or
authorization of, or registration, declaration or filing with, any Governmental
Body or any other Person is required to be obtained or made by or with respect
to the Company or any of its subsidiaries in connection with this Agreement or
the consummation of the transactions contemplated hereby.
(B) Authorization. This Agreement and all documents and
instruments executed pursuant hereto, are legal, valid and binding obligations
of the Company, enforceable against the Company in accordance with their terms.
The execution and delivery of this Agreement by the Company does not, and the
consummation of the transactions contemplated hereby will not, conflict with, or
result in any violation of, or default under (with or without notice or lapse of
time, or both), or give rise to a right of termination, cancellation or
acceleration of any obligation or loss of any benefit under (i) any provision of
the Certificate of Incorporation or Bylaws or equivalent organizational
documents of the Company or any of its subsidiaries, as amended, or (ii) any
mortgage, indenture, lease, contract or other agreement or instrument, permit,
concession, franchise, license, judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to the Company or any of its
subsidiaries or any of their respective properties, assets, or businesses except
where such conflict, violation, default, termination, cancellation or
acceleration with respect to the foregoing provisions of (ii) would not have and
could not reasonably be expected to have a Material Adverse Effect. The
execution, delivery and performance of this Agreement has been duly authorized
by all necessary corporate action of the Company.
(C) Capitalization.
(i) The authorized capital stock of the Company consists of
20,000,000 shares of Common Stock, $0.0001 par value, and 5,000 shares of
Preferred Stock $.01 par value, of which there were issued and outstanding
immediately prior to Closing, 10,784,525 shares of
-2-
3
Common Stock and no shares of Preferred Stock. There are no other outstanding
shares of capital stock or voting securities and no outstanding commitments to
issue any shares of capital stock or voting securities other than pursuant to
(x) the exercise of options outstanding as of such date under the Company's
Stock Option Plan (the "Stock Option Plan"), (y) the exercise of outstanding
options ("Director Options") granted to certain Directors of the Company to
purchase 220,000 shares of Common Stock and (z) the exercise of outstanding
warrants evidencing the rights of the holders thereof to purchase an aggregate
of 5,379,250 shares of Common Stock, as more fully described on Schedule 4.3 to
the Stock Purchase Agreement and as provided for herein, in the Stock Purchase
Agreement and the Warrant Agreement. All outstanding shares of Common Stock are
duly authorized, validly issued, fully paid and non-assessable and are free of
any Encumbrances other than any liens or encumbrances created by or imposed upon
the holders thereof, and are not subject to preemptive rights or rights of first
refusal created by statute, the Certificate of Incorporation, as amended, or
Bylaws, as amended, of the Company or any agreement to which the Company is a
party or by which it is bound. Immediately prior to the Closing, the Company has
reserved 500,000 shares of Common Stock for issuance to employees and
consultants pursuant to the Stock Option Plan, no shares have been issued
pursuant to option exercises, 372,500 shares are subject to outstanding,
unexercised options, and no shares are subject to outstanding stock purchase or
other rights. Immediately prior to the Closing, the Company has reserved
5,379,250 shares of Common Stock for issuance upon exercise of the warrants
described on Schedule 4.3 to the Stock Purchase Agreement. Except for the rights
created pursuant to this Agreement, the Stock Purchase Agreement, the Warrant
Agreement, the warrants described on Schedule 4.3 to the Stock Purchase
Agreement, the Stock Option Plan and the Directors Options, there are no other
options, warrants, calls, rights, commitments or agreements of any character to
which the Company is a party or by which it is bound obligating the Company to
issue, deliver, sell, repurchase or redeem, or cause to be issued, delivered,
sold, repurchased or redeemed, any shares of capital stock of the Company or
obligating the Company to grant, extend, accelerate the vesting of, change the
price of, or otherwise amend or enter into any such option, warrant, call,
right, commitment or agreement. Other than as set forth on Schedule 2(C) hereof,
there are no contracts, commitments or agreements relating to voting, purchase
or sale of the Company capital stock (i) between or among the Company and any of
its stockholders or other Persons and (ii) to the Best Knowledge of the Company,
between or among any of the Company stockholders. True and complete copies of
all agreements and instruments relating to or issued under the Stock Option
Plan, have been filed as an exhibit to the SEC Documents and such agreements and
instruments have not been amended, modified or supplemented, and there are no
agreements to amend, modify or supplement such agreements or instruments in any
case from as filed.
