UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 2 TO
FORM 8-A
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(B) OR (G) OF THE
SECURITIES EXCHANGE ACT OF 1934
PLANET HOLLYWOOD INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 59-3283783
(State or other jurisdic (I.R.S. Employer
incorporation or organization) Identification Number)
8669 COMMODITY CIRCLE, ORLANDO, FLORIDA 32819
(Address of principal executive office, including zip code)
SECURITIES TO BE REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
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Title of each class to Name of each exchange on which each class is to be registered
NONE NONE
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If this form relates to the registration of a class of securities pursuant
to Section 12(b) of the Exchange Act and is effective pursuant to General
Instruction A.(c), check the following box. [ ]
If this form relates to the registration of a class of securities pursuant
to Section 12(g) of the Exchange Act and is effective pursuant to General
Instruction A.(d), check the following box.[X]
Securities Act registration statement file number to which this form
relates: NONE
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
(Title of class)
CLASS A COMMON STOCK, $0.01 PAR VALUE
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ITEM 1. DESCRIPTION OF REGISTRANT'S SECURITIES TO BE REGISTERED.
As of May 9, 2000, the "Effective Date" of the Registrant's plan of
reorganization, the Registrant shall be governed by its Amended and Restated
Certificate of Incorporation (the "Restated Certificate") which provides for Two
Hundred Twenty-Five Million (225,000,000) shares of authorized capital stock,
consisting of One Hundred Million (100,000,000) shares of Class A Common Stock,
$0.01 par value, Twenty-Five Million (25,000,000) shares of Class B Common
Stock, $0.01 par value, and One Hundred Million ($100,000,000) shares of
Preferred Stock, $0.01 par value. The following summary description of the
capital stock of the Registrant is qualified in its entirety by reference to the
Registrant's Restated Certificate and Fourth Amended and Restated By-Laws (the
"Restated Bylaws"), a copy of each of which is filed as an exhibit to this
registration statement.
As a result of the Registrant's reorganization proceedings under the U.S.
Bankruptcy Code of 1978, as amended (the "Bankruptcy Code"), the Registrant is
prohibited from issuing any non-voting equity securities, except in certain
limited situations. This restriction is included in the Restated Certificate.
COMMON STOCK - GENERALLY
The Amended and Restated Certificate of Incorporation provides for two
classes of common stock, Class A Common Stock and Class B Common Stock
(collectively, the "Common Stock"), which are substantially identical except
with respect to certain voting rights. The Common Stock shall be subject to the
terms of any Preferred Stock (as described below) issued by the Registrant.
Holders of Common Stock are entitled to such dividends as may be declared from
time to time by the Registrant from funds legally available therefor and are
entitled to share ratably in all assets of the Registrant remaining after the
payment of all liabilities upon the liquidation, dissolution or winding-up of
the Registrant. The common Stock has no preemptive or conversion rights or the
benefit of any sinking fund and is not subject to redemption or to liability for
any further calls by the Company. The outstanding shares of Common Stock will
be, when issued and delivered against payment therefor, fully paid and
nonassessable.
Except as described below, holders of Class A Common Stock and Class B
Common Stock shall vote together as a single class on all matters submitted to
the stockholders for a vote, and shall be entitled to one vote in person or by
proxy for each share of Common Stock standing in their name. The vote or consent
of the holders of any class of Common Stock voting separately as a single class
shall be required to amend or restate the Restated Certificate in a manner that
would alter or change the powers, preferences or special rights of such class of
Common Stock, so as to affect them adversely. On the Effective Date of the
Registrant's plan of reorganization, there will be outstanding approximately
three million (3,000,000) shares of Class A Common Stock and seven million
(7,000,000) shares of Class B Common Stock.
COMMON STOCK - ELECTION OF DIRECTORS / VOTING AGREEMENTS
Pursuant to the Company's Restated Certificate and Restated Bylaws,
directors of the Registrant shall be elected by holders of the Class B Common
Stock (voting separately as a single class by a plurality of the votes cast),
provided that (I) after the payment in full of all of the
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Registrant's obligations under its 10% Secured Deferrable Interest Notes due
2005 (the "Deferrable Interest Notes"), the holders of the Class A Common Stock
shall be entitled to elect two directors and (II) at such time when there shall
be no shares of Class B Common Stock issued and outstanding, the holders of
Class A Common Stock shall be entitled to elect all members of the Registrant's
Board. Furthermore, the initial holders of the Class B Common Stock (the "New
Money Investors") entered into Voting Agreements whereby they have agreed to
vote their shares initially in favor of the seven directors named in accordance
with the terms of the Registrant's plan of reorganization. Subsequent to the
Effective Date, and until the Registrant's obligations under the Deferrable
Interest Notes have been paid in full, the New Money Investors have agreed to
vote their shares in favor of two directors nominated by holders of at least a
majority in principal amount of the outstanding Deferrable Interest Notes. The
Voting Agreements also provide that (I) a party holding more than 750,000 shares
of Common Stock shall be entitled to nominate a single candidate for election to
the Board and that all parties agree to vote in favor of any such properly
nominated candidate and (II) except as otherwise provided, the parties agree to
vote in accordance with the direction of Robert Earl on certain items, including
the proposal to elect directors or to fill vacancies on the Board, amending the
Registrant's Restated Certificate or Restated Bylaws, removing officers or
issuing securities, provided that Mr. Earl is serving on the Board or as an
executive officer of the Registrant. Holders of Common Stock do not have
cumulative voting rights for the election of directors.
COMMON STOCK - CONVERSION OF CLASS B COMMON STOCK AND CERTAIN INDEBTEDNESS
In accordance with the terms of the Registrant's plan of reorganization,
all shares of Class B Common Stock will be issued to the New Money Investors on
the Effective Date of such plan. Upon the transfer of shares of Class B Common
Stock (other than a transfer to a New Money Investor or an affiliate of a New
Money Investor), such shares of Class B Common Stock shall automatically convert
into an equal number of shares of Class A Common Stock. In the event that all
issued and outstanding shares of Class B Common Stock constitute 10% or less of
all issued and outstanding Common Stock, all such shares of Class B Common Stock
shall automatically convert into an equal number of shares of Class A Common
Stock. All shares of Class B Common Stock shall also be convertible, at the
option of the record holders of such shares, into an equal number shares of
Class A Common Stock at any time after payment in full of the Deferrable
Interest Notes; provided that such optional conversion must include all then
outstanding shares of Class B Common Stock. Shares of Class B Common Stock that
are converted into shares of Class A Common Stock will be canceled and retired
by the Registrant and may not be reissued.
In accordance with the terms of the Registrant's plan of reorganization,
the Registrant obtained a standby term loan in principal amount of up to $10
million which shall mature two years after the Effective Date of the Company's
plan of reorganization, subject to certain optional extensions. At its option,
until the maturity date of the loan, the lender shall have the right to convert
any outstanding amount of the loan into shares of Class A Common Stock, dollar
for dollar, at $4.2857 per share.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for the Class A Common Stock is American
Stock Transfer Trust Company.
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PREFERRED STOCK
The Registrant may issue up to twenty five million (25,000,000) shares of
Preferred Stock in one or more series. The Board of Directors of the Registrant
has the authority, without any vote or action by any stockholders, to issue
Preferred Stock and to fix the designations, preferences, rights,
qualifications, limitations and restrictions thereof, including the voting
rights, dividend rights, dividend rate, conversion rights, terms of redemption
(including sinking fund provisions), liquidation preferences and the number of
shares constituting any series. There are no shares of Preferred Stock
outstanding, and there are no agreements or understandings for the designation
of any series of Preferred Stock or the issuance of shares thereunder. The
existence of authorized but unissued Preferred Stock may enable the Board of
Directors of the Registrant to render more difficult or to discourage an attempt
to obtain control of the Registrant by means of a merger, tender offer, proxy
contest or otherwise.
WARRANTS
As part of the Registrant's plan of reorganization, holders of at least
5,450 shares of the Registrant's old class A common stock (which will be
canceled and extinguished) were issued their pro-rata share of 200,000 Warrants.
Each Warrant is exercisable for the purchase of one share of new Class A Common
Stock at an exercise price of $65.50 per share and will expire on the third
anniversary of the Effective Date of the Registrant's plan of reorganization.
The number of shares of Class A Common Stock issuable upon exercise of the
Warrants is subject to adjustment upon the occurrence of certain customary
dilutive events. In addition, as part of the standby term loan described above,
the lender will be granted, as part of its commitment fee, warrants to purchase
200,000 shares of new Class A Common Stock at an exercise price of $4.2857 per
share which will expire on January 8, 2003.
ITEM 2. EXHIBITS
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2.1* Debtors' First Amended Joint Plan of Reorganization dated December 13, 1999
2.2* First Amended Disclosure Statement Pursuant to Section 1125 of the Bankruptcy
Code For the First Amended Joint Plan of Reorganization dated December 13,
1999 of Planet Hollywood International, Inc. and Certain of its Subsidiaries
2.3* Order confirming the Company's First Amended Joint Plan of Reorganization
dated January 21, 2000
2.4 Motion for Entry of Order and Order Approving Documentation Implementing
Consummation of the Debtors' Plan of Reorganization
2.5 Motion for Entry of Order and Order Approving (A) Modification of Prior Order
(B) $10 Million Standby Term Loan Agreement and (C) Granting Debtors
Authority to Pay Fees Required in Connection with the Standby Loan
3.1 Amended and Restated Certificate of Incorporation of Planet Hollywood
International, Inc.
3.2 Fourth Amended and Restated Bylaws of Planet Hollywood International, Inc.
9.1 Voting Agreement Among Stockholders (New Money Investors)
9.2 Voting Agreement Among Stockholders (Creditor Directors)
10.1 Note Purchase Agreement among Planet Hollywood International, Inc., certain
other parties and Wilmington Trust Company, as agent, dated as of May 8, 2000
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* Incorporated by reference to the exhibits in the Registrant's Current Report
on Form 8-K dated January 21, 2000, previously filed by the Registrant on
February 4, 2000
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SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange Act
of 1934, the registrant has duly caused this registration statement to be signed
on its behalf by the undersigned thereto duly authorized.
Date: As of May 9, 2000 PLANET HOLLYWOOD
INTERNATIONAL, INC.
/s/ Thomas Avallone
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Name: Thomas Avallone
Title: Executive Vice President and
Chief Financial Officer
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HEARING DATE: MARCH 17, 2000 AT 11:00 A.M. (ONLY IF OBJECTIONS ARE FILED)
OBJECTION DEADLINE: MARCH 15, 2000 AT 4:00 P.M.
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE
IN RE: )
) CHAPTER 11
PLANET HOLLYWOOD )
INTERNATIONAL, INC., ET AL. ) CASE NO. 99-3612 (JJF)
)
DEBTORS. ) (JOINTLY ADMINISTERED)
MOTION FOR ENTRY OF ORDER APPROVING
DOCUMENTATION IMPLEMENTING CONSUMMATION
OF THE DEBTORS' PLAN OF REORGANIZATION
--------------------------------------
Planet Hollywood International, Inc., a Delaware corporation
("PHI"), and certain of its affiliates and subsidiaries that are also debtors
and debtors-in-possession before this Court (collectively with PHI, the
"Debtors"), seek entry of an order approving in substantially final form the
corporate documentation relating to exit financing (including a Working Capital
Facility,1 a Note Purchase Agreement (defined below), an indenture for the New
Secured PIK Notes and an Intercreditor and Subordination Agreement and related
or ancillary documents (collectively the "Financing Documents")) and other
corporate governance documentation to be executed in furtherance of implementing
the Debtors' confirmed First Amended Joint Plan of Reorganization (the "Plan")
as agreed to by the Debtors, the Working Capital Lenders (as defined below), Bay
Harbour, Wilmington Trust Company ("Wilmington Trust") as agent for the Note
Purchase Lenders (as defined below), United States Trust Company of New York as
the
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Indenture Trustee for the New Secured PIK Notes (the "Indenture Trustee"),
the New Money Investors, and the Official Committee of Unsecured Creditors (the
"Creditors' Committee"). The Creditors' Committee joins in this motion (the
"Motion"), and the Motion is further supported by the affidavit of Thomas
Avallone, Chief Financial Officer of PHI, and the letter authorized by the
Creditors' Committee affirming that the Plan Implementation Documents (as
defined below) are consistent with the terms of the Plan. The Debtors and the
Creditors' Committee, by their undersigned counsel, respectfully represent as
follows:
PRELIMINARY STATEMENT
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1. The Plan requires the execution of various documents,
including loan agreements with the various lenders, the indenture for the New
Secured PIK Notes (the "Indenture") and other documents required to implement
and consummate the Plan as described in or contemplated by the Plan, its related
Disclosure Statement, and the Financing Documents, as well as corporate
governance documents such as shareholder voting agreements, amended and restated
articles of incorporation and by-laws, a warrant agreement, stock option
agreements and a registration rights agreement (collectively, the "Plan
Implementation Documents"). The major Plan Implementation Documents were
referenced as Exhibits to the Plan and principal economic terms and provisions
of the Financing Documents and various corporate governance documents were set
forth in the Disclosure Statement. However, at the time of the Confirmation
Hearing on January 20, 2000, not all of the Plan Implementation Documents were
in sufficiently final form to be submitted to and approved by this Court.
Further, some of the corporate governance documents that were submitted at the
Confirmation Hearing have been modified since
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(1) Capitalized terms used but not defined herein shall have the meaning
ascribed to such terms in the Plan.
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submission to this Court. Since the Confirmation Hearing, the Debtors, the
Working Capital Lenders, Bay Harbour, Wilmington Trust, the Indenture Trustee,
and the Creditors' Committee have been actively negotiating to finalize the Plan
Implementation Documents. As set forth below and in the affidavit of Thomas
Avallone (the "Avallone Affidavit"), annexed hereto as Exhibit "A", the
substantially finalized Plan Implementation Documents are consistent with and
implement in a commercially reasonable manner the transactions as contemplated
by the Plan and generally described in the Disclosure Statement and as required
by the non-Debtor parties to these transactions. Further, counsel to the
Creditors' Committee has submitted a letter authorized by the Creditors'
Committee affirming that the Plan Implementation documents are reasonably
satisfactory to the Creditors' Committee and are consistent with the terms of
the Plan (the "Creditors' Committee Letter"). A copy of the Creditors' Committee
Letter is annexed hereto as Exhibit "B."
2. The Debtors wish to provide significant parties-in-interest
with prior notice of the substantially final terms of the Plan Implementation
Documents, including without limitation, the details of the intercreditor and
subordination arrangements, whereby the lien rights and priorities, and payment
and enforcement rights of the Working Capital Lenders, the Note Purchase
Lenders, and the holders of the New Secured PIK Notes (the "New Secured PIK
Noteholders") are set forth.
3. The Debtors are granting security interests, mortgages and
pledges to secure the exit financing, which are given under, in furtherance of,
pursuant to and in connection with the Debtors' confirmed Plan. The Debtors
therefore seek an order that the issuance, transfer and recording of the
security interests, mortgages and pledges shall be free from any stamp tax or
similar tax, pursuant to section 1146(c) of title 11 of the United States Code
(the "Bankruptcy Code").
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BACKGROUND
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4. On October 12, 1999, the Debtors filed with this Court
voluntary petitions for relief under the Bankruptcy Code. The Debtors continue
to operate their businesses and manage their properties as debtors-in-possession
under Sections 1107(a) and 1108 of the Bankruptcy Code. On October 22, 1999, the
United States Trustee appointed the Creditors' Committee, which currently
consists of United States Trust Company of New York as Indenture Trustee for the
Old Subdebt Notes, three large holders of Old Subdebt Notes, and two trade
creditors.
5. The Debtors' cases have been procedurally consolidated and
are being jointly administered pursuant to an order of this Court dated October
13, 1999, and were substantively consolidated for purposes of the Plan only.
JURISDICTION
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6. The Court has jurisdiction over these cases under 28 U.S.C.
ss. 1334. The subject matter of this Motion is a "core proceeding" under 28
U.S.C. ss. 157(b). The statutory predicates for the relief requested herein are
Sections 105(a), 363(b), 364(e), 1141, 1142 and 1146(c) of the Bankruptcy Code
and Rule 4001 of the Federal Rules of Bankruptcy Procedure (the "Bankruptcy
Rules").
THE DEBTORS
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7. PHI is the creator and world-wide developer of the Planet
Hollywood name and distinctive logo design, among other widely recognized
trademarks. The other Debtors are either direct or indirect U.S. subsidiaries of
PHI and/or wholly-owned direct or indirect U.S. partnerships of PHI. The
Debtors' primary business, together with their non-debtor subsidiaries (the "PHI
Group"), is the operation of distinctive movie, sport and entertainment-based
theme
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restaurants and retail merchandise stores throughout the United States and
in Europe. The Debtors also have franchisees and licensees in various locations
throughout the world.
8. As of the Petition Date, the PHI Group owned and operated
approximately thirty (30) PLANET HOLLYWOOD, OFFICIAL ALL STAR CAFE and COOL
PLANET theme restaurants and/or related merchandise sales operations.
9. As of August 29, 1999, the PHI Group had total assets of
approximately $392.2 million and total liabilities of approximately $359.1
million. The Debtors' primary creditors currently consist of (a) the holders of
$250 million outstanding aggregate principal amount of PHI's issue of 12% Senior
Subordinated Notes due April 1, 2005 (the "Subdebt Notes") (plus accrued
interest of approximately $32 million), which are governed by the terms of an
Indenture dated March 25, 1998, (b) approximately $6.5 million in outstanding
letter of credit obligations to SunTrust Bank, Central Florida, National
Association and other financial institutions, and (c) approximately $30.1
million of other unsecured pre-petition debt exclusive of (i) amounts payable by
first day orders presented to the Court and (ii) potential lease rejection
claims.
