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EXHIBIT (b)(5)
SECURITIES PURCHASE AGREEMENT
Il Fornaio (America) Corporation
▇/▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇. ▇.▇.▇.
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
As of July 17, 2001
BancBoston Investments Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
I.B.J. Whitehall Capital Corporation
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Exeter Capital Partners IV, L.P.
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
The undersigned, Il Fornaio (America) Corporation, a Delaware
corporation and the surviving corporation of the Merger (as defined below) (the
"Company"), hereby agrees with you (the "Initial Holders") as follows:
1. DEFINITIONS.
For all purposes of this Agreement the following terms shall have the
meanings set forth herein or elsewhere in the provisions hereof:
Affiliate. Affiliate shall mean any Person directly or indirectly
controlling, controlled by or under direct or indirect common control with the
Company (or other specified Person) and shall include (a) any Person who is a
director or beneficial holder of at least 10% of any class of the then
outstanding capital stock (or other shares of beneficial interest) of the
Company (or other specified Person) and Family Members of any such Person, (b)
any Person of which the Company (or other specified Person) or an Affiliate (as
defined in clause (a) above) of the Company (or other specified Person) shall,
directly or indirectly, either beneficially own at least 10% of any class of the
then outstanding capital stock (or other shares of beneficial interest) or
constitute at least a 10% equity participant, and (c) in the case of a specified
Person who is an individual, Family Members of such Person; provided, however,
that BBI shall not be an Affiliate of the Company or any of its Subsidiaries for
the purposes of this Agreement.
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Agent. The Agent shall mean the administrative agent under the Credit
Agreement, or such other Person that may exercise similar administrative
functions thereunder.
Applicable Pension Legislation. Applicable Pension Legislation means, at
any time, any pension or retirement benefits legislation (be it national,
federal, provincial, territorial or otherwise) then applicable, subject to the
preemption provisions of ERISA, to the Company or any of its Subsidiaries.
Applicable Prepayment Charge. Applicable Prepayment Charge shall mean,
with respect to a prepayment or repayment of the Notes, an amount equal to the
product of (a) the principal amount of the Notes so prepaid or repaid multiplied
by (b) the percentage set forth in the table below opposite the period in which
such prepayment or repayment is made:
Period Percentage
------ ----------
From July 17, 2001 5%
through July 16, 2002
From July 17, 2002 4%
through July 16, 2003
From July 17, 2003 3%
through July 16, 2004
Asset Sale. Asset Sale shall mean any one or series of related
transactions in which the Company or any of its Subsidiaries conveys, sells,
leases, licenses or otherwise disposes of, directly or indirectly, any of its
properties, businesses or assets (including the sale or issuance of capital
stock of any Subsidiary other than to the Company or any Subsidiary of the
Company) whether owned on the Closing Date or thereafter acquired.
Balance Sheet Date. See Section 4.6(a).
Bank Affiliate. See Section 15.1.
Bank Holding Company Act. See Section 15.1.
Base Business. Base Business shall mean the operation of "high-end
casual" Italian restaurants and related retail markets and wholesale bakeries.
Base Rate. Base Rate shall mean the annual rate of interest announced
from time to time by Fleet National Bank at its head office in Boston,
Massachusetts, as its "prime rate".
BBI. BBI shall mean BancBoston Investments Inc., a Massachusetts
corporation.
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BRSC. BRSC shall mean Bruckmann, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & Co. II, L.P., a
Delaware limited partnership.
BRSC Affiliate. Any Person which is controlled by or under common
control with, directly or indirectly, BRSC, any director, officer or employee of
BRSC, any family member of any such director, officer or employee and any trust
established by any such Person.
BRSC Associates. BRSC Associates shall mean ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇,
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇.
Call Closing Date. See Section 11.3.
Call Notice. See Section 11.3.
Capital Assets. Capital Assets shall mean fixed assets, both tangible
(such as land, buildings, fixtures machinery and equipment) and intangible (such
as patents, copyrights, trademarks, franchises and good will); provided that
Capital Assets shall not include any item customarily charged directly to
expense or depreciated over a useful life of twelve (12) months or less in
accordance with GAAP.
Capital Expenditures. Capital Expenditures shall mean, for any period,
amounts paid or Indebtedness incurred by the Company or any of its Subsidiaries
in connection with (i) the purchase or lease by the Company or any of its
Subsidiaries of Capital Assets that would be required to be capitalized and
shown on the balance sheet of such Person in accordance with GAAP, (ii)
Consolidated Restaurant Pre-Opening Costs, or (iii) the lease of any assets by
the Company or any of its Subsidiaries as lessee under any Synthetic Lease to
the extent that such assets would have been Capital Assets had the Synthetic
Lease been treated for accounting purposes as a Capitalized Lease, net of any
expected tenant improvement allowances related to a Store.
Capitalized Lease. Capitalized Lease shall mean, with respect to any
Person, leases under which the Company or any of its Subsidiaries is the lessee
or obligor, the discounted future rental payment obligations under which are
required to be capitalized on the balance sheet of the lessee or obligor in
accordance with GAAP.
Capital Transaction. Capital Transaction shall mean any of the
following: (i) one or more mergers, consolidations, liquidations, sales of more
than 50% of the consolidated assets of the Company and its Subsidiaries or other
similar corporate actions pursuant to which the Company or the holders of Common
Stock receive cash, securities or other property (including, without limitation,
sales of a majority of the shares of capital stock of one or more Subsidiaries
of the Company which have combined assets which aggregate more than 50% of the
consolidated assets of the Company and its Subsidiaries) or (ii) at least a
majority of the capital stock of the Company entitled generally to vote in the
election of directors is sold.
Cash Flow Ratio. For any Reference Period, the ratio of (a) Consolidated
Cash Flow for such Reference Period, to (b) Consolidated Financial Obligations
for such Reference Period.
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CERCLA. See Section 4.18.
Change of Control. Change of Control shall mean, at any time, the
occurrence of one or more of the following events: (i) BRSC or the BRSC
Affiliates shall collectively cease to own directly or indirectly at least
fifty-one percent (51%) of the Class A Common Stock and economic interests of
the Company, (ii) BRSC and the BRSC Affiliates shall collectively cease to have
the power, directly or indirectly (including under any stockholders' agreement)
to elect a majority of the directors of the Company, or (iii) the replacement of
a majority of the board of directors of the Company over a two-year period from
the directors who constituted the board of directors of the Company, as
applicable, at the beginning of such period, and such replacement shall not (1)
have been approved by a vote of at least a majority of the board of directors of
the Company, as applicable, then still in office who either were members of such
board of directors at the beginning of such period or whose election as a member
of such board of directors was previously so approved, or (2) have been elected
or nominated for election by BRSC or a BRSC Affiliate.
Charter. Charter shall include the articles or certificate of
incorporation, statute, constitution, joint venture or partnership agreement or
articles or other organizational document of any Person other than an
individual, each as from time to time amended or modified.
Closing. See Section 2.3.
Closing Date. See Section 2.3.
Code. Code shall mean the Internal Revenue Code of 1986, any successor
statute of similar import, and the rules and regulations thereunder,
collectively and as from time to time amended and in effect.
Commission. Commission shall mean the Securities and Exchange
Commission.
Common Shares. Common Shares shall mean (a) the Initial Common Shares,
(b) any capital stock or other securities into which or for which such Common
Stock shall have been converted or exchanged pursuant to any recapitalization,
reorganization or merger of the Company, (c) any shares of capital stock issued
with respect to any security described in clauses (a), (b) or (d) pursuant to a
stock split or stock dividend, and (d) any capital stock or other security into
which or for which any security described in clauses (b), (c) or this clause (d)
shall have been converted or exchanged; provided that no Common Shares which
have been sold pursuant to a Public Sale shall be considered to be outstanding
Common Shares or Securities hereunder.
Common Stock. Common Stock means the Class A Common Stock of the
Company, par value $.001 per share (the "Class A Common Stock"), and the Class B
Common Stock of the Company, par value $.001 per share (the "Class B Common
Stock"). In addition, Common Stock shall mean any capital stock or other
securities into which or for which Common Stock shall have been converted or
exchanged pursuant to any recapitalization, reorganization or merger of the
Company.
Company. Company shall mean Il Fornaio.
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Company Appraisal. See Section 11.5(b).
Company Appraiser. See Section 11.5(b).
Consolidated or consolidated. Consolidated or consolidated shall mean,
with reference to any term defined herein, that term as applied to the accounts
of the Company and all of its Subsidiaries, consolidated in accordance with
generally accepted accounting principles.
Consolidated Cash Flow. For any period, Consolidated EBITDA of the
Company and its Subsidiaries for such period, minus the sum of (a) cash income
taxes paid during such period by the Company and its Subsidiaries on a
consolidated basis and (b) the greater of (i) the aggregate amount of
Maintenance Capital Expenditures made during such period by the Company and its
Subsidiaries or (ii) $1,400,000, plus decreases in Consolidated Working Capital
from the beginning to the end of such period or minus increases in Consolidated
Working Capital from the beginning to the end of such period.
Consolidated Current Assets. All assets of the Company and its
Subsidiaries on a consolidated basis that, in accordance with GAAP, are properly
classified as current assets, provided that (i) notes and accounts receivable
shall be included only if good and collectible as determined by the Company in
accordance with established practice consistently applied and, with respect to
such notes, only if payable on demand or within one (1) year from the date as of
which Consolidated Current Assets are to be determined and if not directly or
indirectly renewable or extendible at the option of the debtors, by their terms,
or by the terms of any instrument or agreement relating thereto, beyond such
year, and, with respect to such accounts receivable, only if payable and
outstanding not more than ninety (90) days after the date of the shipment of
goods or other transaction out of which any such account receivable arose; and
such notes and accounts receivable shall be taken at their face value less
reserves determined to be sufficient in accordance with GAAP; and (ii) inventory
shall be included only if and to the extent that the same shall be marketable in
the ordinary course of business.
Consolidated Current Liabilities. All liabilities and other Indebtedness
of the Company and its Subsidiaries on a consolidated basis maturing on demand
or within one (1) year from the date as of which Consolidated Current
Liabilities are to be determined, and such other liabilities as may properly be
classified as current liabilities in accordance with GAAP.
Consolidated EBITDA. Consolidated EBITDA shall mean, for any period, the
sum of (a) the Consolidated Pre-Tax Income of the Company and its Subsidiaries
for such period, plus (b) in each case to the extent deducted in the calculation
of Consolidated Pre-Tax Income, (i) Consolidated Total Interest Expense for such
period, plus (ii) Consolidated Restaurant Pre-Opening Costs for such period plus
(iii) depreciation and amortization expenses (excluding amortization of
Transaction Costs) for such period, plus (iv) Pro Forma Adjustments for such
period certified by the chief financial officer of the Company, plus (v)
non-recurring charges for such period, in such amounts and as more fully
described on Schedule A attached hereto, plus (vi) expenses (or amortization of
expenses) relating to Transaction Costs during such period to the extent the
aggregate amount of Transaction Costs does not exceed $8,600,000.
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Consolidated EBITDAR. For any period, the sum of (a) the Consolidated
EBITDA of the Company and its Subsidiaries for such period, plus (b)
Consolidated Rental Expense for such period.
Consolidated Financial Obligations. For any period, the sum of (a) all
scheduled payments of principal on Indebtedness of the Company and its
Subsidiaries, including Capitalized Leases and including Synthetic Leases during
such period (but not including Consolidated Rental Expense), plus (b)
Consolidated Cash Interest Expense. Demand obligations shall be deemed to be due
and payable during any period during which such obligations are outstanding.
Consolidated Funded Indebtedness. At any time, the sum of (a) the
aggregate amount of Indebtedness of the Company and its Subsidiaries, on a
consolidated basis, relating to the borrowing of money or the obtaining of
credit (but not including the Maximum Drawing Amount still available under
Letters of Credit or trade credit obtained in the ordinary course of business)
or in respect of Capitalized Leases (but not including Indebtedness consisting
of deferred tax liability), plus (b) without duplication, all Indebtedness of
the type described in clause (a) above guaranteed by the Company or any of its
Subsidiaries.
Consolidated Net Income (or Deficit). The consolidated net income (or
deficit) of the Company and its Subsidiaries, after deduction of all expenses,
taxes, and other proper charges, determined in accordance with GAAP.
Consolidated Pre-Tax Income. For any period, Consolidated Net Income for
such period plus, to the extent deducted from the calculation of Consolidated
Net Income, income tax expenditures for such period, determined in accordance
with GAAP.
Consolidated Rental Expense. For any period, all minimum rental expense
of the Company and its Subsidiaries during such period, determined on a
consolidated basis in accordance with GAAP, incurred under any rental agreements
or leases of real or personal property, including space leases and ground
leases, other than obligations in respect of any Capitalized Leases or any
Synthetic Leases.
Consolidated Restaurant Pre-Opening Costs. "Start-up costs" (such term
used herein as defined in SOP 98-5 published by the American Institute of
Certified Public Accountants) related to the opening and organizing of new
Stores, such costs including, without limitation, the cost of feasibility
studies, staff-training, and recruiting and travel costs for employees engaged
in such start-up activities.
Consolidated Total Interest Expense. For any period, the aggregate
amount of interest required to be paid in cash by the Company and its
Subsidiaries during such period on all Indebtedness of the Company and its
Subsidiaries outstanding during all or any part of such period, whether such
interest was or is required to be reflected as an item of expense or
capitalized, including payments consisting of interest in respect of Capitalized
Leases, or any Synthetic Lease (but not including commitment fees, agency fees,
facility fees, balance deficiency fees and similar fees or expenses, the
one-time up-front "Closing Fee" referred to in the fee letter dated the Closing
Date among the Company, the Agent and the Arranger (as defined in the Credit
Agreement) or any one-time up-front closing fee paid in connection with the
Subordinated Indebtedness) in connection with the borrowing of money.
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Consolidated Working Capital. The excess of Consolidated Current Assets
over Consolidated Current Liabilities.
Credit Agreement. Credit Agreement shall mean the Revolving Credit and
Term Loan Agreement dated as of the date hereof (as amended by any Permitted
Renewal thereof) among the Company, the Agent, IBJ Whitehall Bank & Trust
Company, as Syndication Agent and Fleet Securities, Inc. as Arranger.
Default. Default shall mean an event or condition which with the passage
of time or giving of notice, or both, would become an Event of Default.
Disposal (or Disposed). Disposal (or Disposed) shall have the meaning
specified in RCRA and regulations promulgated thereunder; provided, that in the
event RCRA is amended so as to broaden the meaning of such term defined thereby,
such broader meaning shall apply as of the effective date of such amendment and
provided further, to the extent that the laws of a state wherein the Property
lies establishes a meaning for "Disposal" (or "Disposed") which is broader than
specified in RCRA, such broader meaning shall apply.
Distribution. Distribution shall mean the declaration or payment of any
dividend on or in respect of any shares of any class of the capital stock of any
Person, other than dividends payable solely in shares of common stock of such
Person; the purchase, redemption, defeasance, retirement or other acquisition of
any shares of any class of the capital stock of any Person, directly or
indirectly through a Subsidiary of such Person or otherwise (including the
setting apart of assets for a sinking or other analogous fund to be used for
such purpose); the return of capital by the Company to its shareholders as such;
any "Special Accrual" in respect of options for the purchase of any series of
Preferred Stock, arising under the terms of the Form of Non-Qualified Stock
Option Agreement to be issued under the Company's 2001 Stock-Based Incentive
Compensation Plan or any similar right to payment arising under any other
instrument of the Company; or any other distribution on or in respect of any
shares of any class of the capital stock of any Person.
Employee Benefit Plan. Employee Benefit Plan shall mean any "employee
benefit plan" as defined in Section 3(3) of ERISA which is or was maintained or
contributed to by the Company, any of its Subsidiaries or any of their
respective ERISA Affiliates.
Enforcement Action. Enforcement Action means (a) any acceleration of any
obligations under the Senior Loan Documents, (b) the commencement of proceedings
or the taking of any other steps to realize upon any collateral, (c) the
suspension or termination of any lending commitment under the Senior Loan
Documents, or (d) the commencement of any other action of any nature to enforce
any right of the Senior Lenders under the Senior Loan Documents.
Environmental Laws. See Section 4.18.
EPA. See Section 4.18.
Equity Documents. Equity Documents means the Charter of the Company, the
bylaws of the Company, the Investor Purchase Agreement, the Management Agreement
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and the Company's 2001 Stock-Based Incentive Compensation Plan and the option
agreements to be issued thereunder.
ERISA. ERISA shall mean the federal Employee Retirement Income Security
Act of 1974, any successor statute of similar import, and the rules and
regulations thereunder, collectively and as from time to time amended and in
effect.
ERISA Affiliate. ERISA Affiliate shall mean any Person that is a member
of a group of which the Company, the Company or any Subsidiary is a member and
which is treated as a single employer with the Company or the Company under
Section 414 of the Code.
ERISA Event. ERISA Event shall mean (i) a "reportable event" within the
meaning of Section 4043 of ERISA and the regulations issued thereunder with
respect to any Pension Plan (excluding those for which the provision for 30-day
notice to the PBGC has been waived by regulation); (ii) the failure to meet the
minimum funding standard of Section 412 of the Code with respect to any Pension
Plan (whether or not waived in accordance with Section 412(d) of the Code) or
the failure to make by its due date a required installment under Section 412(m)
of the Code with respect to any Pension Plan or the failure to make any required
contribution to a Multiemployer Plan; (iii) the provision by the administrator
of any Pension Plan pursuant to Section 4041(a)(2) of ERISA of a notice of
intent to terminate such plan in a distress termination described in Section
4041(c) of ERISA; (iv) the withdrawal by the Company, any of its Subsidiaries or
any of their respective ERISA Affiliates from any Pension Plan with two or more
contributing sponsors or the termination of any such Pension Plan resulting in
liability pursuant to Section 4063 or 4064 of ERISA; (v) the institution by the
PBGC of proceedings to terminate any Pension Plan, or the occurrence of any
event or condition which could reasonably be expected to constitute grounds
under ERISA for the termination of, or the appointment of a trustee to
administer, any Pension Plan; (vi) the imposition of material liability on the
Company, any of its Subsidiaries or any of their respective ERISA Affiliates
pursuant to Section 4062(e) or 4069 of ERISA or by reason of the application of
Section 4212(c) of ERISA; (vii) the withdrawal of the Company, any of its
Subsidiaries or any of their respective ERISA Affiliates in a complete or
partial withdrawal (within the meaning of Sections 4203 and 4205 of ERISA) from
any Multiemployer Plan if there is any potential liability therefor, or the
receipt by the Company, any of its Subsidiaries or any of their respective ERISA
Affiliates of notice from any Multiemployer Plan that it is in reorganization or
insolvency pursuant to Section 4241 or 4245 of ERISA, or that it intends to
terminate or has terminated under Section 4041A or 4042 of ERISA; (viii) the
imposition on the Company, any of its Subsidiaries or any of their respective
ERISA Affiliates of material fines, penalties, taxes or related charges under
Chapter 43 of the Code or under Section 409, Section 502(c), (i) or (l), or
Section 4071 of ERISA in respect of any Employee Benefit Plan; (ix) the
commencement of litigation asserting a material claim (other than routine claims
for benefits) against any Employee Benefit Plan other than a Multiemployer Plan
or the assets thereof, or against the Company, any of its Subsidiaries or any of
their respective ERISA Affiliates in connection with any Employee Benefit Plan;
(x) receipt from the Internal Revenue Service of notice of the failure of any
Pension Plan (or any other Employee Benefit Plan intended to be qualified under
Section 401(a) of the Code) to qualify under Section 401(a) of the Code, or the
failure of any trust forming part of any Pension Plan to qualify for exemption
from taxation under Section 501(a) of the Code; or
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(xi) the imposition of a Lien pursuant to section 401(a)(29) or 412(n) of the
Code or pursuant to ERISA with respect to any Pension Plan.
Events of Default. See Section 10.1.
Fair Market Value. See Section 11.5(b).
Family Members. Family Members shall mean, as applied to any individual,
any parent, spouse, child, spouse of a child, brother or sister of the
individual, and each trust created for the benefit of one or more of such
Persons and each custodian of a property of one or more such Persons.
Generally Accepted Accounting Principles or GAAP. Generally accepted
accounting principles or GAAP (a) when used in Schedule 7.17 hereto, whether
directly or indirectly through reference to a capitalized term used therein,
means (i) principles that are consistent with the principles promulgated or
adopted by the Financial Accounting Standards Board and its predecessors, in
effect for the fiscal year ended on the Balance Sheet Date, and (ii) to the
extent consistent with such principles, the accounting practice of the Company
reflected in its financial statements for the year ended on the December 31,
2000, and (b) when used in general, other than as provided above, means
principles that are (i) consistent with the principles promulgated or adopted by
the Financial Accounting Standards Board and its predecessors, as in effect from
time to time, and (ii) consistently applied with past financial statements of
the Company adopting the same principles, provided that in each case referred to
in this definition of "GAAP" a certified public accountant would, insofar as the
use of such accounting principles is pertinent, be in a position to deliver an
unqualified opinion (other than a qualification regarding changes in GAAP) as to
financial statements in which such principles have been properly applied.
Growth Capital Expenditures. (a) Capital Expenditures relating to the
construction, acquisition or opening of new Stores operated by the Company and
its Subsidiaries after the Closing Date, plus (b) Capital Expenditures relating
to the remodeling of existing Stores, plus (c) to the extent not included in the
calculation of such Capital Expenditures, Consolidated Restaurant Pre-Opening
Costs.
Guaranteed Pension Plan. Any employee pension benefit plan within the
meaning of Section 3(2) of ERISA maintained or contributed to by the Company or
any ERISA Affiliate the benefits of which are guaranteed on termination in full
or in part by the PBGC pursuant to Title IV of ERISA, other than a Multiemployer
Plan.
Hazardous Substances. See Section 4.18.
Il Fornaio. Il Fornaio shall mean Il Fornaio (America) Corporation, a
Delaware corporation.
Indebtedness. Indebtedness shall include as to any Person and whether
recourse is secured by or is otherwise available against all or only a portion
of the assets of such Person and whether or not contingent, but without
duplication:
(a) every obligation of such Person for money borrowed,
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(b) every obligation of such Person evidenced by bonds,
debentures, notes or other similar instruments, including obligations
incurred in connection with the acquisition of property, assets or
businesses,
(c) every reimbursement obligation of such Person with respect to
letters of credit, bankers' acceptances or similar facilities issued for
the account of such Person,
(d) every obligation of such Person issued or assumed as the
deferred purchase price of property or services (including securities
repurchase agreements but excluding trade accounts payable or accrued
liabilities arising in the ordinary course of business which are not
overdue or which are being contested in good faith),
(e) every obligation of such Person under any Capitalized Lease,
(f) every obligation of such Person under any Synthetic Lease,
(g) all sales by such Person of (i) accounts or general
intangibles for money due or to become due, (ii) chattel paper,
instruments or documents creating or evidencing a right to payment of
money or (iii) other receivables (collectively "receivables"), whether
pursuant to a purchase facility or otherwise, other than in connection
with the disposition of the business operations of such Person relating
thereto or a disposition of defaulted receivables for collection and not
as a financing arrangement, and together with any obligation of such
Person to pay any discount, interest, fees, indemnities, penalties,
recourse, expenses or other amounts in connection therewith,
(h) every obligation of such Person (an "equity related purchase
obligation") to purchase, redeem, retire or otherwise acquire for value
any shares of Capital Stock issued by such Person or any rights measured
by the value of such Capital Stock,
(i) every obligation of such Person under any forward contract,
futures contract, swap, option or other financing agreement or
arrangement (including, without limitation, caps, floors, collars and
similar agreements), the value of which is dependent upon interest
rates, currency exchange rates, commodities or other indices (a
"derivative contract"),
(j) every obligation in respect of Indebtedness of any other
entity (including any partnership in which such Person is a general
partner) to the extent that such Person is liable therefor as a result
of such Person's ownership interest in or other relationship with such
entity, except to the extent that the terms of such Indebtedness provide
that such Person is not liable therefor and such terms are enforceable
under applicable law,
(k) every obligation, contingent or otherwise, of such Person
guaranteeing, or having the economic effect of guarantying or otherwise
acting as surety for, any obligation of a type described in any of
clauses (a) through (j) (the "primary obligation") of another Person
(the "primary obligor"), in any manner, whether directly or indirectly,
and including, without limitation, any obligation of
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such Person (i) to purchase or pay (or advance or supply funds for the
purchase of) any security for the payment of such primary obligation,
(ii) to purchase property, securities or services for the purpose of
assuring the payment of such primary obligation, or (iii) to maintain
working capital, equity capital or other financial statement condition
or liquidity of the primary obligor so as to enable the primary obligor
to pay such primary obligation.
