-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, VWRQVuLo1vQliSnEKbYY+Z0F5Xo766R1bglabSAQX/h6VIr0Zky778oFaLw1OZwG st6QdoAWNkc07uybsVRURA== 0000950123-97-007198.txt : 19970822 0000950123-97-007198.hdr.sgml : 19970822 ACCESSION NUMBER: 0000950123-97-007198 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 7 FILED AS OF DATE: 19970821 SROS: NONE GROUP MEMBERS: AIG LATIN AMERICA EQUITY PARTNERS LTD GROUP MEMBERS: AMERICAN INTERNATIONAL GROUP INC GROUP MEMBERS: AMERICAN INTERNATIONAL UNDERWRITERS OVERSEAS INC SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: BRAZIL FAST FOOD CORP CENTRAL INDEX KEY: 0000914537 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-EATING PLACES [5812] IRS NUMBER: 133688737 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D SEC ACT: 1934 Act SEC FILE NUMBER: 005-51469 FILM NUMBER: 97667919 BUSINESS ADDRESS: STREET 1: 950 THIRD AVE STREET 2: 27TH FL CITY: NEW YORK STATE: NY ZIP: 10022 BUSINESS PHONE: 2128885563 MAIL ADDRESS: STREET 1: PRAIA DO FLAMENGO STREET 2: 200-22O AMDAR CEP 22210-030 CITY: RIO DE JANEIRO STATE: D5 FORMER COMPANY: FORMER CONFORMED NAME: TRINITY AMERICAS INC DATE OF NAME CHANGE: 19931108 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: AIG LATIN AMERICA EQUITY PARTNERS LTD CENTRAL INDEX KEY: 0001043832 STANDARD INDUSTRIAL CLASSIFICATION: [] STATE OF INCORPORATION: D0 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: AMERICAN INTERNATIONAL BUILDING STREET 2: 29 RICHMOND ROAD CITY: PEMBROKE STATE: D0 ZIP: 00000 MAIL ADDRESS: STREET 1: AMERICAN INTERNATIONAL BUILDING STREET 2: 29 RICHMOND ROAD CITY: PEMBROKE STATE: D0 ZIP: 00000 SC 13D 1 SCHEDULE 13D 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 SCHEDULE 13D UNDER THE SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. ___)* BRAZIL FAST FOOD CORP. (Name of Issuer) COMMON STOCK, $.0001 PAR VALUE (Title of Class of Securities) 105755 10 2 (CUSIP Number) AIG LATIN AMERICA EQUITY PARTNERS, LTD. 70 PINE STREET, 27TH FLOOR NEW YORK, NY 10005 ATTN.: ALBERTO MARCEL (212)770-6539 WITH A COPY TO: CURTIS MALLET-PREVOST, COLT & MOSLE 101 PARK AVENUE, 35TH FLOOR NEW YORK, NEW YORK 10178 ATTN.: LAWRENCE GOODMAN (212) 696-6099 (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) AUGUST 11, 1997 (Date of Event which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ]. 2 CUSIP No.: 105755 10 2 - ------------------------------------------------------------------------------------------------------------- NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON 1 AIG LATIN AMERICA EQUITY PARTNERS, LTD. - ------------------------------------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ] (b) [ ] - ------------------------------------------------------------------------------------------------------------- 3 SEC USE ONLY - ------------------------------------------------------------------------------------------------------------- 4 SOURCE OF FUNDS WC - ------------------------------------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ] - ------------------------------------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION BERMUDA - ------------------------------------------------------------------------------------------------------------- 7 SOLE VOTING POWER NUMBER OF -0- SHARES ---------------------------------------------------------------------------------- BENEFICIALLY 8 SHARED VOTING POWER OWNED BY EACH 1,750,000 REPORTING ---------------------------------------------------------------------------------- PERSON 9 SOLE DISPOSITIVE POWER WITH -0- ---------------------------------------------------------------------------------- 10 SHARED DISPOSITIVE POWER 1,750,000 - ------------------------------------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 1,750,000 - ------------------------------------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [ ] - ------------------------------------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 9 16.2% - ------------------------------------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON CO - -------------------------------------------------------------------------------------------------------------
2 3 CUSIP No.: 105755 10 2 - ----------------------------------------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON AMERICAN INTERNATIONAL UNDERWRITERS OVERSEAS, LTD. - ----------------------------------------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ] (b) [ ] - ----------------------------------------------------------------------------------------------------------------- 3 SEC USE ONLY - ----------------------------------------------------------------------------------------------------------------- 4 SOURCE OF FUNDS WC - ----------------------------------------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ] - ----------------------------------------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION BERMUDA - ----------------------------------------------------------------------------------------------------------------- 7 SOLE VOTING POWER NUMBER OF -0- SHARES --------------------------------------------------------------------------------------- BENEFICIALLY 8 SHARED VOTING POWER OWNED BY EACH 1,750,000 REPORTING --------------------------------------------------------------------------------------- PERSON 9 SOLE DISPOSITIVE POWER WITH -0- --------------------------------------------------------------------------------------- 10 SHARED DISPOSITIVE POWER 1,750,000 - ----------------------------------------------------------------------------------------------------------------- AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 11 1,750,000 - ----------------------------------------------------------------------------------------------------------------- CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [ ] 12 - ----------------------------------------------------------------------------------------------------------------- PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 9 13 16.2% - ----------------------------------------------------------------------------------------------------------------- TYPE OF REPORTING PERSON 14 CO, IC - -----------------------------------------------------------------------------------------------------------------
3 4 CUSIP No.: 105755 10 2 - ------------------------------------------------------------------------------------------------------------------ 1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON AMERICAN INTERNATIONAL GROUP, INC. I.R.S. IDENTIFICATION NO. 13-2592361 - ------------------------------------------------------------------------------------------------------------------ 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ] (b) [ ] - ------------------------------------------------------------------------------------------------------------------ 3 SEC USE ONLY - ------------------------------------------------------------------------------------------------------------------ 4 SOURCE OF FUNDS WC - ------------------------------------------------------------------------------------------------------------------ 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ] - ------------------------------------------------------------------------------------------------------------------ 6 CITIZENSHIP OR PLACE OF ORGANIZATION INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE - ------------------------------------------------------------------------------------------------------------------ SOLE VOTING POWER 7 -0- NUMBER OF --------------------------------------------------------------------------------------- SHARES SHARED VOTING POWER BENEFICIALLY 8 1,750,000 OWNED BY EACH --------------------------------------------------------------------------------------- REPORTING SOLE DISPOSITIVE POWER PERSON 9 -0- WITH --------------------------------------------------------------------------------------- 10 SHARED DISPOSITIVE POWER 1,750,000 - ------------------------------------------------------------------------------------------------------------------ 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 1,750,000 - ------------------------------------------------------------------------------------------------------------------ 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [ ] - ------------------------------------------------------------------------------------------------------------------ 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 9 16.2% - ------------------------------------------------------------------------------------------------------------------ 14 TYPE OF REPORTING PERSON HC, CO - ------------------------------------------------------------------------------------------------------------------
4 5 ITEM 1. SECURITY AND ISSUER. This statement relates to the common stock, $.0001 par value (the "Common Stock") of Brazil Fast Food Corp. (the "Company"), a Delaware corporation whose principal executive offices are located at Praia do Flamengo, 200-22 Andar, CEP 22210-030, Rio de Janeiro, Brazil. ITEM 2. IDENTITY AND BACKGROUND. (a) through (c). (i) AIG Latin America Equity Partners, Ltd. ("AIGLAEP"), an investment company organized under the laws of Bermuda, with its address at American International Building, 29 Richmond Road, Pembroke, HM08 Bermuda, (ii) American International Underwriters Overseas, Ltd. ("AIUO"), an insurance company organized under the laws of Bermuda with its address at American International Building, 29 Richmond Road, Pembroke, HM08 Bermuda which owns the right to vote fifty-one percent (51%) of the voting stock of AIGLAEP, and (iii) American International Group, Inc. ("AIG"), a corporation organized under the laws of Delaware which owns all of the outstanding voting stock of AIUO. AIG is a holding company which, through its subsidiaries, is primarily engaged in a broad range of insurance and insurance-related activities and financial services in the United States and abroad. The principal executive offices of AIG are located at 70 Pine Street, New York, New York 10270. Starr International Company, Inc., a private holding company incorporated in Panama ("SICO"), The Starr Foundation, a New York not-for-profit corporation ("The Starr Foundation"), and C.V. Starr & Co., Inc., a private holding company incorporated in Delaware 5 6 ("Starr"), have the right to vote approximately 16.0%, 3.5% and 2.4%, respectively, of the outstanding common stock of AIG. The principal offices of SICO are located at 29 Richmond Road, Pembroke, Bermuda. The principal offices of The Starr Foundation and Starr are located at 70 Pine Street, New York, New York 10270. A list of the executive directors and officers ("Covered Persons") of AIGLAEP, AIUO, AIG, SICO, the Starr Foundation and Starr, their business addresses and principal occupations is attached hereto as Schedule I. Each of the Covered Persons is a citizen of the United States, except for (i) Mr. Joseph Johnson who is a Bermudian subject, (ii) Messrs. Chan, Cubbon, Manton, Tse, Collis and Waley who are British subjects, (iii) Mr. Cohen who is a Canadian subject, (iv) Messrs. Cusia and Zalamea who are Philippine citizens, (v) Mr. Koay who is a Taiwanese citizen (vi) Messrs. Hibert and Marcel who are Argentine citizens, (vii) Mr. Osorio who is a Brazilian citizen, (viii) Mr. Leon who is a Peruvian citizen, and (ix) Mr. Baldovino who is a Chilean citizen. (d) and (e). During the last five years, none of AIGLAEP, AIUO, AIG, SICO, The Starr Foundation and Starr, nor to their best knowledge of each such entity, any of the Covered Persons, has (i) been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or (ii) been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to federal or state securities laws or finding any violations with respect to such laws. ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION. Effective August 11, 1997, AIGLAEP entered into a Stock Purchase Agreement (the "Stock Purchase Agreement") with the Company pursuant to which AIGLAEP purchased 6 7 1,500,000 shares of Common Stock (the "Shares") and five-year warrants (the "Warrants") to purchase 250,000 shares of Common Stock at an initial exercise price of $4.00 per share, which exercise price and number of shares which may be purchased upon exercise thereof is subject to adjustment. $4,500,000 of the working capital of AIGLAEP was used to purchase the Shares and the Warrants. ITEM 4. PURPOSE OF TRANSACTION. AIGLAEP has acquired the securities reported herein for investment purposes and may, from time to time, depending on its evaluation of the market for the Common Stock, other opportunities available to it, its financial requirements and other possible future developments, decide to increase or decrease its holdings of the Common Stock. In addition, as detailed below, AIGLAEP currently has the right to nominate one member of the Board of Directors of the Company, has the right to approve certain corporate transactions and under certain circumstances, would have the right to nominate a majority of the Board of Directors of the Company. Pursuant to the terms of the Stock Purchase Agreement and the Stockholders' Agreement between AIGLAEP, the Company and certain stockholders' of the Company listed on Schedule A thereto (which agreement was entered into concurrently with the Stock Purchase Agreement and is attached hereto as Exhibit 4), AIGLAEP and certain of its transferees have the right to nominate one member of the Board of Directors of the Company, and have the right to nominate additional Directors which, under certain circumstances may enable AIGLAEP to nominate directors constituting a majority of the Board of Directors of the Company (through an expansion of the Board and the filling of vacancies created by the resignation of certain Directors 7 8 serving at such time) if the Company does not attain certain operating goals. Pursuant to the terms of the Stockholders' Agreement the current directors and executive officers and certain other stockholders of the Company have agreed to take any and all action, including voting their respective shares of Common Stock, to cause the nominee(s) designated by AIGLEAP to be elected to the Board. The Stockholders' Agreement also provides that the Company shall not offer, issue or sell any shares of capital stock of the Company, or any warrants or options to purchase or rights to subscribe for or any other securities convertible into or exchangeable for shares of capital stock of the Company, unless the Company first offers to AIGLAEP its proportionate percentage (as such term is defined in the Stockholders' Agreement) of the securities proposed to be offered by the Company. Pursuant to the terms of the Stockholders' Agreement, AIGLEAP also has certain other rights in connection with certain sales by the stockholders party to such Agreement of the shares of Common Stock owned by such stockholders. In addition, as more fully described in the Stockholders' Agreement, the Company may not, without the prior written approval of AIGLAEP and certain of its transferees: (i) sell, abandon, transfer, lease or otherwise dispose of all or substantially all of its properties or assets to any other company, companies, entity or entities, subject to the Board of Directors of the Company fulfilling its fiduciary duties; (ii) purchase, lease or otherwise acquire all or substantially all of the properties or assets of another corporation or entity; (iii) during the first three (3) years after August 11, 1997, make any payment on account of the purchase, redemption or other retirement of any shares of its capital stock and thereafter, make any payment on account of the non pro rata purchase, redemption or other retirement of any shares of its capital stock; 8 9 (iv) merge or consolidate with or into, or permit any subsidiary to merge or consolidate with or into, any other company, companies, entity or entities, provided that any wholly-owned subsidiary of the Company may merge or consolidate with or into another wholly-owned subsidiary of the Company, subject to the Board of Directors of the Company fulfilling its fiduciary duties; (v) voluntarily dissolve, liquidate or wind up or carry out any partial liquidation or distribution or transaction in the nature of a partial liquidation or distribution; (vi) take any action to cause an amendment to the Certificate of Incorporation or By-Laws of the Company which would affect the rights or obligations of any of the stockholders party to the Stockholders' Agreement; (vii) enter into any agreements or transactions between the Company or any affiliate thereof and the Chief Executive Officer, Chief Financial Officer, Chief Operating Officer and President of the Company or any management group stockholder or any of their respective affiliates; (viii) issue or agree to issue any shares of preferred equity at any price or any shares of common equity or any security, right, option or warrant convertible into or exercisable for, shares of the Company's stock, in either case, at a lower per share price than that paid by the AIGLAEP for its Shares; provided, however that this restriction shall not apply to (a) shares of Common Stock or warrants, options, rights or securities convertible into or exchangeable for capital stock of the Company issued as consideration in the acquisition by the Company of the stock or assets of another company, provided that such acquisition and issuance has been approved by the Board of Directors of the Company, including the Director nominated by AIGLAEP, (b) any shares of Common Stock or warrants, options, rights or securities convertible into or exchangeable for capital stock of the Company issued in connection with any pro rata stock split, stock dividends or similar event affecting the Common Stock, and (c) shares of Common Stock issued pursuant to the exercise of currently outstanding warrants or options or 9 10 any options which may be issued under the Company's currently existing Stock Option Plan; (ix) increase the number of persons serving on the Board; (x) make any significant changes in the Company's or its subsidiaries' accounting policies, unless required by law; (xi) permit material deviations from its business strategy, such as any expansion of the Company's business outside of Brazil or any change in the fundamental nature of the business of the Company as conducted on August 11, 1997; (xii) change any component of the current compensation of the Chief Executive Officer, Chief Financial Officer, Chief Operating Officer and President of the Company, which compensation shall include salary, bonus, stock options and fringe benefits; (xiii) declare any dividends; (xiv) adopt or amend any stock option, stock purchase or similar plan. AIGLAEP and the Company have also entered into a Registration Rights Agreement (attached hereto as Exhibit 6) pursuant to which the Company has agreed to register the Shares under the Securities Act of 1933, as amended (the "Act") within 45 days of August 11, 1997. In the event that the Shares are not subject to an effective registration statement within 135 days after August 11, 1997, AIGLAEP shall have the right to sell the Shares to the Company at a price of $4.00 per share within 30 days of such 135-day period. Subject to the foregoing, neither of the Reporting Persons nor, to the best knowledge of the Reporting Person, any of the Officers and Directors has any present plans or proposals which relate to or would result in: (a) the acquisition by any person of additional securities of the Company, or the disposition of securities of the Company; 10 11 (b) an extraordinary corporate transaction, such as a merger, reorganization or liquidation, involving the Company or any of its subsidiaries; (c) a sale or transfer of a material amount of assets of the Company or any of its subsidiaries; (d) any change in the present board of directors or senior management of the Company, including any plans or proposals to change the number or term of directors or to fill any existing vacancies on the board; (e) any material change in the present capitalization or dividend policy of the Company; (f) any other material change in the Company's business or corporate structure; (g) changes in the Company's Articles of Incorporation, By-Laws or instruments corresponding thereto or other actions which may impede the acquisition of control of the Company by any person; (h) causing a class of securities of the Company to be delisted from a national securities exchange or to cease to be authorized to be quoted in an inter-dealer quotation system of a registered national securities association; (i) a class of equity securities of the Company becoming eligible for termination of registration pursuant to Section 12(g)(4) of the Securities Act of 1933, as amended; or (j) any action similar to any of those enumerated above. ITEM 5. INTEREST IN SECURITIES OF ISSUER. (a) and (b). The information required by these paragraphs is set forth in Items 7 through 11 and 13 of each of the cover pages of this Schedule 13D and is based upon the number 11 12 of shares of Common Stock outstanding as contained in the Quarterly Report on Form 10-Q of the Company for the quarter ended June 30, 1997. (c). Each of AIGLAEP, AIUO, AIG, SICO, The Starr Foundation and Starr, and, to the best knowledge of each such entity, the Covered Persons, have not engaged in any transactions in the Common Stock within the past 60 days other than in connection with the purchase of Common Stock by AIGLAEP under the Stock Purchase Agreement. (d) and (e). Not applicable. ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE ISSUER. Contracts, arrangements, understandings and relationships with respect to securities of the Company consist of the Stock Purchase Agreement, the Stockholders Agreement, the Warrant Agreement and the Registration Rights Agreement, each of which is attached as an exhibit hereto and is incorporated in its entirety by reference. Except as otherwise set forth in this statement and the Exhibits hereto, there are no contracts, arrangements, understandings or relationships between any of AIGLAEP, AIUO, AIG, SICO, The Starr Foundation or Starr, or any of the Covered Persons and any other person with respect to any securities of the issuer, including any contract, arrangement, understanding or relationship concerning the transfer or the voting of any securities of the Company, finder's fees, joint ventures, loan or option arrangements, puts or calls, guarantees of profits, division of profits or loss, or the giving or withholding of proxies. ITEM 7. MATERIAL TO BE FILED AS EXHIBITS. 1. Agreement relating to the joint filing of Statement on Schedule 13D dated as of August 11, 1997 as required by Rule 13d-1(f). 2. Officers and Directors. 3. Stock Purchase Agreement by and between the Company and AIGLAEP. 12 13 4. Stockholders' Agreement by and among the Company, AIGLAEP and the stockholders listed on Schedule A thereto. 5. Warrant Agreement by and between AIGLAEP and the Company. 6. Registration Rights Agreement between AIGLAEP and the Company. 13 14 SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Date: August 20, 1997. AIG LATIN AMERICA EQUITY PARTNERS, LTD. By: /s/ L. Michael Murphy --------------------------------- Name: L. Michael Murphy Title: Director AMERICAN INTERNATIONAL UNDERWRITERS OVERSEAS, LTD. By /s/ L. Michael Murphy --------------------------------- Name: L. Michael Murphy Title: Vice President and Secretary AMERICAN INTERNATIONAL GROUP, INC. By /s/ Kathleen E. Shannon --------------------------------- Name: Kathleen E. Shannon Title Vice President and Secretary 14 15 EXHIBIT INDEX SEQUENTIALLY DOCUMENT NUMBERED PAGE 1. Agreement relating to the joint ---- filing of Statement on Schedule 13D dated as of August 11, 1997 as required by Rule 13d-1(f). 2. Officers and Directors. ---- 3. Stock Purchase Agreement by and ---- between the Company and AIGLAEP. 4. Stockholders' Agreement by and among ---- the Company, AIGLAEP and the stockholders listed on Schedule A thereto. 5. Warrant Agreement by and between AIGLAEP and ---- the Company. 6. Registration Rights Agreement by and between ---- AIGLAEP and the Company. 15 EX-99.1 2 AGREEMENT RELATING TO THE JOINT FILING 1 AGREEMENT OF JOINT FILING In accordance with Rule 13d-1(f), promulgated under the Securities Exchange Act of 1934, as amended, each of the undersigned hereby agrees to the joint filing on behalf of each of them of a Statement on Schedule 13D, and any amendments thereto, with respect to the Common Stock, $.0001 par value, of BRAZIL FAST FOOD CORP. and that this Agreement may be included as an Exhibit to such filing. Each of the undersigned parties represents and warrants to the other that the information contained in any amendment thereto about it will be, true, correct and complete in all material respects and in accordance with all applicable laws. Each of the undersigned parties agrees to inform the other of any changes in such information or of any additional information which would require any amendment to the Schedule 13D and to promptly file such amendment. Each of the undersigned parties agrees to indemnify the other for any losses, claims, liabilities or expenses (including reasonable legal fees and expenses) resulting from, or arising in connection with, the breach by such party of any of representations, warranties or agreements in this Agreement. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original and all of which together shall be deemed to constitute one and the same Agreement. IN WITNESS WHEREOF, each of the undersigned hereby executes this Agreement as of August 11, 1997. AMERICAN INTERNATIONAL GROUP, INC. By: /s/ Kathleen E. Shannon ------------------------------------- Name: Kathleen E. Shannon Title: Vice President and Secretary 2 AIG LATIN AMERICA EQUITY PARTNERS, LTD By /s/ L.M. Murphy ------------------------------------- Name: L.M. Murphy Title: Director AMERICAN INTERNATIONAL UNDERWRITERS OVERSEAS, LTD. By /s/ L.M. Murphy ------------------------------------- Name: L.M. Murphy Title: Vice President and Secretary EX-99.2 3 OFFICERS AND DIRECTORS 1 EXHIBIT 2 AIG LATIN AMERICA EQUITY PARTNERS, LTD. OFFICERS & DIRECTORS NAME Cesar C. Zalamea AIG Investment Corp. (Asia) Ltd. Director & Chairman AIA Building No. 1 Stubbs Road Wan Chai Hong Kong Alejandro J. Hibert Banco Frances y del Director & Deputy Chairman Rio de la Plata Reconquista 199 1003 Buenos Aires Argentina Jose Luiz Osorio Banco Icatu Director Presidente Wilson 231 9(degree) andar Rio de Janeiro, RJ 22420-000 Jesus Zamora Leon Banco de Credito Overseas Limited Director Av. Centenario 156 Urb. Sta. Patricia, La Molina Lima, Peru Claudio Baldovino O. Bicecorp S.A. Director Teatinos, 220 4(degree) Piso Santiago, Chile Graham B.R. Collis Conyers, Dill & Pearman Director Clarendon House Church Street Hamilton Bermuda Anthony Waley Conyers, Dill & Pearman Director Clarendon House Church Street Hamilton Bermuda L. Michael Murphy American International Building Secretary Richmond Road Pembroke 543 Bermuda Alberto Marcel 70 Pine Street Chief Executive Officer New York, NY 10270 U.S.A. 2 AMERICAN INTERNATIONAL GROUP, INC. DIRECTORS
M. Bernard Aidinoff Sullivan & Cromwell 125 Broad Street New York, New York 10004 Lloyd M. Bentsen 2600 Texas Commerce Tower 600 Travis Street Suite 2600 Houston, Texas 77002 Pei-yan Chia 298 Bedford - Banksville Road Bedford, New York 10506 Marshall A. Cohen Cassels, Brock & Blackwell 40 King Street West 20th Fl. Toronto, Ontario M5H 3C2 Barber B. Conable, Jr. P.O. Box 218 Alexander, New York 14005 Martin S. Feldstein National Bureau of Economic Research, Inc. 1050 Massachusetts Avenue Cambridge, Massachusetts 02138 Leslie L. Gonda International Lease Finance Corporation 1999 Avenue of the Stars Los Angeles, California 90067 Evan G. Greenberg American International Group, Inc. 70 Pine Street New York, New York 10270 M. R. Greenberg American International Group, Inc. 70 Pine Street New York, New York 10270 Carla A. Hills Hills & Company 1200 19th Street, N.W. - 5th Fl. Washington, DC 20036 Frank J. Hoenemeyer 7 Harwood Drive Madison, New Jersey 07940
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Edward E. Matthews American International Group, Inc. 70 Pine Street New York, New York 10270 Dean P. Phypers 220 Rosebrook Road New Canaan, Connecticut 06840 John J. Roberts American International Group, Inc. 70 Pine Street New York, New York 10270 Howard I. Smith American International Group, Inc. 70 Pine Street New York, New York 10270 Thomas R. Tizzio American International Group, Inc. 70 Pine Street New York, New York 10270 Edmund S. W. Tse American International Assurance Co., Ltd. 1 Stubbs Road Hong Kong
4 AMERICAN INTERNATIONAL GROUP, INC. OFFICERS' NAME, TITLE AND BUSINESS ADDRESS
M.R. Greenberg Chairman & Chief Executive Officer 70 Pine Street New York, New York 10270 Thomas R. Tizzio Senior Vice Chairman - General 70 Pine Street Insurance New York, New York 10270 Edward E. Matthews Vice Chairman - Investments & 70 Pine Street Financial Services New York, New York 10270 John J. Roberts Vice Chairman - External Affairs 70 Pine Street New York, New York 10270 Edmund S.W. Tse Vice Chairman - Life Insurance American International Assurance Co., Ltd. 1 Stubbs Road Hong Kong Evan G. Greenberg President & Chief Operating Officer 70 Pine Street New York, New York 10270 Edwin A.G. Manton Senior Advisor 70 Pine Street New York, New York 12070 Ernest E. Stempel Senior Advisor 70 Pine Street New York, New York 10270 Robert B. Sandler Executive Vice President - Senior 70 Pine Street Casualty Actuary & Senior Claims New York, New York 10270 Officer Howard I. Smith Executive Vice President, Chief 70 Pine Street Financial Officer & Comptroller New York, New York 10270
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Ronald J. Anderson Senior Vice President - AIU KK Foreign General Insurance CPO Box 953 Tokyo, 100-91 Lawrence W. English Senior Vice President - 70 Pine Street Administration New York, New York 10270 Axel I. Freudmann Senior Vice President - Human 72 Wall Street Resources New York, New York 10270 John G. Hughes Senior Vice President - 70 Pine Street Worldwide Claims New York, New York 10270 L. Oakley Johnson Senior Vice President - 1455 Pennsylvania Ave. Corporate Affairs Suite 900 Washington, DC 20004 Kevin H. Kelley Senior Vice President - Lexington Insurance Company Domestic General Insurance 200 State Street Boston, MA 02109 Kristian P. Moor Senior Vice President - 70 Pine Street Domestic General Insurance New York, New York 10270 Win J. Neuger Senior Vice President & Chief 70 Pine Street Investment Officer New York, New York 10270 R. Kendall Nottingham Senior Vice President - Life American Life Insurance Company Insurance 1 ALICO Plaza Wilmington, DE 19899 Robert J. O'Connell Senior Vice President - Life 70 Pine Street Insurance New York, New York 10270 Nicholas A. O'Kulich Senior Vice President - Life 70 Pine Street Insurance New York, New York 10270 B. Michael Schlenke Senior Vice President - 70 Pine Street Domestic General Insurance New York, New York 10270
