EXHIBIT 1.1
3,800,000 Shares
BAB HOLDINGS, INC.
Common Stock
PLACEMENT AGENT AGREEMENT
____________, 1996
The Chicago Corporation
000 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Ladies and Gentlemen:
BAB Holdings, Inc., an Illinois corporation (the "Company"), proposes to
offer and sell an aggregate of 3,800,000 shares (the "Shares") of its common
stock, no par value per share ("Common Stock") to Qualified Institutional Buyers
and Institutional Accredited Investors. The Company desires that you act as the
placement agent ("Placement Agent") for the offering (the "Offering") of the
Shares. Certain of the capitalized terms used herein or defined in Section 8 of
this Agreement.
In connection therewith, the Company confirms its agreement with you as
follows:
1. Placement Agent.
(a) The Company agrees to retain The Chicago Corporation as its
exclusive placement agent ("Placement Agent") to introduce the Company to
Qualified Institutional Buyers and Institutional Accredited Investors as
prospective purchasers of Shares in the Offering. The Company acknowledges that
X.X. Xxxxxxxx & Company ("Xxxxxxxx") may provide a list of Qualified
Institutional Buyers and Institutional Accredited Investors to the Placement
Agent in connection with the performance of such services, it being understood
that any compensation of Xxxxxxxx for such information shall be the obligation
of the Placement Agent and not the Company.
(b) The Chicago Corporation agrees to act as Placement Agent in
connection with the Offering of the Shares and to use reasonable efforts,
subject to the Securities Act of 1933, as amended (the "Act"), the Securities
Exchange Act of 1934, as amended (the "Exchange Act")
and applicable state and other securities laws, to solicit Qualified
Institutional Buyers and Institutional Accredited Investors as prospective
purchasers of Shares in the Offering.
(c) As consideration for agreeing to act as Placement Agent in
connection with the Offering of the Shares, the Placement Agent shall receive
the consideration set forth that certain letter agreement dated September 25,
1996 between the Company and the Placement Agent, a copy of which is attached
hereto as Exhibit A.
2. Escrow; Closing. (a) The aggregate purchase price ("Funds") for Shares
subscribed to be purchased by Qualified Institutional Buyers and Institutional
Accredited Investors ("Investors") in the Offering shall be held by the
Placement Agent in a segregated account at The First National Bank of Chicago
(or such other bank selected by the Placement Agent) (the "Escrow Agent"). The
Funds will not be released until all of the conditions listed in Section 5 below
have occurred or are otherwise waived in writing by the Placement Agent.
(b) At such time as the Placement Agent has received indications of
interest from prospective investors sufficient to purchase all of the Shares at
a price per share agreed upon by the Company and the Placement Agent, the
Company and the Placement Agent shall request that the Securities and Exchange
Commission ("Commission") declare the Registration Statement (as hereinafter
defined) effective. Confirmation and final prospectuses will be distributed to
all investors promptly following the time the Registration Statement is declared
effective, informing investors of the date of the closing ("Closing"), which
will be at 10:00 a.m., Chicago time, on the third business day after the
effective date of the Registration Statement at the offices of Xxxxxxxxxxxx Xxxx
& Xxxxxxxxx, 0000 Xxxxx Xxxxx, Xxxxxxx, Xxxxxxxx 00000, or at such other time
and place within five business days after the effective date of the Registration
Statement as shall be agreed upon by the parties hereto (such date is
hereinafter referred to as the "Closing Date"). Certificates evidencing the
Shares shall be in definitive form and shall be registered in the respective
names of the Investors or their designees and in such denominations as the
Investors shall request by written notice to the Company. For the purpose of
expediting the checking and packaging of certificates for the Shares, the
Company agrees to make such certificates available for inspection at least 24
hours prior to the Closing Date. On the Closing Date, provided that the
conditions set forth in Section 5 below have occurred or are otherwise waived in
writing by the Placement Agent, delivery of the Shares shall be made to the
Placement Agent for the accounts of the respective Investors (or, at the
election of the Placement Agent, through the facilities of The Depository Trust
Company for the accounts of the respective Investors) against payment of the
purchase price therefor by wire transfer or certified or official bank check
payable to the order of the Company (the "Closing").
3. Representations and Warranties of the Company. Subject to Section 9(a)
of this Agreement, the Company represents and warrants to the Placement Agent as
of the date hereof (except as to matters that are to occur subsequent to the
date hereof and prior to the Closing Date) and as of the Closing Date as
follows:
(a) A registration statement (Registration No. 333-_____) on Form S-l
relating to the Shares, including a preliminary prospectus and such amendments
to such registration
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statement as may have been required to the date of this Agreement, has been
prepared by the Company under the provisions of the Act and the rules and
regulations (collectively referred to as the "Rules and Regulations") of the
Commission thereunder, and has been filed with the Commission. The term
"preliminary prospectus" as used herein means a preliminary prospectus as
contemplated by Rule 430 or Rule 430A of the Rules and Regulations included at
any time as part of the registration statement. Copies of such registration
statement and amendments and of each related preliminary prospectus have been
delivered to the Placement Agent. If such registration statement has not become
effective, a further amendment to such registration statement, including a form
of final prospectus, necessary to permit such registration statement to become
effective will be filed promptly by the Company with the Commission. If such
registration statement has become effective, a final prospectus containing
information permitted to be omitted at the time of effectiveness by Rule 430A of
the Rules and Regulations will be filed promptly by the Company with the
Commission in accordance with Rule 424(b) of the Rules and Regulations. The term
"Registration Statement" means the registration statement as amended at the time
it becomes or became effective (the "Effective Date"), including financial
statements and all exhibits and any information deemed to be included by Rule
430A. The term "Prospectus" means the prospectus as first filed with the
Commission pursuant to Rule 424(b) of the Rules and Regulations or, if no such
filing is required, the form of final prospectus included in the Registration
Statement at the Effective Date.
(b) Neither the Commission nor any state securities division has
issued any order preventing or suspending the use of any preliminary prospectus,
and each preliminary prospectus, at the time of filing thereof with the
Commission, has conformed in all material respects with all applicable
provisions of the Act and the Rules and Regulations and, as of its date, has not
included any untrue statement of a material fact or omitted to state a material
fact necessary to make the statements therein not misleading. On the Effective
Date, the date the Prospectus is first filed with the Commission pursuant to
Rule 424(b) (if required), the Closing Date, and when any post-effective
amendment to the Registration Statement becomes effective or any amendment or
supplement to the Prospectus is filed with the Commission, the Registration
Statement and the Prospectus (as amended or as supplemented if the Company shall
have filed with the Commission any amendment or supplement thereto) did or will
comply in all material respects with all applicable provisions of the Act and
the Rules and Regulations and will contain all statements required to be stated
therein in accordance with the Act and the Rules and Regulations. On the
Effective Date and when any post-effective amendment to the Registration
Statement becomes effective, no part of the Registration Statement, the
Prospectus or any such amendment or supplement did or will contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein not
misleading. At the Effective Date, the date the Prospectus or any amendment or
supplement to the Prospectus is filed with the Commission and at the Closing
Date, the Prospectus did not or will not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The foregoing representations and warranties in this Section 3(b) do
not apply to any statements or omissions made in reliance on and in conformity
with information relating to the Placement Agent furnished in writing to the
Company by the Placement Agent specifically for inclusion in the any preliminary
prospectus,
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the Registration Statement, the Prospectus or any amendment or supplement
thereto. The Company acknowledges that the statements set forth under the
heading "Plan of Distribution" in the Prospectus constitute the only information
relating to the Placement Agent furnished in writing to the Company by the
Placement Agent specifically for inclusion in the Registration Statement.
(c) The Company is a corporation duly organized, validly existing and
in good standing under the laws of the State of Illinois and has all requisite
corporate power and authority to own its Property and to carry on its business
as presently conducted and as presently proposed to be conducted, to enter into,
deliver and perform its obligations under this Agreement and to carry out the
transactions contemplated by this Agreement. The Company is qualified to do
business in each jurisdiction in which the character of its Property or the
nature of its activities makes such qualification in such jurisdiction
necessary, except where the failure to so qualify would not, individually or in
the aggregate, have a Material Adverse Effect.
(d) Chesapeake and each of the Subsidiaries is duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation or organization and has all requisite corporate power and
authority to own its Property and to carry on its business as presently
conducted and as presently proposed to be conducted. Chesapeake and each of the
Subsidiaries is qualified to do business in each jurisdiction in which the
character of its Property or the nature of its activities makes such
qualification in such jurisdiction necessary, except where the failure to so
qualify would not, individually or in the aggregate, have a Material Adverse
Effect. On the Closing Date, the Company will have good and marketable title to
all of the outstanding shares of Stock of such Subsidiaries, free and clear in
each case of any lien, claim or encumbrance of any nature.
(e) As of the date of this Agreement, the Company has an authorized
and outstanding number of shares as set forth under the caption "Shareholders'
Equity" in the table beneath the caption "Capitalization" in the Prospectus and
an outstanding capitalization (in dollars) as set forth under the heading
"Actual" in the Capitalization Table, and immediately following the purchase of
the Shares by the Investors, the application of the net offering proceeds as
described in the Prospectus and the closing of the Chesapeake Acquisition (as
defined in the Prospectus), the Company will have an authorized and outstanding
number of shares as set forth under the caption "Shareholders' Equity" in the
Capitalization Table and an outstanding capitalization (in dollars) as set forth
under the heading "Pro Forma As Adjusted" in the Capitalization Table. The
issued and outstanding shares of capital stock of the Company have been, and the
Shares to be issued and sold by the Company upon such issuance and delivered
against payment therefor will be, duly authorized, validly issued, fully paid
and nonassessable and will not be subject to any preemptive or similar right;
the description of the Common Stock in the Registration Statement and the
Prospectus is, and at the Closing Date will be, complete and accurate in all
material respects. Except as set forth in the Prospectus, none of Chesapeake,
the Company or any Subsidiary has outstanding, and at the Closing Date will not
have outstanding, any options to purchase, or any rights or warrants to
subscribe for, or any securities or obligations convertible into, or any
contracts or commitments to issue or sell, any
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shares of common stock, any shares of capital stock of any subsidiary or any
such warrants, convertible securities or obligations.