(ii) Other than as provided in Schedule 2(C) and as set
forth in the Registration Rights Agreement, there are no outstanding rights
(other than those of which have been satisfied) which permit the holder thereof
to cause the Company to file a registration statement under the Securities Act
or which permit the holder thereof to include securities of the Company in a
registration statement filed by the Company under the Securities Act, and there
are no outstanding agreements or other commitments which otherwise relate to the
registration of any securities of the Company under the Securities Act. All
securities of the Company heretofore issued and sold by the Company were issued
and sold in compliance with all applicable Federal and state securities laws.
-3-
4
(D) Litigation. Except as set forth in the SEC Documents
or on Schedule 4.7 to the Stock Purchase Agreement, there is no private or
governmental action, suit, proceeding, claim, arbitration or investigation
pending before any agency, court or tribunal, foreign or domestic, or, to the
Best Knowledge of the Company, threatened against the Company or any of its
subsidiaries or any of their respective properties or any of their respective
officers or directors (in their capacities as such) that, individually or in the
aggregate, if determined adversely against the Company and its subsidiaries
could reasonably be expected to have a Material Adverse Effect There is no
judgment, decree or order against the Company or any of its subsidiaries or, to
the Best Knowledge of the Company, any of their respective directors or officers
(in their capacities as such), that could prevent, enjoin, alter or delay any of
the transactions contemplated by this Agreement, or that could reasonably be
expected to have a Material Adverse Effect.
(E) Representations Complete None of the representations
or warranties made by the Company herein or in any Schedule attached hereto, or
in any certificate furnished by the Company pursuant to this Agreement contains
or will contain at the Closing Date any untrue statement of a material fact, or
omits or will omit at the Closing Date to state any material fact necessary in
order to make the statements contained herein or therein, in light of the
circumstances under which made, not misleading.
4. Representations and Warranties of the Management Group
Stockholders.
Each of the Management Group Stockholders jointly and
severally represent and warrant to the Fund as follows:
(A) Authorization. This Agreement and all documents and
instruments executed pursuant hereto, are legal, valid and binding obligations
of each Management Group Stockholder, enforceable against each Management Group
Stockholder in accordance with their terms. The execution and delivery of this
Agreement by each Management Group Stockholder does not, and the consummation of
the transactions contemplated hereby will not, conflict with, or result in any
violation of, or default under (with or without notice or lapse of time, or
both), or give rise to a right of termination, cancellation or acceleration of
any obligation or loss of any benefit under (i) if applicable, any provision of
the Certificate of Incorporation or Bylaws or equivalent organizational
documents of each Management Group Stockholder, as amended, or (ii) any
mortgage, indenture, lease, contract or other agreement or instrument, permit,
concession, franchise, license, judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to each Management Group Stockholder or
any of its properties or assets.
(B) Ownership. Each Management Group Stockholder (i)
owns, beneficially or of record, that number of Shares set forth opposite such
Management Group Stockholder's name on Schedule B hereto free and clear of all
Encumbrances and (ii) does not own, beneficially or of record, any other shares
of Common Stock.
(C) Material Contracts. Each Management Group
Stockholder is in compliance with the provisions of all material contracts to
which each such Management Group Stockholder is a party, and there is no default
or event that with or without notice or lapse of time, or both, would constitute
a default or event of acceleration by any party to any of such contracts or
would give either party the right to terminate, modify, cancel or exercise any
remedy under any of such contracts. The Management group Stockholders have not
given or received
-4-
5
any notice or other communication (oral or written) regarding any actual,
alleged, possible or potential violation or breach of, or default under any such
contract and has no knowledge or reason to believe that any party to any of such
contracts intends to cancel or terminate any such contract or to exercise or not
exercise any options under any such contract.
(D) Ownership. Each Management Group Stockholder (i)
owns, beneficially or of record, that number of Shares set forth opposite such
Management Group Stockholder's name on Schedule B hereto free and clear of all
Encumbrances and (ii) does not own, beneficially or of record, any other shares
of Common Stock.
5. Transferability. The Company and each Stockholder agree
that the Shares may be transferred only in accordance with the provisions set
forth herein and only if the transferee of such Shares agrees in writing to be
bound by the provisions hereof by executing a counterpart signature page to this
Agreement. Any transfer by a Stockholder not in accordance with the preceding
sentence shall be void, ab initio.
For the purposes of this Agreement, the term "transfer" shall
mean any sale, exchange, gift, bequest, hypothecation, pledge or grant of a
security interest or any other disposition of the Shares, or of any interest in
the Shares, whether voluntary or by operation of law, that would change the
legal or beneficial ownership of the Shares. The term "transfer" includes,
without limitation, any transaction that creates a form of joint ownership in
the Shares between the transferor and one or more person (whether or not that
other person is the spouse of the transferor) or any transaction that creates or
grants an option, warrant, or right to obtain an interest in the Shares.