10. On January 20, 2000, this Court held a confirmation
hearing and, on January 26, 2000, entered an order dated January 21, 2000
confirming the Debtors' Plan (the "Confirmation Order"). The Plan had been
overwhelmingly accepted by creditors voting in Classes 5 and 6, the two classes
of impaired creditors, holding over $300 million of debt claims against the
Debtors. The Plan provides for the repayment of approximately 40 cents on the
dollar of the Class 5 Subdebt Notes with cash, New Secured PIK Notes and
approximately 27% of the equity of the reorganized company, and payment of cash
and New Secured PIK Notes of comparable value to Class 6 General Unsecured
Creditors. It also contemplates the investment
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of $30 million of new equity capital into the Debtors by an investor group
organized by Robert Earl, the Debtors' Chairman and Chief Executive Officer, in
exchange for approximately 70% of the stock of the Reorganized Debtors, and the
necessary exit financing to effectuate the Plan and provide working capital
after the Plan Effective Date. Administrative, Priority and Secured Claims are
to be paid in full under the Plan, and settlement agreements with pre-petition
landlords, classified in Class 7 under the Plan, are to be honored.
11. On January 20, 2000, this Court entered an order approving
the sale (the "Sale Order") of the Debtors' interests in a retail condominium
unit constituting the lower four floors of the 1567 Broadway, New York, New York
hotel project (the "Retail Unit"), for $30,000,000 subject to minor adjustments
(the "Contract for Sale"). The Contract for Sale is scheduled to close on or
about May 1, 2000. On January 14, 2000, the Debtors filed a motion seeking an
order approving a commitment letter on the Working Capital Facility with the CIT
Group/Business Credit, Inc. and Rothschild Recovery Fund, LP (together, the
"Working Capital Lenders") for $15 million and on January 18, 2000, this Court
entered an order approving the Working Capital Commitment Letter. On January 28,
2000, the Debtors filed a motion seeking an order approving a commitment letter
for a $22 million secured term or "bridge" loan and on February 2, 2000, this
Court entered an order approving such commitment letter with Bay Harbour
Management LC and other participating lenders (collectively, "Bay Harbour" or
the "Note Purchase Lenders") to provide the Debtors with up to a $22 million
senior secured term loan as evidenced by the New Senior Secured Notes (also
referred to as the "Bridge Loan").
PLAN IMPLEMENTATION DOCUMENTS
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12. The Debtors, the Working Capital Lenders, Bay Harbour,
Wilmington Trust, the Indenture Trustee, along with the Creditors' Committee,
and the New Money Investors have been negotiating to finalize the Plan
Implementation Documents evidencing (i) the Working Capital Facility (the
"Revolving Credit Agreement"), (ii) the Bridge Loan (the "Note Purchase
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Agreement), (iii) the Indenture, and (iv) an intercreditor and subordination
agreement which governs the relationship among (a) the Working Capital Lenders,
(b) the Note Purchase Lenders, and (c) the Indenture Trustee and the New Secured
PIK Noteholders (the "Intercreditor and Subordination Agreement"). The Revolving
Credit Agreement, the Note Purchase Agreement, and the Indenture are
collectively subject to the Intercreditor and Subordination Agreement. The
following forms of major documents will be attached as exhibits to the Revolving
Credit Agreement: Senior Secured Note; guaranty; guarantor security agreement;
borrowing base certificate; mortgage; pledge agreements; security agreement; TSP
pledge agreement; and assignment and acceptances. The exhibits to the Note
Purchase Agreement and the Indenture will be the same or comparable to the
Revolving Credit Agreement exhibits.
13. The Working Capital Lenders shall take a first priority
lien and security interest on all assets of the Debtors, except for the Bay
Harbour Priority Collateral described below, with guaranties and/or stock
pledges of non-Debtor affiliates (the "Working Capital Priority Collateral").
The Working Capital Lenders shall take a second priority lien on the Bay Harbour
Priority Collateral. The Note Purchase Lenders shall take a first priority lien
and security interest on the Retail Unit, the Contract for Sale, the 20%
membership interest of the Debtors in Times Square Partners LLC ("TSP"), and all
other ancillary documents relating to the Debtors' interests in the 1567
Broadway property (the "Bay Harbour Priority Collateral") and a second priority
lien on the Working Capital Priority Collateral. The Indenture Trustee shall
hold a third lien on the Working Capital Priority Collateral and the Bay Harbour
Priority Collateral.
14. Planet Hollywood (Region III), Inc. ("Region III"), the
owner of the Retail Unit, will grant a first priority mortgage and security
interest in the Retail Unit and other ancillary documents relating to the
Debtors' interests in the 1567 Broadway property to the Note Purchase Lenders; a
second priority mortgage and security interest to the Working Capital Lenders;
and a third priority mortgage and security interest to the Indenture Trustee
(collectively, the "Mortgages"), as security for the exit financing.
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As additional security for the exit financing, Planet Hospitality Holdings, Inc.
("PHH"), a non-debtor wholly-owned subsidiary of PHI, will pledge (collectively,
the "Pledges") its 20% non-managing membership in TSP (the "Membership
Interest") to the same entities and in the same priorities as the Mortgages.
15. The Plan Implementation Documents were referenced as
exhibits to the Plan and principal economic terms and provisions were set forth
as Annexes A, B and C to the Plan and at pages 9-15 in the accompanying
Disclosure Statement. The Plan Implementation Documents relating to corporate
governance of the Debtors were described at pages 48-54 in the Disclosure
Statement. The Plan Implementation Documents represent the "Plan Documents" as
that term is defined in Section 1.102 of the Plan, which provides that the Plan
Documents are those documents that are to be filed at or prior to the
Confirmation Hearing as evidenced by Exhibits 1-12 to the Plan. The Confirmation
Order expressly approved the Amended and Restated PHI Certificate of
Incorporation, the Amended and Restated PHI By-Laws, the New Warrant Agreement,
the New Warrants and the Registration Rights Agreement as filed with this Court
on that date or as modified subsequently by the Debtors with the consent of the
Creditors' Committee. These documents that were approved by the Confirmation
Order since have been materially modified and therefore are re-submitted to this
Court for approval. Approval of those material "Plan Documents" that were not
finalized at the time the Plan was confirmed was waived by the Creditors'
Committee as a condition to confirmation and those documents are now submitted
to this Court in connection with this Motion.
16. Pursuant to Section 6.2.2 of the Plan, such "Plan
Documents," which the Plan Implementation Documents represent, are binding on
all parties, including all creditors and shareholders and all parties affected
by the documents, upon the Effective Date of the Plan.
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Further, the Confirmation Order provided that the Debtors were authorized to
enter into, execute, deliver, file and/or implement the Plan Documents and other
documents and instruments substantially consistent therewith or incidental
thereto, and any appropriate amendments, supplements or modifications, as
necessary to implement and effectuate the Plan, the Plan Documents, the
Confirmation Order, and to satisfy other conditions precedent to the
implementation and effectiveness of the Plan, and that all such Plan Documents,
including without limitation the Revolving Credit Agreement and the other
documents entered into in connection with the Working Capital Facility if
approved by the Creditors' Committee, would be binding on all parties, including
all creditors and equity security holders under the Plan. The order approving
the commitment letter with Bay Harbour included the same language set forth in
the Confirmation Order and had the same effect with regard to the documents
entered into in connection with the Bridge Loan. The Debtors submit that the
substantially finalized terms of the Plan Implementation Documents are
consistent with and implement in a commercially reasonable manner, the
transactions contemplated by the Plan.
17. The following constitutes a brief summary of each of the
substantially finalized Plan Implementation Documents and is subject to the full
terms and conditions of the respective Plan Implementation Documents. The Plan
Implementation Documents contain open points but are substantially complete.2
Copies of the substantially finalized Plan Implementation Documents are on file
with this Court and are available to any party upon request.
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2 Open points in the Intercreditor and Subordination Agreement are indicated
by brackets.
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- REVOLVING CREDIT AGREEMENT - A $15 million revolving
credit facility, including a $5 million subfacility for
the issuance of letters of credit, provided by the CIT
Group/Business Credit, Inc. ("CIT") and Rothschild
Recovery Fund, LP, with CIT acting as agent (the "CR
Senior Agent"). The facility matures two years after the
date of closing. The interest rate shall be, at PHI's
option, LIBOR plus 3.25% or the Prime Rate plus 1%. The
Working Capital Facility is secured by a first priority
lien on the Working Capital Priority Collateral and a
second priority lien on the Bay Harbour Priority
Collateral. Certain key terms of the Revolving Credit
Agreement are as follows:
(a) Borrowing Base - At any time, the lesser of (x) the
sum of (I) 90% of Eligible Credit Card Receivables (as
defined in the Revolving Credit Agreement) plus (II) the
lesser of 50% of the Eligible Inventory and $5,000,000,
plus (III) the lesser of 80% of the "desk top" appraised
forced liquidation value of the Eligible Memorabilia (as
defined in the Revolving Credit Agreement) and
$10,000,000 and (y) $15,000,000, minus the sum of (A) the
outstanding aggregate principal amount of all revolving
loans and the maximum amount drawable under the
outstanding documentary and standby letters of credit of
the borrower (including unreimbursed letters of credit),
(B) the outstanding amount of all interest and fees due
and owing thereunder, and (C) a reserve of $4,000,000 and
any other reserves imposed by the Working Capital Lenders
reasonably believed by the Working Capital Lenders to be
necessary and appropriate. PHI and the guarantors
thereunder shall be required to use all cash available to
each of them prior to making any request to borrow under
the Working Capital Facility.
(b) Mandatory prepayments - PHI shall prepay the Working
Capital Facility (i) out of net proceeds of certain asset
sales, including proceeds of "going out of business
sales," certain insurance proceeds, proceeds from the
issuance of certain indebtedness and proceeds from
certain equity issuances and (ii) immediately if the
amount outstanding under the Working Capital Facility
exceeds the Borrowing Base determined in accordance with
paragraph (a) above.
(c) Key events of default - Material events of default
include: (i) the failure of PHI or any guarantor to make
payments under the Revolving Credit Agreement or any
related document; (ii) any representation or warranty
made by PHI or any guarantor under the Revolving Credit
Agreement or any related document is false and
misleading; (iii) PHI defaults in performance or
observance of the affirmative or negative covenants; or
(iv) a default under the Note Purchase Agreement or the
Indenture.
(d) Operating conditions - The following constitute
certain operating conditions to the Working Capital
Facility: (i) cash plus availability under the Working
Capital Facility shall not be less than $6,000,000 (after
giving effect to the $4,000,000 reserve); (ii)
establishment of a cash management system whereupon all
payments on receivables are to be made to a lock box
account under the control of the CR Senior Agent for the
benefit of the Working Capital Lenders, the proceeds of
which will be transferred to a concentration account
under the control of the CR Senior Agent for the benefit
of the Working Capital Lenders, and applied to the
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<PAGE>
repayment of the obligations of PHI; and (iii) no
payments to fund the Plan on the Effective Date shall
exceed $66,000,000.
(e) Fees: (i) Initial Fee: a non-refundable fee of
$587,500; $250,000 was payable on the date of the Working
Capital commitment letter and the remainder $337,500 is
payable on the date of closing. (ii) Unused Line Fee: 1/2
of 1% per annum on the average daily unused portion of
Revolving Loan Commitment. (iii) Early Termination Fee:
2% of Revolving Commitment if terminated on or before the
first anniversary of the closing date and 1% if
terminated on or before the maturity date. (iv) Agent
Fee: An annual fee of $75,000, payable in advance to the
Agent at the closing date and each anniversary of the
closing date thereafter. (v) Letter of Credit Fee: A fee
equal to 2% per annum, payable monthly in arrears of the
average daily face amount of all letters of credit
outstanding and all drawn and unreimbursed letters of
credit, as well as the issuing bank's and other customary
letter of credit fees and charges.
- NOTE PURCHASE AGREEMENT - The Note Purchase Lenders, with
Wilmington Trust as agent (the "BH Senior Agent"), will
provide a $22 million aggregate principal amount term
loan facility evidenced by the New Senior Secured Notes.
The New Senior Secured Notes mature one year from the
date of closing. The New Senior Secured Notes are secured
by a first priority lien on the Bay Harbour Priority
Collateral and a second priority lien on the Working
Capital Priority Collateral.
(a) Interest - Interest only is due monthly in cash at
(i) the greater of 8% per annum and LIBOR plus 3% per
annum until the 90th day after the closing date, (ii) 13%
per annum from the 91st day after the closing date until
the 180th day after the closing date, and (iii) 16% per
annum beginning on the 181st day after the closing date
and thereafter. (b) Fees: (i) Commitment Fee (a) Cash:
$625,000, $250,000 (the "Initial Portion") was due upon
execution of the Bridge Loan commitment letter, and the
balance will be due on the Effective Date or, in some
cases, the earlier termination of the Commitment Letter;
(b) Equity: Shares of New Class A Common Stock in an
amount equal to 3.5% of all shares of New Common Stock
issued, on a fully diluted basis (350,000 shares). (ii)
Origination Fee - The Note Purchase Agreement provides
for an Origination Fee of $5,000,000, which is earned and
is due on the date of closing, but payment of which is
deferred until repayment of the outstanding balance of
the Bridge Loan; provided that if the Bridge Loan is paid
in full on or before the following days after the date of
closing, the following portions of the Origination Fee
shall be waived:
Day After Closing Date
Obligations are Paid in Full Amount Waived
---------------------------- -------------
on or before 90th day $5,000,000
91st day through 120th day $4,500,000
121st day through 180th day $4,000,000
181st day through 270th day $3,000,000
271st day and after $0
(iii) Agent's Fee - $36,000 agency fee(c) Key Events of
Default: Material events of default include: (i) the
failure of PHI or any guarantor to make payments under
the Note Purchase Agreement or any related document; (ii)
any representation or warranty made by PHI or any
guarantor under the Note Purchase Agreement or any
related document is false and misleading; (iii) PHI
defaults in
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<PAGE>
performance or observance of the affirmative or negative
covenants; or (iv) a default under the Revolving Credit
Agreement or the Indenture.
- INDENTURE - PHI is the issuer with certain subsidiary
guarantors guarantying its obligations, and United States
Trust Company of New York is Indenture Trustee, for an
issue of approximately $65.7 million principal amount of
the New Secured PIK Notes. The New Secured PIK Notes
mature on the fifth anniversary of the Plan Effective
Date. PHI's obligations under the Indenture are to be
secured by third priority liens on the Working Capital
Priority Collateral and the Bay Harbour Priority
Collateral, junior solely to the liens of the Working
Capital Lenders and the Note Purchase Lenders and other
designated permitted liens.
(a) Interest - The New Secured PIK Notes shall accrue PIK
interest at a rate of 12.75% per annum for the first 2
1/2 years, and thereafter interest is payable in cash at
a rate of 10% per annum, unless after one year the ratio
of the Reorganized Debtors' consolidated EBITDA to
interest expense is greater than 1.75 to 1.00 for the
last 12 months, in which event interest at a rate of 10%
per annum is payable in cash.
(b) Junior Scheduled Payments - At an annual measuring
point to be agreed upon by PHI and the Creditors'
Committee, (i) if the ratio of PHI's consolidated EBITDA
to interest expense is greater than 2.00 to 1.00 for the
last 12-month period; and (ii) the sum of PHI's cash plus
availability under the Working Capital Facility exceeds
$25 million, then 50% of such excess shall be used to
redeem the New Secured PIK Notes (the "Junior Scheduled
Payments").
- INTERCREDITOR AND SUBORDINATION AGREEMENT - The terms of
the Revolving Credit Agreement, the Note Purchase
Agreement and the Indenture are all subject to the
Intercreditor and Subordination Agreement. The provisions
of the Intercreditor and Subordination Agreement have
been extensively negotiated with the Creditors' Committee
and the various lender groups. The following summary is
intended only to provide an overview, is not intended to
substitute for full and complete review of the
Intercreditor and Subordination Agreement, and is
qualified in its entirety by the terms thereof. The key
terms of the Intercreditor and Subordination Agreement
include the following categories:
(a) Lien Subordination - (i) The liens and security
interests of Wilmington Trust and the Indenture Trustee
for the benefit of the Note Purchase Lenders and the New
Secured PIK Noteholders, respectively (collectively, the
"BH/PIK Lenders") are subordinate to the liens and
security interests of the Working Capital Lenders in the
Working Capital Priority Collateral, including
restrictions on enforcement by the BH/PIK Lenders and the
New Secured PIK Noteholders until the Working Capital
Lenders have been paid in full. (ii) The liens and
security interests of CIT and the Indenture Trustee for
the benefit of the Working Capital Lenders and the New
Secured PIK Noteholders, respectively are subordinate to
the liens and security interests of the Note Purchase
Lenders in the Bay Harbour Priority Collateral, including
restrictions on enforcement by the Working Capital
Lenders and the New Secured PIK Noteholders until the
Note Purchase Lenders have been paid in full.
(b) Debt Subordination - Payment of the New Secured PIK
Notes is subordinate to the prior payment in full of the
obligations owing to the Working Capital Lenders (first)
and Note Purchase Lenders (second) unless and until all
of such prior obligations have been paid in full, and
there are restrictions on enforcement of obligations by
the New Secured PIK Noteholders and the Indenture Trustee
(collectively, the "Junior Subordinated Lenders") while
such obligations remain subordinate. Scheduled payments
are permitted prior to an event of default.