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Martin J. Sullivan Senior Vice President - 70 Pine Street Foreign General Insurance New York, New York 10270 Frank Chan Vice President - Life American International Insurance Assurance Co., Ltd. 1 Stubbs Road Hong Kong Edward Cloonan Vice President - Corporate 70 Pine Street Affairs New York, New York 10270 Jose L. Cuisia, Jr. Vice President - Life Philippine American Life and Insurance General Insurance Company The Philam Life Building United Nations Avenue Manila 0990 Philippines Hamilton C. Da Silva Vice President - Foreign 70 Pine Street General Insurance New York, New York 10270 Florence A. Davis Vice President & General 70 Pine Street Counsel New York, New York 10270 William N. Dooley Vice President & Treasurer 70 Pine Street New York, New York 10270 William A. Freda Vice President - Foreign 70 Pine Street General Claims New York, New York 10270 David M. Hupp Vice President - Domestic 70 Pine Street General Insurance New York, New York 10270 Harold Jacobowitz Vice President - Claims 70 Pine Street Litigation New York, New York 10270 Thomas G. Kaiser Vice President - Foreign 70 Pine Street General Insurance New York, New York 10270 Jeffrey M. Kestenbaum Vice President - Foreign 70 Pine Street General Insurance New York, New York 10270
7
Boon-Teik Koay Vice President - Life Nan Shan Life Insurance Company Insurance Nan Shan Life Building 144, Sec., 2, Min Chuan East Road Taipei, Taiwan Robert E. Lewis Vice President & Chief Credit 70 Pine Street Officer New York, New York 10270 Richard Merski Vice President - Corporate 1455 Pennsylvania Avenue Affairs Suite 900 Washington, DC 20004 Christian M. Milton Vice President - Reinsurance 99 John Street New York, New York 10038 Michael Mitrovic Vice President - Worldwide 70 Pine Street Financial Services Claims New York, New York 10270 Frank Petralito II Vice President & Director of 70 Pine Street Taxes New York, New York 10270 Theodore J. Rupley Vice President - Domestic 70 Pine Street General Insurance New York, New York 10270 Kathleen E. Shannon Vice President, Secretary & 70 Pine Street Associate General Counsel New York, New York 10270 Joseph C. Smetana, Jr. Vice President - Foreign 70 Pine Street General Insurance New York, New York 10270 Joseph Umansky Vice President & Deputy 70 Pine Street Comptroller New York, New York 10270 William Vinck Vice President & Chief 70 Pine Street Information Officer New York, New York 10270 Nicholas C. Walsh Vice President - Foreign AIG Europe (U.K.) Limited General Insurance 120 Fenchurch Street London, England EC3M 5BP
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John T. Wooster, Jr. Vice President - 72 Wall Street Communications New York, New York 10270 Cesar C. Zalamea Vice President - Investments AIG Investment Corp. (Asia) Ltd. AIA Building No. 1 Stubbs Road Wan Chai Hong Kong
9 AMERICAN INTERNATIONAL UNDERWRITERS OVERSEAS, LTD. OFFICERS' NAME, TITLE AND BUSINESS ADDRESS DIRECTORS:
Houghton Freeman Director 990 Taber Ridge Road Stowe, Vermont Evan Glenn Greenberg Director 70 Pine Street New York, New York 10270 Maurice Raymond Greenberg Director 70 Pine Street New York, New York 10270 Joseph Charles Henry Johnson Director American International Building 29 Richmond Road Pembroke HM 08 Bermuda Edwin Alfred Greenville Manton Director 70 Pine Street New York, New York 10270 Lawrence Michael Murphy Director American International Building 29 Richmond Road Pembroke HM 08 Bermuda John Joseph Roberts Director 70 Pine Street New York, New York 10270 OFFICERS: Evan Glenn Greenberg Chairman of the Board 70 Pine Street New York, New York 10270 Houghton Freeman Honorary Chairman 990 Taber Ridge Road Stowe, Vermont Joseph Charles Henry Johnson President American International Building 29 Richmond Road Pembroke HM 08 Bermuda
10
Lawrence Michael Murphy Vice President & Secretary American International Building 29 Richmond Road Pembroke HM 08 Bermuda S. George Cubbon Assistant Vice President American International Building 29 Richmond Road Pembroke HM 08 Bermuda Joseph Charles Henry Johnson Treasurer American International Building 29 Richmond Road Pembroke HM 08 Bermuda
11 STARR INTERNATIONAL COMPANY, INC. OFFICERS & DIRECTORS
Houghton Freeman 1880 Mountain Road, #14 Director Stowe, Vermont 05672 Evan G. Greenberg 70 Pine Street Director New York, New York 10270 Maurice R. Greenberg 70 Pine Street Director & Chairman of New York, New York 10270 the Board Joseph C.H. Johnson American International Building Executive Vice President Richmond Road & Treasurer Pembroke 543 Bermuda Edwin A.G. Manton 70 Pine Street Director New York, New York 10270 Edward E. Matthews 70 Pine Street Director New York, New York 10270 L. Michael Murphy American International Building Director & Secretary Richmond Road Pembroke 543 Bermuda John J. Roberts 70 Pine Street Director New York, New York 12070 Robert M. Sandler 70 Pine Street Director New York, New York 10270 Ernest E. Stempel 70 Pine Street Director New York, New York 10270 Thomas R. Tizzio 70 Pine Street Director New York, New York 10270 Edmund S.W. Tse 1 Stubbs Road Director Hong Kong
12 THE STARR FOUNDATION OFFICERS & DIRECTORS
M.R. Greenberg 70 Pine Street Director and Chairman New York, New York 10270 T.C. Hsu 70 Pine Street Director and President New York, New York 10270 Marion Breen 70 Pine Street Director and Vice President New York, New York 10270 John J. Roberts 70 Pine Street Director New York, New York 10270 Ernest E. Stempel 70 Pine Street Director New York, New York 10270 Houghton Freeman 1880 Mountain Road, #14 Director Stowe, Vermont 05672 Edwin A.G. Manton 70 Pine Street Director New York, New York 10270 Gladys Thomas 70 Pine Street Vice President New York, New York 10270 Frank Tengi 70 Pine Street Treasurer New York, New York 10270 Ida Galler 70 Pine Street Secretary New York, New York 10270
EX-99.3 4 STOCK PURCHASE AGREEMENT 1 STOCK PURCHASE AGREEMENT by and between BRAZIL FAST FOOD CORP. (a Delaware Corporation) and AIG LATIN AMERICA EQUITY PARTNERS, LTD. (a Bermuda Company) 2 TABLE OF CONTENTS
Page # ------- ARTICLE I DEFINITIONS....................................................................................1 ARTICLE II SALE AND PURCHASE OF SHARES...................................................................5 2.1 Agreement to Sell and Purchase....................................................................5 2.2 Purchase Price....................................................................................5 ARTICLE III CLOSING......................................................................................5 3.1 Time of Closing...................................................................................5 3.2 The Company's Obligations.........................................................................5 3.3 the Purchaser's Obligations.......................................................................5 ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY.................................................6 4.1 Organization and Corporate Power..................................................................6 4.2 Authorization.....................................................................................7 4.3 Capitalization....................................................................................7 4.4 SEC Documents and Financial Statements............................................................9 4.5 Absence of Certain Changes........................................................................9 4.6 Absence of Undisclosed Liabilities...............................................................10 4.7 Litigation.......................................................................................10 4.8 Restrictions on Business Activities..............................................................10 4.9 Certain Contracts and Arrangements...............................................................10 4.10 Title of Property...............................................................................11 4.11 Intellectual Property...........................................................................12 4.12 Environmental Matters...........................................................................13 4.13 Taxes...........................................................................................13 4.14 Employee Benefit and Labor Matters..............................................................14 4.15 Employee Matters................................................................................17 4.16 Interested Party Transactions...................................................................17 4.17 Insurance.......................................................................................17 4.18 Compliance with Laws............................................................................18 4.19 Minutes Books...................................................................................18 4.20 Complete Copies of Materials....................................................................18 4.21 Brokers' and Finders' Fees......................................................................18 4.22 Suppliers.......................................................................................18 4.23 Occupational Safety and Health..................................................................18 4.24 Representations Complete........................................................................18 ARTICLE V REPRESENTATIONS OF THE PURCHASER..............................................................19 5.1 Organization.....................................................................................19 5.2 Authority........................................................................................19 5.3 Enforceability...................................................................................19 5.4 Securities Act...................................................................................19
i 3 ARTICLE VI CONDITIONS OF PURCHASE.......................................................................20 6.1 Conditions Precedent to the Purchaser's Performance..............................................20 6.2 Conditions Precedent to the Company's Performance................................................22 ARTICLE VII COVENANTS OF THE COMPANY....................................................................23 7.1 Use of Proceeds..................................................................................23 7.2 Registration Rights..............................................................................23 7.3 Underwriters.....................................................................................23 7.4 Exchange, Transfer and Replacement of Share Certificates.........................................23 7.5 Reservation of Shares............................................................................24 ARTICLE VIII COMPANY'S OBLIGATIONS BEFORE CLOSING.......................................................24 8.1 Affirmative Obligations of the Company...........................................................24 8.2 Negative Obligations of the Company..............................................................25 ARTICLE IX OBLIGATIONS AFTER CLOSING....................................................................26 9.1 Company's Indemnity..............................................................................26 9.2 Claims Between the Purchaser and the Company.....................................................27 9.3 De Minimis.......................................................................................27 9.4 Payment..........................................................................................27 ARTICLE X GENERAL.......................................................................................27 10.1 Amendments, Waivers and Consents................................................................27 10.2 Survival of Covenants; Assignability of Rights..................................................28 10.3 Governing Law...................................................................................28 10.4 Section Headings................................................................................28 10.5 Publicity.......................................................................................28 10.6 Counterparts....................................................................................29 10.7 Notices.........................................................................................29 10.8 Severability....................................................................................30 10.9 Expenses........................................................................................30 10.10 Entire Agreement...............................................................................30 10.11 Specific Enforcement; Injunctive Relief........................................................30
ii 4 STOCK PURCHASE AGREEMENT This Stock Purchase Agreement (the "Agreement") is made and entered into as of July 23, 1997, by and between AIG Latin America Equity Partners, Ltd., a Bermuda company (the "Purchaser"), and Brazil Fast Food Corp., a Delaware corporation (the "Company"). W I T N E S S E T H: WHEREAS, the Company desires to obtain Four Million Five Hundred Thousand Dollars ($4,500,000) of additional capital by selling to the Purchaser One Million Five Hundred Thousand (1,500,000) shares (the "Shares") of its common stock, par value $0.0001 per share (the "Common Stock") and five-year warrants (the "Warrants") to purchase 250,000 shares of Common Stock at an initial exercise price of $4.00 per share, and the Purchaser desires to acquire the same, all subject to the terms and conditions of this Stock Purchase Agreement; and WHEREAS, the Purchaser and the Company are, simultaneously with the Closing of this Stock Purchase Agreement, entering into a certain Registration Rights Agreement and a Warrant Agreement, and certain stockholders of the Company, the Purchaser and the Company are, simultaneously with the Closing of this Stock Purchase Agreement, entering into a Stockholders' Agreement among the Purchaser, the Company and the persons named in Schedule A thereto (the "Stockholders' Agreement") (collectively, the above agreements are hereafter referred to as the "Agreements"), all of which collectively provide for a constructive and mutually beneficial relationship between the Purchaser and the Company; and NOW, THEREFORE, in consideration of the respective agreements herein contained and for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, and subject to the terms and conditions set forth herein, the parties agree as follows: ARTICLE I DEFINITIONS For purposes of this Agreement, the following terms have the meanings specified or referred to in this Article I. "Agreement" shall have the meaning set forth in the recitals hereto. "Agreements" shall have the meaning set forth in the recitals hereto. "Balance Sheet" shall have the meaning set forth in Section 4.6. "Balance Sheet Date" shall have the meaning set forth in Section 4.5. 5 "Best Knowledge of the Company" shall mean and include (a) actual knowledge of the executive officers and directors of the Company and (b) that knowledge which a prudent businessperson could have obtained in the management of his or her business affairs after making due inquiry and exercising due diligence with respect thereto. In connection therewith, the knowledge of any such executive officer or director of the Company shall be imputed to be the knowledge of the Company. "Closing" shall have the meaning set forth in Section 3.1. "Closing Date" shall mean such date as the parties hereto mutually agree; provided, however, that in no event shall such date be later than August 11, 1997. "COBRA" shall mean the Consolidated Omnibus Budget Reconciliations Act of 1985, as amended. "Code" shall mean the Internal Revenue Code of 1986, as amended. "Common Stock" shall have the meaning set forth in the recitals hereto. "Company" shall have the meaning set forth in the recitals hereto. "Confidential Information" shall have the meaning set forth in Section 4.11. "Contracts" shall have the meaning set forth in Section 4.9. "Defined Benefit Plan" shall have the meaning set forth in Section 4.14. "Defined Contribution Plan" shall have the meaning set forth in Section 4.14. "DOL" shall mean the Department of Labor. "Dollars, US Dollars and $" shall mean the lawful currency of the United States of America , or its equivalent in any other currency. "Encumbrances" shall mean all liens, mortgages, pledges, options, claims, charges, security interests, rights of first refusal, rights of way, hypothecations or other legal or equitable encumbrances, limitations, defects in title or restrictions of any kind or nature whatsoever. "Environmental Law" shall mean any requirement of foreign or U.S. federal, state, or local law, civil or criminal, or regulation, relating to air quality, surface water quality, ground water quality, soil, solid waste management, hazardous or toxic substances, or the protection of health or the environment; and all applicable state statutes and regulations; including any retroactive amendments or extensions thereof in effect on the date hereof. "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as amended. "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended. 2 6 "Facilities" shall have the meaning set forth in Section 4.12. "Financial Statements" shall have the meaning set forth in Section 4.4. "Governmental Authorization" shall mean any approval, consent, license, permit, waiver or other authorization issued, granted, given or otherwise made available by or under the authority of any Governmental Body. "Governmental Body" shall mean any multi-national, U.S., Brazilian or other, federal, national, state, local (including county, city, town, village), municipal, or other jurisdiction or government or governmental authority (including any branch, agency, department, official or Person, and any court or other tribunal) or any body exercising or entitled to exercise any administrative, executive, judicial, legislative, police, regulatory or taxing authority or power of any nature. "Hazardous Materials" shall have the meaning set forth in Section 4.12. "Indemnified Party" shall have the meaning set forth in Section 9.2. "Indemnifying Party" shall have the meaning set forth in Section 9.2. "Intellectual Property" shall mean all trademarks, service marks, trade dress, logos and trade names; patents or inventions; copyrights (including software); mask works; and trade secrets, formulas and confidential business information and know-how, used or owned by or licensed to the Company or any of its subsidiaries which are of any value or importance to its business or which it is authorized to use in the provision, production or marketing of any services or products now provided, produced or proposed to be provided, produced or marketed by the Company. "Legal Requirement" shall mean any U.S., Brazilian, or other federal, state, local, municipal, foreign, international, multinational or other administrative order, constitution, law, ordinance, principle of common law, regulation, code, statute or treaty. "Licenses" shall have the meaning set forth in Section 4.1. "Material Adverse Effect" shall mean a material adverse effect upon the business, operations, prospects, properties, assets, liabilities or condition (financial or other) of the Company or the Company and its subsidiaries, taken as a whole. "Multi-employer Plan" shall have the meaning set forth in Section 4.14. "Ordinary Course of Business" shall mean an action taken by a Person which is: (a) consistent with the past practices of such Person and taken in the ordinary course of the normal day-to-day operations of such Person; (b) not required to be authorized by the board of directors of such Person (or by any Person or group of Persons exercising similar authority); and 3 7 (c) similar in nature and magnitude to actions customarily taken, without any authorization by the board of directors (or by any Person or group of Persons exercising similar authority), in the ordinary course of the normal day-to-day operations of other Persons that are in the same line of business as such Person. "PBGC" shall mean the Pension Benefit Guaranty Corporation. "Person" shall mean any individual, corporation, (including any non-profit corporation), general or limited partnership, limited liability company, joint venture, estate, trust, association, organization, labor union, or other entity or Governmental Body. "Plan" shall have the meaning set forth in Section 4.14. "Purchaser" shall have the meaning set forth in the recitals hereto. "Purchase Price" shall have the meaning set forth in Section 2.2. "Purchaser Indemnified Party" shall have the meaning set forth in Section 9.1. "Purchaser Losses" shall have the meaning set forth in Section 9.1. "Real Properties" shall mean the real properties owned, leased, occupied or used by the Company, or in connection with its business. "Receita Federal" shall have the meaning set forth in Section 4.14. "SEC Documents" shall have the meaning set forth in Section 4.4. "Securities Act" shall mean the Securities Act of 1933, as amended. "Shares" shall have the meaning set forth in the recitals hereto. "Stock Option Plan" shall have the meaning set forth in Section 4.3. "Stockholders' Agreement" shall have the meaning set forth in the recitals hereto. "Taxes" shall mean any federal, state, local, municipal or foreign income, gross receipts, license, payroll, employment, excise, severance, stamp, occupation, premium, wind-fall profits, environmental (including taxes under the Code Section 59A), customs, duties, capital stock, franchise, profits, business and occupation, withholding, social security (or similar), unemployment, disability, real property or personal property, intangibles, sales, use, transfer, registration, value added, alternative or add-on minimum, estimated or other tax of any kind whatsoever, including any interest, penalty, or addition thereto whether disputed or not imposed by or on behalf of the United States, Brazil, or any other country (or any political subdivision or tax authority thereof or therein). "Tax Return" shall mean any return, declaration, estimate, report, claim for refund, or information return or statement relating to Taxes, including any amendment thereof. 4 8 "Third Party Intellectual Property Rights" shall have the meaning set forth in Section 4.11. "Warrants" shall have the meaning set forth in the recitals hereto. ARTICLE II SALE AND PURCHASE OF SHARES 2.1 Agreement to Sell and Purchase. At the Closing, the Company agrees, on the terms and subject to the conditions hereinafter set forth, to sell, transfer and deliver or cause to be sold, transferred and delivered to the Purchaser, free and clear of all Encumbrances, and the Purchaser agrees to purchase from the Company on the terms, subject to the conditions, and in reliance upon the covenants, agreements, representations, warranties and indemnities of the Company hereinafter set forth, the Shares and the Warrants. 2.2 Purchase Price. In consideration of the issuance to the Purchaser of the Shares and the Warrants, at the Closing, the Purchaser shall pay to the Company as the purchase price (the "Purchase Price") Four Million Five Hundred Thousand Dollars ($4,500,000) by wire transfer in immediately available funds to an account designated in writing by the Company. ARTICLE III CLOSING 3.1 Time of Closing. Subject to the terms and conditions of this Agreement, the closing (the "Closing") of the sale and purchase of the Shares and the Warrants shall take place at the offices of Curtis, Mallet-Prevost, Colt & Mosle, 101 Park Avenue, New York, New York 10178 at such time and place as may be acceptable to the parties provided, however, that in no event shall such date be later than August 11, 1997. 3.2 The Company's Obligations. At the Closing, the Company is delivering to the Purchaser (i) a duly executed copy of this Agreement; (ii) the Shares; (iii) the Warrants; (iv) a duly executed copy of the Registration Rights Agreement; (v) a duly executed copy of the Stockholders' Agreement; (vi) a duly executed copy of the Warrant Agreement; (vii) an opinion of counsel to the Company required by Section 6.1 hereof; (viii) the President's Certificate required by Section 6.1 hereof; (ix) the Good Standing Certificate(s) required by Section 6.1 hereof; and (x) the Certificate of Incorporation, Bylaws, and resolutions of the Board of Directors of the Company authorizing the execution, delivery and performance of this Agreement, and such other certificates and opinions as the Purchaser may reasonable request. 3.3 The Purchaser's Obligations. At the Closing, the Purchaser is delivering to the Company (i) the Purchase Price; (ii) a duly executed copy of this Agreement; (iii) a duly executed copy of the Registration Rights Agreement; (iv) a duly executed copy of the Stockholders' Agreement; (v) a duly executed copy of the Warrant Agreement; 5 9 and (vi) evidence of the authorization of the execution, delivery and performance of this Agreement.. ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY In order to induce the Purchaser to enter into this Agreement, the Company represents and warrants to the Purchaser, its successors and assigns as follows: 4.1 Organization and Corporate Power (a) Each of the Company and its subsidiaries is a corporation duly organized, validly existing and in good standing under the laws of its jurisdiction of organization, and is qualified to do business as a foreign corporation in each jurisdiction in which such qualification is required, except where the failure to so qualify could not have a Material Adverse Effect. Each of the Company and its subsidiaries has all required power and authority (corporate and other) to own, operate and lease its properties and assets and to carry on its business as presently conducted, and the Company has all required power and authority (corporate and other) to enter into and perform each of the Agreements and to carry out the transactions contemplated hereby and thereby. The copies of the Certificate of Incorporation and By-Laws of the Company, as amended to date, which have been furnished to counsel for the Purchaser by the Company, are correct and complete at the date hereof. Neither the Company nor any of its subsidiaries is in violation of any of the provisions of its Certificate of Incorporation or By-Laws or equivalent organizational documents. No consent, approval, order, license, permit or authorization of, or registration, declaration or filing with, any Governmental Body or any other Person is required to be obtained or made by or with respect to the Company in connection with any of the Agreements or the consummation of the transactions contemplated hereby or thereby, except where the failure to obtain or make could not have a Material Adverse Effect. (b) Except as disclosed in Schedule 4.1, the Company is the owner, directly or indirectly through its subsidiaries, of all outstanding shares of capital stock of each of its subsidiaries and all such shares are duly authorized, validly issued, fully paid and non-assessable and are owned by the Company, directly or indirectly through its subsidiaries, free and clear of all liens, charges, claims and Encumbrances or rights of others. There are no outstanding subscriptions, options, warrants, puts, calls, rights, exchangeable or convertible securities or other commitments or agreements of any character relating to the issued or unissued capital stock or other securities of any such subsidiary, or otherwise obligating the Company or any such subsidiary to issue, transfer, sell, purchase, redeem or otherwise acquire such securities. The Company does not directly or indirectly own any equity or similar interest in, or any interest convertible or exchangeable or exercisable for, any equity or similar interest in, any corporation, partnership, joint venture or other business association or entity. (c) Except as provided in Schedule 4.1, the Company and each of its subsidiaries and their respective properties, assets, operations and businesses are in 6 10 compliance in all material respects with all applicable statutes, laws, ordinances, rules and regulations of any court, administrative agency or commission or other Governmental Body and any filing requirements relating thereto, including Environmental Laws. The Company and each of its subsidiaries has obtained all permits, licenses and other authorizations (collectively, "Licenses") which are required with respect to the operation of their respective businesses and the ownership of their respective assets under U.S., Brazilian or other, federal, state, local and foreign laws, including Environmental Laws except when the failure to obtain could not have a Material Adverse Effect, and each of them is in compliance in all material respects with all terms and conditions of such Licenses. 4.2 Authorization. Each of the Agreements and all documents and instruments executed pursuant thereto, are legal, valid and binding obligations of the Company, enforceable against the Company in accordance with their respective terms. The execution and delivery of each of the Agreements by the Company does not, and the consummation of the transactions contemplated hereby or thereby will not, conflict with, or result in any violation of, or default under (with or without notice or lapse of time, or both), or give rise to a right of termination, cancellation or acceleration of any obligation or loss of any benefit under (i) any provision of the Certificate of Incorporation or Bylaws or equivalent organizational documents of the Company or any of its subsidiaries, as amended, or (ii) any mortgage, indenture, lease, contract or other agreement or instrument, permit, concession, franchise, license, judgment, order, decree, statute, laws, ordinance rule or regulation applicable to the Company or any of its subsidiaries or any of their respective properties, assets or businesses, except where such conflict, violation, default, termination, cancellation or acceleration with respect to the foregoing provisions of clause (ii) would not have and could not reasonably be expected to have a Material Adverse Effect. The execution, delivery and performance of the Agreements and the issuance of the Shares and the Warrants have been duly authorized by all necessary corporate action of the Company. 