6. Rights of First Offer.
(A) The Company shall not offer, issue or sell any
shares of capital stock of the Company, or any warrants or options to purchase
or rights to subscribe for or any other securities convertible into or
exchangeable for shares of capital stock of the Company, or enter into any
agreements or commitments pursuant to which the Company may become obligated to
issue any shares of capital stock, warrants, options, rights or securities
convertible into or exchangeable for capital stock of the Company, unless the
Company shall first offer to the Investor Group, the Investor Group's
Proportionate Percentage (as hereinafter defined) of the securities proposed to
be offered by the Company; provided, however that this Section 6, shall not
apply to (i) shares of Common Stock or warrants, options, rights or securities
convertible into or exchangeable for capital stock of the Company issued as
consideration in the acquisition by the Company of the stock or assets of
another company, which acquisition and issuance has been approved by the Board
of Directors of the Company, including the Fund Director (as hereinafter
defined), (ii) any shares of Common Stock or warrants, options, rights or
securities convertible into or exchangeable for capital stock of the Company
issued in connection with any pro rata stock split, stock dividends or similar
event affecting the Common Stock; and (iii) shares of Common Stock issued
pursuant to the exercise of currently outstanding warrants or options or any
options which may be issued under the Company's currently existing Stock Option
Plan. The offer shall be effected by delivery of written notice thereof by the
Company to the Investor Group, which notice shall contain (i) a description of
the securities being offered, (ii) the amount and type of consideration which
the Company will receive for each such security, (iii) the aggregate amount of
securities being offered, (iv) the manner of distribution of the securities and
-5-
6
(v) any other information which is material to a decision to accept or reject
the offer. Such offer shall remain open for a period of twenty-five (25) days
from receipt thereof.
(B) Notice of the Investor Group's intention to accept in
whole or in part any offer made pursuant to Section 6(A) hereof shall be
evidenced by a writing delivered to the Company prior to the end of the
twenty-five (25) day period of such offer, setting forth that portion of the
securities offered as the Investor Group elects to purchase (the "Notice of
Acceptance").
(C) In the event that a Notice of Acceptance is not given
by the Investor Group, the Company shall have one hundred and twenty (120) days
from the expiration of the foregoing twenty-five (25) day period, to sell all or
any part of such securities offered as to which a Notice of Acceptance has not
been given by the Investor Group to any other person or persons, but only upon
terms and conditions which are no more favorable to such other person or persons
or less favorable to the Company than those set forth in the original offer.
(D) In each case, any securities offered but not
purchased by the Investor Group or other person or persons in accordance with
Section 6(C) may not be sold or otherwise disposed of until they are again
offered to the Investor Group under the procedures specified in this Section 6.
(E) For purposes of this Section 6, the term
"Proportionate Percentage" shall mean, as to the Investor Group, the result,
expressed as a percentage, obtained by dividing (i) the number of shares of
Common Stock held by the Investor Group (including any shares obtainable by the
Investor Group upon the conversion or exercise of convertible securities,
options, rights or warrants) by (ii) the number of shares of Common Stock then
outstanding (including any shares obtainable by the Investor Group upon the
conversion or exercise of convertible securities, options, rights or warrants).
7. Co-Sale Rights
(A) If at any time one or more Management Group
Stockholders (the "Seller") desires to sell, directly or indirectly, in one or a
series of related transactions, more than twenty percent (20%) of the aggregate
number of Shares held by the Seller at such time pursuant to a bona fide offer
or offers from a third party or parties (the "Proposed Transferee"), the Seller
shall submit a written notice (the "Notice") of such proposed sale of such
Shares (the "Offered Shares") to the Investor Group. The Notice shall disclose
the identity of the Proposed Transferee, the Offered Shares proposed to be sold,
the total number of Shares owned by the Seller, the terms and conditions,
including price, of the proposed sale, that the Proposed Transferee has been
informed of the rights and obligations provided for in this Section 7 and has
agreed to purchase the Offered Shares in accordance with the terms of this
Agreement, and any other material facts relating to the proposed sale.
