$31,100,000 ORIGINAL PRINCIPAL AMOUNT AT MATURITY
THE RESTAURANT COMPANY
11 1/4% SENIOR DISCOUNT NOTES DUE 2008
PURCHASE AGREEMENT
May 13, 1998
SALOMON BROTHERS INC
BANCBOSTON SECURITIES INC.
c/o Salomon Brothers Inc
Seven World Trade Center
New York, New York 10048
Ladies and Gentlemen:
The Restaurant Company, a Delaware corporation (the "Company" or the
"Issuer"), proposes, upon the terms and conditions set forth herein, to issue
and sell to the Initial Purchasers named in Schedule I hereto (the "Initial
Purchasers") $31,100,000 in aggregate Original Principal Amount at Maturity (as
defined in the Indenture) of the Issuer's 11 1/4% Senior Discount Notes due 2008
(the "Series A Notes"). The Series A Notes are to be issued pursuant to the
provisions of an Indenture (the "Indenture"), to be dated as of the Closing
Date (as defined below), between the Issuer and State Street Bank and Trust
Company of Connecticut, N.A., as Trustee (the "Trustee"). The Series A Notes
and the Series B Notes (as defined below) issuable in exchange therefor are
collectively referred to herein as the "Notes."
It is understood by the parties hereto that on or prior to the
Closing Date the Company will consummate a recapitalization (the
"Recapitalization") pursuant to which the Company will purchase 5,820 shares of
Common Stock of the Company owned by ▇▇▇▇▇▇'▇ Operating Company, Inc., a
subsidiary of ▇▇▇▇▇▇'▇ Entertainment, Inc. will be purchased by the Issuer at
an aggregate purchase price of $17 million.
The Issuer wishes to confirm as follows its agreement with the
Initial Purchasers in connection with the purchase and resale of the Series A
Notes.
1. PRELIMINARY OFFERING MEMORANDUM AND OFFERING MEMORANDUM. The
Notes shall be offered and sold to the Initial Purchasers pursuant to one or
more exemptions
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from the registration requirements of the Securities Act of 1933 (the "Act").
The Issuer has prepared a preliminary offering memorandum, dated May 8, 1998
(the "Preliminary Offering Memorandum") and a final offering memorandum,
dated May 13, 1998 (the "Offering Memorandum"), setting forth information
regarding the Issuer and the Series A Notes. Any references herein to the
Preliminary Offering Memorandum and the Offering Memorandum shall be deemed
to include all amendments and supplements thereto. The Issuer hereby
confirms that it has authorized the use of the Preliminary Offering
Memorandum and the Offering Memorandum, on the terms and in the manner set
forth therein, in connection with the offering and resale of the Series A
Notes by the Initial Purchasers.
The Issuer understands that the Initial Purchasers propose to make
offers and sales (the "Exempt Resales") of the Series A Notes purchased by the
Initial Purchasers hereunder only on the terms and in the manner set forth in
the Offering Memorandum and Section 2 hereof, as soon as the Initial Purchasers
deem advisable after this Agreement has been executed and delivered, (i) to
persons in the United States whom the Initial Purchasers reasonably believe to
be qualified institutional buyers ("QlBs") as defined in Rule 144A under the
Act, as such rule may be amended from time to time ("Rule 144A"), in
transactions under Rule 144A and (ii) outside the United States to persons
other than U.S. persons in reliance upon Regulation S ("Regulation S") under
the Act (such persons specified in clauses (i) and (ii) being referred to
herein as the "Eligible Purchasers"). As used herein the terms "United States"
and "U.S. persons" have the meaning given them in Regulation S.
It is understood and acknowledged that upon original issuance
thereof, and until such time as the same is no longer required under the
applicable requirements of the Act, the Series A Notes shall bear the following
legend:
THIS SECURITY (OR ITS PREDECESSOR) HAS NOT BEEN REGISTERED UNDER
SECTION 5 OF THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), OR ANY STATE SECURITIES LAWS, AND THE SECURITY EVIDENCED
HEREBY MAY NOT BE OFFERED, SOLD, OR OTHERWISE TRANSFERRED IN THE
ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM.
EACH PURCHASER OF THE SECURITY EVIDENCED HEREBY IS HEREBY NOTIFIED
THAT THE SELLER MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS
OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER.
THE HOLDER OF THE SECURITY EVIDENCED ▇▇▇▇▇▇ AGREES FOR THE BENEFIT OF
THE ISSUER THAT (A) SUCH SECURITY MAY BE RESOLD, PLEDGED OR OTHERWISE
TRANSFERRED, ONLY (1)(a) TO A PERSON WHO THE SELLER REASONABLY
BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A
UNDER THE
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SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF
RULE 144A, (b) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE
144 UNDER THE SECURITIES ACT, (c) OUTSIDE THE UNITED STATES TO A
FOREIGN PERSON IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 904
UNDER THE SECURITIES ACT OR (d) IN ACCORDANCE WITH ANOTHER EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED
UPON AN OPINION OF COUNSEL IF THE COMPANY SO REQUESTS), (2) TO THE
ISSUER OR (3) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND, IN
EACH CASE, IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY
STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND
(B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO,
NOTIFY ANY PURCHASER FROM IT OF THE SECURITY EVIDENCED HEREBY OF THE
RESALE RESTRICTIONS SET FORTH IN (A) ABOVE.
It is also understood and acknowledged that holders (including
subsequent transferees) of the Series A Notes will have the registration rights
set forth in the registration rights agreement (the "Registration Rights
Agreement"), to be dated the Closing Date, in the form of EXHIBIT A hereto, for
so long as such Series A Notes constitute "Transfer Restricted Securities" (as
defined in the Registration Rights Agreement). Pursuant to the Registration
Rights Agreement, the Issuer will agree to file with the Securities and
Exchange Commission (the "Commission") under the circumstances set forth
therein, (i) a registration statement on the appropriate form under the Act
(the "Exchange Offer Registration Statement") relating to the Issuer's 11 1/4%
Senior Discount Notes due 2008 (the "Series B Notes") to be offered in exchange
for the Series A Notes (the "Exchange Offer") and (ii) a shelf registration
statement pursuant to Rule 415 under the Act relating to the resale by certain
holders of the Series A Notes (the "Shelf Registration Statement"), and to use
all commercially reasonable efforts to cause such Shelf Registration Statement
to be declared effective. This Agreement, the Notes, the Indenture and the
Registration Rights Agreement are hereinafter referred to collectively as the
"Operative Documents."
Capitalized terms used herein without definition have the respective
meanings specified therefor in the Indenture.
2. AGREEMENTS TO SELL, PURCHASE AND RESELL. On the basis of the
representations, warranties and agreements contained in this Agreement and
subject to all the terms and conditions set forth herein, the Issuer agrees to
issue and sell to the Initial Purchasers, and the Initial Purchasers agree to
purchase from the Issuer, at a purchase price equal to 56.75% of the Original
Principal Amount at Maturity thereof, the Original Principal Amount at Maturity
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of Series A Notes set forth opposite the name of each Initial Purchaser in
Schedule I hereto (the "Purchase Price"). The Initial Purchasers have advised
the Issuer that they shall offer the Series A Notes to Eligible Purchasers at a
price initially equal to 57.907% of the Original Principal Amount at Maturity
thereof. Such price may be changed by the Initial Purchasers at any time
thereafter without notice.
3. INITIAL PURCHASERS' REPRESENTATIONS AND WARRANTIES. Each of the
Initial Purchasers, severally and not jointly, represents and warrants to the
Issuer, and agrees that:
(a) Such Initial Purchaser is a QIB, with such knowledge and
experience in financial and business matters as is necessary in order to
evaluate the merits and risks of an investment in the Series A Notes.
(b) No form of general solicitation or general advertising (within
the meaning of Regulation D under the Act) has been or shall be used by such
Initial Purchaser or any of its representatives in connection with the offer
and sale of any of the Series A Notes, including, but not limited to, articles,
notices or other communications published in any newspaper, magazine, or
similar medium or broadcast over television or radio, or any seminar or meeting
whose attendees have been invited by any general solicitation or general
advertising.
(c) In connection with the Exempt Resales, such Initial Purchaser
shall solicit offers to buy the Series A Notes only from, and shall offer to
sell the Series A Notes only to, (1) persons that it reasonably believes to be
QIBs who in purchasing such Series A Notes shall be deemed to have represented
and agreed that they are purchasing the Series A Notes for their own accounts
or accounts with respect to which they exercise sole investment discretion and
that they or such accounts, as applicable, are QIBs and (2) Regulation S
Purchasers, in each case, that acknowledge and agree that (A) such Series A
Notes shall not have been registered under the Act and may be resold, pledged
or otherwise transferred only (x)(I) to a person who the seller reasonably
believes is a QIB in a transaction meeting the requirements of Rule 144A, (II)
in a transaction meeting the requirements of Rule 144, (III) outside the United
States in a transaction meeting the requirements of Rule 903 or 904 of
Regulation S under the Securities Act or (IV) in accordance with another
exemption from the registration requirements of the Act (and based upon an
opinion of counsel if the Company so requests), (y) to the Issuer or (z)
pursuant to an effective registration statement under the Act and, in each
case, in accordance with any applicable securities laws of any state of the
United States or any other applicable jurisdiction and (B) that the holder
shall, and each subsequent holder is required to, notify any purchaser of the
security evidenced thereby of the resale restrictions set forth in (A) above.