4.3 Capitalization. (a) The authorized capital stock of the Company consists of 20,000,000 shares of Common Stock, $0.0001 par value, and 5,000 shares of Preferred Stock $.01 par value, of which there were issued and outstanding immediately prior to Closing 10,784,525 shares of Common Stock and no shares of Preferred Stock. There are no other outstanding shares of capital stock or voting securities and no outstanding commitments to issue any shares of capital stock or voting securities other than pursuant to (i) the exercise of options outstanding under the Company's Stock Option Plan (the "Stock Option Plan"), (ii) the exercise of outstanding warrants evidencing the right of the holders thereof to purchase an aggregate of 5,379,250 shares of Common Stock, as more fully described in Schedule 4.3 hereof, (iii) the exercise of outstanding options ("Director Options") granted to certain Directors of the Company to purchase 220,000 shares of Common Stock and (iv) as provided in the Agreements. All outstanding shares of Common Stock are duly authorized, validly issued, fully paid and non-assessable and are free of any Encumbrances other than any liens or encumbrances created by or imposed 7 11 upon the holders thereof, and are not subject to preemptive rights or rights of first refusal created by statute, the Certificate of Incorporation, as amended, or Bylaws, as amended, of the Company or any agreement to which the Company is a party or by which it is bound. Immediately prior to Closing, the Company has reserved 500,000 shares of Common Stock for issuance to employees and consultants pursuant to the Stock Option Plan, no shares have been issued pursuant to option exercises, 372,500 shares are subject to outstanding, unexercised options, and no shares are subject to outstanding stock purchase or other rights. Immediately prior to Closing, the Company has reserved 5,379,250 shares of Common Stock for issuance upon exercise of the warrants described on Schedule 4.3. Except for the rights created pursuant to the Agreements, the warrants described on Schedule 4.3, the Stock Option Plan and the Director Options, there are no other options, warrants, calls, rights, commitments or agreements of any character to which the Company is a party or by which it is bound obligating the Company to issue, deliver, sell, repurchase or redeem, or cause to be issued, delivered, sold, repurchased or redeemed, any shares of capital stock of the Company or obligating the Company to grant, extend, accelerate the vesting of, change the price of, or otherwise amend or enter into any such option, warrant, call, right, commitment or agreement. Other than as set forth on Schedule 4.3 hereof, there are no contracts, commitments or agreements relating to voting, purchase or sale of the Company capital stock (i) between or among the Company and any of its stockholders or other Persons and (ii) to the Best Knowledge of the Company, between or among any of the Company stockholders. True and complete copies of all agreements and instruments relating to or issued under the Stock Option Plan, have been filed as an exhibit to the SEC documents and such agreements and instruments have not been amended, modified or supplemented, and there are no agreements to amend, modify or supplement such agreements or instruments in any case from the form as filed. (b) Other than as provided in Schedule 4.3 and as set forth in the Registration Rights Agreement, there are no outstanding rights (other than those of which have been satisfied) which permit the holder thereof to cause the Company to file a registration statement under the Securities Act or which permit the holder thereof to include securities of the Company in a registration statement filed by the Company under the Securities Act, and there are no outstanding agreements or other commitments which otherwise relate to the registration of any securities of the Company under the Securities Act. All securities of the Company heretofore issued and sold by the Company were issued and sold in compliance with all applicable Federal and state securities laws. Assuming that the representations and warranties of the Purchaser set forth in Article V are true and correct, the offering, issuance and sale of the Shares and the Warrants will be exempt from the registration requirements of the Securities Act. 4.4 SEC Documents and Financial Statements. The Company has furnished or made available to the Purchaser a true and complete copy of each statement, report, registration statement (with the prospectus in the form filed pursuant to Rule 424(b) under the Securities Act, definitive proxy statement and other filing filed with the SEC by the Company since January 1, 1996, and, prior to the Closing, the Company will have furnished the Purchaser with true and complete copies of any additional documents 8 12 filed with the SEC by the Company prior to the Closing (collectively, the "SEC Documents"). In addition, the Company has made available to the Purchaser all exhibits to the SEC Documents filed prior to the date hereof, and will promptly make available to the Purchaser all exhibits to any additional SEC Documents filed prior to the Closing. The Company has filed with the SEC all reports and registration statements and other filings required to be filed with the SEC under the rules and regulations of the SEC. All documents required to be filed as exhibits to the SEC Documents have been so filed, and all material contracts so filed as exhibits are in full force and effect, except those which have expired in accordance with their terms or have been revised as disclosed in the SEC Documents, and neither the Company nor any of its subsidiaries is in default thereunder. As of their respective filing dates, the SEC Documents complied in all material respects with the requirements of the Exchange Act and the Securities Act, and none of the SEC Documents contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements made therein, in light of the circumstances under which they were made, not misleading, except to the extent corrected by a subsequently filed SEC Document. The financial statements of the Company, including the notes thereto, included in the SEC Documents (the "Financial Statements") were complete and correct in all material respects as of their respective dates, complied as to form in all material respects with applicable accounting requirements and with the published rules and regulations of the SEC with respect thereto as of their respective dates, and were prepared in accordance with generally accepted accounting principles applied on a basis consistent throughout the periods indicated and consistent with each other (except as may be indicated in the notes thereto or, in the case of unaudited statements included in Quarterly Reports on Form 10-Q, as permitted by Form 10-Q of the SEC). The Financial Statements fairly present the financial condition and operating results of the Company and its subsidiaries at the dates and for the periods indicated therein (subject, in the case of unaudited statements, to normal, recurring year-end adjustments). There has been no change in the Company's accounting policies except as described in the notes to the Financial Statements. 4.5 Absence of Certain Changes. Since March 31, 1997, (the "Balance Sheet Date"), each of the Company and its subsidiaries has conducted its business in the Ordinary Course of Business, consistent with past practice and there has not occurred: (i) any change, event or condition (whether or not covered by insurance) that has resulted in, or might reasonably be expected to result in, a Material Adverse Effect; (ii) any acquisition, sale or transfer of any material asset of the Company or any of its subsidiaries; (iii) any change in accounting methods or practices (including any change in depreciation or amortization policies or rates) by the Company or any of its subsidiaries or any revaluation by the Company or any of its subsidiaries of any of their respective assets; (iv) any declaration, setting aside, or payment of a dividend or other distribution with respect to the shares of capital stock of the Company, or any direct or indirect redemption, purchase or other acquisition by the Company of any of its shares of capital stock; (v) any material contract entered into by the Company or any of its subsidiaries, other than in the Ordinary Course of Business and as provided to the Purchaser, or any material amendment or termination of, or default under, any material contract to which the Company or any of its subsidiaries is a party or by which any of 9 13 them are bound; or (vi) any commitment or agreement by the Company or any of its subsidiaries to do any of the things described in the preceding clauses (i) through (v). 4.6 Absence of Undisclosed Liabilities. Neither the Company nor any of its subsidiaries has any material obligations or liabilities of any nature (matured or unmatured, fixed or contingent) other than (i) those set forth or adequately provided for in the balance sheet included in the Company's Quarterly Report on Form 10-Q for the period ended March 31, 1997, including the notes thereto (the "Balance Sheet"), (ii) those incurred in the Ordinary Course of Business and not required to be set forth in the Balance Sheet under generally accepted accounting principles, (iii) those incurred in the Ordinary Course of Business since the Balance Sheet Date; and (iv) those incurred in connection with the execution of the Agreements. 4.7 Litigation. Except as set forth in the SEC Documents or on Schedule 4.7, there is no private or governmental action, suit, proceeding, claim, arbitration or investigation pending before any agency, court or tribunal, foreign or domestic, or, to the Best Knowledge of the Company, threatened against the Company, any of its subsidiaries or any of their respective properties or any of their respective officers or directors (in their capacities as such) that, individually or in the aggregate, if determined adversely against the Company and its subsidiaries could reasonably be expected to have a Material Adverse Effect. There is no judgment, decree or order against the Company, or any of its subsidiaries or, to the Best Knowledge of the Company, any of their respective directors or officers (in their capacities as such), that could prevent, enjoin, alter or delay any of the transactions contemplated by the Agreements, or that could reasonably be expected to have a Material Adverse Effect. 4.8 Restrictions on Business Activities. There is no material agreement, judgment, injunction, order or decree binding upon the Company or any of its subsidiaries which has or reasonably could be expected to have the effect of prohibiting or materially impairing any current or future business practice of the Company or any of its subsidiaries, any acquisition of property by the Company or any of its subsidiaries or the conduct of business by the Company or any of its subsidiaries as currently conducted or as proposed to be conducted by the Company or any of its subsidiaries. 4.9 Certain Contracts and Arrangements. Except for agreements listed as exhibits to the SEC Documents, neither the Company nor any of its subsidiaries is a party to any (i) material employment agreement or employment agreement with any officer or director, (ii) material collective bargaining or industry-wide labor agreement, (iii) material license agreement or arrangement, (iv) indenture, mortgage, note, installment obligation, agreement or other instrument relating to the borrowing of money in excess of $50,000 or the guaranty of any obligation for the borrowing of money in excess of such amount, or (v) other material agreement or arrangement. The Company is in compliance with the provisions of all material contracts (the "Contracts") to which it is a party, including, without limitation, (i) the Assignment and Transfer of Quotas and Other Covenants dated March 19, 1996 by and among Bob's Industria e Comercio Ltda. ("BIEC"), Arnaldo Bisoni ("Bisoni"), the 10 14 Company and Vendex do Brasil Industria e Comercio Ltda. ("Vendex"); (ii) the Conditional Assignment and Transfer of Trademark Rights dated March 19, 1996 between the Company and Vendex International, N.V. and (iii) the Pledge and Security Agreement dated March 19, 1996 by and among Shampi Investments A.E.C. ("Shampi"), the Company, BIEC, Vendex and Vendex International, N.V., and there is no default or event that with or without notice or lapse of time, or both, would constitute a default or an event of acceleration by any party to any of the Contracts or would give any party the right to terminate, modify, cancel or exercise any remedy under any of the Contracts. All necessary Governmental Authorizations with respect to the Contracts have been obtained. The Company has not given or received any notice or other communication (oral or written) regarding any actual, alleged, possible or potential violation or breach of, or default under any Contract and does not have any knowledge or reason to believe that any party to any of the Contracts intends to cancel or terminate any Contract or to exercise or not exercise any options under any Contract. The Company is not a party to, nor is it or its property bound by, any agreement that is materially adverse to the business, operations, prospects, assets, liabilities or condition, financial or other, of the Company or of the Company and its subsidiaries, taken as a whole. 4.10 Title of Property. Each of the Company and its subsidiaries has good and valid title to all of their respective properties, interests in properties and assets, real and personal, reflected in the Balance Sheet or acquired after the Balance Sheet Date (except properties, interests in properties and assets sold or otherwise disposed of since the Balance Sheet date in the Ordinary Course of Business), or in the case of leased properties and assets, valid leasehold interests in such properties, free and clear of all Encumbrances, except (i) liens for of current taxes not yet due and payable, (ii) such imperfections of title, liens and easements as do not and will not materially detract from or interfere with the use of the properties subject thereto or affected thereby, or otherwise materially impair business operations involving such properties and (iii) liens securing debt which is reflected on the Balance Sheet. The plants, property and equipment of the Company and its subsidiaries are in good operating condition and repair. All properties used in the operations of the Company and its subsidiaries are reflected in the Balance Sheet to the extent generally accepted accounting principles require the same to be reflected. 4.11 Intellectual Property. (a) The Company or its subsidiaries owns, or is licensed or otherwise possesses legally enforceable rights to use, all Intellectual Property that is used or proposed to be used in the business of the Company and the businesses of its subsidiaries as currently conducted or as proposed to be conducted by the Company and its subsidiaries, except to the extent that the failure to have such rights have not and could not reasonably be expected to have a Material Adverse Effect. (b) To the Best Knowledge of the Company, there is no material unauthorized use, disclosure, infringement or misappropriation of any Intellectual Property rights of the Company or any of its subsidiaries, any trade secret material to the 11 15 Company or any of its subsidiaries, or any material licenses, sublicenses and other agreements as to which the Company or any of its subsidiaries is a party and pursuant to which the Company or any of its subsidiaries is authorized to use any third party patents, trademarks or copyrights, including software ("Third Party Intellectual Property Rights"), by any third party, including any employee or former employee of the Company or any of its subsidiaries. Neither the Company nor any of its subsidiaries has entered into any agreement to indemnify any other Person against any charge of infringement of any Intellectual Property. (c) Neither the Company nor any of its subsidiaries is, nor will the Company or any of its subsidiaries be as a result of the execution and delivery of the Agreements or the performance of the Company's obligations under the Agreements, in breach of any license, sublicense or other agreement relating to the Intellectual Property or Third Party Intellectual Property Rights. (d) All patents, registered trademarks, service marks and copyrights held by the Company or any of its subsidiaries are valid and subsisting. Neither the Company nor any of its subsidiaries (i) has been sued in any suit, action or proceeding which involves a claim of infringement of any patents, trademarks, service marks, copyrights or violation of any trade secret or other proprietary right of any third party or (ii) has brought any action, suit or proceeding for infringement of Intellectual Property or breach of any license or agreement involving Intellectual Property against any third party. The manufacture, marketing, licensing or sale of the products and services of the Company and its subsidiaries do not infringe any patent, trademark, service mark, copyright, trade secret or other proprietary right of any third party. (e) Each of the Company and its subsidiaries has secured valid written assignments from all consultants and employees who contributed to the creation or development of Intellectual Property of the rights to such contributions that the Company and its subsidiaries does not already own by operation of law. (f) Each of the Company and its subsidiaries has taken all reasonable and appropriate steps to protect and preserve the confidentially of all Intellectual Property not otherwise protected by patents, or patent applications or copyright ("Confidential Information"). All use, disclosure or appropriation of Confidential Information owned by the Company and its subsidiaries or to a third party has been pursuant to the terms of a written agreement with such third party. All use, disclosure or appropriation of Confidential Information not owned by the Company and its subsidiaries has been pursuant to the terms of a written agreement with the owner of such Confidential Information, or is otherwise lawful. 12 16 4.12 Environmental Matters (a) The following terms shall be defined as follows: (i) "Hazardous Materials" shall mean any toxic or hazardous substance, material or waste or any pollutant or contaminant, or infectious or radioactive substance or material, including without limitation, petroleum products and those substances, materials and wastes defined in or regulated under any Environmental Law. (ii) "Facilities" shall mean all buildings and improvements on the Real Properties. (b) The Company represents and warrants as follows with respect to the operations of the Company and its subsidiaries: (i) to the Best Knowledge of the Company, no friable asbestos is contained in the Facilities; (ii) all Hazardous Materials have been disposed of in accordance with all Environmental Laws; (iii) the Company and its subsidiaries has received no notice (verbal or written) of any noncompliance of the Facilities or its past or present operations with Environmental Laws; (iv) no notices, administrative actions or suits are pending or, to the Best Knowledge of the Company, threatened relating to a violation of any Environmental Laws; (v) to the Best Knowledge of the Company, there have not been in the past, and are not now, any Hazardous Materials under or migrating to or from the Facilities or the Real Properties; (vi) to the Best Knowledge of the Company, there have not been in the past, and are not now, any underground tanks or underground improvements at, on or under the Real Properties, including without limitation , treatment or storage tanks, sumps, or water, gas or oil wells; (vii) to the Best Knowledge of the Company, the Facilities and the Company's and its subsidiaries uses and activities therein have at all times complied with all Environmental Laws; and (viii) the Company and its subsidiaries have all the permits and licenses required to be issued and are in full compliance with the terms and conditions of those permits. 4.13 Taxes. The Company and each of its subsidiaries, and any consolidated, combined, unitary or aggregate group for tax purposes of which the Company or any of its subsidiaries is or has been a member have timely filed all Tax Returns required to be filed by it taking into account extensions of due dates, has paid all Taxes shown thereon to be due and has provided adequate accruals in accordance with generally accepted accounting principles in its financial statements for any Taxes that have not been paid, whether or not shown as being due on any Tax Returns. Except as disclosed in the SEC Documents, (i) no material claim for Taxes has become a lien against the property of the Company or any of its subsidiaries or is being asserted against the Company other than liens for Taxes not yet due and payable, (ii) no audit of any Tax Return of the Company or any of its subsidiaries is being conducted by a Tax authority, (iii) no Tax authority is now asserting, or to the Best Knowledge of the Company, threatening to assert against the Company or any of its subsidiaries any deficiency or claim for additional Taxes, and there are no requests for information from a Tax authority currently outstanding that could affect the Taxes of the Company or any of its subsidiaries, (iv) no extension of the statute of limitations on the assessment of any 13 17 Taxes has been granted by the Company or any of its subsidiaries and is currently in effect, and (v) neither the Company nor any of its subsidiaries has entered into any compensatory agreements with respect to the performance of services which payment thereunder would result in a nondeductible expense pursuant to Sections 162(m) or 280G of the Code. Neither the Company nor any of its subsidiaries is a party to any tax sharing or tax allocation agreement nor does the Company owe any amount under any such agreement. The Company and each of its subsidiaries is in full compliance with all terms and conditions of any tax exemptions or other tax-sparing agreement or order of a foreign government and the consummation of the transactions contemplated by the Agreements shall not have any adverse effect on the continued validity and effectiveness of such tax exemptions or other tax-sparing agreement or order. 4.14 Employee Benefit and Labor Matters. (a) Neither the Company nor any subsidiary has in the past and does not now sponsor, maintain, contribute or otherwise have any obligation with respect to any pension, profit sharing, retirement, fringe benefit, deferred compensation, stock purchase, stock option, incentive, bonus, vacation, severance, disability, hospitalization, medical insurance or life insurance plan, oral or written commitment of any nature regarding retiree health care, or program or any other type of employee benefit plan, program or arrangement within the meaning of Section 3(3) of ERISA including without limitation any defined benefit plan within the meaning of Section 3(35) of ERISA or Section 414(j) of the Code or any defined contribution plan within the meaning of Section 3(34) of ERISA or Section 414(j) of the Code or any multiemployer plan within the meaning of Section 3(37) and 4001(a)(3) of ERISA for the benefit of any current or former officers or employees of the Company or any subsidiary or their beneficiaries (whether on an active or frozen basis). (b) Except as set forth on Schedule 4.14, neither the Company nor any subsidiary has in the past and does not now sponsor, maintain, contribute or otherwise have any obligation with respect to any pension, profit sharing, retirement, fringe benefit, deferred compensation, stock purchase, stock option, incentive, bonus, vacation, severance, disability, hospitalization, medical insurance or life insurance plan, oral or written commitment of any nature regarding retiree health care, or program or any other type of employee benefit plan, program or arrangement under Brazilian law including without limitation any defined benefit plan ("Defined Benefit Plan") or any defined contribution plan ("Defined Contribution Plan") or any multiemployer plan ("Multiemployer Plan") for the benefit of any current or former officers or employees of the Company or any subsidiary or their beneficiaries (whether on an active or frozen basis) (hereinafter each individually referred to as a "Plan" and collectively referred to as the "Plans") (c) Except as set forth on Schedule 4.14, (A) the Company and each subsidiary have complied in all material respects with all applicable laws, rules and regulations of governmental agencies or authorities relating to the employment of labor in connection with the operation of their businesses, including, without limitation, ERISA 14 18 and the regulations and published interpretations of the Internal Revenue Service, regulations issued by the Brazilian Internal Revenue Services ("Receita Federal"), the Secretaria de Previdencia Complementar and the Superintendencia de Seguros Privados - SUSEP, the PBGC or the Department of Labor thereunder, the requirements of COBRA, related to continuation of group health coverage by employees and former employees, and those relating to wages, hours, salaries, "aditionais" and other benefits granted by law, including "Consolidacao das Leis do Trabalho" by virtue of collective bargaining agreements or individual employment agreements, unemployment insurance, workers' compensation, equal employment opportunity, collective bargaining and the payment and withholding of Taxes, including income and disability Taxes and any other applicable contributions required by law, including, but not limited to, social security taxes and the severance indemnity account and (B) except as disclosed in the SEC Documents, (x) since March 19, 1996, neither the Company nor any subsidiary has experienced any strikes, work stoppages, significant grievance proceedings or claims of unfair labor practices filed nor have there been any threats known to the Company within such period to file any such significant grievance proceedings or claims of unfair labor practices and (y) to the Best Knowledge of the Company prior to March 19, 1996, neither the Company nor any subsidiary has experienced any strikes, work stoppages, significant grievance proceedings or claims of unfair labor practices filed nor have there been any threats known to the Company within such period to file any such significant grievance proceedings or claims of unfair labor practices. (d) Except as set forth in Schedule 4.14, neither the Company nor any subsidiary has in the past and does not now sponsor, maintain, contribute to or otherwise have any obligation with respect to any Plan. The Company has furnished to Purchaser true and correct copies of (A) all documents evidencing each of the Plans referred to in Schedule 4.14 hereto (or true and correct written summaries of such Plans to the extent not evidenced by documents) and all employee communications with respect to the Plans, (B) copies of the last filed Annual Report with respect to each Plan and all Schedules and exhibits to all such reports (to the extent such reports were required) and the most recent actuarial valuation and annual accounting of Plan assets and (C) all contracts relating to such Plans with respect to which the Company, the Plans may have liability, including without limitation, insurance contracts, investment management agreements, subscription and participation agreements and record keeping agreements. (e) Each Plan administered by the Company has been operated in accordance with all applicable laws, the Company's By-Laws and its internal procedures. No investigation or review by the Brazilian Authorities, including, but not limited to, the Receita Federal, the Secretaria de Previdencia Complementar and the Superintendencia de Seguros Privados - SUSEP is currently pending. No assessment of any Taxes has been made, or to the Best Knowledge of the Company, is contemplated against the Company or any subsidiary on the basis of a failure of any qualification or exemption. Annual Reports have been timely filed with respect to all Plans. (f) Except as set forth on Schedule 4.14, there has been no material violation of the administrative, reporting and disclosure requirements imposed under 15 19 applicable Brazilian laws for which a penalty has been or may be imposed with respect to any Plan listed in Schedule 4.14 which could potentially disqualify the Plan. No Plan has any material liability of any nature, accrued or contingent, including, without limitation, liabilities for Taxes and contributions (including excise and penalty Taxes), other than for routine payments (including but not limited to death benefit payments) to be made in due course to or on behalf of participants and beneficiaries. (g) (A) Except as set forth on Schedule 4.14, the Company and each subsidiary have made all payments due to date under or with respect to each Plan set forth in Schedule 4.14 and all amounts properly accrued to date due as liabilities of the Company or any subsidiary, under or with respect to each Plan, for the current plan years, have been recorded on the books of the Company or any subsidiary; (B) the Company and each subsidiary have performed all material obligations required to be performed, and are not in material default under, or in material violation of, any such Plan; (C) the Company and each subsidiary are in compliance in all material respects with the requirements prescribed by all statutes, orders or governmental rules or regulations applicable to each such Plan, and none of the Company, any subsidiary, any such Plan is required to take any action to remedy any material violation of any of such requirements; (D) there are no actions, suits, arbitrations, claims (other than insignificant claims), governmental or other proceedings (formal or informal) or investigations pending or to the knowledge of the Company, threatened against any such Plan, the assets of any such Plan, or any fiduciary, administrator or sponsor (in its capacity as such) of any such Plan or related trust (except for claims for benefits payable in the normal operation of such Plan which have not previously been denied under such Plan); (E) except as set forth on Schedule 4.14, no such Plan has incurred any accumulated funding deficiency or actuarial deficiency whether or not waived by the competent authorities; (F) neither the Company nor any subsidiary has incurred, and does not reasonably expect to incur, any liability to the Brazilian authorities, including, but not limited to, the Receita Federal, the Secretaria de Previdencia Complementar and the Superintendencia de Seguros Privados - SUSEP , and no Defined Benefit Plan described in Schedule 4.14 has been terminated or has been the subject of any termination proceeding under circumstances which could reasonably result in the imposition of any such liability on the Company or any subsidiary; (G) no notice of termination has been filed by the plan administrator with respect to any such Defined Benefit Plan; (H) neither the Company nor any subsidiary has contributed, nor does it now contribute to any Multiemployer Plan nor does it have any liability or potential liability for complete or partial withdrawal from any Multiemployer Plan; and (I) the Company has the power to amend and/or terminate every Plan. 4.15 Employee Matters. The Company and each of its subsidiaries is in compliance with all applicable laws and regulations respecting employment, discrimination in employment, terms and conditions of employment, wages, hours and occupational safety and health and employment practices, and is not engaged in any unfair labor practice, except where the failure to be in compliance or the engagement in such unfair labor practices could not have a Material Adverse Effect. Except as set forth 16 20 in the SEC Documents, there are no material pending claims against the Company or any of its subsidiaries under any workers compensation plan or policy or for long term disability. Neither the Company nor any of its subsidiaries has obligations under COBRA with respect to any former employees or qualifying beneficiaries thereunder, except for obligations that could not have a Material Adverse Effect. There are no controversies pending or, to the Best Knowledge of the Company, threatened, between the Company or any of its subsidiaries and any of its employees, which controversies have or could reasonably be expected to have a Material Adverse Effect. 