(B) If upon receipt of a Notice pursuant to Section 7(A)
above, the Investor Group desires to sell any or all of its pro rata portion
("Pro Rata Portion") of Common Stock held by the Investor Group at such time,
then the Investor Group shall have the right, exercisable upon written notice
(the "Co-Sale Acceptance Notice") to the Seller, given within thirty (30) days
after the Notice has been delivered pursuant to Section 7(A) above, to
participate in the proposed sale of the Offered Shares pursuant to the terms and
conditions specified in the proposed sale of the Offered Shares pursuant to the
terms and conditions specified in the
-6-
7
Notice, and the Seller shall require the Proposed Transferee designated in the
Notice to purchase any or all of the Investor Group's Pro Rata Portion of Common
Stock. The Co-Sale Acceptance Notice shall state the number of Shares the
Investor Group proposes to include in such proposed sale to the Proposed
Transferee (the "Co-Sale Shares"). Any such sale by the Investor Group shall be
at the same price per share (including type of consideration) paid by the
Proposed Transferee and otherwise on identical terms and conditions as received
by the Seller in its sale to the Proposed Transferee; provided, however, that if
the Proposed Transferee is unable or unwilling to purchase the Co-Sale Shares
from the Investor Group, the total number of Shares to be sold to such Proposed
Transferee shall be allocated between the Seller and the Investor Group on a pro
rata basis.
(C) If no Co-Sale Acceptance Notice is received by the
Seller during the 30-day period referred to in Section 7(B) above, then the
Seller shall have the right to sell the Offered Shares to the Proposed
Transferee at any time within 120 days after the date of the Notice, subject to
the other provisions of this Agreement. Any such sale to the Proposed Transferee
shall be at the price and upon the terms and conditions specified in the Notice.
Any Offered Shares not sold within such 120 day period shall continue to be
subject to the requirements of this Section 7.
(D) Notwithstanding anything to the contrary contained
in Sections 7(A) through 7(C) above, if at any time, a Management Group
Stockholder desires to sell, directly or indirectly, in one or a series of
related transactions, more than forty nine percent (49%) of the aggregate number
of Shares owned or controlled by such Management Group Stockholder at such time
pursuant to a bona fide offer or offers from a third party or parties (the
"Management Group Proposed Transferee"), such Management Group Stockholder shall
submit a written notice (the "Management Group Notice") of such proposed sale of
such Shares (the "Management Group Offered Shares") to the Investor Group. The
Management Group Notice shall disclose the identity of the Management Group
Proposed Transferee, the Management Group Offered Shares proposed to be sold,
the total number of Shares owned by the Management Group Stockholder, the terms
and conditions, including price, of the proposed sale, that the Proposed
Transferee has been informed of the rights and obligations provided for in this
Section 7 and has agreed to purchase the Management Group Offered Shares in
accordance with the terms of this Agreement, and any other material facts
relating to the proposed sale.
(E) If upon receipt of a Management Group Notice pursuant
to Section 7(D) above, the Investor Group desires to sell any or all of the
Investor Group's Shares, then the Investor Group shall have the right,
exercisable upon written notice (the "Management Co-Sale Acceptance Notice") to
the Management Group Stockholder, given within thirty (30) days after the
Management Group Notice has been delivered pursuant to Section 7(D) above, to
participate in the proposed sale of the Management Group Offered Shares pursuant
to the terms and conditions specified in the Management Group Notice, and the
Management Group Stockholder shall require the Management Group Proposed
Transferee designated in the Management Group Notice to purchase any or all of
the Investor Group's Shares. The Management Co-Sale Acceptance Notice shall
state the number of Shares the Investor Group proposes to include in such
proposed sale to the Proposed Management Group Transferee (the "Management
Co-Sale Shares"). Any such sale by the Investor Group shall be at the same price
per share (including type of consideration) paid by the Management Group
Proposed Transferee and otherwise on identical terms and conditions as received
by the Management Group Stockholder in its sale to
-7-
8
the Management Group Proposed Transferee. In the event that the Management Group
Proposed Transferee does not purchase the Management Co-Sale Shares from the
Investor Group pursuant to a timely delivered Management Group Co-Sale
Acceptance Notice as required by this Section 7, then the Management Group
Stockholder shall not be permitted to, and shall not, sell any Management Group
Offered Shares to the Management Group Proposed Transferee in the proposed sale.
(F) If no Management Group Co-Sale Acceptance Notice is
received by the Management Group Stockholder during the 30-day period referred
to in Section 7(E) above, then the Management Group Stockholder shall have the
right to sell the Management Group Offered Shares to the Management Group
Proposed Transferee at any time within 120 days after the date of the Management
Group Notice, subject to the other provisions of this Agreement. Any such sale
to the Management Group Proposed Transferee shall be at the price and upon the
terms and conditions specified in the Management Group Notice. Any Management
Group Offered Shares not sold within such 120-day period shall continue to be
subject to the requirements of this Section 7.
(G) In the event that any Management Group Stockholder
desires to transfer, in the aggregate, at any time or from time to time 20%
(twenty percent) or less of the aggregate number of Shares held by such
Management Group Stockholder, the Investor Group shall have no rights with
respect to such transfer.
Notwithstanding anything to the contrary contained in this
Section 7, the foregoing Co-Sale rights shall not apply to any Shares that are
offered for sale or are sold in a public market transaction.