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(d) Not to offer, sell or deliver any of the Series A Notes in any
jurisdiction outside the United States except under circumstances that shall
result in compliance with the applicable laws thereof, and to take at its own
expense whatever action is required to permit its purchase and resale of the
Series A Notes in such jurisdictions.
(e) Not to cause any advertisement of the Series A Notes to be
published in any newspaper or periodical or posted in any public place and not
to issue any circular relating to the Series A Notes, except such
advertisements as include the statements required by Regulation S.
(f) The sale of the Series A Notes offered and sold by such Initial
Purchaser pursuant hereto in reliance on Regulation S is not part of a plan or
scheme to evade the registration provisions of the Act.
(g) Such Initial Purchaser has offered the Series A Notes and shall
offer and sell the Series A Notes as part of its distribution at any time and
otherwise until 40 days after the later of the commencement of the offering of
the Series A Notes and the Closing Date, only in accordance with Rule 903 of
Regulation S or another exemption from the registration requirements of the
Act. Accordingly, neither such Initial Purchaser, its affiliates nor any
persons acting on its or their behalf has engaged or shall engage in any
directed selling efforts within the meaning of Rule 901(b) of Regulation S with
respect to the Series A Notes, and such Initial Purchaser, its affiliates and
all persons acting on its or their behalf have complied and shall comply with
the offering restrictions requirements of Regulation S.
(h) Such Initial Purchaser agrees that the Series A Notes offered
and sold in reliance on Regulation S have been and shall be offered and sold
only in offshore transactions and that such securities have been and shall be
represented upon issuance by a temporary global security that may not be
exchanged for definitive securities until the expiration of the restricted
period (as defined in Regulation S) and only upon certification of beneficial
ownership of the securities by a non-U.S. person or a U.S. person who purchased
such securities in a transaction that was exempt from the registration
requirements of the Act, which U.S. person will acquire an interest in a
"Registrable Security" (as defined in the Registration Rights Agreement).
(i) Such Initial Purchaser agrees that, at or prior to confirmation
of a sale of Series A Notes, it shall have sent to each distributor, dealer
or person receiving a selling concession, fee or other remuneration that
purchases Series A Notes from it during the restricted period (as defined in
Regulation S) a confirmation or notice to substantially the following effect:
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"The Securities covered hereby have not been registered under the
U.S. Securities Act of 1933, as amended (the "Securities Act"), and
may not be offered and sold within the United States or to, or for
the account or benefit of, U.S. persons (i) as part of their
distribution at any time or (ii) otherwise until 40 days after the
later of the commencement of the Offering and the Closing Date,
except in either case in accordance with Regulation S (or Rule 144A
or in transactions that are exempt from the registration requirements
of the Securities Act) under the Securities Act. Terms used above
have the meanings assigned to them in Regulation S."
Such Initial Purchaser further agrees that it has not entered and
shall not enter into any contractual arrangement with respect to the
distribution or delivery of the Series A Notes, except with its affiliates or
with the prior consent of the Company.
The Initial Purchasers understand that the Issuer and, for purposes
of the opinions to be delivered to the Initial Purchasers pursuant to Sections
8, 8(d) and 8(e) hereof, counsel to the Issuer and counsel to the Initial
Purchasers, shall rely upon the accuracy and truth of the foregoing
representations and agreements and the Initial Purchasers hereby consent to
such reliance.
4. DELIVERY OF THE NOTES AND PAYMENT THEREFOR. Delivery to the
Initial Purchasers of and payment for the Series A Notes shall be made at the
office of ▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ or
such other location as may be mutually acceptable, at 9:00 A.M., New York time,
on May 18, 1998 (the "Closing Date").
The Series A Notes shall be delivered to the Initial Purchasers
against payment of the Purchase Price in immediately available funds with any
transfer taxes thereon duly paid by the Company. The Series A Notes shall be
evidenced by one or more global securities (including a temporary global
security that may not be exchanged for definitive securities until the
expiration of the restricted period (as defined in Regulation S)) in definitive
form (the "Global Notes") and/or by additional definitive securities, and shall
be registered, in the case of the Global Notes, in the name of Cede & Co. as
nominee of The Depository Trust Company ("DTC"), and in the other cases, in
such names and in such denominations as the Initial Purchasers shall request
prior to 9:30 A. M., New York City time, on the second business day preceding
the Closing Date. The Series A Notes to be delivered to the Initial Purchasers
shall be made available to the Initial Purchasers in New York City for
inspection and packaging not later than 9:30 A.M., New York City time, on the
business day immediately preceding the Closing Date.
5. AGREEMENTS OF THE ISSUER. The Issuer hereby agrees with the
Initial Purchasers as follows:
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(a) To advise the Initial Purchasers promptly and, if requested by
them, to confirm such advice in writing, (i) of the issuance by any state
securities commission of any stop order suspending the qualification or
exemption from qualification of any Series A Notes for offering or sale in any
jurisdiction designated by the Initial Purchasers pursuant to Section 5(f)
hereof, or the initiation of any proceeding by any state securities commission
or any other federal or state regulatory authority for such purpose and (ii)
within the period of time referred to in paragraph (e) below, of any material
change in the Issuer's condition (financial or other), business, prospects,
properties, net worth or results of operations, or of the happening of any
event which makes any statement made in the Offering Memorandum untrue or which
requires the making of any additions to or changes in the Offering Memorandum
in order to make the statements therein not misleading, or of the necessity to
amend or supplement the Offering Memorandum to comply with any law. The Issuer
shall use its best efforts to prevent the issuance of any stop order or order
suspending the qualification or exemption of any Series A Notes under any state
securities or Blue Sky laws and, if at any time any state securities commission
or other federal or state regulatory authority shall issue an order suspending
the qualification or exemption of any Series A Notes under any state securities
or Blue Sky laws, the Issuer shall use its best efforts to obtain the
withdrawal or lifting of such order at the earliest possible time.
(b) To furnish to the Initial Purchasers and those persons
identified by the Initial Purchasers to the Issuer, without charge, as of the
date of the Offering Memorandum, such number of copies of the Offering
Memorandum as they may reasonably request.
(c) Not to make any amendment or supplement to the Preliminary
Offering Memorandum or to the Offering Memorandum of which the Initial
Purchasers shall not previously have been advised or to which they shall
reasonably object after being so advised.
(d) Prior to the execution and delivery of this Agreement, the
Issuer has delivered or shall deliver to the Initial Purchasers, without
charge, in such quantities as the Initial Purchasers shall have requested or
may hereafter reasonably request, copies of the Preliminary Offering
Memorandum. The Issuer consents to the use, on the terms and in the manner set
forth therein and in accordance with the securities or Blue Sky laws of the
jurisdictions in which the Series A Notes are offered by the Initial Purchasers
and by dealers prior to the date of the Offering Memorandum, of each
Preliminary Offering Memorandum so furnished by the Issuer. The Issuer
consents to the use of the Offering Memorandum on the terms and in the manner
set forth therein and in accordance with the securities or Blue Sky laws of the
jurisdictions in which the Series A Notes are offered by the Initial Purchasers
and by all dealers to whom Series A Notes may be sold, in connection with the
offering and sale of the Series A Notes.
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(e) If, at any time prior to completion of the distribution of the
Series A Notes by the Initial Purchasers to Eligible Purchasers, any event
shall occur that, in the judgment of the Issuer or in the opinion of counsel
for the Initial Purchasers, should be set forth in the Offering Memorandum in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading, or if it is necessary to supplement or
amend the Offering Memorandum in order to comply with any law, to forthwith
prepare an appropriate supplement or amendment thereto, and to expeditiously
furnish to the Initial Purchasers and dealers a reasonable number of copies
thereof. In the event that the Issuer and the Initial Purchasers agree that
the Offering Memorandum should be amended or supplemented, the Issuer, if
reasonably requested by the Initial Purchasers, shall promptly issue a press
release announcing or disclosing the matters to be covered by the proposed
amendment or supplement or such document.
(f) To cooperate with the Initial Purchasers and their counsel in
connection with the qualification of the Series A Notes for offering and sale
by the Initial Purchasers and by dealers under the securities or Blue Sky laws
of such jurisdictions as the Initial Purchasers may designate and to file such
consents to service of process or other documents necessary or appropriate in
order to effect such qualification; provided that in no event shall the Issuer
be obligated to qualify to do business in any jurisdiction where it is not now
so qualified or to take any action which would subject it to service of process
in suits, other than those arising out of the offering or sale of the Series A
Notes, in any jurisdiction where it is not now so subject.