4.16 Interested Party Transactions. Except as disclosed in the SEC Documents, neither the Company nor any of its subsidiaries is indebted to any director, officer, employee or agent of the Company or any of its subsidiaries (except for amounts due as normal salaries and bonuses and in reimbursement of ordinary expenses), and no such person is indebted to the Company or any of its subsidiaries and there have been no other transactions of the type required to be disclosed pursuant to Items 402 and 404 of Regulation S-K under the Securities Act and the Exchange Act since January 1, 1996. 4.17 Insurance. The Company and each of its subsidiaries has policies of insurance and bonds of the type and in amounts customarily carried by Persons conducting businesses or owning assets similar to those of the Company and its subsidiaries and is sufficient in amount and scope to cover those risks to which the Company and its subsidiaries are exposed. There is no material claim pending under any of such policies or bonds. All premiums due and payable under all such policies and bonds have been paid and the Company and its subsidiaries are otherwise in compliance in all material respects with the terms of such policies and bonds. To the Best Knowledge of the Company there is no threatened termination of, or material premium increase with respect to, any of such policies. 4.18 Compliance with Laws. Each of the Company and its subsidiaries has complied with, is not in violation of, and has not received any notices of violation with respect to, any U.S., Brazilian, or other, federal, state, or local statute, law or regulation with respect to the conduct of its business, or the ownership or operation of its business, except for such violations or failures to comply which, singly or in the aggregate, could not reasonably be expected to have a Material Adverse Effect. 4.19 Minutes Books. The minutes of the Company made available to the Purchaser contain complete and accurate summaries of all meetings of directors and stockholders or actions by written consent since the time of incorporation of the Company and the respective subsidiaries through the date of this Agreement, and reflect all transactions referred to in such minutes accurately in all material respects. 4.20 Complete Copies of Materials. The Company and its subsidiaries has delivered or made available true and complete copies of each document that has been requested by the Purchaser or its counsel in connection with their legal and accounting review of the Company and its subsidiaries. 17 21 4.21 Brokers' and Finders' Fees. The Company has not incurred, nor will it incur, directly or indirectly, any liability for brokerage or finders' fees or agents' commissions or investment bankers' fees or any similar charges in connection with the Agreements or any transaction contemplated hereby. 4.22 Suppliers. As of the date hereof, no material supplier of the Company or any of its subsidiaries has indicated to the Company or any of its subsidiaries that it will stop, or decrease the rate of, supplying materials, products or services to the Company or any of its subsidiaries . Neither the Company nor any of its subsidiaries has breached any agreement with, or engaged in any fraudulent conduct with respect to, any supplier of the Company or any of its subsidiaries. 4.23 Occupational Safety and Health. The Company and its subsidiaries and their respective operations, assets and other properties are presently in compliance with all applicable occupational safety and health Legal Requirements. Neither the Company nor any of its subsidiaries has received any notice of, or know of or has any reasonable grounds to believe that there exists any potential environmental or occupational safety and health problem in connection with the Company's or its subsidiaries' operations, assets or properties. 4.24 Representations Complete. None of the representations or warranties made by the Company herein or in any Schedule, attached hereto, or in any certificate furnished by the Company or any of its subsidiaries pursuant to this Agreement, or the SEC Documents, contains or will contain at the Closing Date any untrue statement of a material fact, or omits or will omit at the Closing Date to state any material fact necessary in order to make the statements contained herein or therein, in the light of the circumstances under which made, not misleading. ARTICLE V REPRESENTATIONS OF THE PURCHASER To induce the Company to execute this Agreement, the Purchaser hereby represents and warrants to, and covenants with, the Company with respect to the Purchaser's purchase of Shares and Warrants hereunder, that: 5.1 Organization. The Purchaser is a company duly organized, validly existing and in good standing under the laws of Bermuda. 5.2 Authority. The Purchaser has the full right, power, legal capacity and authority to execute, deliver and perform its obligations under the Agreements. The execution and delivery of each of the Agreements by the Purchaser does not, and the consummation of the transactions contemplated hereby or thereby will not, conflict with, or result in any violation of, or default under (with or without notice or lapse of time, or both), or give rise to a right of termination, cancellation or acceleration of any obligation or loss of any benefit under (i) any provision of the organizational documents of the Purchaser or (ii) any mortgage, indenture, lease, contract or other agreement or instrument, permit, concession, franchise, license, judgment, order, decree, statute, laws, 18 22 ordinance, rule or regulation applicable to the Purchaser or any of its subsidiaries or any of their respective properties, assets or businesses, except where such conflict, violation, default, termination, cancellation or acceleration with respect to the foregoing provisions of clause (ii) would not have and could not reasonably be expected to have a material adverse effect on the Purchaser. The execution, delivery and performance of the Agreements have been duly authorized by all necessary action of the Purchaser. 5.3 Enforceability. This Agreement has been, and the other agreements, documents and instruments required to be delivered by the Purchaser hereunder, when executed and delivered in accordance with the provisions hereof will be duly executed and delivered on behalf of the Purchaser and this Agreement constitutes and the other Agreements, when so executed and delivered will constitute, a legal, valid and binding obligation of the Purchaser enforceable against the Purchaser in accordance with the terms hereof and thereof. 5.4 Securities Act. (a) The Shares and Warrants to be purchased by the Purchaser pursuant to this Agreement are being acquired for investment purposes only and not with a view to any public distribution thereof, and it will not offer to sell or otherwise dispose of the Shares or Warrants so acquired by it in violation of any of the registration requirements of the Securities Act. (b) The Purchaser has substantial experience in business and financial matters and in making investments of the type contemplated by this Agreement and is capable of evaluating the merits and risks of its purchase of the Shares and Warrants and is able to bear the economic risks of its investment. (c) The Purchaser has had an opportunity to discuss the Company's business, management and financial affairs, and the terms and conditions of the Shares and Warrants with the Company's management and all such questions have been answered to the full satisfaction of the Purchaser. (d) The Purchaser is an entity that qualifies as an "accredited investor" within the meaning of Rule 5.01(a) of Regulation D under the Securities Act. ARTICLE VI CONDITIONS OF PURCHASE 6.1 Conditions Precedent to the Purchaser's Performance. The obligation of the Purchaser to consummate the transactions described herein which are to be consummated on the Closing Date and to perform its other covenants and agreements in accordance with the terms and conditions of this Agreement is subject to the satisfaction, at or before Closing, of each of the conditions set forth in this Section 6.1. The Purchaser may waive any or all of these conditions in whole or in part without prior notice; provided, however, that no such waiver of a condition shall constitute a waiver by 19 23 the Purchaser of any of its other rights or remedies, at law or in equity, if the Company shall be in default of any of its respective representations, warranties, agreements, or covenants under this Agreement. (a) Representations and Warranties of Shareholder or Company. All representations and warranties made by the Company in the Agreements, or in any other statement that shall be delivered to the Purchaser by or on behalf of the Company in connection with the transactions contemplated hereby and thereby shall be true and complete when made, and on and as of the Closing Date as though made as of such date. (b) Performance of the Company. The Company shall have performed and complied with all covenants and agreements, and satisfied all obligations and conditions required by the Agreements to be performed, complied with or satisfied by it at or before the Closing. (c) No Adverse Changes. During the period from the Balance Sheet Date to Closing, there shall not have been or occurred any material adverse change in the business, operations, prospects, properties, assets, liabilities or condition, (financial or other), of the Company or the Company and its subsidiaries, taken as a whole and neither the Company nor any of its subsidiaries shall have sustained any material loss or damage to any of their respective assets or properties, whether or not insured. (d) Certificate of the Company The Purchaser shall have received a certificate, dated as of the Closing Date, signed by the Company's President certifying, in such detail as the Purchaser and its counsel may reasonably request, that the conditions specified in paragraphs (a) through (c) above and (g), (j) and (n) below have been satisfied. (e) Share Certificates. The Purchaser shall have received share certificates representing all of the Shares and the Warrants, duly registered in the name of the Purchaser. (f) Good Standing Certificate. The Purchaser shall have received certificates of good standing of the Company dated not more than one month prior to Closing, in the State of Delaware and each of the other jurisdictions in which it is qualified to do business at the time of Closing. (g) Absence of Litigation. No action, suit, or proceeding before any Governmental Body pertaining to the transactions contemplated by the Agreements or to their consummation, shall have been instituted or threatened by a third party on or before the Closing. (h) Notice of Changes. The Purchaser shall have received from the President and Chief Financial Officer of the Company a certificate, dated the Closing Date, that on the basis of a review of the latest available accounting records of the Company and its subsidiaries and upon consultation with other responsible officers of the Company and its subsidiaries, and upon other pertinent inquiries that they may deem 20 24 necessary, from the Balance Sheet Date to a specific date not more than five business days before Closing, there was no adverse change in the financial condition or results of operations of the Company and its subsidiaries, taken as a whole. (i) Opinion of Counsel. The Purchaser shall have received from counsel for the Company, Cooperman Levitt Winkoff Lester & Newman, P.C., their opinion addressed to the Purchaser, dated the Closing Date in the form set forth in Exhibit 6.1 hereto. (j) Authorization. The Board of Directors of the Company shall have duly adopted resolutions in form reasonably satisfactory to the Purchaser authorizing the Company to consummate the transactions contemplated hereby and by the other Agreements in accordance with the terms hereof and thereof, and the Purchaser shall have received a duly executed certificate of the Secretary or an Assistant Secretary of the Company setting forth a copy of such resolutions and such other matters as may be requested by the Purchaser. (k) Stockholders' Agreement. The Company, the Purchaser, and certain stockholders of the Company identified by the Purchaser shall have executed and delivered a Stockholders' Agreement in the form of Exhibit A hereto, with a revised Schedule D thereto, which Schedule shall be acceptable to the parties hereto. (l) Registration Rights Agreement. The Company and the Purchaser shall have executed and delivered a Registration Rights Agreement in the form of Exhibit B hereto. (m) Warrant Agreement. The Company and the Purchaser shall have executed and delivered a Warrant Agreement in the form of Exhibit C hereto. (n) Reservation of Shares. The Company shall have reserved for issuance solely for the purposes of issue upon exercise of the Warrants, such number of shares of Common Stock as shall then be issuable upon exercise of the Warrants. (o) Purchaser Authorization. The execution and delivery of the Agreements and the consummation of the transactions contemplated hereby and thereby shall have been authorized by all necessary action (corporation or other) on the part of the Purchaser. (p) All Proceedings Satisfactory. All corporate and other proceedings taken prior to or at the Closing in connection with the transactions contemplated by this Agreement, and all documents and evidences incident thereto, shall be reasonably satisfactory in form and substance to the Purchaser, and the Purchaser shall receive such copies thereof. (q) Employment Agreements. The Purchaser shall have received evidence, satisfactory to the Purchaser, that each Person party to a severance or employment agreement with the Company has agreed that the acquisition by the 21 25 Purchasers or its transferees of Common Stock on the Closing Date and from time to time thereafter, including the Shares and the Warrants will not constitute a "Change of Control" as such term is defined in each such agreement. (r) Other. The Purchaser shall have received such other opinions, certificates, and documents as it may reasonably request and shall have completed its due diligence review of the Company and be satisfied with the results thereof. 6.2 Conditions Precedent to the Company's Performance. The obligations of the Company to consummate the transactions described herein which are to be consummated on the Closing Date and to perform its other covenants and agreements in accordance with the terms and conditions of this Agreement are subject to the satisfaction, at or before Closing, of each of the conditions set forth in this Section 6.2. The Company may waive any or all of these conditions in whole or in part without prior notice; provided, however, that no such waiver of any condition shall constitute a waiver by the Company of any of their rights or remedies, at law or in equity, if the Purchaser shall be in default of any of its representations, warranties, agreements or covenants under this Agreement. (a) Representations and Warranties of the Purchaser. All representations and warranties by the Purchaser contained in this Agreement or in any written statement delivered by the Purchaser under this Agreement shall be true on and as of the Closing Date as though such representations and warranties were made on and as of such date. (b) Performance of the Purchaser. The Purchaser shall have performed and complied with all covenants and agreements, and satisfied all obligations and conditions required by this Agreement to be performed, complied with, or satisfied by it on or before the Closing. ARTICLE VII COVENANTS OF THE COMPANY The Company shall comply with the following covenants, except as shall otherwise be expressly agreed pursuant to a written consent executed by the Purchaser. 7.1 Use of Proceeds. The proceeds received by the Company hereunder shall be used by the Company exclusively for the purposes set forth in Schedule 7.1. 7.2 Registration Rights. All Shares purchased by the Purchaser under this Agreement and all shares to be issued upon exercise of the Warrants shall be subject to registration rights in accordance with the Registration Rights Agreement set forth in Exhibit B. 7.3 Underwriters. Banco Icatu S.A. and/or Icatu Securities, Inc. shall have the right of first refusal to be the sole and exclusive underwriter or placement agent 22 26 with respect to any debt or equity instruments issued by the Company; provided, however, that any underwriting or placement wholly within the United States of America and/or Europe or having a significant tranche therein shall have a co-managing underwriter or co-placement agent reasonably satisfactory to the Company and Banco Icatu S.A. and/or Icatu Securities, Inc. 7.4 Exchange, Transfer and Replacement of Share Certificates. Upon surrender of any certificate representing Shares or Warrants for exchange or transfer at the offices of the Company, the Company shall, at its expense (exclusive of applicable transfer taxes), issue in exchange therefor new certificates in such denomination or denominations as may be requested for the same aggregate number of shares of Common Stock or Warrants represented by the certificate so surrendered and registered as may be requested. Upon receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of any certificate representing Shares or Warrants and, in the case of any such loss, theft or destruction, upon delivery of an agreement of indemnity, and if required such other instruments or security bond, reasonably satisfactory to the Company and its transfer agent, or, in the case of any such mutilation, upon surrender and cancellation thereof, the Company shall, at its expense, issue a new certificate for the same aggregate number of Shares or Warrants represented by such lost, stolen, destroyed or mutilated certificate, as the case may be. 7.5 Reservation of Shares The Company will at all times reserve and keep available out of its authorized Common Stock, solely for the purpose of issue upon exercise of the Warrants, such number of shares of Common Stock as shall then be issuable upon exercise of the Warrants. The Company covenants that all shares of Common Stock which shall be issuable upon exercise of the Warrants shall, at the time of delivery thereof and upon payment of the exercise price with respect thereto, be duly and validly issued and fully paid and non-assessable and free from all preemptive or similar rights, taxes, liens, charges and Encumbrances with respect to the issue thereof, and that upon issuance such shares shall have been registered with the Securities and Exchange Commission under the Securities Act and shall be listed on each securities exchange, if any, on which the other shares of outstanding Common Stock of the Company are then listed. ARTICLE VIII COMPANY'S OBLIGATIONS BEFORE CLOSING 8.1 Affirmative Obligations of the Company. During the period from the date of this Agreement and continuing until the Closing, the Company agrees (except to the extent expressly contemplated by this Agreement or as consented to in writing the Purchaser), to carry on its and its subsidiaries' business in the usual, regular and ordinary course in substantially the same manner as heretofore conducted; to pay Taxes when due subject (i) to good faith disputes over such debts or Taxes, and (ii) to the Purchaser's consent to the filing of material Tax Returns, if applicable; to pay or perform all other obligations when due; and to use all reasonable efforts consistent with past practice and 23 27 policies to preserve intact its and its subsidiaries' present business organizations, use its best efforts consistent with past practice to keep available the services of its and its present subsidiaries' officers and key employees and use its best efforts consistent with past practice to preserve its relationships with suppliers, distributors, licensors, licensees, and others having business dealings with it, to the end that its and its subsidiaries' ongoing businesses shall be unimpaired at the Closing. The Company agrees to notify promptly the Purchaser of any event or occurrence not in the Ordinary Course of its Business, and of any event which could have a Material Adverse Effect. Without limiting the foregoing, except as expressly contemplated by this Agreement, the Company shall not do or cause or permit any of the actions set forth in Section 9 of the Stockholders' Agreement, without the prior written consent of the Purchaser; The Company agrees that if the Shares and the shares of Common Stock underlying the Warrants are not subject to an effective registration statement within 135 days after the Closing Date, the Purchaser shall have the right to sell the Shares to the Company at a price of $4.00 per share and the Company shall have the obligation to purchase the Shares for cash within 30 days following such 135-day period. 8.2 Negative Obligations of the Company. During the period from the date of this Agreement and continuing until the Closing, except as expressly contemplated by this Agreement, the Company shall not do, cause or permit any of the following without the prior written consent of the Purchaser, which consent shall not be unreasonable withheld: (a) Material Contracts. Enter into any material contract or commitment, or violate, amend or otherwise modify or waive any of the terms of any of its material contracts; (b) Intellectual Property. Transfer to any Person any rights to its Intellectual Property; (c) Exclusive Rights. Enter into or amend any agreements pursuant to which any other party is granted exclusive marketing or other exclusive rights of any type or scope with respect to any of its products or technology; (d) Dispositions. Sell, lease, license or otherwise dispose of or encumber any of its properties or assets which are material, individually or in the aggregate, to its and its subsidiaries' business, taken as a whole; (e) Indebtedness. Incur any indebtedness for borrowed money or guarantee any such indebtedness or issue or sell any debt securities or guarantee any debt securities of others, other than in the Ordinary Course of Business consistent with the Business Plan (as such term is defined in the Stockholders' Agreement); (f) Leases. Enter into any operating lease providing for payments in excess of an aggregate of $100,000, other than in the Ordinary Course of Business consistent with the Business Plan; 24 28 (g) Payment of Obligations. Pay, discharge or satisfy in an amount in excess of $10,000 in any one case or $100,000 in the aggregate, any claim, liability or obligation (absolute, accrued, asserted or unasserted, contingent or otherwise) arising other than in the Ordinary Course of Business, other than the payment, discharge or satisfaction of liabilities reflected or reserved against in the Financial Statements and other than the expenses related to this Agreement or any of the transactions contemplated hereby; (h) Capital Expenditures. Make any capital expenditures, capital additions or capital improvements except in the Ordinary Course of Business consistent with the Business Plan; (i) Insurance. Reduce the amount of any insurance coverage provided by existing insurance policies; (j) Employee Benefit Plans; New Hires; Pay Increases. Adopt or amend any employee benefit or stock purchase or option plan, or hire any new director level or officer level employee, pay any special bonus or special remuneration to any employee or director, or increase the salaries or wage rates of its employees; (k) Severance Arrangements. Grant any severance or termination pay (i) to any director or officer, or (ii) to any other employee, except payments made pursuant to standard written agreements outstanding on the date hereof; (l) Lawsuits. Commence a lawsuit other than (i) for the routine collection of bills or (ii) in such cases where it in good faith determines that failure to commence suit would result in the material impairment of a valuable aspect of its business, provided that it consults with the Purchaser prior to the filing of such a suit; (m) Acquisitions. Acquire or agree to acquire by merging or consolidating with, or by purchasing a substantial portion of the assets of, or by any other manner, any business or any corporation, partnership, association or other business organization or division thereof; (n) Taxes. Other than in the Ordinary Course of Business, make or change any material election in respect of Taxes, adopt or change any accounting method in respect of Taxes, file any material Tax Return or any amendment to a material Tax Return, enter into any closing agreement or settle any claim or assessment in respect of Taxes, or consent to any extension or waiver of the limitation period applicable to any claim or assessment in respect of Taxes; (o) Revaluation. Revalue any of its assets, including without limitation writing down the value or inventory or writing off notes or accounts receivable other than in the Ordinary Course of Business; or (p) Other. Take or agree in writing or otherwise to take, any of the actions described in Sections 8.2(a) through (o) above, or any action which would make 25 29 any of its representations or warranties contained in this Agreement untrue or incorrect or prevent it from performing or cause it not to perform its covenants hereunder. ARTICLE IX OBLIGATIONS AFTER CLOSING 9.1 Company's Indemnity. The Company hereby agrees to indemnify, defend and hold harmless the Purchaser, any affiliate of the Purchaser and any director, officer, employee, representative or agent of any of them (a "Purchaser Indemnified Party") from and against, and agrees to pay or cause to be paid to the Purchaser all amounts ("Purchaser Losses") equal to the sum of, any and all claims, demands, costs, expenses or other liabilities of any kind that any Purchaser Indemnified Party may incur or suffer, directly or indirectly, including without limitation the cost of investigation, fines, penalties, cleanup, containment and preventative, restoration or mitigating measures and all professional fees (including without limitation reasonable attorneys', accountants', consultants' and engineering fees) which arise out of, result from or relate to any misrepresentation or breach by the Company of, or any failure by the Company to perform, any of its representations, warranties, covenants, obligations or agreements in any of the Agreements, or in any schedule, certificate, exhibit, or other instrument furnished by, or on behalf of, the Company under the Agreements. 9.2 Claims Between the Purchaser and the Company. Any claim for indemnification under this Agreement which does not result from the assertion of a claim by a third party shall be asserted by written notice given by the party seeking indemnification (the "Indemnified Party") to the other party (the "Indemnifying Party"). The Indemnifying Party shall have a period of 20 days within which to respond thereto. If the Indemnifying Party does not respond within such 20 day period, the Indemnifying Party shall be deemed to have accepted responsibility for such indemnity, and shall have no further right to contest the validity of such claim. If the Indemnifying Party does respond within such 20 day period and rejects such claim in whole or in part, the Indemnified Party shall be free to pursue such remedies as may be available to it under this Agreement and applicable law. 9.3 De Minimis If the Closing occurs, the Purchaser shall not make any claims or assert any rights under this Agreement until the aggregate amount of all actual damages incurred by the Purchaser exceeds $50,000 (fifty thousand dollars). At such time the Purchaser shall be entitled to recover the full amount of such damages. The limitation set forth in this Section 9.3 shall not apply to (a) any misrepresentation or breach of any representation or warranty which the Company had knowledge at the time such representation or warranty was made or deemed to have been made that such representation or warranty was untrue, (ii) any breach or misrepresentation of Section 4.6 or (iii) any intentional breach or failure to perform any covenant or obligation or agreement contained herein 26 30 9.4 Payment. Any and all amounts determined from time to time to be paid by the group hereto by reason of its indemnity obligations under Section 9.1 of this Agreement shall be paid in cash, on demand. ARTICLE X GENERAL 10.1 Amendments, Waivers and Consents. For the purposes of this Agreement and all agreements, documents and instruments executed pursuant hereto, except as otherwise specifically set forth herein or therein, no course of dealing between the Company and the Purchaser and no delay on the part of any party hereto in exercising any rights hereunder or thereunder shall operate as a waiver of the rights hereof and thereof. No covenant or other provision hereof or thereof may be waived otherwise than by a written instrument signed by the party so waiving such covenant or other provision. Any amendment or waiver effected in accordance with this paragraph shall be binding upon the Purchaser and the Company. 