(c) Deficiency Claim Subordination - Any deficiency claim
of the Note Purchase Lenders after liquidation of the Bay
Harbour Priority Collateral is subordinate to the prior
payment in full of all of the deficiency claims of the
Working Capital Lenders, and until such time, the Note
Purchase Lenders are
12
<PAGE>
restricted in their ability to enforce their deficiency
claim. Similarly, any deficiency claim of the Junior
Subordinated Lenders is subordinate to the prior payment
in full of the Note Purchase Lenders' deficiency claim,
and until such time, the Junior Subordinated Lenders are
restricted in their ability to enforce their deficiency
claim.
(d) No Payment Upon Insolvency Event - In any insolvency
proceeding, the Working Capital Lenders must receive
payment in full, including fees, costs and interest,
before the BH/PIK Lenders may receive any payment or
distribution, other than net proceeds received by the
Note Purchase Lenders from disposition of or distribution
in respect of the Bay Harbour Priority Collateral.
(e) No Payment When Working Capital Facility is in
Default - No scheduled payments will be made under the
Note Purchase Agreement or Indenture (other than payments
received by the Note Purchase Lenders from the Bay
Harbour Priority Collateral proceeds) during the
occurrence and continuance of an event of default under
the Revolving Credit Agreement, until the earlier to
occur of the following: (i) written waiver of the default
by the Working Capital Lenders; or (ii) the Revolving
Credit Agreement obligations have been paid in full and
the Working Capital Lenders have no further commitment to
make credit extensions to the Debtors.
(f) Remedies Standstill - The BH/PIK Lenders are subject
to a remedies standstill until (i) all of the obligations
under the Revolving Credit Agreement have been paid in
full and (ii) all of the commitments by the Working
Capital Lenders to make credit extensions to the Debtors
have been irrevocably terminated; provided, however, that
the Note Purchase Lenders may accelerate the obligations
owed to them, but will be limited as to the commencement
of any remedial action except with respect to enforcement
actions and the receipt of proceeds from any disposition
of the Bay Harbour Priority Collateral.
(g) Limitation of Rights - (i) No BH/PIK Lender: (A) may
require the Working Capital Lenders to marshal property
or assets of the Debtors or of any guarantor or to
enforce any guaranty or any security interest or lien to
secure the payment of obligations under the Revolving
Credit Agreement; (B) may oppose or interfere with the
Working Capital Lenders in enforcing the security
interests on any Working Capital Priority Collateral; and
(C) may take any action inconsistent with the terms of
the Intercreditor and Subordination Agreement. (ii) The
rights of the Working Capital Lenders and each Junior
Subordinated Lender are similarly limited with respect to
the Note Purchase Lenders, the Note Purchase Agreement,
the BH guarantors and BH guarantees and the Bay Harbour
Priority Collateral.
(h) Bay Harbour Priority Collateral Sale Proceeds
Shortfall - From and after the time when the Note
Purchase Lenders receive proceeds from the Bay Harbour
Priority Collateral equaling $22 million plus certain
accrued interest and fees and expenses, the Note Purchase
Lenders agree to purchase junior participations in the
Revolving Credit Agreement, until the sum of the proceeds
from such collateral received or retained by the Debtors
and such participations aggregate $3 million.
(i) Guaranty and Subordination Action/Exclusive
Enforcement Rights - If the obligations under the
Revolving Credit Agreement have not been paid in full,
the Working Capital Lenders shall have the sole and
exclusive right to take action with respect to any
guaranty (other than the BH guaranty), and shall have the
sole and exclusive right to take any remedial actions
with respect to the Working
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<PAGE>
Capital Priority Collateral. If the obligations under the
Note Purchase Agreement have not been paid in full, the
Note Purchase Lenders shall have the sole and exclusive
right to take any remedial actions with respect to the
Bay Harbour Priority Collateral and the BH guarantors.
The Working Capital Lenders and the Note Purchase Lenders
shall have the exclusive right to carry out or not carry
out the provisions of the Revolving Credit Agreement and
the Note Purchase Agreement, respectively, as well as
related security agreements, and in exercising such
rights shall not owe any duties to the other lenders.
(j) Release of Liens on Collateral: (i) if the Working
Capital Lenders release any lien on Working Capital
Priority Collateral upon sale or other disposition
thereof in accordance with the terms of the Revolving
Credit Agreement, the liens of the BH/PIK Lenders shall
(subject to compliance with Article 10 of the Indenture)
be automatically and unconditionally and simultaneously
released. (ii) if the Note Purchase Lenders release any
lien on any part of the Bay Harbour Priority Collateral
upon sale or other disposition thereof in accordance with
the terms of the Note Purchase Agreement, the liens of
the Working Capital Lenders and the Junior Subordinated
Lenders shall be automatically and unconditionally and
simultaneously released.
(k) Limitation on Declaring Defaults - notwithstanding
any occurrence of any default under any PIK credit
document, no PIK Lender shall declare any default or
event of default if prohibited under the Intercreditor
Agreement.
- MORTGAGES - The three Mortgages evidence the grant by
Region III of a lien on the Retail Unit to evidence the
Note Purchase Lenders' first priority lien on the Bay
Harbour Priority Collateral, the Working Capital Lenders
second priority lien on the Bay Harbour Priority
Collateral, and the Indenture Trustee's third priority
lien on the Bay Harbour Priority Collateral. The
Mortgages are subject to the Intercreditor and
Subordination Agreement, and must be released when the
Retail Unit is sold.
- 1999 STOCK AWARD AND INCENTIVE PLAN - This agreement
provides for the procedures to implement the stock award
and incentive plan for the plan participants, who are
directors and officers of the Debtors, employees, and
independent contractors.
- 1999 CELEBRITY STOCK AWARD AND INCENTIVE PLAN - This
agreement provides for the procedures to implement the
stock award and incentive plan for the plan participants
who are selected celebrities, including certain
producers, agents, and business advisors, in their
capacity as independent contractors of PHI or any of its
subsidiaries.
- AMENDED AND RESTATED PHI CERTIFICATE OF INCORPORATION -
The amended and restated certificate of incorporation of
Reorganized PHI shall become effective on the Effective
Date.
- AMENDED AND RESTATED PHI BY-LAWS - The amended and
restated by-laws of Reorganized PHI shall become
effective on the Effective Date.
- NEW WARRANT AGREEMENT - The agreement between Reorganized
PHI, as issuer, and the New Warrant Agent, as agent,
which relates to the freely transferable New Warrants
evidencing the right to purchase up to an aggregate of
200,000 shares of
14
<PAGE>
New Class A Common Stock, which shall expire three (3)
years from the Effective Date, and which shall have an
exercise price of $65.50 per share.
- REGISTRATION RIGHTS AGREEMENT - The agreement entered
into by Reorganized PHI, the New Money Investors and the
Note Purchase Lenders. This agreement requires
Reorganized PHI to file within 90 days after the
Effective Date, or such longer time as may be required to
prepare the necessary financial statements, at its
expense, a Shelf Registration Statement and to use its
best efforts to have the Shelf Registration Statement
declared effective as soon as practicable after such
filing and to keep the Shelf Registration Statement
continuously effective until the later of (i) two years
following the effective date of the Shelf Registration
Statement or (ii) the date that is three months after the
date on which a selling securityholder thereunder is not
considered an "affiliate" of Reorganized PHI (as defined
in Rule 144(a)(1) under the Securities Act of 1933, as
amended). The Registration Rights Agreement covers New
Class A Common Stock issuable upon conversion of the
Class B Common Stock issued to the New Money Investors,
shares of Class A Common Stock issued to the Note
Purchase Lenders, and any New Secured PIK Notes and
shares of Class A Common Stock issued upon exercise of
New Warrants that are issued by the Company to New Money
Investors. The Shelf Registration Statement also affords
these securityholders with certain "piggyback"
registration rights with respect to other registration
statements that may be filed by Reorganized PHI.
ENCUMBRANCE OF ASSETS FREE OF TRANSFER, RECORDING OR SIMILAR TAX
----------------------------------------------------------------
18. The security interests, the Mortgages and the Pledges to
be given pursuant to the Financing Documents are a necessary inducement to the
extension of exit financing to the Debtors in order to fund the Plan
distributions and consummate the Plan, and are given under, in furtherance of,
pursuant to and in connection with the Debtors' confirmed Plan. The Debtors
therefore seek an order that the issuance of the security interests, Mortgages
and Pledges, and the making, delivery, creation, assignment, amendment or
recording of any document or instrument in relation thereto, shall not be taxed
under any law imposing a stamp tax or similar tax, pursuant to section 1146(c)
of the Bankruptcy Code. Further, the Debtors request that the Court direct the
New York County Clerk and the New York City Register to accept for filing the
mortgages and related documents, without the payment of a mortgage recording or
other tax.
STOCK OPTIONS ISSUED UNDER ROBERT EARL'S EMPLOYMENT AGREEMENT
-------------------------------------------------------------
15
<PAGE>
19. In conjunction with the reorganization, PHI has executed a
revised employment agreement with Robert Earl, the Debtors' Chairman and Chief
Executive Officer. Pursuant to the new employment agreement, part of Mr. Earl's
compensation will include stock options issued by PHI for Mr. Earl to purchase
two million (2,000,000) shares of Class A common stock (the "Bonus Options") at
an exercise price equal to $4.2857 per share. The Bonus Options will be issued
pursuant to a separate stock option agreement and not under PHI's stock option
plans. The Bonus Options will vest and become non-forfeitable only if the
average market price for the Class A Shares equals or exceeds $40.00 per share
for three consecutive business days during the five year term of the Bonus
Options. Mr. Earl will also be eligible to receive stock options under PHI's
stock option plan. Such Bonus Options were reviewed and approved by the
Creditors' Committee and also were disclosed at the confirmation hearing.
COMPLIANCE WITH TRUST INDENTURE ACT
-----------------------------------
20. As explained above, the Indenture, Intercreditor and
Subordination Agreement, Security Agreements and other Financing documents
provide that, upon release of Bay Harbour's lien in connection with the sale or
other disposition of all or a portion of the Retail Unit collateral, the
respective second and third priority liens of the Working Capital Lenders and
the Indenture Trustee therein shall be automatically, simultaneously and
unconditionally released (or partially released, as applicable). The Debtors
seek a finding that such release (or partial release) of collateral does not
impair the security under the Indenture in contravention of the terms thereof.
21. Section 314(d) of the Trust Indenture Act of 1939 (the
"TIA") requires that if collateral is released from a mortgage or pledge
securing an indenture thereunder,
16
<PAGE>
the obligor upon the indenture securities shall furnish to the indenture trustee
a certificate or opinion of an engineer, appraiser, or other expert as to the
fair value-
(1) Of any property or securities to be released from the lien
of the indenture, which certificate or opinion shall state that in the
opinion of the person making the same the proposed release will not
impair the security under such indenture in contravention of the
provisions thereof and requiring further that such certificate or
opinion shall be made by an independent engineer, appraiser or other
expert if the fair value of such property is 10 per centum or
more of the aggregate principal amount of the indenture securities at
the time outstanding.
22. Here, the Indenture expressly contemplates the sale or
other disposition of all or a portion of the Retail Unit collateral, and
expressly provides that the proceeds of such sale or other disposition represent
the fair value of such collateral, and release (or partial release) of liens of
the security documents will not be deemed to impair the security under the
Indenture. See Indenture, ss.ss. 10.3(a) & (c).
23. By order dated January 20, 2000, this Court has approved
the sale of all or a portion of the Retail Unit pursuant to the Contract for
Sale and use of the proceeds of sale as contemplated in the Plan, as provided in
an order of the Court and/or definitive documentation in Final Plan Documents
(as defined in the Sale Order). As reflected in the Intercreditor and
Subordination Agreement, the Security Documents (as defined in the Indenture)
and Mortgages, the Lenders have agreed that upon sale of all or a portion of the
Retail Unit pursuant to the Contract of Sale, the proceeds of sale of such
collateral will be applied in the manner and priority set forth therein or as
otherwise agreed, and each junior lien shall be released when the senior
lienholder is entitled to direct such release of liens. The sale of the Retail
Unit is expected to close on or about May 1, 2000. Upon the sale of the Retail
Unit, it is not anticipated that there will be a distribution of sale proceeds
to the New Secured PIK Noteholders. The sale price for the Retail Unit (or
portion thereof) pursuant to the approved Contract of Sale represented the
17
<PAGE>
highest and best offer for the Retail Unit, and represents the fair value of the
collateral to be released upon closing of the Contract of Sale.
24. In light of the above-described agreements and previous
orders of this Court, the Debtors request a finding that the release (or partial
release) of liens against the Retail Unit collateral is consistent with the
Indenture, Security Documents and other Financing Documents and is for fair
value, and does not impair the security under the Indenture, in contravention of
the provisions thereof, and further request the Court to confirm that the liens
of all Lenders in the Retail Unit are released (or partially released, as
applicable) upon closing of a sale of all or a portion of the Retail Unit under
the Contract of Sale and performance by the purchaser thereof of its obligations
with respect thereto, and attach to the proceeds of sale in the order of
priority set forth in the Intercreditor and Subordination Agreement and other
Financing Documents, without the execution, delivery or procurement of any
further documents or instruments other than evidence of the closing of any such
sale of all or any portion of the Retail Unit.
RELIEF REQUESTED
----------------
25. By this Motion, the Debtors seek entry of an order
pursuant to sections 105(a), 363(b), 364(e), 1141, 1142 and 1146(c) of the
Bankruptcy Code (i) approving the substantially finalized Plan Implementation
Documents; (ii) authorizing the Debtors to execute such substantially finalized
Plan Implementation Documents when finalized with such additional modifications
as the Debtors, the Working Capital Lenders, the Note Purchase Lenders, the
Indenture Trustee, and the Creditors' Committee agree are necessary and not
materially adverse to the Debtors or their creditors; (iii) determining that the
Plan Implementation Documents are binding on all creditors and shareholders
under the Plan, including without limitation holders of
18
<PAGE>
Subdebt Notes and General Unsecured Creditors; (iv) authorizing that the
security interests, Mortgages and Pledges, and the making, execution, delivery,
or recordation of any document or instrument in relation thereto, shall not be
taxed under any law imposing a stamp tax or similar tax, pursuant to section
1146(c) of the Bankruptcy Code; and (v) finding that the proceeds from the sale
of all or a portion of the Retail Unit pursuant to the Contract of Sale approved
by this Court represents the fair value of the collateral to be released from
the lien of the Indenture, and that such release will not impair the security
under the Indenture in contravention of the provisions thereof.
BASIS FOR RELIEF REQUESTED
--------------------------
26. Section 363 of the Bankruptcy Code provides, in pertinent
part, as follows:
The trustee, after notice and a hearing, may use, sell, or
lease, other than in the ordinary course of business, property of the estate.
11 U.S.C.ss. 363(b)(1). Section 105(a) of the Bankruptcy Code
further provides in relevant part: The court may issue any order, process or
judgment that is necessary or appropriate to carry out the provisions of this
title.
11 U.S.C.ss. 105(a). Section 1146(a) of the Bankruptcy Code
exempts from federal, state or local stamp taxes, inter alia, the transfer or
the delivery of an instrument of transfer under a plan.
27. In the case of a proposed use of property of a debtor's
estate under Section 363(b) of the Bankruptcy Code, approval should be granted
when such use is supported by the exercise of sound business judgement. See The
Institutional Creditors of Continental Airlines v. Continental Airlines, Inc.
(In re Continental Airlines, Inc.), 780 F.2d 1223, 1226 (5th Cir. 1986) (holding
that debtor-in-possession must demonstrate some articulate business
justification to justify use, sale or lease of property outside the ordinary
course of business); Walter v. Sunset Bank (In re Walter Bank), 83 B.R. 14, 17
(B.A.P. 9th Cir. 1988) (same); In re Ionosphere Clubs,
19
<PAGE>
Inc., 98 B.R. 174, 175 (Bankr. S.D.N.Y. 1989) (same); see also In re Phoenix
Steel Corp., 82 B.R. 334, 335-36 (Bankr. D. Del. 1987) (stating that judicial
approval of Section 363 sale includes showing that good business reason exists).
28. Section 1142 of the Bankruptcy Code governs the
implementation of the Debtors' Plan. Section 1142(a) directs a debtor to carry
out the terms of the confirmed plan and to comply with any orders entered by the
court in connection with confirmation of the plan. Section 1142(b) authorizes a
court to direct the debtor or any other party to execute and deliver instruments
necessary to effect transfer of property dealt with by a confirmed plan and to
take any other act necessary for the plan to be consummated. The scope of
Section 1142(b) is considerably broad, as acting pursuant to Section 1142(b) a
court may authorize, inter alia, the execution of deeds to property, stock
transfers and execution of documents necessary for the sale of corporate assets.
See 8 Collier on Bankruptcy, P. 1142.03 (15th Ed. Rev. 1999).
29. The implementation of the Debtors' confirmed Plan requires
the execution and approval of corporate documentation evidencing the Debtors'
exit financing and other transactions. The Debtors, the Working Capital Lenders,
the Note Purchase Lenders and the Indenture Trustee, along with the Creditors'
Committee have been in constant communication finalizing these Plan
Implementation Documents and the Debtors and the Creditors' Committee believe
that they reflect the provisions of the Plan as confirmed. The Debtors submit
that the substantially finalized terms of the Plan Implementation Documents are
consistent with and implement in a commercially reasonable manner the
transactions contemplated by the Plan and are necessary in order to consummate
the Plan. The Debtors submit that to the extent any terms of the Plan
Implementation Documents differ from that what was set forth in the Disclosure
Statement, such differences are minimal, they do not materially adversely affect
any creditors'
20
<PAGE>
rights and the Plan Implementation Documents are fully consistent with the Plan
and are binding on all creditors and shareholders under the Plan, including but
not limited to, holders of Subdebt Notes and General Unsecured Creditors
classified in Classes 5 and 6 under the Plan. Modifications may be made by the
parties to the Plan Implementation Documents prior to execution of these
documents. The Debtors submit that such changes will not be material, will not
affect any creditor's substantive rights and will be agreed to by the parties
thereto and the Creditors' Committee.