(f) As of the Closing Date, no security holder of Chesapeake, the
Company or any Subsidiary will hold a right to require the Company to register
under the Act any securities of any nature owned or held by such person in
connection with the transactions contemplated by this Agreement except for
rights which are described in the Prospectus and which have been waived in
connection with the transactions contemplated by this Agreement. Upon payment
for and delivery of the Shares to be sold by the Company pursuant to this
Agreement, the Investors will acquire ownership to such Shares, free and clear
of all adverse claims, legal or equitable. The certificates evidencing the
Shares will comply as to form with all applicable provisions of the laws of the
State of Illinois.
(g) The financial statements (together with the related notes thereto)
and schedules included in the Registration Statement or the Prospectus present
fairly the financial position of the Company, Bagels Unlimited, Inc. ("XXX") and
Strathmore Bagels Franchise Corp. ("Strathmore") and, to the best of the
Company's knowledge after diligent investigation, Chesapeake as of the
respective dates thereof and the results of operations and cash flows of the
Company, XXX and Strathmore and, to the best of the Company's knowledge after
diligent investigation, Chesapeake for the respective periods covered thereby,
all in conformity with generally accepted accounting principles applied on a
consistent basis throughout the entire period involved, except as otherwise
disclosed in the Prospectus. No other financial statements or schedules are
required by the Act or the Rules and Regulations to be included in the
Registration Statement or the Prospectus. The accountants who have expressed
their opinions with respect to the financial statements and schedules included
in the Registration Statement are independent accountants with respect to the
entities which such opinion relates to as required by the Act and the Rules and
Regulations.
(h) The financial information set forth in the Prospectus under
"Summary Consolidated Financial and Store Data" and "Selected Consolidation
Information of the Company" presents fairly, on the basis stated in the
Prospectus, the information set forth therein and, to the best of the Company's
knowledge after diligent investigation, the financial information set forth in
the Prospectus under "Selected Combined Financial Data of Chesapeake" presents
fairly, on the basis stated in the Prospectus, the information set forth
therein; and the pro forma information included in the Prospectus presents
fairly the information shown therein, has been prepared in accordance with the
Commission's rules and guidelines with respect to pro forma information, has
been properly compiled on the pro forma basis described therein, and, in the
opinion of the Company, the assumptions used in the preparation of such
information are reasonable and the adjustments used therein are appropriate
under the circumstances.
(i) Subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus and prior to the Closing
Date, except as set forth in or contemplated by the Registration Statement and
the Prospectus, (i) there has not been and will not have been any change in the
capitalization of Chesapeake, the Company or any Subsidiary, or in the business,
properties, business prospects, condition (financial or otherwise) or results
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of operations of Chesapeake, the Company or any Subsidiary, arising for any
reason whatsoever, (ii) none of Chesapeake, the Company or any Subsidiary has
incurred nor will it incur any material liabilities or obligations, direct or
contingent, nor has it entered into nor will it enter into any material
transactions other than pursuant to this Agreement and the transactions referred
to herein and (iii) Chesapeake, the Company and its Subsidiaries have not and
will not have paid or declared any dividends or other distributions of any kind
on any class of its capital stock.
(j) None of Chesapeake, the Company or any Subsidiary is an
"investment company" or an "affiliated person" of, or "promoter" or "principal
underwriter" for, an "investment company," as such terms are defined in the
Investment Company Act of 1940, as amended.
(k) Except as set forth in the Registration Statement and the
Prospectus, there are no actions, suits or proceedings pending or, to the
knowledge of the Company, threatened against or affecting Chesapeake, the
Company or its Subsidiaries or any of their respective directors or officers in
their capacity as such, before or by any federal or state court, commission,
regulatory body, administrative agency or other governmental body, domestic or
foreign, wherein an unfavorable ruling, decision or finding might have a
Material Adverse Effect.
(l) Chesapeake, the Company and its Subsidiaries have, and at the
Closing Date will have, (i) all material governmental licenses, permits,
consents, orders, approvals and other authorizations necessary to carry on its
business as contemplated in the Prospectus, (ii) complied with all laws,
regulations and orders applicable to it or its business where the failure to
comply could, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect and (iii) performed its material obligations required to
be performed by it and is not, and at the Closing Date will not be, in default
under any contract or other instrument to which it is a party or by which its
property is bound or affected, which defaults, individually or in the aggregate,
could reasonably be expected to have a Material Adverse Effect. There does not
exist any state of facts, including without limitation the sale of the Shares
hereunder, which constitutes, or which with notice or lapse of time or both
would constitute, an event of default as defined in such contracts or other
instruments or which would result in any party thereto other than the Company
having the right to terminate any such contract or other instrument, and to the
best knowledge of the Company, no other party under any such contract or other
instrument is in material default in any respect thereunder. None of Chesapeake,
the Company or any Subsidiary is, and at the Closing Date will not be, in
violation of any provision of its articles of incorporation or bylaws.
(m) No consent, approval, authorization or order of, or any filing or
declaration with, any court or governmental agency or body is required for the
consummation by the Company of the transactions on its part herein contemplated,
except such as have been obtained under the Act or the Rules and Regulations and
such as may be required under state securities or blue sky laws or the bylaws
and rules of the National Association of Securities Dealers, Inc. (the "NASD")
in connection with the purchase by the Investors of the Shares.
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(n) The Company has full corporate power and authority to enter into
this Agreement. This Agreement has been duly authorized, executed and delivered
by the Company and constitutes a valid and binding agreement of the Company and
is enforceable against the Company in accordance with the terms hereof except to
the extent enforceability may be limited by bankruptcy, insolvency,
reorganization or other laws of general applicability affecting or relating to
creditors' rights or by general principles of equity and except insofar as the
enforceability of the Placement Agent's right to indemnity and contribution
hereunder may be limited by public policy. The performance of this Agreement and
the consummation of the transactions contemplated hereby will not result in the
creation or imposition of any lien, charge or encumbrance upon any of the assets
of Chesapeake, the Company or its Subsidiaries pursuant to the terms or
provisions of, or result in a breach or violation of any of the terms or
provisions of, or constitute a default under, or result in the acceleration of
any obligation under, the articles of incorporation or bylaws of Chesapeake, the
Company or any Subsidiary, any material indenture, mortgage, deed of trust,
voting trust agreement, loan agreement, bond, debenture, note agreement or other
evidence of indebtedness, lease, contract or other agreement or instrument to
which Chesapeake, the Company or any Subsidiary is a party or by which
Chesapeake, the Company or any Subsidiary or any of their respective properties
is bound or affected, except where the other contract party or parties have
granted such waivers or consents as are necessary to prevent such default or
acceleration, or violate or conflict with any judgment, ruling, decree, order,
statute, rule or regulation of any court or other governmental agency or body
applicable to the business or properties of Chesapeake, the Company or any
Subsidiary.
(o) Chesapeake, the Company and its Subsidiaries have good and
marketable title to all properties and assets described in the Prospectus as
owned by it, free and clear of all liens, charges, encumbrances or restrictions,
except such as are described in the Prospectus or would not, individually or in
the aggregate, have a Material Adverse Effect. Chesapeake, the Company and its
Subsidiaries have valid, subsisting and enforceable leases for the properties
described in the Prospectus as leased by it, with such exceptions as are not
material, individually or in the aggregate, to Chesapeake, the Company or its
Subsidiaries and do not materially interfere with the use made and proposed to
be made of such properties by Chesapeake, the Company and its Subsidiaries.
(p) There is no document or contract of a character required to be
described in the Registration Statement or the Prospectus or to be filed as an
exhibit to the Registration Statement which is not described or filed as
required. All such contracts to which Chesapeake, the Company or any Subsidiary
is a party have been duly authorized, executed and delivered by Chesapeake, the
Company or such Subsidiary, constitute valid and binding agreements of
Chesapeake, the Company or such Subsidiary and are enforceable against
Chesapeake, the Company or such Subsidiary in accordance with the terms thereof
except to the extent enforceability may be limited by bankruptcy, insolvency,
reorganization or other laws of general applicability affecting or relating to
creditors' rights or by general principles of equity.
(q) No statement, representation, warranty or covenant made by the
Company in this Agreement or made in any certificate or document required by
this Agreement to be delivered to the Placement Agent was or will be, when made,
inaccurate, untrue or incorrect in
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any material respect.
(r) Neither the Company, any Subsidiary nor any of their respective
directors, officers or controlling persons has taken, directly or indirectly,
any action designed, or which might reasonably be expected, to cause or result,
under the Act or otherwise, in, or which has constituted, stabilization or
manipulation of the price of the Common Stock to facilitate the sale or resale
of the Shares.