The "amount" or "principal amount" of any Indebtedness at any time of
determination represented by (t) any Indebtedness, issued at a price that is
less than the principal amount at maturity thereof, shall be the amount of the
liability in respect thereof determined in accordance with GAAP, (u) any
Capitalized Lease shall be the principal component of the aggregate of the
rentals obligation under such Capitalized Lease payable over the term thereof
that is not subject to termination by the lessee, (v) any sale of receivables
shall be the amount of unrecovered capital or principal investment of the
purchaser (other than the Company or any of its wholly-owned Subsidiaries)
thereof, excluding amounts representative of yield or interest earned on such
investment, (w) any Synthetic Lease shall be the stipulated loss value,
termination value or other equivalent amount, (x) any derivative contract shall
be the maximum amount of any termination or loss payment required to be paid by
such Person if such derivative contract were, at the time of determination, to
be terminated by reason of any event of default or early termination event
thereunder, whether or not such event of default or early termination event has
in fact occurred, (y) any equity related purchase obligation shall be the
maximum fixed redemption or purchase price thereof inclusive of any accrued and
unpaid dividends to be comprised in such redemption or purchase price and (z)
any guaranty or other contingent liability referred to in clause (k) shall be an
amount equal to the stated or determinable amount of the primary obligation in
respect of which such guaranty or other contingent obligation is made or, if not
stated or determinable, the maximum reasonably anticipated liability in respect
thereof (assuming such Person is required to perform thereunder) as determined
by such Person in good faith.
Initial Common Shares. See Section 2.1.
Investments. Investments shall mean all expenditures made and all
liabilities incurred (contingently or otherwise) for the acquisition of stock or
Indebtedness of, or for loans, advances, capital contributions or transfers of
property to, or in respect of any guaranties (or other commitments as described
under Indebtedness), or obligations of, any Person. In determining the aggregate
amount of Investments outstanding at any particular time: (a) the amount of any
Investment represented by a guaranty shall be taken at not less than the
principal amount of the obligations guaranteed and still outstanding; (b) there
shall be included as an Investment all interest accrued with respect to
Indebtedness constituting an Investment unless and until such interest is paid;
(c) there shall be deducted in respect of each such Investment any amount
received as a return of capital (but only by repurchase, redemption, retirement,
repayment, liquidating dividend or liquidating distribution); (d) there shall
not be deducted in respect of any Investment any amounts received as earnings on
such Investment, whether as dividends, interest or otherwise, except that
accrued interest included as provided in the foregoing clause (b) may be
deducted when paid; and (e) there shall not be deducted from the aggregate
amount of Investments any decrease in the value thereof.
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Investor Group Preferred. Investor Group Preferred means (a) the shares
of Series A Preferred Stock and Series B Preferred Stock being issued under
Sections 2.1(b)(ii) and (iii), (b) any capital stock or other securities into
which or for which such Preferred Stock shall have been converted or exchanged
pursuant to any recapitalization, reorganization or merger of the Company, (c)
any shares of capital stock issued with respect to any security described in
clauses (a), (b) or (d) pursuant to a stock split or stock dividend, and (d) any
capital stock or other security into which or for which any security described
in clauses (b), (c) or this clause (d) shall have been converted or exchanged,
and in each case whether held by an Initial Investor or any transferee; provided
that no Preferred Shares which have been sold pursuant to a Public Sale shall be
considered to be outstanding Preferred Shares or Securities hereunder.
Investor Purchase Agreement. Investor Purchase Agreement shall mean the
Securities Purchase and Contribution Agreement, dated November 15, 2000, as
amended as of January 9, 2001 and as of May 1, 2001, among the Company, BRSC,
the other investors named therein or joining thereto from time to time and those
beneficial and record stockholders of the Company set forth on Exhibit A to the
Merger Agreement.
Letter of Credit. Letter of Credit means a standby or documentary letter
of credit issued, extended or renewed in accordance with the Credit Agreement.
Leverage Ratio. As at any date of determination, the ratio of (a)
Consolidated Funded Indebtedness outstanding on such date to (b) Consolidated
EBITDA for the Reference Period ending on such date.
Lien. Lien shall mean any mortgage, deed of trust, security interest,
pledge, hypothecation, assignment, attachment, deposit arrangement, encumbrance,
lien (statutory, judgment or otherwise), or other security agreement or
preferential arrangement of any kind or nature whatsoever (including any
conditional sale or other title retention agreement, any Capitalized Lease, any
Synthetic Lease, any financing lease involving substantially the same economic
effect as any of the foregoing and the filing of any financing statement under
the UCC or comparable law of any jurisdiction).
Maintenance Capital Expenditures. Capital Expenditures that are not
Growth Capital Expenditures.
Major Holder. Major Holder shall mean the holder or holders at the
relevant time (excluding the Company) of (a) in the case of the Notes, at least
10% of the then outstanding principal amount of the Notes, (b) in the case of
the Warrants, Warrant Stock and Common Shares, at least 10% of the total number
of (i) shares of Warrant Stock then issuable upon exercise of the outstanding
Warrants and (ii) then outstanding shares of Warrant Stock and Common Shares,
and (c) in the case of the Preferred Shares, at least 10% of the then
outstanding number of Preferred Shares.
Majority Holders. Majority Holders shall mean the holder or holders at
the relevant time (excluding the Company) of (a) in the case of the Notes, at
least 51% of the then outstanding principal amount of the Notes, (b) in the case
of the Warrants, Warrant Stock and Common Shares, at least 51% of the number of
(i) shares of Warrant Stock then issuable upon exercise of the outstanding
Warrants and (ii) the then outstanding shares of Warrant Stock and Common
Shares, (c) in the case of the Preferred Shares, at
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least 51% of the then outstanding number of Preferred Shares, (d) in the case of
the Put Notes, at least 51% in outstanding principal amount of the Put Notes and
(e) in the case of the Investor Group Preferred, at least 51% of the then
outstanding number of shares of Investor Group Preferred.
Management Agreement. Management Agreement shall mean the Management
Agreement, dated as of the date hereof, between Bruckman, Rosser, ▇▇▇▇▇▇▇▇ & Co.
L.L.C. and the Company.
Material Adverse Effect. Material Adverse Effect shall mean with respect
to any event or occurrence of whatever nature (including any adverse
determination in any litigation, arbitration or governmental investigation or
proceeding):
(a) a material adverse effect on the business, properties, prospects,
condition (financial or otherwise), assets, operations or income of the Company
and its Subsidiaries, taken as a whole; or
(b) any impairment of the validity, binding effect or enforceability of
this Agreement or any of the other Mezzanine Documents, or any impairment of the
rights, remedies or benefits available to any holder of Securities under any
Mezzanine Document.
Material Contract. Material Contract shall mean any contract or other
arrangement to which the Company or any of its Subsidiaries is a party (other
than the Mezzanine Documents) for which breach, nonperformance, cancellation or
failure to renew would reasonably be expected to have a Material Adverse Effect.
Maximum Drawing Amount. The maximum aggregate amount that the
beneficiaries may at any time draw under outstanding Letters of Credit, as such
aggregate amount may be reduced from time to time pursuant to the terms of the
Letters of Credit.
Maximum Rate. See Section 3.6(c).
Merger. Merger shall mean the merger of Manhattan Acquisition Corp. with
and into Il Fornaio pursuant to the Merger Documents, with Il Fornaio being the
surviving corporation of such merger.
Merger Agreement. Merger Agreement shall mean The Agreement and Plan of
Merger, dated as of November 14, 2000 (and as amended on January 9, 2001, May 1,
2001 and June 13, 2001) between the Company and Manhattan Acquisition Corp.,
evidencing a maximum purchase price per share of $12.00, as in effect without
giving effect to any amendments, modifications or waivers of the term thereof
other than amendments, modifications and waivers certified copies of which have
been delivered to the Majority Holders and approved by the Majority Holders in
writing.
Merger Documents. Merger Documents shall mean (a) the Certificate of
Merger dated as of July 17, 2001 filed with the Secretary of State of the State
of Delaware, (b) the Merger Agreement, and (c) the Voting Agreement, dated as of
November 15, 2000, between the Company and those beneficial and record
stockholders of the Company set forth on Exhibit A to the Merger Agreement.
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Mezzanine Documents. Mezzanine Documents shall include this Agreement,
the Securities, the Registration Rights Agreement, the Subsidiary Guaranty,
Securities Holders Agreement and any and every other present or future
instrument or agreement from time to time entered into between the Company or
any of its Subsidiaries and the Initial Holders or any other holder of the
Securities which relates to this Agreement or any of the transactions
contemplated hereby or is stated to be a Mezzanine Document, as from time to
time amended or modified, and all statements, reports or certificates delivered
by or on behalf of the Company to the Initial Holders or any other holder of the
Securities in connection herewith or therewith.
Multiemployer Plan. Multiemployer Plan shall mean any Employee Benefit
Plan which is a "multiemployer plan" as defined in Section 3(37) of ERISA.
Negotiation Period. See Section 11.5(b).
Notes. Notes shall mean an aggregate of $13,000,000 Senior Subordinated
Notes of the Company, issued pursuant to Section 2.1 hereof, and any other Notes
transferred to any other holders pursuant to Section 16 hereof, as the same may
be amended, restated or modified from time to time.
PBGC. PBGC shall mean the Pension Benefit Guaranty Corporation created
by Section 4002 of ERISA and any successor entity or entities having similar
responsibilities.
Pension Plan. Pension Plan shall mean any Employee Benefit Plan, other
than a Multiemployer Plan, which is subject to Section 412 of the Code or
Section 302 of ERISA.
Permitted Indebtedness. See Section 7.11.
Permitted Liens. See Section 7.12.
Permitted Renewal. See Section 3.7(b).
Person. Person shall mean an individual, partnership, corporation,
association, trust, joint venture, unincorporated organization, and any
government, governmental department or agency or political subdivision thereof.
Preferred Shares. Preferred Shares shall mean (a) the Preferred Stock
issued pursuant to this Agreement, (b) any capital stock or other securities
into which or for which such Preferred Stock shall have been converted or
exchanged pursuant to any recapitalization, reorganization or merger of the
Company, (c) any shares of capital stock issued with respect to any security
described in clauses (a), (b) or (d) pursuant to a stock split or stock
dividend, and (d) any capital stock or other security into which or for which
any security described in clauses (b), (c) or this clause (d) shall have been
converted or exchanged; provided that no Preferred Shares which have been sold
pursuant to a Public Sale shall be considered to be outstanding Preferred Shares
or Securities hereunder.
Preferred Stock. Preferred Stock shall mean the Series A Cumulative
Compounding Preferred Stock of the Company, par value $.001 per share (the
"Series A Preferred Stock") and the Series B Cumulative Compounding Preferred
Stock of the Company, par value $.001 per share (the "Series B Preferred Stock")
having the rights
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and privileges set forth in Exhibit D hereto and, in addition, any capital stock
or other securities into which or for which such Preferred Stock shall have been
converted or exchanged pursuant to any recapitalization, reorganization or
merger of the Company.
Pro Forma Adjustments. Adjustments relating to executive compensation
and expenses incurred by the Company prior to the Merger which were related
solely to the fact that the Company was a company registered under the
Securities Act of 1933, such adjustments in amounts and at times acceptable to
BBI, provided, however, that the aggregate amount of Pro Forma Adjustments for
any fiscal period shall not exceed the amount set forth opposite such period in
the table set forth below:
------------------------------- ---------------------
Fiscal Period Ending: Amount
------------------------------- ---------------------
Closing Date $1,100,000
------------------------------- ---------------------
September 30, 2001 $850,000
------------------------------- ---------------------
December 31, 2001 $550,000
------------------------------- ---------------------
March 31, 2002 $300,000
------------------------------- ---------------------
Thereafter $0
=
------------------------------- ---------------------
Projections. See Section 4.6(a)(iii).
Property. Property means the properties owned, leased or operated by the
Company and its Subsidiaries.
Public Sale. Public Sale shall mean any sale of Common Stock to the
public pursuant to a public offering registered under the Securities Act or to
the public through a broker pursuant to the provisions of Rule 144 (or any
successor rule) under the Securities Act.
Purchase Price. See Section 2.2.
Purchased Securities. See Section 2.2.
Put Closing Date. See Section 11.2.
Put Note. See Section 11.4.
Put Notice. See Section 11.1.
Put Warrant. See Section 11.4.
Qualified Public Offering. Qualified Public Offering shall mean a sale
of Common Stock in a bona fide, firm commitment underwriting registered under
the Securities Act (other than a Registration Statement on Forms S-8 or S-4 or
any similar or successor forms or any registration statement relating to an
exchange offer or an offering of securities solely to the Company's employees or
securityholders, or used in connection with an acquisition or business
combination, or used to offer and sell and combination of
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debt and equity securities of the Company in which (i) not more than 20% of the
gross proceeds from such offering is attributable to the equity securities and
(ii) after giving effect to such offering, the Company does not have a class of
equity securities required to be registered under the Exchange Act) where the
aggregate net proceeds received by the Company are not less than $30,000,000.
RCRA. See Section 4.18.
Redeemable Capital Stock. Redeemable Capital Stock shall mean any equity
security that (i) by its terms is required to be redeemed prior to the maturity
date of the Notes, or is redeemable at the option of the holder thereof at any
time prior to the maturity date of the Notes, or (ii) requires the payment of
cash dividends to the holders of such security at any time while the Notes are
outstanding.
Reference Period. Any period of four (4) consecutive fiscal quarters of
the Company ending on the relevant date, provided, however, that solely for
purposes of calculating the Cash Flow Ratio contained in Section 11.3 and the
ratio of EBITDAR to Total Interest Expense and Rental Expense contained in
Schedule 7.17, until four (4) full fiscal quarters of the Company have elapsed
after September 30, 2001, such shorter period of one (1), two (2) or three (3)
full fiscal quarters elapsed since September 30, 2001.
Registration Rights Agreement. Registration Rights Agreement shall mean
the Registration Rights Agreement, dated as of the date hereof among the
Company, the purchasers of Securities hereunder and certain other stockholders
of the Company, in the form of Exhibit E hereto.
Related Agreements. Related Agreements shall mean, collectively, the
Merger Documents, the Senior Loan Documents, the Mezzanine Documents and the
Equity Documents.
Release. Release shall have the meaning specified in CERCLA and
regulations promulgated thereunder; provided, that in the event CERCLA is
amended so as to broaden the meaning of such term defined thereby, such broader
meaning shall apply as of the effective date of such amendment and provided
further, to the extent that the laws of a state wherein the Property lies
establishes a meaning for "Release" which is broader than specified in CERCLA,
such broader meaning shall apply.
Repurchase Price. See Section 11.5(a).
Rescission Notice. See Section 11.4.
Restricted Payment. Restricted Payment shall mean any Distribution and
any payment (whether in cash, securities or other property) to or for the
benefit of any Affiliate of the Company or any of its Subsidiaries. Without
limiting the generality of the foregoing, all payments by the Company under the
Management Agreement shall be Restricted Payments.
Rollover Group. Rollover Group shall have the meaning set forth in the
Merger Agreement.
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▇▇▇▇. See Section 4.18.
Securities. Securities shall mean the Notes, the Put Notes, the
Warrants, the shares of Warrant Stock, the Common Shares and the Preferred
Shares.
Securities Act. Securities Act shall mean the Securities Act of 1933, as
amended, or any successor federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.
Securities Holders Agreement. Securities Holders Agreement shall mean
the Securities Holders Agreement, dated as of the date hereof, among the
Company, BRSC, and the other investors named therein or joining thereto from
time to time, in the form of Exhibit B hereto, as amended from time to time in
accordance with its terms.
Senior Funded Indebtedness. At any time of determination, the sum of
Consolidated Funded Indebtedness minus Subordinated Indebtedness.
Senior Leverage Ratio. As at any date of determination, the ratio of (a)
Senior Funded Indebtedness at such date to (b) Consolidated EBITDA for the
Reference Period ending on such date.
Senior Indebtedness. See Section 3.7(b).
Senior Lenders. Senior Lenders shall mean (i) the lenders party to the
Credit Agreement from time to time and Fleet National Bank as administrative
agent for such lenders (and any successor or replacement agent) and (ii) any
other holders from time to time of Senior Indebtedness.
Senior Loan Documents. Senior Loan Documents shall mean the Credit
Agreement and any related notes, guarantees, collateral documents, instruments
and other agreements executed in connection therewith (including schedules,
exhibits and annexes thereto), as the same may be amended, restated,
supplemented renewed, replaced or otherwise modified from time to time in
accordance with the provisions of Section 9.10 hereof, whether or not with the
same agents, representative lenders or holders, and irrespective of any changes
in the terms and conditions thereof.
Specified Event of Default. Specified Event of Default shall mean (a)
any breach of Section 8.1 which is not remedied or cured within thirty (30) days
after written notice to the Company, (b) any breach of Sections 8.2, 8.3, 8.4 or
8.5, (c) any breach of Section 9 which is not remedied or cured within thirty
(30) days after written notice to the Company, and (d) the occurrence of a
Change of Control.
Standstill Period. See Section 3.7(b).
Store. A particular restaurant at a particular location that is owned or
operated by the Company or one of its Subsidiaries.
Subordinated Indebtedness. See Section 3.7(b).
Subordinated Instrument. See Section 3.7(b).
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Subsidiary. Subsidiary shall mean any Person of which the Company or
other specified Person now or hereafter shall at the time own directly or
indirectly through a Subsidiary at least a majority of the outstanding capital
stock (or other shares of beneficial interest) entitled to vote generally.
Subsidiary Guaranty. Subsidiary Guaranty shall mean the Subsidiary
Guaranty in the form of Exhibit F hereto.
Synthetic Lease. Any lease of goods or other property, whether real or
personal, which is treated as an operating lease under GAAP and as a loan or
financing for U.S. income tax purposes.
Third Appraiser. See Section 11.5(b).
Transaction Costs. Transaction Costs shall mean all of the costs, fees
and expenses incurred by the Company or Manhattan Acquisition Corp. in
connection with the Merger, the Related Agreements and the transactions
contemplated thereby and hereby, including without limitation, broker's,
finder's or placement fees or commissions, attorneys' fees and fees of other
professionals.
Transfer Notice. See Section 16.2.
Unfunded Accrued Benefits. Unfunded Accrued Benefits shall mean with
respect to any "employee pension benefit plan" (as defined in Section 3(2) of
ERISA) at any time, the amount (if any) by which (a) the present value of all
vested liabilities under such employee pension benefit plan exceeds (b) the fair
market value of plan assets, all determined as of the most recent valuation date
for such employee pension benefit plan.
Unprofitable Store. Unprofitable Store shall mean, at the relevant time
of reference thereto, any Store whose net income (without deduction or
adjustment for expenses relating to interest, income taxes, depreciation or
amortization or other non-cash charges, gains or losses on the sale of Capital
Assets or corporate overhead that may be attributable to such Store) on an
individual Store basis is less than $1 for the twelve most recently ended fiscal
months, provided that, solely for purposes of determining whether any Store is
an Unprofitable Store, it shall be assumed that the net income of each Store
shall be greater than $1 for each of its first six months of operation.
Unrepurchased Securities. See Section 11.4.
Warrant(s). Warrants shall mean, collectively, the Common Stock Purchase
Warrants of the Company issued pursuant to Section 2.1 hereof, any Put Warrants
issued pursuant to Section 11.4 hereof and any other Warrants transferred to any
other holders pursuant to Section 16 hereof; provided that no Warrants which
have been sold pursuant to a Public Sale shall be considered to be outstanding
Warrants or Securities hereunder.
Warrant Stock. Warrant Stock shall mean Common Stock previously issued
or, at the time of determination, issuable upon exercise of the Warrants in
accordance with their terms and any capital stock or other securities into which
or for which such Common Stock shall have been converted or exchanged pursuant
to any recapitalization,
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reorganization or merger of the Company and any shares of capital stock issued
with respect to the foregoing pursuant to a stock split or stock dividend;
provided that no shares of Warrant Stock which have been sold pursuant to a
Public Sale shall be considered to be outstanding Warrant Stock or Securities
hereunder.
Warrantholder Appraisal. See Section 11.5(b).
Warrantholder Appraiser. See Section 11.5(b).
2. SALE AND PURCHASE OF PURCHASED SECURITIES.
2.1. Sale and Purchase of Purchased Securities.
(a) The Company agrees to issue and sell to the Initial Holders and,
subject to all of the terms and conditions hereof and in reliance on the
representations and warranties set forth or referred to herein, each Initial
Holder severally agrees to purchase the Senior Subordinated Notes of the
Company, in the aggregate principal amount of $13,000,000, in the form of
Exhibit A-1 hereto and in the individual amounts set forth on Schedule 2.1
hereto.
(b) The Company agrees to issue and sell to the Initial Holders and,
subject to all of the terms and conditions hereof and in reliance on the
representations and warranties set forth or referred to herein, each Initial
Holder severally agrees to purchase, in the individual amounts set forth on
Schedule 2.1 hereto, the Securities listed below:
(i) Common Stock Purchase Warrants for the purchase of an
aggregate of 25,396 shares of Common Stock, in the form of Exhibit B-1
hereto;
(ii) an aggregate of 82,278 shares of Series A Preferred Stock;
(iii) an aggregate of 68,565 shares of Series B Preferred Stock.
(c) The Company further agrees to issue and sell to BBI and, subject to
all of the terms and conditions hereof and in reliance on the representations
and warranties set forth or referred to herein, BBI agrees to purchase, the
Securities listed below:
(i) an aggregate of 21,930 shares of Common Stock (the "Initial
Common Shares");
(ii) an aggregate of 78,947 shares of Series A Preferred Stock;
and
(iii) an aggregate of 65,789 shares of Series B Preferred Stock.
2.2. Purchase Price. The aggregate purchase price for the Securities
purchased pursuant to Section 2.1 (the "Purchased Securities") is $15,000,000
(the "Purchase Price"). The parties agree that the consideration paid for the
Securities shall be allocated, for purposes of determining the issue price of
the Securities for federal income tax purposes, among the Securities, in the
following manner: (a) $10,885,308.24 for the
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Notes; (b) $987,253.72 for the Series A Preferred Stock; (c) $822,711.44 for the
Series B Preferred Stock; and (d) $304,726.60 for the Warrants. The parties
agree that such allocation was agreed to by the parties in the manner set forth
in Treas. Reg. Section 1.1273-2(h)(i) and that they will not take any position
for tax purposes that is inconsistent with such allocation. At the Closing, the
Company will also deliver to the Initial Holders the closing fee referred to in
Section 6.9 hereof in immediately available funds.