NOTICE
------
30. The Debtors have provided notice of this Motion and the
relief requested herein to (i) the Working Capital Lenders; (ii) Bay Harbour;
(iii) Wilmington Trust; (iv) known beneficial holders of approximately
two-thirds in principal amount of the Subdebt Notes, including all of the
Electing Holders of Class 5 Claims; (v) United States Trust Company of New York;
(vi) the New York State Department of Taxation and Finance and the New York City
Department of Finance; (vii) the New York County Clerk and the New York City
Register; (viii) the New Money Investors or their representatives; (ix) counsel
for and the members of the Creditors' Committee; (x) the Office of the United
States Trustee; (xi) the Securities and Exchange Commission; and (xii) those
persons that have requested notices in accordance with Bankruptcy Rule 2002(a).
Because the Plan Implementation Documents are so voluminous, the respective
documents which are attached as Exhibit C to this Motion have not been served on
the notice parties, except that the Intercreditor and Subordination in
substantially final form is being served herewith on the known beneficial
holders of approximately two-thirds in principal amount of the Subdebt Notes,
including all of the Electing Holders of Class 5 Claims. However, any creditor
seeking to view the Plan Implementation Documents may request a copy from
21
<PAGE>
Rosemarie Serrette at phone number 212-806-5492, fax number 212-806-6006 or
e-mail to [email protected], and will be sent a copy of the requested
document via e-mail or overnight mail.
31. Simultaneously herewith, the Debtors have filed a motion
to limit notice and shorten time for notice and response. All parties have
worked under very tight time constraints to try to effectuate the closing on the
Financing Documents. The operational needs of the Debtors, their ability to sign
up new celebrity supporters and obtain positive publicity going into the
important spring and summer season, as well as the desire of creditors to
receive distributions as soon as possible mandate the earliest possible closing
date. In addition, the commitment of the New Money Investors to fund a $30
million equity infusion was due to expire on February 29, 2000, and has been
extended very briefly to permit the closing to occur. Any further delay will
jeopardize this linch-pin of the reorganization. Thus, it is in the best
interests of all parties-in-interest for the Plan Implementation Documents to be
approved on the shortest possible time frame. In light of the intense
involvement of creditor and New Money Investor representatives in the
documentation negotiation and drafting process, the Debtors and the Committee
believe the short notice period is not prejudicial, and that the benefits of
achieving finality in this process are paramount.
32. No previous request for the relief sought herein has been
made to this or any other court except as described herein.
33. Because this Motion does not present any novel issues of
law, the Debtors request a waiver from filing a memorandum of law in support of
the Motion.
22
<PAGE>
WHEREFORE, the Debtors respectfully request that the Court
enter an order granting the relief requested herein and such other and further
relief as is just and proper.
Dated: Wilmington, Delaware
March 8, 2000
STROOCK & STROOCK & LAVAN LLP
Robin E. Keller
180 Maiden Lane
New York, New York 10038
(212) 806-5400
YOUNG CONAWAY STARGATT & TAYLOR LLP
----------------------------
James L. Patton, Jr. (No. 2202)
Pauline K. Morgan (No. 3650)
P.O. Box 391
Rodney Square North, 11(th) Floor
Wilmington, DE 19899
Telephone: (302) 571-6600
Co-counsel for the Debtors and
Debtors-in-Possession
-and-
WILLKIE FARR & GALLAGHER
Myron Trepper Steven Wilamowsky
787 Seventh Avenue
New York, New York 10019
(212) 728-8000
-and-
23
<PAGE>
MORRIS, NICHOLS, ARSHT & TUNNELL
----------------------------
Robert J. Dehney (No. 3578)
Gregory W. Werkheiser (No. 3553)
P.O. Box 1347
1201 N. Market Street
Wilmington, DE 19899-1347
Telephone: (302) 658 - 9200
Co-counsel for the Official Committee of
Unsecured Creditors
24
<PAGE>
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE
IN RE: )
) CHAPTER 11
PLANET HOLLYWOOD )
INTERNATIONAL, INC., ET AL. ) CASE NO. 99-3612 (JJF)
)
DEBTORS. ) (JOINTLY ADMINISTERED)
ORDER APPROVING DOCUMENTATION
IMPLEMENTING CONSUMMATION OF THE
DEBTORS' PLAN OF REORGANIZATION
Upon consideration of the motion dated March __, 2000 (the "Motion") of
Planet Hollywood International, Inc. ("PHI") and twenty-five of its affiliates
that are also debtors and debtors-in-possession herein (collectively with PHI,
the "Debtors"), which is joined by the Official Committee of Unsecured Creditors
(the "Creditors' Committee"), for an order pursuant to Sections 105(a), 363(b),
364(e), 1141, 1142 and 1146(c) of the Bankruptcy Code approving in substantially
final form the corporate documentation relating to exit financing (including the
Working Capital Facility, the Note Purchase Agreement, the Indenture for the New
Secured PIK Notes (the "Indenture") and the Intercreditor and Subordination
Agreement between various parties to the Working Capital Facility, the Note
Purchase Agreement and the Indenture) as well as corporate governance
documentation as contemplated by and in furtherance of the Debtors' confirmed
Plan as agreed to by the Debtors, the Working Capital Lenders, Bay Harbour, the
Indenture Trustee for the New Secured PIK Notes (the "Indenture
<PAGE>
Trustee"), the New Money Investors and the Creditors' Committee; and this Court
having further considered:
A. The affidavit of Thomas Avallone, Chief Financial Officer of PHI
(the "Avallone Affidavit") and the letter from the Creditors' Committee
evidencing that Creditors' Committee satisfaction with the Plan Implementation
Documents and that they comport with the terms of the Plan (the "Creditors'
Committee Letter");
B. The motion to approve a commitment letter with CIT Group/Business
Credit, Inc. ("CIT") and Rothschild Recovery Fund, LP ("RRF") (the "CIT Motion")
which set forth the material terms and conditions of a commitment by CIT and RRF
to provide the Debtors and their affiliates with a Working Capital Facility
subject to definitive documentation and the satisfaction of other conditions,
and the record of the hearing before this Court on the CIT Motion held on
January 18, 2000, which hearing was held on notice to all parties requesting
notices pursuant to Bankruptcy Rule 2002 ("Rule 2002") and other substantial
parties in interest and the Order entered by this Court approving the CIT Motion
on January 18, 2000; C. The motion to approve a commitment letter with Bay
Harbour Management LC (the "Bay Harbour Motion") which set forth the material
terms and conditions of a commitment by Bay Harbour to purchase the New Senior
Secured Notes from PHI so as to provide the Debtors and their affiliates with a
secured term loan, and the record of the hearing before this Court on the Bay
Harbour Motion held on February 2, 2000, which hearing was held on notice to all
parties requesting notices pursuant to Rule 2002 and other substantial parties
in interest, and the Order entered by this Court approving the Bay Harbour
Motion on February 2, 2000;
D. The record of the hearing before this Court held on December 9, 1999
on the adequacy of the Disclosure Statement for the First Amended Joint Plan of
Reorganization dated December 13, 1999 (the "Disclosure Statement Hearing"),
which hearing was held on notice to all creditors and shareholders of the
Debtors as well as the Rule 2002 list and other substantial
2
<PAGE>
parties in interest, and the Order entered by this Court approving the
Disclosure Statement as containing adequate information dated December 14, 1999;
E. The record of the hearing before this Court held on January 20, 2000
on confirmation of the Plan (the "Confirmation Hearing"), which hearing was held
on notice to all Creditors and shareholders of the Debtors as well as the Rule
2002 list and other substantial parties in interest;
F. The provisions of the Order Confirming The First Amended Joint Plan
of Reorganization Dated December 13, 1999 of Planet Hollywood International,
Inc. and Certain of Its Subsidiaries, which Order was signed by this Court on
January 21, 2000 and entered on this Court's docket on January 26, 2000 (the
"Confirmation Order"); G. The record of the hearing before this Court held on
January 20, 2000 on the motion to approve a purchase and sale agreement between
PHI (Region III) and Intel 1567 LLC for the sale of the 1567 Broadway property
(the "Sale Motion"), which hearing was held on notice to the Rule 2002 list and
other substantial parties in interest, and the provisions of the Order signed by
this Court on January 20, 2000 and entered on the Court docket on January 24,
2000 approving the Sale Motion; and it appearing that the relief requested in
the Motion is in the best interests of the Debtors and their Estates and
Creditors; and it appearing that the relief requested in the Motion constitutes
an exercise of the Debtors' sound business judgment; and due and sufficient
notice having been given to (i) the Working Capital Lenders; (ii) Bay Harbour,
(iii) Wilmington Trust Company, (iv) known beneficial holders of approximately
two-thirds in principal amount of the Subdebt Notes, including all of the
Electing Holders of Class 5 Claims, (v) United States Trust
3
<PAGE>
Company of New York, (vi) the New York State Department of Taxation and Finance
and the New York City Department of Finance, (vii) the New York County Clerk and
the New York City Register; (viii) counsel for and the members of the Creditors'
Committee, (ix) the Office of the United States Trustee; (x) the New Money
Investors or their representatives; (xi) the Securities and Exchange Commission;
and (xii) those persons that have requested notices in accordance with the Rule
2002 list; and no objections having been filed or raised with respect to the
relief requested, and sufficient cause appearing therefor and after due
deliberation and as evidenced by the Avallone Affidavit and the Creditors'
Committee Letter, the Court makes the following findings of fact:
FINDINGS OF FACT
1. Thomas Avallone is the Debtors' Chief Financial Officer and as such,
in consultation with counsel and other advisors, has led the Debtors'
negotiations with respect to the treatment of creditors under the Plan and in
connection with obtaining exit financing for the Debtors.
2. The Creditors' Committee has played an integral role, through its
counsel and advisors, in the negotiation of the treatment of creditors under the
Plan, and has reviewed the Plan Implementation Documents and their impact on the
treatment of creditors.
3. The Plan Implementation Documents were referenced as exhibits to the
Plan and principal economic terms and provisions were set forth as Annexes A, B,
and C to the Plan and at pages 9-15 in the accompanying Disclosure Statement.
The Plan Implementation Documents being submitted with this Motion include: (i)
the Revolving Credit Agreement; (ii) the Note Purchase Agreement; (iii) the
Indenture; (iv) the Intercreditor and Subordination
4
<PAGE>
Agreement, (v) the 1999 Stock Award and Incentive Plan; (vi) the 1999 Celebrity
Stock Award and Incentive Plan; (vii) the modified Amended and Restated PHI
Certificate of Incorporation; (viii) the modified Amended and Restated PHI
By-Laws, (ix) the modified New Warrant Agreement; (x) the modified New Warrants;
and (xi) the modified Registration Rights Agreement, and other ancillary
agreements and documents. The Revolving Credit Agreement will include the
following major document forms as exhibits: Senior Secured Note; guaranty;
guarantor security agreement; borrowing base certificate; mortgage; pledge
agreements; security agreement; TSP pledge agreement; and assignment and
acceptances. The Note Purchase Agreement and the Indenture will include the same
or comparable exhibits.
4. The Plan Implementation Documents represent the "Plan Documents" as
that term is defined in the Plan. Section 1.102 provides that the Plan Documents
are those documents that are to be Filed at or prior to the Confirmation Hearing
as evidenced by Exhibits 1-12 to the Plan.
5. The Confirmation Order expressly approved the Amended and Restated
PHI Certificate of Incorporation, the Amended and Restated PHI By-Laws, the New
Warrant Agreement, the New Warrants and the Registration Rights Agreement as
filed with the Court on that date or as modified subsequently by the Debtors
with the consent of the Creditors' Committee.
6. The Confirmation Order further provided that the Debtors were
authorized to enter into, execute, deliver, file and/or implement the Plan
Documents and other documents and instruments substantially consistent therewith
or incidental thereto, and any appropriate
5
<PAGE>
amendments, supplements or modifications, as necessary to implement and
effectuate the Plan, the Plan Documents, the Confirmation Order, and to satisfy
other conditions precedent to the implementation and effectiveness of the Plan,
and that all such Plan Documents, including without limitation the Revolving
Credit Agreement and all other documents in connection with the Working Capital
Facility, if approved by the Creditors' Committee, would be binding on all
parties under the Plan, including all creditors, shareholders and other parties
affected by the Plan Implementation Documents.
7. The Order entered by this Court approving the Bay Harbour Motion
provided that the Debtors, Reorganized PHI, the other reorganized Debtors and
their directors, officers and agents are authorized to enter into, execute and
deliver the documents relating to the Bridge Loan commitment to be negotiated by
the Note Purchase Lenders if such documents are approved by the Creditors'
Committee and to take other such steps and perform other such acts as may be
necessary to effectuate the terms thereof, and all other documents in connection
with the Bridge Loan, if approved by the Creditors' Committee, would be binding
on all parties under the Plan, including all creditors, shareholders and other
parties affected by the Plan Implementation Documents
8. Pursuant to Section 6.2.2 of the Plan, such "Plan Documents," which
the Plan Implementation Documents represent, are binding on all parties thereto,
as well as all creditors, shareholders and other parties affected by the Plan
Implementation Documents, upon the Effective Date of the Plan.
6
<PAGE>
9. Those material Plan Implementation Documents that were not finalized
at the time the Plan was confirmed so as to be approved by this Court are
submitted to this Court in connection with the Motion.
10. The Debtors, the Working Capital Lenders, Bay Harbour, Wilmington
Trust, the Indenture Trustee, representatives of the New Money Investors, and
the Creditors' Committee have been negotiating to finalize the Plan
Implementation Documents.
11. The Plan Implementation Documents were reviewed by Thomas Avallone
and counsel to the Creditors' Committee and are substantially finalized.
12. The Plan Implementation Documents are fully consistent with the
treatment provided for creditors under the Plan and reflect the intent of the
parties who negotiated that treatment.
13. The Plan Implementation Documents are fully consistent with and
implement in a commercially reasonable manner the transactions as contemplated
by the Plan.
14. The Plan Implementation Documents, including the Intercreditor and
Subordination Agreement, are binding on all creditors and shareholders,
including without limitation, the holders of Subdebt Notes and General Unsecured
Creditors.
15. The credit extended by the Working Capital Lenders, the Note
Purchase Lenders, and the holders of New Secured PIK Notes has been negotiated
at arm's-length and in good faith.
16. The credit extended by the Working Capital Lenders and the Note
Purchase Lenders has been negotiated at arm's-length and in good faith and is
entitled to the protections of Section 364(e) of the Bankruptcy Code.
7
<PAGE>
17. The security interests granted, and the Mortgages of the Retail
Unit granted by Region III, and the Pledges of the Membership Interest granted
by PHH, to (i) the Note Purchase Lenders, (ii) the Working Capital Lenders, and
(iii) the Indenture Trustee, are under, in furtherance of, pursuant to and in
connection with the Debtors' confirmed Plan.
18. The sale price for all or a portion of the Retail Unit pursuant to
the Contract for Sale previously approved by this Court represented the fair
value of such Retail Unit or portion thereof, and the release of liens against
the Retail Unit by the Indenture Trustee upon the sale or other disposition of
all or any portion of the Retail Unit as provided for in the Financing Documents
is consistent with the Indenture, Security Documents (as defined in the
Indenture) and other Financing Documents, is for fair value, and does not impair
the security under the Indenture in contravention of the terms thereof.
WHEREFORE, BASED UPON, INTER ALIA, ALL OF THE FOREGOING FINDINGS OF FACT, it is
hereby
ORDERED, that the Motion is hereby granted in its entirety; and it is
further
ORDERED, that all capitalized terms not otherwise defined herein shall
have the meanings ascribed to such terms in the Plan, or to the extent not
inconsistent therewith, in the Motion; and it is further
ORDERED, that the Plan Implementation Documents in substantially final
form as contemplated by the Plan are approved; and it is further
ORDERED, that the Debtors, Reorganized PHI and the other Reorganized
Debtors and their respective directors, officers and agents are hereby
authorized to enter into, execute and deliver the Plan Implementation Documents
and to take other such steps and perform other
8
<PAGE>
such acts as may be necessary to effectuate the terms thereof, including
effectuating modifications to the Plan Implementation Documents which shall not
be materially adverse to the interests of the Debtors or their creditors prior
to the closing on the exit financing transactions; and it is further
ORDERED, that, when fully executed and delivered, the Plan
Implementation Documents shall be binding upon and inure to the benefit of the
Reorganized Debtors, all Holders of Claims against, and Interests in, the
Debtors and any other party-in-interest in these chapter 11 cases and their
respective successors and assigns, regardless of whether the Claims or Interests
of such Holders or obligations of any party-in-interest (i) are in a Class that
is impaired under the Plan, (ii) have accepted the Plan, or (iii) have filed a
proof of claim; and it is further
ORDERED, that upon the release (or partial release, as the case may be)
of the liens of Wilmington Trust as agent for the Note Purchase Lenders in
connection with the sale of all or a portion of the Retail Unit, the liens of
the Working Capital Lenders and the Indenture Trustee in the Retail Unit (or
applicable portion thereof) shall be released (or partially released, as the
case may be), and shall attach to the proceeds of each such sale in the order of
priority set forth in the Intercreditor and Subordination Agreement and in the
other Financing Documents, and such release of the lien of the Indenture Trustee
shall not impair the security under the Indenture in contravention of the
provisions thereof; and it is further
ORDERED, that this Court shall retain jurisdiction to ensure compliance
with the obligations under the Contract of Sale; and it is further
9
<PAGE>
ORDERED, that pursuant to section 1146(c) of the Bankruptcy Code, the
security interests, the Mortgages and the Pledges, and the making, execution,
delivery or recordation of any deed or any other instrument in connection
therewith is not subject to taxation under any law imposing a stamp or similar
tax, and the New York County Clerk and the New York City Register are directed
to accept for recordation the Security Documents, the Mortgages and related
documents without requiring payment of a recording or other tax.