(s) Chesapeake, the Company and each Subsidiary owns or possess
adequate rights to use all trademarks, patents, copyrights and other proprietary
rights ("Trade Rights") material to the conduct of the business of Chesapeake,
the Company or such Subsidiary and none of Chesapeake, the Company or any
Subsidiary has granted any lien or encumbrance on, or granted any right of
license (other than in the ordinary course of its business) with respect to, any
such Trade Rights. Chesapeake, the Company and its Subsidiaries have not
received any notice of infringement, misappropriation or conflict from any third
party as to such Trade Rights that has not been resolved or disposed of and, to
the best of the Company's knowledge, none of Chesapeake, the Company or any
Subsidiary has infringed, misappropriated or otherwise conflicted with Trade
Rights of any third parties which might, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.
(t) All offers and sales of the Company's and each Subsidiary's
capital stock prior to the date hereof were at all relevant times duly
registered under or exempt from the registration requirements of the Act and
were duly registered in accordance with or the subject of an available exemption
from registration under the applicable state securities or blue sky laws.
(u) Chesapeake, the Company and its Subsidiaries have filed all
necessary federal and state income, sales, use and franchise tax returns which
have been required to be filed, except such income, sales, use and franchise tax
returns for states in which such entity reasonably believes it had no income,
sale, use or franchise tax liability, and has paid all taxes shown as due
thereon to the extent that such taxes have become due. Except as disclosed in
the Registration Statement, there is no tax deficiency that has been asserted,
or to the knowledge of the Company, threatened against Chesapeake, the Company,
any Subsidiary or any of their respective properties or assets which might,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
(v) No relationship, direct or indirect, exists between or among the
Company, on the one hand, and the directors, officers, shareholders, customers,
or suppliers of the Company, on the other hand, which is required to be
described in the Prospectus which is not so described.
(w) Except for The Chicago Corporation, no person is entitled,
directly or indirectly, to compensation from the Company for services as a
finder or placement agent in connection with the transactions contemplated
hereby.
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(x) The Company maintains insurance, which is in full force and
effect, of the types and in the amounts which the Company believes is adequate
for the business of the Company and its Subsidiaries.
(y) The consummation of the Chesapeake Acquisition and the execution,
delivery and performance of all documents and instruments executed and delivered
in connection therewith were authorized by all necessary corporate action on the
part of Company; all consents, approvals, authorizations, orders, licenses,
certificates, permits, registrations or qualifications required to be obtained
in connection with the Chesapeake Acquisition have been obtained, other than
such consents, approvals, authorizations, orders, licenses, certificates,
permits, registrations or qualifications which, individually or in the
aggregate, would not have a Material Adverse Effect; the consummation of the
Chesapeake Acquisition will not (i) conflict with or result in a breach or
violation of any of terms or provisions of, or constitute a default under, any
indenture, mortgage, deed of trust, loan agreement or other agreement or
instrument to which the Company or any of its Subsidiaries was or is bound or to
which any of the Property or assets of the Company or any of its subsidiaries
was or is subject, (ii) result in any violation of the provisions of the
articles of incorporation or by-laws of the Company or any of its Subsidiaries
or (iii) result in any violation of the provisions of any statute or any order,
rule or regulation of any court or governmental agency or body having
jurisdiction over the Company or any of its Subsidiaries or any of their
Properties, other than, in the case of clauses (i) and (iii) above, such
conflicts, breaches, violations or defaults that, individually or in the
aggregate, would not have a Material Adverse Effect.
(z) The Company and the Subsidiaries have complied with all applicable
laws and regulations, including franchise and business opportunity laws, of
every governmental authority, including the Federal Trade Commission, in
offering and selling "Big Apple Bagel" franchises and area franchises, except
for noncompliance which neither individually or in the aggregate might
reasonably be expected to have a Material Adverse Effect. To the best of the
Company's knowledge after diligent investigation, Chesapeake has complied with
all applicable laws and regulations, including franchise and business
opportunity laws, of every governmental authority, including the Federal Trade
Commission, in offering and selling "Chesapeake Bagel Bakery" franchises and
area franchises, except for noncompliance which neither individually or in the
aggregate might reasonably be expected to have a Material Adverse Effect. Except
as disclosed by the Company to the Placement Agent in writing prior to the date
hereof, (i) all of the terms and conditions of all franchises and all area
franchises to which Chesapeake, the Company or any Subsidiary is a party are
contained in a written document and, except as so disclosed in writing, no
material term or condition has been waived by Chesapeake, the Company or any
Subsidiary, (ii) the Franchise Offering Circulars of Chesapeake, the Company and
its Subsidiaries in use in each jurisdiction have been maintained current in all
material respects and fairly disclose all matters required to be disclosed by
applicable laws and regulations and (iii) all franchise agreements and area
franchise development agreements entered into by Chesapeake, the Company or any
Subsidiary with their franchisees were entered into accordance with the
requirements of all applicable laws and regulations; provided, however, that the
representation and warranty made by this sentence with respect to Chesapeake are
made to the Company's knowledge after diligent investigation rather than
unconditionally.
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(aa) The Company and each of its Subsidiaries are in compliance with
all provisions of Section 1 of Laws of Florida, Chapter 92-198, An Act Relating
to Disclosure of Doing Business with Cuba, and the Company further agrees that
if it or any of its Subsidiaries commences engaging in business with the
government of Cuba or with any person or affiliate located in Cuba after the
Effective Date, or if the information reported in the Prospectus, if any,
concerning the Company's business with Cuba or with any person or affiliate
located in Cuba changes in any material way, the Company will provide the
Florida Department of Banking and Finance Department notice of such business or
change, as appropriate, in a form acceptable to such Department.
4. Agreements of the Company. The Company agrees with the Placement Agent
as follows:
(a) The Company will not file any amendment or supplement to the
Registration Statement or the Prospectus, unless a copy thereof shall first have
been submitted to the Placement Agent within a reasonable period of time prior
to the filing thereof, and the Placement Agent shall not have objected thereto
in good faith.
(b) If the Registration Statement has not become effective, the
Company will use its best efforts to cause the Registration Statement to become
effective as soon as practicable. The Company will notify the Placement Agent
promptly, and will confirm such advice in writing, (1) when the Registration
Statement has become effective (if applicable) and when any post-effective
amendment thereto becomes effective, (2) of any request by the Commission for
amendments or supplements to the Registration Statement or the Prospectus or for
additional information, (3) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or the initiation of
any proceedings for that purpose or the threat thereof, (4) of the happening of
any event during the period mentioned in the third sentence of Section 4(e)
that, in the judgment of the Company, makes any statement of material fact made
in the Registration Statement or the Prospectus untrue or that requires the
making of any changes in the Registration Statement or the Prospectus in order
to make the statements of material fact therein, in light of the circumstances
in which they are made, not misleading and (5) of receipt by the Company or any
representative or attorney of the Company of any other communication from the
Commission relating to the Company, the Registration Statement, any preliminary
prospectus or the Prospectus. If at any time the Commission shall issue any
order suspending the effectiveness of the Registration Statement, the Company
will make every reasonable effort to obtain the withdrawal of such order at the
earliest possible moment. If the Company has omitted any information from the
Registration Statement pursuant to Rule 430A of the Rules and Regulations, the
Company will comply with the provisions of and make all requisite filings with
the Commission pursuant to said Rule 430A and will notify the Placement Agent
promptly of all such filings.
(c) The Company will furnish to the Placement Agent, without charge,
two signed copies of the Registration Statement and of any post-effective
amendment thereto.
(d) The Company will comply with all the provisions of any
undertakings
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contained in the Registration Statement.
(e) On the Effective Date, and thereafter from time to time, the
Company will deliver to the Placement Agent, without charge, as many copies of
the Prospectus or any amendment or supplement thereto as the Placement Agent may
reasonably request. The Company consents to the use of the Prospectus or any
amendment or supplement thereto by the Placement Agent and its designees. If
during such period of time any event shall occur which, in the judgment of the
Company or counsel to the Placement Agent, should be set forth in the Prospectus
in order to make any statement of material fact therein, in the light of the
circumstances under which it was made, not misleading, or if it is necessary to
supplement or amend the Prospectus to comply with law, the Company will
forthwith prepare and duly file with the Commission an appropriate supplement or
amendment thereto, and will deliver to the Placement Agent, without charge, such
number of copies thereof as the Placement Agent may reasonably request.
(f) During the period of five years commencing on the Effective Date,
the Company will furnish to the Placement Agent copies of such financial
statements and other periodic and special reports as the Company may from time
to time distribute generally to the holders of any class of its capital stock,
and will furnish to the Placement Agent a copy of each annual or other report it
shall be required to file with the Commission.
(g) Whether or not the transactions contemplated by this Agreement
are consummated or this Agreement is terminated, the Company will pay (i) all
costs, fees and expenses incurred in connection with the performance of the
Company's obligations hereunder, including without limiting the generality of
the foregoing, all costs, fees and expenses relating to (1) the preparation,
printing and filing of the Registration Statement and exhibits to it, each
preliminary prospectus, the Prospectus and any amendment or supplement to the
Registration Statement or the Prospectus, (2) the preparation and delivery of
certificates representing the Shares, (3) the production and reproduction of
this Agreement, the Escrow Agreement and other documents used in connection with
the transactions contemplated hereby, (4) furnishing (including costs of
shipping and mailing) such copies of the Registration Statement, the Prospectus
and any preliminary prospectus, and all amendments and supplements thereto, as
may be requested for use in connection with the offering and sale of the Shares,
(5) the quotation of the Shares on the Nasdaq Small-Cap Market, (6) legal
counsel for the Company and (7) the Company's independent accountants and the
independent accountants of entities acquired by the Company, (ii) all costs,
fees and expenses (including legal fees and disbursements of counsel for the
Placement Agent) incurred by the Placement Agent in connection with (1)
qualifying or registering all or any part of the Shares for offer and sale under
applicable state securities laws, including the preparation of a blue sky
memorandum relating to the Shares and (2) clearance of such offering with the
NASD; (iii) all costs, fees and expenses of the Company's transfer agent,
printing of the certificates for the Shares and all transfer taxes, if any, with
respect to the sale and delivery of the Shares to the Investors; and (iv) all
costs, fees and expenses incurred in connection with the escrow contemplated by
Section 2 hereof, including the costs, fees and expenses of the Escrow Agent. In
addition, the Company shall reimburse other expenses incurred by the Placement
Agent to the extent set forth in the letter agreement dated
-11-
September 25, 1996 between the Company and the Placement Agent, a copy of which
is attached hereto as Exhibit A.