8. (A) Right of the Investor Group to Elect Board Member. So
long as at least 750,000 of the issued and outstanding shares of Common Stock
(including shares obtainable upon exercise of the Warrants) are held by the
Investor Group, the Investor Group shall have the right to nominate one member
of the Board of Directors, and the Company, the Management Group Stockholders
and the Investor Group agree to take any and all action, including voting all of
their shares of Common Stock, which may be necessary to cause the election to
the Board of Directors of the person nominated by the Investor Group (the "Fund
Director"). The Investor Group shall have the right to require the resignation
of its nominee and his or her replacement with another nominee of the Investor
Group.
(B) Right of the Management Group Stockholders to Elect
Board Members. The Management Group Stockholders and the Fund agree that (i)
Xxxxxx Investment, A.E.C. shall have the right to nominate two members of the
Board of Directors; (ii) BigBurger Ltda. shall have the right to nominate one
member of the Board of Directors; and (iii) Xxxxxxxx Xxxxxxxx, Xxxx Xxxxxxx,
Xxxxx Xxxxxx and Xxxxx W, Xxxxxxx (the "Xxxxxxxx Group"), shall have the right,
as a group, to nominate two members of the Board of Directors. The Company, the
Management Group Stockholders and the Investor Group agree to take any and all
action, including voting all of their shares of Common Stock, which may be
necessary to cause the election to the Board of Directors of the person
nominated by each of Xxxxxx Investment, A.E.C., BigBurger Ltda. and the
Xxxxxxxx Group.
-8-
9
(C) Approval of Budgets. The Company shall prepare and submit
to the Investor Group for approval, an annual operating and capital budget, and
shall not permit, without the prior written consent of the Investor Group, any
variation by more than 5% from the amounts set forth in such budgets for
indebtedness, capital expenditures, fixed costs and the ratio of total
liabilities to total assets, provided that the Investor Group shall exercise
such approval right in what it in good faith believes to be in the best
interests of the Company and its stockholders.
9. Covenants. The Company shall not and each of the Management
Group Stockholders in their capacity as shareholders, officers and directors, to
the extent applicable, shall cause the Company not to, directly or indirectly,
without the prior written consent or approval of the Investor Group, undertake
or agree to undertake any of the following actions: (i) sell, abandon, transfer,
lease or otherwise dispose of all or substantially all of its properties or
assets to any other company, companies, entity or entities; provided, however
that nothing contained in this Section 9(i) shall restrict the Board of
Directors of the Company from taking any action necessary to fulfill its
fiduciary duties; (ii) purchase, lease or otherwise acquire all or substantially
all of the properties or assets of another corporation or entity; (iii) during
the first three (3) years after the Closing Date, make any payment on account of
the purchase, redemption or other retirement of any shares of its capital stock
and thereafter, make any payment on account of the non pro rata purchase,
redemption or other retirement of any shares of its capital stock; (iv) merge or
consolidate with or into, or permit any subsidiary to merge or consolidate with
or into, any other company, companies, entity or entities, provided that any
wholly-owned subsidiary of the Company may merge or consolidate with or into
another wholly-owned subsidiary of the Company, provided, however that nothing
contained in this Section 9(iv)shall restrict the Board of Directors of the
Company from taking any action necessary to fulfill its fiduciary duties; (v)
voluntarily dissolve, liquidate or wind up or carry out any partial liquidation
or distribution or transaction in the nature of a partial liquidation or
distribution; (vi) take any action to cause an amendment to the Certificate of
Incorporation or By-Laws of the Company which would affect the rights or
obligations of any of the Stockholders; (vii) enter into any agreements or
transactions between the Company or any affiliate thereof and the CEO, CFO, COO
and President of the Company or any Management Group Stockholder or any of their
respective affiliates; (viii) issue or agree to issue any shares of preferred
equity at any price or any shares of common equity or any security, right,
option or warrant convertible into or exercisable for, shares of the Company's
stock, in either case, at a lower per share price than that paid by the Investor
Group for its Shares; provided, however that this Section 9(viii), shall not
apply to (a) shares of Common Stock or warrants, options, rights or securities
convertible into or exchangeable for capital stock of the Company issued as
consideration in the acquisition by the Company of the stock or assets of
another company, provided that such acquisition and issuance has been approved
by the Board of Directors of the Company, including the Fund Director, (b) any
shares of Common Stock or warrants, options, rights or securities convertible
into or exchangeable for capital stock of the Company issued in connection with
any pro rata stock split, stock dividends or similar event affecting the Common
Stock, and (c) shares of Common Stock issued pursuant to the exercise of
currently outstanding warrants or options or any options which may be issued
under the Company's currently existing Stock Option Plan; (ix) increase the
number of persons serving on the Board; (x) make any significant changes in the
Company's or its subsidiaries' accounting policies, unless required by law; (xi)
permit material deviations from the business strategy provided to the Investor
Group, attached hereto as Schedule C (the "Business Plan"), such as any
expansion of the Company's business outside of Brazil or any change in the
fundamental nature of the business of the Company as conducted on the Closing
-9-
10
Date (i.e., Hamburger Fast Food Restaurants); (xii) change any component of the
current compensation of the CEO, CFO, COO and President of the Company, which
compensation shall include salary, bonus, stock options and fringe benefits;
(xiii) declare any dividends; (xiv) adopt or amend any stock option, stock
purchase or similar plan.