10.2 Survival of Covenants; Assignability of Rights (a) All representations and warranties of the Company contained herein or in any of the other Agreements or in any certificate or other instrument delivered by the Company pursuant to the Agreements or in connection with the transactions contemplated hereby or thereby shall survive the closing. (b) This Agreement and the rights hereunder shall not be assignable or transferable by the Purchaser or the Company (except by operation of law in connection with a merger, consolidation or other reorganization or sale of all or substantially all the assets of the Purchaser or the Company) without the prior written consent of the other party hereto; provided that the Purchaser may assign, in its sole discretion, any or all of its rights, interests and obligations under this Agreement to any transferee of the Shares or Warrants. Subject to the preceding sentence, this Agreement shall be binding upon, inure to the benefit of and be enforceable by the parties hereto and their respective successors and assigns. The assignment by the Purchaser of any rights, interest or obligations under this Agreement to any transferee of the Shares or Warrants acquired hereunder shall not affect or diminish the rights or obligations of the Purchaser under this Agreement. 10.3 Governing Law The enforcement of this Agreement shall be governed by, and in connection with such enforcement this Agreement shall be construed in accordance with, the laws of the State of New York. 10.4 Section Headings. The descriptive headings in this Agreement have been inserted for convenience only and shall not be deemed to limit or otherwise affect the construction of any provision thereof or hereof. 10.5 Publicity.The Company and the Purchaser agree that (a) no public release or announcement concerning the transactions contemplated hereby shall be issued 27 31 by any party hereto without the prior consent of the other party, except as such release or announcement may be required by law or the rules or regulations of any securities exchange, in which case the party required to make the release or announcement shall allow the other party reasonable time to comment on such release or announcement in advance of such issuance and (b) without the prior consent of the Purchaser, the Company shall not issue any public release or announcement or issue or distribute any document to be used in connection with the private or public sale of debt or equity securities of the Company if such release, announcement or document refers to the Purchaser's investment in or contracts or other arrangements with the Company, except as may be required by law or the rules or regulations of any securities exchange or by any Governmental Body, in which case the Company shall allow the Purchaser reasonable time to comment on the relevant portions of such release, announcement or document. 10.6 Counterparts. This Agreement may be executed simultaneously in any number of counterparts, each of which when so executed and delivered shall be taken to be an original; but such counterparts shall together constitute but one and the same document. 10.7 Notices. All notices, requests, demands and other communications hereunder shall be in writing and shall be deemed given if delivered personally or mailed by certified or registered mail, postage prepaid, return receipt requested, or delivered to a nationally recognized next business day courier for delivery on the next business day, or by facsimile, with a copy sent as aforesaid and in any instance addressed as follows: (i) if to the Purchaser AIG Latin America Equity Partners, Ltd. AIG Latin America Investment Advisors, Inc. 80 Pine Street, 14th Floor New York, NY 10005 Attn: Alberto Marcel with a copy to: Curtis, Mallet-Prevost, Colt & Mosle 101 Park Avenue, 35th Floor New York, NY 10178 Attn: Lawrence Goodman, Esq. (ii) if to the Company Brazil Fast Food Corp. Praia do Flamengo 200-22(degree): Andar CEP 22210-030 Rio de Janeiro, Brazil Attention: Peter van Voorst Vader 28 32 with a copy to: Cooperman Levitt Winikoff Lester & Newman, P.C. 800 Third Avenue New York, NY 10022 Attn: Ira Roxland, Esq. 10.8 Severability. Whenever possible, each provision of this Agreement shall be interpreted in such a manner as to be effective and valid under applicable law, but if any provision of this Agreement shall be deemed prohibited or invalid under such applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, and such prohibition or invalidity shall not invalidate the remainder of such provision or the other provisions or this Agreement. 10.9 Expenses. The Company shall pay all costs and expenses that it incurs with respect to the negotiation, execution, delivery and performance of this Agreement, and the Purchaser shall pay all costs and expenses that it incurs with respect to the negotiation, execution, delivery and performance of this Agreement 10.10 Entire Agreement. This Agreement and the agreements referred to herein contain the entire agreement and understanding between the parties hereto with respect to the subject matter hereof and supersede all prior agreements and understandings relating to such subject matter. 10.11 Specific Enforcement; Injunctive Relief. The parties acknowledge that damages would be an inadequate remedy for any breach of the provisions of this Agreement. Therefore, the obligations of the parties hereunder shall be specifically enforceable and each of the parties agrees that each of them shall be entitled to an injunction, restraining order or other equitable relief from any court of competent jurisdiction, restraining any party from committing any violations of the provisions of this Agreement. 29 33 IN WITNESS WHEREOF, the undersigned have executed this Agreement as a sealed instrument as of the day and year first above written. BRAZIL FAST FOOD CORP. By: /s/ P.Van Voorst Vader ---------------------------------- Name: P. Van Voorst Vader Title: Chief Executive Officer AIG LATIN AMERICA EQUITY PARTNERS, LTD. By: /s/ Alberto Marcel ---------------------------------- Name: Alberto Marcel Title: Chief Executive Officer 30 EX-99.4 5 STOCKHOLDERS' AGREEMENT 1 BRAZIL FAST FOOD CORP. STOCKHOLDERS' AGREEMENT THIS AGREEMENT is made as of the 11th day of August, 1997, by and among Brazil Fast Food Corp., a Delaware Corporation (the "Company"); AIG Latin America Equity Partners, Ltd., a Bermuda company (the "Fund"); and the Persons named in Schedule A hereto (each a "Management Group Stockholder" and, collectively, the "Management Group Stockholders"). The Management Group Stockholders and the Fund are collectively referred to herein as the "Stockholders". Capitalized terms used herein, unless otherwise defined herein, shall have the meanings ascribed to them in the Stock Purchase Agreement (as such term is hereinafter defined). W I T N E S S E T H WHEREAS, the Management Group Stockholders are the beneficial owners of the issued and outstanding shares of common stock, par value $0.0001 per share of the Company (the "Common Stock") set forth opposite their names on Schedule A hereto; WHEREAS, the Fund and the Company are simultaneously with the entering into of this Agreement, entering into a certain Stock Purchase Agreement (the "Stock Purchase Agreement") pursuant to which the Fund is purchasing 1,500,000 shares of Common Stock and the Company has agreed to issue to the Fund five-year warrants to purchase 250,000 shares of the Common Stock (the "Warrants"); and WHEREAS, one of the conditions to Closing (as defined in the Stock Purchase Agreement) is the execution and delivery of this Agreement. NOW, THEREFORE, in consideration of the premises and mutual agreements set forth below, the parties intending to be legally bound agree, effective on the date of this Agreement, to the following terms and conditions: 1. Transferees. For purposes of this Agreement, unless otherwise provided herein, the term "Management Group Stockholders" shall include any permitted transferees of a Management Group Stockholder, to the extent of any such transfer. For the purposes of this Agreement, the term "Investor Group" shall include the Fund and the following transferees of the Fund: (i) the partners of the Fund; (ii) any affiliate of the Fund or a partner thereof; and (iii) transferees of any of the foregoing holding more than 750,000 of the outstanding shares of Common Stock (including shares obtainable upon exercise of the Warrants), which transferee has been approved by the Board of Directors of the Company, which approval shall not be unreasonably withheld or delayed; provided, however, that without the approval of the Board of Directors of the Company, a transferee described in clause (iii) above shall nevertheless be included in such definition for all purposes of this Agreement, except with respect to Section 8(C), Sections 9(i), 9(ii), 9(iv), 9(vii), 9(x), 9(xi), 9(xii), and 9(xiii) and Section 10 hereof. 2 2. Stock. The Fund is the registered owner of an aggregate of 1,500,000 shares of Common Stock, and the Warrants and the Management Group Stockholders are the registered owners of that number of shares of Common Stock, stock options and warrants set forth opposite such Management Group Stockholders name on Schedule B hereto (collectively, and together with any shares of Common Stock acquired or over which beneficial ownership is obtained after the date hereof, the "Shares"). Each Stockholder's Shares shall be subject to a number of restrictions as set forth in this Agreement. 3. Representations and Warranties of the Company. The Company hereby represents and warrants to the Fund as follows: (A) Organization. Each of the Company and its subsidiaries is a corporation duly organized, validly existing and in good standing under the laws of its jurisdiction of organization, and is qualified to do business as a foreign corporation in each jurisdiction in which such qualification is required, except where the failure to so qualify could not have a Material Adverse Effect. Each of the Company and its subsidiaries has all required power and authority (corporate and other) to own, operate and lease its properties and assets and to carry on its business as presently conducted, and the Company has all requisite power and authority (corporate and other) to enter into and perform this Agreement and to carry out the transactions contemplated hereby. Neither the Company nor any of its subsidiaries is in violation of any of the provisions of its Certificate of Incorporation or By-Laws or equivalent organizational documents. No consent, approval, order, license, permit or authorization of, or registration, declaration or filing with, any Governmental Body or any other Person is required to be obtained or made by or with respect to the Company or any of its subsidiaries in connection with this Agreement or the consummation of the transactions contemplated hereby. (B) Authorization. This Agreement and all documents and instruments executed pursuant hereto, are legal, valid and binding obligations of the Company, enforceable against the Company in accordance with their terms. The execution and delivery of this Agreement by the Company does not, and the consummation of the transactions contemplated hereby will not, conflict with, or result in any violation of, or default under (with or without notice or lapse of time, or both), or give rise to a right of termination, cancellation or acceleration of any obligation or loss of any benefit under (i) any provision of the Certificate of Incorporation or Bylaws or equivalent organizational documents of the Company or any of its subsidiaries, as amended, or (ii) any mortgage, indenture, lease, contract or other agreement or instrument, permit, concession, franchise, license, judgment, order, decree, statute, law, ordinance, rule or regulation applicable to the Company or any of its subsidiaries or any of their respective properties, assets, or businesses except where such conflict, violation, default, termination, cancellation or acceleration with respect to the foregoing provisions of (ii) would not have and could not reasonably be expected to have a Material Adverse Effect. The execution, delivery and performance of this Agreement has been duly authorized by all necessary corporate action of the Company. (C) Capitalization. (i) The authorized capital stock of the Company consists of 20,000,000 shares of Common Stock, $0.0001 par value, and 5,000 shares of Preferred Stock $.01 par value, of which there were issued and outstanding immediately prior to Closing, 10,784,525 shares of -2- 3 Common Stock and no shares of Preferred Stock. There are no other outstanding shares of capital stock or voting securities and no outstanding commitments to issue any shares of capital stock or voting securities other than pursuant to (x) the exercise of options outstanding as of such date under the Company's Stock Option Plan (the "Stock Option Plan"), (y) the exercise of outstanding options ("Director Options") granted to certain Directors of the Company to purchase 220,000 shares of Common Stock and (z) the exercise of outstanding warrants evidencing the rights of the holders thereof to purchase an aggregate of 5,379,250 shares of Common Stock, as more fully described on Schedule 4.3 to the Stock Purchase Agreement and as provided for herein, in the Stock Purchase Agreement and the Warrant Agreement. All outstanding shares of Common Stock are duly authorized, validly issued, fully paid and non-assessable and are free of any Encumbrances other than any liens or encumbrances created by or imposed upon the holders thereof, and are not subject to preemptive rights or rights of first refusal created by statute, the Certificate of Incorporation, as amended, or Bylaws, as amended, of the Company or any agreement to which the Company is a party or by which it is bound. Immediately prior to the Closing, the Company has reserved 500,000 shares of Common Stock for issuance to employees and consultants pursuant to the Stock Option Plan, no shares have been issued pursuant to option exercises, 372,500 shares are subject to outstanding, unexercised options, and no shares are subject to outstanding stock purchase or other rights. Immediately prior to the Closing, the Company has reserved 5,379,250 shares of Common Stock for issuance upon exercise of the warrants described on Schedule 4.3 to the Stock Purchase Agreement. Except for the rights created pursuant to this Agreement, the Stock Purchase Agreement, the Warrant Agreement, the warrants described on Schedule 4.3 to the Stock Purchase Agreement, the Stock Option Plan and the Directors Options, there are no other options, warrants, calls, rights, commitments or agreements of any character to which the Company is a party or by which it is bound obligating the Company to issue, deliver, sell, repurchase or redeem, or cause to be issued, delivered, sold, repurchased or redeemed, any shares of capital stock of the Company or obligating the Company to grant, extend, accelerate the vesting of, change the price of, or otherwise amend or enter into any such option, warrant, call, right, commitment or agreement. Other than as set forth on Schedule 2(C) hereof, there are no contracts, commitments or agreements relating to voting, purchase or sale of the Company capital stock (i) between or among the Company and any of its stockholders or other Persons and (ii) to the Best Knowledge of the Company, between or among any of the Company stockholders. True and complete copies of all agreements and instruments relating to or issued under the Stock Option Plan, have been filed as an exhibit to the SEC Documents and such agreements and instruments have not been amended, modified or supplemented, and there are no agreements to amend, modify or supplement such agreements or instruments in any case from as filed. (ii) Other than as provided in Schedule 2(C) and as set forth in the Registration Rights Agreement, there are no outstanding rights (other than those of which have been satisfied) which permit the holder thereof to cause the Company to file a registration statement under the Securities Act or which permit the holder thereof to include securities of the Company in a registration statement filed by the Company under the Securities Act, and there are no outstanding agreements or other commitments which otherwise relate to the registration of any securities of the Company under the Securities Act. All securities of the Company heretofore issued and sold by the Company were issued and sold in compliance with all applicable Federal and state securities laws. -3- 4 (D) Litigation. Except as set forth in the SEC Documents or on Schedule 4.7 to the Stock Purchase Agreement, there is no private or governmental action, suit, proceeding, claim, arbitration or investigation pending before any agency, court or tribunal, foreign or domestic, or, to the Best Knowledge of the Company, threatened against the Company or any of its subsidiaries or any of their respective properties or any of their respective officers or directors (in their capacities as such) that, individually or in the aggregate, if determined adversely against the Company and its subsidiaries could reasonably be expected to have a Material Adverse Effect There is no judgment, decree or order against the Company or any of its subsidiaries or, to the Best Knowledge of the Company, any of their respective directors or officers (in their capacities as such), that could prevent, enjoin, alter or delay any of the transactions contemplated by this Agreement, or that could reasonably be expected to have a Material Adverse Effect. (E) Representations Complete None of the representations or warranties made by the Company herein or in any Schedule attached hereto, or in any certificate furnished by the Company pursuant to this Agreement contains or will contain at the Closing Date any untrue statement of a material fact, or omits or will omit at the Closing Date to state any material fact necessary in order to make the statements contained herein or therein, in light of the circumstances under which made, not misleading. 4. Representations and Warranties of the Management Group Stockholders. Each of the Management Group Stockholders jointly and severally represent and warrant to the Fund as follows: (A) Authorization. This Agreement and all documents and instruments executed pursuant hereto, are legal, valid and binding obligations of each Management Group Stockholder, enforceable against each Management Group Stockholder in accordance with their terms. The execution and delivery of this Agreement by each Management Group Stockholder does not, and the consummation of the transactions contemplated hereby will not, conflict with, or result in any violation of, or default under (with or without notice or lapse of time, or both), or give rise to a right of termination, cancellation or acceleration of any obligation or loss of any benefit under (i) if applicable, any provision of the Certificate of Incorporation or Bylaws or equivalent organizational documents of each Management Group Stockholder, as amended, or (ii) any mortgage, indenture, lease, contract or other agreement or instrument, permit, concession, franchise, license, judgment, order, decree, statute, law, ordinance, rule or regulation applicable to each Management Group Stockholder or any of its properties or assets. (B) Ownership. Each Management Group Stockholder (i) owns, beneficially or of record, that number of Shares set forth opposite such Management Group Stockholder's name on Schedule B hereto free and clear of all Encumbrances and (ii) does not own, beneficially or of record, any other shares of Common Stock. (C) Material Contracts. Each Management Group Stockholder is in compliance with the provisions of all material contracts to which each such Management Group Stockholder is a party, and there is no default or event that with or without notice or lapse of time, or both, would constitute a default or event of acceleration by any party to any of such contracts or would give either party the right to terminate, modify, cancel or exercise any remedy under any of such contracts. The Management group Stockholders have not given or received -4- 5 any notice or other communication (oral or written) regarding any actual, alleged, possible or potential violation or breach of, or default under any such contract and has no knowledge or reason to believe that any party to any of such contracts intends to cancel or terminate any such contract or to exercise or not exercise any options under any such contract. (D) Ownership. Each Management Group Stockholder (i) owns, beneficially or of record, that number of Shares set forth opposite such Management Group Stockholder's name on Schedule B hereto free and clear of all Encumbrances and (ii) does not own, beneficially or of record, any other shares of Common Stock. 5. Transferability. The Company and each Stockholder agree that the Shares may be transferred only in accordance with the provisions set forth herein and only if the transferee of such Shares agrees in writing to be bound by the provisions hereof by executing a counterpart signature page to this Agreement. Any transfer by a Stockholder not in accordance with the preceding sentence shall be void, ab initio. For the purposes of this Agreement, the term "transfer" shall mean any sale, exchange, gift, bequest, hypothecation, pledge or grant of a security interest or any other disposition of the Shares, or of any interest in the Shares, whether voluntary or by operation of law, that would change the legal or beneficial ownership of the Shares. The term "transfer" includes, without limitation, any transaction that creates a form of joint ownership in the Shares between the transferor and one or more person (whether or not that other person is the spouse of the transferor) or any transaction that creates or grants an option, warrant, or right to obtain an interest in the Shares. 6. Rights of First Offer. (A) The Company shall not offer, issue or sell any shares of capital stock of the Company, or any warrants or options to purchase or rights to subscribe for or any other securities convertible into or exchangeable for shares of capital stock of the Company, or enter into any agreements or commitments pursuant to which the Company may become obligated to issue any shares of capital stock, warrants, options, rights or securities convertible into or exchangeable for capital stock of the Company, unless the Company shall first offer to the Investor Group, the Investor Group's Proportionate Percentage (as hereinafter defined) of the securities proposed to be offered by the Company; provided, however that this Section 6, shall not apply to (i) shares of Common Stock or warrants, options, rights or securities convertible into or exchangeable for capital stock of the Company issued as consideration in the acquisition by the Company of the stock or assets of another company, which acquisition and issuance has been approved by the Board of Directors of the Company, including the Fund Director (as hereinafter defined), (ii) any shares of Common Stock or warrants, options, rights or securities convertible into or exchangeable for capital stock of the Company issued in connection with any pro rata stock split, stock dividends or similar event affecting the Common Stock; and (iii) shares of Common Stock issued pursuant to the exercise of currently outstanding warrants or options or any options which may be issued under the Company's currently existing Stock Option Plan. The offer shall be effected by delivery of written notice thereof by the Company to the Investor Group, which notice shall contain (i) a description of the securities being offered, (ii) the amount and type of consideration which the Company will receive for each such security, (iii) the aggregate amount of securities being offered, (iv) the manner of distribution of the securities and -5- 6 (v) any other information which is material to a decision to accept or reject the offer. Such offer shall remain open for a period of twenty-five (25) days from receipt thereof. (B) Notice of the Investor Group's intention to accept in whole or in part any offer made pursuant to Section 6(A) hereof shall be evidenced by a writing delivered to the Company prior to the end of the twenty-five (25) day period of such offer, setting forth that portion of the securities offered as the Investor Group elects to purchase (the "Notice of Acceptance"). (C) In the event that a Notice of Acceptance is not given by the Investor Group, the Company shall have one hundred and twenty (120) days from the expiration of the foregoing twenty-five (25) day period, to sell all or any part of such securities offered as to which a Notice of Acceptance has not been given by the Investor Group to any other person or persons, but only upon terms and conditions which are no more favorable to such other person or persons or less favorable to the Company than those set forth in the original offer. (D) In each case, any securities offered but not purchased by the Investor Group or other person or persons in accordance with Section 6(C) may not be sold or otherwise disposed of until they are again offered to the Investor Group under the procedures specified in this Section 6. (E) For purposes of this Section 6, the term "Proportionate Percentage" shall mean, as to the Investor Group, the result, expressed as a percentage, obtained by dividing (i) the number of shares of Common Stock held by the Investor Group (including any shares obtainable by the Investor Group upon the conversion or exercise of convertible securities, options, rights or warrants) by (ii) the number of shares of Common Stock then outstanding (including any shares obtainable by the Investor Group upon the conversion or exercise of convertible securities, options, rights or warrants). 7. Co-Sale Rights (A) If at any time one or more Management Group Stockholders (the "Seller") desires to sell, directly or indirectly, in one or a series of related transactions, more than twenty percent (20%) of the aggregate number of Shares held by the Seller at such time pursuant to a bona fide offer or offers from a third party or parties (the "Proposed Transferee"), the Seller shall submit a written notice (the "Notice") of such proposed sale of such Shares (the "Offered Shares") to the Investor Group. The Notice shall disclose the identity of the Proposed Transferee, the Offered Shares proposed to be sold, the total number of Shares owned by the Seller, the terms and conditions, including price, of the proposed sale, that the Proposed Transferee has been informed of the rights and obligations provided for in this Section 7 and has agreed to purchase the Offered Shares in accordance with the terms of this Agreement, and any other material facts relating to the proposed sale. (B) If upon receipt of a Notice pursuant to Section 7(A) above, the Investor Group desires to sell any or all of its pro rata portion ("Pro Rata Portion") of Common Stock held by the Investor Group at such time, then the Investor Group shall have the right, exercisable upon written notice (the "Co-Sale Acceptance Notice") to the Seller, given within thirty (30) days after the Notice has been delivered pursuant to Section 7(A) above, to participate in the proposed sale of the Offered Shares pursuant to the terms and conditions specified in the proposed sale of the Offered Shares pursuant to the terms and conditions specified in the -6- 7 Notice, and the Seller shall require the Proposed Transferee designated in the Notice to purchase any or all of the Investor Group's Pro Rata Portion of Common Stock. The Co-Sale Acceptance Notice shall state the number of Shares the Investor Group proposes to include in such proposed sale to the Proposed Transferee (the "Co-Sale Shares"). Any such sale by the Investor Group shall be at the same price per share (including type of consideration) paid by the Proposed Transferee and otherwise on identical terms and conditions as received by the Seller in its sale to the Proposed Transferee; provided, however, that if the Proposed Transferee is unable or unwilling to purchase the Co-Sale Shares from the Investor Group, the total number of Shares to be sold to such Proposed Transferee shall be allocated between the Seller and the Investor Group on a pro rata basis. (C) If no Co-Sale Acceptance Notice is received by the Seller during the 30-day period referred to in Section 7(B) above, then the Seller shall have the right to sell the Offered Shares to the Proposed Transferee at any time within 120 days after the date of the Notice, subject to the other provisions of this Agreement. Any such sale to the Proposed Transferee shall be at the price and upon the terms and conditions specified in the Notice. Any Offered Shares not sold within such 120 day period shall continue to be subject to the requirements of this Section 7. (D) Notwithstanding anything to the contrary contained in Sections 7(A) through 7(C) above, if at any time, a Management Group Stockholder desires to sell, directly or indirectly, in one or a series of related transactions, more than forty nine percent (49%) of the aggregate number of Shares owned or controlled by such Management Group Stockholder at such time pursuant to a bona fide offer or offers from a third party or parties (the "Management Group Proposed Transferee"), such Management Group Stockholder shall submit a written notice (the "Management Group Notice") of such proposed sale of such Shares (the "Management Group Offered Shares") to the Investor Group. The Management Group Notice shall disclose the identity of the Management Group Proposed Transferee, the Management Group Offered Shares proposed to be sold, the total number of Shares owned by the Management Group Stockholder, the terms and conditions, including price, of the proposed sale, that the Proposed Transferee has been informed of the rights and obligations provided for in this Section 7 and has agreed to purchase the Management Group Offered Shares in accordance with the terms of this Agreement, and any other material facts relating to the proposed sale. (E) If upon receipt of a Management Group Notice pursuant to Section 7(D) above, the Investor Group desires to sell any or all of the Investor Group's Shares, then the Investor Group shall have the right, exercisable upon written notice (the "Management Co-Sale Acceptance Notice") to the Management Group Stockholder, given within thirty (30) days after the Management Group Notice has been delivered pursuant to Section 7(D) above, to participate in the proposed sale of the Management Group Offered Shares pursuant to the terms and conditions specified in the Management Group Notice, and the Management Group Stockholder shall require the Management Group Proposed Transferee designated in the Management Group Notice to purchase any or all of the Investor Group's Shares. The Management Co-Sale Acceptance Notice shall state the number of Shares the Investor Group proposes to include in such proposed sale to the Proposed Management Group Transferee (the "Management Co-Sale Shares"). Any such sale by the Investor Group shall be at the same price per share (including type of consideration) paid by the Management Group Proposed Transferee and otherwise on identical terms and conditions as received by the Management Group Stockholder in its sale to -7- 8 the Management Group Proposed Transferee. In the event that the Management Group Proposed Transferee does not purchase the Management Co-Sale Shares from the Investor Group pursuant to a timely delivered Management Group Co-Sale Acceptance Notice as required by this Section 7, then the Management Group Stockholder shall not be permitted to, and shall not, sell any Management Group Offered Shares to the Management Group Proposed Transferee in the proposed sale. (F) If no Management Group Co-Sale Acceptance Notice is received by the Management Group Stockholder during the 30-day period referred to in Section 7(E) above, then the Management Group Stockholder shall have the right to sell the Management Group Offered Shares to the Management Group Proposed Transferee at any time within 120 days after the date of the Management Group Notice, subject to the other provisions of this Agreement. Any such sale to the Management Group Proposed Transferee shall be at the price and upon the terms and conditions specified in the Management Group Notice. Any Management Group Offered Shares not sold within such 120-day period shall continue to be subject to the requirements of this Section 7. (G) In the event that any Management Group Stockholder desires to transfer, in the aggregate, at any time or from time to time 20% (twenty percent) or less of the aggregate number of Shares held by such Management Group Stockholder, the Investor Group shall have no rights with respect to such transfer. Notwithstanding anything to the contrary contained in this Section 7, the foregoing Co-Sale rights shall not apply to any Shares that are offered for sale or are sold in a public market transaction. 