(h) The Company will make generally available to holders of its
securities as soon as may be practicable, but in no event later than the last
day of the fifteenth full calendar month following the calendar quarter in which
the Effective Date falls, an earnings statement (which need not be audited but
shall be in reasonable detail) for a period of 12 months ended, commencing after
the Effective Date, and satisfying the provisions of Section 11(a) of the Act
(including Rule 158 of the Rules and Regulations).
(i) The Company will not at any time, directly or indirectly, take
any action designed, or which might reasonably be expected, to cause or result
in, or which will constitute, stabilization of the price of the shares of Common
Stock to facilitate the sale of any of the Shares.
(j) The Company will apply the net proceeds from the offering and
sale of the Shares in the manner set forth in the Prospectus under the caption
"Use of Proceeds."
(k) During the period commencing on the date hereof and ending 90
days after the Closing Date, the Company will not, without the prior written
consent of the Placement Agent, offer, sell, offer to sell, contract to sell,
grant any option to purchase or otherwise sell or dispose (or announce any
offer, sale, offer of sale, contract of sale, grant of any option to purchase or
other sale or disposition) of any shares of Common Stock or any securities
convertible into, or exchangeable or exercisable for, shares of Common Stock
other than pursuant to (i) outstanding stock options and warrants disclosed in
the Prospectus, (ii) the Company stock option plans disclosed in the Prospectus,
under which all options granted subsequent to the date hereof have an exercise
price not less than the fair market value on the date of grant or (iii) the
negotiation and consummation of potential acquisitions by the Company, provided
that any shares of Common Stock issued in connection therewith will not be
freely transferable during such 90 day period.
(l) As soon as practicable after the date hereof and in no event
later than the Closing Date, the Company will cause each of its officers and
directors, each beneficial owner of any outstanding shares of Common Stock to
enter into agreements with the Placement Agent to the effect that for a period
beginning on the date of such agreement and ending 90 days after the Closing
Date they will not, without the prior written consent of the Placement Agent,
offer, sell, offer to sell, contract to sell, grant any option to purchase or
otherwise sell or dispose (or announce any offer, sale, offer of sale, contract
of sale, grant of any option to purchase or other sale or disposition) of any
shares of Common Stock or any securities convertible into, or exchangeable or
exercisable for, shares of Common Stock except as otherwise agreed by the
Company and the Placement Agent prior to the effective date of the Registration
Statement.
(m) The Company will cooperate with the Placement Agent in qualifying
or registering the Shares for sale under the state securities laws of such
jurisdictions as you designate, and will continue such qualifications in effect
so long as reasonably required for the
-12-
distribution of the Shares. In connection with such qualification or
registration of the Shares, the Company shall not be required to qualify as a
foreign corporation or to file a general consent to service of process in any
such jurisdiction where it is not currently qualified or where it would be
subject to taxation as a foreign corporation.
(n) As soon as practicable after the date hereof, the Company will
use its best efforts to cause the Common Stock (including the Shares) to be
listed on the Nasdaq Stock Market's National Market.
(o) The Company will use its best efforts to cause the closing of the
Chesapeake Acquisition to be completed on the Closing Date concurrently with or
immediately after the Closing of the sale of the Shares pursuant to this
Agreement.
5. Conditions. The obligation of The Chicago Corporation to act as
Placement Agent pursuant to Section 1 hereunder and the Closing shall be subject
to the accuracy of the representations and warranties on the part of the Company
herein set forth as of the date hereof and as of the Closing Date, to the
accuracy of the statements of officers of the Company made pursuant to the
provisions hereof, to the performance by the Company and of its obligations
hereunder, and to the following additional conditions:
(a) The Registration Statement shall have been declared effective by
the Commission; no stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for that
purpose shall have been instituted or shall be pending or, to the knowledge
of the Company or you, shall be contemplated by the Commission.
(b) The legality and sufficiency of the authorization, issuance and
sale or transfer and sale of the Shares hereunder, the validity and form of
the certificates representing the Shares, the execution and delivery of
this Agreement, and all corporate proceedings and other legal matters
incident thereto, and the form of the Registration Statement and the
Prospectus (except financial statements) shall have been approved by your
special counsel.
(c) You shall not have advised the Company that the Registration
Statement or the Prospectus or any amendment or supplement thereto,
contains an untrue statement of fact, which, in the opinion of your special
counsel, is material or omits to state a fact which, in the opinion of such
counsel, is material and is required to be stated therein or necessary to
make the statements therein not misleading.
(d) Subsequent to the execution and delivery of this Agreement, there
shall not have occurred any change, or any development involving a
prospective change, in or affecting particularly the business or properties
of the Company or its subsidiaries, whether or not arising in the ordinary
course of business, which, in the judgment of the Placement Agent, makes it
impractical or inadvisable to proceed with the offering of the Shares as
contemplated hereby.
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(e) You shall have received from Xxxx & Xxxxxxx, counsel to the
Company, an opinion of counsel substantially in the form attached hereto as
Exhibit B.
(f) A certificate of the chief executive officer and the chief
financial officer of the Company, dated the Closing Date, to the effect
that (i) each signer of such certificate has examined the Registration
Statement and the Prospectus and (A) as of the date of such certificate,
such documents are true and correct in all material respects and do not
omit to state a material fact required to be stated therein or necessary in
order to make the statements therein not untrue or misleading and (B) since
the date of this Agreement no event has occurred as a result of which it is
necessary to amend or supplement the Prospectus in order to make the
statements therein not untrue or misleading in any material respect; (ii)
each of the representations and warranties of the Company contained in this
Agreement were, when originally made, and are, at the time such certificate
is dated true and correct; (iii) each of the covenants required herein to
be performed by the Company on or prior to the date of such certificate has
been duly, timely and fully performed, and each condition herein required
to be complied with by the Company on or prior to the date of such
certificate has been duly, timely and fully complied with; and (iv) the
Commission has not issued an order preventing or suspending the use of the
Prospectus or any preliminary prospectus filed as a part of the
Registration Statement or any amendment thereto; no stop order suspending
the effectiveness of the Registration Statement has been issued; and to the
best knowledge of the respective signers, no proceedings for that purpose
have been instituted or are pending or contemplated under the Act. The
delivery of the certificate provided for in this subparagraph shall be and
constitute a representation and warranty of the Company as to the facts
required in the immediately foregoing clauses (i) through (iv) of this
subparagraph to be set forth in such certificate.
(g) At the time the Registration Statement is declared effective and
also on the Closing Date, there shall be delivered to you a letter
addressed to you, as Placement Agent, from Ernst & Young LLP, independent
accountants, the first one to be dated the effective date of the
Registration Statement and the second one to be dated the Closing Date, to
the effect set forth in Exhibit C. There shall not have been any change or
decrease specified in the letters referred to in this subparagraph which
makes it impractical or inadvisable in the judgment of the Placement Agent
to proceed with the offering of the Shares as contemplated hereby.
(h) At the time the Registration Statement is declared effective and
also on the Closing Date, there shall be delivered to you a letter
addressed to you, as Placement Agent, from Xxxxx, Xxxxxxx & Xxxxxxx, S.C.,
independent accountants, the first one to be dated the effective date of
the Registration Statement and the second one to be dated the Closing Date,
to the effect set forth in Exhibit D.
(i) At the time the Registration Statement is declared effective and
also on the Closing Date, there shall be delivered to you a letter
addressed to you, as Placement Agent, from Xxxxxxxx & Xxxxxxx, independent
accountants, the first one to be dated the
-14-
effective date of the Registration Statement and the second one to be dated
the Closing Date, to the effect set forth in Exhibit E.
(j) The fees and out-of-pocket expenses payable by the Company
pursuant to Section 4(g) of this Agreement, shall have been paid in full,
to the extent that the Company shall have received an invoice therefor at
any time prior to the Closing Date.
(k) All conditions to the closing of the Chesapeake Acquisition have
been satisfied or waived, and the Company and Chesapeake shall have
notified you that they intend to complete the closing of the Chesapeake
Acquisition on the Closing Date concurrently with or immediately after the
Closing of the sale of the Shares pursuant to this Agreement.
(l) Such further certificates and documents as you may reasonably
request.
(m) The Escrow Agent shall have received Funds from prospective
investors for the purchase of all of the Shares.