10. Covenants of the CEO. For a period of five years from the
Closing Date or for so long as Xxxxx xxx Xxxxxx Vader is an officer, director or
consultant of the Company, whichever is shorter, provided that in no event shall
such period be less than three years from the Closing Date, Xxxxx xxx Xxxxxx
Vader shall not, directly or indirectly, without the prior written consent of
the Investor Group, (i) sell, in any three year period, more than 100,000 of the
Shares directly or indirectly owned (beneficially or of record) or controlled by
him, including the Shares owned of record by Xxxxxx Investment A.E.C. but
beneficially owned by Xxxxx xxx Xxxxxx Vader or (ii) sell at any time or from
time to time after the Closing Date, an aggregate of more than 300,000 of the
Shares directly or indirectly owned (beneficially or of record) or controlled by
him, including the Shares owned of record by Xxxxxx Investment A.E.C. but
beneficially owned by Xxxxx xxx Xxxxxx Vader.
11. Additional Rights. In the event that, at the end of fiscal
1999, 2000 or 2001, the Company has failed to achieve 75% of projected
cumulative EBITDA as set forth in Schedule D hereto measured for the period from
January 1, 1997 to December 31, 1999, 2000 or 2001, as the case may be, the
Investor Group shall have the right to (A) nominate 2 additional Board members
within thirty days of the completion of the audited financial statements for
fiscal 1999, (B) 1 additional Board member within thirty days of the completion
of the audited financial statements for fiscal 2000 and (C) in the event that
the Investor is not entitled to nominate an additional Board member pursuant to
Section (B) hereof, 1 additional Board member within thirty days of the
completion of the audited financial statements for fiscal 2001, as the case may
be, and the Company and each of the Management Group Stockholders, in their
capacity as stockholders, officers and directors, to the extent applicable,
agree to take any and all action, including voting their respective shares of
Common Stock for such nominee, causing the resignation of any Management Group
Stockholder nominee, if applicable, and expanding the number of Board members,
all as may be required in accordance with this Section 11, in order to cause
such nominee to be elected to the Board; provided, however that if the average
per share price of the Common Stock for the thirty trading days ending on
December 31, 1999, December 31, 2000 or December 31, 2001, as the case may be,
is $6.00 or higher, $7.00 or higher, or $8.00 or higher, respectively, the
Investor Group shall not have the right to nominate additional Board members
that it otherwise has the right to nominate on such date.
Notwithstanding the provisions of Section 8 hereof, the
Management Group Stockholders agree that if the Investor Group is entitled under
this Section 11 to (i) nominate 2 additional Board members pursuant to 11(A)
above, a nominee of the Management Group Stockholders who is serving as a member
of the Board at such time shall resign and the number of members of the Board
shall be increased by one; (ii) nominate 1 additional Board member pursuant to
11(B) above, a nominee of the Management Group Stockholders who is serving as a
member of the Board at such time shall resign; and (iii) nominate 1 additional
Board member pursuant to 11(C) above, a nominee of the Management Group
Stockholders who is serving as a member of the Board at such time shall resign.
For purposes of (i), (ii) and (iii), the nominee of the Management Group
Stockholders who shall be required to resign shall be designated by the
Management Group Stockholders; provided, however, that in the event the
-10-
11
Management Group Stockholders can not agree as to which member of the Board
shall be required to resign, the Investor Group, in its sole discretion may
designate such member and such designee shall resign.
12. Investor Group Action. Any action, consent or approval
required to be obtained or taken by the Investor Group shall be deemed to have
been obtained or taken if Shares representing 662/3% of the Shares held by the
Investor Group take such action or provide such consent or approval.