Dated: Wilmington, Delaware
_________ ___, 2000
---------------------------
CHIEF UNITED STATES
DISTRICT COURT JUDGE
10
HEARING DATE: ONLY IF OBJECTIONS ARE FILED.
OBJECTION DEADLINE: MAY 4, 2000 AT 4:00 P.M.
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE
IN RE: )
) CHAPTER 11
PLANET HOLLYWOOD )
INTERNATIONAL, INC., ET AL. ) CASE NO. 99-3612 (JJF)
)
DEBTORS. ) (JOINTLY ADMINISTERED)
DEBTORS' MOTION FOR ENTRY OF ORDER APPROVING (A)
MODIFICATION OF PRIOR ORDER OF THIS COURT; (B) $10 MILLION
STANDBY TERM LOAN AGREEMENT; AND (C) IN CONNECTION
THEREWITH, GRANTING THE DEBTORS AUTHORITY TO PAY FEES REQUIRED
IN CONNECTION WITH THE IMPLEMENTATION OF THE STANDBY LOAN
---------------------------------------------------------
Planet Hollywood International, Inc. ("PHI") and certain of
its affiliates and subsidiaries that are also debtors and debtors-in-possession
before this Court (collectively with PHI, the "Debtors"), seek entry of an order
pursuant to 11 U.S.C. ss.ss.105, 363, and 364 (i) approving modifications to the
Plan Implementation Order previously entered by this Court; (ii) approving a
standby term loan of up to $10 million in principal amount (the "Standby Loan")
from Bay Harbour1 and/or its affiliates or managed accounts to the Debtors; and
(iii) in connection therewith, granting the Debtors authority to pay commitment
fees required in connection with the implementation of the Standby Loan,
including reasonable legal and other expenses incurred by Bay Harbour or its
agents in connection with the Standby Loan. In support
- --------
1 Capitalized terms used but not defined herein shall have the meaning
ascribed to such terms in the Plan or in the Debtors' Motion for an
Order Approving Documentation Implementing Consummation of the Debtors'
Plan of Reorganization ("Plan Documents Motion").
<PAGE>
of this motion (the "Motion"), the Debtors, by their undersigned counsel,
respectfully represent as follows:
PRELIMINARY STATEMENT
---------------------
In order to become effective, Planet Hollywood's confirmed
Plan of Reorganization requires the implementation of exit financing
arrangements necessary to fund payments under the Plan and ensure the viability
of the reorganized companies going forward. As set forth in the Plan and
Disclosure Statement (as defined below), and prior pleadings filed with this
Court seeking orders approving the implementation of the Plan, the exit
financing was to consist principally of (i) a two year, $15 million working
capital facility (the "Working Capital Facility") provided by CIT Business
Credit Group ("CIT") and Rothschild Recovery Fund (now known as WLR Recovery
Fund, LP) ("RRF"), and secured by a first lien on substantially all assets of
the Debtors and their affiliates with a second lien on the Debtors' interests in
the 1567 Broadway property, (ii) a one-year term loan (the "Bridge Loan") of $22
million (plus potential fees which could raise the total to $27 million)
provided by Bay Harbour Management, LC ("Bay Harbour") and other participating
lenders (the "Electing Class 5 holders"), to be secured by a first lien on the
1567 Broadway property interests and a second lien on all other assets securing
the Working Capital Facility, which Bridge Loan was to be repaid out of the
proceeds of sale of the Retail Unit component of 1567 Broadway pursuant to a $30
million contract for sale previously approved by this Court; (iii) an Indenture
for the issuance of up to $95 million of New Secured PIK Notes, secured by third
liens on substantially all of the Debtors' assets, and (iv) $30 million of cash
from the New Money Investors, all as described in or contemplated by the Plan,
its related Disclosure Statement, and the Financing Documents, as well as
corporate governance documents such as shareholder voting agreements, amended
and
2
<PAGE>
restated articles of incorporation and by-laws, a warrant agreement, stock
option agreements and a registration rights agreement (collectively, the "Plan
Implementation Documents").
Under the Plan, post-confirmation equity will be held 70% by
the New Money Investors, 26.5% by the Unsecured Creditors, and 3.5% by the
Bridge Note lenders. Warrants for up to 2% of Reorganized PHI's stock on a fully
diluted basis exercisable at $65 per share are to be issued to pre-petition
shareholders.
Since this Court's approval of the Plan Implementation
Documents by order entered on the docket on March 20, 2000 (the "Plan Documents
Order"), the Debtors have continued to work diligently with the Lenders and
other parties-in-interest to finalize the Plan Implementation Documents and to
close the exit financing transactions contemplated thereunder and under the
Plan. Since that date, the SEC has approved the Indenture pursuant to the Trust
Indenture Act; the New Money Investor funding has been received and is being
held in escrow; and virtually every detail of the Plan financing has been agreed
to among the Debtors, the Creditors' Committee and the various lenders.
Several events have occurred since the confirmation hearing
which require modification to the exit financing structure, which the Debtors
submit does not materially adversely affect Creditors and other parties in
interest, and which modifications are supported by the Creditors' Committee, and
by the other lenders. In the first instance, the closing of the sale of the 1567
Broadway Retail Unit which was scheduled to occur on or after May 3, 2000, was
accelerated by the purchaser, and the Retail Unit sale has now occurred. As a
result, the Debtors have realized over $29 million of sale proceeds from this
transaction, allowing them to fund the $22 million cash distribution to the
Bridge Loan participants, and obviating the need for the Bridge Loan. However,
the closing of the Retail Unit purchase coincided with the finalization of
3
<PAGE>
transactions regarding the development of the balance of the 1567 Broadway
property owned by Times Square Partners, LLC in which the Debtors hold
approximately a 20% interest. The conclusion of these transactions appears
likely to result in additional realizations by the Debtors of approximately $10
million over several years, a somewhat lower recovery over a longer period than
was originally projected by the Debtors.
Secondly, due to unexpected delays in the finalization of the
Plan Implementation Documents which have delayed the Debtors' emergence from
bankruptcy with its expected benefits to the Debtors' operations, as well as
certain budget overruns in the legal and related implementation costs, the
Debtors and the New Money Investors determined that, in an exercise of caution,
additional liquidity (which the approved Plan Implementation Documents had
contemplated could be made available in the future if needed) ought to be put in
place now as a backstop to the Working Capital Facility.
Bay Harbour, the Working Capital Lenders, and the Creditors'
Committee support the relief sought herein. The Motion is further supported by
the affidavit of Thomas Avallone (the "Avallone Affidavit"), Chief Financial
Officer of PHI, annexed hereto. The Debtors, therefore, seek approval of a two
year, $10 million standby term loan to be provided by Bay Harbour, secured by a
second lien on all assets securing the Working Capital Facility. The terms of
the Standby Loan are more fully set forth in the Term Sheet annexed hereto as
Exhibit "A". As further consideration for the Standby Loan, Bay Harbour has the
option to convert the outstanding obligations under the Standby Loan into New
Class A Common Stock at an initial rate of $4.28 per share, and will receive New
Warrants for 2% of the New Class A Common Stock on a fully diluted basis
exercisable at the same initial rate. This loan constitutes a modification to
the Plan Implementation Documents as approved by the Plan Documents Order
4
<PAGE>
which the parties believe requires further court approval upon notice to
interested parties, even though the economic impact of the Standby Loan is
within the parameters of additional debt contemplated in the original Plan
Implementation Documents. Thus, as demonstrated herein, such modifications are
not materially adverse to any Creditor or equity holder; on the contrary, the
modifications have a net beneficial effect on these constituencies. The
documentation evidencing the modifications has already been substantially
finalized, and the consummation of the Plan is expected to occur immediately
following the Court's approval of these modifications.
BACKGROUND
----------
1. On October 12, 1999, the Debtors filed with this Court
voluntary petitions for relief under the Bankruptcy Code. The Debtors continue
to operate their businesses and manage their properties as debtors-in-possession
under Sections 1107(a) and 1108 of the Bankruptcy Code. On October 22, 1999, the
United States Trustee appointed the Creditors' Committee.
2. The Debtors' cases have been procedurally consolidated and
are being jointly administered pursuant to an order of this Court dated October
13, 1999.
JURISDICTION
------------
3. The Court has jurisdiction over these cases under 28 U.S.C.
ss. 1334. The subject matter of this Motion is a "core proceeding" under 28
U.S.C. ss. 157(b). The statutory predicates for the relief requested herein are
Sections 105, 363 and 364 of the Bankruptcy Code and Rule 2002 of the Federal
Rules of Bankruptcy Procedure (the "Bankruptcy Rules").
THE DEBTORS
-----------
4. PHI, a Delaware corporation, is the creator and world-wide
developer of the Planet Hollywood name and distinctive logo design, among other
widely recognized
5
<PAGE>
trademarks. The other Debtors are either direct or indirect U.S. subsidiaries of
PHI and/or wholly-owned direct or indirect U.S. partnerships of PHI. The
Debtors' primary businesses, together with their non-debtor subsidiaries (the
"PHI Group"), are the operation of distinctive movie, sport and
entertainment-based theme restaurants and retail merchandise stores throughout
the United States and in Europe. The Debtors also have franchisees and licensees
in various locations throughout the world.
5. As of the Petition Date, the PHI Group owned and operated
approximately 30 PLANET HOLLYWOOD, OFFICIAL ALL STAR CAFE and COOL PLANET theme
restaurants and/or related merchandise sales operations.
6. As of August 29, 1999, the PHI Group had total assets of
approximately $392.2 million and total liabilities of approximately $359.1
million. The Debtors' primary creditors currently consist of (a) the holders of
$250 million outstanding principal amount of PHI's issue of 12% Senior
Subordinated Notes due April 1, 2005 (the "Subdebt Notes"), (plus accrued
interest of approximately $32 million) which are governed by the terms of an
Indenture dated March 25, 1998, (b) approximately $6.5 million in outstanding
letter of credit obligations to SunTrust Bank, Central Florida, National
Association ("SunTrust Bank") and others, and (c) approximately $30.1 million of
other unsecured pre-petition debt exclusive of amounts payable by first day
orders presented to the Court, and exclusive of potential lease rejection
claims.
7. Prior to the Petition Date, PHI negotiated an agreement in
principle with an unofficial committee representing over two-thirds in amount of
the holders of its Subdebt Notes (the "Unofficial Noteholders' Committee"),
regarding a capital restructuring of the Debtors, which was to be embodied in a
Chapter 11 Plan of Reorganization. In addition, the
6
<PAGE>
Debtors have negotiated a number of settlements of pre-petition lease
termination claims which are embodied in Landlord Settlement Agreements that are
unimpaired under the proposed Plan.
8. On November 8, 1999, the Debtors filed their Joint Plan of
Reorganization and Disclosure Statement, which Plan was supported by the
Creditors' Committee. Following a hearing held on December 9, 1999, the Court
approved the Debtors' Disclosure Statement as amended, and on December 13, 1999
the Debtors filed their First Amended Joint Plan of Reorganization (the "Plan")
and First Amended Disclosure Statement. Following a hearing on January 20, 2000,
the Court confirmed the Plan. The Plan provides for the repayment of
approximately 40 cents on the dollar of the Subdebt Notes with Cash, New Secured
PIK Notes and approximately 27% of the equity of the reorganized company, and
payment of Cash and New Secured PIK Notes of comparable value to General
Unsecured Creditors. It also contemplates the investment of $30 million of new
equity capital into the Debtors by an investor group organized by Robert Earl,
the Debtors' Chairman and Chief Executive Officer, a restructuring of the
Debtors' other debt obligations, and exit financing to effectuate the Plan and
provide working capital after the Plan Effective Date.
9. Consummation of the Plan is conditioned on, among other
things, the Debtors having sufficient cash to fund their obligations under the
Plan and to operate their businesses post-bankruptcy. The Plan contemplates that
sufficient funding will be made available through the cash infusion from the New
Money Investors, from a Working Capital Facility not to exceed $15 million, and
the Bridge Loan, in an amount not to exceed $25 million, to be evidenced by New
Senior Secured Notes. This Court has previously approved commitment letters from
CIT and RRF with respect to the Working Capital Facility, and with Bay Harbour
with respect to the Bridge Loan. The Working Capital Facility as documented is
subject to a $4
7
<PAGE>
million dollar reserve which effectively limits availability thereunder to a
maximum of $11 million. The need for the Bridge Loan arose from the fact that a
substantial asset of the Debtors held for sale pursuant to an order of this
Court, consisting of the Debtors' Retail Unit interests in a hotel development
project at 1567 Broadway in Times Square, New York City, was not expected to
close until several months after the projected Effective Date of the Plan. By
order dated January 20, 2000 and entered on the docket on January 24, 2000, this
Court approved the Sale Motion, and a closing thereon was scheduled to occur
approximately 70 days after the Court's order became final; i.e., on or about
May 3, 2000. Following completion of the Retail Unit sale, the Debtors would
still retain an approximately 20% interest in an LLC which owns the balance of
the 1567 Broadway property rights, and which has been marketing that property
for sale.
10. In the Plan Documents Order, the Court approved the exit
financing and other documentation related to the Debtors' emergence from
bankruptcy in substantially final form. As contemplated therein, the Bridge Loan
was primarily secured by a first lien on the 1567 Broadway interests, and
secondarily by the Debtors' other assets, with the Working Capital Facility
taking a first lien on those other assets as necessary to obtain the Working
Capital Facility, and a second lien on the 1567 Broadway interests. The
Indenture Trustee for the New Secured PIK Notes was to take a third lien on the
1567 Broadway interests and the other assets of the Debtors.
11. Pursuant to the Plan Documents, the Debtors were
authorized to refinance the $22 million Bridge Loan by new indebtedness of up to
$27 million, and the Working Capital Facility by indebtedness of up to $16.5
million, and to incur debt related to the acquisition or improvement of other
assets of up to $10 million, and to incur other debt on a limited basis. The
8
<PAGE>
incurrence of the Standby Loan is not inconsistent with the provisions for the
incurrence of future debt contemplated by the parties in drafting the original
Plan Implementation Documents. Further, the New Warrants to be provided to Bay
Harbour are exercisable for approximately 2% of Reorganized PHI at a price which
reflects the same value allocated to the company's stock by the New Money
Investors, and thus do not materially adversely affect any creditor or
shareholder. Thus, the Debtors and other parties believe that the modifications
described herein do not materially adversely alter the projected capital
structure for the Debtors upon emergence from bankruptcy, nor materially
adversely dilute the interests of parties in interest going forward.
12. The principal terms and conditions of the Standby Loan
Commitment are set forth in the Term Sheet annexed hereto as Exhibit "A".
RELIEF REQUESTED
----------------
13. By this Motion, the Debtors seek entry of an order
pursuant to Sections 105, 363, and 364 of the Bankruptcy Code (i) approving the
Standby Loan, including the right to convert the loan to shares of Reorganized
PHI, and the right to New Warrants, (ii) authorizing the Debtors to pay to Bay
Harbour a fee of $400,000 in connection with implementing the Standby Loan and
(iii) authorizing the Debtors to deposit with Bay Harbour $200,000 of such
$400,000 fee, and an additional $100,000 as a deposit against actual costs and
expenses, including legal fees, and thereafter to pay all legal costs and other
expenses incurred by Bay Harbour in connection with the Standby Loan, as well as
all amounts previously incurred in connection with the Bridge Loan; (iv) in
connection with the foregoing, approving necessary modifications to the Plan
Documents Order and the Plan Implementation Documents; and (v) authorizing the
Debtors to perform such acts and take such steps as may be necessary to
effectuate the terms thereof, including authorizing the Debtors to enter into a
commitment letter.
9
<PAGE>
BASIS FOR RELIEF REQUESTED
--------------------------
14. Section 363 of the Bankruptcy Code provides, in pertinent
part, as follows:
The trustee, after notice and a hearing, may use, sell or
lease, other than in the ordinary course of business,
property of the estate.
11 U.S.C.ss. 363(b)(1).
15. Section 364 of the Bankruptcy Code provides in pertinent
part:
(e) The reversal or modification on appeal of an authorization
under this section to obtain credit or incur debt, or a grant
under this section of a priority or a lien, does not affect
the validity of any debt so incurred, or any priority or lien
so granted, to an entity that extended such credit in good
faith, whether or not such entity knew of the pendency of the
appeal, unless such authorization and the incurring of such
debt, or the granting of such priority or lien, were stayed
pending appeal.
11 U.S.C.ss.364(e).
16. Section 105(a) of the Bankruptcy Code further provides in
pertinent part:
The court may issue any order, process or judgment that
is necessary or appropriate to carry out the provisions
of this title.
11 U.S.C.ss. 105(a).
17. In the case of a proposed use of property of a debtor's
estate under section 363(b) of the Bankruptcy Code, approval should be granted
when such use is supported by the exercise of sound business judgement. See The
Institutional Creditors of Continental Airlines v. Continental Airlines, Inc.