(g) If this Agreement shall terminate or shall be terminated after
execution and delivery pursuant to any provisions hereof (otherwise than by
notice given by the Initial Purchasers terminating this Agreement pursuant to
Section 11 hereof) or if this Agreement shall be terminated by the Initial
Purchasers because of any failure or refusal on the part of the Issuer to
comply with the terms or fulfill any of the conditions of this Agreement, to
reimburse the Initial Purchasers for all out-of-pocket expenses (including fees
and expenses of its counsel) reasonably incurred by them in connection
herewith, but without any further obligation on the part of the Issuer for loss
of profits or otherwise.
(h) So long as any of the Series A Notes remain outstanding and
during any period in which the Issuer is not subject to Section 13 or 15(d) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), to make
available to any holder of Series A Notes in connection with any sale thereof
and any prospective purchaser of such Series A Notes from such holder, the
information ("Rule 144A Information") required by Rule 144A(d)(4) under the
Act.
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(i) To apply the net proceeds from the sale of the Series A Notes to
be sold by them hereunder substantially in accordance with the description set
forth in the Offering Memorandum.
(j) Without the prior consent of the Initial Purchasers, prior to
and including the Closing Date, not to offer, sell, contract to sell or
otherwise dispose of any fixed income obligation having a maturity of more than
one year.
(k) Except as stated in this Agreement and in the Preliminary
Offering Memorandum and Offering Memorandum, not to take, directly or
indirectly, any action designed to or that might reasonably be expected to
cause or result in stabilization or manipulation of the price of the Series A
Notes to facilitate the sale or resale of the Series A Notes. Except as
permitted by the Act, not to distribute any offering material in connection
with the Exempt Resales.
(l) To use its best efforts to cause the Series A Notes to be
eligible for trading on the PORTAL Market and to maintain the listing of the
Series A Notes on PORTAL for so long as the Series A Notes are outstanding.
(m) Not to sell, offer for sale or solicit offers to buy or
otherwise negotiate in respect of any security (as defined in the Act) that
would be integrated with the sale of the Series A Notes in a manner that would
require the registration under the Act of the sale to the Initial Purchasers or
the Eligible Purchasers of the Series A Notes.
(n) To comply with all the terms and conditions of the Registration
Rights Agreement and all agreements set forth in the representation letters of
the Issuer to DTC relating to the approval of the Series A Notes by DTC for
"book entry" transfer.
(o) Prior to any registration of the Series B Notes pursuant to the
Registration Rights Agreement, or at such earlier time as may be required, to
cause the Indenture to be qualified under the Trust Indenture Act of 1939 (the
"TIA") and to enter into any necessary supplemental indentures in connection
therewith.
(p) To use all commercially reasonable efforts to do and perform all
things required or necessary to be done and performed under this Agreement by
it prior to the Closing Date and to satisfy all conditions precedent to the
delivery of the Series A Notes.
6. REPRESENTATIONS AND WARRANTIES OF THE ISSUER. The Issuer
represents and warrants to the Initial Purchasers that:
(a) The Preliminary Offering Memorandum and Offering Memorandum
with respect to the Series A Notes have been prepared by the Issuer for use,
on the terms and
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in the manner set forth therein, by the Initial Purchasers in connection with
the Exempt Resales. No order or decree preventing the use of the Preliminary
Offering Memorandum or the Offering Memorandum or any amendment or supplement
thereto, or any order asserting that the transactions contemplated by this
Agreement are subject to the registration requirements of the Act has been
issued and no proceeding for that purpose has commenced or is pending or, to
the knowledge of the Issuer, is contemplated.
(b) The Preliminary Offering Memorandum and the Offering Memorandum,
as of their respective dates, and the Offering Memorandum as of the Closing
Date, did not or will not, as of the Closing Date, contain an untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading, except that
this representation and warranty does not apply to statements in or omissions
from the Preliminary Offering Memorandum or Offering Memorandum made in
reliance upon and in conformity with information furnished to the Issuer in
writing by or on behalf of the Initial Purchasers expressly for use therein.
(c) The Indenture has been duly and validly authorized by the Issuer
and, upon its execution, delivery and performance by the Issuer and assuming
due authorization, execution, delivery and performance by the Trustee, shall be
a valid and binding agreement of the Issuer, enforceable against it in
accordance with its terms, except as enforcement thereof may be limited by
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or
other similar laws relating to or affecting creditors' rights generally and by
general equitable principles (whether considered in a proceeding in equity or
at law) and conforms in all material respects to the description thereof in the
Offering Memorandum. No qualification of the Indenture under the TIA is
required in connection with the offer and sale of the Series A Notes
contemplated hereby or in connection with the Exempt Resales.
(d) The Series A Notes have been duly authorized by the Issuer and,
when executed by the Issuer and authenticated by the Trustee in accordance with
the Indenture and delivered to the Initial Purchasers against payment therefor
in accordance with the terms hereof, shall have been validly issued and
delivered, and shall constitute valid and binding obligations of the Issuer
entitled to the benefits of the Indenture and enforceable in accordance with
their terms, except as enforcement thereof may be limited by bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium or other similar
laws relating to or affecting creditors' rights generally and by general
equitable principles (whether considered in a proceeding in equity or at law).
The Series A Notes shall conform in all material respects to the description
thereof in the Offering Memorandum.
(e) The Series B Notes have been duly authorized by the Issuer, and,
when duly executed, authenticated, issued and delivered, shall constitute valid
and binding obligations of the Issuer entitled to the benefits of the Indenture
and enforceable in accordance with
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their terms, except as enforcement thereof may be limited by bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium or other
similar laws relating to or affecting creditors' rights generally and by
general equitable principles (whether considered in a proceeding in equity or
at law).
(f) All the outstanding equity interests of the Issuer have been
duly authorized and validly issued and are fully paid and nonassessable, and
are not subject to any preemptive or similar rights.
(g) Each of the Issuer and the Subsidiaries (as defined) is duly
organized, validly existing and in good standing under the laws of its
jurisdiction of organization with full power and authority to own, lease and
operate its properties and to conduct its business as described in the Offering
Memorandum, and is duly registered and qualified to conduct its business and is
in good standing in each jurisdiction or place where the nature of its
properties or the conduct of its business requires such registration or
qualification, except where the failure so to register or qualify does not have
a material adverse effect on the condition (financial or other), business,
prospects, properties, net worth or results of operations of the Issuer and the
Subsidiaries, taken as a whole (a "Material Adverse Effect").
(h) The Company does not have any subsidiaries or any ownership
interests in any entities other than TRC Realty Co., ▇▇▇▇▇▇▇ Restaurants, Inc.,
▇▇▇▇▇▇▇ Management Company, Inc., ▇▇▇▇▇▇▇ Family Restaurants, L.P. and Perkins
Finance Corp. (the "Subsidiaries") and ▇.▇. Joint Venture LLC.
(i) There are no legal or governmental proceedings pending or, to
the knowledge of the Issuer, threatened, against the Issuer or any of the
Subsidiaries or to which the Issuer or any of the Subsidiaries or any of their
respective properties is subject, that are not disclosed in the Offering
Memorandum and which might reasonably be expected to result, singly or in the
aggregate, in a Material Adverse Effect or might materially affect the issuance
of the Series A Notes or the consummation of the transactions contemplated by
this Agreement. There are no agreements, contracts, indentures, leases or other
instruments that are material to the Issuer and the Subsidiaries, taken as a
whole, that are not described in the Offering Memorandum. Neither the Issuer
nor any of the Subsidiaries is involved in any strike, job action or labor
dispute with any group of employees, and, to each Issuer's knowledge, no such
action or dispute is threatened.
(j) Neither the Issuer nor any of the Subsidiaries is (i) in
violation of its certificate or articles of incorporation, certificate of
limited partnership, partnership agreement, by-laws or other organizational
documents, as applicable, or of any law, ordinance, administrative or
governmental rule or regulation applicable to it or of any decree of any court
or governmental agency or body having jurisdiction over it except where any
such violation or
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violations in the aggregate would not reasonably be expected to have a
Material Adverse Effect or (ii) in default in any material respect in the
performance of any obligation, agreement or condition contained in any bond,
debenture, note or any other evidence of indebtedness or in any material
agreement, indenture, lease or other instrument to which it is a party or by
which it or any of its respective properties may be bound, except as may be
disclosed in the Offering Memorandum.