8. (A) Right of the Investor Group to Elect Board Member. So long as at least 750,000 of the issued and outstanding shares of Common Stock (including shares obtainable upon exercise of the Warrants) are held by the Investor Group, the Investor Group shall have the right to nominate one member of the Board of Directors, and the Company, the Management Group Stockholders and the Investor Group agree to take any and all action, including voting all of their shares of Common Stock, which may be necessary to cause the election to the Board of Directors of the person nominated by the Investor Group (the "Fund Director"). The Investor Group shall have the right to require the resignation of its nominee and his or her replacement with another nominee of the Investor Group. (B) Right of the Management Group Stockholders to Elect Board Members. The Management Group Stockholders and the Fund agree that (i) Shampi Investment, A.E.C. shall have the right to nominate two members of the Board of Directors; (ii) BigBurger Ltda. shall have the right to nominate one member of the Board of Directors; and (iii) Lawrence Burstein, John Cattier, Barry Goldin and Barry W, Ridings (the "Burstein Group"), shall have the right, as a group, to nominate two members of the Board of Directors. The Company, the Management Group Stockholders and the Investor Group agree to take any and all action, including voting all of their shares of Common Stock, which may be necessary to cause the election to the Board of Directors of the person nominated by each of Shampi Investment, A.E.C., BigBurger Ltda. and the Burstein Group. -8- 9 (C) Approval of Budgets. The Company shall prepare and submit to the Investor Group for approval, an annual operating and capital budget, and shall not permit, without the prior written consent of the Investor Group, any variation by more than 5% from the amounts set forth in such budgets for indebtedness, capital expenditures, fixed costs and the ratio of total liabilities to total assets, provided that the Investor Group shall exercise such approval right in what it in good faith believes to be in the best interests of the Company and its stockholders. 9. Covenants. The Company shall not and each of the Management Group Stockholders in their capacity as shareholders, officers and directors, to the extent applicable, shall cause the Company not to, directly or indirectly, without the prior written consent or approval of the Investor Group, undertake or agree to undertake any of the following actions: (i) sell, abandon, transfer, lease or otherwise dispose of all or substantially all of its properties or assets to any other company, companies, entity or entities; provided, however that nothing contained in this Section 9(i) shall restrict the Board of Directors of the Company from taking any action necessary to fulfill its fiduciary duties; (ii) purchase, lease or otherwise acquire all or substantially all of the properties or assets of another corporation or entity; (iii) during the first three (3) years after the Closing Date, make any payment on account of the purchase, redemption or other retirement of any shares of its capital stock and thereafter, make any payment on account of the non pro rata purchase, redemption or other retirement of any shares of its capital stock; (iv) merge or consolidate with or into, or permit any subsidiary to merge or consolidate with or into, any other company, companies, entity or entities, provided that any wholly-owned subsidiary of the Company may merge or consolidate with or into another wholly-owned subsidiary of the Company, provided, however that nothing contained in this Section 9(iv)shall restrict the Board of Directors of the Company from taking any action necessary to fulfill its fiduciary duties; (v) voluntarily dissolve, liquidate or wind up or carry out any partial liquidation or distribution or transaction in the nature of a partial liquidation or distribution; (vi) take any action to cause an amendment to the Certificate of Incorporation or By-Laws of the Company which would affect the rights or obligations of any of the Stockholders; (vii) enter into any agreements or transactions between the Company or any affiliate thereof and the CEO, CFO, COO and President of the Company or any Management Group Stockholder or any of their respective affiliates; (viii) issue or agree to issue any shares of preferred equity at any price or any shares of common equity or any security, right, option or warrant convertible into or exercisable for, shares of the Company's stock, in either case, at a lower per share price than that paid by the Investor Group for its Shares; provided, however that this Section 9(viii), shall not apply to (a) shares of Common Stock or warrants, options, rights or securities convertible into or exchangeable for capital stock of the Company issued as consideration in the acquisition by the Company of the stock or assets of another company, provided that such acquisition and issuance has been approved by the Board of Directors of the Company, including the Fund Director, (b) any shares of Common Stock or warrants, options, rights or securities convertible into or exchangeable for capital stock of the Company issued in connection with any pro rata stock split, stock dividends or similar event affecting the Common Stock, and (c) shares of Common Stock issued pursuant to the exercise of currently outstanding warrants or options or any options which may be issued under the Company's currently existing Stock Option Plan; (ix) increase the number of persons serving on the Board; (x) make any significant changes in the Company's or its subsidiaries' accounting policies, unless required by law; (xi) permit material deviations from the business strategy provided to the Investor Group, attached hereto as Schedule C (the "Business Plan"), such as any expansion of the Company's business outside of Brazil or any change in the fundamental nature of the business of the Company as conducted on the Closing -9- 10 Date (i.e., Hamburger Fast Food Restaurants); (xii) change any component of the current compensation of the CEO, CFO, COO and President of the Company, which compensation shall include salary, bonus, stock options and fringe benefits; (xiii) declare any dividends; (xiv) adopt or amend any stock option, stock purchase or similar plan. 10. Covenants of the CEO. For a period of five years from the Closing Date or for so long as Peter van Voorst Vader is an officer, director or consultant of the Company, whichever is shorter, provided that in no event shall such period be less than three years from the Closing Date, Peter van Voorst Vader shall not, directly or indirectly, without the prior written consent of the Investor Group, (i) sell, in any three year period, more than 100,000 of the Shares directly or indirectly owned (beneficially or of record) or controlled by him, including the Shares owned of record by Shampi Investment A.E.C. but beneficially owned by Peter van Voorst Vader or (ii) sell at any time or from time to time after the Closing Date, an aggregate of more than 300,000 of the Shares directly or indirectly owned (beneficially or of record) or controlled by him, including the Shares owned of record by Shampi Investment A.E.C. but beneficially owned by Peter van Voorst Vader. 11. Additional Rights. In the event that, at the end of fiscal 1999, 2000 or 2001, the Company has failed to achieve 75% of projected cumulative EBITDA as set forth in Schedule D hereto measured for the period from January 1, 1997 to December 31, 1999, 2000 or 2001, as the case may be, the Investor Group shall have the right to (A) nominate 2 additional Board members within thirty days of the completion of the audited financial statements for fiscal 1999, (B) 1 additional Board member within thirty days of the completion of the audited financial statements for fiscal 2000 and (C) in the event that the Investor is not entitled to nominate an additional Board member pursuant to Section (B) hereof, 1 additional Board member within thirty days of the completion of the audited financial statements for fiscal 2001, as the case may be, and the Company and each of the Management Group Stockholders, in their capacity as stockholders, officers and directors, to the extent applicable, agree to take any and all action, including voting their respective shares of Common Stock for such nominee, causing the resignation of any Management Group Stockholder nominee, if applicable, and expanding the number of Board members, all as may be required in accordance with this Section 11, in order to cause such nominee to be elected to the Board; provided, however that if the average per share price of the Common Stock for the thirty trading days ending on December 31, 1999, December 31, 2000 or December 31, 2001, as the case may be, is $6.00 or higher, $7.00 or higher, or $8.00 or higher, respectively, the Investor Group shall not have the right to nominate additional Board members that it otherwise has the right to nominate on such date. Notwithstanding the provisions of Section 8 hereof, the Management Group Stockholders agree that if the Investor Group is entitled under this Section 11 to (i) nominate 2 additional Board members pursuant to 11(A) above, a nominee of the Management Group Stockholders who is serving as a member of the Board at such time shall resign and the number of members of the Board shall be increased by one; (ii) nominate 1 additional Board member pursuant to 11(B) above, a nominee of the Management Group Stockholders who is serving as a member of the Board at such time shall resign; and (iii) nominate 1 additional Board member pursuant to 11(C) above, a nominee of the Management Group Stockholders who is serving as a member of the Board at such time shall resign. For purposes of (i), (ii) and (iii), the nominee of the Management Group Stockholders who shall be required to resign shall be designated by the Management Group Stockholders; provided, however, that in the event the -10- 11 Management Group Stockholders can not agree as to which member of the Board shall be required to resign, the Investor Group, in its sole discretion may designate such member and such designee shall resign. 12. Investor Group Action. Any action, consent or approval required to be obtained or taken by the Investor Group shall be deemed to have been obtained or taken if Shares representing 662/3% of the Shares held by the Investor Group take such action or provide such consent or approval. 13. Existing Voting Agreement. The Company and certain of the Management Group Stockholders, effective as of March 19, 1996 had entered into an agreement (the "Original Agreement") with respect to the voting of the shares of Common Stock owned by each of such Management Group Stockholders and a limitation, effective through September 1996, on the disposition of shares owned by Shampi Investment, A.E.C (the "Limitation"), which Original Agreement, with the exception of the Limitation which remained in full force and effect, was replaced and superseded in its entirety by an agreement (the "Voting Agreement") dated as of March 19, 1996, by and between, Lawrence Burstein, John Cattier, Barry L. Goldin and Barry W. Ridings, Shampi Investments, A.E.C. and BigBurger Ltda. The Company and the Management Group Stockholders agree that the Limitation and the Voting Agreement are hereby replaced and superseded in their entirety by this Agreement. 14. Employment Agreements. Each of the Management Group Stockholders party to a severance agreement ("Severance Agreement") with the Company hereby agrees that the acquisition by the Fund of the Shares will not constitute a Change of Control, as such term is defined in each Severance Agreement. 15. No Waiver. Any waiver of a breach of any of the terms of this Agreement shall not operate as a waiver of any other breach of such terms or conditions or any other terms or conditions, nor shall any failure to enforce any provision of this Agreement operate as a waiver of such provision or any other provision. 16. Successor and Assigns. The rights, benefits and obligations of the Company under this Agreement and all covenants and agreements hereunder shall inure to the benefit of and be enforceable by or against its successors and assigns. Subject to the limitations set forth herein, this Agreement shall inure to the benefit and be binding upon the Stockholders' heirs, successors, assigns and transferees, provided that the requirements set forth in Section 5 hereof are satisfied. 17. (A) Company Indemnification. The Company shall, with respect to the representations, warranties, agreements and covenants made by it herein or in any certificate or other instrument delivered by it pursuant hereto or in connection with the transactions contemplated hereby, indemnify, defend and hold the Investor Group harmless against all liability, loss or damage, together with all reasonable costs and expenses related thereto (including reasonable legal and accounting fees and expenses), arising from the untruth, inaccuracy or breach of any of such representations, warranties, agreements or covenants of the Company. (B) Management Group Stockholder Indemnification. Each Management Group Stockholder shall jointly and severally, with respect to the representations, warranties and -11- 12 agreements made by the Management Group Stockholders herein or in any certificate or other instrument delivered by them pursuant hereto or in connection with the transactions contemplated hereby, indemnify, defend and hold the Investor Group harmless against all liability, loss or damage, together with all reasonable costs and expenses related thereto (including reasonable legal and accounting fees and expenses), arising from the untruth, inaccuracy or breach of any such representations, warranties, agreements or covenants of the Management Group Stockholders. 18. Remedies. In case any one or more of the covenants set forth in this Agreement shall have been breached by the Company or any of the Management Group Stockholders, the Investor Group may proceed to protect and enforce its rights either by suit in equity and/or by action at law, including, but not limited to, an action for damages as a result of any such breach and/or an action for specific performance of any such covenant contained in this Agreement. 19. Entire Agreement. This Agreement constitutes the entire agreement among the parties. This Agreement may not be amended or modified, except in writing, and signed by (i) the Company, (ii) holders of sixty-six and two-thirds percent (66-2/3%) of the Shares then held by the Investor Group and (iii) holders of sixty-six and two-thirds percent (66-2/3%) of the Shares then held by the Management Group Stockholders. 20. Severability. If any provision of this Agreement or the application thereof is held invalid or unenforceable, the invalidity or unenforceability thereof shall not affect any other provisions or applications of this Agreement which can be given effect without the invalid or unenforceable provision or application. To that end, the provisions of this Agreement are to be severable. 21. Termination. The provisions of this Agreement shall terminate when the Investor Group no longer holds more than 750,000 of the outstanding shares of Common Stock (including shares obtainable upon the exercise of the Warrants). 22. Notice. All notices, request, consents and other communications hereunder to any party shall be deemed sufficient if contained in a written instrument delivered in person or duly sent by first class certified mail, postage prepaid, addressed to such party at the address set forth below or such other address as may hereafter be designated in writing in accordance with the provisions of this Section 22: (i) if to the Company, to Brazil Fast Food Corp. Praia do Flamengo 200-22(degree): Andar CEP 22210-030 Rio de Janeiro, Brazil Attention: Peter van Voorst Vader -12- 13 with a copy to: Cooperman Levitt Winikoff Lester & Newman, P.C. 800 Third Avenue New York, NY 10022 Attn: Ira Roxland, Esq. (ii) if to the Fund, to AIG Latin America Equity Partners, Ltd. c/o AIG Latin America Investment Advisors, Inc. 80 Pine Street, 14th Floor New York, NY 10005 Attention: Alberto Marcel with a copy to: Curtis, Mallet-Prevost, Colt & Mosle 101 Park Avenue, 35th Floor New York, NY 10178 Attn: Lawrence Goodman, Esq. (iii) if to a Management Group Stockholder, to the registered address of such Stockholder, as such appears on the record books of the Company All such notices, requests, consents and other communications shall be deemed to have been received (a) in the case of personal delivery, on the date of such delivery and (b) in the case of mailing, on the third business day following the date of such mailing. 23. Governing Law. This Agreement shall be governed by and construed in accordance with the internal laws of the State of New York (without giving effect to its conflicts of laws principles). -13- 14 IN WITNESS WHEREOF, the Company has caused this Agreement to be signed and each Stockholder has executed this Agreement as of the date shown below. BRAZIL FAST FOOD CORP. Dated: August 11, 1997 By: /s/ P. Van Voorst Vader ------------------------------ Name: P. Van Voorst Vader Title: Chief Executive Officer AIG LATIN AMERICA EQUITY PARTNERS, LTD. Dated: August 11, 1997 By: /s/ Alberto Marcel ----------------------------- Name: Alberto Marcel Title: Chief Executive Officer -14- 15 SCHEDULE A MANAGEMENT GROUP STOCKHOLDERS Dated: August 11, 1997 /s/ Peter van Voorst Vader ---------------------------------- Peter van Voorst Vader Dated: August 11, 1997 /s/ Rogerio Carlos Lamim Braz ---------------------------------- Rogerio Carlos Lamim Braz Dated: August 11, 1997 /s/ Marcos Bastos Rocha ---------------------------------- Marcos Bastos Rocha Dated: August 11, 1997 /s/ Omar Carneiro da Cunha ---------------------------------- Omar Carneiro da Cunha Dated: August 11, 1997 /s/ Ian S. Barnett ---------------------------------- Ian S. Barnett Dated: August 11, 1997 /s/ Lawrence Burstein ---------------------------------- Lawrence Burstein Dated: August 11, 1997 /s/ Jose Ricardo Bosquet Bomeny ---------------------------------- Jose Ricardo Bosquet Bomeny Dated: August 11, 1997 /s/ Peter van Voorst Vader ---------------------------------- Shampi Investment A.E.C. Dated: August 11, 1997 /s/ Lawrence Burstein ---------------------------------- Trinity Capital Dated: August 11, 1997 /s/ John Cattier ---------------------------------- John Cattier Dated: August 11, 1997 /s/ Barry Goldin ---------------------------------- Barry Goldin Dated: August 11, 1997 /s/ Barry W. Ridings ---------------------------------- Barry W. Ridings Dated: August 11, 1997 /s/ Jose Ricardo Bosquet Bomeny ---------------------------------- BigBurger Ltda. Dated: August 11, 1997 /s/ Omar Carneiro da Cunha ---------------------------------- Seaview Venture Group
-15- 16 SCHEDULE B MANAGEMENT GROUP STOCKHOLDERS OWNERSHIP OF SHARES, WARRANTS AND OPTIONS
NAME SHARES WARRANTS OPTIONS ---- ------ --------- ------- Peter van Voorst Vader 23,000 185,000 Rogerio Carlos Lamim Braz 5,000 120,000 Marcos Bastos Rocha 35,000 Omar Carneiro da Cunha 20,000 50,000 Ian S. Barnett 11,111 35,000 Lawrence Burstein 225,556 100,000 35,000 Jose Ricardo Bosquet Bomeny 35,000 Shampi Investment A.E.C. 453,450 Trinity Capital 11,111 John Cattier 27,668 39,000 Barry Goldin 187,875 100,000 Barry W. Ridings 13,779 39,000 BigBurger Ltda 1,520,000 Seaview Venture Group 453,450
-16- EX-99.5 6 WARRANT AGREEMENT 1 WARRANT AGREEMENT WARRANT AGREEMENT, dated as of this 11th day of August, 1997, between AIG Latin America Equity Partners, Ltd., a Bermuda company (the "Fund") and Brazil Fast Food Corp. (the "Company"). Capitalized terms used herein and not otherwise defined shall have the meanings ascribed to them in the Stock Purchase Agreement, dated as of the date hereof, between the Fund and the Company (the "Stock Purchase Agreement"). WHEREAS, the Fund and the Company are entering into the Stock Purchase Agreement dated the date hereof; and WHEREAS, pursuant to the Stock Purchase Agreement, the Fund has agreed to purchase and the Company has agreed to sell 1,500,000 shares of common stock, $0.0001 par value per share of the Company (the "Common Stock"); and WHEREAS, pursuant to the Stock Purchase Agreement, the Company has agreed to issue to the Fund five-year warrants to purchase 250,000 shares of Common Stock (the "Warrants") at an exercise price of $4.00 per share, subject to anti-dilution and other adjustments pursuant to the provisions hereof. NOW, THEREFORE, in consideration of the Fund executing and delivering the Stock Purchase Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and the Fund hereby agree as follows: SECTION 1. Warrants and Issuance of Warrant Certificates The Fund is entitled to subscribe for and purchase from the Company, at any time or from time to time subsequent to August 11, 1997 and prior to 5:00 p.m. on August 11, 2002, New York time (the "Exercise Period") initially an aggregate of 250,000 shares of fully paid, validly issued and nonassessable shares of Common Stock, at a purchase price of $4.00 per share, subject to adjustment as provided herein (the "Exercise Price"). (a) Each Warrant shall initially entitle the person in whose name such Warrant is registered on the books of the Company (the "Registered Holder") to purchase at the Exercise Price therefor, one share of Common Stock upon 2 the exercise thereof, subject to modification and adjustment as hereinafter provided. (b) Upon execution of this Agreement, one Warrant Certificate (substantially in form attached hereto as Exhibit A) representing 250,000 Warrants to purchase initially up to an aggregate of 250,000 shares of Common Stock (subject to modification and adjustment as hereinafter provided) shall be executed by the Company and delivered to the Fund. (c) From time to time, during the Exercise Period, as the case may be, the Company shall countersign and deliver Warrant Certificates in required denominations of one or whole number multiples thereof to the person entitled thereto in connection with any transfer or exchange permitted under this Agreement and the Stockholders' Agreement, dated as of the date hereof, between the Fund, the Company and the persons named in Schedule A thereto (the "Stockholders' Agreement"). Except as provided in Section 7 hereof, no Warrant Certificates shall be issued except (i) Warrant Certificates initially issued pursuant to Section 1(b) hereof, (ii) Warrant Certificates issued upon any transfer or exchange of Warrants, and (iii) Warrant Certificates issued to reflect any adjustment or change in the Exercise Price and the number of shares of Common Stock purchasable upon exercise of the Warrants therefor made pursuant to provisions of this Agreement. SECTION 2. Form and Execution of Warrant (a) The Warrant Certificates shall be substantially in the form annexed hereto as Exhibit A (the provisions of which are hereby incorporated herein) and may have such letters, numbers or other marks of identification or designation and such legends, summaries or endorsements printed, lithographed or engraved thereon as the Company may deem appropriate and as are not inconsistent with the provisions of this Agreement, or as may be required to comply with any law or with any rule or regulation made pursuant thereto or to conform to usage. The Warrant Certificates shall be dated the date of issuance thereof (whether upon initial issuance, transfer, exchange or in lieu of mutilated, lost, stolen or destroyed Warrant Certificates). (b) Warrant Certificates shall be executed on behalf of the Company by its Chairman of the Board, President or any Vice President and by its Treasurer or an Assistant Treasurer or its Secretary or an Assistant 2 3 Secretary, by manual signatures or by facsimile signatures printed thereon, and shall have imprinted thereon a manual or a facsimile of the Company's seal. SECTION 3. Election to Exercise The Warrants may be exercised in whole or in part at any time during the Exercise Period by delivery of the Election to Exercise attached hereto as Exhibit B duly executed (and, if this Warrant is being exercised in whole, by the surrender of the Warrant Certificate representing such Warrant) to the Company at its office at Praia do Flamenco, 200-22(degree) Andar, CEP 22210-030, Rio de Janeiro, Brazil, Attention: President, or such other place as may be designated in writing by the Company, together with a certified or bank cashier's check payable to the order of the Company in an amount equal to the Exercise Price multiplied by the number of shares of Common Stock covered by such exercise. SECTION 4. Exercise Upon exercise of the Warrants in whole or in part, the Registered Holder shall be deemed to be the holder of record of the shares of Common Stock issuable upon such exercise, notwithstanding that the stock transfer books of the Company shall then be closed or certificates representing such shares of Common Stock shall not then have been physically delivered to the Registered Holder. As soon as practicable after each such exercise of the Warrants, but not later than five days from the date of such exercise, the Company shall issue and deliver to the Registered Holder a certificate or certificates for the shares of Common Stock issuable upon such exercise, registered in the name of the Registered Holder. The Company shall not be required to issue stock certificates representing fractions of shares, but shall, in respect of any final fraction of a share, make a payment in cash in an amount equal to the same fraction (calculated to the nearest 1/100th of a share) of the closing sale price per share of the Common Stock on the principal public trading market on which the Common Stock is then traded, or, if the Common Stock is not then traded on any public trading market, in an amount determined in good faith by the Company's Board of Directors. SECTION 5. Reservation of Shares; Taxes (a) The Company covenants that it will at all times reserve and keep available out of its authorized Common Stock, solely for the purpose of issue upon exercise of the Warrants, such number of shares of Common Stock as shall then be issuable upon exercise of the Warrants. The Company covenants that all shares of Common Stock which shall be issuable upon exercise of the Warrants shall, at the time of delivery thereof and upon payment of the Exercise Price with respect thereto, be duly and validly issued and fully paid and non-assessable and free from all preemptive or similar rights, taxes, liens, charges and Encumbrances, and that upon issuance such shares shall be listed on each securities exchange, if any, on which the other shares of outstanding Common Stock of the Company are then listed. 3 4 (b) The Company shall pay all documentary, stamp or similar taxes and other governmental charges that may be imposed with respect to the issuance of Warrants, or the issuance or delivery of any shares of Common Stock upon the exercise of the warrants. SECTION 6. Exchange and Registration of Transfer (a) The Warrants are transferable, subject to the provisions of the Stockholders' Agreement. (b) Warrant Certificates may be exchanged for other Warrant Certificates representing an equal aggregate number of Warrants, or, subject to the limitations set forth in Section 6(h) hereof, may be transferred in whole or in part. Warrant Certificates to be so exchanged shall be surrendered to the Company at its office at Praia do Flamenco, 200-22(degree) Andar, CEP 22210-030, Rio de Janeiro, Brazil, Attention: President, and the Company shall execute, issue and deliver in exchange therefor to the Registered Holder a new Warrant Certificate or Certificates representing an equal aggregate number of Warrants. (c) The Company shall keep, at such office, books in which, subject to such reasonable regulations as it may prescribe, it shall register Warrant Certificates, and the transfer thereof. Upon due presentment for registration of transfer of any Warrant Certificate at such office, the Company shall execute and shall issue and deliver to the Registered Holder a new Warrant Certificate or Certificates representing an equal aggregate number of Warrants. (d) With respect to any Warrant Certificates presented for registration or transfer, or for exchange or exercise, the subscription or assignment form accompanying the Warrant Certificate(s), as the case may be, attached thereto shall be duly endorsed or be accompanied by a written instrument or instrument of transfer or subscription, in form satisfactory to the Company, duly executed by the Registered Holder thereof or his attorney duly authorized in writing. (e) No service charge shall be made for any exchange of, registration or transfer of Warrant Certificates. 