All such opinions, certificates, letters and documents shall be in
compliance with the provisions hereof only if they are satisfactory to you and
to Xxxxxxxxxxxx Xxxx & Xxxxxxxxx, special counsel to the Placement Agent, which
approval shall not be unreasonably withheld. The Company shall furnish you with
such manually signed or conformed copies of such opinions, certificates, letters
and documents as you request. If any of the conditions specified in this Section
shall not have been fulfilled when and as required by this Agreement, the
Placement Agent shall have no obligation to transfer any funds representing the
purchase price for the Shares to the Company and may, in its sole discretion,
return any such funds to prospective Investors in the Offering. Any such return
of funds to prospective Investors shall be without liability of the Placement
Agent to the Company or to any shareholder, officer, director, employee or
creditor of the Company. Notice of such return of funds to prospective Investors
shall be given to the Company in writing, or by telegraph or telephone and
confirmed in writing.
6. Termination. This Agreement may be terminated with respect to the
Shares in the sole discretion of the Placement Agent by notice to the Company
given prior to the Closing, in the event that the Company shall have failed,
refused or been unable to perform all obligations and satisfy all conditions on
its part to be performed or satisfied hereunder at or prior thereto or, if at or
prior to the Closing, the Placement Agent determines in its sole discretion
(which determination shall be conclusive absent manifest error) that there has
been an adverse change in the financial or securities markets or in the
Company's business, financial condition, results of operations or prospects that
makes it impracticable or inadvisable to proceed with the Offering contemplated
hereby or the delivery of the Shares as contemplated hereby. Any termination of
this Agreement pursuant to this Section 6 shall not be deemed a termination of
that certain letter agreement dated September 25, 1996 between the Company and
the Placement Agent, a copy of which is attached hereto as Exhibit A.
-15-
7. Indemnification.
(a) The Company will indemnify and hold harmless the Placement Agent
and each of the directors, officers, employees and agents of the Placement Agent
and each person, if any, who controls the Placement Agent within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act, from and against any
and all losses, claims, liabilities, expenses and damages (including any and all
investigative, legal and other expenses reasonably incurred in connection with,
and any amount paid in settlement of, any action, suit or proceeding or any
claim asserted), to which they, or any of them, may become subject under the
Act, the Exchange Act or other federal or state statutory law or regulation, at
common law or otherwise, insofar as such losses, claims, liabilities, expenses
or damages arise out of or are based on the engagement of or services rendered
by the Placement Agent in its capacity as Placement Agent of the Offering or any
untrue statement or alleged untrue statement of a material fact contained in any
preliminary prospectus, the Registration Statement or the Prospectus or any
amendment or supplement to the Registration Statement or the Prospectus, or the
omission or alleged omission to state in such document a material fact required
to be stated in it or necessary to make the statements in it not misleading,
provided that the Company will not be liable to the extent that such loss,
claim, liability, expense or damage arises from the sale of the Shares in the
Offering to any person and is based on an untrue statement or omission or
alleged untrue statement or omission made in reliance on and in conformity with
information relating to the Placement Agent furnished in writing to the Company
by the Placement Agent expressly for inclusion in the Registration Statement,
any preliminary prospectus or the Prospectus. The Company acknowledges that the
statements set forth under the heading "Plan of Distribution" in any preliminary
prospectus and the Prospectus constitute the only information relating to the
Placement Agent furnished in writing to the Company by the Placement Agent
expressly for inclusion in the Registration Statement, any preliminary
prospectus or the Prospectus. This indemnity agreement will be in addition to
any liability that the Company might otherwise have.
(b) The Placement Agent will indemnify and hold harmless the Company
and each person, if any, who controls the Company within the meaning of Section
15 of the Act or Section 20 of the Exchange Act, each director of the Company
and each officer of the Company who signs the Registration Statement, to the
same extent as the foregoing indemnity from the Company to the Placement Agent,
but only insofar as losses, claims, liabilities, expenses or damages arise out
of or are based on any untrue statement or omission or alleged untrue statement
or omission made in reliance on and in conformity with information relating to
the Placement Agent furnished in writing to the Company by the Placement Agent
expressly for use in the Registration Statement, any preliminary prospectus or
the Prospectus. The Company acknowledges that the statements set forth under the
heading "Plan of Distribution" in any preliminary prospectus and the Prospectus
constitute the only information relating to the Placement Agent furnished in
writing to the Company by the Placement Agent expressly for inclusion in the
Registration Statement, any preliminary prospectus or the Prospectus. This
indemnity will be in addition to any liability that the Placement Agent might
otherwise have.
-16-
(c) Any party that proposes to assert the right to be indemnified
under this Section 7 will, promptly after receipt of notice of commencement of
any action against such party in respect of which a claim is to be made against
an indemnifying party or parties under this Section 7, notify each such
indemnifying party of the commencement of such action, enclosing a copy of all
papers served, but the omission so to notify such indemnifying party will not
relieve it from any liability that it may have to any indemnified party under
this Section unless, and only to the extent that, such omission results in the
forfeiture of substantive rights or defenses by the indemnifying party. If any
such action is brought against any indemnified party and it notifies the
indemnifying party of its commencement, the indemnifying party will be entitled
to participate in and, to the extent that it elects by delivering written notice
to the indemnified party promptly after receiving notice of the commencement of
the action from the indemnified party, jointly with any other indemnifying party
similarly notified, to assume the defense of the action, with counsel reasonably
satisfactory to the indemnified party, and, after notice from the indemnifying
party to the indemnified party of its election to assume the defense, the
indemnifying party will not be liable to the indemnified party for any legal or
other expenses except as provided below and except for the reasonable costs of
investigation subsequently incurred by the indemnified party in connection with
the defense. The indemnified party will have the right to employ its own counsel
in any such action, but the fees, expenses and other charges of such counsel
will be at the expense of such indemnified party unless (1) the employment of
counsel by the indemnified party has been authorized in writing by the
indemnifying party, (2) the indemnified party has reasonably concluded (based on
advice of counsel) that there may be legal defenses available to it or other
indemnified parties that are different from or in addition to those available to
the indemnifying party, (3) a conflict or potential conflict exists (based on
advice of counsel to the indemnified party) between the indemnified party and
the indemnifying party (in which case the indemnifying party will not have the
right to direct the defense of such action on behalf of the indemnified party)
or (4) the indemnifying party has not in fact employed counsel to assume the
defense of such action within a reasonable time after receiving notice of the
commencement of the action, in each of which cases the reasonable fees,
disbursements and other charges of counsel will be at the expense of the
indemnifying party or parties. All such fees, disbursements and other charges
will be reimbursed by the indemnifying party promptly as they are incurred. An
indemnifying party will not be liable for any settlement of any action or claim
effected without its written consent (which consent will not be unreasonably
withheld).
(d) In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in the foregoing
paragraphs of this Section 7 is applicable in accordance with its terms but for
any reason is held to be unavailable from the Company or the Placement Agent,
the Company and the Placement Agent will contribute to the total losses, claims,
liabilities, expenses and damages (including any investigative, legal and other
expenses reasonably incurred in connection with, and any amount paid in
settlement of, any action, suit or proceeding or any claim asserted, but after
deducting any contribution received by the Company from persons other than the
Placement Agent, such as persons who control the Company within the meaning of
the Act, officers of the Company who signed the Registration Statement and
directors of the Company, who also may be liable for contribution) to which the
Company and the Placement Agent may be subject in such proportion so that the
Placement
-17-
Agent is responsible for that portion represented by the percentage that the
cash commission appearing on the cover of the Prospectus bears to the public
offering price appearing thereon, and the Company is responsible in such
proportion as shall be appropriate to reflect the relative benefits received by
the Company. If, but only if, the allocation provided by the foregoing sentence
is not permitted by applicable law, the allocation of contribution shall be made
in such proportion as is appropriate to reflect not only the relative benefits
referred to in the foregoing sentence but also the relative fault of the
Company, on the one hand, and the Placement Agent, on the other, with respect to
the statements or omissions which resulted in such loss, claim, liability,
expense or damage, or action in respect thereof, as well as any other relevant
equitable considerations with respect to such offering. Such relative fault
shall be determined by reference to whether the untrue or alleged untrue
statement of a material fact or omission or alleged omission to state a material
fact relates to information supplied by the Company or the Placement Agent, the
intent of the parties and their relative knowledge, access to information and
opportunity to correct or prevent such statement or omission. The Company and
the Placement Agent agree that it would not be just and equitable if
contributions pursuant to this Section 7(d) were to be determined by pro rata
allocation or by any other method of allocation which does not take into account
the equitable considerations referred to herein. The amount paid or payable by
an indemnified party as a result of the loss, claim, liability, expense or
damage, or action in respect thereof, referred to above in this Section 7(d)
shall be deemed to include, for purposes of this Section 7(d), any legal or
other expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 7(d), the Placement Agent shall not be required to
contribute any amount in excess of the cash commissions received by it, and no
person found guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Act) will be entitled to contribution from any person who
was not guilty of such fraudulent misrepresentation. For purposes of this
Section 7(d), any person who controls a party to this Agreement within the
meaning of the Act will have the same rights to contribution as that party, and
each officer of the Company who signed the Registration Statement will have the
same rights to contribution as the Company, subject in each case to the
provisions hereof. Any party entitled to contribution, promptly after receipt of
notice of commencement of any action against such party in respect of which a
claim for contribution may be made under this Section 7(d), will notify any such
party or parties from whom contribution may be sought, but the omission so to
notify will not relieve the party or parties from whom contribution may be
sought from any other obligation it or they may have under this Section 7(d). No
party will be liable for contribution with respect to any action or claim
settled without its written consent (which consent will not be unreasonably
withheld).
(e) The indemnity and contribution agreements contained in this
Section 7, the representations and warranties of the Company contained in this
Agreement and the Company's obligations in Section 4(g) shall remain operative
and in full force and effect regardless of (i) any investigation made by or on
behalf of the Placement Agent or (ii) any termination of this Agreement.