(k) None of the issuance, offer, sale or delivery of the Series A
Notes, the execution, delivery or performance of this Agreement, the
Indenture or the Registration Rights Agreement by the Issuer or the
consummation by the Issuer of the transactions contemplated hereby or thereby
(including the Recapitalization) (i) requires any consent, approval,
authorization or other order of, or registration or filing with, any court,
regulatory body, administrative agency or other governmental body, agency or
official (except as may be required in connection with the registration under
the Act of the Series B Notes in accordance with the Registration Rights
Agreement, qualification of the Indenture under the TIA and compliance with
the securities or Blue Sky laws of various jurisdictions), or conflicts or
shall conflict with or constitutes or shall constitute a breach of, or a
default under, the certificate or articles of incorporation, certificate of
limited partnership, bylaws, partnership agreement or other organizational
documents, as applicable, of the Issuer or any of the Subsidiaries or (ii)
conflicts or will conflict with or constitutes or will constitute a breach
of, or a default under, in any material respect, any material agreement,
indenture, lease or other instrument to which the Issuer or any of the
Subsidiaries is a party or by which any of them or any of their respective
properties may be bound, or (assuming compliance with all applicable state
securities and Blue Sky laws and, in the case of the Registration Rights
Agreement and the transactions contemplated thereby, the Act, the Exchange
Act and the TIA) violates or will violate in any material respect any
statute, law, regulation or filing or judgment, injunction, order or decree
applicable to the Issuer or any of the Subsidiaries or any of their
respective properties, or will result in the creation or imposition of any
lien, charge or encumbrance upon any property or assets of the Issuer or any
of the Subsidiaries pursuant to the terms of any agreement or instrument to
which either of them is a party or by which any of them may be bound or to
which any of the property or assets of any of them is subject.
(l) This Agreement has been duly authorized, executed and
delivered by the Issuer.
(m) The financial statements (historical and pro forma), together
with related schedules and notes forming part of the Offering Memorandum (and
any amendment or supplement thereto), present fairly in all material respects
the consolidated financial position, results of operations and changes in
owners' equity and cash flows of such entities purported to be shown thereby
on the basis stated in the Offering Memorandum at the respective dates or for
the respective periods to which they apply; such statements and related
schedules and
-13-
notes have been prepared in accordance with generally accepted
accounting principles consistently applied throughout the periods involved,
except as disclosed therein; the assumptions used in preparing the pro forma
financial information and related notes and schedules included in the
Offering Memorandum are reasonable; and the other financial and statistical
information and data set forth in the Offering Memorandum (and any amendment
or supplement thereto) is accurately presented and, to the extent such
information and data is derived from the financial books and records of the
entities covered thereby, is prepared on a basis consistent with such
financial statements and the books and records of the entities covered
thereby.
(n) The accountants, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, LLP, who have certified or
shall certify the financial statements included as part of the Offering
Memorandum (or any amendment or supplement thereto), are independent public
accountants under Rule 101 of the AICPA's Code of Professional Conduct, and its
interpretation and rulings. The historical financial statements, together with
related schedules and notes, set forth in the Preliminary Offering Memorandum
and the Offering Memorandum comply as to form in all material respects with the
requirements applicable to registration statements on Form S-1 under the Act.
(o) The Registration Rights Agreement has been duly authorized by
the Issuer and, on the Closing Date, will have been duly executed and delivered
by the Issuer. When the Registration Rights Agreement has been duly executed
and delivered, the Registration Rights Agreement will be a valid and binding
agreement of the Issuer, enforceable against the Issuer in accordance with its
terms subject to the effects of bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws relating to or affecting
creditors' rights generally and to general equitable principles (whether
considered in a proceeding in equity or at law) and except as rights to
indemnity and contribution may be limited by Federal or state securities laws
or principles of public policy. On the Closing Date, the Registration Rights
Agreement will conform as to legal matters in all material respects to the
description thereof in the Offering Memorandum.
(p) [Intentionally Omitted.]
(q) The Recapitalization has been duly authorized by the Company.
(r) Neither the Issuer nor any of its affiliates has taken, directly
or indirectly, any action designed to, or that might reasonably be expected to,
cause or result in stabilization or manipulation of the price of the Series A
Notes.
(s) Except as disclosed in the Offering Memorandum (or any amendment
or supplement thereto) (including, without limitation, in connection with the
Recapitalization and the Registration Rights Agreement), subsequent to the date
as of which such information is given in the Offering Memorandum (or any
amendment or supplement thereto), neither the
-14-
Issuer nor any Subsidiary has incurred any liability or obligation, direct or
contingent, or entered into any transaction, not in the ordinary course of
business, that is material to the Issuer and the Subsidiaries, taken as a
whole, and there has not been any material change in the general or limited
partners' interests or capital stock, or material increase in the short-term
or long-term debt, of the Issuer or any Subsidiary or any material adverse
change, or any development involving or which could reasonably be expected to
involve a prospective material adverse change, in the condition (financial or
other), business, properties, net worth or results of operations of the
Issuer and the Subsidiaries, taken as a whole.
(t) Each of the Issuer and the Subsidiaries has good and marketable
title to all property (real and personal) described in the Offering Memorandum
as being owned by it, free and clear of all liens, claims, security interests
or other encumbrances except such as are described in the Offering Memorandum
and all the property described in the Offering Memorandum as being held under
lease by each of the Issuer and the Subsidiaries is held by it under valid,
subsisting and enforceable leases, with only such exceptions as in the
aggregate are not materially burdensome and do not interfere in any material
respect with the conduct of the business of the Issuer and the Subsidiaries,
taken as a whole. Each of the Issuer and the Subsidiaries enjoys peaceful and
undisturbed possession under all leases to which it is a party as lessee,
except for such leases that, in the aggregate, are not material to the business
of the Issuer and the Subsidiaries taken as a whole. No consent need be
obtained from any person with respect to any such lease or agreement in
connection with the transactions contemplated hereby and in the Offering
Memorandum, including the Recapitalization, which consent has not already been
obtained. Except for such assets, plants and facilities as are not material in
the aggregate to the business of the Issuer and the Subsidiaries taken as a
whole, all tangible assets, plants and facilities of each of the Issuer and the
Subsidiaries are in good condition and repair (ordinary wear and tear excepted)
and are adequate, in the reasonable opinion of the Issuer, for the uses to
which they are being put or would be put in the ordinary course of business.
(u) Except as permitted by the Act, the Issuer has not distributed
and, prior to the later to occur of the Closing Date and completion of the
distribution of the Series A Notes, shall not distribute any offering material
in connection with the offering and sale of the Series A Notes other than the
Preliminary Offering Memorandum and Offering Memorandum.
(v) Each of the Issuer and the Subsidiaries has such permits,
licenses, franchises, certificates of need and other approvals or
authorizations of governmental or regulatory authorities ("Permits") as are
necessary under applicable law to own its properties and to conduct its
businesses in the manner described in the Offering Memorandum, except to the
extent that the failure to have such Permits would not reasonably be expected
to have a Material Adverse Effect. Each of the Issuer and the Subsidiaries has
fulfilled and performed in all
-15-
material respects all its material obligations with respect to the Permits,
and no event has occurred which allows, or after notice or lapse of time
would allow, revocation or termination thereof or results in any other
material impairment of the rights of the holder of any such Permit, subject
in each case to such qualification as may be set forth in the Offering
Memorandum and except to the extent that any such revocation or termination
would not have a Material Adverse Effect; and, except as described in the
Offering Memorandum, none of the Permits contains any restriction that is
materially burdensome to the Issuer or any Subsidiary.
(w) Neither the Issuer nor any Subsidiary has violated any foreign,
federal, state or local law or regulation relating to the protection of human
health and safety, the environment or hazardous or toxic substances or wastes,
pollutants or contaminants ("Environmental Laws") or any provisions of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), or the
rules and regulations promulgated thereunder, except for such violations which,
singly or in the aggregate, would not reasonably be expected to have a Material
Adverse Effect.
(x) There are no costs or liabilities associated with Environmental
Laws (including, without limitation, any capital or operating expenditures
required for clean-up, closure of properties or compliance with Environmental
Laws or any Permit, any related constraints on operating activities and any
potential liabilities to third parties) which would, singly or in the
aggregate, reasonably be expected to have a Material Adverse Effect.
(y) Each of the Issuer and the Subsidiaries maintains a system of
internal accounting controls sufficient to provide reasonable assurances that
(i) transactions are executed in accordance with management's general or
specific authorization; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain accountability for assets; (iii) access
to assets is permitted only in accordance with management's general or specific
authorization; and (iv) the recorded accountability for assets is compared with
existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
(z) Neither the Issuer nor any Subsidiary has, nor, to the Issuer's
knowledge, has any employee or agent of the Issuer or any Subsidiary made any
payment of funds of the Issuer or any Subsidiary or received or retained any
funds in violation of any law, rule or regulation.
(aa) Except as disclosed in the Offering Memorandum, each of the
Issuer and the Subsidiaries has filed all tax returns required to be filed,
which returns are true and correct in all material respects, and neither the
Issuer nor any Subsidiary is in default in the payment of any taxes which were
payable pursuant to said returns or any assessments with
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respect thereto, except where the failure to file such returns and make such
payments would not reasonably be expected to have a Material Adverse Effect.
(bb) Except as contemplated pursuant to the Registration Rights
Agreement, there are no contracts, agreements or understandings between the
Issuer and any person granting such person the right to require the Issuer to
file a registration statement under the Act with respect to any securities of
the Issuer or to require the Issuer to include such securities with the Series
A Notes registered pursuant to any Shelf Registration Statement. Except as
described in or contemplated by the Offering Memorandum, there are no
outstanding options, warrants or other rights calling for the issuance of, and
there are no commitments, plans or arrangements to issue, any equity interests
of the Issuer or any security convertible into or exchangeable or exercisable
for equity interests of the Issuer.