2.3. Closing. The closing of the purchase and sale of the Purchased
Securities (the "Closing") will take place at the offices of Dechert, ▇▇
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, at 10:00 a.m. on July 17, 2001, or at
such other time, date and place as the parties hereto may agree upon (the
"Closing Date"). At the Closing, the Company will deliver to each Initial Holder
its Purchased Securities against payment by such Initial Holder of the Purchase
Price in respect of its Securities in immediately available funds. Each of the
Purchased Securities will be issued to the applicable Initial Holder or any
nominee specified by such Initial Holder on or before the Closing Date and
registered in such Initial Holder's name or the name of such specified nominee
in the records of the Company.
2.4. Use of Proceeds. The proceeds from the sale of the Purchased
Securities hereunder will be used by the Company solely to pay the cash
consideration payable by the Company in connection with the Merger and to pay
Transaction Costs.
3. PRINCIPAL AND INTEREST PAYMENTS ON NOTES; SUBORDINATION.
3.1. Mandatory Principal Repayment. The Company agrees to repay the
entire unpaid principal amount of the Notes on July 17, 2008.
3.2. Prepayments. The Company, upon not less than 15 nor more than 30
days' prior written notice to the holders of the Notes of the date and amount of
optional prepayment, may prepay from time to time all or any portion (in
integral multiples of $500,000) of the principal amount of the Notes; provided,
that (x) no prepayment of any Note may be made under this Agreement prior to the
third anniversary of the Closing Date except upon payment to the holder thereof
of the Applicable Prepayment Charge and (y) no prepayment or repayment in full
of the Notes may be made at any time while any Put Notes are outstanding unless
concurrently therewith the Put Notes are paid in full. In addition, the
Applicable Prepayment Charge, if any, shall be due and payable upon any
repayment of the Notes following the acceleration of the Notes pursuant to
Section 10.2 hereof. The principal amount of any Notes designated for prepayment
in any notice of optional prepayment permitted by this Section 3.2 shall become
due and payable on the date fixed for prepayment in such notice, together with
all accrued and unpaid interest thereon.
3.3. Application of Payments and Prepayments. Each repayment or
prepayment of less than the entire unpaid principal amount of all outstanding
Notes shall be applied pro rata to all outstanding Notes, according to the
respective unpaid principal amounts thereof.
3.4. Presentation or Surrender of Notes. The Company may, as a condition
to making any prepayment of a Note, require the holder thereof to present such
Note at the
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place specified in the Note for payment of the principal thereof, for notation
thereon of the amount and date of such prepayment, or, if such Note is prepaid
in full, to surrender the same to the Company.
3.5. No Reborrowing or Other Prepayments. Except as expressly permitted
by Section 3.2, none of the principal of the Notes may be prepaid. No amount
repaid or prepaid pursuant to Section 3.1 or 3.2 may be reborrowed under the
Notes.
3.6. Interest Payments.
(a) Subject to Section 3.6(b) hereof, the unpaid principal amount of the
Notes outstanding from time to time shall bear interest (i) from the Closing
Date until the fifth anniversary of the Closing Date at a rate equal to 13% per
annum and (ii) from and after the fifth anniversary of the Closing Date until
and including the maturity of the Notes, at a rate equal to the greater of (A)
the Base Rate plus 5% per annum and (B) 13% per annum. Interest on the Notes
shall be calculated on the basis of the actual number of days elapsed and a 360
day year, and shall be payable quarterly in arrears on the first day of each
calendar quarter, commencing on the first such date to occur after the Closing
Date, and at the maturity or any earlier acceleration or prepayment of the
Notes.
(b) Overdue principal and (to the extent permitted by applicable law)
overdue interest on the Notes shall bear interest at a rate per annum equal to
the then applicable non-default interest rate applicable to the Notes plus 3%,
payable on demand and compounded monthly, until such amount shall be paid in
full.
(c) From and after the occurrence of any Event of Default, the unpaid
principal amount of the Notes then outstanding shall bear interest at the then
prevailing rate plus 2%.
(d) It is not intended by the holders of the Notes, and nothing
contained in this Agreement or any Note shall be deemed, to establish or require
the payment of a rate of interest in excess of the maximum rate permitted by
applicable federal, state or other law (the "Maximum Rate") and, to prevent such
an occurrence, any agreement which may now or hereafter be in effect between the
Company and the holders of the Notes regarding the payment of fees or interest
to such holders is hereby limited by the provisions of this Section 3.6(c). If,
in any month, the effective interest rate applicable to the principal
outstanding under the Notes, absent the Maximum Rate limitation contained
herein, would have exceeded the Maximum Rate, then the effective interest rate
applicable to the Notes for that month shall be the Maximum Rate, and, if in any
subsequent month, the effective interest rate would otherwise be less than the
Maximum Rate, then the effective interest rate applicable to the Notes for such
month shall be increased to the Maximum Rate until such time as the amount of
interest paid hereunder equals the amount of interest which would have been paid
in respect of the Notes if the same had not been limited by the Maximum Rate. In
the event that, upon payment in full of the principal outstanding under the
Notes, the total amount of interest paid or accrued in respect of the Notes
under the terms of this Agreement is less than the total amount of interest
which would have been paid or accrued in respect of the Notes had the interest
not been limited hereby to the Maximum Rate, then the Company shall, to the
extent permitted by such applicable federal, state or other law, pay to each of
the holders of the Notes an amount equal to the excess, if any, of (i) the
lesser of (A) the
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amount of interest which would have been charged in respect of the Notes if the
Maximum Rate had, at all times, been in effect with respect to the Notes and (B)
the amount of interest which would have accrued in respect of the Notes had the
effective interest rate applicable with respect to the Notes at all times not
been limited hereunder by the Maximum Rate over (ii) the amount of interest
actually paid or accrued in respect of the Notes held by such holder under this
Agreement. In the event that the holders of the Notes receive, collect or apply
as interest any sum in excess of the Maximum Rate, such excess amount shall be
applied in accordance with Section 3.3 hereof to the reduction of principal
outstanding under the Notes and if no such principal is then outstanding, such
excess or part thereof remaining, shall be paid to the Company.
3.7. Subordination.
(a) Subordination to Senior Indebtedness. Notwithstanding any other
provision of this Agreement, the payment by the Company of the Subordinated
Indebtedness is and shall be subordinated in right of payment, to the extent and
in the manner set forth in this Section 3.7, to the prior payment in full of the
Senior Indebtedness.
(b) Definitions. As used herein:
(i) the term "Blockage Period" shall mean an Indefinite Blockage Period
or a Limited Blockage Period;
(ii) the term "Enforcement Action" shall mean any of the following: (a)
any action by the Agent or any holder of Senior Indebtedness to enforce any
payment obligation under the Senior Loan Documents; (b) the Agent or any holder
of Senior Indebtedness joining in the commencement of any bankruptcy,
insolvency, liquidation or similar proceeding by or against the Company or any
of its Affiliates; (c) any acceleration of the maturity of any Senior
Indebtedness; (d) any termination or suspension of any lending commitment under
any Senior Loan Document; (e) any commencement of a proceeding or other action
for the purpose of realizing upon any collateral securing Senior Indebtedness;
or (f) any other action by the Agent or any holder of Senior Indebtedness to
enforce any right or pursue any remedy under any Senior Loan Document;
(iii) the term "Indefinite Blockage Period" shall mean the period
beginning on the date on which the Subordinated Debt Representative shall have
received a Senior Payment Default Notice and ending on the date which all Senior
Payment Defaults identified in such Senior Payment Default Notice shall have
been cured or waived;
(iv) the term "Junior Securities" shall mean any equity security of the
Company that does not constitute Redeemable Capital Stock, and any debt security
of the Company that is subordinated in right of payment to Senior Indebtedness
at least to the same extent as the Notes;
(v) the term "Limited Blockage Period" shall mean the period commencing
on the date on which the Subordinated Debt Representative shall have received a
Senior Covenant Default Notice and ending on the earlier to occur of (A) the
date on which all
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Senior Covenant Defaults identified in such notice shall have been cured or
waived, or (B) 180 days after such date;
(vi) the term "Maximum Amount" shall mean, at any date of determination,
an amount equal to the sum of (A) $41,250,000 (or, in the event that the Total
Commitment under the Credit Agreement is increased prior to July 17, 2002 by up
to $5,000,000, then the lesser of the Total Commitment plus 10% and
$43,000,000), minus (B) the amount of all principal payments regularly scheduled
to have been made (whether or not actually made) on the Term Loans (as defined
in the Credit Agreement as in effect on the date hereof) from the date hereof
through the date of determination in accordance with the schedule for such
payments in effect under the Credit Agreement on the date hereof, minus (C) the
aggregate amount of all voluntary and mandatory prepayments of principal of
Senior Term Loans actually made, minus (D) the aggregate amount of all
commitment reductions in respect of any revolving credit facility under any
senior indebtedness, plus (E) the amount of any principal payments referred to
in clause (B) above not actually made as of such date of determination and
constituting a default under the Credit Agreement;
(vii) the term "Permitted Renewal" shall mean any amendment,
restatement, extension, renewal or refinancing of the Credit Agreement which
does not (A) increase the aggregate principal amount of Indebtedness and undrawn
commitments thereunder to an amount which would at any time exceed the Maximum
Amount in effect for such time, or (B) modify or amend any of the provisions of
the Senior Loan Documents in a way which would impose greater restrictions on
the rights of the holders of Subordinated Indebtedness, or on the obligations of
the Company and its Subsidiaries under the Mezzanine Documents, than those
restrictions imposed by the Senior Loan Documents on the date hereof;
(viii) the term "Senior Covenant Default" shall mean any default (other
than a Senior Payment Default) with respect to any Senior Indebtedness which
then permits the acceleration of all Senior Indebtedness;
(ix) the term "Senior Covenant Default Notice" shall mean written notice
from the Agent of any Senior Covenant Default;
(x) the term "Senior Indebtedness" shall mean the principal amount of
any Indebtedness of the Company or any of its Subsidiaries under the Credit
Agreement as in effect on the date hereof and any Permitted Renewal thereof
which does not cause the aggregate amount of Senior Indebtedness (and undrawn
commitments thereunder) to exceed at any time the Maximum Amount then in effect,
and all interest (including, without limitation, post-petition interest whether
or not an allowed claim), fees and indemnification and reimbursement obligations
owing by the Company or any of its Subsidiaries with respect thereto or under
the Senior Loan Documents;
(xi) the term "Senior Payment Default" shall mean any default in payment
of any principal of, or interest on, Senior Indebtedness;
(xii) the term "Senior Payment Default Notice" shall mean written notice
from the Agent of any Senior Payment Default;
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(xiii) the term "Senior Term Loans" shall mean the term loans (as
defined in the Credit Agreement as in effect on the date hereof) and any other
term loan under any Senior Indebtedness;
(xiv) the term "Standstill Period" shall mean with respect to any
Subordinated Indebtedness, the period commencing on the first day of any
Blockage Period and ending on the earlier of (A) 180 days after the commencement
of such Blockage Period or (B) the date on which such Blockage Period ends;
(xv) the term "Subordinated Debt Representative" shall mean a
representative for the holder of Subordinated Indebtedness who shall be
designated in writing to the Agent by the Majority Holders of the Notes and who
shall initially be BBI;
(xvi) the term "Subordinated Indebtedness" shall mean all principal,
premium (if any), interest and fees and other amounts owing by the Company under
or with respect to the Notes or the Mezzanine Documents, as the same may be
amended from time to time; and
(xvii) the term "Subordinated Instrument" shall mean any instrument or
agreement evidencing Subordinated Indebtedness.
(c) Prior Payment of Senior Indebtedness on Dissolution, Liquidation or
Reorganization. Upon any distribution of assets of the Company or any of its
Subsidiaries upon any dissolution, winding up, total or partial liquidation or
reorganization of the Company or such Subsidiary, whether voluntary or
involuntary, in bankruptcy, insolvency, receivership or similar proceeding or
upon assignment for the benefit of creditors or any marshalling of assets or
liabilities (a "Bankruptcy or Insolvency Proceeding"):
(i) the holders of Senior Indebtedness will be entitled to
receive payment in full in cash of all Senior Indebtedness before the
holders of Subordinated Indebtedness receive any payment (other than
Junior Securities) on account of any obligation in respect of any
Subordinated Instrument, including the principal of, premium, if any,
and interest on the Subordinated Indebtedness; and
(ii) any payment or distribution of assets of the Company or such
Guarantor of any kind or character from any source, whether in cash,
property or securities (other than Junior Securities) to which the
holders of Subordinated Indebtedness would be entitled (by setoff or
otherwise), except for the subordination provisions contained in this
Agreement, will be paid by the liquidating trustee or agent or other
person making such payment or distribution directly to the holders of
Senior Indebtedness or their representative to the extent necessary to
make payment in full in cash on all such Senior Indebtedness remaining
unpaid, after giving effect to any concurrent payment or distribution to
the holders of such Senior Indebtedness, and rendering any surplus
remaining to the holders of Subordinated Indebtedness.
(d) No Payment on Notes Under Certain Conditions.
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(i) No payment shall be made by or on behalf of the Company with
respect to Subordinated Indebtedness during any Blockage Period.
(ii) During any Standstill Period, unless either (A) the holders
of Senior Indebtedness shall have commenced an Enforcement Action or (B)
any Bankruptcy or Insolvency Proceeding is commenced, no action or
proceeding shall be commenced by any holder of such Subordinated
Indebtedness to collect payment thereof.
(iii) Notwithstanding anything herein to the contrary, (A) no
Limited Blockage Period shall commence within 180 days after the end of
another Limited Blockage Period, (B) no Standstill Period shall commence
within 180 days after the end of another Standstill Period, and (C) no
new Limited Blockage Period may be commenced with respect to any Senior
Covenant Default after the termination of a prior Limited Blockage
Period with respect to such Senior Covenant Default unless another
Senior Covenant Default then exists, nor may the provisions of this
Section 3.7(d) or the Limited Blockage Periods or Standstill Periods
established hereby restrict or prohibit for more than 180 days in any
360-day period the Company from making or the holder thereof from
accepting any payment of Subordinated Indebtedness or such holder from
bringing any action or proceeding to collect any such payment.
(e) Payments Held in Trust. If, in violation of the terms of this
Section 3.7, any holder of Subordinated Indebtedness receives payment thereof or
any distribution with respect thereto before all Senior Indebtedness is paid in
full, and such holder of Subordinated Indebtedness receives notice within 30
days after receipt of such payment that such payment was made in violation of
the terms of this Section 3.7, such payment or distribution shall be held in
trust for and paid ratably to the holders of Senior Indebtedness or their
representatives until all Senior Indebtedness shall have been paid in full in
cash. No such payments or distributions paid to the holders of Senior
Indebtedness or their representatives by any holder of Subordinated Indebtedness
shall be deemed to discharge any of such Subordinated Indebtedness.
(f) Subrogation. Subject to the payment in full of all Senior
Indebtedness as provided herein, the holders of Subordinated Indebtedness shall
be subrogated to the rights of the holders of such Senior Indebtedness to
receive payments or distributions of assets of the Company applicable to the
Senior Indebtedness until all amounts owing on the Subordinated Indebtedness
shall be paid in full, and for the purpose of such subrogation no such payments
or distributions to the holders of Senior Indebtedness by or on behalf of the
Company, or by or on behalf of the holders of Subordinated Indebtedness by
virtue of this Section 3.7, which otherwise would have been made to the holders
of Subordinated Indebtedness shall, as between the Company and the holders of
Subordinated indebtedness, be deemed to be payment by the Company on account of
such Senior Indebtedness, it being understood that the provisions of this
Section 3.7 are intended solely for the purpose of defining the relative rights
of the holders of Subordinated Indebtedness, on the one hand, and the holders of
Senior Indebtedness, on the other hand.
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(g) Scope of Subordination. The subordination provisions of this Section
3.7 are intended solely to define the relative rights of the holders of
Subordinated Indebtedness and the holders of Senior Indebtedness. Nothing in
this Section 3.7 or any Mezzanine Document shall impair, as between the Company,
its creditors (other than the holders of Senior Indebtedness) and the holders of
Subordinated Indebtedness, the unconditional and absolute obligation of the
Company to timely pay the principal, interest, and other amounts and obligations
owing under the terms of such Subordinated Instrument or affect the relative
rights of the holders of such Subordinated Instrument and creditors of the
Company (other than the holders of Senior Indebtedness), nor shall anything
prevent any holder of Subordinated Indebtedness from accepting any payment with
respect to such Subordinated Indebtedness or exercising all remedies otherwise
permitted by applicable law upon default with respect to such Subordinated
Indebtedness or this Agreement, subject to any rights under this Section 3.7 of
the holders of Senior Indebtedness in respect of such payment.
(h) Notices. All notices to be made by the holders of Senior
Indebtedness to the holders of Subordinated Indebtedness hereunder (including,
without limitation, any notice to commence a Standstill Period or any notice in
connection with the proceedings referred to in Section 3.7(c)) may be made to
the Subordinated Debt Representative and any such notices so delivered shall be
deemed to have been delivered to all holders of Subordinated Indebtedness.
(i) Senior Lenders. So long as any Senior Indebtedness is outstanding
under the Credit Agreement, the Agent acting on behalf of the Senior Lenders
which hold such Senior Indebtedness shall be entitled exclusively to exercise
all rights of the Senior Lenders and of a holder of Senior Indebtedness
hereunder on behalf of and for the benefit of all holders of Senior
Indebtedness, including without limitation, receiving any notices, exercising
any remedies or taking any other actions to be taken by a Senior Lender or a
holder of Senior Indebtedness under this Section 3.7. After the payment in full
of the Senior Indebtedness under the Credit Agreement, the holders of Senior
Indebtedness shall be entitled to exercise such rights and remedies.
(j) From and after the commencement of any Bankruptcy or Insolvency
Proceeding and during the pendency thereof, the holders of Subordinated
indebtedness shall not contest the validity of the Senior Loan Documents, and
liens granted to the Senior Lenders thereunder or the enforceability of the
subordination provisions set forth in this Section 3.7
4. REPRESENTATIONS AND WARRANTIES.
In order to induce each Initial Holder to enter into this Agreement and
to purchase the Purchased Securities, the Company hereby represents and warrants
that, both immediately before and immediately after giving effect to the Closing
and the Merger:
4.1. Organization and Good Standing. The Company and each of its
Subsidiaries is duly organized and existing in good standing in its jurisdiction
of incorporation and is duly qualified as a foreign corporation and authorized
to do business in all other jurisdictions in which the nature of its business or
property makes such qualification
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necessary, except where the failure to so qualify would not have a Material
Adverse Effect. The Company and each of its Subsidiaries have the corporate
power to own their properties and to carry on their business as now conducted.
4.2. Authorization. Except as set forth on Schedule 4.2 hereto, the
execution, delivery and performance by the Company of this Agreement and by the
Company and each of its Subsidiaries of each Related Agreement to which such
Person is a party, and the issuance and sale by the Company of the Securities
hereunder, (a) are within such Person's corporate power and authority, (b) have
been duly authorized by all necessary corporate proceedings, (c) do not result
in the creation of any Lien upon any of the property of the Company or any of
its Subsidiaries (other than Liens incurred in connection with the security
interests granted pursuant to the Senior Loan Documents), (d) do not conflict
with or result in any breach of any provision of or require any filing, consent
or approval pursuant to the Charter or bylaws of the Company or any of its
Subsidiaries or any law or regulation (including without limitation any
applicable environmental restrictive transfer law or regulation) or order,
judgment, writ, injunction, license, permit, and (e) do not conflict with or
result in any breach of any provision of or require any filing, consent or
approval pursuant to any agreement or instrument to which the Company or any of
its Subsidiaries is a party or by which it is bound or to which any of their
respective assets is subject, except for conflicts or breaches of such
agreements and instruments which would not reasonably be expected to have a
Material Adverse Effect.
4.3. Enforceability. The execution and delivery by the Company of this
Agreement and by the Company and each of its Subsidiaries of each of the Related
Agreements to which such Person is a party, and the issuance and sale by the
Company of the Notes hereunder, will result in legally binding obligations of
such Person enforceable against such Person in accordance with the respective
terms and provisions hereof and thereof, except to the extent that (a) such
enforceability is limited by bankruptcy, insolvency, reorganization, moratorium
or other laws relating to or affecting generally the enforcement of creditors'
rights, (b) the availability of the remedy of specific performance or injunctive
or other equitable relief is subject to the discretion of the court before which
any proceeding therefor may be brought and (c) the enforceability of the
indemnities and contribution provisions contained in the Registration Rights
Agreement may be limited under securities laws.
4.4. Capitalization.
(a) Capital Stock. Immediately after giving effect to the transactions
contemplated by the Merger Agreement and this Agreement, (i) the number of
authorized and outstanding shares of capital stock of the Company are set forth
on Schedule 4.4(a) hereto, (ii) all of the outstanding shares of capital stock
of the Company are owned as set forth in Schedule 4.4(a) hereto, and (iii) all
of the outstanding shares of capital stock of the Company are duly authorized,
validly issued, fully paid and non-assessable.
(b) Options, Etc. Other than as disclosed on Schedule 4.4(b) hereto, the
Company has no outstanding rights (either pre-emptive or other) or options to
subscribe for or purchase from the Company and no warrants or other agreements
providing for or
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requiring the issuance by the Company of, any capital stock or any securities
convertible into or exchangeable for its capital stock.
(c) Reservation, Etc. Sufficient shares of authorized but unissued
Common Stock have been reserved by appropriate corporate action by the board of
directors of the Company in connection with the prospective exercise of the
Warrants and any other rights, options or agreements disclosed on Schedule
4.4(b). The issuance of the Warrants or the shares of Warrant Stock (i) does not
require any further corporate action by the stockholders or directors of the
Company, (ii) is not subject to pre-emptive rights created by the Company in any
present or future stockholders of the Company and (iii) does not conflict with
any provision of any material agreement to which the Company is a party or by
which it is bound. All shares of Warrant Stock, when issued upon exercise of the
Warrants in accordance with their terms, will be duly authorized, validly
issued, fully paid and non-assessable.
4.5. Subsidiaries. The Company does not have any Subsidiaries and does
not own or hold of record and/or beneficially any shares of any class of the
capital stock of any corporations. The Company does not own any legal and/or
beneficial interests in any partnerships, business trusts or joint ventures or
in any other unincorporated trade or business enterprises.
4.6. Reports and Financial Statements. (a) The Initial Holders have
heretofore been furnished with, and hereby acknowledge receipt of, complete and
correct copies of the following:
(i) the audited consolidated balance sheet of the Company and its
Subsidiaries as at December 31, 2000 (the "Balance Sheet Date") and the
related statements of operations, shareholders' equity and cash flows
for the fiscal year then ended, and the unaudited consolidated balance
sheet of the Company and its Subsidiaries as at March 31, 2001, and the
related statements of income and cash flows for the three-month period
then ended, each of such balance sheets and related statements being
attached hereto as Schedule 4.6(a)(i);
(ii) the pro forma consolidated balance sheet of the Company and
its Subsidiaries as at the Closing Date, taking into account the Merger
and all transactions contemplated by the Related Agreements, such
balance sheet being attached hereto as Schedule 4.6(a)(ii); and
(iii) the projections of the future performance of the Company
and its Subsidiaries for each of the five fiscal years following the
Closing Date, on a consolidated basis, including income, net profits,
and cash flows, dated as of the Closing Date and attached hereto as
Schedule 4.6(a)(iii) (the "Projections").