-18-
8. Certain Definitions.
"Chesapeake" shall mean The American Bagel Company, a Maryland corporation,
and Almike Enterprises, Inc., a Maryland corporation.
"Chesapeake Asset Purchase Agreement" shall mean that certain Asset
Purchase Agreement dated as of September 4, 1996 among the Company, Chesapeake,
Xxxxxxx X. Xxxxxxxx and Xxxx X. Xxxxxxx.
"Chesapeake Acquisition" shall have the meaning assigned to such term in
the Registration Statement.
"Institutional Accredited Investor" shall mean an institutional investor
which is an "accredited investor," as defined in Rule 501(a)(1),(2),(3) or (7)
of Regulation D promulgated under the Act.
"Material Adverse Effect" shall mean a material adverse effect upon the
condition (financial or otherwise), business, assets, results of operations or
prospects of Chesapeake, the Company and its Subsidiaries taken as a whole, upon
the Company's ability to perform its obligations under this Agreement or upon
the validity or consummation of the Chesapeake Acquisition or the transactions
contemplated by this Agreement.
"Property" shall mean any interest of any kind of property assets, whether
real, personal or mixed, or tangible or intangible.
"Qualified Institutional Buyer" shall have the meaning ascribed to that
term in Section (a)(i) of Rule 144A promulgated under the Act.
"Subsidiary" shall mean any corporation at least 50% of whose outstanding
voting stock shall at the time be owned by the Company or by one or more
Subsidiaries of the Company or by the Company and one or more Subsidiaries of
the Company.
9. Miscellaneous.
(a) To the extent that any representation and warranty in Section 3 of
this Agreement pertains specifically to Chesapeake, such representation and
warranty of the Company shall be deemed given by the Company to the Placement
Agent pursuant to Section 3 hereof only to the extent represented and warranted
by Chesapeake to the Company in Section 4 of the Chesapeake Asset Purchase
Agreement and to the extent of the Company's knowledge after diligent
investigation. Nothing in this Section 9(a) shall be deemed to limit in any
respect the representation and warranty of the Company contained in Section 3(b)
of this Agreement.
(b) All communications provided for hereunder shall be in writing and
delivered by hand or by certified mail, return receipt requested, postage
prepaid, and, if to The Chicago Corporation, at its offices at 000 Xxxxx XxXxxxx
Xxxxxx, Xxxxxxx, Xxxxxxxx 00000, Attention:
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Xxxxxxx XxXxxxx, or such other place or places as shall be designated by The
Chicago Corporation in writing, with a copy to Xxxxxxxx X. Xxxxxxx, Xxxxxxxxxxxx
Xxxx & Xxxxxxxxx, 0000 Xxxxx Xxxxx, Xxxxxxx, Xxxxxxxx 00000, and if to the
Company, at its offices at 0000 X. Xxxxxxx Xxxx, Xxxxx 000, Xxxxxxx, Xxxxxxxx
00000, Attention: Chief Executive Officer, or such other place or places as
shall be designated by the Company in writing, with a copy to Xxxxxx X. Xxxxx,
Xxxx & Xxxxxxx, 4800 Norwest Center, 00 Xxxxx Xxxxxxx Xxxxxx, Xxxxxxxxxxx,
Xxxxxxxxx 00000-0000. Any such notice shall be effective only upon receipt. Any
notice under Section 6 or 7 may be made by facsimile, telex or telephone, but if
so made shall be subsequently confirmed in writing.
(c) This Agreement has been and is made solely for the benefit of the
Placement Agent and the Company and of the controlling persons, directors and
officers referred to in Section 7, and their respective successors and assigns,
and no other person shall acquire or have any right under or by virtue of this
Agreement.
(d) This Agreement shall be governed by and construed in accordance with
the laws of the State of Illinois applicable to contracts made and to be
performed entirely within such State without giving effect to the principles of
conflicts of law of such State.
(e) This Agreement may be signed in two or more counterparts with the same
effect as if the signatures thereto and hereto were upon the same instrument.
(f) In case any provision in this Agreement shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
* * * *
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If you agree with the foregoing, please sign the form of acceptance below
and return this Agreement to the Company, whereupon this Agreement will become
and evidence a binding agreement between the Company and you as of the date
first written above.
Sincerely,
BAB HOLDINGS, INC.
By:
------------------------------
Name:
Its:
Confirmed as of the date
first above mentioned:
THE CHICAGO CORPORATION
By:
------------------------------
Name:
Its:
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EXHIBIT A
THE CHICAGO CORPORATION
September 20, 1996
PERSONAL AND CONFIDENTIAL
-------------------------
BAB Holdings, Inc.
0000 X. Xxxxxxx Xxxx
Xxxxx 000
Xxxxxxx, XX 00000
Attn: Xx. Xxxxxxx X. Xxxxxxxx
Vice President and General Counsel
Dear Xx. Xxxxxxxx:
The Chicago Corporation ("TCC") is pleased to set forth the terms of this
engagement letter agreement (the "Agreement") relating to our retention for
financial advisory and investment banking services by BAB Holdings, Inc. ("BAB"
or the "Company").
1. DESCRIPTION OF ENGAGEMENT. TCC agrees to act as the exclusive
financial advisor and agent for BAB to provide investment banking services in
connection with a private placement of securities of the Company, to be
convertible into or exercisable to purchase common stock, (the "Offering") and
TCC agrees to act as agent in soliciting potential institution investors (the
"Investors") to purchase such securities to finance the Company's pending merger
with Chesapeake Bagel Bakery. The Investors may be either new or existing
investors of the Company.
The terms of this Agreement shall extend from the date of this letter to the
earlier of a period of twelve months thereafter or the consummation of the
financing transaction contemplated herein, and may be extended on a month-to-
month basis by mutual written consent of the parties hereto, hereinafter as it
may be extended referred to as the "Term".
2. PRIVATE PLACEMENT STRUCTURE. The Offering will comprise securities
which will be convertible into or exchangeable for approximately 3,000,000
shares of common stock. The Offering will be structured to allow for trading of
such securities under Rule 144A. The common stock into which such securities are
convertible or for which such securities are exercisable will be registered
under the Securities Act of 1933 pursuant to a Registration Statement filed by
the Company on or about November 30, 1996. Except for the 160,350 shares
excluded from a similar "no sale" provision agreed to as part of the Company's
initial public
-1-
offering, the Company and its officers and directors will not offer to sell or
sell any shares of the common stock from the date of the closing of the Offering
through the 30th day following the effective date of such Registration Statement
under the Securities Act of 1993.
3. SERVICES TO BE PROVIDED. In connection with the Offering described in
paragraph 1 above, TCC will, or will stand ready to:
. Review the business operations of the Company;
. Analyze and evaluate the historical and projected financial
performance of the Company;
. Assist in preparation of a Financing Memorandum describing the
Offering and the business and prospects of the Company;
. Compile a list of potential Investors and contact those sources
approved by the Company;
. Formulate a strategy for discussions and negotiations with potential
Investors;
. Distribute the Memorandum and determine the interest of Investors in
providing financing;
. Coordinate and assist in informational due diligence meetings with
potential Investors;
. Assist in negotiations and execution of a term sheet and subscription
agreements pursuant to the Offering; and
. Provide, as deemed appropriate by TCC, additional financial advisory
services related to the Offering.
4. COMPENSATION. In consideration of TCC providing, or standing ready to
provide, the investment banking services described in paragraph 3 above, BAB
agrees to pay to TCC: (i) a fee ("Placement Fee") payable at Closing equal to
5.5% of any financing commitments secured by BAB (whether or not such monies are
actually funded at Closing); and (ii) Warrants to purchase 100,000 shares of the
Company's Common Stock at a price equal to 150% of the Offering price per share
for a period of five years.
The Placement Fee shall be payable in immediately available funds on the closing
date of an Offering regardless of whether such closing occurs during the Term or
such Offering is initiated during the Term and is closed after the Term. Except
as expressly provided in the last sentence of paragraph 10 hereof, BAB's
obligation to pay the Placement Fee shall be contingent solely upon closing of
an Offering. The Placement Fee shall not include any fees earned by TCC or
others for furnishing services other than as provided herein, such as fees
payable in connection
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with the placement or arrangement of any other debt or equity financing, or
advisory work unrelated to the Offering including, without limitation, advisory
fees associated with the pending acquisition of Chesapeake by BAB.
5. EXPENSES. In addition to the Placement Fee described in paragraph 4
above, BAB agrees to promptly reimburse TCC, upon request, for all reasonable
out-of-pocket expenses incurred in the performance of its services hereunder
regardless of whether an Offering is consummated, not to exceed $75,000 in
aggregate without BAB's prior approval.
6. INDEMNIFICATION. BAB agrees to: (1) indemnify and hold harmless TCC,
their directors, officers, agents, employees, and any individual(s) who may be
deemed to control TCC (collectively, "Indemnified Persons") against all losses,
claims, damages, penalties, judgments, liabilities and expenses of every kind
whatsoever (including, without limitation, all expenses of litigation or
preparation therefor, including reasonable attorneys' fees; whether or not an
Indemnified Person is a party thereto) (collectively, "Liabilities") which any
of the Indemnified Persons may pay or incur arising out of or relating to this
Agreement or the Offering; and (2) expressly and irrevocably waives any and all
rights and objections which it may have against any Indemnified Persons in
respect of any Liabilities arising out of or relating to this Agreement or the
Offering, except to the extent that such Liabilities arise primarily from TCC's
gross negligence or wilful misconduct.