(cc) Each of the Issuer and the Subsidiaries owns or possesses all
patents, trademarks, trademark registration, service marks, service mark
registrations, trade names, copyrights, licenses, inventions, trade secrets and
rights described in the Offering Memorandum as being owned by it or necessary
for the conduct of its businesses, and the Issuer is not aware of any claim to
the contrary or any challenge by any other person to the rights of either the
Issuer or any Subsidiary with respect to the foregoing.
(dd) Each of the Issuer and the Subsidiaries is insured by insurers
of recognized financial responsibility against such losses and risks and in
such amount as are prudent and customary in the businesses in which they are
engaged. Neither Issuer nor any Subsidiary (i) has received notice from any
insurer or agent of such insurer that substantial capital improvements or other
material expenditures shall have to be made in order to continue such insurance
or (ii) has any reason to believe that it shall not be able to renew its
existing insurance coverage as and when such coverage expires or to obtain
similar coverage from similar insurers at a cost that would not have a Material
Adverse Effect.
(ee) Except as disclosed in the Offering Memorandum, no relationship,
direct or indirect, exists between or among the Issuer or any Subsidiary, on
the one hand, and the directors, officers, stockholders, customers or suppliers
of the Issuer or any Subsidiary, on the other hand, which would be required by
the Act to be described in the Offering Memorandum if the Offering Memorandum
were a prospectus included in a registration statement on Form S-1 filed with
the Commission.
(ff) Neither the Issuer nor any Subsidiary is and, upon sale of the
Series A Notes to be issued and sold thereby in accordance herewith and the
application of the net proceeds to the Issuer of such sale as described in the
Offering Memorandum under the caption "Use of Proceeds," shall not be an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended.
-17-
(gg) No "nationally recognized statistical rating organization" as
such term is defined for purposes of Rule 436(g)(2) under the Act (i) has
imposed (or has informed the Issuer that it is considering imposing) any
condition (financial or otherwise) on the Issuer's retaining any rating
assigned to the Issuer or any securities of the Issuer or (ii) has indicated to
the Issuer that it is considering (a) the downgrading, suspension or withdrawal
of, or any review for a possible change that does not indicate the direction of
the possible change in, any rating so assigned or (b) any change in the outlook
for any rating of the Issuer or any securities of the Issuer.
(hh) When the Series A Notes are issued and delivered pursuant to
this Agreement, such Series A Notes shall not be of the same class (within the
meaning of Rule 144A(d)(3) under the Act) as any security of the Issuer that is
listed on a national securities exchange registered under Section 6 of the
Exchange Act or that is quoted in a United States automated interdealer
quotation system.
(ii) Neither the Issuer nor any affiliate (as defined in Rule 501(b)
of Regulation D ("Regulation D") under the Act) of the Issuer has directly, or
through any agent (provided that no representation is made as to the Initial
Purchasers or any person acting on their behalf), sold, offered for sale,
solicited offers to buy or otherwise negotiated in respect of, any security (as
defined in the Act) which is or shall be integrated with the offering and sale
of the Series A Notes in a manner that would require the registration of the
Series A Notes under the Act.
(jj) Each of the Preliminary Offering Memorandum and the Offering
Memorandum, as of its date, contains all of the information specified in, and
meeting the requirements of, Rule 144(d)(4) under the Act.
(kk) Assuming (i) that the representations and warranties in Section
3 hereof are true, (ii) the Initial Purchasers comply with the covenants set
forth in Section 3 hereof and (iii) that each person to whom the Initial
Purchasers offer, sell or deliver the Series A Notes is a QIB or a person other
than a U.S. person outside the United States in reliance on Regulation S under
the Act, the purchase and sale of the Series A Notes pursuant hereto (including
the Initial Purchasers' proposed offering of the Series A Notes on the terms
and in the manner set forth in the Offering Memorandum and Section 3 hereof) is
exempt from the registration requirements of the Act.
(ll) The execution and delivery of this Agreement, the other
Operative Documents and the sale of the Series A Notes to the Initial
Purchasers or by the Initial Purchasers to Eligible Purchasers shall not
involve any prohibited transaction within the meaning of Section 406 of ERISA
or Section 4975 of the Code. The representation made by the Issuer in the
preceding sentence is made in reliance upon and subject to the accuracy of, and
in compliance
-18-
with, the representations and covenants made or deemed made by the Eligible
Purchasers as set forth in the Offering Memorandum under the section entitled
"Notice to Investors."
(mm) No form of general solicitation or general advertising (as
defined in Regulation D under the Act) was used by the Issuer or any of its
representatives (other than the Initial Purchasers, as to whom the Issuer makes
no representation) in connection with the offer and sale of the Series A Notes
contemplated hereby, including, but not limited to, articles, notices or other
communications published in any newspaper, magazine, or similar medium or
broadcast over television or radio, or any seminar or meeting whose attendees
have been invited by any general solicitation or general advertising.
(nn) Neither the Issuer nor any of its affiliates or any person
acting on its behalf (other than the Initial Purchasers, as to whom the Issuer
makes no representation) has engaged or shall engage in any directed selling
efforts within the meaning of Regulation S under the Act with respect to the
Series A Notes.
(oo) The sale of the Series A Notes pursuant to Regulation S is not
part of a plan or scheme to evade the registration provisions of the Act.
(pp) The Issuer and its affiliates and all persons acting on their
behalf (other than the Initial Purchasers, as to whom the Issuer makes no
representation) have complied with and shall comply with the offering
restrictions requirements of Regulation S in connection with the offering of
the Series A Notes outside the United States and, in connection therewith, the
Offering Memorandum shall contain the disclosure required by Rule 902(h).
(qq) The Series A Notes offered and sold in reliance on Regulation S
have been and shall be offered and sold only in offshore transactions and such
securities have been and shall be represented upon issuance by a temporary
global security that may not be exchanged for definitive securities until the
expiration of the 40-day restricted period referred to in Rule 903(c)(3) of the
Act and only upon certification of beneficial ownership of such Series A Notes
by non-U.S. persons or U.S persons who purchased such Series A Notes in
transactions that were exempt from the registration requirements of the Act.
(rr) Each certificate signed by any officer of the Issuer delivered
to the Initial Purchasers or counsel to the Initial Purchasers shall be deemed
to be a representation and warranty by the Issuer to the Initial Purchasers as
to the matters covered thereby.
The Issuer acknowledges that the Initial Purchasers and, for purposes
of the opinions to be delivered to the Initial Purchasers pursuant to Sections
8(c), 8(d) and 8(e)
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hereof, counsel to the Issuer and counsel to the Initial Purchasers, will
rely upon the accuracy and truth of the foregoing representations and hereby
consent to such reliance.
7. INDEMNIFICATION AND CONTRIBUTION. (a) The Issuer agrees to
indemnify, and hold harmless each Initial Purchaser and each person, if any,
who controls such Initial Purchaser within the meaning of Section 15 of the
Act or Section 20 of the Exchange Act, from and against any and all losses,
claims, damages, liabilities and expenses (including reasonable costs of
investigation) arising out of or based upon any untrue statement or alleged
untrue statement of a material fact contained in the Preliminary Offering
Memorandum, the Offering Memorandum or the Proxy Statement or in any amendment
or supplement thereto, or arising out of or based upon any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, except insofar as such
losses, claims, damages, liabilities or expenses (i) arise out of or are based
upon any untrue statement or omission or alleged untrue statement or omission
which has been made therein or omitted therefrom in reliance upon and in
conformity with the information furnished in writing to the Issuer by or on
behalf of the Initial Purchasers expressly for use in connection therewith or
(ii) with respect to the Preliminary Offering Memorandum, result from the fact
that an Initial Purchaser sold Series A Notes to a person to whom there was not
sent or given, at or prior to the written confirmation of such sale, a copy of
the Offering Memorandum, as amended or supplemented, if the Issuer shall have
previously furnished copies thereof to such Initial Purchaser in accordance
with this Agreement, and the Issuer proves that the Offering Memorandum, as
amended or supplemented, would have corrected such untrue statement or
omission. The foregoing indemnity agreement shall be in addition to any
liability which the Issuer may otherwise have.