(b) Each of the statements delivered under Section 4.6(a)(i) hereof was
prepared in accordance with generally accepted accounting principles applied on
a basis consistent with prior periods except as otherwise stated therein and
subject to the lack of footnote disclosures and year-end adjustments in the case
of unaudited statements; each of the balance sheets included in such financial
statements fairly presents the financial condition of the Company and its
consolidated Subsidiaries as at the close of business on the date thereof in all
material respects; and each of the statements of income included
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in such financial statements fairly presents the results of operations of the
Company and its consolidated Subsidiaries for the fiscal period then ended in
all material respects.
(c) The pro forma consolidated balance sheet of the Company referred to
in Section 4.6(a)(ii) has been prepared by management of the Company on the
basis of reasonable assumptions, taking into consideration the effect of the
Merger and the transactions contemplated hereby and by the Related Agreements.
(d) The Projections have been prepared on the basis of reasonable
assumptions and all material assumptions used in the preparation of the
Projections are set forth in the notes thereto. The Projections are based on
certain estimates and assumptions about future events and circumstances and are
subject to variation. There can be no assurance that the actual performance of
the Company and its Subsidiaries for the periods covered by the Projections will
not deviate significantly from the Projections.
4.7. Material Adverse Change. Except as disclosed in the unaudited
monthly financial statements provided to you prior to the Closing Date, from
March 31, 2001 through the date hereof and through the Closing Date there has
occurred no materially adverse change in the financial condition or business of
the Company and its Subsidiaries as shown or reflected in the consolidated
balance sheet of the Company and its Subsidiaries as at March 31, 2001, or the
consolidated statement of income for the fiscal period then ended, other than
changes in the ordinary course of business that have not had any materially
adverse effect either individually or in the aggregate on the business or
financial condition of the Company and its Subsidiaries. From March 31, 2001
through the Closing Date, the Company has not made any Restricted Payment. Prior
to and at the Closing Date, Manhattan Acquisition Corp. will not have (i)
incurred any liabilities or obligations, (ii) engaged in any business or
activities of any kind whatsoever, (iii) entered into any agreement or
arrangements with any Person or (iv) been subject to or bound by any obligation
or undertaking, except in each case as incurred in connection with the
incorporation, capitalization or negotiation and consummation of the
transactions contemplated by this Agreement and the other Related Agreements,
including, but not limited to, the Merger and the debt and equity financing
related thereto.
4.8. Indebtedness. Neither the Company nor any of its Subsidiaries has
any Indebtedness other than Permitted Indebtedness.
4.9. Related Agreements. The Initial Holders have heretofore or
simultaneously herewith been furnished with complete and correct copies of all
of the Related Agreements, other than the Mezzanine Documents. No Related
Agreement has subsequently been amended, supplemented or modified (other than
amendments, if any, delivered to the Major Holders on or prior to the Closing
Date and consented to or approved on or prior to the Closing Date by the Major
Holders or as expressly permitted hereunder). The Related Agreements are the
only material agreements relating to the Merger and the transactions
contemplated hereby to which the Company or any of its Subsidiaries is a party,
and constitute the complete understanding among the parties thereto in respect
of the matters and transactions covered thereby. Neither the Company nor any of
its Subsidiaries is in default on any of its representations, warranties or
obligations under this Agreement, any Related Agreement or any Material Contract
to
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which such Person is a party and, to the knowledge of the Company, no other
party to any Related Agreement or Material Contract is in default thereunder.
4.10. Licenses, Etc. The Company and each of its Subsidiaries possesses
and has the right to use all material franchises, patents, patent applications,
patent licenses, patent rights, trademarks, trademark rights, trade names, trade
name rights, copyrights, licenses, permits, authorizations and other rights as
are necessary for the conduct of its business as currently conducted, including
without limitation all approvals by any federal, state or local liquor authority
necessary for the continued operation of any restaurant or bakery operated by
the Company or its Subsidiaries with full liquor service, subject to the receipt
of the consents or approvals set forth on Schedule 4.10. All of the foregoing
are in full force and effect, and the Company and each of its Subsidiaries is in
compliance with the foregoing without any conflict with the rights of others
known to the Company, except as set forth on Schedule 4.10 hereto.
4.11. Solvency. Immediately prior to, upon and immediately after
consummation of the Merger and the transactions contemplated hereby and by the
other Related Agreements, the Company and each of its Subsidiaries is solvent,
has tangible and intangible assets having a fair value in excess of the amount
required to pay its probable liabilities on its existing debts as they become
absolute and matured, and has access to adequate capital for the conduct of its
business and the ability to pay its debts from time to time incurred in
connection therewith as such debts mature.
4.12. Title to Assets; Leases. Except as disclosed on Schedule 4.12
attached hereto, the Company and its Subsidiaries have (i) good, sufficient and
legal title to (in the case of fee interests in real property), (ii) valid
leasehold interests in (in the case of leasehold interests in real or personal
property) or (iii) good title to (in the case of all other personal property)
all of the assets reflected in the pro forma consolidated balance sheet of the
Company as at the Closing Date, subject to no Liens other than Permitted Liens.
The Company and each of its Subsidiaries is in material compliance with the
terms of all leases of real property on which facilities operated by it are
situated, and all such leases are valid and in full force and effect, except to
the extent that would not have a Material Adverse Effect.
4.13. Litigation. There is no litigation, at law or in equity, or any
proceeding before any court, board or other governmental or administrative
agency or any arbitrator pending or, to the knowledge of the Company, threatened
which, individually or in the aggregate, would have a Material Adverse Effect
after giving effect to any applicable insurance if adversely determined, or
which seeks to enjoin the consummation of, or which questions the validity of,
any of the transactions contemplated by this Agreement or any Related Agreement.
No judgment, decree or order of any court, board or other governmental or
administrative agency or arbitrator has been issued against or binds the
Company, any of its Subsidiaries or their respective assets.
4.14. Tax Returns. The Company and each of its Subsidiaries has filed
all material tax returns and reports which are required to be filed with any
foreign, federal, state or local governmental authority or agency and has paid,
or made adequate provision for the payment of, all assessments received and all
taxes which have become due under applicable foreign, federal, state or local
governmental law or regulations with respect to the periods in respect of which
such returns and reports were filed, other than
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(i) any taxes or assessments, the validity of which the Company or such
Subsidiary is contesting in good faith by appropriate proceedings, and with
respect to which the Company or such Subsidiary shall, to the extent required by
generally accepted accounting principles consistently applied, have set aside on
its books adequate reserves and (ii) taxes that in the aggregate are not
material and which would not, if unpaid, result in the imposition of any
material Lien on any property or assets of the Company or their Subsidiaries.
The Company knows of no additional assessments since the date of such returns
and reports. The Company and each of its Subsidiaries has made adequate
provision in accordance with generally accepted accounting principles for all
current taxes.
4.15. Defaults. No Default or Event of Default exists on the date
hereof. Neither the Company nor any of its Subsidiaries is in default under any
provisions of its Charter or by-laws. Neither the Company nor any of its
Subsidiaries is in default under any provisions of any franchise, contract,
agreement, lease or other instrument to which it is a party or by which it or
its property is bound or in violation of any law, judgment, decree or
governmental order, rule or regulation, except for violations or defaults which
would not have a Material Adverse Effect.
4.16. Employee Benefit Plans.
(a) The Company, each of its Subsidiaries and each of their respective
ERISA Affiliates are in compliance in all material respects with all applicable
provisions and requirements of ERISA and the regulations and published
interpretations thereunder with respect to each Employee Benefit Plan, and have
performed in all material respects all their obligations under each Employee
Benefit Plan. Each Employee Benefit Plan which is intended to qualify under
Section 401(a) of the Code is so qualified.
(b) No ERISA Event has occurred or is reasonably expected to occur that
might reasonably be expected to have (individually or in the aggregate) a
Material Adverse Effect.
(c) The liability of the Company and its Subsidiaries for
post-retirement welfare benefits to be provided to current and former employees
and their beneficiaries, net of all assets allocable to such benefits, are
reflected on the consolidated financial statements of the Company and its
Subsidiaries in accordance with FAS 106.
(d) As of the most recent valuation date for any Pension Plan, the
amount of unfunded benefit liabilities (as defined in Section 4001(a)(18) of
ERISA), individually or in the aggregate for all Pension Plans (excluding for
purposes of such computation any Pension Plans with respect to which assets
exceed benefit liabilities), does not exceed $250,000.
(e) As of the most recent valuation date for each Multiemployer Plan for
which the actuarial report is available, the potential liability of the Company
and its Subsidiaries and their respective ERISA Affiliates for a complete
withdrawal from such Multiemployer Plan (within the meaning of Section 4203 of
ERISA), when aggregated with such potential liability for a complete withdrawal
from all Multiemployer Plans, based on information available pursuant to Section
4221(e) of ERISA, does not exceed $250,000.
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4.17. Governmental Regulations. Neither the Company nor any of its
Subsidiaries is a "holding company", or a "subsidiary company" of a "holding
company" or an "affiliate" of a "holding company", as such terms are defined in
the Public Utility Holding Company Act of 1935; nor is the Company or any of its
Subsidiaries a "registered investment company", or an "affiliated person" or a
"principal underwriter" of a "registered investment company", as such terms are
defined in the Investment Company Act of 1940, as amended.
4.18. Safety, Zoning and Environmental Compliance. Except as set forth
on Schedule 4.18 hereto, neither the offices or properties in or on which the
Company or any of its Subsidiaries carries on its respective business or the
activities carried on therein are in violation of any zoning, health or safety
law or regulation, including without limitation, the Occupational Safety and
Health Act of 1970, as amended. Except as set forth on Schedule 4.18 hereto:
(a) None of the Company, any of its Subsidiaries or, to the Company's
knowledge, any operator of any real property owned, leased or operated by any of
them is in violation, or alleged violation, of any judgment, decree, order, law,
license, rule or regulation pertaining to environmental matters, including
without limitation those arising under the Resource Conservation and Recovery
Act ("RCRA"), the Comprehensive Environmental Response, Compensation and
Liability Act of 1980 as amended ("CERCLA"), the Superfund Amendments and
Reauthorization Act of 1986 ("▇▇▇▇"), the Federal Clean Water Act, the Solid
Wastes Disposal Act, as amended, the Federal Clean Air Act, as amended, the
Toxic Substances Control Act, or any state or local statute, regulation,
ordinance, order or decree relating to health, safety or the environment
(hereinafter "Environmental Laws") which violation could reasonably be expected
to have a Material Adverse Effect;
(b) Neither the Company nor any of its Subsidiaries has received written
notice from any third party including without limitation any federal, state or
local governmental authority, (i) that the Company or any of its Subsidiaries or
any predecessor in interest has been identified by the United States
Environmental Protection Agency ("EPA") as a potentially responsible party under
CERCLA with respect to a site listed on the National Priorities List, 40 C.F.R.
Part ▇▇▇ ▇▇▇▇▇▇▇▇ ▇ (1986); (ii) that any "hazardous waste" as defined by 42
U.S.C. Section 6903(5), any "hazardous substances" as defined by 42 U.S.C.
Section 9601(14), any "pollutant or contaminant" as defined by 42 U.S.C. Section
9601(33) or any toxic substance, petroleum products or hazardous materials or
other chemicals or substances regulated by any Environmental Laws ("Hazardous
Substances") which any one of them has generated, transported or disposed of has
been found at any site at which a federal, state or local agency or other third
party has conducted or has ordered that the Company or any of its Subsidiaries
or any predecessor in interest conduct a remedial investigation, removal or
other response action (a "Remediation") pursuant to any Environmental Law; or
(iii) that any of them is or shall be a named party to any claim, action, cause
of action, complaint or legal or administrative proceeding (in each case,
contingent or otherwise) arising out of any third party's incurrence of costs,
expenses, losses or damages of any kind whatsoever in connection with the
release of Hazardous Substances; and
(c) (i) No portion of any real property presently or, to the knowledge
of the Company, formerly owned, leased or operated by the Company or any of its
Subsidiaries
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has been used for the handling, manufacturing, processing, storage or disposal
of Hazardous Substances in material violation of any Environmental Law or in a
manner which would require treatment, storage or disposal under RCRA; and to the
knowledge of the Company, no underground tank or other underground storage
receptacle for Hazardous Substances is located on such properties; (ii) in the
course of any activities conducted by the Company or any of its Subsidiaries or,
to the knowledge of the Company and is Subsidiaries, by the operators of any
real property owned, leased or operated by the Company or any of its
Subsidiaries, no Hazardous Substances have been generated or are being used on
such properties except in material compliance with all Environmental Laws or in
a manner which would require treatment, storage or disposal under RCRA; (iii)
there have been no Releases or threatened Releases of Hazardous Substances on,
upon, into or from any real property presently or formerly owned, leased or
operated by the Company or any of its Subsidiaries in material violation of
Environmental Laws or which have created a condition for which the Company or
any of its Subsidiaries is required to conduct Remediation pursuant to any
Environmental Law; (iv) to the knowledge of the Company, there have been no
releases of Hazardous Substances on, upon, from or into any real property in the
vicinity of any real property presently owned, leased or operated by the Company
or any of its Subsidiaries during such ownership, lease or operation which,
through soil or groundwater contamination, have come to be located on any of the
properties of the Company or any of its Subsidiaries in material violation of
Environmental Laws or which have created a condition which the Company or any of
its Subsidiaries is required to conduct Remediation pursuant to any
Environmental Law; and (v) in addition, any Hazardous Substances that have been
generated on any real property presently or formerly owned, leased or operated
by the Company or any of its Subsidiaries have been treated or disposed of only
by treatment or disposal facilities which, to the knowledge of the Company,
maintained at the time of such treatment or disposal valid permits as required
under applicable Environmental Laws for such activities.
4.19. Representations and Warranties under Related Agreements. All
representations and warranties made by the Company, Manhattan Acquisition Corp.
or any of their respective Affiliates in any of the Related Agreements or in the
certificates delivered in connection therewith are true and correct as of the
date hereof with the same force and effect as though made on and as of the date
hereof, and such representations and warranties are hereby confirmed to each
Initial Holder and made representations and warranties of the Company hereunder
as fully as if set forth herein. Except as set forth on Schedule 4.19 hereto, to
the Company's knowledge, all representations and warranties made in the Related
Agreements by or on behalf of any party thereto other than the Company,
Manhattan Acquisition Corp. or any of their Affiliates are true and correct in
all material respects.
4.20. Disclosure. No representation, warranty or statement made in this
Agreement, any Related Agreement, or any agreement, certificate, statement or
document furnished by or on behalf of the Company or any of its Subsidiaries in
connection herewith or therewith contains any untrue statement of material fact
or omits to state a material fact necessary in order to make the statements
contained herein or therein, in light of the circumstances in which they were
made, not misleading.
4.21. Withholding, Union Contracts, Labor Relations. The Company and
each of its Subsidiaries has withheld all amounts required by law or agreement
to be withheld by
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it from the wages, salaries and other payments to its employees and is not
liable for any arrears of wages or any taxes or penalties for failure to comply
with any of the foregoing, except to the extent that would not have a Material
Adverse Effect. None of the Company and its Subsidiaries is a party to any
written employment agreement, arrangement or understanding with any of its
officers or employees, other than as set forth on Schedule 4.21. Except as set
forth on Schedule 4.21, there are no collective bargaining agreements covering
any of the employees of the Company or any of its Subsidiaries. No grievance
against the Company or its Subsidiaries, and no arbitration proceeding arising
out of or under any collective bargaining agreement set forth on Schedule 4.21
is pending or, to the Company's knowledge, threatened. Except as disclosed in
Schedule 4.13, there are no pending, or, the knowledge of the Company,
threatened or anticipated (a) employment discrimination charges or complaints
against or involving the Company or any of its Subsidiaries before any federal,
state, or local board, department, commission or agency, (b) unfair labor
practice charges or complaints, disputes or grievances affecting the Company or
any of its Subsidiaries, (c) to the knowledge of the Company, efforts being made
to organize any of the employees of the Company or any of its Subsidiaries or
(d) strikes, slow downs, work stoppages, or lockouts or threats thereof
affecting the Company or any of its Subsidiaries.
4.22. Potential Conflicts of Interest. Except as set forth on Schedule
4.22, no Affiliate of the Company or any of its Subsidiaries (a) owns, directly
or indirectly, in whole or in part, any tangible or intangible property which
the Company or any of its Subsidiaries is using or the use of which is necessary
for the business of the Company or any of its Subsidiaries; or (b) has any cause
of action or other claim against, or owes any amount to the Company or any of
its Subsidiaries, except for claims in the ordinary course of business, such as
for accrued vacation pay, accrued benefits under employee benefit plans and
similar matters and agreements.
5. INVESTMENT REPRESENTATION.
Each Initial Holder, severally and not jointly, represents and warrants
to the Company that such Initial Holder is (i) an "accredited investor" as
defined in Rule 501 promulgated under the Securities Act, and (ii) acquiring the
Purchased Securities for investment and not with a view to selling or otherwise
distributing the Purchased Securities; provided, however, that the disposition
of such Initial Holder's property shall at all times be and remain in such
Initial Holder's control, subject to the provisions of Section 16 hereof.
6. CONDITIONS TO PURCHASE.
The several obligations of each Initial Holder to purchase the Purchased
Securities pursuant to this Agreement are subject to compliance by the Company
with its agreements herein contained, and to the satisfaction, on or prior to
the Closing Date, of the following conditions:
6.1. Related Agreements. This Agreement, each of the other Mezzanine
Documents and each of the other Related Agreements shall have been executed and
delivered by all of the parties thereto in a form satisfactory to such Initial
Holder. Each of the Related Agreements shall be in full force and effect and no
term or condition
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thereof shall have been amended, modified or waived except with the prior
written consent of the Initial Holders. All covenants, agreements and conditions
contained in the Related Agreements which are to be performed or complied with
on or prior to the Closing Date shall have been performed or complied (or waived
with each Initial Holder's prior written consent) with in all material respects,
all payments required to be paid at closing by each party to each Related
Agreement shall have been paid in full, and all Indebtedness to be repaid in
connection with the Merger shall have been satisfied in full.
6.2. Charter Documents; Good Standing Certificate. (a) The Initial
Holders shall have received from the surviving corporation of the Merger copies,
each certified by the Secretary of State of the State of Delaware, of (i) the
Charter of the Company, reflecting the filing and effectiveness of the
Certificate of Merger and establishing the rights and privileges of the
Preferred Stock set forth on Exhibit D hereto, (ii) the Charter of Manhattan
Acquisition Corp. as in effect immediately prior to the Merger, (iii) the
Charter of the Company as in effect immediately prior to the Merger, and (iv) a
certificate, dated not more than one (1) day prior to the Closing Date, as to
the corporate good standing of the Company.
(b) The Initial Holders shall have received from the Company a copy,
certified by a duly authorized officer of such Person to be true and complete as
of the Closing Date, of (i) the bylaws of the Company as in effect after giving
effect to the Merger, (ii) the bylaws of Manhattan Acquisition Corp. as in
effect immediately prior to the Merger, (iii) the bylaws of the Company as in
effect immediately prior to the Merger, and (vi) a certificate, dated not more
than ten (10) days prior to the Closing Date, from the Secretary of State or
other appropriate official of each state in which the Company, Manhattan
Acquisition Corp. or any of their respective Subsidiaries is qualified to do
business, as to the corporate good standing or qualification to do business in
such state by the Company, Manhattan Acquisition Corp. or such Subsidiary, as
the case may be.
6.3. Proof of Corporate Action. (a) The Initial Holders shall have
received from the Company copies, certified by a duly authorized officer thereof
to be true and complete as of the Closing Date, of the records of all corporate
action taken to authorize the execution, delivery and performance of this
Agreement and each of the Related Agreements to which the Company is or is to
become a party.
(b) The Initial Holders shall have received from Manhattan Acquisition
Corp. copies, certified by a duly authorized officer of Manhattan Acquisition
Corp. to be true and complete as of the Closing Date, of the records of all
corporate action taken to authorize the execution, delivery and performance of
each of the Related Agreements to which Manhattan Acquisition Corp. is or is to
become a party.
6.4. Incumbency Certificate. (a) The Initial Holders shall have received
from the Company an incumbency certificate, dated the Closing Date, signed by a
duly authorized officer thereof and giving the name and bearing a specimen
signature of each individual who shall be authorized to sign, with respect to
periods both before and after the Effective Time of the Merger (as defined in
the Merger Agreement), in the name and on behalf of the Company, this Agreement
and each of the Related Agreements to which the Company is or is to become a
party, and to give notices and to take other action on behalf of the Company
under each of such documents.
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(b) The Initial Holders shall have received from Manhattan Acquisition
Corp. an incumbency certificate, dated the Closing Date, signed by a duly
authorized officer of Manhattan Acquisition Corp. and giving the name and
bearing a specimen signature of each individual who shall be authorized to sign,
in the name and on behalf of Manhattan Acquisition Corp., each of the Related
Agreements to which Manhattan Acquisition Corp. is or is to become a party, and
to give notices and to take other action on behalf of Manhattan Acquisition
Corp. under each of such documents.
6.5. Legal Opinion. The Initial Holders shall have received from counsel
to the Company their favorable opinion covering such matters with respect to the
transactions contemplated by this Agreement and the other Related Agreements as
the Initial Holders may reasonably request. The Initial Holders shall have
received from counsel to Manhattan Acquisition Corp. their favorable opinion
covering such matters with respect to the transactions contemplated by the
Related Agreements to which Manhattan Acquisition Corp. is a party as the
Initial Holders may reasonably request.
6.6. Representations and Warranties; Officers' Certificates. The
representations and warranties contained or incorporated by reference herein
shall be true and correct immediately after completion of the Merger on and as
of the Closing Date; no event or condition shall have occurred or would result
from the issuance of any of the Securities which would be a Default or an Event
of Default on and as of the Closing Date, and the Company and each of its
Subsidiaries shall have performed and complied in all respects with all
conditions and agreements required to be performed or complied with by them
prior to the Closing; and the Initial Holders shall have received on the Closing
Date a certificate to these effects, as well as certifying the satisfaction of
the conditions set forth in Sections 6.1, 6.7 and 6.11, signed by an authorized
officer of the Company.
6.7. Legality; Governmental Authorization. The purchase of the Purchased
Securities shall not be prohibited by any applicable law or governmental order
or regulation. The Major Holders shall have received evidence reasonably
satisfactory to them that all consents, approvals, licenses, permits, orders and
authorizations of, or registrations, declarations and filings with, any
governmental or administrative agency or of or with any other Person required to
be provided or obtained prior to the Closing Date and with respect to any of the
transactions contemplated by this Agreement or any of the Related Agreements
shall have been duly obtained or made and shall be in full force and effect,
except where the failure to do so would not have a Material Adverse Effect.
6.8. [Intentionally omitted].
6.9. Closing Fee. The Initial Holders shall have received from the
Company payment in full of a closing fee in the aggregate amount of $260,000,
disbursed in the amount of $210,000 to BancBoston Investments Inc., $25,000 to
I.B.J. Whitehall Capital Corporation, and $25,000 to Exeter Capital Partners IV,
L.P. in accordance with such instructions as the Initial Holders may give to the
Company prior to Closing.