4 5 (f) All Warrant Certificates surrendered for exercise or for exchange shall be promptly canceled by the Company. (g) Prior to due presentment for registration or transfer thereof, the Company may deem and treat the Registered Holder of any Warrant Certificate as the absolute owner of each Warrant represented thereby (notwithstanding any notations of ownership or writing thereon made by anyone other than the Company) for all purposes and shall not be affected by any notice to the contrary. (h) The Warrants represented by the Warrant Certificates may not be exercised nor may any interest in the Warrants represented by the Warrant Certificates be sold, assigned, pledged, hypothecated, encumbered or in any other manner transferred or disposed of, in whole or in part, except in compliance with applicable United States federal and state securities or Blue Sky laws and the terms and conditions hereof. Each Warrant Certificate shall bear the legend set forth in Section 11 hereof. Each share of Common Stock issued upon exercise of the Warrants shall bear a legend substantially in the form set forth in Section 11 hereof. Any Warrant Certificate issued at any time in exchange or substitution for any Warrant Certificate bearing such legend shall also bear such legend unless, in the opinion of legal counsel for the Company, the Warrants represented thereby need no longer be subject to the restriction contained herein. The provisions of this Section 6(h) shall be binding upon all subsequent Registered Holders of the Warrant Certificates. SECTION 7. Loss or Mutilation. Upon receipt by the Company of evidence satisfactory to it of the loss, theft, destruction or mutilation of any Warrant Certificate and (in the case of loss, theft or destruction) of indemnity satisfactory to it, and (in case of mutilation) upon surrender and cancellation thereof, the Company shall execute and deliver in lieu thereof a new Warrant Certificate to the Registered Holder thereof representing an equal aggregate number of Warrants. SECTION 8. Adjustment of Purchase Price (a) Adjustments to Exercise Price for Diluting Issues. (i) Special definitions. For purposes of this Subsection 8(a), the following definitions shall apply: (A) "Option" shall mean rights, options or warrants to subscribe for, purchase or otherwise acquire Common Stock or Convertible Securities, excluding (x) rights or options granted to employees, directors or consultants of the Company pursuant to the currently existing stock option plan (the "Stock Option Plan") and (y) outstanding warrants evidencing the 5 6 right of the holders thereof to purchase an aggregate of 5,379,250 shares of Common Stock, as more fully described in Schedule 4.3 of the Stock Purchase Agreement (provided that, for purposes of this Subsection 8(a)(i)(A), all shares of Common Stock issuable upon exercise of options granted or available for grant under the Stock Option Plan and the warrants described in this subparagraph (A), shall be deemed to be outstanding). (B) "Original Issue Date" shall mean the date on which the Warrants are first issued. (C) "Convertible Securities" shall mean any evidences of indebtedness, shares or other securities directly or indirectly convertible into or exchangeable for Common Stock. (D) "Additional Shares of Common Stock" shall mean all shares of Common Stock issued (or, pursuant to Subsection 8(a)(iii) below, deemed to be issued) by the Company after the Original Issue Date, other than shares of Common Stock issued or issuable upon the exercise of options excluded from the definition of "Option" in Subsection 8(a)(i)(A). (E) "Rights to Acquire Common Stock" (or "Rights") shall mean all rights issued by the Company to acquire common stock whether by exercise of a warrant, option or similar call or conversion of any existing instruments, in either case for consideration fixed, in amount or by formula, as of the date of issuance. (ii) No Adjustment of Exercise Price. No adjustment in the number of shares of Common Stock into which the warrants are convertible shall be made, by adjustment in the applicable Exercise Price thereof: (a) unless the consideration per share (determined pursuant to Subsection 8(a)(v) below) for an Additional Share of Common Stock issued or deemed to be issued by the Company is less than the applicable Exercise Price in effect on the date of, and immediately prior to, the issue of such additional shares, or (b) if prior to such issuance, the Company receives written notice from the Registered Holders of at least sixty-six and two-thirds percent (66-2/3%) of the then outstanding Warrants agreeing that no such adjustment shall be made as the result of the issuance of Additional Shares of Common Stock. (iii) Issue of Securities Deemed Issue of Additional Shares of Common Stock. If the Company at any time or from time to time after the Original Issue Date shall issue any Options or Convertible Securities or other Rights to Acquire Common Stock, then the maximum number of shares of Common Stock (as set forth in the instrument relating thereto without regard to any provision contained therein for a subsequent adjustment of such number) issuable upon the exercise of such Options, Rights or, in the case of Convertible Securities, the conversion or exchange of such Convertible Securities, shall be deemed to be Additional Shares of Common Stock issued as of the time of such issue, provided that Additional Shares of Common Stock shall not be deemed to have been issued unless the consideration per share (determined pursuant to Subsection 8(a) (v) hereof) of such Additional Shares of Common Stock would be less than the applicable Exercise Price in effect on the date of and immediately prior to such issue, or such record date, as the case may be, and provided further that in any such case in which Additional Shares of Common Stock are deemed to be issued: 6 7 (A) No further adjustment in the Exercise Price shall be made upon the subsequent issue of shares of Common Stock upon the exercise of such Rights or conversion or exchange of such Convertible Securities; (B) Upon the expiration or termination of any unexercised Option or Right, the Exercise Price shall not be readjusted, but the Additional Shares of Common Stock deemed issued as the result of the original issue of such Option or Right shall not be deemed issued for the purposes of any subsequent adjustment of the Exercise Price; and (C) In the event of any change in the number of shares of Common Stock issuable upon the exercise, conversion or exchange of any Option, Right or Convertible Security, including, but not limited to, a change resulting from the anti-dilution provisions thereof, the Exercise Price then in effect shall forthwith be readjusted to such Exercise Price as would have been obtained had the adjustment that was made upon the issuance of such Option, Right or Convertible Security not exercised or converted prior to such change been made upon the basis of such change, but no further adjustment shall be made for the actual issuance of Common Stock upon the exercise or conversion of any such Option, Right or Convertible Security. (iv) Adjustment of Exercise Price upon Issuance of Additional Shares of Common Stock. If the Company shall at any time after the Original Issue Date issue Additional Shares of Common Stock (including Additional Shares of Common Stock deemed to be issued pursuant to Subsection 8(a)(iii), but excluding shares issued as a dividend or distribution as provided in Subsection 8(c) or upon a stock split or combination as provided in Subsection 8(b)), without consideration or for a consideration per share less than the applicable Exercise Price in effect on the date of and immediately prior to such issue, then and in such event, such Exercise Price shall be reduced, concurrently with such issue to a price (calculated to the nearest cent) determined by multiplying such Exercise Price by a fraction, (a) the numerator of which shall be (1) the number of shares of Common Stock outstanding immediately prior to such issue plus (2) the number of shares of Common Stock which the aggregate consideration received by the Company for the total number of Additional Shares of Common Stock so issued would purchase at such Exercise Price; and (b) the denominator of which shall be (1) the number of shares of Common Stock outstanding immediately prior to such issue plus (2) the number of such Additional Shares of Common Stock so issued. Notwithstanding the foregoing, the applicable Exercise Price shall not be reduced if the amount of such reduction would be an amount less than $.01, but any such amount shall be carried forward and reduction with respect thereto made at the time of and together with any subsequent reduction which, together with such amount and any other amount or amounts so carried forward, shall aggregate $.01 or more. (v) Determination of Consideration. For purposes of this Subsection 8(a), the consideration received by the Company for the issue of any Additional Shares of Common Stock shall be computed as follows: 7 8 (A) Cash and Property: Such consideration shall: (1.) insofar as it consists of cash, be computed at the aggregate amount of cash received by the Company, excluding amounts paid or payable for accrued interest or accrued dividends; (2.) insofar as it consists of property other than cash, be computed at the fair market value thereof at the time of such issue, as determined in good faith by the Board of Directors; and (3.) in the event Additional Shares of Common Stock are issued together with other shares or securities or other assets of the Company for consideration which covers both, be the proportion of such consideration so received, computed as provided in clauses (1.) and (2.) above, as determined in good faith by the Board of Directors. (B) Options, Rights and Convertible Securities. The consideration per share received by the Company for Additional Shares of Common Stock deemed to have been issued pursuant to Subsection 8(a)(iii), relating to Options, Rights and Convertible Securities, shall be determined by dividing - the total amount, if any, received or receivable by the Company as consideration for the issue of such Options, Rights or Convertible Securities, plus the minimum aggregate amount of additional consideration (as set forth in the instruments relating thereto, without regard to any provision contained therein for a subsequent adjustment of such consideration) payable to the Company upon the exercise of such Options, Rights or the conversion or exchange of such Convertible Securities, by - the maximum number of shares of Common Stock (as set forth in the instruments relating thereto, without regard to any provision contained therein for a subsequent adjustment of such number) issuable upon the exercise of such Options or the conversion or exchange of such Convertible Securities. (b) Adjustment for Stock Splits and Combinations. If the Company shall at any time or from time to time after the Original Issue Date effect a subdivision of the outstanding Common Stock, the Exercise Price then in effect immediately before that subdivision shall be proportionately decreased. If the Company shall at any time or from time to time after the Original Issue Date combine the outstanding shares of Common Stock, the Exercise Price then in effect immediately 8 9 before the combination shall be proportionately increased. Any adjustment under this paragraph shall become effective at the close of business on the date the subdivision or combination becomes effective. (c) Adjustment for Certain Dividends and Distributions. In the event the Company at any time, or from time to time after the Original Issue Date shall make or issue, a dividend or other distribution payable in Additional Shares of Common Stock, then and in each event the Exercise Price shall be decreased as of the time of such issuance, by multiplying the Exercise Price by a fraction: - the numerator of which shall be the total number of shares of Common Stock issued and outstanding immediately prior to the time of such issuance, and - the denominator of which shall be the total number of shares of Common Stock issued and outstanding immediately prior to the time of such issuance plus the number of shares of Common Stock issuable in payment of such dividend or distribution. (d) Adjustments for Other Dividends and Distributions. In the event the Company at any time or from time to time after the Original Issue Date shall make or issue a dividend or other distribution payable in securities of the Company other than shares of Common Stock, then and in each such event provision shall be made so that the Registered Holders of the Warrants shall receive upon conversion thereof in addition to the number of shares of Common Stock receivable thereupon, the amount of securities of the Company that they would have received had their Warrants been converted into Common Stock on the date of such event and had thereafter, during the period from the date of such event to and including the conversion date, retained such securities receivable by them as aforesaid during such period given application to all adjustments called for during such period, under this paragraph with respect to the rights of the Registered Holders of the Warrants. (e) Adjustment for Merger or Reorganization, etc. in case of any consolidation or merger of the Company with or into another corporation or the sale of all or substantially all of the assets of the Company to another corporation, 1. if the surviving entity shall consent in writing to the following provisions, then each Warrant shall thereafter be convertible into the kind and amount of shares of stock or other securities or property to which a holder of the number of shares of Common Stock of the Company deliverable upon conversion of the Warrants would have been entitled upon such consolidation, merger or sale; and, in such case, appropriate adjustment (as determined in good faith by the Board of Directors) shall be made in the application of the provisions of this Section 8 with respect to the rights and interest thereafter of the Registered Holders of the Warrants, to the end that the provisions of this Section 8 (including provisions 9 10 with respect to changes in and other adjustments of the Exercise Price) shall thereafter be applicable, as nearly as reasonably may be, in relation to any shares of stock or other property thereafter deliverable upon the conversion of the Warrants; or 2. if the surviving corporation shall not so consent, the each registered Holder of the Warrants, may, after receipt of the notice specified in subsection (g), elect to convert the Warrants into shares of Common Stock as provided in Section 4 hereof. (f) Adjustment for Reclassification, Exchange, or Substitution. If the Common Stock issuable upon the conversion of the Warrants shall be changed into the same or a different number of shares of any class or classes of stock, whether by capital reorganization, reclassification, or otherwise (other than a subdivision or combination of shares or stock dividend provided for above, or a reorganization, merger, consolidation, or sale of assets for above), then and in each such event the Registered Holders of each Warrant shall have the right thereafter to convert such Warrant into the kind and amount of shares of stock and other securities and property receivable upon such reorganization, reclassification, or other change, by holders of the number of shares of Common Stock into which such Warrants might have been converted immediately prior to such reorganization, reclassification, or change, all subject to further adjustment as provided herein. (g) Notice of Record Date. In the event: 1. that the Company declares a dividend (or any other distribution) on its Common Stock payable in Common Stock or other securities of the Company; 2. that the Company subdivides or combines its outstanding shares of Common Stock; 3. of any reclassification of the Common Stock of the Company (other than a subdivision or combination of its outstanding shares of Common Stock or a stock dividend or stock distribution thereon), or of any consolidation or merger of the Company into or with another corporation, or of the sale of all or substantially all of the assets of the Company; or 4. of the involuntary or voluntary dissolution, liquidation or winding-up of the Company; then the Company shall cause to be filed at its principal office, and shall cause to be mailed to the Registered Holders of the Warrants at their last addresses as shown on the records of the 10 11 Company, at least ten days prior to the record date specified in (A) below or twenty days before the date specified in (B) below, a notice stating (A) the record date of such dividend, distribution, subdivision or combination, or, if a record is not to be taken, the date as of which the holders of Common Stock of record to be entitled to such dividend, distribution, subdivision or combination are to be determined, or (B) the date on which such reclassification, consolidation, merger, sale, dissolution, liquidation or winding-up is expected to become effective, and the date as of which it is expected that holders of Common Stock of record shall be entitled to exchange their shares of Common Stock for securities or other property deliverable upon such reclassification, consolidation, merger, sale, dissolution or winding-up. (h) In addition to the foregoing, the Exercise Price of the Warrants shall be subject to an aggregate adjustment of $0.75 per share as follows: (i) If the Company fails to achieve 85% of projected EBITDA for the three year period January 1, 1997 through December 31, 1999, as set forth in Schedule A hereto, the Exercise Price shall be reduced by $0.25 per share; provided, however that if the average per share price of the Common Stock for the thirty trading days ending on December 31, 1999 is $6.00 or higher, the exercise price of the Warrants shall not be adjusted under this Section h(i). (ii) If the Company fails to achieve 85% of projected EBITDA for the one year period January 1, 2000 through December 31, 2000, as set forth in Schedule A hereto, the Exercise Price shall be reduced by an additional $0.25 per share; provided, however that if the average per share price of the Common Stock for the thirty trading days ending on December 31, 2000 is $7.00 or higher, the exercise price of the Warrants shall not be adjusted under this Section h(ii). (iii)If the Company fails to achieve 85% of projected EBITDA for the one year period January 1, 2001 through December 31, 2001, as set forth in Schedule A hereto, the Exercise Price shall be reduced by an additional $0.25 per share; provided, however that if the average per share price of the Common Stock for the thirty trading days ending on December 31, 2001 is $8.00 or higher, the exercise price of the Warrants shall not be adjusted under this Section h(iii). 11 12 SECTION 9. Other Dilutive Events. In case any event shall occur as to which the provisions of Sections 8 are not strictly applicable but the failure to make any adjustment would not fairly protect the purchase rights represented by the Warrants in accordance with the essential intent and principles of such Section, then, in each such case, the Company shall make a good faith adjustment to the Exercise Price and to the number of shares of Common Stock into which the Warrants are exercisable in accordance with the intent of Section 8 hereof and, upon the written request of the Registered Holder(s), shall appoint a firm of independent certified public accountants of recognized national standing (which may be the regular auditors of the Company), which shall give their opinion upon the adjustment, if any, on a basis consistent with the essential intent and principles established in Section 8 hereof, necessary to preserve, without dilution, the purchase rights represented by the Warrants. Upon receipt of such opinion, the Company shall promptly mail a copy thereof to the Registered Holder(s) and shall make the adjustments described therein. SECTION 10. Covenants The Company will not, by amendment to its certificate of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Agreement. Without limiting the generality of the foregoing, the Company (a) will not increase the par value of any shares of stock receivable upon the exercise of the Warrants above the amount payable therefor upon such exercise, (b) will take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable shares of stock upon the exercise of the Warrants from time to time outstanding, and (c) without the prior written consent of the Registered Holder(s), will not issue any security providing for anti-dilution protection of such security. SECTION 11. Legend. The Warrants and the shares of Common Stock issuable upon exercise of the Warrants have not been registered under the Act as of the date hereof. Subject to the provisions of Section 12 hereof, if on the date of exercise of the Warrants, the Common Stock underlying the Warrants shall not have been registered under the Securities Act, then upon such exercise, in part or in whole, of the Warrants, certificates representing the shares of Common Stock underlying the Warrants and any of the other securities issuable upon exercise of the Warrants shall bear the following legend: 12 13 THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE SECURITIES LAWS AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR, UNLESS, IN THE OPINION OF COUNSEL, IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER, SUCH OFFER, SALE, OR TRANSFER IS EXEMPT FROM REGISTRATION OR IS OTHERWISE IN COMPLIANCE WITH THE ACT AND SUCH LAWS. SECTION 12. Registration Rights The Company and the Fund acknowledge and agree that the Warrants and the shares of Common Stock underlying the Warrants are subject to a Registration Rights Agreement between the Fund and the Company, dated as of the date hereof. SECTION 13. Notices All notices, requests, demands and other communications hereunder shall be in writing and shall be deemed given if delivered personally or mailed by certified or registered mail, postage prepaid, return receipt requested, or delivered to a nationally recognized next business day courier for delivery on the next business day, or by facsimile, with a copy sent as aforesaid and in any instance addressed as follows: (i) if to the Fund AIG Latin America Equity Partners, Ltd. c/o Latin America Investment Advisors, Inc. 80 Pine Street, 14th Floor New York, NY 10005 Attn: Alberto Marcel with a copy to: Curtis, Mallet-Prevost, Colt & Mosle 101 Park Avenue, 35th Floor New York, NY 10178 Attn: Lawrence Goodman, Esq. (ii) if to the Company Brazil Fast Food Corp. Praia do Flamenco 200-22(degree): Andar CEP 22210-030 Rio de Janeiro, Brazil Attention: Peter van Voorst Vader 13 14 with a copy to: Cooperman Levitt Winikoff Lester & Newman, P.C. 800 third Avenue New York, NY 10022 Attn: Ira Roxland, Esq. SECTION 14. Modification of Agreement This Agreement may not be modified, supplemented or altered in any respect except with the consent in writing of the Registered Holders representing not less than 51% of the Warrants and the Company; provided, further, that no change in the number or nature of the securities purchasable upon the exercise of any Warrant, or the Exercise Price therefor shall be made without the consent in writing of the Registered Holder of the affected Warrant, other than such changes as are specifically prescribed by this Agreement as originally executed. SECTION 15. Binding Effect This Agreement shall be binding upon and shall inure to the benefit of, the parties hereto and their respective heirs, legal representatives, successors, and permitted assigns and any transferee of any of the Warrants or the Common Stock issuable upon exercise thereof. SECTION 16. Governing Law This Agreement shall be governed by and construed in accordance with the laws of the State of New York, without regard to the conflicts of laws principles thereof. SECTION 17. Counterparts This Agreement may be executed in one or more counterparts, each of which when so executed shall be deemed an original, but all of which together shall constitute one and the same instrument. 14 15 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the date first written above. BRAZIL FAST FOOD CORP. By: /s/ P. Van Voorst Vader ------------------------------------------- Name: P. Van Voorst Vader Title: Chief Executive Officer AIG LATIN AMERICA EQUITY PARTNERS, LTD. By: /s/ Alberto Marcel ------------------------------------------- Name: Alberto Marcel Title: Chief Executive Officer 15 16 EXHIBIT A THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS AND NEITHER THE SECURITIES NOR ANY INTEREST THEREIN MAY BE OFFERED, SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT OR SUCH LAWS OR AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT AND SUCH LAWS, WHICH, IN THE OPINION OF COUNSEL, IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER, IS AVAILABLE. NO. VOID AFTER August , 2002 WARRANT CERTIFICATE TO PURCHASE _____ SHARES OF COMMON STOCK of BRAZIL FAST FOOD CORP. THIS CERTIFIES THAT, FOR VALUE RECEIVED _________________________ or registered assigns (the "Registered Holder")are the owners of the number of Common Stock Purchase Warrants (the "Warrants") specified above. Each Warrant initially entitles the Registered Holder to purchase, subject to the terms and conditions set forth in this Certificate and the Warrant Agreement (as hereinafter defined), one fully paid and nonassesable share of Common Stock, $.0001 par value per share, of Brazil Fast Food Corp., a Delaware corporation (the "Company"), at any time beginning on August__, 1997, and prior to the Expiration Date (as hereinafter defined) upon the presentation and surrender of this Warrant Certificate with the Election to Exercise Form on the reverse hereof duly executed, at the corporate office of the Company, accompanied by payment of $4.00, subject to adjustment (the "Exercise Price"), in lawful money of the United States of America in cash or by check made payable to the Company. This Warrant Certificate and each Warrant represented hereby are issued pursuant to and are subject in all respects to the terms and conditions set forth in the Warrant Agreement 16 17 (the "Warrant Agreement"), dated as of August 11, 1997, by and between the Company and the holder thereof. In the event of certain contingencies provided for in the Warrant Agreement, the Exercise Price and the number of shares of Common Stock subject to purchase upon the exercise of each Warrant represented hereby are subject to modification or adjustment. Each Warrant represented hereby is exercisable at the option of the Registered Holder, but no fractional interests will be issued. In the case of the exercise of less than all the Warrants represented hereby, the Company shall cancel this Warrant Certificate upon the surrender hereof and shall execute and deliver a new Warrant Certificate or Certificates of like tenor for the balance of such Warrant. The term "Expiration Date" shall mean 5:00 p.m. (New York time) on August __, 2002. If such date shall in the state of New York be a holiday or a day on which the banks are authorized to close, then the Expiration Date shall mean 5:00 p.m. (New York time) the next following day which in the state of New York is not a holiday or a day on which banks are authorized to close. This Warrant shall not be exercisable by a Registered Holder in any state where such exercise would be unlawful. This Warrant Certificate is exchangeable, upon the surrender hereof by the Registered Holder at the corporate office of the Company, for a new Warrant Certificate or Certificates of like tenor representing an equal aggregate number of Warrants, each of such new Warrant Certificates to represent such number of Warrants as shall be designated by such Registered Holder at the time of such surrender. Upon due presentment of this Warrant Certificate, for registration of transfer a new Warrant Certificate representing an equal aggregate number of Warrants will be issued to the transferee in exchange therefor, subject to the limitations provided in the Warrant Agreement. Except as provided in the Warrant Agreement, prior to the exercise of any Warrant represented hereby, the registered Holder shall not be entitled to any rights of a stockholder of the Company, including, without limitation, the right to vote or receive any notice of any proceedings of the Company. Prior to the due presentment for registration of transfer hereof, the Company may deem and treat the Registered Holder as the absolute owner hereof and each Warrant represented hereby (notwithstanding any notations of ownership or writing hereon made by anyone other than a duly authorized officer of the Company) for all purposes and shall not be affected by any notice to the contrary, except as provided in the Warrant Agreement. This Warrant Certificate shall be governed by and construed in accordance with the laws of the state of new York, without giving effect to conflicts of law. 17 18 IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to be duly executed as of the date hereof. Dated: August , 1997 BRAZIL FAST FOOD CORP. -------------------------------- Name: P. Van Voorst Vader Title: Chief Executive Officer 18 19 EXHIBIT B TO: Brazil Fast Food Corp. ELECTION TO EXERCISE The undersigned hereby exercises its right to subscribe for and purchase from Brazil Fast Food Corp. ____ fully paid, validly issued and nonassessable shares of Common Stock covered by the within Warrant and tenders payment herewith in the amount of $______ in accordance with the terms thereof, and requests that certificates for such shares be issued in the name of and delivered to: ------------------------ ------------------------ ------------------------ Date:____________________ ---------------------------- By: ------------------------- Name: Title: 19 EX-99.6 7 REGISTRATION RIGHTS AGREEMENT 1 REGISTRATION RIGHTS AGREEMENT This Registration Rights Agreement (the "Agreement") is made and entered into as of August 11, 1997, between AIG Latin America Equity Partners, Ltd., a Bermuda company (the "Fund") and Brazil Fast Food Corp., a Delaware corporation (the "Company"). W I T N E S S E T H : WHEREAS, the Fund and the Company are, simultaneously with this Agreement, entering into a certain Stock Purchase Agreement (the "Stock Purchase Agreement") to provide for the purchase by the Fund of 1,500,000 shares of common stock, par value $0.0001 per share of the Company (the "Common Stock") and five-year warrants to purchase 250,000 shares of Common Stock (the "Warrants"). NOW, THEREFORE, in consideration of the respective agreements herein contained and in order to induce the Fund to enter into the Stock Purchase Agreement, the parties hereby agree as follows: 1. IMMEDIATE REGISTRATION (a) The Company agrees that within 45 days of the Closing Date, it will cause to be registered under the Securities Act of 1933, as amended (the "Act"), on Form S-3, or any other similar form then in effect, a "shelf" registration statement (the "Shelf Registration") with respect to all of the shares of Common Stock then owned by the Fund, including the shares of Common Stock issuable upon exercise of the Warrants (the "Shares"), and in the event that the Company no longer qualifies to register the Shares on Form S-3, the Company shall file, on demand, one or more successive registration statements on Form S-1. The Company agrees that it will use its best efforts to cause any registration statement filed pursuant to this Section 1 to become effective as soon as practicable after Closing. With respect to any registration statement filed pursuant to this Section 1, if the Fund desires to distribute the shares in an underwritten offering, the managing underwriter or underwriters shall be selected by the Fund, subject to the approval by the Company, which approval shall not be unreasonably withheld or delayed, and the Company agrees to enter into an underwriting agreement in customary form with such underwriters. (b) Notwithstanding the effectiveness of any Registration Statement filed pursuant to this Section 1, the Fund agrees that it will not publicly offer the Shares for sale for a period of one year from the Closing Date, provided that this limitation shall not apply to any sales by the Fund pursuant to any underwritten offering by the Company or any stockholder of the Company, other than the Fund or any sale in connection with a tender or exchange offer, merger or similar transaction. 