BAB further agrees not to settle any claim, litigation or proceeding (whether or
not any Indemnified Person is a party thereto) relating to this Agreement or
Offering unless: (1) such settlement releases all the Indemnified Persons from
any and all Liabilities related to this Agreement or the Offering; and (2) the
entire settlement amount and all costs of settlement are borne by BAB.
For the purposes of this Indemnification provision, BAB irrevocably submits to
the non-exclusive jurisdiction of any court in which a claim relating to this
Agreement or the Offering is properly brought against an Indemnified Person and
irrevocably waives any objection as to venue or forum.
An Indemnified Person shall have the right to employ their own counsel in any
suit, action or proceeding arising from this Agreement or the Offering if the
Indemnified Person reasonably concludes, based on advice of counsel, that a
conflict of interest exists between BAB and the Indemnified Person which would
materially impact the effective representation of the Indemnified Person. In
the event that the Indemnified Person concludes that a conflict of interest
exists, the Indemnified Person shall have the right to: (1) assume and direct
the defense of such suit, action, or proceeding on their own behalf; and (2) to
select counsel which will represent them in any such action, suit or proceeding,
and BAB shall indemnify the Indemnified Person for the reasonable legal fees and
expenses of such counsel and other expenses reasonably incurred by the
Indemnified Person.
7. PERSONS ENTITLED TO RELIANCE. BAB recognizes that TCC has been
retained only by the undersigned, and that its engagement of TCC is not deemed
to be on behalf of and is not
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intended to confer rights upon any shareholder, owner or partner of BAB or any
other person not a party hereto as against TCC or any of TCC's affiliates, the
respective directors, officers, agents and employees of TCC's affiliates or each
other person, if any, controlling TCC or any of TCC's affiliates.
8. COOPERATION. In connection with TCC's activities pursuant to this
Agreement, BAB will cooperate with TCC will, to the extent possible, furnish TCC
with all information and data concerning the Offering which TCC deems
appropriate and will, to the extent possible, provide TCC with access to the
Company's respective officers, directors, employees, financial advisors,
independent accountants and legal counsel. BAB represents and warrants that all
information made available to TCC by BAB or contained in any filing by BAB with
any court or governmental regulatory agency, commission or instrumentality with
respect to any Offering will, at all times during the period of the engagement
of TCC hereunder, be complete and correct in all material respects and will not
contain any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein not misleading in the light of
the circumstances under which such statements are made. BAB further represents
and warrants that any projections provided by it to TCC will have been prepared
in good faith and will be based upon assumptions which, in light of the
circumstances under which they are made, are reasonable. BAB acknowledges and
agrees that, in rendering its services hereunder, TCC will be using and relying
on information provided by BAB or information available from public sources and
other sources deemed reliable by TCC without independent verification thereof by
TCC or independent appraisal by TCC. TCC does not assume responsibility for the
accuracy or completeness of any of this information regarding the Company.
9. CONFIDENTIALITY.
(a) TCC agrees to keep confidential non-public information which it
receives from BAB concerning BAB and the Offering and to disclose that
information only with the consent of BAB, to the extent necessary to
complete the Offering, or as required by law or legal process.
(b) BAB agrees to keep confidential non-public information which it
receives from TCC (including, without limitation, opinions and advice)
and to disclose that information only with the consent of TCC;
provided that BAB may disclose the fact that it has retained TCC as an
advisor, and as required by regulation, law or legal process.
10. TERMINATION. This Agreement shall become effective upon BAB's
acceptance of this letter. This Agreement may be terminated during the Term by
either TCC or BAB giving written notice of termination to the other. Neither
termination of this Agreement nor consummation of the Offering contemplated
herein shall effect i) any compensation earned by TCC up to and including the
date of termination or consummation; ii) the reimbursement of expenses incurred
by TCC up to the date of termination or consummation; and iii) paragraphs 3-11,
inclusive, of this Agreement. If this Agreement is terminated by BAB or this
Agreement is terminated by TCC after a breach of the Agreement by BAB or the
Agreement's Term expires
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without renewal and consummation of the financing contemplated herein, and if an
Offering is consummated with any institution contacted by TCC on behalf of the
Company in connection with the Offering during the period of two years following
a termination for any of the three foregoing reasons, then the Placement Fee in
respect of such Offering shall become due and payable.
11. MISCELLANEOUS.
(a) BAB may not assign this Agreement.
(b) BAB agrees that, upon consummation of an Offering, TCC has the right
to publish a tombstone advertisement in financial publications at its
own expense describing its services hereunder.
(c) The Agreement represented by this letter shall be governed by the laws
of the State of Illinois.
Please confirm that the foregoing is in accordance with your understanding of
this Agreement by signing and returning to us a copy of this letter.
Very truly yours,
THE CHICAGO CORPORATION
By: /s/ Xxxxxxx X. XxXxxxx
-------------------------
Xxxxxxx X. XxXxxxx
Managing Director
ACCEPTED AND AGREED
BAB HOLDINGS, INC.
By: /s/ Xxxxxxx X. Xxxxx
------------------------------
Title: Chief Executive Officer
----------------------------
Date: September 25, 1996
-----------------------------
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EXHIBIT B
The opinion letter, dated the Closing Date, of Xxxx & Xxxxxxx, counsel to
the Company, shall include opinions to the effect that:
1. BAB Holdings, Inc. (the "Company") is a corporation duly organized,
validly existing and in good standing under the laws of the State of Illinois
and has all requisite corporate power and authority to own its Property and to
carry on its business as presently conducted, and to enter into, deliver and
perform its obligations under the Placement Agent Agreement (the "Agreement"),
and to issue and sell the Shares to be issued and sold pursuant thereto. The
Company is qualified to do business in each jurisdiction in which the character
of the Company's Property or the nature of its activities makes such
qualification in such jurisdictions necessary, except where the failure to so
qualify would not, individually or in the aggregate, have a Material Adverse
Effect.
2. Chesapeake and each of the Subsidiaries is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation or organization and has all requisite corporate
power and authority to own its Property and to carry on its business as
presently conducted. Chesapeake and each of the Subsidiaries is qualified to do
business in each jurisdiction in which the character of the its Property or the
nature of its activities makes such qualification in such jurisdictions
necessary, except where the failure to so qualify would not, individually or in
the aggregate, have a Material Adverse Effect. The Company has good and
marketable title to all of the outstanding shares of capital stock of such
Subsidiaries, free and clear in each case of any lien, claim or encumbrance of
any nature.
3. The number of authorized, issued and outstanding shares of capital
stock of the Company are as set forth in the Prospectus under the historical
column of the "Capitalization" section, and all issued and outstanding capital
stock of the Company has been duly authorized and is validly issued, fully paid
and nonassessable. No preemptive rights or similar rights of any security
holders of the Company exist with respect to the issuance and sale of the Shares
by the Company. To the knowledge of such counsel, no security holder of
Chesapeake, the Company or any Subsidiary holds a right to require the Company
to register under the Act any securities of any nature owned or held by such
person in connection with the transactions contemplated by this Agreement except
for rights which are described in the Prospectus and which have been waived in
connection with the transactions contemplated by this Agreement. The Shares
conform as to matters of law in all material respects to the description of the
Shares under the caption "Description of Capital Stock -- Common Stock" in the
Prospectus, and such description accurately sets forth the material legal
provisions thereof required to be set forth in the Prospectus.
4. The outstanding shares of Common Stock have been, and the Shares will
be, when they are duly countersigned by the Company's Transfer Agent, issued and
delivered in accordance with the provisions of the Registration Statement and
paid for by the Investors in accordance with the terms of the Agreement, duly
authorized, validly issued, fully paid and
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nonassessable. The Shares have been approved for listing on the Nasdaq Small-
Cap Market, subject to official notice of issuance.
5. No consent, approval, authorization or order of, or any filing or
declaration with, any court or governmental agency or body is required in
connection with the authorization, issuance, transfer, sale or delivery of the
Shares by the Company, in connection with the execution, delivery and
performance of the Agreement by the Company or in connection with the taking by
the Company of any action contemplated thereby, except such as have been
obtained under the Act and the Rules and Regulations and such as may be required
under state securities or blue sky laws or by the bylaws and rules of the NASD
in connection with the purchase and of the Shares by the Investors.
6. The Registration Statement has become effective under the Act, and no
order suspending the effectiveness of the Registration Statement has been issued
and no proceeding for that purpose has been instituted or to our knowledge is
threatened or pending.
7. We have reviewed all contracts or other documents referred to in the
Registration Statement and the Prospectus, and such contracts or other documents
are fairly summarized or disclosed therein, and filed as exhibits thereto as
required, and we do not know of any contracts or documents required to be so
summarized or disclosed or filed which have not been so summarized or disclosed
or filed.
8. The Registration Statement and the Prospectus comply in all material
respects as to form with the requirements of the Act and the Rules and
Regulations (except that we express no opinion as to financial statements,
schedules and other financial and statistical data contained in the Registration
Statement or the Prospectus).
9. All descriptions in the Prospectus of statutes, regulations or legal or
governmental proceedings fairly present the information required to be shown.
10. The Company has full corporate power and authority to enter into the
Agreement, and the Agreement has been duly authorized, executed and delivered by
the Company, is a valid and binding agreement of the Company and, except for the
indemnification and contribution provisions thereof, as to which we express no
opinion, is enforceable against the Company in accordance with the terms
thereof.