6.10. Senior Debt Financing. Simultaneously with the purchase and sale
of the Purchased Securities hereunder, the Company shall have obtained
financing, on terms and conditions reasonably satisfactory to the Initial
Holders, from the Senior Lenders
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pursuant to the Credit Agreement providing total credit of not more than
$42,500,000, of which not more than $28,500,000 will be drawn down on the
Closing Date. On the Closing Date, after giving effect to the Merger, the
transactions contemplated by this Agreement and the other Related Agreements and
the payment of all Transaction Costs, the Company shall have aggregate cash and
cash equivalents, including availability to borrow under the revolving credit
facility under the Credit Agreement, of at least $9,000,000.
6.11. Completion of Merger. On the Closing Date, simultaneously with the
purchase and sale of the Purchased Securities hereunder, the Company shall have
completed the Merger in accordance with the Merger Documents for aggregate
consideration (including all Transaction Costs) of not more than $86,322,631
consisting of (A) up to $77,722,631 of Cash Merger Consideration (as defined in
the Merger Agreement) and (B) up to $8,600,000 in Transaction Costs, and
otherwise on terms reasonably satisfactory to the Initial Holders in all
respects. A Certificate of Merger giving effect to the Merger shall have been
accepted for filing by the Secretary of State of the State of Delaware, and BBI
shall have received evidence satisfactory to it of the same.
6.12. Payment of Certain Fees and Disbursements. ▇▇▇▇▇▇▇ ▇▇▇▇ LLP, BBI's
special counsel, shall have received payment in full for all reasonable legal
fees charged and all reasonable costs and expenses incurred by such counsel
through the Closing Date in connection with the transactions contemplated by
this Agreement and the other Related Agreements. All of the other reasonable
fees, expenses and disbursements incurred by the Initial Holders or their
accountants and other consultants in connection with their due diligence
investigation of the Company and its Subsidiaries shall have been paid in full
by the Company.
6.13. No Material Change. There shall not have been, or threatened to be
immediately after giving effect to the Merger, any damage to or loss or
destruction of any properties owned or leased by the Company or any of its
Subsidiaries, taken as a whole, (whether or not covered by insurance) or any
change in the business, assets, liabilities, or condition (financial or
otherwise) of the Company and its Subsidiaries, taken as a whole, or imposition
of any applicable laws, rules or regulations which have or would have a Material
Adverse Effect.
6.14. No Litigation. No restraining order or injunction shall prevent
the transactions contemplated by this Agreement and no action, suit or
proceeding shall be pending or threatened before any court or administrative
body in which it will be, or is, sought to restrain or prohibit or to obtain
damages or other relief in connection with this Agreement or the consummation of
the transactions contemplated hereby.
6.15. Environmental Reports. The Initial Holders shall have received an
environmental questionnaire completed by the Company and a transaction screening
report prepared by ▇▇▇▇▇▇▇ Environmental Consultants regarding each of the
Properties listed on Schedule 6.15 hereto in form and substance satisfactory to
the Initial Holders, and the Initial Holders shall have received a so-called
"reliance letter" from ▇▇▇▇▇▇▇ Environmental Consultants in form and substance
satisfactory to the Initial Holders.
6.16. Termination of Existing Credit Facilities. The Major Holders shall
have received evidence reasonably satisfactory to them that (i) the Loan
Agreement, dated as
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of October 12, 2000 between the Company and ▇▇▇▇▇ Fargo Bank, N.A., has been
terminated, (ii) all commitments to lend thereunder have been terminated, (iii)
all indebtedness thereunder has been paid in full, and (iv) all liens granted by
the Company or any of its Subsidiaries thereunder have been released.
6.17. General. All instruments and legal, governmental, administrative
and corporate proceedings in connection with the transactions contemplated by
this Agreement and the other Related Agreements shall be reasonably satisfactory
in form and substance to the Initial Holders, and the Initial Holders shall have
received copies of all documents, including, without limitation, records of
corporate or other proceedings, opinions of counsel, consents, licenses,
approvals, permits and orders which the Initial Holders may have requested in
connection therewith.
7. COVENANTS APPLICABLE TO THE COMPANY WHILE NOTES ARE OUTSTANDING.
The Company covenants that, until all of the Indebtedness of the Company
with respect to the Notes has been paid in full, the Company will comply and
will cause each of its Subsidiaries to comply with the following provisions:
7.1. Punctual Payment. The Company will duly and punctually pay or cause
to be paid all principal and interest payable with respect to the Notes in
accordance with the terms thereof.
7.2. Records and Accounts. The Company and each of its Subsidiaries will
keep true and accurate records and books of account in which full, true and
correct entries will be made in accordance with generally accepted accounting
principles and maintain adequate accounts and reserves for all taxes (including
income taxes), all depreciation, depletion, obsolescence and amortization of its
properties and all other contingencies.
7.3. Corporate Existence; Maintenance of Properties. The Company and
each of its Subsidiaries will preserve and keep in full force and effect its
existence and franchises necessary to its and its Subsidiaries' businesses,
except as otherwise permitted by this Agreement or where the failure to do so
would not have a Material Adverse Effect. Neither the Company nor any of its
Subsidiaries will engage in any line of business other than those presently
conducted thereby, presently proposed to be conducted, or reasonably related
thereto (it being understood that this Section 7.3 shall not prohibit the
Company or any of its Subsidiaries from owning or operating restaurants in
addition to or other than those currently owned or operated by the Company or
its Subsidiaries, so long as at least 75% of the consolidated revenues of the
Company and its Subsidiaries are derived from the Base Business). The Company
and each of its Subsidiaries will maintain all of its material properties used
or useful in the conduct of its business in good condition, repair and working
order (ordinary wear and tear excepted) and cause to be made all necessary
repairs, renewals, replacements, betterments and improvements thereof, all as in
the judgment of the Company may be necessary so that the business carried on in
connection therewith may be properly and advantageously conducted at all times;
provided, however, that nothing in this Section 7.3 shall prevent the Company or
any of its Subsidiaries from discontinuing the operation and maintenance of any
of such
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properties if such discontinuance is, in the judgment of the Company, desirable
in the conduct of such Person's business and does not have a Material Adverse
Effect.
7.4. Insurance. The Company will, and will cause each of its
Subsidiaries to, maintain with financially sound and reputable insurers
insurance with respect to its properties and business against such casualties
and contingencies as shall be in accordance with the general practices of
businesses engaged in similar activities in similar geographic areas and in
amounts, containing such terms, in such forms and for such periods as may be
reasonable and prudent. Without limiting the foregoing, (a) such insurance shall
be in such minimum amounts that such Person will not be deemed a co-insurer
under applicable insurance laws, regulations and policies and otherwise shall be
in such amounts, contain such terms, be in such forms and be for such periods as
may be reasonably satisfactory to the Majority Holders, and (b) each such Person
will (i) keep all of its physical property insured with casualty or physical
hazard insurance on an "all risks" basis, with broad form flood coverage and
electronic data processing coverage, with a full replacement cost endorsement
and an "agreed amount" clause in an amount equal to 100% of the full replacement
cost of such property, subject to aggregate sublimits for flood equal to those
generally maintained by businesses engaged in similar activities in similar
geographic areas, (ii) maintain all such workers' compensation or similar
insurance as may be required by law and (iii) maintain, in amounts and with
deductibles equal to those generally maintained by businesses engaged in similar
activities in similar geographic areas, general public liability insurance
against claims of bodily injury, death or property damage occurring, on, in or
about the properties of such Person; business interruption insurance; and
product liability insurance.
7.5. Taxes. The Company and each of its Subsidiaries will pay and
discharge, or cause to be paid and discharged, before any material penalty shall
accrue thereon, all taxes, assessments and other governmental charges imposed
upon the Company and its Subsidiaries and their real properties, sales and
activities, or any part thereof, or upon the income or profits therefrom, as
well as all claims for labor, materials, or supplies, which if unpaid might by
law become a Lien or charge upon any of their properties; provided, however,
that any such tax, assessment, charge, levy or claim need not be paid if the
validity or amount thereof shall currently be contested in good faith by
appropriate proceedings and if the Company or any of its Subsidiaries shall have
set aside on its books adequate reserves with respect thereto to the extent
required under generally accepted accounting principles; and provided, further,
that the Company and its Subsidiaries will pay or cause to be paid all such
taxes, assessments, charges, levies or claims forthwith prior to foreclosure on
any Lien which may have attached as security therefor.
7.6. Inspection of Properties and Books. The Company and each of its
Subsidiaries shall permit the Initial Holders or any of their designated
representatives, as well as any other Major Holder and its designated
representatives, to visit and inspect any of the properties of the Company and
its Subsidiaries, to examine the books of account of the Company and its
Subsidiaries (and to make copies thereof and extracts therefrom), and to discuss
the affairs, finances and accounts of each of the Company and its Subsidiaries
with, and to be advised as to the same by, officers of such Persons, all at such
reasonable times and intervals during normal business hours as the Initial
Holders or Major Holders may reasonably request.
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7.7. Compliance with Laws, Licenses, and Permits. The Company and each
of its Subsidiaries will comply with (a) all applicable laws and regulations,
(b) the provisions of its Charter and by-laws, and (c) all applicable decrees,
orders, and judgments, except, in each case, to the extent any failure to so
comply would not have a Material Adverse Effect. If any authorization, consent,
approval, operating right, permit or license from any officer, agency or
instrumentality of any government shall become necessary or required in order
that any of the Company or its Subsidiaries may fulfill any of its obligations
hereunder, each of the Company and its Subsidiaries will promptly take or cause
to be taken all reasonable steps within its power to obtain such authorization,
consent, approval, operating right, permit or license and furnish the Initial
Holders with evidence thereof.
7.8. Redeemable Capital Stock. The Company shall not at any time issue
any Redeemable Capital Stock after the date hereof, other than (a) the Warrants
and the Warrant Stock, and (b) securities issued to Employee Investors, which
securities are subject to repurchase by the Company upon termination of
employment or otherwise, provided, that (i) the aggregate liquidation value of
any outstanding securities issued to Employee Investors, plus the aggregate
liquidation value of all securities previously repurchased from the Employee
Investors and management of the Company, does not exceed 10% of the aggregate
liquidation value of the shares of Preferred Stock outstanding on the Closing
Date.
7.9. Further Assurances. The Company and each of its Subsidiaries will
cooperate with the Major Holders and execute such further instruments and
documents as they shall reasonably request to carry out to their satisfaction
the transactions contemplated by this Agreement and the other Related
Agreements.
7.10. Notices. The Company will promptly notify the Major Holders in
writing of the occurrence of any Default or Event of Default or if any Person
shall give any notice or take any other action in respect of a claimed default
(whether or not constituting a Default or an Event of Default) under the Related
Agreements.
7.11. Restrictions on Indebtedness. Neither the Company nor any of its
Subsidiaries will create, incur, assume, guarantee or be or remain liable,
contingently or otherwise, with respect to any Indebtedness other than the
following ("Permitted Indebtedness"):
(a) Indebtedness hereunder or with respect to the Notes;
(b) Senior Indebtedness;
(c) Indebtedness under or in respect of the agreements or
instruments existing on the date of this Agreement listed and described
on Schedule 7.11 hereto, but only to the extent of the amounts listed
thereon, and any Indebtedness incurred to refinance or replace such
existing Indebtedness, provided that (i) the amount of Indebtedness
incurred to refinance or replace such existing Indebtedness does not
exceed the outstanding amount of such existing Indebtedness immediately
prior to such refinancing or replacement, (ii) the amortization schedule
of such refinancing or replacement Indebtedness is not accelerated on a
weighted average basis as compared to that in effect for the
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existing Indebtedness immediately prior to such refinancing or
replacement and (iii) the terms of the refinancing or replacement of
such existing Indebtedness are no less favorable, as a whole, to the
Company and its Subsidiaries and the holders of the Notes than the terms
of such existing Indebtedness (including, without limitation, with
respect to interest rate, amortization, maturities, covenants, events of
default and subordination provisions);
(d) Indebtedness incurred pursuant to interest rate or hedging
contracts for the purpose of fixing or hedging interest rate risk of the
Company (and not for speculative purposes);
(e) guarantees of Indebtedness otherwise permitted hereunder;
(f) Indebtedness of the Company to any of its wholly-owned
Subsidiaries that is a Guarantor and Indebtedness of any wholly-owned
Subsidiary of the Company that is a Guarantor to the Company or to any
other wholly-owned Subsidiary of the Company, provided that all such
intercompany Indebtedness owed by the Company to any of its Subsidiaries
shall be subordinated in right of payment to the payment in full of the
Notes pursuant to the terms of the applicable promissory notes or an
intercompany subordination agreement;
(g) Indebtedness under Capitalized Leases incurred to finance
Capital Expenditures permitted under Section 7.17 hereof not to exceed
$3,250,000 in aggregate amount outstanding at any time; and
(h) other Indebtedness in an aggregate principal amount at any
time outstanding not exceeding $1,500,000; provided, that no Event of
Default shall exist (i) prior to the incurrence of such Indebtedness or
(ii) as a result of the incurrence of such Indebtedness.
7.12. Restrictions on Liens. Neither the Company nor any of its
Subsidiaries will create or incur or suffer to be created or incurred or to
exist any Lien or other security interest of any kind upon any of its property
or assets of any character whether now owned or hereafter acquired, or upon the
income or profits therefrom; or transfer any of such property or assets or the
income or profits therefrom for the purpose of subjecting the same to the
payment of Indebtedness or performance of any other obligation in priority to
payment of its general creditors; or acquire, or agree or have an option to
acquire, any property or assets upon conditional sale or other title retention
or security agreement, device or arrangement; or suffer to exist for a period of
more than 30 days after the same shall have been incurred any Indebtedness or
claim or demand against it which if unpaid might by law or upon bankruptcy or
insolvency, or otherwise, be given any priority whatsoever over its general
creditors (other than those claims which the Company or such Subsidiary is
contesting in good faith by appropriate proceedings and as to which the Company
or such Subsidiary shall have set aside on its books, adequate reserves with
respect thereto in accordance with generally accepted accounting principles); or
sell, assign, pledge or otherwise transfer any accounts, contract rights,
general intangibles or chattel paper for security, with or without recourse;
provided, however, that the Company and its Subsidiaries may create or incur or
suffer to be created or incurred or to exist any of the following ("Permitted
Liens"):
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(a) Liens (i)to secure taxes, assessments and other government
charges in respect of obligations not overdue or (ii) with respect to
assessments issued by governmental authorities or regulated utilities
for benefits rendered to the real estate owned or operated by the
Company, which assessments are payable in installments over time,
provided, however, that such taxes, assessments, installments or other
governmental charges are not overdue or are being contested in good
faith and for which adequate reserves or other appropriate provisions
shall have been made to the extent required by GAAP (other than any such
overdue taxes, levies, claims, assessments or charges, to the extent the
payment therefor shall not at the time be required to be made in
accordance with the provisions of Section 7.5 hereof);
(b) Deposits or pledges made in connection with, or to secure
payment of, workmen's compensation, unemployment insurance, old age
pensions or other social security or statutory obligations in the
ordinary course of business;
(c) Liens in respect of judgments or awards which do not result
in an Event of Default hereunder;
(d) Liens of carriers, warehousemen, mechanics and materialmen,
and other like liens, not overdue more than 120 days or, if so overdue,
all such liens that the Company or such Subsidiary is contesting in good
faith by appropriate proceedings which prevent enforcement of the lien;
(e) Encumbrances consisting of easements, rights of way, zoning
restrictions, restrictions on the use of real property and
irregularities in the title thereto, landlord's or lessor's Liens under
leases to which the Company or any of its Subsidiaries is a party, and
other Liens (but not liens securing Indebtedness) none of which
interferes materially with the use of the property affected in the
ordinary conduct of the business of the Company and its Subsidiaries and
which defects do not individually or in the aggregate have a Material
Adverse Effect;
(f) Any Liens from time to time securing Senior Indebtedness and
Liens securing Indebtedness permitted under Sections 7.11(c) hereof,
provided that Liens securing any new Indebtedness permitted under
Section 7.11(c) for the purpose of refinancing existing Indebtedness
shall be no more adverse to the holders of the Notes than the terms of
the Liens securing such refinanced Indebtedness, and provided further
that the Indebtedness secured is not increased and the Lien is not
extended to any additional assets or property that would not have been
security for the Indebtedness refinanced;
(g) Liens reserved to or vested in, and any obligations owed to,
any municipality or governmental, statutory or public authority by the
terms of any right, power, franchise, grant, license or permit, or by
any provision of law, regulation or policy;
(h) leases or subleases granted to other Persons in the ordinary
course of business; and
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(i) Liens existing on the date hereof and listed on Schedule 7.12
hereto.
7.13. Distributions. Neither the Company nor any of its Subsidiaries
shall make any Distribution except (i) the Company may repurchase the Warrants
and Warrant Stock in accordance with Sections 10.3 and 11 hereof, (ii) any
Subsidiary of the Company may make Distributions to the Company or to a
wholly-owned Subsidiary of the Company that is a Guarantor, (iii) the Company
may pay dividends to the holders of Common Stock solely in shares of Common
Stock, (vi) the Company may pay the "Special Accrual" or similar payments
referred to in the definition of "Distribution" in Section 1 above solely
through a reduction in the exercise price applicable to the option or similar
instrument giving rise to the Special Accrual, (v) so long as no Event of
Default shall have occurred and be continuing or would result therefrom, the
Company may make Distributions (A) in an aggregate amount not to exceed $500,000
in any fiscal year, and (B) in a maximum amount not to exceed $1,500,000 in the
aggregate during the term of this Agreement to be used to repurchase or
otherwise redeem capital stock of the Company from former employees of the
Company pursuant to the terms of employee stock ownership, employee stock option
or other employee compensation plans of the Company; provided that the portion
of such Distributions equal to cash payments received by the Company from the
subsequent sale of such repurchased or redeemed capital stock for cash to any
employee of the Company at the commencement of such Person's employment shall
not be deemed to be a Distribution for purposes of this Section 7.13, and (vi)
any payment of shares of Common Stock or Preferred Stock of the Company made to
the Rollover Group (as defined in the Merger Agreement) in accordance with the
terms of the option agreements between the members of the Rollover Group and the
Borrower in connection with the exercise by any such members of such option.
Notwithstanding the foregoing, at any time while the Put Notes are outstanding,
the Company shall not make any Distribution other than a Distribution described
in clauses (i), (ii) and (iii) of the preceding sentence.
7.14. Restrictions on Fundamental Changes; Asset Sales and Acquisitions.
The Company shall not, and shall not permit any of its Subsidiaries to, amend
its certificate of incorporation, bylaws, limited liability company agreement,
limited partnership agreement or similar organizational documents in any manner
adverse to any holder of Securities. The Company shall not, and shall not permit
any of its Subsidiaries to, enter into any transaction of merger or
consolidation, or liquidate, wind-up or dissolve itself (or suffer any
liquidation or dissolution), or convey, sell, lease or sub-lease (as lessor or
sublessor), transfer or otherwise dispose of, in one transaction or a series of
transactions, all or any part of its business, property or assets, whether now
owned or hereafter acquired, or effect any asset acquisition or stock
acquisition, except:
(a) any Subsidiary of the Company may be merged with and into the
Company or any wholly-owned Subsidiary, or be liquidated, wound up or
dissolved, or all or any part of its business, property or assets may be
conveyed, sold, leased, transferred or otherwise disposed of, in one
transaction or a series of transactions, to the Company or any of its
wholly-owned Subsidiaries; provided that, in the case of such a merger,
the Company or such wholly-owned Subsidiary shall be the continuing or
surviving corporation; and further provided that the
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Company shall cause all Subsidiaries to at all times comply with the
requirements set forth in Section 9.11 hereof;
(b) the Company and its Subsidiaries may make Growth Capital
Expenditures permitted under Section 7.17 hereof and Maintenance Capital
Expenditures incurred in the ordinary course of business to maintain the
assets of the Company or to insure compliance with applicable laws and
regulations;
(c) the Company or any of its Subsidiaries may sell or otherwise
dispose of inventory and obsolete, worn out or surplus property sold in
the ordinary course of business, provided that the consideration
received for such assets shall be in an amount at least equal to the
fair market value thereof;
(d) subject to Section 7.21 hereof, the Company and its
Subsidiaries may make Asset Sales of assets during any fiscal year
having an aggregate fair market value not in excess of $100,000 on a
consolidated basis; provided that the consideration received therefor
shall be in an amount at least equal to the fair market value thereof;
(e) the Company and its Subsidiaries may sell up to four (4)
Unprofitable Stores during the term of this Agreement, provided that the
proceeds of such sales are (i) reinvested or committed to be reinvested
in new or existing Stores within two hundred seventy (270) days
thereafter, or (ii) are used to prepay the Obligations (as defined in
the Credit Agreement) of the Company under the Credit Agreement; and
(f) the Company and its Subsidiaries shall be permitted to enter
into Sale-Leasebacks (as defined in Section 7.20 below) to the extent
permitted under Section 7.20 below.
7.15. Investments. The Company will not, nor permit any of its
Subsidiaries to, have outstanding or acquire or commit itself to acquire or hold
any Investment except for the Investments set forth on Schedule 7.15 and except
Investments in:
(a) marketable direct obligations issued or guaranteed by the
United States of America which mature within one year from the date of
acquisition thereof,
(b) commercial paper maturing within one year from the date of
acquisition thereof and having, at the date of acquisition thereof, the
rating of not less than "P1" from ▇▇▇▇▇'▇ Investors Service, Inc. or not
less than "A1" from Standard & Poor's Corporation,
(c) bankers' acceptances eligible for rediscount under Federal
Reserve Board requirements accepted by any commercial bank or trust
company incorporated under the laws of the United States or any state
thereof or the District of Columbia,
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(d) certificates of deposit maturing within one year from the
date of acquisition thereof issued by any commercial bank or trust
company referred to in clause (c) hereof and having capital and surplus
of at least $1,000,000,000,
(e) intercompany loans permitted under Section 7.11(f) hereof,
(f) Capital Expenditures permitted pursuant to Section 7.17
hereof,
(g) Investments consisting of loans and advances to employees for
moving, entertainment and other similar expenses in the ordinary course
of business not to exceed $250,000 in the aggregate at any time
outstanding, and
(h) Investments by the Company in any Subsidiary of the Company
which has complied with the provisions of Section 9.11 hereof.
7.16. Transactions with Affiliates. Neither the Company nor any of its
Subsidiaries will (a) engage in any transaction with any Affiliate on terms more
favorable to such Affiliate than would have been obtainable on an arms-length
basis in the ordinary course of business or (b) make any Restricted Payment
other than (i) payments made pursuant to the terms of any agreement or
instrument, as in effect on the Closing Date, listed on Schedule 7.16, (ii) any
Restricted Payment permitted pursuant to Section 7.13 hereof, (iii) payment of
customary fees and expenses to the directors of the Company and its Subsidiaries
in an aggregate annual amount not to exceed $50,000, provided, that no such
fees, and only expense reimbursements, may be paid to each director that is an
employee of the Company or an Affiliate of BRSC or the Company , and (iv) so
long as no Default or Event of Default is continuing or would result therefrom,
management fees, expenses and indemnities payable to BRS or any BRS Affiliate in
accordance with the Management Agreement as in effect on the Closing Date. The
Company shall cause each member of senior management to devote substantially all
of his or her business time to the affairs of the Company and its Subsidiaries.
7.17. Certain Financial Covenants. The Company and its Subsidiaries will
comply with each of the covenants set forth on Schedule 7.17 hereto.