(In re Continental Airlines, Inc.), 780 F.2d 1223, 1226 (5th Cir. 1986) (holding
that debtor-in-possession must demonstrate some articulate business
justification to justify use, sale or lease of property outside the ordinary
course of business); Walter v. Sunset Bank (In re Walter Bank), 83 B.R. 14, 17
(Bankr. 9th Cir. 1988) (same); In re Ionosphere Clubs, Inc., 98 B.R. 174, 175
(Bankr. S.D.N.Y. 1989) (same); see also In re Phoenix Steel Corp., 82 B.R. 334,
335-36 (Bankr. D. Del. 1987) (stating that judicial approval of section 363 sale
10
<PAGE>
includes showing that good business reason exists). Additionally, courts in
Delaware also routinely approve commitment fees for debtors to obtain exit
financing. See In re Doehler-Jarvis, Inc. et al., Case No. 97-953 (SLR) (Bankr.
D. Del. August 19, 1999); In re Crown Books Corporation, Case No. 98-1575 (RRM)
(Bankr. D. Del. July 26, 1999). The modifications requested do not violate the
requirements of Sections 1122 or 1123 of the Bankruptcy Code, or of any other
confirmation requirement in Chapter 11.
18. As is typical of restructurings of companies in Chapter
11, an exit financing facility is required in order to pay obligations on
confirmation of the Plan and to finance the Debtors' post-confirmation working
capital needs. The Standby Loan would stand as additional liquidity for
post-confirmation working capital needs.
19. The Standby Loan, like most provisions for exit financing,
requires the payment of certain fees upon the Debtors' acceptance of the
lender's commitment to fund the Standby Loan, in this case in the amount of
$400,000 (with $200,000 of this amount payable in advance in the event there is
a lag time between approval of the Motion and the closing on the Standby Loan)
(the "Commitment Fee"). Bay Harbour also seeks from the Debtors a deposit of
$100,000 (the "Expense Deposit") against actual costs and expenses incurred in
connection with the Standby Loan. The Debtors believe that the Commitment Fee
and the Expense Deposit are fair, reasonable and necessary under the
circumstances.
20. Pursuant to Section 364(e) of the Bankruptcy Code, the
Debtors request that the Court make a finding that the Standby Loan has been
extended in good faith. Bay Harbour has continued to negotiate in good faith and
at arm's length throughout the financing
11
<PAGE>
process, and this Court has previously found that Bay Harbour's extension of the
Bridge Loan Commitment was in good faith.
21. As the documents relating to the exit financing, including
the Standby Loan, have been substantially finalized, the Debtors request prompt
approval of the Standby Loan, in order to close on this and other financing
transactions contemplated by the Plan, at which time the Plan can become
effective and be consummated. The Debtors submit that their acceptance of the
Standby Loan and payment of the Commitment Fee and the Expense Deposit is in
their sound business judgment and in the best interests of the Debtors, their
Estates and Creditors.
22. As noted above, the Plan Implementation Documents
previously approved by this Court provided for refinancings of the Working
Capital Facility and the Bridge Loan, and for the Debtors to incur new debt on a
limited basis. In light of this, approval of the Standby Loan and related
changes to the Plan Implementation Documents is not inconsistent with the Plan
implementation arrangements previously approved by this Court on notice to all
interested parties, and does not materially adversely affect any constituency.
By ensuring greater liquidity and stability to the company, the company believes
the Standby Loan enhances the value of the New Secured PIK Notes. Moreover, the
Standby Loan is necessary in order to obtain new money from the New Money
Investors. Accordingly, the modifications sought herein are beneficial, not
adverse, to the PIK Noteholders and the General Unsecured Creditors.
NOTICE
------
23. The Debtors have provided notice of this Motion and the
relief requested herein to (i) Bay Harbour; (ii) the Working Capital Lenders;
(iii) United States Trust Company of New York, as Indenture Trustee for the New
Secured PIK Notes; (iv) Wilmington Trust
12
<PAGE>
Company, as Agent; (v) counsel for and members of the Creditors' Committee; (vi)
known beneficial holders of approximately two-thirds in principal amount of the
Subdebt Notes, including all of the Electing Class 5 holders; (vii) the Office
of the United States Trustee; (viii) the New Money Investors or their
representatives; (ix) the Securities and Exchange Commission; and (x) those
persons that have requested notices in accordance with Bankruptcy Rule 2002(a).
Due to the voluminous nature of the modified documents, they have not been
served along with this Motion. Any party wishing to review the Plan
Implementation Documents as modified may direct their requests to Rose Serrette
at Stroock & Stroock & Lavan, LLP, via e-mail: [email protected], by
telephone at (212) 806-5492, or by fax at (212) 806-6006, and copies of the
requested documents will be promptly provided by e-mail or as requested by the
party.
24. Except with respect to confirmation of the Plan and
previous motions relating to the Debtors' exit financing, no previous request
for the relief sought herein has been made to this or any other court.
25. Because this Motion does not present any novel issues of
law, the Debtors request a waiver from filing a memorandum of law in support of
the Motion.
13
<PAGE>
WHEREFORE, the Debtors respectfully request that the Court
enter an order granting the relief requested herein and such other and further
relief as is just and proper.
Dated: Wilmington, Delaware
April 29, 2000
STROOCK & STROOCK & LAVAN LLP
Robin E. Keller
180 Maiden Lane
New York, New York 10038
(212) 806-5400
-and-
YOUNG CONAWAY STARGATT & TAYLOR LLP
___________________________________________
James L. Patton, Jr. (No. 2202)
Pauline K. Morgan (No. 3650)
P.O. Box 391
Rodney Square North, 11th Floor
Wilmington, DE 19899
Telephone: (302) 571-6600
Co-counsel for the Debtors and
Debtors-in-Possession
14
<PAGE>
209715/12 DRAFT
Exhibit A
TERM LOAN
TO
REORGANIZED PLANET HOLLYWOOD INTERNATIONAL, INC.
TERM SHEET
THE PROPOSED TERMS AND CONDITIONS SET FORTH HEREIN ARE SUBJECT TO THE
TERMS OF THE COMMITMENT LETTER OF WHICH THIS EXHIBIT A IS A PART AND
DO NOT CONSTITUTE AN OFFER, AGREEMENT OR COMMITMENT OF ANY KIND.
(Capitalized terms that are not defined herein have the same meanings as
in the Disclosure Statement.)
ISSUER: Reorganized Planet Hollywood International, Inc.
("PHI")
GUARANTORS: All existing and future subsidiaries of PHI
(together with PHI, the "COMPANY")
AGENT Wilmington Trust Company, or as otherwise
determined by the lenders
PRINCIPAL AMOUNT: Up to $10 million
AVAILABILITY: Multiple borrowings (up to an aggregate of $10
million), each subject to the following
conditions, among others:
(1) the Revolving Credit Facility has been
fully drawn
(2) delivery of a certificate signed by the
Chief Financial Officer of the Company
providing a representation and warranty
that the Company does not intend to file
for bankruptcy and that no bankruptcy
proceedings have been commenced
(3) no default under any loan documents
(including Revolving Credit and PIK Loan
Documents) has occurred
(4) all representations and warranties remain
true and all closing conditions remain
satisfied
MATURITY: Second Anniversary of the Effective Date (subject
to mandatory prepayments below); PROVIDED, that
if no Default or Event of Default has occurred,
(x) upon payment of a $75,000 extension fee the
Company may extend the maturity date for 3
months, and (y) upon payment of an additional
$75,000 extension fee the Company may extend the
maturity date for an additional 2 months and 28
days, in each case if necessary to accommodate a
refinancing of the Revolving Credit Facility.
<PAGE>
INTEREST:
NOTE RATE: 14% per annum
DEFAULT RATE: Note Rate then in effect, plus 2% per annum
PAYMENTS: Monthly, in arrears, in cash
PRINCIPAL:
AMORTIZATION: None.
MANDATORY PREPAYMENTS: Subject to the prior repayment of
debt then due and payable under the Revolving
Credit Facility, and to the Conversion Option,
the Term Loan must be repaid from the net
proceeds of dispositions of Core Assets (as
defined in the PIK Indenture) and non-Core Assets
(such proceeds, together with distributions in
respect of the Membership Interest, "ASSET
DISPOSITION PROCEEDS"), as follows:
(1) Dispositions of Core Assets at any time,
and
(2) Dispositions of non-Core Assets (including
distributions in respect of the Membership
Interest) (x) after aggregate Asset
Dispositions Proceeds from non-Core Assets
exceed $7 million, or (y) while a Default
or Event of Default has occurred and is
continuing.
The Membership Interest shall be a non-Core
Asset.
REDUCTION OF COMMITMENTS: The maximum amount of the undrawn commitment
under the Term Loan shall be permanently reduced
by the amount of any Asset Disposition Proceeds
received by the Company (or any person on their
behalf) from time to time (x) in excess of an
aggregate amount of $7 million from dispositions
of non-Core Assets and (y) any amount from
dispositions of Core Assets.
In addition, at all times, the maximum amount
permitted to be drawn under the Revolving Credit
Facility from time to time (taking into account
all reserves and other limitations that reduce
such amount below the maximum amount of the full
commitment thereunder) shall be (x) reduced
(while any amount of the commitment and/or any
obligations under the Term Loan remain undrawn or
outstanding) by the amount of any Asset
Disposition Proceeds received by any person at
any time that obligations are outstanding under
the Term Loan and (y) reduced (permanently) at
the time of each Asset Sale by the amount of
interest actually paid by the Company to Bay
Harbour in respect to the Term Loan between the
date of such Asset Sale and the date of any
earlier such reduction.
-2-
<PAGE>
CONVERSION OPTION: At its option, until the Maturity Date, Bay
Harbour shall have the right to convert any
outstanding amount of the Term Loan into shares
of New Class A Common Stock, dollar for dollar,
at $4.28 per share (subject to adjustment). Prior
to making any repayment of the Term Loan, the
Company must give Bay Harbour 45 days notice to
decide whether to exercise the Conversion Option
for that portion of the Term Loan.
COLLATERAL: The Term Loan shall be secured by liens on the
same of the Company's current and future assets
as secure the Revolving Credit Facility in the
existing drafts of the Bridge Loan Documents.
PRIORITY: The liens on the collateral shall be second
priority liens, subject only to the liens
securing the Revolving Credit Facility and
certain other permitted liens. The Company shall
be permitted to grant third-priority liens solely
to secure the New Secured PIK Notes.
REPRESENTATIONS AND Normal and customary for secured indebtedness of
COVENANTS: this nature, including without limitation all
applicable representations, warranties and
covenants set forth in the existing drafts of the
Bridge Loan Documents, Revolving Credit Facility
Loan Documents and PIK Loan Documents, modified
as necessary or desirable given the transactions
contemplated hereby.
EVENTS OF DEFAULT: Normal and customary for secured indebtedness of
this nature, including without limitation all
applicable defaults set forth in the existing
drafts of the Bridge Loan Documents, Revolving
Credit Facility Loan Documents and PIK Loan
Documents, modified as necessary or desirable
given the transactions contemplated hereby.
CLOSING CONDITIONS: All of the conditions to the occurrence of the
Effective Date of the Plan, as contemplated by
Section 10.2 of the Plan, as amended by the
Confirmation Order, shall have occurred, and all
agreements, instruments and consents necessary or
desirable to evidence and implement the
transactions contemplated hereby, shall have been
executed and delivered, including without
limitation, the conditions set forth in the
existing drafts of the Bridge Loan Documents,
Revolving Credit Facility Loan Documents and PIK
Loan Documents, modified as necessary or
desirable given the transactions contemplated
hereby.
COMMITMENT FEES:
CASH: $400,000 ($200,000 thereof payable upon the
execution of the Commitment Letter)
EQUITY: Warrants to purchase 200,000 shares of New Class
A Common Stock (on a fully diluted basis as of
the Effective Date) at an exercise price of $4.28
per share (subject to adjustment). The term of
the warrants will be 29 months after the
Effective Date.
All fees will be earned in full and are
non-refundable on the date hereof, but (except
for the deposit in respect thereof), shall not be
payable or deliverable
-3-
<PAGE>
until the earlier of the Effective Date or the
termination of the Commitment Letter (or other
determination of the Company not to complete the
financing).
EXPENSES: The Company shall pay all fees and expenses of
Bay Harbour and the Agent, including the Agent's
agency fee and all reasonable legal and
accounting fees and expenses, title and lien
searches and the filing and recording of UCCs and
other liens and security interests, recording
fees and taxes, if any, and any other reasonable
expenses in connection with the structuring,
documenting, closing, monitoring or enforcing the
Term Loan, whether or not the closing shall
occur.
The Company will pay a deposit against expenses
of $100,000 upon execution of the Commitment
Letter.
PRIOR EXPENSES: Upon execution of the Commitment Letter, and
subject to final negotiation between the Company
and Bay Harbour, the Company will also pay all
fees and expenses due under the Commitment Letter
for the Bridge Loan.
PURCHASE OF It shall also be a condition to the Term Loan
REVOLVING CREDIT that Bay Harbour is granted an option, in form
FACILITY: and substance reasonably satisfactory to Bay
Harbour, to acquire the Revolving Credit Facility
at any time for an amount equal to the amount of
principal then outstanding (including amounts
then drawn on open letters of credit), plus
accrued interest thereon.
GOVERNING LAW: New York
DOCUMENTS AND ANCILLARY Ancillary documents and matters are expected to
MATTERS: include, but shall not be limited to, the
following substantially in the form of the drafts
of the existing Bridge Loan documents, modified
as necessary or desirable to implement the
transactions contemplated hereby:
(1) Note Purchase Agreement (including
Convertible Notes)
(2) Guaranties
(3) Security Agreements
(4) Pledge Agreements
(5) Warrants
(6) Trademark (and other intellectual
property) Security Agreements
(7) Subordination and Intercreditor Agreement
(a) regarding senior liens of Revolving
Credit Facility
(b) regarding junior liens of New
Secured PIK Notes
(8) Registration Rights Agreement with
respect to the New Class A Common Stock
issued under the prior commitment letter
and in connection with the Warrants and
Conversion Option
(9) UCC financing statements
(10) Employment Agreement of Robert Earl
(1) UCC lien search
(2) Trademark lien search
(3) Casualty and liability insurance (naming
Bay Harbour and Holders as additional
insureds)
(4) Legal opinions
-4-
<PAGE>
(5) Corporate authorizations (good standing
certificates, resolutions, secretary's
certificates)
-5-
<PAGE>
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE
IN RE: )
) CHAPTER 11
PLANET HOLLYWOOD )
INTERNATIONAL, INC., ET AL. ) CASE NO. 99-3612 (JJF)
)
DEBTORS. ) (JOINTLY ADMINISTERED)
ORDER APPROVING (A) MODIFICATION OF PLAN
IMPLEMENTATION ORDER OF THIS COURT; (B) A $10 MILLION
STANDBY TERM LOAN AGREEMENT; AND (C) IN CONNECTION
THEREWITH, GRANTING THE DEBTORS AUTHORITY TO PAY FEES REQUIRED
IN CONNECTION WITH THE IMPLEMENTATION OF THE STANDBY LOAN
---------------------------------------------------------
Planet Hollywood International, Inc. ("PHI") and certain of
its affiliates and subsidiaries that are also debtors and debtors-in-possession
before this Court (collectively with PHI, the "Debtors"), having filed a motion
(the "Motion") pursuant to 11 U.S.C. ss.ss.105, 363, and 364 seeking an order
(a) approving modifications to this Court's order approving Plan Implementation
Documentation (the "Plan Documents Order"); (b) approving a standby term loan of
up to $10 million in principal amount (the "Standby Loan"), extended by Bay
Harbour and/or its affiliates or managed accounts to the Debtors; and (c) in
connection therewith, granting the Debtors authority to pay commitment fees
required in connection with the implementation of the Standby Loan, as well as
reasonable legal and other expenses incurred by Bay Harbour or its agents in
connection with the Standby Loan; and notice having been given to (i) Bay
Harbour; (ii) the Working Capital Lenders; (iii) United States Trust Company of
New York, as Indenture Trustee for the New Secured PIK Notes; (iv) Wilmington
Trust Company, as Agent; (v) counsel for and members of the Creditors'
Committee; (vi) known beneficial holders of approximately
<PAGE>
two-thirds in principal amount of the Subdebt Notes, including all of the
Electing Holders of Class 5 Claims; (vii) the Office of the United States
Trustee; (viii) the New Money Investors or their representatives; (ix) the
Securities and Exchange Commission; and (x) those persons that have requested
notices in accordance with Bankruptcy Rule 2002(a); and no objections having
been received to the relief sought in the Motion; and sufficient cause appearing
therefor and after due deliberation, it is hereby
ORDERED, that capitalized terms used but not otherwise defined
herein shall have the meanings ascribed to them in the Motion; and it is further
ORDERED, that the Motion is hereby granted; and it is further
ORDERED, that the Standby Loan is approved, and the Debtors
are authorized to perform such acts and take such steps as may be necessary to
effectuate the terms thereof, including authorizing the Debtors to enter into a
commitment letter and effectuating further modifications to the Plan
Implementation Documents as may be required to implement the Standby Loan; and
it is further
ORDERED, that in connection with the Standby Loan, Bay Harbour
has extended credit in good faith, and is entitled to the protections of 11
U.S.C. ss.364(e); and it is further
ORDERED, that the Debtors are hereby authorized to pay to Bay
Harbour the Commitment Fee and the Expense Deposit, as well as all other amounts
owed under the Commitment Letter for the Bridge Loan; and it is further
2
<PAGE>
ORDERED, that the Plan Documents Order is hereby modified to
the extent necessary to permit the transactions approved by this Order, and the
parties are authorized to prepare, execute and deliver all documents necessary
and appropriate to implement the agreements contemplated by the Standby Loan
proposal.