(b) If any action, suit or proceeding shall be brought against any
Initial Purchaser or any person controlling such Initial Purchaser in respect
of which indemnity may be sought against the Issuer, such Initial Purchaser or
such controlling person shall promptly notify the parties against whom
indemnification is being sought (the "indemnifying parties"), and such
indemnifying parties shall assume the defense thereof, including the employment
of counsel and payment of all fees and expenses. Each Initial Purchaser or any
such controlling person shall have the right to employ separate counsel in any
such action, suit or proceeding and to participate in the defense thereof, but
the fees and expenses of such counsel shall be at the expense of such Initial
Purchaser or such controlling person unless (i) the indemnifying parties have
agreed in writing to pay such fees and expenses, (ii) the indemnifying parties
have failed to assume the defense and employ counsel, or (iii) the named
parties to any such action, suit or proceeding (including any impleaded
parties) include such Initial Purchaser or such controlling person and the
indemnifying parties and such Initial Purchaser or such controlling person
shall have been advised by its counsel that representation of such indemnified
party and any indemnifying party by the same counsel would be inappropriate
under applicable
-20-
standards of professional conduct (whether or not such representation by the
same counsel has been proposed) due to actual or potential differing
interests between them (in which case the indemnifying party shall not have
the right to assume the defense of such action, suit or proceeding on behalf
of such Initial Purchaser or such controlling person). It is understood,
however, that the indemnifying parties shall, in connection with any one such
action, suit or proceeding or separate but substantially similar or related
actions, suits or proceedings in the same jurisdiction arising out of the
same general allegations or circumstances, be liable for the reasonable fees
and expenses of only one separate firm of attorneys (in addition to any local
counsel) at any time for the Initial Purchasers and controlling persons,
which firm shall be designated in writing by Salomon Brothers Inc, and that
all such fees and expenses shall be reimbursed on a monthly basis. Each
indemnified party, as a condition to the indemnity agreement contained in
paragraph (a) above, shall use all commercially reasonable efforts to
cooperate with the indemnifying party in the investigation and defense of any
such action, suit, proceeding or claim. The indemnifying parties shall not
be liable for any settlement of any such action, suit or proceeding effected
without their written consent (which consent shall not unreasonably be
withheld), but if settled with such written consent, or if there be a final
judgment for the plaintiff in any such action, suit or proceeding, the
indemnifying parties agree to indemnify and hold harmless the Initial
Purchasers and any such controlling person, to the extent provided in
paragraph (a), from and against any loss, claim, damage, liability or expense
by reason of such settlement or judgment.
(c) Each of the Initial Purchasers, severally and not jointly,
agrees to indemnify and hold harmless the Issuer, its directors and officers
and any person who controls the Issuer within the meaning of Section 15 of the
Act or Section 20 of the Exchange Act to the same extent as the indemnity from
the Issuer to the Initial Purchasers set forth in paragraph (a) hereof, but
only with respect to information furnished in writing by or on behalf of such
Initial Purchaser expressly for use in the Preliminary Offering Memorandum or
the Offering Memorandum or any amendment or supplement thereto. If any action,
suit or proceeding shall be brought against the Issuer, its directors or
officers or any such controlling person based on the Preliminary Offering
Memorandum or the Offering Memorandum, or any amendment or supplement thereto,
and in respect of which indemnity may be sought against such Initial Purchaser
pursuant to this paragraph (c), such Initial Purchaser shall have the rights
and duties given to the Issuer by paragraph (b) above (except that if the
Issuer shall have assumed the defense thereof such Initial Purchaser shall not
be required to do so, but may employ separate counsel therein and participate
in the defense thereof, but the fees and expenses of such counsel shall be at
such Initial Purchaser's expense), and the Issuer, its directors and officers,
and any such controlling person shall have the rights and duties given to such
Initial Purchaser by paragraph (b) above. The foregoing indemnity agreement
shall be in addition to any liability which such Initial Purchaser may
otherwise have.
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(d) If the indemnification provided for in this Section 6 is
unavailable to an indemnified party under paragraphs (a) or (c) hereof in
respect of any losses, claims, damages, liabilities or expenses referred to
therein, then an indemnifying party, in lieu of indemnifying such indemnified
party, shall contribute to the amount paid or payable by such indemnified party
as a result of such losses, claims, damages, liabilities or expenses (i) in
such proportion as is appropriate to reflect the relative benefits received by
the Issuer on the one hand and the Initial Purchasers on the other hand from
the offering of the Series A Notes, or (ii) if the allocation provided by
clause (i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Issuer on the one hand and the Initial
Purchasers on the other in connection with the statements or omissions that
resulted in such losses, claims, damages, liabilities or expenses, as well as
any other relevant equitable considerations. The relative benefits received by
the Issuer on the one hand and the Initial Purchasers on the other shall be
deemed to be in the same proportion as the total net proceeds from the offering
(before deducting expenses) received by the Issuer to the total underwriting
discounts and commissions received by the Initial Purchasers, in each case as
set forth in the table on the cover page of the Offering Memorandum. The
relative fault of the Issuer on the one hand and the Initial Purchasers on the
other hand shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by
the Issuer on the one hand or by the Initial Purchasers on the other hand and
the parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such statement or omission.
(e) The Issuer and the Initial Purchasers agree that it would not be
just and equitable if contribution pursuant to this Section 7 were determined
by a pro rata allocation (even if the Initial Purchasers were treated as one
entity for such purpose) or by any other method of allocation that does not
take account of the equitable considerations referred to in paragraph (d)
above. The amount paid or payable by an indemnified party as a result of the
losses, claims, damages, liabilities and expenses referred to in paragraph (d)
above shall be deemed to include, subject to the limitations set forth above,
any legal or other expenses reasonably incurred by such indemnified party in
connection with investigating any claim or defending any such action, suit or
proceeding. Notwithstanding the provisions of this Section 7, no Initial
Purchaser shall be required to contribute any amount in excess of the amount by
which the total price of the Series A Notes purchased by it and distributed to
Eligible Purchasers exceeds the amount of any damages which such Initial
Purchaser has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Initial Purchasers' obligations to
contribute pursuant to this
-22-
Section 7(e) are several in proportion to the respective amount of Series A
Notes purchased by each of the Initial Purchasers hereunder and not joint.
(f) Any losses, claims, damages, liabilities or expenses for which
an indemnified party is entitled to indemnification or contribution under this
Section 7 shall be paid by the indemnifying party to the indemnified party as
such losses, claims, damages, liabilities or expenses are incurred. The
indemnity and contribution agreements contained in this Section 7 and the
representations and warranties of the Issuer set forth in this Agreement shall
remain operative and in full force and effect, regardless of (i) any
investigation made by or on behalf of any Initial Purchaser or any person
controlling such Initial Purchaser, the Issuer, its directors or officers or
any person controlling the Company, (ii) acceptance of any Series A Notes and
payment therefor hereunder, and (iii) any termination of this Agreement. A
successor to any Initial Purchaser or any person controlling any Initial
Purchaser, or to the Issuer, its directors or officers or any person
controlling the Issuer, shall be entitled to the benefits of the indemnity,
contribution and reimbursement agreements contained in this Section 7.
(g) No indemnifying party shall, without the prior written consent
of the indemnified party (which consent shall not be unreasonably withheld),
effect any settlement of any pending or threatened action, suit or proceeding
in respect of which any indemnified party is a party and indemnity could have
been sought hereunder by such indemnified party, unless such settlement
includes an unconditional release of such indemnified party from all liability
on claims that are the subject matter of such action, suit or proceeding.
8. CONDITIONS OF THE INITIAL PURCHASERS' OBLIGATIONS. The
obligations of the Initial Purchasers to purchase the Series A Notes hereunder
are subject to the following conditions:
(a) At the time of execution of this Agreement and on the Closing
Date, no order or decree preventing the use of the Offering Memorandum or any
amendment or supplement thereto, or any order asserting that the transactions
contemplated by this Agreement are subject to the registration requirements of
the Act shall have been issued and no proceedings for that purpose shall have
been commenced or shall be pending or, to the knowledge of the Issuer, be
contemplated. No stop order suspending the sale of the Series A Notes in any
jurisdiction designated by the Initial Purchasers shall have been issued and no
proceedings for that purpose shall have been commenced or shall be pending or,
to the knowledge of the Issuer, shall be contemplated.
(b) Subsequent to the effective date of this Agreement, there shall
not have occurred (i) any material change, or any development involving a
prospective material change, in or affecting the condition (financial or
other), business, properties, net worth, or
-23-
results of operations of the Issuer and the Subsidiaries, taken as a whole,
not contemplated by the Offering Memorandum, which in the opinion of the
Initial Purchasers, would materially adversely affect the market for the
Series A Notes, or (ii) any event or development relating to or involving any
officer or director of the Issuer or any Subsidiary which makes any statement
made in the Offering Memorandum untrue or which, in the opinion of the Issuer
and its counsel or the Initial Purchasers and their counsel, requires the
making of any addition to or change in the Offering Memorandum in order to
state a material fact required by any law to be stated therein or necessary
in order to make the statements therein not misleading, if amending or
supplementing the Offering Memorandum to reflect such event or development
would, in the opinion of the Initial Purchasers, materially adversely affect
the market for the Series A Notes.