7.18. Intentionally omitted.
7.19. Subsidiary Guaranty. On the Closing Date, immediately following
the Closing, the Company shall cause each of its Subsidiaries to execute and
deliver to the Initial Holders the Subsidiary Guaranty.
7.20. Sales and Lease-Backs. The Company will not, nor will it permit
any of its Subsidiaries to, enter into any arrangement, directly or indirectly,
whereby the Company or such Subsidiary shall sell or transfer any property owned
by it in order then or thereafter to lease such property or lease other property
that the Company or such Subsidiary intends to use for substantially the same
purpose as the property being sold or transferred (a "Sale-Leaseback"); provided
that, so long as no Event of Default has occurred and is continuing, the Company
and its Subsidiaries may enter into Sale-Leaseback transactions with respect to
property and equipment in an aggregate amount not to exceed $3,250,000 in the
aggregate over the term of this Agreement; provided further that (a) the terms
of the sale as such are comparable to terms which could be
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obtained in an arms length sale among unaffiliated parties not involving a
Sale-Leaseback transaction, (b) the terms of the lease as such are comparable to
terms which could be obtained in an arms length commercial operating lease among
unaffiliated parties and (c) the proceeds of such Sale-Leaseback transaction are
applied in accordance with Section 4.3.2 of the Credit Agreement
7.21. Subsidiary Stock. Except for Permitted Liens, the Company shall
not (i) directly or indirectly sell, assign, pledge or otherwise encumber or
dispose of any shares of capital stock or other equity securities of any of its
Subsidiaries except to qualify directors if required by applicable law or (ii)
permit any of its Subsidiaries directly or indirectly to issue, sell, assign,
pledge or otherwise encumber or dispose of any shares of capital stock or other
equity securities of any of its Subsidiaries (including such Subsidiary), except
to the Company, another wholly-owned Subsidiary of the Company or to qualify
directors if required by applicable law.
7.22. Communication with Accountants. The Company authorizes each Major
Holder to communicate directly with the Company's independent certified public
accountants and authorizes such accountants to disclose to the Major Holders any
and all financial statements and other supporting financial documents and
schedules including copies of any management letter with respect to the
business, financial condition and other affairs of the Company or any of its
Subsidiaries. At the request of the Majority Holders, the Company shall deliver
a letter addressed to such accountants instructing them to comply with the
provisions of this Section 7.22.
7.23. Employee Benefit Plans. Neither the Company nor any ERISA
Affiliate will:
(a) engage in any "prohibited transaction" within the meaning of
Section 406 of ERISA or Section 4975 of the Code which could result in a
material liability for the Company or any of its Subsidiaries; or
(b) permit any Guaranteed Pension Plan to incur an "accumulated
funding deficiency", as such term is defined in Section 302 of ERISA,
whether or not such deficiency is or may be waived; or
(c) fail to contribute to any Guaranteed Pension Plan to an
extent which, or terminate any Guaranteed Pension Plan in a manner
which, could result in the imposition of a lien or encumbrance on the
assets of the Company or any of its Subsidiaries pursuant to Section
302(f) or Section 4068 of ERISA; or
(d) amend any Guaranteed Pension Plan in circumstances requiring
the posting of security pursuant to Section 307 of ERISA or Section
401(a)(29) of the Code;
(e) permit or take any action which would result in the aggregate
benefit liabilities (with the meaning of Section 4001 of ERISA) of all
Guaranteed Pension Plans exceeding the value of the aggregate assets of
such Plans, disregarding for this purpose the benefit liabilities and
assets of any such Plan with assets in excess of benefit liabilities; or
(f) permit or take any action which would contravene any
Applicable Pension Legislation.
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7.24. Fiscal Year. The Company will not, nor will it permit any of it
Subsidiaries to, change the date of the end of its fiscal year.
7.25. Related Agreements. The Company will not, nor will it permit any
of its Subsidiaries to, materially amend, supplement or otherwise modify
(pursuant to a waiver or otherwise) the terms and conditions of any of the
Related Agreements without the prior written consent of the Majority Holders.
8. COVENANTS APPLICABLE WHILE THE PUT NOTES, WARRANTS, SHARES OF WARRANT
STOCK, COMMON SHARES AND PREFERRED SHARES ARE OUTSTANDING.
The Company covenants that, as long as any of the Put Notes, the
Warrants, any shares of Warrant Stock, any Common Shares or any Preferred Shares
remain outstanding, the Company will comply and will cause each of its
Subsidiaries to comply, with the following provisions:
8.1. General. The Company will comply with and will cause each of its
Subsidiaries to comply with the provisions of Sections 7.2, 7.3, 7.4, 7.5, 7.6,
7.7, 7.9, 7.14, 7.16 and 7.21 hereof.
8.2. Distributions. The Company shall not make any Distribution except
(i) The Company may repurchase the Warrants and Warrant Stock in accordance with
Sections 10.3 and 11 hereof, (ii) any Subsidiary of the Company may make
Distributions to the Company or to a wholly-owned Subsidiary of the Company,
(iii) the Company may pay dividends to the holders of Common Stock solely in
shares of Common Stock, (iv) the Company may pay cash dividends to the holders
of Common Stock provided that such dividends are paid on a pro rata basis among
all of the holders of Common Stock and further provided that upon payment of any
such dividend by the Company, the Company shall make a payment to each holder of
Warrants in an amount equal to the dividend such holder would have received had
such holder's Warrants been exercised in full and the holder thereof held of
record all shares of Warrant Stock issuable upon exercise in full of such
Warrants, (v) the Company may pay cash dividends to the holders of Preferred
Stock provided that such dividends are paid on a pro rata basis among all of the
holders of Preferred Stock in accordance with the Company's Charter, (vi) so
long as no Specified Event of Default shall have occurred and be continuing or
would result therefrom, the Company may make Distributions (A) in an aggregate
amount not to exceed $500,000 in any fiscal year, and (B) in a maximum amount
not to exceed $1,500,000 in the aggregate during the term of this Agreement to
be used to repurchase or otherwise redeem capital stock of the Company from
former employees of the Company pursuant to the terms of employee stock
ownership, employee stock option or other employee compensation plans of the
Company; provided that the portion of such Distributions equal to cash payments
received by the Company from the subsequent sale of such repurchased or redeemed
capital stock for cash to any employee of the Company at the commencement of
such Person's employment shall not be deemed to be a Distribution for purposes
of this Section 8.2. Notwithstanding the foregoing, at any time while the Put
Notes are outstanding, the Company shall not make any Distribution other than a
Distribution described in clauses (i), (ii) and (iii) of the preceding sentence.
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8.3. Merger, Consolidation or Sale of Assets. The Company will not, nor
permit any of its Subsidiaries to, become a party to (x) any sale of all or
substantially all of the assets of the Company, (y) any sale of a majority of
the capital stock of the Company (whether by merger, consolidation or
otherwise), or (z) any other Capital Transaction, other than a sale of stock in
which all holders of Warrants, Warrant Stock, Common Shares, Preferred Shares
and Put Notes are entitled to "Tag-Along Rights" under Section 3.4 of the
Securities Holders Agreement, or otherwise.
8.4. Conduct of Business. Neither the Company nor any of its
Subsidiaries will engage in any line of business other than those presently
conducted thereby, presently proposed to be conducted, or reasonably related
thereto (it being understood that this Section 8.4 shall not prohibit the
Company or any of its Subsidiaries from owning or operating restaurants in
addition to or other than those currently owned or operated by the Company or
its Subsidiaries, so long as at least 75% of the consolidated revenues of the
Company and its Subsidiaries are derived from the Base Business).
8.5. Issuance of Common Stock and Preferred Stock. The Company will not
issue any preferred stock the terms of which would prohibit or restrict in any
circumstance the payment by the Company of the Repurchase Price in accordance
with Section 11 hereof.
9. COVENANTS APPLICABLE WHILE THE SECURITIES ARE OUTSTANDING.
The Company hereby agrees that so long as any Securities are outstanding
that it will comply with and it will cause its Subsidiaries to comply with the
following provisions:
9.1. Annual Statements. As soon as available and in any event within 90
days after the close of each fiscal year of the Company commencing with the
fiscal year ending on December 31, 2001, the Company will deliver to each holder
of any Securities consolidated and, with respect to operating groups,
consolidating balance sheets and consolidated statements of income and
stockholders' equity and consolidated statements of cash flows of the Company
and its Subsidiaries audited by an independent public accounting firm of
nationally recognized standing selected by the Company and acceptable to the
Majority Holders, showing the consolidated financial condition of the Company
and its Subsidiaries as of the close of such fiscal year and the consolidated
results of the Company's and its Subsidiaries' operations during such fiscal
year. Each of the financial statements delivered hereunder shall be certified
without qualification (except any qualifications as the Majority Holders may in
their reasonable discretion approve in writing), and without an expression of
uncertainty as to the ability of the Company or any of its Subsidiaries to
continue as a going concern, by such accounting firm to have been prepared in
accordance with generally accepted accounting principles consistently applied,
accompanied by a certificate from such accounting firm containing the written
statement of such accounting firm that, to such firm's knowledge, no Default or
Event of Default exists, or if such firm shall have obtained knowledge of any
such Default or Event of Default or other event, setting forth the nature
thereof.
9.2. Quarterly Statements. Within 45 days after the end of each fiscal
quarter commencing with the first fiscal quarter ending after the Closing Date,
the Company will
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deliver to each holder of any Securities consolidated internal, unaudited
balance sheets and consolidated statements of income, stockholders' equity and
cash flows of the Company and its Subsidiaries as of the end of such fiscal
quarter and for the year to date, each setting forth in comparative form the
figures for the corresponding fiscal quarter for the prior fiscal year and the
projections for such fiscal quarter, certified by the Chief Financial Officer of
the Company to present fairly, in all material respects, the financial position
of the Company and its Subsidiaries and to have been prepared in accordance with
generally accepted accounting principles, consistently applied (subject to
normal year-end adjustments and the lack of footnote disclosures).
9.3. Monthly Statements. Within 30 days after the end of each month
commencing with the month ending July 31, 2001, the Company will deliver to each
Major Holder consolidated internal, unaudited balance sheets and consolidated
statements of income, stockholders' equity and cash flows of the Company and its
Subsidiaries as of the end of each such month and for the year to date, each
setting forth in comparative form the figures for the corresponding fiscal month
for the prior fiscal year and the projections for such fiscal month, certified
by the Chief Financial Officer of the Company to present fairly, in all material
respects, the financial position of the Company and its Subsidiaries and to have
been prepared in accordance with generally accepted accounting principles
consistently applied (subject to normal year-end adjustments and the lack of
footnote disclosures).
9.4. Other Information.
(a) Within forty-five (45) days after the beginning of each fiscal year
of the Company and from time to time upon request of a Major Holders (but not
more frequently than annually so long as no Default or Event of Default is
continuing), the Company will deliver to each Major Holder projections of the
Company and its Subsidiaries broken down for the next fiscal year on a month by
month and quarter by quarter basis updating those projections and budgets
delivered to the Major Holders on or prior to the Closing Date or, if
applicable, updating any later such projections delivered in response to a
request pursuant to this Section.
(b) Contemporaneously with the mailing thereof, the Company will deliver
to each Major Holder, copies of all notices and other information which are
delivered to the Senior Lenders.
(c) As soon as practicable, but in any event not later than forty-five
(45) days after the end of each of the fiscal quarters of the Company and its
Subsidiaries, the Company will deliver to each Major Holder sales and
Consolidated EBITDA statements on an individual Store-by-Store basis for each
Store operated by the Company or any of its Subsidiaries, each setting forth in
comparative form the figures for the prior fiscal quarter and the projections
for such fiscal quarter, such statements to be in a form satisfactory to the
Major Holders.
(d) The Company will promptly give notice to each Major Holder (a) of
any violation of any Environmental Law that the Company or any of its
Subsidiaries reports in writing or is reportable by such Person in writing (or
for which any written report supplemental to any oral report is made) to any
Governmental Authority and (b) upon becoming aware thereof, of any inquiry,
proceeding, investigation, or other action,
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including a notice from any agency of potential environmental liability, of any
Governmental Authority that could have a Material Adverse Effect.
(e) Contemporaneously with the filing or mailing thereof, the Company
will deliver to each Major Holder copies of all material of a financial nature
filed with the Securities and Exchange Commission or sent to the stockholders of
the Company.
(f) The Company will promptly give to each Major Holder all information
sent to the directors of the Company regarding the opening of new Stores.
9.5. Officers' Certificates. Together with delivery of consolidated
financial statements of the Company pursuant to Sections 9.1, 9.2 and 9.3 above,
the Company will deliver to each holder of any Securities receiving such
statements a certificate of the President, chief financial officer or Treasurer
of the Company, (a) stating that such statements have been prepared in
accordance with generally accepted accounting principles consistently applied
and present fairly in all material respects the consolidated financial position
of the Company and its Subsidiaries as of the dates specified and the results of
its consolidated operations and cash flows with respect to the periods specified
(subject in the case of interim financial statements only to normal year-end
audit adjustments and a lack of footnotes), (b) as long as any Notes shall be
outstanding, and then only to the holders of Notes, setting forth computations
demonstrating compliance with each of the financial ratios and restrictions
referred to in Section 7.17 of this Agreement, (c) as long as any Notes shall be
outstanding, and then only to the holders of Notes, stating that such officers
have caused the provisions of this Agreement and the Securities to be reviewed
and have no knowledge of any Default or Event of Default, or if either such
officer has such knowledge, specifying such Default or Event of Default and the
nature thereof, and what action the Company has taken, is taking or proposes to
take with respect thereto, and (d) setting forth a comparison of the actual
results of the Company and its Subsidiaries to the budgets, projections and
analyses previously provided to each Major Holder under Section 9.4(a) above.
9.6. Notice of Litigation, Defaults, Etc. The Company will promptly give
notice to each Major Holder of any litigation or any administrative proceeding
to which the Company or any of their Subsidiaries may hereafter become a party
which reasonably could be expected to result in a Material Adverse Effect.
Promptly upon any officer of the Company obtaining knowledge of any Default or
Event of Default hereunder, any material default or event of default under any
Related Agreement, any Material Contract or any agreement relating to any
Indebtedness, the Company will furnish a notice specifying the nature and period
of existence thereof and in the case of a Default or Event of Default hereunder,
what action the Company or any of its Subsidiaries has taken, is taking or
proposes to take with respect thereto. Promptly after the receipt thereof, the
Company will provide copies of any reports as to adequacies in accounting
controls submitted by independent accountants with respect to the Company and
their Subsidiaries.
9.7. Rights to Attend Meetings.
(a) Board Meetings. The Company will call and hold a meeting of its
board of directors at least once each fiscal quarter. The Company will give one
representative designated by the Majority Holders of the Notes prior written
notice, (i) in the event of regular quarterly meetings, given at the previous
regular meeting and (ii) in the event of
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a special meeting, given as soon as possible but in any event no later than two
(2) business days prior to such meeting (or, in the case of an emergency
meeting, such shorter period of time as is practicable), of the time, place and
subject matter of any proposed meeting (or action by written consent) of the
board of directors of the Company (except written consents executed solely in
connection with the establishment of bank accounts or other purely
administrative matters), such notice in all cases to include true and complete
copies of all documents furnished to any director in connection with such
meeting or consent. If no Notes shall be outstanding, then the Majority Holders
of the Warrants, Warrant Stock and Common Shares shall be entitled to designate
such representative. Such representative, or its respective officers and
authorized representatives, will be entitled to attend as an observer at any
such meeting or, if a meeting is held by telephone conference, to participate
therein for the purpose of listening thereto, provided, however, that the
Company shall have the right to withhold copies of documents furnished to
directors in connection with such meeting and to exclude such representative of
the Majority Holders from such meeting if delivery of such materials or
attendance at such meeting would adversely affect any attorney-client or other
privilege of the Company with respect to or in connection with any actual or
threatened legal action between the Company and the Majority Holders which
designated such representative.
(b) Annual Meetings. The Company will give each Major Holder at least 30
days' advance written notice of each meeting of the stockholders of the Company,
whether such meeting is an annual meeting or special meeting, and will allow
each Major Holder to attend such meeting.
9.8. Other Information. The Company will deliver to each Initial Holder
and each Person entitled to receive notice pursuant to Section 9.7(a) of
quarterly board meetings copies of all board minutes and other material
documents and memoranda which may be distributed from time to time to the
directors and stockholders of the Company at such time as such materials are so
distributed to them; provided, that the Company shall not be required to provide
any such documents or memoranda (or portions thereof) to the extent that the
delivery thereof would, in the opinion of counsel to the Company, result in the
loss of attorney-client privilege with respect thereto or any such documents or
memoranda which are subject to a confidentiality agreement with a third party
unless such Person agrees to be bound (in writing, if requested by the Company)
by the provisions of such confidentiality agreement. In addition, from time to
time upon the request of the Initial Holders or upon the request of any
representative designated by the Majority Holders of the Notes, or by the
Majority Holders of Warrants, Warrant Stock and Common Shares and the Company
will furnish to any authorized officer or representative of such Person such
information regarding the business, affairs, prospects and financial condition
of the Company and its Subsidiaries as such officer or representative may
reasonably request. Each such officer or representative shall have the right
during normal business hours to examine the books and records of the Company and
its Subsidiaries to make copies, notes and abstracts therefrom, and to make an
independent examination of the books and records of the Company and its
Subsidiaries.
9.9. Confidentiality. (a) Each holder of Securities will hold in
confidence, until such time as such information has become publicly available
other than as a consequence of a breach by a holder of Securities of its
confidentiality obligations
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hereunder, all proprietary information of the Company and its Subsidiaries
provided or made available to such Person pursuant to this Section 9, and will
not use such information except to evaluate its investment in the Company;
provided, however, that each holder shall be permitted to disclose any
proprietary information of the Company and its Subsidiaries (i) to the extent
required in order to comply with any applicable law, regulation or court or
administrative order, (ii) to the extent such person deems such disclosure to be
necessary or advisable in connection with any action to enforce any of such
holder's rights under any of the Mezzanine Documents, or (iii) otherwise in
accordance with standard and customary banking practices.
(b) The Company agrees that any holder of Securities may disclose
information obtained by such Person pursuant to this Agreement to (i) assignees
or participants hereunder or to any direct or indirect contractual counterparty
in swap agreements or such contractual party's professional advisor and (ii)
potential assignees, participants hereunder, contractual counterparties in swap
agreements or such contractual parties' professional advisors; provided that
such (x) assignees, participants, contractual counterparties or such contractual
parties' professional advisors or (y) potential assignees, participants,
contractual counterparties or such contractual parties' professional advisors
shall agree to treat such information in confidence as provided in Section
9.9(a) above.
9.10. Amendment of Credit Agreement, Securities Purchase Agreement,
Registration Rights Agreement, Etc. Neither the Company nor any of its
Subsidiaries shall agree to any amendment or modification of, or grant any
waiver or fail to enforce any of its rights pursuant to the Credit Agreement or
any of the Senior Loan Documents which would not constitute a Permitted Renewal.
The Company shall not agree to any amendment or modification of, or grant any
waiver or fail to enforce any of its rights pursuant to the Securities Holders
Agreement or the Registration Rights Agreement, other than a decision to
exercise or not exercise a right of first offer or repurchase right granted to
the Company thereunder.
9.11. New Subsidiaries. The Company will promptly deliver notice to the
Major Holders upon any Person becoming a Subsidiary of the Company and will
cause such Person to execute and deliver to each holder of Securities a
subsidiary guaranty in substantially the form of Exhibit G hereto.
9.12. Further Assurances. The Company will, and will cause each of its
Subsidiaries to, cooperate with any of the Majority Holders of any of the
Securities and execute such further instruments and documents as the Majority
Holders shall reasonably request to carry out to their satisfaction the
transactions contemplated by this Agreement and the other Mezzanine Documents.
10. DEFAULTS.
10.1. Events of Default. Holders of the Notes will be entitled to
exercise the remedies provided by Section 10.2 hereof in accordance with the
terms thereof if any one or more of the following events ("Events of Default")
shall occur:
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(a) the Company shall fail to make any payment of interest or
principal on any of the Notes when the same shall become due, whether at
maturity or by acceleration or otherwise; or
(b) the Company or any of its Subsidiaries shall fail to perform
or observe any of the covenants applicable to it set forth in Section
7.8, or Sections 7.11 through 7.25 hereof; or
(c) the Company or any of its Subsidiaries shall fail to perform
or observe any covenant, agreement or provision set forth in this
Agreement or any covenant, agreement, or provision to be performed or
observed by it under the Subsidiary Guaranty or any of the Notes, other
than those provisions set forth in Sections 10.1(a) and (b) above, and
such failure shall not be rectified or cured to the satisfaction of the
Majority Holders of Notes within thirty (30) days after written notice
from any holder of Notes; or
(d) any representation or warranty made by the Company or any of
its Subsidiaries to the Initial Holders in connection with this
Agreement, the Subsidiary Guaranty or the Notes or any amendment to this
Agreement, the Subsidiary Guaranty or the Notes shall prove to have been
false in any material respect on the date as of which it was made; or
(e) the Company or any of its Subsidiaries shall fail (i) to make
any required payment on any Indebtedness in excess of $500,000, or (ii)
to perform or observe any of the covenants or provisions required to be
performed or observed by it pursuant to the Credit Agreement or the
Senior Loan Documents, as amended from time to time and, in the case of
each of (i) and (ii), (x) such failure shall continue, without having
been duly cured, waived or consented to, beyond the period of grace, if
any, therein specified and such failure results in the acceleration
thereof, or (y) any security interest in or other Lien on any property
securing any such Indebtedness shall be enforced through judicial
proceedings or foreclosure or repossession of collateral; or
(f) a final judgment which in the aggregate with other
outstanding final judgments against the Company or any of its
Subsidiaries exceeds $500,000 (net of insurance proceeds) shall be
rendered against the Company or any of its Subsidiaries if, within 45
days after entry thereof, such judgment shall not have been satisfied
and discharged or stayed pending appeal or bonded, or within 45 days
after expiration of such stay such judgment shall not have been
discharged; or
(g) the Company or any of its Subsidiaries shall make an
assignment for the benefit of creditors, or admit in writing its
inability to pay or generally fail to pay its debts as they mature or
become due, or shall petition or apply for the appointment of a trustee
or other custodian, liquidator or receiver of the Company or any of its
Subsidiaries or of any substantial part of the assets of the Company or
any of its Subsidiaries or shall commence any case or other proceeding
relating to the Company or any of its Subsidiaries under any bankruptcy,
reorganization, arrangement, insolvency, readjustment of debt,
dissolution or liquidation or similar law of any jurisdiction, now or
hereafter in
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effect, or shall take any action to authorize or in furtherance of any
of the foregoing, or if any such petition or application shall be filed
or any such case or other proceeding shall be commenced against the
Company or any of its Subsidiaries and the Company or any of its
Subsidiaries shall indicate its approval thereof, consent thereto or
acquiescence therein or such petition or application shall not have been
dismissed within forty-five (45) days following the filing thereof; or
(h) a decree or order is entered appointing any such trustee,
custodian, liquidator or receiver or adjudicating the Company or any of
its Subsidiaries bankrupt or insolvent, or approving a petition in any
such case or other proceeding, or a decree or order for relief is
entered in respect of the Company or any of its Subsidiaries in an
involuntary case under federal bankruptcy laws as now or hereafter
constituted; or
(i) a Change of Control shall occur; or
(j) there shall occur one or more ERISA Events which individually
or in the aggregate result in or might reasonably be expected to result
in payment obligations of the Company, any of its Subsidiaries or any of
their respective ERISA Affiliates in excess of $500,000 during the term
of this Agreement or (x) there shall exist an amount of unfunded benefit
liabilities (as defined in Section 4001(a)(18) of ERISA), individually
or in the aggregate for all Pension Plans (excluding for purposes of
such computation any Pension Plans with respect to which assets exceed
benefit liabilities), which exceeds $500,000 and (y) the minimum funding
standards of Section 412 of the Code (whether or not waived in
accordance with Section 412(d)) have not been met with respect to any
Pension Plan which is included in this computation; or
(k) if any of the Mezzanine Documents shall be cancelled,
terminated, revoked or rescinded otherwise than in accordance with the
terms thereof or with the express prior written agreement, consent or
approval of the Majority Holders, or any action at law, suit or in
equity or other legal proceeding to cancel, revoke or rescind any of the
Mezzanine Documents shall be commenced by or on behalf of the Company or
any of its Subsidiaries party thereto or any of their respective
stockholders, or any court or any other governmental or regulatory
authority or agency of competent jurisdiction shall make a determination
that, or issue a judgment, order, decree or ruling to the effect that,
any one or more of the Mezzanine Documents is illegal, invalid or
unenforceable in accordance with the terms thereof; or
(l) the Company or any of its Subsidiaries shall be enjoined,
restrained or in any way prevented by the order of any Governmental
Authority from conducting any material part of its business and such
order shall continue in effect for more than thirty (30) days; or
(m) there shall occur the loss, suspension or revocation of, or
failure to renew, any license or permit now held or hereafter acquired
by the Company or any of its Subsidiaries if such loss, suspension,
revocation or failure to renew would have a Material Adverse Effect; or
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(n) the Company or any of its Subsidiaries shall be indicted for
a state or federal crime, or any civil or criminal action shall
otherwise have been brought against the Company or any of its
Subsidiaries, a punishment for which in any such case could include the
forfeiture of any assets of the Company or such Subsidiary having a fair
market value in excess of $500,000.