Dated: Wilmington, Delaware
May__, 2000
------------------------------
Joseph J. Farnan, Jr.
Chief United States District Judge
3
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
PLANET HOLLYWOOD INTERNATIONAL, INC.
The undersigned, being the President and Chief Executive
Officer of Planet Hollywood International, Inc., a Delaware corporation (the
"Corporation"), originally incorporated in the State of Delaware on December 14,
1994, for the purpose of amending and restating the Certificate of
Incorporation, hereby certifies that the following amended and restated
certificate of incorporation has been duly adopted in accordance with the
provisions of Sections 242, 245 and 303 of the General Corporation Law of the
State of Delaware:
ARTICLE I
Name
The name of the Corporation is PLANET HOLLYWOOD INTERNATIONAL,
INC.
ARTICLE II
Registered Office and Agent
The street address of the registered office of the Corporation
in the State of Delaware is 1013 Centre Road, in the City of Wilmington, County
of New Castle, Delaware 19805.
The name of the registered agent of the Corporation at that
address is Corporation Service Company.
ARTICLE III
Mailing Address
The mailing address of the Corporation is 8669 Commodity
Circle, Orlando, Florida 32819.
ARTICLE IV
Duration
This Corporation shall exist perpetually.
<PAGE>
ARTICLE V
Purpose
The purpose or purposes of the Corporation are:
(1) To conduct any lawful business, to exercise any lawful
purpose and power, and to engage in any lawful act or activity for which
corporations may be organized under the General Corporation Law of Delaware; and
(2) In general, to possess and exercise all the powers and
privileges granted by the General Corporation Law of Delaware or any other law
of Delaware or by this Amended and Restated Certificate of Incorporation
together with any power incidental thereto, so far as such powers and privileges
are necessary or convenient to the conduct, promotion or attainment of the
business or purposes of the Corporation.
ARTICLE VI
Capital Stock
SECTION 1. The maximum number of shares of capital stock which
this Corporation shall have authority to issue is Two Hundred Twenty-Five
Million (225,000,000), consisting of One Hundred Million (100,000,000) shares of
Class A Common Stock, $.01 par value, Twenty-Five Million (25,000,000) shares of
Class B Common Stock, $.01 par value, and One Hundred Million (100,000,000)
shares of Preferred Stock, $.01 par value. The Class A Common Stock and the
Class B Common Stock are hereinafter referred to collectively as the "Common
Stock".
Notwithstanding anything to the contrary set forth in this
Article VI, the Corporation shall not issue any non-voting equity securities;
provided, however, that this provision, included in this Amended and Restated
Certificate of Incorporation in compliance with Section 1123(a)(6) of the United
States Bankruptcy Code of 1978, as amended (the "Bankruptcy Code"), shall have
no force and effect beyond that required by Section 1123(a)(6) of the Bankruptcy
Code and shall be effective only for so long as Section 1123(a)(6) of the
Bankruptcy Code is in effect and applicable to the Corporation.
Upon the filing in the Office of the Secretary of State of the
State of Delaware of this Amended and Restated Certificate of Incorporation, the
shares of Class A Common Stock, par value $.01 per share, and the shares of
Class B Common Stock, par value $.01 per share (collectively, the "Old Common
Stock"), of the Corporation issued and outstanding immediately prior to the time
when this Amended and Restated Certificate of Incorporation becomes effective
are hereby automatically canceled and extinguished. Upon the filing in the
Office of the Secretary of State of the State of Delaware of this Amended and
Restated Certificate of Incorporation, each certificate which prior to such
filing evidenced Old Common Stock shall be deemed canceled and extinguished.
2
<PAGE>
The preferences, qualifications, limitations, restrictions and
the special or relative rights in respect of the shares of each class are as
follows:
SECTION 2. Preferred Stock. The Preferred Stock may be issued
from time to time in one or more series. All shares of Preferred Stock shall be
of equal rank and shall be identical, except in respect of the matters that may
be fixed and determined by the Board of Directors as hereinafter provided, and
each share of each series shall be identical with all other shares of such
series, except as to the date from which dividends are cumulative. The Board of
Directors hereby is authorized to cause such shares to be issued in one or more
classes or series and with respect to each such class or series to fix and
determine the designation, powers, preferences and rights of the shares of each
such series and the qualifications, limitations or restrictions thereof.
The authority of the Board of Directors with respect to each
series shall include, but not be limited to, determination of the following:
(1) the number of shares constituting a series, the
distinctive designation of a series and the stated value of a series, if
different from the par value;
(2) whether the shares of a series are entitled to any fixed
or determinable dividends, the dividend rate (if any) on such shares, whether
the dividends are cumulative and the relative rights of priority of dividends on
shares of that series;
(3) whether a series has voting rights in addition to the
voting rights provided by law and the terms and conditions of such voting
rights;
(4) whether a series will have or receive conversion or
exchange privileges and the terms and conditions of such conversion or exchange
privileges;
(5) whether the shares of a series are redeemable and the
terms and conditions of such redemption, including the manner of selecting
shares for redemption if less than all shares are to be redeemed, the date or
dates on or after which the shares in the series will be redeemable and the
amount payable in case of redemption;
(6) whether a series will have a sinking fund for the
redemption or purchase of the shares in the series and the terms and the amount
of such sinking fund;
(7) the right of a series to the benefit of conditions and
restrictions on the creation of indebtedness of the Corporation or any
subsidiary, on the issuance of any additional capital stock (including
additional shares of such series or any other series) on the payment of
dividends or the making of other distributions on any outstanding stock of the
Corporation and the purchase, redemption or other acquisition by the
Corporation, or any subsidiary, of any outstanding stock of the Corporation;
3
<PAGE>
(8) the rights of a series in the event of voluntary or
involuntary liquidation, dissolution or winding up of the Corporation and the
relative rights of priority of payment of a series; and
(9) any other relative, participating, optional or other
special rights, qualifications, limitations or restrictions of such series.
Dividends on outstanding shares of Preferred Stock shall be
paid or set apart for payment before any dividends shall be paid or declared or
set apart for payment on the Common Stock with respect to the same dividend
period.
If upon any voluntary or involuntary liquidation, dissolution
or winding up of the Corporation the assets available for distribution to
holders of shares of Preferred Stock of all series shall be insufficient to pay
such holders the full preferential amount to which they are entitled, then such
assets shall be distributed ratably among the shares of all series in accordance
with the respective preferential amounts (including unpaid cumulative dividends,
if any, payable with respect thereto).
SECTION 3. Common Stock - General Provisions. The Common Stock
shall be subject to the express terms of the Preferred Stock and any series
thereof. Except as otherwise provided in this Amended and Restated Certificate
of Incorporation or as otherwise required by the Delaware General Corporation
Law, all shares of Class A Common Stock and Class B Common Stock shall be
identical and shall entitle the holders thereof to the same powers, preferences
and rights, and shall be subject to the same qualifications, limitations and
restrictions thereof.
Shares of Common Stock authorized hereby shall not be subject
to preemptive rights. The holders of shares of Common Stock now or hereafter
outstanding shall have no preemptive right to purchase or have offered to them
for purchase any of such authorized but unissued shares, or any shares of
Preferred Stock, Common Stock or other equity securities issued or to be issued
by the Corporation.
Subject to the preferential and other dividend rights
applicable to Preferred Stock, the holders of shares of Common Stock shall be
entitled to receive such dividends (payable in cash, stock or otherwise) as may
be declared on the Common Stock by the Board of Directors at any time or from
time to time out of any funds legally available therefor.
In the event of any voluntary or involuntary liquidation,
distribution or winding up of the Corporation, after distribution in full of the
preferential or other amounts to be distributed to the holders of shares of
Preferred Stock, the holders of shares of Common Stock shall be entitled to
receive all of the remaining assets of the Corporation available for
distribution to its stockholders, ratably in proportion to the number of shares
of Common Stock held by them.
4
<PAGE>
SECTION 4. Common Stock - Other Provisions.
(a) Voting Rights. Except as prescribed in this Amended and
Restated Certificate of Incorporation or as otherwise required by applicable
law, holders of Class A Common Stock and Class B Common Stock shall vote
together as a single class on all matters submitted to the stockholders for a
vote. With respect to all matters upon which stockholders are entitled to vote,
the holders of outstanding shares of Common Stock shall be entitled to one vote
in person or by proxy for each share of Common Stock standing in the name of
such stockholders on the record of stockholders.
(i) Except as otherwise provided in this Section 4, the
holders of Class B Common Stock shall be entitled, voting separately as a single
class by a plurality of the votes cast, to the exclusion of all other classes of
the Corporation's capital stock, to elect all members of the Corporation's Board
of Directors (the "Class B Directors"). Any one or more of the Class B Directors
may be removed with or without cause only by a vote of the holders of Class B
Common Stock, voting separately as a single class and holding not less than a
majority of the issued and outstanding shares of Class B Common Stock.
(ii) Notwithstanding the provisions of subparagraph (i) above,
after the payment in full of all of the Corporation's obligations under the
Deferrable Interest Notes, the holders of Class A Common Stock shall be
entitled, voting separately as a single class by a plurality of the votes cast,
to the exclusion of all other classes of the Corporation's capital stock, to
elect two (2) directors to serve on the Corporation's Board of Directors (the
"Class A Directors"). Any one or more of the Class A Directors may be removed
with or without cause only by a vote of the holders of Class A Common Stock,
voting separately as a single class and holding not less than a majority of the
issued and outstanding shares of Class A Common Stock.
(iii) At such time when there shall be no shares of Class B
Common Stock issued and outstanding, the holders of Class A Common Stock shall
be entitled to elect all members of the Corporation's Board of Directors.
Directors so elected by the holders of Class A Common Stock may be removed only
with cause by a vote of the holders of not less than a majority of the issued
and outstanding shares of Class A Common Stock.
(iv) In addition to any other vote that may be required by the
Delaware General Corporation Law or this Amended and Restated Certificate of
Incorporation, the vote or consent of the holders of any class of Common Stock
voting separately as a single class shall be required to amend or restate this
Amended and Restated Certificate of Incorporation in a manner that would alter
or change the powers, preferences or special rights of such class of Common
Stock, so as to affect them adversely.
(b) Dividends and Distributions. Except as otherwise provided
in this Amended and Restated Certificate of Incorporation, holders of Common
Stock shall be entitled to such dividends and other distributions in cash, stock
or property of the Corporation as may be declared thereon by the Board of
Directors from time to time out of assets or funds of the
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Corporation legally available therefor; provided, however, that in no event may
the rate of any dividend payable on outstanding shares of any class of Common
Stock be greater than the dividend rate payable on outstanding shares of the
other class of Common Stock. All dividends and distributions on the Class A
Common Stock payable in stock of the Corporation shall be made in shares of
Class A Common Stock, and all dividends and distributions on the Class B Common
Stock payable in stock of the Corporation shall be made at the same dividend
rate per share in shares of Class B Common Stock. In no event will shares of any
class of Common Stock be split, divided or combined unless the outstanding
shares of the other class of Common Stock shall be proportionately split,
divided or combined.
(c) Options, Rights or Warrants. The Corporation may make
offerings of options, rights or warrants to subscribe for shares of either class
of capital stock to all holders of one class of Common Stock if an identical
offering is made simultaneously to all the holders of the other class. All such
offerings of options, rights or warrants shall offer the respective holders of
Class A Common Stock and Class B Common Stock the right to subscribe at the same
rate per share.
SECTION 5. Conversion of Class B Common Stock.
(a) Automatic Conversion.
(i) Upon the transfer of shares of Class B Common Stock (other
than a transfer to a New Money Investor or an affiliate of a New Money
Investor), such shares of Class B Common Stock shall automatically convert into
an equal number of shares of Class A Common Stock.
(ii) In the event that all issued and outstanding shares of
Class B Common Stock constitute 10% or less of all issued and outstanding shares
of Common Stock, all issued and outstanding shares of Class B Common Stock shall
automatically convert into an equal number of shares of Class A Common Stock.
(iii) Upon the occurrence of any event set forth in clauses
(i) and (ii) above (each an "Automatic Conversion"), the conversion of the Class
B Common Stock affected thereby shall be effective without any further action on
the part of the Corporation or the holder or holders of Class B Common Stock.
Stock certificates formerly representing shares of Class B Common Stock held by
(A) the transferee of Class B Common Stock in the case of clause (i) above, or
(B) the record holders of then outstanding shares of Class B Common Stock in the
case of clause (ii) above, shall thereupon and thereafter be deemed to represent
a number of shares of Class A Common Stock equal to the number of shares of
Class B Common Stock represented by such certificates. Each holder of shares of
Class B Common Stock shall to deliver to the Corporation or any transfer agent
for shares of Class A Common Stock the certificates representing shares of Class
B Common Stock subject to Automatic Conversion, but the failure to deliver such
certificates shall not affect the validity of such Automatic Conversion. As
promptly as practicable after such surrender, the Corporation or its transfer
agent will deliver to, or upon the written order of, such holder, a certificate
or certificates representing the number of shares of Class A Common Stock
issuable upon such Automatic Conversion. The Board Directors of the
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Corporation shall have all power and authority necessary or advisable to
implement the provisions of this Section.
(b) Voluntary Conversion. All shares of Class B Common Stock
shall be convertible, at the option of the record holders of such shares, into
an equal number of validly issued, fully paid and nonassessable shares of Class
A Common Stock at any time after payment in full of the Deferrable Interest
Notes; provided that such optional conversion must include all then outstanding
shares of Class B Common Stock.
(c) Voluntary Conversion Procedure. At the time of the
voluntary conversion, if any, the record holders of the Class B Common Stock
shall deliver to the principal office of the Corporation or any transfer agent
for shares of the Class A Common Stock (i) the certificate or certificates
representing in the aggregate all shares of Class B Common Stock, duly endorsed
in blank or accompanied by proper instruments of transfer and (ii) written
notice to the Corporation stating that the record holders elect to convert all
outstanding shares of Class B Common Stock and stating the name or names (with
addresses) and denominations in which the certificate or certificates
representing the shares of Class A Common Stock issuable upon such conversion
are to be issued and including instructions for the delivery thereof. Conversion
shall be deemed to have been effected at the time when delivery is made to the
Corporation or its transfer agent of such written notice and the certificate or
certificates representing all outstanding shares of Class B Common Stock, and as
of such time each person named in such written notice as the person to whom a
certificate representing shares of Class A Common Stock is to be issued shall be
deemed to be the holder of record of the number of shares of Class A Common
Stock to be evidenced by that certificate. Upon such delivery, the Corporation
or its transfer agent shall promptly issue and deliver at such stated address to
such record holder of shares of Class A Common Stock a certificate or
certificates representing the number of shares of Class A Common Stock to which
such record holder is entitled by reason of such conversion, and shall cause
such shares of Class A Common Stock to be registered in the name of such record
holder.
(d) Reclassifications. In the event of a reclassification or
other similar transaction as a result of which the shares of Class A Common
Stock are converted into another security, then the holders of Class B Common
Stock shall be entitled to receive upon conversion the amount of such security
that such holders would have received if such conversion had occurred
immediately prior to the record date of such reclassification or other similar
transaction.
(e) Retired Shares. Shares of Class B Common Stock that are
converted into shares of Class A Common Stock as provided herein shall be
canceled and retired by the Corporation, such shares shall not be reissued and
the number of shares of Class B Common Stock which the Corporation shall have
authority to issue shall be decreased by the number of shares of Class B Common
Stock so converted. The Board of Directors shall take such steps as are required
to so retire such shares.
(f) Reservation. The Corporation shall at all times reserve
and keep available, out of its authorized and unissued shares of Class A Common
Stock, for the purposes of effecting conversions, such number of duly authorized
shares of Class A Common Stock as shall from time
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<PAGE>
to time be sufficient to effect the conversion of all outstanding shares of
Class B Common Stock; provided, however, that nothing contained herein shall be
construed to preclude the Corporation from satisfying its obligations in respect
of the conversion of the outstanding shares of Class B Common Stock by delivery
of purchased shares of Class A Common Stock which are held in treasury of the
Corporation. All the shares of Class A Common Stock so issuable shall, when so
issued, be duly and validly issued, fully paid and nonassessable, and free from
liens and charges with respect to the issue. The Corporation shall take all
actions as may be necessary to ensure that all such shares of Class A Common
Stock may be so issued without violation of any applicable law or regulation, or
of any requirements of any national securities exchange upon which the shares of
Class A Common Stock are or may be listed, or of any inter-dealer quotation
system of a registered national securities association upon which the shares of
Class A Common Stock are or may be listed.
(g) Taxes. The issuance of a certificate for shares of Class A
Common Stock upon conversion of shares of Class B Common Stock shall be made
without charge for any stamp or other similar tax in respect of such issuance.
However, if any such certificate is to be issued in a name other than that of
the holder of the shares of Class B Common Stock converted, the person or
persons requesting the issuance thereof shall pay to the Corporation the amount
of any tax which may be payable in respect of any transfer involved in such
issuance or shall establish to the satisfaction of the Corporation that such tax
has been paid or is not required to be paid.
ARTICLE VII
Board of Directors
SECTION 1. The business and affairs of the Corporation shall
be managed by or under the direction of the Board of Directors. In addition to
the powers and authorities herein or by statute expressly conferred upon it, the
Board of Directors may exercise all such powers and do all such acts and things
as may be exercised or done by the Corporation, subject, nevertheless, to the
provisions of the laws of the State of Delaware, or this Amended and Restated
Certificate of Incorporation and the By-laws of the Corporation.