13. Existing Voting Agreement. The Company and certain of the
Management Group Stockholders, effective as of March 19, 1996 had entered into
an agreement (the "Original Agreement") with respect to the voting of the shares
of Common Stock owned by each of such Management Group Stockholders and a
limitation, effective through September 1996, on the disposition of shares owned
by Xxxxxx Investment, A.E.C (the "Limitation"), which Original Agreement, with
the exception of the Limitation which remained in full force and effect, was
replaced and superseded in its entirety by an agreement (the "Voting Agreement")
dated as of March 19, 1996, by and between, Xxxxxxxx Xxxxxxxx, Xxxx Xxxxxxx,
Xxxxx X. Xxxxxx and Xxxxx X. Xxxxxxx, Xxxxxx Investments, A.E.C. and BigBurger
Ltda. The Company and the Management Group Stockholders agree that the
Limitation and the Voting Agreement are hereby replaced and superseded in their
entirety by this Agreement.
14. Employment Agreements. Each of the Management Group
Stockholders party to a severance agreement ("Severance Agreement") with the
Company hereby agrees that the acquisition by the Fund of the Shares will not
constitute a Change of Control, as such term is defined in each Severance
Agreement.
15. No Waiver. Any waiver of a breach of any of the terms of
this Agreement shall not operate as a waiver of any other breach of such terms
or conditions or any other terms or conditions, nor shall any failure to enforce
any provision of this Agreement operate as a waiver of such provision or any
other provision.
16. Successor and Assigns. The rights, benefits and
obligations of the Company under this Agreement and all covenants and agreements
hereunder shall inure to the benefit of and be enforceable by or against its
successors and assigns. Subject to the limitations set forth herein, this
Agreement shall inure to the benefit and be binding upon the Stockholders'
heirs, successors, assigns and transferees, provided that the requirements set
forth in Section 5 hereof are satisfied.
17. (A) Company Indemnification. The Company shall, with
respect to the representations, warranties, agreements and covenants made by it
herein or in any certificate or other instrument delivered by it pursuant hereto
or in connection with the transactions contemplated hereby, indemnify, defend
and hold the Investor Group harmless against all liability, loss or damage,
together with all reasonable costs and expenses related thereto (including
reasonable legal and accounting fees and expenses), arising from the untruth,
inaccuracy or breach of any of such representations, warranties, agreements or
covenants of the Company.
(B) Management Group Stockholder Indemnification. Each
Management Group Stockholder shall jointly and severally, with respect to the
representations, warranties and
-11-
12
agreements made by the Management Group Stockholders herein or in any
certificate or other instrument delivered by them pursuant hereto or in
connection with the transactions contemplated hereby, indemnify, defend and hold
the Investor Group harmless against all liability, loss or damage, together with
all reasonable costs and expenses related thereto (including reasonable legal
and accounting fees and expenses), arising from the untruth, inaccuracy or
breach of any such representations, warranties, agreements or covenants of the
Management Group Stockholders.
18. Remedies. In case any one or more of the covenants set
forth in this Agreement shall have been breached by the Company or any of the
Management Group Stockholders, the Investor Group may proceed to protect and
enforce its rights either by suit in equity and/or by action at law, including,
but not limited to, an action for damages as a result of any such breach and/or
an action for specific performance of any such covenant contained in this
Agreement.
19. Entire Agreement. This Agreement constitutes the entire
agreement among the parties. This Agreement may not be amended or modified,
except in writing, and signed by (i) the Company, (ii) holders of sixty-six and
two-thirds percent (66-2/3%) of the Shares then held by the Investor Group and
(iii) holders of sixty-six and two-thirds percent (66-2/3%) of the Shares then
held by the Management Group Stockholders.
20. Severability. If any provision of this Agreement or the
application thereof is held invalid or unenforceable, the invalidity or
unenforceability thereof shall not affect any other provisions or applications
of this Agreement which can be given effect without the invalid or unenforceable
provision or application. To that end, the provisions of this Agreement are to
be severable.
21. Termination. The provisions of this Agreement shall
terminate when the Investor Group no longer holds more than 750,000 of the
outstanding shares of Common Stock (including shares obtainable upon the
exercise of the Warrants).
22. Notice. All notices, request, consents and other
communications hereunder to any party shall be deemed sufficient if contained in
a written instrument delivered in person or duly sent by first class certified
mail, postage prepaid, addressed to such party at the address set forth below or
such other address as may hereafter be designated in writing in accordance with
the provisions of this Section 22:
(i) if to the Company, to
Brazil Fast Food Corp.
Praia do Flamengo
200-22(degree): Andar
CEP 00000-000
Xxx xx Xxxxxxx, Xxxxxx
Attention: Xxxxx xxx Xxxxxx Vader
-12-
13
with a copy to:
Xxxxxxxxx Xxxxxx Xxxxxxxx Xxxxxx & Xxxxxx, P.C.
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxx Xxxxxxx, Esq.