10.2. Remedies for Holders of Notes. Subject to Section 3.7, upon the
occurrence and continuance of any of the Events of Default under Section 10.1
hereof, in each and every such case, the Majority Holders of the Notes may
proceed to protect and enforce its or their rights by suit in equity, action at
law and/or other appropriate proceedings either for specific performance of any
covenant, provision or condition contained or incorporated by reference in this
Agreement or in the Notes, or in aid of the exercise of any power granted in
this Agreement or in the Notes, and (unless there shall have occurred an Event
of Default under Section 10.1(g) hereof, in which case the unpaid balance of the
Notes shall automatically become due and payable) may by notice to the Company,
declare all or any part of the unpaid principal amount of the Notes then
outstanding to be forthwith due and payable, and thereupon such unpaid principal
amount or part thereof, together with interest accrued thereon and any
Applicable Prepayment Charge and all other sums, if any, payable under this
Agreement or the Notes shall become so due and payable without presentation,
presentment, protest or further demand or notice of any kind, all of which are
hereby expressly waived, and such holder or holders may proceed to enforce
payment of such amount or part thereof in such manner as it or they may elect;
provided, that, if any Event of Default under Section 10.1(a) shall have
occurred and be continuing and the Majority Holders of the Notes shall not have
taken any action in connection therewith within thirty (30) days, any Initial
Holder that is the holder of a Note may take any action referred to above with
respect to its Note.
10.3. Specified Events of Default. Upon the occurrence and continuance
of any of the Specified Events of Default, in each and every such case, (i) the
Majority Holders of the Warrants and the Warrant Stock, the Majority Holders of
the Common Shares, the Majority Holders of the Preferred Shares and the Majority
Holders of the Put Notes may proceed to protect and enforce its or their rights
by suit in equity, action at law and/or other appropriate proceeding for
specific performance of any covenant, provision or condition contained or
incorporated by reference in this Agreement or in any Related Agreement, or in
aid of the exercise of any power granted in this Agreement or any Related
Agreement, (ii) the Majority Holders of the Warrants and Warrant Stock and the
Majority Holders of the Investor Group Preferred may give a Put Notice to the
Company pursuant to Section 11 hereof and at any time after the giving of such
Put Notice, the theretofore unexercised "put" rights set forth in Section 11
hereof shall, to the extent not already exercisable, be deemed to have become
immediately exercisable and the Majority Holders of Warrants and Warrant Stock
and the Majority Holders of Investor Group Preferred may in such Put Notice to
the Company declare all or part of such theretofore unexercised "put" rights to
be forthwith exercised and due and payable, whereupon the Repurchase Price for
the Warrants, shares of Warrant Stock and shares of Investor Group Preferred
subject to such declaration shall become so due and payable without
presentation, presentment, protest or further demand or notice of any kind, all
of which are expressly waived), and any such holder or holders may proceed to
enforce payment of such amount or part thereof in such manner as it or they may
elect and (iii) if the
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Majority Holders of the Notes have accelerated the maturity of the Notes, the
Majority Holders of the Put Notes may by notice to the Company, declare all or
any part of the unpaid principal amount of the Put Notes then outstanding to be
forthwith due and payable, and thereupon such unpaid principal amount or part
thereof, together with interest accrued thereon and all other sums, if any,
payable under this Agreement or the Put Notes shall become so due and payable
without presentation, presentment, protest or further demand or notice of any
kind, all of which are hereby expressly waived, and such holder or holders may
proceed to enforce payment of such amount or part thereof in such manner as it
or they may elect.
10.4. Waivers. The Company and each of its Subsidiaries hereby waives,
to the extent not prohibited by applicable law, (a) all presentments, demands
for performance and notices of nonperformance (except to the extent specifically
required by the provisions hereof), (b) any requirement of diligence or
promptness on the part of any holder of Securities in the enforcement of its
rights under the provisions of this Agreement, the Company's Charter, or any
Mezzanine Document, and (c) any and all notices of every kind and description
which may be required to be given by any statute or rule of law.
10.5. Course of Dealing. No course of dealing between the Company or any
of its Subsidiaries on the one hand, and the Initial Holders or any holder of
Securities, on the other hand, shall operate as a waiver of any of the Initial
Holders' or its rights under this Agreement, the Company's Charter, or any
Mezzanine Document. No delay or omission in exercising any right under this
Agreement, the Company's Charter, or any Mezzanine Document shall operate as a
waiver of such right or any other right. A waiver on any one occasion shall not
be construed as a bar to or waiver of any right or remedy on any other occasion.
11. REPURCHASE OF WARRANTS AND WARRANT STOCK.
11.1. Right to Put Warrants or Warrant Stock. (a) At any time on or
after the earlier of (i) the fifth anniversary of the Closing Date or (ii)
payment in full of the Notes, or on such earlier date as may be determined under
Section 10.3 hereof, the Majority Holders of the Warrants and Warrant Stock or
the Majority Holders of Investor Group Preferred may, by notice to the Company
(a "Put Notice"), elect to sell to the Company (and the Company hereby agrees to
repurchase), at the applicable Repurchase Price per share specified in Section
11.5 hereof, any or all of the shares of Warrant Stock and the Warrants as are
then held by such Majority Holders of the Warrants and Warrant Stock and/or any
or all of the shares of Investor Group Preferred as are then held by such
Majority Holders of Investor Group Preferred. For all purposes of this Section
11, each Warrant shall be treated as the number of shares of Warrant Stock for
which it is then exercisable. The right to issue a Put Notice shall be
exercisable only once by the Majority Holders.
(b) Upon delivery of any Put Notice by the Majority Holders of the
Warrants and Warrant Stock or the Majority Holders of Investor Group Preferred,
the Company shall promptly deliver a copy of the Put Notice to each other holder
of Warrants, Warrant Stock and Investor Group Preferred. Such other holders may,
by written notice to the Company within 30 days of receipt of the Put Notice
from the Company, elect to sell to
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the Company (and the Company hereby agrees to repurchase from each such holder),
at the applicable Repurchase Price per share specified in Section 11.5 hereof
(which shall in any event be the same applicable Repurchase Price per share paid
to any Majority Holders of Warrants and Warrant Stock or Majority Holders of
Investor Group Preferred giving such Put Notice), any or all of the shares of
Warrant Stock, Investor Group Preferred and Warrants as are then held by such
holders. All repurchases under Sections 11.1(a) and this 11.1(b) relating to the
same Put Notice shall occur at the same put closing under Section 11.2 below.
(c) The Company shall deliver notice to each holder of Warrants, Warrant
Stock and Investor Group Preferred of the prepayment in full of the Notes no
later than 30 days prior to the date of such prepayment in order to permit such
holders to exercise their put rights hereunder if they so elect. Notwithstanding
anything herein to the contrary, if the Company prepays the Notes prior to the
fifth anniversary of the Closing Date and neither the Majority Holders of the
Warrants and Warrant Stock nor the Majority Holders of Investor Group Preferred
elect to exercise their put rights in connection with such prepayment of the
Notes within 30 days after receipt by such holders of such notice, such holders
shall not be entitled to exercise their put rights until the fifth anniversary
of the Closing Date or such earlier date as may be determined under Section
10.3.
11.2. Put Closing. The put closing shall take place at the offices of
the Company at 10:00 a.m. local time on a date (a) not more than 120 days after
the date a Put Notice is received by the Company as the Company shall specify by
notice to each holder of Warrants, Warrant Stock or Investor Group Preferred, or
at such later time as Fair Market Value shall have been determined under Section
11.5(b) hereof, or (b) at such other time and place as the Majority Holders of
the Warrants and Warrant Stock, the Majority Holders of Investor Group Preferred
and the Company may agree upon (a "Put Closing Date"). At the put closing,
holders of the Warrants, Warrant Stock and Investor Group Preferred being put
will deliver to the Company a certificate or certificates evidencing all of such
Warrant Stock, Investor Group Preferred and Warrants (properly endorsed or
accompanied by stock powers or, in the case of any Warrant, assignments) against
payment of the aggregate Repurchase Price to each such holder in the manner
specified in Section 11.4 hereof. Except to the extent prohibited by applicable
law, prior to the Put Closing Date, the Company will provide each holder of
Securities, regardless of whether such holders have exercised put rights
hereunder, with all material available information regarding the Company,
including any plans or proposals for any mergers, sales of assets, acquisitions
and substantial sales of stock by its stockholders.
11.3. Right to Call Warrants or Warrant Stock; Call Closing. At any time
after the seventh anniversary of the Closing Date or payment in full of the
Notes, the Company may, by notice to all holders of Warrants, Warrant Stock and
Investor Group Preferred (the "Call Notice"), elect to purchase from all such
holders (and all such holders agree to sell to the Company) out of funds legally
available therefor, at the applicable Repurchase Price per share, all but not
less than all of the shares of Warrant Stock, Investor Group Preferred and the
Warrants as are then outstanding on a date specified in such notice not more
than 30 days after the date of the Call Notice or at such later time as Fair
Market Value shall have been determined under Section 11.5(b) hereof. The
closing under this Section 11.3 shall take place at the offices of the Company
at 10:00 a.m. local time on the date so specified or at such later time as Fair
Market Value shall have been determined
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under Section 11.5(b) hereof, or at such other time and place as the Company and
the Majority Holders of the Warrants and Warrant Stock and the Majority Holders
of the Investor Group Preferred may agree upon (the "Call Closing Date"). At the
closing, each holder will deliver to the Company a certificate or certificates
evidencing the Warrant Stock, Investor Group Preferred and/or the Warrant or
Warrants to be repurchased by the Company pursuant to such call (properly
endorsed or accompanied by stock powers or assignments), and the Company shall
pay each holder the aggregate Repurchase Price for such Warrants, Investor Group
Preferred and/or Warrant Stock in cash or in immediately available funds.
11.4. Payment.
(a) Subject to the provisions of paragraph (b) below, the Company shall
pay the aggregate Repurchase Price at any closing under Section 11.2 or 11.3
hereof out of funds legally available therefor in cash or immediately available
funds. In the event that any portion of the aggregate Repurchase Price is not
paid to any selling holder either in immediately available funds or (to the
extent permitted by paragraph (b) below) by the issuance of a Put Note, then
until such time as the unpaid portion of the aggregate Repurchase Price and
interest thereon, determined as set forth below, shall be paid to such holder in
full, such holder shall retain all of its rights hereunder and under and in
connection with the Warrants, Warrant Stock and Investor Group Preferred not
repurchased (the "Unrepurchased Securities"). If the aggregate Repurchase Price
is not paid to any selling holder on or prior to the Put Closing Date, such
holder shall be entitled, by notice to the Company (the "Rescission Notice"), to
rescind its put of such Unrepurchased Securities pursuant to Section 11.1.
Unless and until the Company receives a Rescission Notice, the unpaid portion of
the aggregate Repurchase Price allocable to the Unrepurchased Securities shall
remain an obligation of the Company and shall become due and payable, in cash or
immediately available funds, as soon as there are funds legally available
therefor. Interest shall accrue from the date three (3) months after the date on
which the Company receives the applicable Put Notice on any unpaid portion of
the aggregate Repurchase Price at the rate of 16% per annum, compounded on a
monthly basis to the extent permitted by law and payable on demand. In addition,
at the end of each three (3) month period, commencing three (3) months after the
date on which the Company receives the applicable Put Notice, at the end of
which any portion of the aggregate Repurchase Price remains unpaid, any Warrants
held by each holder of Unrepurchased Securities shall become exercisable for an
additional number of shares of Common Stock (the "Additional Shares") equal in
amount to 2.5% of the number of shares of Warrant Stock or portion of the
Warrants which are then Unrepurchased Securities. Notwithstanding the foregoing,
in the event that any holder rescinds its put of the Unrepurchased Securities,
such holder shall not be entitled to receive the interest on the unpaid portion
of the Repurchase Price described herein and the Warrants held by such holder
shall not become exercisable for the Additional Shares.
(b) If the Company is unable to pay any portion of the aggregate
Repurchase Price in cash at any "put closing" under Section 11.2 hereof
occurring prior to July 17, 2008 because payment of such portion of the
Repurchase Price would then cause an event of default under the terms of the
Credit Agreement, then the Company may pay such unpaid portion of the aggregate
Repurchase Price by issuing to the holders of Warrants, Warrant Stock and
Investor Group Preferred which are participating in the put, not later than the
date which is 30 days after the date on which the Company
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receives the applicable Put Notice, promissory notes in the form of Exhibit A-2
hereto (a "Put Note") in the principal amount of such unpaid portion of the
aggregate Repurchase Price owing to each such holder, provided, that the Company
may only pay the aggregate Repurchase Price in the manner specified above if (i)
the Company shall have notified all of the holders of Warrants, Warrant Stock
and Investor Group Preferred which are participating in the put of its election
to pay such portion of the aggregate Repurchase Price in such manner at least 10
days prior to the applicable Put Closing Date and (ii) such holders of Warrants,
Warrant Stock and Investor Group Preferred have elected not to rescind their put
(such election shall be made by the Majority Holders of the Investor Group
Preferred and the Majority Holders of the Warrants and Warrant Stock) prior to
the applicable Put Closing Date. The outstanding principal amount of any Put
Note shall bear interest at the rate of 16% per annum (compounded monthly) and
shall be payable in a single installment on July 17, 2008. Any portion of the
Repurchase Price paid in cash shall be allocated first to purchase Investor
Group Preferred, prior to any allocation to purchase any Warrants or Warrant
Common Stock. In addition, the Company may not elect to pay any portion of the
aggregate Repurchase Price by the issuance of a Put Note unless concurrently
therewith, the Company shall issue to the holders participating in the put a new
warrant in the form of Exhibit B-4 hereof (a "Put Warrant"). Each Put Warrant
shall be exercisable for a number of shares of Common Stock equal in amount to
the product of (i) the number of three-month periods elapsed from the date which
is three (3) months after the date of issuance of such Put Warrant through the
exercise date of such Put Warrant multiplied by (ii) 2.5% of the number of
shares of Warrant Stock or portion of the Warrants which were repurchased by the
Company from such holder by the issuance of a Put Note. Any Put Warrant issued
hereunder shall be a "Warrant" for all purposes of this Agreement and shall be
entitled to the benefit of all the covenants, terms and provisions contained
herein.
11.5. Repurchase Price for Warrants and Warrant Stock.
(a) Repurchase Price. The repurchase price (the "Repurchase Price")
shall be an amount equal to (i) in the case of each share of issued and
outstanding Warrant Stock, the quotient obtained by dividing (A) the Fair Market
Value of the Company's Common Stock (as determined pursuant to Section 11.5(b)
hereof), calculated as of the date of the related Put Notice or Call Notice
under Section 11.1 or 11.3 hereof, respectively (or in the case of the exercise
of put rights hereunder in connection with the repayment in full of the Notes,
as of the end of the calendar month preceding the date of such repayment), plus,
the aggregate consideration to be paid to the Company upon the exercise of all
then exercisable outstanding warrants, options or convertible securities
pursuant to which the Company is then obligated to issue Common Stock by (B) the
sum of (1) the number of shares of Common Stock then outstanding plus (2) the
number of shares of Common Stock then issuable upon exercise of then outstanding
warrants, options or convertible securities, in each case to the extent then
exercisable (excluding, for this purpose, shares of Common Stock issuable upon
conversion of shares of Common Stock), (ii) in the case of each share of Warrant
Stock issuable upon exercise of any outstanding Warrant, (A) the product of the
Repurchase Price per share of issued and outstanding Warrant Stock as determined
under this Section 11.5 multiplied by the number of such shares of Warrant Stock
then issuable under such Warrant, minus (B) the aggregate exercise price for
such shares of Warrant Stock under such Warrant, and (iii) in the case of each
share of Investor Group Preferred of any class the quotient obtained by dividing
(A) the Fair Market Value of the Company's Preferred Stock of such class (as
determined pursuant to
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Section 11.5(b) hereof), calculated as of the date of the related Put Notice or
Call Notice under Section 11.1 or 11.3 hereof, respectively (or in the case of
exercise of put rights hereunder in connection with repayment in full of the
Notes, as of the end of the calendar moth preceding the date of such repayment),
plus the aggregate consideration to be paid to the Company upon exercise of all
then exercisable outstanding warrants, options or convertible securities
pursuant to which the Company is then obligated to issue Preferred Stock of such
class.
(b) Fair Market Value. For a period of 20 days after the date of any Put
Notice or Call Notice (the "Negotiation Period"), the Company and the Majority
Holders of the Warrants and Warrant Stock and the Majority Holders of the
Investor Group Preferred agree to negotiate in good faith to reach agreement
upon the fair market value of the Company's Common Stock and each class of the
Company's Preferred Stock (the "Fair Market Value"). If such parties reach
agreement on such Fair Market Value, such agreement shall be binding on all
holders of Warrants, Warrant Stock and Investor Group Preferred. In the event
that such parties are unable to agree upon the Fair Market Value by the end of
the Negotiation Period, the Fair Market Value shall be determined for purposes
of this Section 11.5(b) initially by an appraiser of nationally recognized
standing selected by the Company (the "Company Appraiser") and whose appraisal
(the "Company Appraisal") shall be furnished to the Majority Holders of the
Warrants and Warrant Stock and the Majority Holders of Investor Group Preferred
within 30 days after the end of the Negotiation Period. If the Majority Holders
of the Warrants and Warrant Stock and the Majority Holders of Investor Group
Preferred do not object to such determination within 15 days after receipt of
such notice, the fair market value of each class determined by the Company
Appraiser shall be the Fair Market Value of such classes and shall be binding on
all holders of Warrants, Warrant Stock and Investor Group Preferred. If the
Majority Holders of the Warrants and Warrant Stock or the Majority Holders of
Investor Group Preferred object to the Fair Market Value determined by the
Company Appraiser, the Majority Holders of the Warrants and Warrant Stock and
the Majority Holders of Investor Group Preferred, acting jointly, may select an
Appraiser of nationally recognized standing (the "Investor Group Appraiser") who
shall review the determination of the Company Appraiser and issue a report
thereon (the "Investor Group Appraisal"), within 30 days after delivery to the
Majority Holders of the Warrants and Warrant Stock and the Majority Holders of
Investor Group Preferred of the Company Appraisal. Within 10 days after delivery
to the Company of the Investor Group Appraisal, the Company Appraiser and the
Investor Group Appraiser shall meet in order to resolve any questions or
differences with respect to the Fair Market Value of each class of equity. If
such Appraisers agree on a Fair Market Value of the Company's common and
preferred stock equity of each class, such Fair Market Value of each class shall
be the Fair Market Value of such class and shall be binding on all holders of
Warrants, Warrant Stock and Investor Group Preferred. If no agreement is
reached, such Appraisers shall select an appraiser of nationally recognized
standing (the "Third Appraiser") within five days after such meeting. The Fair
Market Value of each class of equity shall then be determined by the Third
Appraiser within 30 days after delivery to the Company of the Investor Group
Appraisal, and the determination of the Third Appraiser shall be conclusive and
binding upon the Company and all holders of Warrants, Warrant Stock and Investor
Group Preferred. Fair Market Value shall in all cases be calculated by
determining the Fair Market Value of the entire equity interest of each class of
the Company's stock, taken as a whole, without premium for control or discounts
for minority interests or restrictions on transfer or lack of voting rights, and
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considering the Class A Common Stock and the Class B Common Stock as a single
class; provided, that in the case of any determination of Fair Market Value made
pursuant to the exercise of "put rights" by the holders of the Warrants, Warrant
Stock or Investor Group Preferred in connection with the prepayment in full of
the Notes, Fair Market Value shall be determined without taking into account any
incurrence of Indebtedness, granting of Liens, making of Distributions, issuance
of equity, acquisition of assets of liabilities or any other transaction
consummated by the Company in connection with such prepayment to the extent that
such transaction would have been prohibited under the terms of Section 7 hereof
(assuming for purposes of such determination that such covenants were in effect
at such time). All expenses of the Company Appraiser shall be borne by the
Company; all expenses of the Investor Group Appraiser shall be borne by the
holders of Warrants, Warrant Stock and Investor Group Preferred participating in
the relevant put or call; and all expenses of the Third Appraiser shall be borne
equally by the Company and such selling holders.
11.6. Additional Payments Upon Merger, Etc. If at any time within six
(6) months after any Put Closing Date or twelve (12) months after any Call
Closing Date with respect to the repurchase or exchange of any Warrants,
Investor Group Preferred and/or Warrant Stock, the Company or any of its
Subsidiaries shall become party to any Capital Transaction, the Company shall,
simultaneously with the consummation of such Capital Transaction or at such
later time as any payment is received by the Company or any of its stockholders
in respect of such Capital Transaction, make an additional payment to each
holder of Securities who participated in any applicable put or call in an amount
per share of Warrant Stock (or Warrant Stock issuable upon exercise of any
Warrant) or Investor Group Preferred repurchased from such holder pursuant to
Section 11.2 or 11.3 hereof equal to the excess, if any, of the value per share
of the cash, securities and other property that such holder would have received
(or that the Company received in which such holder would have had a beneficial
interest as a stockholder of the Company) had such holder's Investor Group
Preferred, Warrant Stock and/or Warrants not been previously repurchased
pursuant to Section 11.2 or 11.3 hereof, over the payment received by such
holder with respect to each such share pursuant to Section 11.2 or 11.3 hereof.