11. Except as described in the Registration Statement and Prospectus, the
execution and delivery of the Agreement by the Company, the consummation by the
Company of the transactions therein contemplated and the compliance by the
Company with the terms of the Agreement do not and will not result in the
creation or imposition of any lien, charge or encumbrance upon any of the assets
of Chesapeake, the Company or any Subsidiary pursuant to the terms or provisions
of, or result in a breach or violation of any of the terms or provisions of, or
constitute a default or result in the acceleration of any obligation under, the
articles of incorporation or bylaws of Chesapeake, the Company or any Subsidiary
or any indenture, mortgage, deed of trust, loan agreement, bond, debenture, note
agreement or other evidence of
-2-
indebtedness, lease, contract or other material agreement or instrument to which
Chesapeake, the Company or any Subsidiary is a party or by which it or any of
its properties is bound or affected, or any judgment, ruling, decree, order,
statute, rule or regulation of any court or other governmental agency or body
applicable to the business or properties of Chesapeake, the Company or any
Subsidiary (except that we express no opinion as to the securities or blue sky
laws of any jurisdiction other than the United States) or result in any party
thereto other than the Company having the right to terminate any such indenture,
mortgage, deed of trust, loan agreement, bond, debenture, note agreement or
other evidence of indebtedness, lease, contract or other material agreement or
instrument to which the Company is a party or by which it or any of its
properties is bound or affected.
12. To our knowledge, except as described in the Registration Statement
and Prospectus, none of Chesapeake, the Company or any Subsidiary is in
violation of its articles of incorporation or bylaws or in default (nor has an
event occurred which, with notice or lapse of time or both, would constitute a
default or acceleration) in the performance of any obligation, agreement or
condition contained in any indenture, mortgage, deed of trust, voting trust
agreement, loan agreement, bond, debenture, note agreement or other evidence of
indebtedness, lease, contract or other agreement or instrument to which such
entity is a party or by which it or its properties is bound or affected, and
none of Chesapeake, the Company or any Subsidiary is in violation of any
judgment, ruling, decree, order, franchise, license or permit or any statute,
rule or regulation of any court or other governmental agency or body applicable
to the business or properties of Chesapeake, the Company or such Subsidiary.
13. To our knowledge, there are no actions, suits or proceedings pending
or threatened against or affecting Chesapeake, the Company or any Subsidiary or
the business, properties, business prospects, condition (financial or otherwise)
or results of operations of Chesapeake, the Company or any Subsidiary or any of
their respective directors or officers in their capacities as such, before or by
any federal or state court, commission, regulatory body, administrative agency
or other governmental body, wherein an unfavorable ruling, decision or finding
would reasonably be expected to have a Material Adverse Effect, except as set
forth in or contemplated by the Registration Statement and the Prospectus.
14. All offers and sales of the Company's and each Subsidiary's capital
stock prior to the date hereof were at all relevant times duly registered under
or exempt from the registration requirements of the Act and were duly registered
in accordance with or exempt from the registration requirements of all
applicable state securities or blue sky laws.
15. None of Chesapeake, the Company or any Subsidiary is an "investment
company" or an "affiliated person" of, or "promoter" or "principal underwriter"
for, an "investment company," as such terms are defined in the Investment
Company Act of 1940, as amended.
16. The consummation of the Chesapeake Acquisition and the execution,
delivery and performance of all documents and instruments executed and delivered
in connection therewith were authorized by all necessary corporate action on the
part of Company; all consents, approvals, authorizations, orders, licenses,
certificates, permits, registrations or qualifications
-3-
required to be obtained in connection with the consummation of the Chesapeake
Acquisition have been obtained, other than such consents, approvals,
authorizations, orders, licenses, certificates, permits, registrations or
qualifications which, individually or in the aggregate, would not have a
Material Adverse Effect; the consummation of the Chesapeake Acquisition will not
(i) conflict with or result in a breach or violation of any of terms or
provisions of, or constitute a default under, any indenture, mortgage, deed of
trust, loan agreement or other agreement or instrument known to such counsel to
which Chesapeake, the Company or any of its Subsidiaries was or is bound or to
which any of the Property or assets of Chesapeake, the Company or any of its
Subsidiaries was or is subject, (ii) result in any violation of the provisions
of the articles of incorporation or by-laws of Chesapeake, the Company or any of
its Subsidiaries or (iii) result in any violation of the provisions of any
statute or any order, rule or regulation of any court or governmental agency or
body having jurisdiction over Chesapeake, the Company or any of its Subsidiaries
or any of their Properties, other than, in the case of clauses (i) and (iii)
above, such conflicts, breaches, violations or defaults that, individually or in
the aggregate, would not have a Material Adverse Effect.
17. We have participated in the preparation of the Registration Statement
and the Prospectus and nothing has come to our attention which has caused us to
believe that, as of the Effective Date, the date of the Agreement, and the
Closing Date, either the Registration Statement or the Prospectus, or any
amendment or supplement thereto contained or contains any untrue statement of a
material fact or omitted or omits to state a material fact required to be stated
therein or necessary to make the statements therein not misleading in light of
the circumstances in which they were made (except that we express no opinion as
to financial statements, schedules and other financial or statistical data
contained in the Registration Statement or the Prospectus). The opinion
expressed in this paragraph is made without independent check or verification of
such facts, and we do not assume any responsibility for the accuracy,
completeness or fairness of the statements in the Registration Statement or
Prospectus .
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EXHIBIT C
Matters to be Covered in Comfort Letter
to be Delivered by Ernst & Young LLP
(1) They are independent public accountants with respect to the Company
and its subsidiaries (the "Company"), Chesapeake and its subsidiaries
("Chesapeake") and Bagels Unlimited, Inc. ("XXX") within the meaning of the Act.
(2) In their opinion the financial statements and schedules of the
Company, Chesapeake and XXX included in the Registration Statement and the
financial statements from which the information presented under the captions
"Summary Consolidated Financial and Store Data," "Selected Consolidated
Financial Information of the Company" and "Selected Combined Financial
Information of Chesapeake" has been derived, which are stated therein to have
been examined by them comply as to form in all material respects with the
applicable accounting requirements of the Act.
(3) On the basis of specified procedures (but not an examination in
accordance with generally accepted auditing standards), including inquiries of
certain officers of the Company and Chesapeake responsible for financial and
accounting matters as to transactions and events subsequent to November 30, 1995
(in the case of the Company) and December 31, 1995 (in the case of Chesapeake),
a reading of minutes of meetings of the shareholders and directors of the
Company since November 30, 1995 (in the case of the Company) and December 31,
1995 (in the case of Chesapeake), a reading of the latest available interim
unaudited financial statements of the Company and Chesapeake (with an indication
of the dates thereof) and other procedures as specified in such letter, nothing
came to their attention which caused them to believe that:
(i) the unaudited financial statements of the Company and Chesapeake
included in the Registration Statement do not comply as to form in
all material respects with the applicable accounting requirements of
the Act or that such unaudited financial statements are not fairly
presented in accordance with generally accepted accounting
principles applied on a basis substantially consistent with that of
the audited financial statements included in the Registration
Statement,
(ii) the amounts in "Summary Consolidated Financial and Store Data,"
"Selected Consolidated Financial Information of the Company" and
"Selected Combined Financial Information of Chesapeake" included in
the Prospectus do not agree with or are not derivable from the
corresponding amounts in the audited consolidated financial
statements or unaudited consolidated financial statements (as
applicable) from which such amounts were derived, and
(iii) at a specified date not more than five days prior to the date of
such letter, there was any change in the capital stock or long-term
debt or short-term debt (other than normal payments) of the Company
or Chesapeake or any decrease in net current assets or shareholders'
equity as compared with amounts shown on the
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latest unaudited balance sheet of the Company and Chesapeake included
in the Registration Statement or for the period from the date of such
balance sheet to a date not more than five days prior to the date
thereof, there were any decreases, as compared with the corresponding
period of the prior year, in net sales, income before income taxes or
in the total or per share amounts of net income except, in all
instances, for changes or decreases which the Prospectus discloses
have occurred or may occur or which are set forth in such letter.
(4) On the basis of reading the pro forma information included in the
Prospectus, carrying out specified procedures, inquiries of certain officials of
the Company and Chesapeake who have responsibility for financial and accounting
matters, and proving the arithmetic accuracy of the application of the pro forma
adjustments to the historical amounts, nothing came to their attention which
caused them to believe that the pro forma financial information does not comply
in all material respects with the applicable accounting requirements of Rule 11-
02 of Regulation S-X and the pro forma adjustments have not been properly
applied to the historical amounts in the compilation of such information.
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EXHIBIT D
Matters to be Covered in Comfort Letter
to be Delivered by Xxxxx, Xxxxxxx & Xxxxxxx, S.C.
(1) They are independent public accountants with respect to Bagels
Unlimited, Inc. within the meaning of the Securities Act of 1933, as amended.
(2) In their opinion the financial statements and schedules of Bagels
Unlimited, Inc. included in the Registration Statement which are stated therein
to have been examined by them comply as to form in all material respects with
the applicable accounting requirements of the Securities Act of 1933, as
amended.
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EXHIBIT E
Matters to be Covered in Comfort Letter
to be Delivered by Xxxxxxxx & Xxxxxxx
(1) They are independent public accountants with respect to Strathmore
Bagels Franchise Corp. within the meaning of the Securities Act of 1933, as
amended.
(2) In their opinion the financial statements and schedules of Strathmore
Bagels Franchise Corp. included in the Registration Statement which are stated
therein to have been examined by them comply as to form in all material respects
with the applicable accounting requirements of the Securities Act of 1933, as
amended.
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