(ii) if to the Fund, to
AIG Latin America Equity Partners, Ltd.
c/o AIG Latin America Investment Advisors, Inc.
00 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxx Xxxxxx
with a copy to:
Xxxxxx, Xxxxxx-Xxxxxxx, Colt & Mosle
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxxxx Xxxxxxx, Esq.
(iii) if to a Management Group Stockholder, to the registered
address of such Stockholder, as such appears on the record
books of the Company
All such notices, requests, consents and other communications
shall be deemed to have been received (a) in the case of personal delivery, on
the date of such delivery and (b) in the case of mailing, on the third business
day following the date of such mailing.
23. Governing Law. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of New York (without
giving effect to its conflicts of laws principles).
-13-
14
IN WITNESS WHEREOF, the Company has caused this Agreement to
be signed and each Stockholder has executed this Agreement as of the date shown
below.
BRAZIL FAST FOOD CORP.
Dated: August 11, 1997 By: /s/ X. Xxx Xxxxxx Vader
------------------------------
Name: X. Xxx Xxxxxx Vader
Title: Chief Executive Officer
AIG LATIN AMERICA EQUITY PARTNERS, LTD.
Dated: August 11, 1997 By: /s/ Xxxxxxx Xxxxxx
-----------------------------
Name: Xxxxxxx Xxxxxx
Title: Chief Executive Officer
-14-
15
SCHEDULE A
MANAGEMENT GROUP STOCKHOLDERS
Dated: August 11, 1997 /s/ Xxxxx xxx Xxxxxx Vader
----------------------------------
Xxxxx xxx Xxxxxx Vader
Dated: August 11, 1997 /s/ Xxxxxxx Xxxxxx Xxxxx Xxxx
----------------------------------
Xxxxxxx Xxxxxx Xxxxx Xxxx
Dated: August 11, 1997 /s/ Xxxxxx Xxxxxx Xxxxx
----------------------------------
Xxxxxx Xxxxxx Xxxxx
Dated: August 11, 1997 /s/ Xxxx Xxxxxxxx xx Xxxxx
----------------------------------
Xxxx Xxxxxxxx xx Xxxxx
Dated: August 11, 1997 /s/ Xxx X. Xxxxxxx
----------------------------------
Xxx X. Xxxxxxx
Dated: August 11, 1997 /s/ Xxxxxxxx Xxxxxxxx
----------------------------------
Xxxxxxxx Xxxxxxxx
Dated: August 11, 1997 /s/ Xxxx Xxxxxxx Xxxxxxx Bomeny
----------------------------------
Xxxx Xxxxxxx Xxxxxxx Bomeny
Dated: August 11, 1997 /s/ Xxxxx xxx Xxxxxx Vader
----------------------------------
Xxxxxx Investment A.E.C.
Dated: August 11, 1997 /s/ Xxxxxxxx Xxxxxxxx
----------------------------------
Trinity Capital
Dated: August 11, 1997 /s/ Xxxx Xxxxxxx
----------------------------------
Xxxx Xxxxxxx
Dated: August 11, 1997 /s/ Xxxxx Xxxxxx
----------------------------------
Xxxxx Xxxxxx
Dated: August 11, 1997 /s/ Xxxxx X. Xxxxxxx
----------------------------------
Xxxxx X. Xxxxxxx
Dated: August 11, 1997 /s/ Xxxx Xxxxxxx Xxxxxxx Bomeny
----------------------------------
BigBurger Ltda.
Dated: August 11, 1997 /s/ Xxxx Xxxxxxxx xx Xxxxx
----------------------------------
Seaview Venture Group
-15-
16
SCHEDULE B
MANAGEMENT GROUP STOCKHOLDERS
OWNERSHIP OF SHARES, WARRANTS AND OPTIONS
NAME SHARES WARRANTS OPTIONS
---- ------ --------- -------
Xxxxx xxx Xxxxxx Vader 23,000 185,000
Xxxxxxx Xxxxxx Xxxxx Xxxx 5,000 120,000
Xxxxxx Xxxxxx Xxxxx 35,000
Xxxx Xxxxxxxx xx Xxxxx 20,000 50,000
Xxx X. Xxxxxxx 11,111 35,000
Xxxxxxxx Xxxxxxxx 225,556 100,000 35,000
Xxxx Xxxxxxx Xxxxxxx Bomeny 35,000
Xxxxxx Investment A.E.C. 453,450
Trinity Capital 11,111
Xxxx Xxxxxxx 27,668 39,000
Xxxxx Xxxxxx 187,875 100,000
Xxxxx X. Xxxxxxx 13,779 39,000
BigBurger Ltda 1,520,000
Seaview Venture Group 453,450
-16-