Each payment pursuant to this Section 11.6 shall be made either in cash or in
the form of consideration received by the holders of equity of the applicable
class of the Company (or by the Company itself). For purposes of this Section
11.6 only, the term "Capital Transaction" shall include the completion of a
public offering of the Common Stock pursuant to an effective registration
statement filed under the Securities Act.
11.7. Termination. The provisions of Section 11 hereof shall terminate
on the date of the completion of a Qualified Public Offering.
12. SUBSEQUENT HOLDERS OF SECURITIES.
Whether or not any express assignment has been made in this Agreement,
the provisions of this Agreement and the other Mezzanine Documents that are for
the benefit of the Initial Holders as the holders of any Securities are also for
the benefit of, and enforceable by, all subsequent holders of Securities.
13. REGISTRATION RIGHTS.
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Each Initial Holder shall have certain registration rights with respect
to the shares of Warrant Stock held by such Initial Holder as set forth in the
Registration Rights Agreement.
14. REGISTRATION AND TRANSFER OF SECURITIES.
14.1. Registration, Transfer and Exchange of Notes.
(a) The Company shall keep at its principal office a register in which
shall be entered the names and addresses of the registered holders of the Notes
issued by it and particulars of the respective Notes held by them and of all
transfers of such Notes. References to the "holder" or "holder of record" of any
Note shall mean the payee thereof unless the payee shall have presented such
Note to the Company for transfer and the transferee shall have been entered in
said register as a subsequent holder, in which case the terms shall mean such
subsequent holder. The ownership of any of the Notes shall be proven by such
register and the Company may conclusively rely upon such register.
(b) The holder of any of the Notes may at any time and from time to time
prior to maturity or redemption thereof surrender any Note held by it for
exchange or (subject to compliance with the applicable provisions of Section 16
hereof) transfer at said office of the Company. Within a reasonable time
thereafter and without expense (other than transfer taxes, if any) to such
holder, the Company shall issue, at its expense, in exchange therefor another
Note or Notes, dated the date to which interest has been paid on the surrendered
Note, for the same aggregate principal amount as the unpaid principal amount of
the Note or Notes so surrendered (subject to the applicable holder's endorsement
or execution of any documents reasonably requested by the Company to evidence
the cancellation of any surrendered Note), having the same maturity and rate of
interest, containing the same provisions and subject to the same terms and
conditions as the Note or Notes so surrendered. Each such new Note shall be in
the denominations and registered in the name of such person or persons as the
holder of such surrendered Note or Notes may designate in writing, and such
exchange shall be made in a manner such that no additional or lesser amount of
principal or interest shall result. The Company will pay shipping and insurance
charges, from and to each holder's principal office, involved in the exchange or
transfer of any Note.
(c) Each Note issued hereunder, whether originally or in substitution
for, or upon transfer or exchange of, any Note shall be registered on the date
of execution thereof by the Company. The registered holder of record shall be
deemed to be the owner of the Note for all purposes of this Agreement. All
notices given hereunder to the holder of record shall be deemed validly given if
given in the manner specified in Section 18 hereof.
14.2. Registration, Transfer and Exchange of Warrants.
(a) The Company shall keep at its principal office a register in which
shall be entered the names and addresses of the holders of Warrants issued by it
and particulars of the respective Warrants held by them and of all transfers of
such Warrants. References to the "holder" or "holder of record" of any Warrant
shall mean the holder thereof unless the holder shall have presented such
Warrant to the Company for transfer and the transferee shall have been entered
in said register as a subsequent holder, in
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which case the terms shall mean such subsequent holder. The ownership of any of
the Warrants shall be proven by such register and the Company may conclusively
rely upon such register.
(b) The holder of any of the Warrants may at any time and from time to
time prior to exercise, repurchase or redemption thereof surrender any Warrant
held by it for exchange or (subject to compliance with Section 16 hereof)
transfer at said office of the Company. On surrender for exchange of the
Warrants, properly endorsed, to the Company, the Company at its expense will
issue and deliver to or on the order of the holder thereof a new warrant or
warrants of like tenor, in the name of such holder or, upon payment by such
holder of any applicable transfer taxes, as such holder may direct, calling in
the aggregate on the face or faces thereof for the number of shares of Warrant
Stock called for on the face or faces of the Warrants so surrendered. The
Company will pay shipping and insurance charges, from and to each holder's
principal office, involved in the exchange or transfer of any Warrant.
(c) Each Warrant issued hereunder, whether originally or in substitution
for, or upon transfer or exchange of, any Warrant shall be registered on the
date of execution thereof by the Company. The registered holder of record shall
be deemed to be the owner of the Warrant for all purposes of this Agreement. All
notices given hereunder to the holder of record shall be deemed validly given if
given in the manner specified in Section 18 hereof.
14.3. Transfer and Exchange of Common Stock and Preferred Stock.
(a) The Company shall keep at its principal office a register in which
shall be entered the names and addresses of the holders of the Common Stock and
the Preferred Stock and the particulars (including without limitation the class
thereof) of the respective Common Stock and Preferred Stock held by them and of
all transfers of shares of Common Stock or Preferred Stock or conversions of
shares of Common Stock from one class to another. References to the "holder" or
"holder of record" of any Common Stock and Preferred Stock shall mean the holder
thereof unless the holder shall have presented the stock certificates evidencing
same to the Company for transfer and the transferee shall have been entered in
said register as a subsequent holder, in which case the terms shall mean such
subsequent holder. The ownership of any of the Common Stock and Preferred Stock
shall be proven by such register and the Company may conclusively rely upon such
register.
(b) Upon surrender at such office of any certificate representing shares
of Common Stock or Preferred Stock for registration of exchange or (subject to
compliance with the applicable provisions of this Agreement, including without
limitation the conditions set forth in Section 16 hereof) transfer or
conversion, the Company shall issue, at its expense, one or more new
certificates, in such denomination or denominations as may be requested, for
shares of Preferred stock or for shares of such class of Common Stock as may be
requested, and registered as such holder may request. Any certificate
representing shares of Common Stock or Preferred Stock surrendered for
registration of transfer shall be duly endorsed, or accompanied by a written
instrument of transfer duly executed by the holder of such certificate or his
attorney duly authorized in writing. The Company will pay shipping and insurance
charges, from and to each
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holder's principal office, upon any transfer, exchange or conversion provided
for in this Section 14.3.
(c) Each stock certificate evidencing Common Stock or Preferred Stock,
whether originally or in substitution for, or upon transfer, conversion or
exchange of, any Common Stock or Preferred Stock or upon the exercise of any
Warrant shall be registered on the date of execution thereof by the Company. The
registered holder of record shall be deemed to be the owner of the Common Stock
or Preferred Stock for all purposes of this Agreement. All notices given
hereunder to the holder of record shall be deemed validly given if given in the
manner specified in Section 18 hereof.
14.4. Replacement of Securities. Upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of any
Security and, in the case of any such loss, theft or destruction, conditioned
upon prior or simultaneous delivery of an indemnity bond in such reasonable
amount as the Company may determine (or, in the case of any Security held by an
Initial Holder or any other institutional holder, an unsecured indemnity
agreement from such Initial Holder or such other holder reasonably satisfactory
to the Company) or, in the case of any such mutilation, upon the surrender of
such Security for cancellation to the Company at its principal office, the
Company, at its own expense, will execute and deliver, in lieu thereof, a new
Security of like tenor, dated in the case of a Note so that there will be no
loss of interest. Any Security in lieu of which any such new Security has been
so executed and delivered by the Company shall not be deemed to be outstanding
for any purpose of this Agreement.
15. REGULATORY RESTRICTIONS.
15.1. Bank Holding Company Act. No Person which is a bank holding
company or a subsidiary of a bank holding company (a "Bank Affiliate") as
defined in the Bank Holding Company Act of 1956, as amended, or other applicable
banking laws of the United States of America and the rules and regulations
promulgated thereunder (the "Bank Holding Company Act"), if such Bank Affiliate
provides written notice to the Company electing to be bound by this Article 15,
shall exercise any Warrant, or otherwise acquire Common Stock or Preferred
Stock, if, after giving effect to such conversion, the Bank Affiliate, together
with its Affiliates, would own more than five percent (5%) of the outstanding
voting securities the Company. Notwithstanding the foregoing, to the extent not
inconsistent with the Bank Holding Company Act, such conversion rights may be
exercised or shares of Common Stock or Preferred Stock may otherwise be acquired
in the event that:
(a) The Company shall vote to merge or consolidate with or into
any other Person and after giving effect to such merger or consolidation
the Bank Affiliate would not own more than five percent (5%) of the
outstanding voting securities of the surviving corporation;
(b) said holder exercises its registration rights pursuant to the
Registration Rights Agreement and the registration statement resulting
therefrom is effective.
Any notice by a Bank Affiliate electing to be bound by this Article 15 shall be
revocable by such Bank Affiliate upon delivery to the Company of written notice
of such revocation.
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15.2. Statement of Compliance. For purposes of this Agreement, a written
statement of a holder or any of its Affiliates, exercising any Warrant or
otherwise acquiring any Common Stock or any Preferred Stock, delivered to the
Company upon surrender of any Warrant for exercise, or upon any other
acquisition of Common Stock or Preferred Stock, to the effect that such holder
or its Affiliate, as the case may be, is legally entitled to exercise its rights
to purchase such securities of the Company and that such exercise or acquisition
will not violate or contravene any law or regulation or any judgment, decree or
order of any governmental authority then applicable to such holder or such
Affiliate, as the case may be, shall be conclusive and binding upon the Company
and shall absolutely obligate and bind the Company to deliver, in accordance
with the other terms and provisions hereof, certificates or other appropriate
instruments representing the securities so purchased.
15.3. Acknowledgment of Cross-Lending Restrictions. The Company hereby
acknowledges that if BBI at any time shall own more than 15% of the total equity
capital of the Company, then the Company will become subject to certain
"cross-lending" restrictions under the ▇▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act of 1999.
16. RESTRICTIONS ON TRANSFER.
16.1. General Restriction. The Securities shall be transferable only
upon the satisfaction of the conditions set forth below in this Section 16 and
any applicable provisions of the Securities Holders Agreement.
16.2. Notice of Transfer. Prior to any transfer of any Securities, the
holder thereof shall be required to give written notice to the Company
describing in reasonable detail the manner and terms of the proposed transfer
and the identity of the proposed transferee (the "Transfer Notice"), accompanied
by (a) if requested by the Company, an opinion of ▇▇▇▇▇▇▇ ▇▇▇▇ LLP or other
counsel reasonably acceptable to the Company, addressed to the Company, that
such transfer may be effected without registration of such Securities under the
Securities Act, and (b) the written agreement of the proposed transferee to be
bound by all of the provisions hereof and of the other Mezzanine Documents,
applicable to holders of such Securities hereunder or thereunder.
16.3. Restrictive Legends. Except as otherwise permitted by this Section
16, each Security shall bear the legend specified for such Security in Schedule
16.3 hereto and any other legend required by law or regulation.
16.4. Termination of Restrictions. The restrictions imposed by this
Section 16 upon the transferability of Securities shall terminate as to any
particular Securities when such Securities shall have been effectively
registered under the Securities Act or sold pursuant to a Public Sale. Whenever
any of such restrictions shall terminate as to any Securities, the holder
thereof shall be entitled to receive from the Company or the Company, at such
Person's expense, new Securities without such legends except that any legend
required by law or regulation will be removed only upon delivery to the Company
of an opinion of counsel of the type referred to in clause (a) of Section 16.2
hereof to the effect that such legend may be removed.
17. EXPENSES; INDEMNITY.
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(a) The Company hereby agrees to pay on demand all reasonable
out-of-pocket expenses incurred by each holder of any Security issued hereunder,
as a result of being party to this Agreement, in connection with the
transactions contemplated by this Agreement and the other Related Agreements and
in connection with any amendments or waivers (whether or not the same become
effective) hereof or thereof and all reasonable out-of-pocket expenses incurred
by any holder of any Security issued hereunder in connection with the
enforcement of any rights hereunder, under any other Related Agreement or with
respect to any Security, including without limitation (i) the reasonable cost
and expenses of preparing and duplicating this Agreement, each other Mezzanine
Document and Related Agreement and the Securities; (ii) the cost of delivering
to the principal offices of each holder of any Security, insured to such
holder's reasonable satisfaction, the Securities sold to such holder hereunder
and any Securities delivered to such holder in exchange therefor or upon any
exercise, conversion or substitution thereof; (iii) the reasonable fees,
expenses and disbursements of ▇▇▇▇▇▇▇ ▇▇▇▇ LLP, BBI's special counsel, in
connection with the transactions contemplated by this Agreement and the other
Related Agreements and any amendments, modifications, approvals, consents or
waivers hereunder or thereunder; (iv) the reasonable fees, expenses and
disbursements of BBI's accountants and other consultants, in connection with
BBI's due diligence investigation of the Company; (v) all documentary stamp and
similar taxes at any time payable in respect of this Agreement, any other
Related Agreement or the issuance of any of the Securities; and (vi) all
reasonable out-of-pocket expenses (including without limitation reasonable
attorneys' fees and costs, whether or not such attorneys are employees of any
holder, all reasonable costs associated with any rights of board attendance,
observation or inspection and travel and lodging expenses related thereto, and
reasonable consulting, accounting, appraisal, investment banking and similar
professional fees and charges) incurred by any holder in connection with (A) the
exercise, enforcement or preservation of rights under this Agreement or any of
the other Related Agreements against the Company or any of its Subsidiaries or
the administration thereof whether before or after the occurrence of a Default
or Event of Default and (B) any litigation, proceeding or dispute whether
arising hereunder or otherwise, in any way related to any holder's relationship
with the Company or its Subsidiaries, but in the case of litigation brought
against the Company or its Subsidiaries by a Security holder under clause (B),
only to the extent that such Security holder prevails in such litigation.
(b) The Company hereby further agrees to indemnify, exonerate and hold
each holder and its stockholders, officers, directors, employees and agents, and
each of its and their respective Affiliates, free and harmless from and against
any and all actions, causes of action, suits, losses, liabilities, damages and
expenses (including, without limitation, reasonable attorneys' fees and
disbursements), incurred in any capacity by any of the indemnitees as a result
of or relating to (A) any transaction financed or to be financed in whole or in
part directly or indirectly with proceeds from the sale of any of the
Securities, or (B) the execution, delivery, performance or enforcement of this
Agreement (including, without limitation, any failure by the Company to comply
with any of its covenants hereunder), the Related Agreements or any instrument
contemplated hereby or thereby, except, in each such case, for any such
liabilities arising from any indemnitee's breach of this Agreement, gross
negligence or willful misconduct.
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(c) The Company hereby indemnifies each holder against and agrees that
they will hold each holder harmless from any claim, demand or liability for any
broker's, finder's or placement fees or lender's incentive fees alleged to have
been incurred by it in connection with the transactions contemplated by this
Agreement or the other Related Agreements.
(d) Except to the extent otherwise expressly provided herein, the
Company shall pay on demand interest at a rate per annum equal to the lesser of
the maximum rate of interest permitted by law or the then current non-default
interest rate applicable to the Notes (or which would be applicable to the Notes
if they were then outstanding) plus 3% (in each case, compounded monthly) on all
overdue amounts payable under this Agreement until such amounts shall be paid in
full.
(e) The obligations of the Company under this Section 17 shall survive
payment or transfer of the Securities and the termination of this Agreement.
18. NOTICES.
Any notice or other communication in connection with this Agreement, any
other Mezzanine Document or the Securities shall be deemed to be delivered if in
writing (or in the form of a telex or telecopy) addressed as provided below (a)
when actually delivered, telexed or telecopied to said address or (b) in the
case of a letter, three business days shall have elapsed after the same shall
have been deposited in the United States mails, postage prepaid and registered
or certified:
If to the Company, at ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ Attention: Chief Financial Officer, or at such other
address as such person shall have specified by notice actually received
by the addressor, with a copy to Bruckmann, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & Co.,
L.L.C., at ▇▇▇ ▇ ▇▇▇▇.
If to BBI, then to its address set forth on page 1 hereof, to the
attention of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, or at such other address as BBI shall have
specified by notice actually received by the addressor, with a copy to
▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇, Esq., ▇▇▇▇▇▇▇ ▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇.
If to I.B.J. Whitehall, then to its address set forth on page 1
hereof, to the attention of ▇▇▇▇▇ ▇▇▇▇▇▇, or at such other address as
I.B.J. Whitehall shall have specified by notice actually received by the
addressor.
If to Exeter Capital, then to its address set forth on page 1
hereof, to the attention of ▇▇▇▇▇ ▇▇▇, or at such other address as
Exeter Capital shall have specified by notice actually received by the
addressor.
If to any other holder of record of any Security, to it at its
address set forth in the applicable register referred to in Section 14
hereof.
19. SURVIVAL AND TERMINATION OF COVENANTS.
All covenants, agreements, representations and warranties made herein or
in any other document referred to herein or delivered pursuant hereto shall be
deemed to have
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been relied on by each holder of Securities hereunder, notwithstanding any
investigation made by such holder or on its behalf, and shall survive the
execution and delivery hereof and of the Securities. All of the covenants
contained herein shall terminate at such time as no Securities remain issued and
outstanding and all amounts owed by the Company or any of its Subsidiaries in
respect thereof have been paid in full, including, without limitation all
interest on the Notes and Put Notes and any other applicable charges, fees and
expenses payable under this Agreement or any of the Securities.
20. AMENDMENTS AND WAIVERS.
Any term of this Agreement may be amended and the observance of any term
of this Agreement may be waived (either generally or in a particular instance
and either retroactively or prospectively) only with the written consent of the
Company and the Majority Holders of the Notes, the Majority Holders of the
Warrants, the Warrant Stock and the Common Shares and the Majority Holders of
the Preferred Shares, respectively, with respect to any provision of this
Agreement which by its terms operates for the benefit of such respective
holders. Any term of the Notes may be amended and the observance of any term of
the Notes may be waived (either generally or in a particular instance and either
retroactively or prospectively) only with the written consent of the Company and
the Majority Holders of the Notes with respect to whom such amendment or waiver
is made. Notwithstanding the foregoing, (a) without the prior written consent of
each holder of Warrants, Warrant Stock and Preferred Shares with respect to whom
such amendment or waiver is made, no such amendment or waiver shall extend the
scheduled date of any required repurchase of such respective Securities held by
such holder or reduce the repurchase price payable thereon, (b) without the
prior written consent of each holder of Notes with respect to whom such
amendment or waiver is made, no such amendment or waiver shall extend the fixed
maturity or reduce the principal amount of, or reduce the rate or extend the
time of payment of interest on, or reduce the amount or extend the time of
payment of any principal or premium payable on any prepayment of, any Note with
respect to whom such amendment or waiver is made, (c) without the written
consent of the aforesaid percentage of Securities reduce the aforesaid
percentage of Securities, the holders of which are required to consent to any
such amendment or waiver, (d) without the written consent of the percentage of
the holders of each Security required to exercise the remedies provided in
Section 10 hereof, increase such required percentage, or (e) without the written
consent of the Senior Lenders, amend Section 3.7 hereof. Any amendment or waiver
effected in accordance with this Section 20 shall be binding upon each holder of
any Security sold pursuant to this Agreement and the Company.
21. CONSENT TO JURISDICTION.
THE COMPANY HEREBY AGREES TO SUBMIT TO THE NON-EXCLUSIVE JURISDICTION OF
THE COURTS IN AND OF THE COMMONWEALTH OF MASSACHUSETTS AND THE COURTS IN AND OF
THE STATE OF NEW YORK, AND CONSENTS THAT SERVICE OF PROCESS WITH RESPECT TO ALL
COURTS IN AND OF THE COMMONWEALTH OF MASSACHUSETTS OR IN AND OF THE STATE OF NEW
YORK MAY BE MADE BY REGISTERED MAIL TO IT AT ITS ADDRESS SET FORTH ON PAGE 1
HEREOF.
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22. RIGHT TO PUBLICIZE
The Company hereby acknowledges that BBI and its Affiliates will have
the right to publicize BBI's investment in the Company as contemplated hereby by
means of a tombstone advertisement or other customary advertisement in
newspapers and other periodicals, which advertisement shall be subject to the
reasonable prior approval of the Company.
23. WAIVER OF JURY TRIAL.
THE COMPANY AND EACH INITIAL HOLDER HEREBY EXPRESSLY WAIVES ANY RIGHT IT
MAY HAVE TO A JURY TRIAL IN ANY SUIT, ACTION OR PROCEEDING EXISTING UNDER OR
RELATING TO THIS AGREEMENT, THE SECURITIES OR ANY OF THE OTHER MEZZANINE
DOCUMENTS.
24. MISCELLANEOUS.
This Agreement and the other Mezzanine Documents set forth the entire
understanding of the parties hereto with respect to the transactions
contemplated hereby and supersede any prior written or oral understandings with
respect thereto. The invalidity or unenforceability of any term or provision
hereof shall not affect the validity or enforceability of any other term or
provision hereof. The headings in this Agreement are for convenience of
reference only and shall not alter or otherwise affect the meaning hereof. THIS
AGREEMENT IS INTENDED TO TAKE EFFECT AS A SEALED INSTRUMENT AND MAY BE EXECUTED
IN ANY NUMBER OF COUNTERPARTS WHICH TOGETHER SHALL CONSTITUTE ONE INSTRUMENT AND
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE DOMESTIC SUBSTANTIVE
LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO ANY CHOICE OR CONFLICT OF
LAW PROVISION OR RULE THAT WOULD CAUSE THE APPLICATION OF THE DOMESTIC
SUBSTANTIVE LAWS OF ANY OTHER STATE, AND SHALL BIND AND INURE TO THE BENEFIT OF
THE PARTIES HERETO AND THEIR RESPECTIVE SUCCESSORS AND ASSIGNS.
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If the foregoing corresponds with your understanding of our agreement,
kindly sign this letter and the accompanying copies thereof in the appropriate
space below and return one counterpart of the same to the Company, at the
address first listed above.
Very truly yours,
IL FORNAIO (AMERICA) CORPORATION
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: CFO
Accepted and agreed to:
BANCBOSTON INVESTMENTS INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: Director
IBJ WHITEHALL CAPITAL CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------
Title: Director
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
EXETER CAPITAL PARTNERS IV, L.P.
By: Exeter IV Advisors, L.P.,
General Partner
By: Exeter IV Advisors, Inc.
General Partner
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Vice President
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List of Schedules
A Non-Recurring Charges
2.1 Purchased Securities
4.2 Authorizations
4.4(a) Stock Ownership
4.4(b) Stock Rights, Options, Warrants, Etc.
4.5 Subsidiaries
4.6(a)(i) Historical Financial Statements
4.6(a)(ii) Pro Forma Balance Sheet
4.6(a)(iii) Projections
4.12 Title to Assets (Exceptions)
4.18 Environmental Compliance
4.19 Representations under Related Agreements
4.21 Withholding, Union Contracts, Labor Relations
4.22 Potential Conflicts of Interest
4.23 Transaction Costs
6.15 Environmental Reports
7.11 Indebtedness
7.15 Investments
7.16 Transactions with Affiliates
7.17 Financial Covenants
16.3 Restrictive Legends
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List of Exhibits
A-1 Form of Senior Subordinated Note
A-2 Form of Put Note
B-1 Form of Common Stock Purchase Warrant
B-2 Form of Series A Preferred Stock Purchase Warrant
B-3 Form of Series B Preferred Stock Purchase Warrant
B-4 Form of Put Warrant
C Form of Legal Opinion of Counsel to the Company
D Form of Charter Amendment
E Form of Registration Rights Agreement
F Form of Subsidiary Guaranty
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