(c) The Initial Purchasers shall have received on the Closing Date
an opinion of ▇▇▇▇▇, Brown & ▇▇▇▇▇, counsel for the Company, dated the Closing
Date and addressed to the Initial Purchasers, to the effect that:
(i) Each of the Issuer and the Subsidiaries is validly existing and
in good standing under the laws of its jurisdiction or organization
with full power and authority to own, lease and operate its
properties and to conduct its business as described in the Offering
Memorandum (and any amendment or supplement thereto);
(ii) The Issuer has the requisite power and authority to enter into
this Agreement and the Registration Rights Agreement and to issue,
sell and deliver the Series A Notes to be sold by it to the Initial
Purchasers as provided herein. This Agreement and the Registration
Rights Agreement have been duly authorized, executed and delivered by
the Issuer and are the valid, legal and binding agreements of the
Issuer, enforceable against the Issuer in accordance with their
terms, except (A) as enforcement of rights to indemnity and
contribution hereunder and thereunder may be limited by Federal or
state securities laws or principles of public policy and (B) subject
to the qualification that the enforceability of each Issuer's
obligations hereunder and thereunder may be limited by bankruptcy,
fraudulent conveyance, insolvency, reorganization, moratorium, and
other laws relating to or affecting creditors' rights generally and
by general equitable principles;
(iii) The Indenture has been duly and validly authorized,
executed and delivered by the Issuer and, assuming due authorization,
execution and delivery by the Trustee, is a valid and binding
agreement of the Issuer, enforceable in accordance with its terms,
subject to the qualification that the enforceability of the Issuer's
obligations thereunder may be limited by bankruptcy, fraudulent
-24-
conveyance, insolvency, reorganization, moratorium, and other laws
relating to or affecting creditors' rights generally and by general
equitable principles. No qualification of the Indenture under the
TIA is required in connection with the offer and sale of the Series A
Notes contemplated hereby or in connection with the Exempt Resales;
(iv) The Series A Notes have been duly and validly authorized by the
Issuer and when executed by the Issuer in accordance with the
Indenture and, assuming due authentication of the Series A Notes by
the Trustee, upon delivery to the Initial Purchasers against payment
therefor in accordance with the terms hereof, will have been validly
issued and delivered, and will constitute valid and binding
obligations of the Issuer entitled to the benefits of the Indenture,
subject to the qualification that the enforceability of the Issuer's
obligations thereunder may be limited by bankruptcy, fraudulent
conveyance, insolvency, reorganization, moratorium, and other laws
relating to or affecting creditors' rights generally and by general
equitable principles;
(v) Neither the offer, sale or delivery of the Series A Notes, the
execution, delivery or performance by the Issuer of this Agreement,
the Registration Rights Agreement or the Indenture, compliance by the
Issuer with the provisions hereof or thereof or consummation by the
Issuer of the transactions contemplated hereby or thereby (including
the Recapitalization) conflicts or will conflict with or constitutes
or will constitute a breach of, or a default under, in any material
respect, the certificate or articles of incorporation, the
certificate of limited partnership, the bylaws, the partnership
agreement or other organizational documents of the Issuer or any
Subsidiary, as applicable, or any material agreement, indenture,
lease or other instrument listed on Exhibit B hereto (collectively,
the "Material Agreements"), or will result in the creation or
imposition of any lien, charge or encumbrance upon any property or
assets of the Issuer or any Subsidiary pursuant to the terms of any
Material Agreement nor will any such action (assuming compliance with
all applicable state securities and Blue Sky laws and, in the case of
the Registration Rights Agreement and the transactions contemplated
thereby, the Act, the Exchange Act and the TIA) result in any
violation in any material respect of any existing New York, Illinois,
Delaware corporate or federal law, regulation, ruling, judgment,
injunction, order or decree known to such counsel, applicable to the
Issuer or any Subsidiary or any of their respective properties;
(vi) Other than any state securities and Blue Sky laws, no consent,
approval, authorization or other order of, or registration or filing
with, any court, regulatory body, administrative agency or other
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governmental body, agency, or official is required on the part of the
Issuer for the valid issuance and sale of the Series A Notes to the
Initial Purchasers as contemplated by this Agreement;
(vii) The Issuer and the Subsidiaries have full corporate power
and authority to own their respective properties and to conduct their
respective businesses as now being conducted as described in the
Offering Memorandum;
(viii) The statements in the Offering Memorandum, insofar as they
are descriptions of contracts, agreements or other legal documents,
or refer to statements of law or legal conclusions, are accurate in
all material respects and present fairly the information required to
be shown;
(ix) When the Series A Notes are issued and delivered pursuant to
this Agreement, such Series A Notes will not be of the same class
(within the meaning of Rule 144A(d)(3) under the Act) as any equity
interests of the Issuer that are listed on a national securities
exchange registered under Section 6 of the Exchange Act or that are
quoted in a United States automated interdealer quotation system;
(x) No registration of the Series A Notes under the Act is required
for the sale of the Series A Notes to the Initial Purchasers as
contemplated in this Agreement or for the Exempt Resales (assuming
(A) that any Eligible Purchaser who buys the Series A Notes in the
Exempt Resales is a QIB or a person other than a U.S. person outside
the United States in reliance on Regulation S and (B) the accuracy of
the Initial Purchasers' representations and those of the Issuer in
this Agreement regarding the absence of general solicitation in
connection with the Exempt Resales);
(xi) The Recapitalization has been duly authorized by the Company;
and
(xii) Although such counsel have not undertaken, except as
otherwise indicated in their opinion, to determine independently, and
do not assume any responsibility for, the accuracy, completeness or
fairness of the statements in the Offering Memorandum, such counsel
have participated in the preparation of the Offering Memorandum,
including review and discussion of the contents thereof, and nothing
has come to the attention of such counsel that has caused them to
believe that the Offering Memorandum, as of its date and as of the
Closing Date, contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or
-26-
necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading or that any
amendment or supplement to the Offering Memorandum, as of its
respective date, and as of the Closing Date, contained any untrue
statement of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they
were made, not misleading (it being understood that such counsel need
express no opinion with respect to the financial statements and the
notes thereto and the schedules and other financial and statistical
data included or incorporated by reference in the Offering Memorandum
and information furnished in writing by or on behalf of the Initial
Purchasers).
(d) The Initial Purchasers shall have received on the Closing Date
an opinion of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq., General Counsel of the Company, dated
the Closing Date and addressed to the Initial Purchasers to the effect that:
(i) Each of the Issuer and the Subsidiaries is duly organized under
the laws of its jurisdiction of organization.
(ii) Each of the Issuer and the Subsidiaries is duly registered and
qualified to conduct its business and is in good standing in each
jurisdiction or place where the nature of its properties or the
conduct of its business requires such registration or qualification,
except where the failure so to register or qualify or to be in good
standing does not have a Material Adverse Effect;
(iii) Upon consummation of the Recapitalization, all outstanding
equity interests of the Issuer will have been duly authorized and
validly issued, are fully paid and nonassessable, and not subject to
any preemptive or similar rights;
(iv) Neither Issuer nor any Subsidiary is in violation in any
material respect of its certificate or articles of incorporation,
certificate of limited partnership, bylaws, partnership or other
organizational documents, as applicable, or to the knowledge of such
counsel after reasonable inquiry, is in default in any material
respect in the performance of any material obligation, agreement or
condition contained in any bond, debenture, note or other evidence of
indebtedness or in any material agreement, indenture, lease or other
instrument to which such Issuer or Subsidiary is a party or by which
the Issuer or a Subsidiary or any of their respective properties may
be bound, except as disclosed in the Offering Memorandum and except
-27-
to the extent that any such violation or default would not reasonably
be expected to have a Material Adverse Effect; and
(v) To the knowledge of such counsel, the Issuer and the
Subsidiaries have all Permits that are required under applicable law
to own their respective properties and to conduct their respective
businesses as now being conducted as described in the Offering
Memorandum except where the failure to have any such Permits would
not, individually or in the aggregate, reasonably be expected to have
a Material Adverse Effect
(vi) To the knowledge of such counsel, (A) other than as described or
contemplated in the Offering Memorandum (or any amendment or
supplement thereto), there are no legal or governmental proceedings
pending or threatened against the Issuer or a Subsidiary, or to which
the Issuer or a Subsidiary or any of their properties are subject,
which are not disclosed in the Offering Memorandum and which, if
adversely decided, are reasonably likely to cause a Material Adverse
Effect or materially affect the issuance of the Series A Notes or the
consummation of the transactions contemplated by this Agreement and
(B) there are no agreements, contracts, indentures, leases or other
instruments material to the Issuer and the Subsidiaries, taken as a
whole, that are not described in the Offering Memorandum (or any
amendment or supplement thereto);
(vii) To the knowledge of such counsel, neither the Issuer nor
any Subsidiary is in violation of any law, ordinance, administrative
or governmental rule or regulation applicable to the Issuer or a
Subsidiary or of any decree of any court or governmental agency or
body having jurisdiction over the Issuer or a Subsidiary, except to
the extent that any such violation would not reasonably be expected
to have a Material Adverse Effect.