2 2. PIGGYBACK REGISTRATION (a) If at any time or from time to time, the Company shall determine to register any of its Common Stock, for its own account or for the account of any of its stockholders, other than a registration relating solely to employee benefit plans, or a registration relating solely to a Rule 145 transaction under the Act, and to distribute such Common Stock in an underwritten offering, the Company will: (i) give to the Fund written notice thereof as soon as practicable prior to filing the registration statement; and (ii) include in any such registration and in such underwriting involved therein, all of the Shares specified in a written request or requests made by the Fund within fifteen (15) days after receipt of such written notice from the Company by the Fund, except as set forth in subsection (b) below. (b) If the Fund desires to distribute any or all of its shares of Common Stock through such underwriting, it shall (together with the Company and the other holders distributing their Common Stock through such underwriting) enter into an underwriting agreement in customary form with the underwriter or underwriters selected for such underwriting by the Company. Notwithstanding the foregoing, if in the written opinion of the managing underwriter for such offering, the inclusion of all or a portion of the shares requested to be included in such underwriting will exceed the maximum amount of the Company's Common Stock which can be sold in such offering (the "Total Common Stock") without materially adversely affecting the entire offering, then the Company shall include in such underwriting only that number of shares which the Company is so advised can be sold in such offering without having such adverse effect. The shares of Common Stock which shall be excluded from such offering shall be determined in following manner: (i) first, all shares of Common Stock held by shareholders that do not have a contractual right to include their shares in such offering and (ii) second, to the extent additional shares must be excluded, all shares of Common Stock held by the Company and the shareholders possessing such right (including the Fund), allocated pro rata among the Company and such other holders of Common Stock (including the Fund) in accordance with the ratio that the number or amount of Common Stock that the Company or such shareholders sought to register bears to the Total Common Stock. (c) Notwithstanding the provisions of this Section 2, the Company shall have the right at any time after it shall have given written notice pursuant to this Section 2 (irrespective of whether any written request for inclusion of Shares shall have already been made) to elect not to file any such proposed registration statement, or to withdraw the same after the filing but prior to the effective date thereof. -2- 3 3. REGISTRATION PROCEDURES In the case of each registration statement filed, requested to be filed or intended to be filed by the Company pursuant to this Agreement, the Company will keep the Fund advised in writing as to the initiation of each registration and as to the status and completion thereof. At its expense, the Company will: (a) keep such registration statement effective: (i) in the case of the Shelf Registration or the S-1 Registration Statement, until such time as all of such Shares have been disposed of in accordance with the intended methods of disposition set forth in such registration statement; and (ii) in the case of the Piggyback Registration Statement, until the earlier of (A) 90 days following the effectiveness of such registration statement and (B) such time as all of such Shares have been disposed of in accordance with the intended methods of disposition set forth in such registration statement; (b) provide appropriate officers (including, if requested, the Company's Chief Executive Officer and Chief Financial Officer) for such reasonable periods as are requested by the underwriters to participate in a "road show" or similar marketing effort being conducted by such underwriter with respect to an underwriting offering; (c) prepare and file with the SEC such amendments and supplements to such registration statement and the prospectus used in connection therewith (including, without limitation, any post-effective amendment or pricing supplement necessary to include a form of prospectus reasonably requested by its underwriter) as may be necessary to keep such registration statement continuously effective and to comply with the registration form used by the Company or by the instructions applicable to such registration form or by the Act (and use its best efforts to have such amendments declared effective as soon as reasonably practicable after such filing); (d) furnish such number of prospectuses and other documents related thereto as the Fund may from time to time reasonably request; (e) use its best efforts to obtain the withdrawal or lifting of any order suspending the effectiveness of a registration statement, or the lifting of any suspension of the qualification of any of the Shares for sale in any jurisdiction, at the earliest possible moment; (f) register or qualify the Shares for offer and sale under the securities or Blue Sky laws of such jurisdictions as the Fund or its underwriter reasonably requests, and keep such registration or qualification effective during the period set forth in Section 3(a) above; (g) cause the Shares covered by such registrations to be listed on each securities exchange, including NASDAQ, on which similar securities issued by the Company are -3- 4 then listed or, if no such listing exists, use its best efforts to list the Shares on one of the New York Stock Exchange, the American Stock Exchange or NASDAQ; (h) cause its accountants to issue to the underwriter, if any, or to the Fund, if there is no underwriter, comfort letters and updates thereof, including "cold comfort" letters, in customary form and covering matters of the type customarily covered in such letters with respect to underwritten offerings; (i) enter into such customary agreements (including underwriting agreements in customary form) and take all such other actions as the Fund or the underwriters, if any, reasonably request in order to expedite or facilitate the disposition of such Shares; (j) make available for inspection by the Fund, any underwriter participating in any disposition pursuant to such registration statement, and any attorney, accountant or other agent retained by the Fund or any such underwriter, all financial and other records, pertinent corporate documents and properties of the Company, and cause the Company's officers, directors, employees and independent accountants to supply all information reasonably requested by the Fund, underwriter, attorney, accountant or agent in connection with such registration statement; provided, however, that the Company may request that customary confidentiality agreements be entered into prior to the delivery of any such information to any such underwriter, attorney, accountant or agent; (k) if the offering is underwritten, at the request of the Fund to furnish on the date that the Shares are delivered to the underwriters for sale pursuant to such registration: (i) an opinion dated such date of counsel representing the Company for the purposes of such registration, addressed to the underwriters and to the Fund, stating that such registration statement has become effective under the Act and that (A) to the best knowledge of such counsel, no stop order suspending the effectiveness thereof has been issued and no proceedings for that purpose have been instituted or are pending or contemplated under the Act, (B) the registration statement, the related prospectus and each amendment or supplement thereof comply as to form in all material respects with the requirements of the Act, (C) nothing has come to the attention of such counsel that would lead it to believe that the Registration Statement contains any untrue statement of a material fact or omits to state a material fact necessary to make the statements therein not misleading and nothing has come to the attention of such counsel that would lead it to believe that the Prospectus contains any untrue statement of a material fact or omits to state a material fact necessary to make the statements therein not misleading in light of the circumstances under which they were made and (D) to such other effects as may reasonably be requested by counsel for the underwriters or by the Fund or its counsel and (ii) a letter dated such date from the independent public accountants retained by the Company, addressed to the underwriters and the Fund, stating that they are independent public accountants within the meaning of the Act and that, in the opinion of such accountants, the financial statements of the Company included in the registration statement or the prospectus, or any amendment or supplement thereto, comply as to form in all material respects with the applicable accounting -4- 5 requirements of the Act, and such letter shall additionally cover such other financial matters (including information as to the period ending no more than five business days prior to the date of such letter) with respect to such registration as such underwriters or the Fund may reasonably request; (l) notify the Fund, at any time a prospectus covered by such registration statement is required to be delivered under the Act, of the happening of any event as a result of which the prospectus included in such registration statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing; and (m) take such other actions as shall be reasonably requested by the Fund. 4. PROSPECTUSES, DOCUMENTS, ETC. Prior to the filing of a registration statement pursuant to Section 1 hereof or upon making a request for piggyback registration pursuant to Section 2 hereof, the Fund shall furnish to the Company such information regarding the Fund's holdings and the proposed manner of distribution thereof as shall be reasonably required in connection with any registration, qualification or compliance referred to in such Sections, and shall otherwise reasonably cooperate with the Company in the preparation and filing of any registration statement, amendment or supplement required thereunder. 5. EXPENSES With respect to the filing of a registration statement pursuant to Section 1 or 2 hereof, the Fund shall pay for (i) all underwriters' discounts and commissions applicable to the sale of the Shares and (ii) the fees of its legal counsel. All other fees and expenses incurred in connection with such a registration shall be borne by the Company, including, but not limited to, (i) all expenses (including filing fees) incurred in connection with qualifying under state securities or Blue Sky laws, (ii) all other filing fees, including SEC and NASD filing fees, (iii) the fees of its legal counsel, (iv) audit and other accounting fees and expenses, and (v) printing costs (together the "Registration Costs"). 6. INDEMNIFICATION AND CONTRIBUTION (a) In connection with any registration statement, the Company shall indemnify and hold harmless the Fund, each underwriter who participates in an offering of the Shares, each Person, if any, who controls any of such parties within the meaning of Section 15 of the Act or Section 20 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and each of their respective directors, officers, employees and agents, as follows: -5- 6 (i) from and against any and all loss, liability, claim, damage and expense whatsoever as incurred, arising out of any untrue statement or alleged untrue statement of a material fact contained in any registration statement (or any amendment thereto), covering Shares, including all documents incorporated therein by reference, or the omission or alleged omission therefrom of a material fact required to be stated therein or necessary to make the statements therein not misleading or arising out of any untrue statement or alleged untrue statement of a material fact contained in any prospectus (or any amendment or supplement thereto) or the omission or alleged omission therefrom of a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; (ii) from and against any and all loss, liability, claim, damage and expense whatsoever as incurred, to the extent of the aggregate amount paid in settlement of any litigation, or any investigation or proceeding by any court or government agency or body, commenced or threatened, or of any claim whatsoever based upon any such untrue statement or omission, or any such alleged untrue statement or omission, if such settlement is effected with the prior written consent of the Company; and (iii) from and against any and all expenses whatsoever, as incurred (including reasonable fees and disbursement of counsel chosen by the Fund, or any underwriter), reasonably incurred in investigating, preparing or defending against any litigation, or any investigation or proceeding by any court or governmental agency or body, commenced or threatened, or any claim whatsoever based upon any such untrue statement or omission, or any such alleged untrue statement or omission, to the extent that any such expense is not paid under subparagraph (i) or (ii) of this Section 6(a); provided, however, that (i) this indemnity does not apply to any loss, liability, claim, damage or expense to the extent that it shall be determined by a court in a judgment not subject to appeal or final review that such loss, liability, claim, damage or expense resulted from an untrue statement or omission or alleged untrue statement or omission made in reliance upon and in conformity with written information furnished in writing to the Company by the Fund or any underwriter, as the case may be, expressly for use in a registration statement (or any amendment thereto) or any prospectus (or any amendment or supplement thereto) and (ii) the Company shall not be liable to the Fund or any underwriter, as the case may be, with respect to any untrue statement or alleged untrue statement or omission or alleged omission in any preliminary prospectus to the extent that any such loss, liability, claim, damage or expense of the Fund or any underwriter, as the case may be, results from the fact that the Fund or any underwriter, as the case may be, sold Common Stock to a person to whom there was not sent or given, at or prior to the written confirmation of such sale, a copy of the final prospectus as then amended or supplemented if the Company had previously furnished copies thereof to the Fund or underwriter, as the case may be, and the loss, liability, claim, damage or expense of the Fund or underwriter, as the case may be, results from an untrue statement or omission of a material fact contained in the preliminary prospectus which was corrected in the final prospectus. -6- 7 (b) The Fund agrees, severally and not jointly, to indemnify and hold harmless the Company and any underwriter and each of their respective directors, officers (including each officer of the company who signed the registration statement), employees and agents and each Person, if any, who controls the Company or any underwriter within the meaning of Section 15 of the Act or Section 20 of the Exchange Act, from and against any and all loss, liability, claim, damage and expense whatsoever described in the indemnity contained in Section 6 (a) hereof, as incurred, but only with respect to untrue statements or omissions, or alleged untrue statements or omissions, made in a registration statement (or any amendment thereto) or any prospectus (or any amendment or supplement thereto) in reliance upon and in conformity with written information furnished to the Company by the Fund with respect to the Fund expressly for use in such registration statement (or any amendment thereto); provided however, that the Fund shall not be liable for any amount hereunder in excess of the amount of net proceeds received by the Fund from the sale of Shares. (c) Each indemnified party shall give prompt notice to each indemnifying party of any action commenced against it in respect of which indemnity may be sought hereunder enclosing a copy of all papers properly served on such indemnified party, but failure to so notify an indemnifying party shall not relieve such indemnifying party from any liability which it may have under this Section 6, except to the extent that it is materially prejudiced by such failure. In the event that an indemnifying party so elects within a reasonable time after receipt of such notice, an indemnifying party, severally or jointly with any other indemnifying parties receiving such notice, may assume the defense of such action with counsel chosen by it and reasonably acceptable to the indemnified parties defendant in such action, provided, however, that if (i) representation of such indemnified party by the same counsel would present a conflict of interest or (ii) the actual or potential party and the indemnifying party and any such indemnified party reasonably determines that there may be legal defenses available to such indemnified party which are different from or in addition to those available to such indemnifying party, then in the case of clauses (i) and (ii) of this Section 6 (c) such indemnifying party and counsel for each indemnifying party or parties shall not be entitled to assume such defense. If an indemnifying party is not entitled to assume the defense of such action as a result of the proviso to the preceding sentence, counsel for such indemnifying party and counsel for each indemnified party or parties shall be entitled to conduct the defense of such indemnified party or parties. If an indemnifying party assumes the defense of such action, in accordance with and as permitted by the provisions of this paragraph, such indemnifying parties shall not be liable for any fees and expenses of counsel for the indemnified parties incurred thereafter in connection with such action. In no event shall the indemnifying parties be liable for the fees and expenses of more than one counsel (in addition to local counsel), separate from its own counsel, for all indemnified parties in connection with any one action or separate but similar or related actions in the same jurisdiction arising out of the same general allegations or circumstances. No indemnifying party shall, without the prior written consent of the indemnified parties, settle or compromise or consent to the entry of any judgment with respect to any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or any claim whatsoever in respect of which indemnification or contribution could be sought under this -7- 8 Section 6 (whether or not the indemnified parties are actual or potential parties thereto), unless such settlement, compromise or consent (i) includes an unconditional written release in form and substance satisfactory to the indemnified parties of each indemnified party from all liability arising out of such litigation, investigation, proceeding or claim and (ii) does not include a statement as to or an admission of fault, culpability or a failure to act by or on behalf of any indemnified party. (d) Notwithstanding the last sentence of Section 6 (c), if at any time an indemnified party shall have requested an indemnifying party to reimburse the indemnified party for reasonable fees and expenses of counsel pursuant to Section 6 (a) (iii) above, such indemnifying party agrees that it shall be liable for any settlement effected without its written consent if (i) such settlement is entered into more than 45 days after receipt by such indemnifying party of the aforesaid request, (ii) such indemnifying party shall have received notice of the terms of such settlement at least 30 days prior to such settlement being entered into and (iii) such indemnifying party shall not have reimbursed such indemnified party in accordance with such request prior to the date of such settlement; provided that an indemnifying party shall not be liable for any such settlement effected without its consent if such indemnifying party (1) reimburses such indemnified party in accordance with such request to the extent it considers reasonable and (2) provides written notice to the indemnified party substantiating the unpaid balance as unreasonable, in each case prior to the date of such settlement. (e) In order to provide for just and equitable contribution in circumstances under which any of the indemnity provisions set forth in this Section 6 is for any reason held to be unavailable to the indemnified parties although applicable in accordance with its terms, the Company and the Fund shall contribute to the aggregate losses, liabilities, claims, damages and expenses of the nature contemplated by such indemnify agreement incurred by the Company and the Fund, as incurred; provided that no Person guilty of fraudulent misrepresentation (within the meaning of Section 11 (f) of the 1933 Act) shall be entitled to contribution from any person that was not guilty of such fraudulent misrepresentation. As between the Company and the Fund, such parties shall contribute to such aggregate losses, liabilities, claims, damages and expenses of the nature contemplated by such indemnity agreement in such proportion as shall be appropriate to reflect the relative fault of the Company, on the one hand, and the Fund, on the other hand, with respect to the statements or omissions which resulted in such loss, liability, claim, damage or expenses, or action in respect thereof; as well as any other relevant equitable considerations. The relative fault of the Company, on the one hand, and of the Fund, on the other hand, shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company, on the one hand, or by or on behalf of the Fund, on the other, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Company and the Fund of the Shares agree that it would not be just and equitable if contribution pursuant to this Section 6 were to be determined by pro rata allocation or by any other method of allocation that does not take into account the relevant equitable considerations. For purposes of this Section 6, each affiliate of the -8- 9 Fund, and each director, officer, employee, agent and Person, if any, who controls the Fund or such affiliate within the meaning of Section 15 of the Act or Section 20 of the Exchange Act shall have the same rights to contribution as the Fund, and each director or officer of the Company who signed the registration statement, 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 shall have the same rights to contribution as the Company. (f) For purposes of this Section 6 the terms "control", "controlling person" and "underwriter" have the meanings which they have in and under the Act. (g) The indemnification provided by this Section 6 shall be a continuing right to indemnification and shall survive the registration and sale of any securities by any Person entitled to indemnification hereunder. 7. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents and warrants to the Fund as follows: (a) The execution, delivery and performance of this Agreement by the Company have been duly authorized by all requisite corporate action and will not violate any provision of law, any order of any court or other agency of government, the Articles of Organization or Bylaws of the Company or any provision of any indenture, agreement or other instrument to which it or its subsidiaries or any of their respective properties or assets is bound, conflict with, result in a breach of or constitute (with due notice or lapse of time or both) a default under any such indenture, agreement or other instrument or result in the creation or imposition of any lien, charge or Encumbrance of any nature whatsoever upon any of the properties or assets of the Company or subsidiaries. (b) This Agreement has been duly executed and delivered by the Company and constitutes the legal, valid and binding obligation of the Company, enforceable in accordance with its terms. 8. NEGATIVE COVENANT. The Company may not, without the prior written consent of the Fund, grant any rights to any Persons to register shares of capital stock or securities of the Company, unless and until all of the Shares have been registered pursuant to an effective registration statement in accordance with the provisions hereof. 9. MISCELLANEOUS (a) For so long as the Company is subject to the reporting requirements of Section 13 or 15 of the Exchange Act and any Shares remain outstanding, the Company covenants that it will file the reports required to be filed by it under the Act and Section 13(a) or 14(d) of the Exchange Act and the rules and regulations adopted by the SEC thereunder, that if it -9- 10 ceases to be so required to file such reports, it will upon the request of the Fund (a) make publicly available such information as is necessary to permit sales pursuant to Rule 144 under the Act, (b) deliver such information to a prospective purchaser as is necessary to permit sales pursuant to Rule 144A under the Act and (c) take such further action, if any, that is reasonable in the circumstances, in each case, to the extent required from time to time to enable the Fund to sell its Shares without registration under the Act within the limitation of the exemptions provided by (i) Rule 144 under the Act, as such rule may be amended from time to time, (ii) Rule 144A under the Act, as such rule may be amended from time to time, or (iii) any similar rules or regulations hereafter adopted by the SEC. Upon the reasonable request of the Fund, the Company will deliver to the Fund a written statement as to whether it has complied with such requirements. (b) The Fund and the Company acknowledge and agree that irreparable damage would occur in the event any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the parties shall be entitled to an injunction or injunctions to prevent breaches of the provisions of this Agreement and to enforce specifically the terms and provisions hereof in any court of the United States or any State thereof having jurisdiction, in addition to any other remedy to which any of them may be entitled by law or equity. (c) All notices, consents, requests, instructions, approvals and other communications provided for herein and all legal process in regard hereto shall be validly given, made or served, if in writing and delivered or mailed as provided in the Stock Purchase Agreement. (d) This Agreement, the Stock Purchase Agreement, the Stockholders' Agreement and the Warrant Agreement contain the entire understanding of the parties with respect to the transactions contemplated hereby and thereby and this Agreement may be amended only by an agreement in writing executed by the parties hereto. (e) For the convenience of the parties, any number of counterparts of this Agreement may be executed by the parties hereto and each such executed counterpart shall be, and shall be deemed to be, an original instrument. (f) Descriptive headings are for convenience only and shall not control or affect the meaning or construction of any provisions of this Agreement. (g) This Agreement shall be binding upon and inure to the benefit of the respective successors and assigns of the Fund, the Company and any transferees of the Shares. (h) If any provision of this Agreement shall be held to be illegal, invalid or unenforceable, such illegality, invalidity or unenforceability shall attach only to such provision -10- 11 of this Agreement, and this Agreement shall be carried out as if any such illegal, invalid or unenforceable provision were not contained herein. (i) This Agreement shall be governed by and construed in accordance with the laws of the State of New York applicable to contracts made and to be performed therein. 10. DEFINITIONS Each capitalized term used and not otherwise defined herein shall have the meaning assigned to it by the Stock Purchase Agreement. IN WITNESS WHEREOF, the Fund and the Company have caused this Agreement to be duly executed by their respective officers, each of whom is duly authorized, all as of the day and year first above written. BRAZIL FAST FOOD CORP. By:/s/ P. Van Voorst Vader ----------------------------------- Name: P. Van Voorst Vader Title: Chief Executive Officer AIG LATIN AMERICA EQUITY PARTNERS, LTD By:/s/ Alberto Marcel ----------------------------------- Name: Alberto Marcel Title: Chief Executive Officer -11- -----END PRIVACY-ENHANCED MESSAGE-----