(viii) Except as described in the Offering Memorandum, such
counsel does not know of any person who has the right, contractual or
otherwise, to cause the Issuer to sell or otherwise issue to them, or
to permit them to underwrite the sale of, any of the Series A Notes
or the right, as a result of the consummation of the transactions
contemplated by this Agreement, to require registration under the Act
of any equity interests of the Issuer;
(ix) To the knowledge of such counsel and except as has previously
been obtained, the Issuer is not required to obtain stockholder
consent for the issuance or offering of the Series A Notes;
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(x) Nothing has come to the attention of such counsel that has
caused him to believe that, as of the date of the Offering Memorandum
or as of the Closing Date, the Offering Memorandum (except for the
financial statements and the notes thereto and other financial and
statistical data included therein and information furnished in
writing by or on behalf of the Initial Purchasers, as to which such
counsel need not express any belief) contains any untrue statement of
a material fact or omits to state a material fact necessary in order
to make the statements therein, in the light of the circumstances
under which they were made, not misleading.
(e) The Initial Purchasers shall have received on the Closing Date
an opinion of ▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, counsel for the Initial Purchasers,
dated the Closing Date, and addressed to the Initial Purchasers, in form and
substance reasonably satisfactory to the Initial Purchasers.
(f) The Initial Purchasers shall have received letters addressed to
the Initial Purchasers, and dated the date hereof and the Closing Date from
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, LLP, independent certified public accountants, substantially
in the forms heretofore approved by the Initial Purchasers.
(g) (i) There shall not have been any change in the capital stock of
the Issuer or any Subsidiary nor any material increase in the short-term or
long-term debt of the Issuer or any Subsidiary (other than in the ordinary
course of business) from that set forth or contemplated in the Offering
Memorandum (or any amendment or supplement thereto); (ii) there shall not have
been, since the respective dates as of which information is given in the
Offering Memorandum (or any amendment or supplement thereto), except as may
otherwise be stated in the Offering Memorandum (or any amendment or supplement
thereto), any material adverse change in the condition (financial or other),
business, prospects, properties, net worth or results of operations of the
Issuer and the Subsidiaries taken as a whole; (iii) the Issuer and the
Subsidiaries shall not have any liabilities or obligations, direct or
contingent (whether or not in the ordinary course of business), that are
material to the Issuer, taken as a whole, other than those reflected in the
Offering Memorandum (or any amendment or supplement thereto) (including,
without limitation, in connection with the Recapitalization and the
Registration Rights Agreement); and (iv) all the representations and warranties
of the Issuer contained in this Agreement shall be true and correct in all
material respects on and as of the date hereof and on and as of the Closing
Date as if made on and as of the Closing Date, and the Initial Purchasers shall
have received a certificate, dated the Closing Date and signed by the chief
executive officer and the chief accounting officer of the Issuer (or such other
officers as are acceptable to the Initial Purchasers), to the effect set forth
in this Section 8(g) and in Section 8(h) hereof.
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(h) The Issuer shall not have failed at or prior to the Closing Date
to have performed or complied with any of its agreements herein contained and
required to be performed or complied with by it hereunder at or prior to the
Closing Date.
(i) There shall not have been any announcement by any "nationally
recognized statistical rating organization," as defined for purposes of Rule
436(g) under the Act, that (i) it is downgrading its rating assigned to any
class of securities of the Issuer or any Subsidiary, or (ii) it is reviewing
its ratings assigned to any class of securities of the Issuer with a view to
possible downgrading, or with negative implications, or direction not
determined.
(j) The Series A Notes shall have been approved for trading on
PORTAL.
(k) The Recapitalization shall be consummated concurrently with the
Closing.
(l) [Intentionally Omitted.]
(m) The Issuer shall have furnished or caused to be furnished to the
Initial Purchasers such further certificates and documents as the Initial
Purchasers shall have reasonably requested.
All such opinions, certificates, letters and other documents will be
in compliance with the provisions hereof only if they are reasonably
satisfactory in form and substance to the Initial Purchasers and counsel for
the Initial Purchasers.
9. EXPENSES. The Issuer agrees to pay the following costs and
expenses and all other costs and expenses incident to the performance by it of
its obligations hereunder: (i) the preparation, printing or reproduction of
the Offering Memorandum (including financial statements thereto), and each
amendment or supplement to any of them, this Agreement and the Indenture; (ii)
the printing (or reproduction) and delivery (including postage, air freight
charges and charges for counting and packaging) of such copies of the Offering
Memorandum, the Preliminary Offering Memorandum, and all amendments or
supplements to any of them as may be reasonably requested for use in connection
with the offering and sale of the Series A Notes; (iii) the preparation,
printing, authentication, issuance and delivery of certificates for the Series
A Notes, including any stamp taxes in connection with the original issuance and
sale of the Series A Notes; (iv) the printing (or reproduction) and delivery of
this Agreement, the preliminary and supplemental Blue Sky Memoranda and all
other agreements or documents printed (or reproduced) and delivered in
connection with the offering of the Series A Notes; (v) the application for
quotation of the Notes on the PORTAL market; (vi) the qualification of the
Series A Notes for offer and sale under the securities or Blue Sky laws of the
several states as provided in Section 4(f) hereof (including the reasonable
fees, expenses
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and disbursements of counsel for the Initial Purchasers relating to the
preparation, printing or reproduction, and delivery of the preliminary and
supplemental Blue Sky Memoranda and such qualification); (vii) the
performance by the Issuer of its obligations under the Registration Rights
Agreement; and (viii) the fees and expenses of the Issuer's accountants and
the fees and expenses of counsel (including local and special counsel) for
the Issuer. The Issuer hereby agrees to pay in full on the Closing Date the
fees and expenses referred to in clause (vi) of this Section 9 by delivering
to counsel for the Initial Purchasers on such date a check payable to such
counsel in the requisite amount.
10. EFFECTIVE DATE OF AGREEMENT. This Agreement shall become
effective upon the execution and delivery hereof by all the parties hereto.
11. TERMINATION OF AGREEMENT. This Agreement shall be subject to
termination in the absolute discretion of the Initial Purchasers, without
liability on the part of the Initial Purchasers to the Issuer, by notice to the
Issuer, if prior to the Closing Date, (i) trading in securities generally on
the New York Stock Exchange shall have been suspended or materially limited,
(ii) a general moratorium on commercial banking activities in New York shall
have been declared, or (iii) there shall have occurred any outbreak or
escalation of hostilities, or other U.S. or international calamity, crisis or
change in political, financial or economic conditions, the effect of which on
the financial markets of the United States is such as to make it, in the
judgment of the Initial Purchasers, impracticable or inadvisable to commence or
continue the offering of the Series A Notes on the terms set forth on the cover
page of the Offering Memorandum or to enforce contracts for the resale of the
Series A Notes by the Initial Purchasers. Notice of such termination may be
given to the Issuer by telecopy or telephone and shall be subsequently
confirmed by letter.
12. INFORMATION FURNISHED by the Initial Purchasers. The statements
set forth in the stabilization legend on the inside front cover, the last
paragraph on the cover page and the statements in the first, second and third
paragraphs and the fifth sentence of the fourth paragraph under the caption
"Plan of Distribution" in the Preliminary Offering Memorandum and Offering
Memorandum, constitute the only information furnished by or on behalf of the
Initial Purchasers as such information is referred to in Sections 6(b), 7(a),
7(c), 8(c)(xii) and 8(d)(x) hereof.
13. MISCELLANEOUS. Except as otherwise provided in Sections 4, 10
and 11 hereof, notice given pursuant to any provision of this Agreement shall
be in writing and shall be delivered (i) if to the Issuer, at the office of the
Issuer at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇, Attention:
General Counsel, or (ii) if to the Initial Purchasers, to Salomon Brothers Inc,
Seven World Trade Center, New York, New York 10048, Attention: Manager,
Investment Banking Division.
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This Agreement has been and is made solely for the benefit of the
Initial Purchasers, the Issuer, its directors, its officers and the controlling
persons referred to in Section 7 hereof and their respective successors and
assigns, to the extent provided herein, and no other person shall acquire or
have any right under or by virtue of this Agreement. Neither the term
"successor" nor the term "successors and assigns" as used in this Agreement
shall include a purchaser from the Initial Purchasers of any of the Series A
Notes in its status as such purchaser.
14. APPLICABLE LAW; COUNTERPARTS. This Agreement shall be governed
by and construed in accordance with the laws of the State of New York
applicable to contracts made and to be performed within the State of New York
and without regard to the conflicts of law principles thereof.
This Agreement may be signed in various counterparts which together
constitute one and the same instrument. If signed in counterparts, this
Agreement shall not become effective unless at least one counterpart hereof
shall have been executed and delivered on behalf of each party hereto.
Please confirm that the foregoing correctly sets forth the agreement
between the Issuer and the Initial Purchasers.
Very truly yours,
THE RESTAURANT COMPANY
By:
--------------------------------
Name:
Title:
Confirmed as of the date first
above mentioned.
SALOMON BROTHERS INC
By:
-----------------------------
Name:
Title:
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BANCBOSTON SECURITIES INC.
By:
------------------------------
Name:
Title:
EXHIBIT A
FORM OF REGISTRATION RIGHTS AGREEMENT
A-1
SCHEDULE I
NAME OF ISSUER
Original Principal Amount
At Maturity
Initial Purchasers of Series A Notes
------------------ ---------------------------
Salomon Brothers Inc $15,550,000
BancBoston Securities Inc. $15,550,000
Total $31,100,000