SECTION 2. Number and Terms. The number of directors which
shall constitute the whole Board of Directors shall be determined in the manner
provided in the Bylaws of the Corporation. The Board of Directors shall be
divided into three classes, designated Class I, Class II and Class III, which
shall be as nearly equal in number as possible. The initial directors of Class I
shall hold office for a term expiring at the next succeeding annual meeting; the
initial directors of Class II shall be elected to hold office for a term
expiring at the second succeeding annual meeting and the initial directors of
Class III shall be elected to hold office for a term expiring at the third
succeeding annual meeting. Beginning with the next succeeding annual meeting,
directors shall be chosen for a term of three years to succeed those whose terms
then expire and shall hold office until the third following annual meeting of
stockholders and until election of their respective successors.
SECTION 3. Vacancies. Any vacancy on the Board of Directors,
whether arising through death, resignation or removal of a director or through
an increase in the number of
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directors of any class, shall be filled in the following manner: (i) vacancies
in Class A directorships shall be filled by the holders of the issued and
outstanding shares of Class A Common Stock, voting separately as a single class;
and (ii) vacancies in Class B directorships shall be filled by the holders of
the issued and outstanding shares of Class B Common Stock, voting separately as
a single class. The term of office of any director elected to fill such a
vacancy shall expire at the expiration of the term of office of directors of the
class in which the vacancy occurred.
SECTION 4. Other Provisions. Notwithstanding any other
provision of this Article VII, and except as otherwise required by law, whenever
the holders of any one or more series of Preferred Stock or other securities of
the Corporation shall have the right, voting separately as a class, to elect one
or more directors of the Corporation, the term of office, the filling of
vacancies and other features of such directorships shall be governed by the
terms of this Amended and Restated Certificate of Incorporation applicable
thereto, and unless the terms of this Amended and Restated Certificate of
Incorporation expressly provide otherwise, such directorship shall be in
addition to the number of directors provided in the Bylaws and such directors
shall not be classified. Elections of directors need not be by written ballot
unless the Bylaws of the Corporation shall so provide.
ARTICLE VIII
Bylaws
The power to adopt, alter, amend or repeal the Bylaws of the
Corporation shall be vested in the Board of Directors. The stockholders of the
Corporation may adopt, amend or repeal the Bylaws of the Corporation only by the
affirmative vote of holders of at least 66 2/3% of the combined voting power of
the then outstanding shares of stock of all classes and series of the
Corporation entitled to vote generally on matters requiring the approval of
stockholders (the "Voting Stock").
ARTICLE IX
Stockholder Meetings
Any action required or permitted to be taken by the
stockholders of the Corporation must be taken at a duly called and noticed
meeting of stockholders and may not be taken by consent in writing, unless such
action requiring or permitting stockholder approval is approved by a majority of
the directors then in office. An action required or permitted to be taken by the
stockholders which has been approved by a majority of the directors may be taken
by consent in writing if the consent is signed by the record holders of no less
than the Voting Stock that would otherwise be required for approval of such
action.
ARTICLE X
Indemnification
SECTION 1. The personal liability of the directors of the
Corporation is hereby eliminated to the fullest extent permitted by the
provisions of paragraph (7) of subsection (b) of Section 102 of the General
Corporation Law of the State of Delaware, as the same may be
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<PAGE>
amended and supplemented (but any such amendment shall not be deemed to increase
the liability of any directors of the Corporation for past acts or omissions of
any such person insofar as such amendment decreases the extent of liability
protection that said law permitted the Corporation to provide prior to such
amendment).
SECTION 2. The Corporation shall, to the fullest extent
permitted by the provisions of Section 145 of the General Corporation Law of the
State of Delaware, as the same may be amended and supplemented (but any such
amendment shall not be deemed to limit or prohibit the rights of indemnification
hereunder for past acts or omissions of any such person insofar as such
amendment limits or prohibits the indemnification rights that said law permitted
the Corporation to provide prior to such amendment), indemnify any and all
persons whom it shall have the power to indemnify under said section, and the
indemnification provided for herein shall not be deemed exclusive of any other
rights to which those indemnified may be entitled under any Bylaw, agreement,
vote of stockholders or disinterested directors or otherwise, both as to action
in such person's official capacity and as to action in another capacity while
holding such office, and shall continue as to a person who has ceased to be a
director, officer, employee, or agent and shall inure to the benefit of the
heirs, executors, and administrators of such person.
SECTION 3. Any repeal or modification of this Article X shall
be prospective only and shall not adversely affect any right or protection of,
or any limitation of the liability of, a director or officer of the Corporation,
or any other person covered under this Article X, existing at, or arising out of
facts or incidents occurring prior to, the effective date of such repeal or
modification.
ARTICLE XI
Amendments
The provisions set forth in Articles VI, VII, VIII, IX, X and
in this Article XI may not be repealed, rescinded, altered or amended, and no
other provision may be adopted which is inconsistent therewith or impairs in any
way the operation or effect thereof, except by the affirmative vote of holders
of not less than 66 2/3% of the Voting Stock.
Consistent with the preceding sentence, the Corporation
reserves the right to adopt, repeal, rescind, alter or amend in any respect any
provision contained in this Amended and Restated Certificate of Incorporation as
prescribed by applicable law.
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ARTICLE XI
Definitions
The following terms used herein shall the meanings specified
below.
"Deferrable Interest Notes" shall mean the 10% Secured Deferrable
Interest Notes due 2005 issued by the Corporation pursuant to the Plan under the
Deferrable Interest Notes Indenture.
"Deferrable Interest Notes Indenture" means the Indenture among the
Corporation, as Issuer, the Subsidiary Guarantors named therein, and United
States Trust Company of New York, as trustee, which Indenture relates to the
Deferrable Interest Notes.
"New Class B Common Stock" means the 7,000,000 shares of Class B Common
Stock to be issued to the New Money Investors under the Plan.
"New Money Investors" means certain persons or entities that have
agreed to purchase 7,000,000 shares of New Class B Common Stock for an aggregate
purchase price of $30 million in accordance with the terms of the Plan.
"Plan" means the Joint Plan of Reorganization proposed by the
Corporation and certain of its subsidiaries, as it may be amended or modified
from time to time, and as confirmed by Order dated January 20, 2000 by the
United States Bankruptcy Court for the District of Delaware.
IN WITNESS WHEREOF, the Corporation has caused this Amended
and Restated Certificate of Incorporation to be executed in its corporate name
this ____ day of March, 2000.
PLANET HOLLYWOOD INTERNATIONAL, INC., a Delaware
corporation
By: _________________________
Name: Robert Earl
Title: President and Chief Executive Officer
11
FOURTH AMENDED AND RESTATED BY-LAWS
OF
PLANET HOLLYWOOD INTERNATIONAL, INC.
ARTICLE I
MEETINGS OF SHAREHOLDERS
SECTION 1. ANNUAL MEETING. The annual meeting of the shareholders of
this Corporation for the election of directors and for the transaction of any
proper business shall be held at the time and place designated by the Board of
Directors (the "Board") of the Corporation.
SECTION 2. SPECIAL MEETINGS. Special meetings of the shareholders shall
be held when called by the Chief Executive Officer or by a majority of the Board
of Directors. Special meetings may not be called by any other person. Written
notice of a special meeting pursuant to Section 4 herein shall be given to all
shareholders entitled to vote at such meeting not less than 10 nor more than 60
days before the date of the meeting. Each such special meeting shall be held at
such date and time as requested by the person or persons calling the meeting
within the limits fixed by law. Business transacted at any special meeting of
shareholders shall be limited to the purposes stated in the notice.
SECTION 3. PLACE. Meetings of shareholders may be held in the State of
Delaware or outside the State of Delaware.
SECTION 4. NOTICE. Written notice stating the place, date and time of
the meeting and, in the case of a special meeting, the purpose or purposes for
which the meeting is called, shall be delivered not less than 10 nor more than
60 days before the meeting, either personally or by first class mail, by or at
the direction of the Chief Executive Officer, the Secretary, or the officer or
persons calling the meeting to each shareholder of record entitled to vote at
such meeting. If mailed, such notice shall be effective when deposited in the
United States mail addressed to the shareholder at his address as it appears on
the Corporation's current record of shareholders.
SECTION 5. NOTICE OF ADJOURNED MEETINGS. When a meeting is adjourned to
another time or place, it shall not be necessary to give any notice of the
adjourned meeting if the time and place to which the meeting is adjourned are
announced at the meeting at which the adjournment is taken, and at the adjourned
meeting any business may be transacted that might have been transacted on the
original date of the meeting. If, however, the adjournment is for more than 30
days, or if, after the adjournment, the Board of Directors fixes a new record
date for the adjourned meeting, a notice of the adjourned meeting shall be given
as provided in Section 4 herein to each shareholder of record on the new record
date entitled to vote at such meeting.
SECTION 6. NOTICE OF SHAREHOLDER BUSINESS AND NOMINATIONS. Except as
may otherwise be provided herein, or in the Amended and Restated Certificate of
Incorporation in connection with rights to elect directors under specified
circumstances which may be granted to the holders of any series of Preferred
Stock, nominations for the election of
<PAGE>
directors and the proposal of business to be considered by the shareholders may
be made by the Board or any shareholder of record entitled to vote at the
meeting and who complies with the notice procedures set forth in this by-law.
For nominations or other business to be properly brought before an
annual meeting by a shareholder, the shareholder must have given timely notice
thereof in writing to the Secretary of the Corporation and such other business
must otherwise be a proper matter for shareholder action. Except as otherwise
provided by applicable law, to be timely, a shareholder's notice must be
delivered to the Secretary of the Corporation at the Corporation's principal
executive offices not later than the close of business on the 60th day, nor
earlier than the close of business on the 90th day, prior to the first
anniversary of the preceding year's annual meeting; provided, however, that in
the event that the date of the annual meeting is more than 30 days before or 60
days after such anniversary date, notice by the shareholder must be so delivered
not earlier than the close of business on the later of the 60th day prior to
such meeting or the 10th day following the day on which public announcement of
the date of such meeting is made by the Corporation. In no event shall public
announcement of an adjournment of an annual meeting commence a new time period
for giving of a shareholder's notice as described above.
Such shareholder's notice shall set forth (a) as to each person whom
the shareholder proposes to nominate for election to the Board of Directors, all
information relating to such person required to be disclosed in solicitation of
proxies for election of directors pursuant to Regulation 14A under the
Securities Exchange Act of 1934 (including such person's written consent to
being named in the proxy statements as a nominee and to serving as a director if
elected); (b) as to any other business that the shareholder proposes to bring
before the meeting, a brief description of the business desired to be brought
before the meeting, the reasons for conducting such business at the meeting and
any material interest in such business of such shareholder and the beneficial
owner, if any, on whose behalf the nomination or proposal is made; and (c) as to
the shareholder giving notice and the beneficial owner, if any, on whose behalf
the nomination or proposal is made (i) the name and address of such shareholder,
as they appear on the Corporation's books, and of such beneficial owner and (ii)
the class and number of shares of the Corporation which are owned beneficially
and of record by such shareholder and beneficial owner. Notice of nominations
which are proposed by the Board shall be given by the Chairman, the Chief
Executive Officer, the President or the Secretary of the Corporation on behalf
of the Board.
The chairperson of the meeting may, if the facts warrant, determine and
declare to the meeting that a nomination was not made in accordance with the
foregoing procedure, and if he or she should so determine, he or she shall so
declare to the meeting and the defective nomination shall be disregarded.
SECTION 7. FIXING RECORD DATE. For the purpose of determining
shareholders entitled to notice of or to vote at any meeting of shareholders or
any adjournment thereof, or entitled to receive payment of any distribution, or
in order to make a determination of shareholders for any other purpose, the
Board of Directors may fix in advance a date as the record date for any
determination of shareholders, such date in any case to be not more than 60
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days and, in case of a meeting of shareholders, not less than 10 days prior to
the date on which the particular action requiring such determination of
shareholders is to be taken.
If the stock transfer books are not closed and no record date is fixed
for the determination of shareholders entitled to notice or to vote at an annual
or special meeting of shareholders, or shareholders entitled to receive payment
of a distribution, the date on which notice of the meeting is mailed or the date
on which the resolution of the Board of Directors declaring such distribution is
adopted, as the case may be, shall be the record date for such determination of
shareholders.
When a determination of shareholders entitled to vote at any meeting of
shareholders has been made as provided in this section, such determination shall
apply to any adjournment thereof, unless the Board of Directors fixes a new
record date for the adjourned meeting. A new record date must be fixed if the
meeting is adjourned to a date more than 120 days after the date fixed for the
original meeting.
SECTION 8. VOTING RECORD. The officers or agent having charge of the
stock transfer books for shares of the Corporation shall make, at least 10 days
before each meeting of shareholders, a complete alphabetical list of the
shareholders entitled to vote at such meeting or any adjournment thereof,
arranged by voting group with the address of and the number and class and
series, if any, of shares held by each. The list, for a period of 10 days prior
to such meeting, shall be available for inspection at the principal office of
the Corporation, or at the office of the transfer agent or registrar of the
Corporation or at a place identified in the meeting notice in the city where the
meeting will be held. Upon written demand to the Corporation, any shareholder or
his agent or attorney shall be entitled to inspect the list at any time during
usual business hours. The list shall also be produced and kept open at the time
and place of the meeting and shall be subject to the inspection of any
shareholder or his agent or attorney at any time during the meeting.
If the requirements of this section have not been substantially
complied with, the meeting, on demand of any shareholder in person or by proxy,
shall be adjourned until the requirements are complied with. If no such demand
is made, failure to comply with the requirements of this section shall not
affect the validity of any action taken at such meeting.
SECTION 9. SHAREHOLDER QUORUM AND VOTING. A majority of all then
outstanding shares of voting stock entitled to vote, represented in person or by
proxy, shall constitute a quorum at a meeting of shareholders. When a specified
item of business is required to be voted on by a class or series of stock, a
majority of the shares of such class or series shall constitute a quorum for the
transaction of such item of business by that class or series.
If a quorum is present, the affirmative vote of the majority of the
shares represented at the meeting and entitled to vote on the subject matter
shall be the act of the shareholders unless otherwise provided by law or by the
Amended and Restated Certificate of Incorporation.
After a quorum has been established at a shareholders' meeting, the
subsequent withdrawal of shareholders, so as to reduce the number of
shareholders entitled to vote at the meeting below
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the number required for a quorum, shall not affect the validity of any action
taken at the meeting or any adjournment thereof.
SECTION 10. VOTING OF SHARES. Except as otherwise provided in the
Amended and Restated Certificate of Incorporation, each outstanding share of
Common Stock shall be entitled to one vote on each matter submitted to a vote at
a meeting of shareholders.
Shares of stock of this Corporation owned directly or indirectly by
another corporation the majority of the voting stock of which is owned, directly
or indirectly, by this Corporation are not entitled to vote, and shall not be
counted in determining the total number of outstanding shares at any given time.
A shareholder or the shareholder's attorney in fact may vote either in
person or by proxy executed in writing by the shareholder or his duly authorized
attorney-in-fact.
At each election for directors every shareholder entitled to vote at
such election shall have the right to vote, in person or by proxy, the number of
votes represented by the shares owned by him for as many persons as there are
directors to be elected at that time and for whose election he has a right to
vote.
Shares standing in the name of another corporation, domestic or
foreign, may be voted by the officer, agent, or proxy designated by the by-laws
of the corporate shareholder; or, in the absence of any applicable by-law, by
such person as the board of directors of the corporate shareholder may
designate. Proof of such designation may be made by presentation of a certified
copy of the by-laws or other instrument of the corporate shareholder. In the
absence of any such designation, or in case of conflicting designation by the
corporate shareholder, the Chairman of the Board, Chief Executive officer,
President, any Vice President, Secretary and Treasurer of the corporate
shareholder shall be presumed to possess, in that order, authority to vote such
shares.
Shares held by an administrator, executor, guardian, personal
representative, or conservator may be voted by him, either in person or by
proxy, without a transfer of such shares into his name. Shares standing in the
name of a trustee may be voted by him, either in person or by proxy, but no
trustee shall be entitled to vote shares held by him without a transfer of such
shares into his name or the name of his nominee.
Shares held by or under the control of a receiver, trustee in
bankruptcy proceedings or an assignee for the benefit of creditors, may be voted
by such receiver, trustee or assignee, without the transfer thereof into the
name of such receiver, trustee or assignee.
A shareholder whose shares are pledged shall be entitled to vote such
shares until the shares have been transferred into the name of the pledgee, and
thereafter the pledgee or his nominee shall be entitled to vote the shares so
transferred.
On and after the date on which written notice of redemption of
redeemable shares has been mailed to the holders thereof and a sum sufficient to
redeem such shares has been deposited
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<PAGE>
with a bank, trust company or other financial institution, with irrevocable
instruction and authority to pay the redemption price to the holders thereof
upon surrender of certificates therefor, such shares shall not be entitled to
vote on any matter and shall not be deemed to be outstanding shares.
SECTION 11. WRITTEN CONSENT OF SHAREHOLDERS. Any action required or
permitted to be taken by the shareholders of the Corporation must be effected at
a duly called annual or special meeting of the shareholders, unless such action
is approved by a majority of the Board of Directors. In the event of such
approval, such action may be taken without a meeting, without prior notice and
without a vote if a consent in writing, setting forth the action so taken, shall
be signed by the holders of outstanding shares having not less than the minimum
number of votes that would be necessary to authorize or take such action at a
meeting of shareholders at which all shares entitled to vote thereon were
present and voted, provided that all requirements of law and the Amended and
Restated Certificate of Incorporation have been satisfied. To be effective, the
executed written consent of the shareholders must be delivered to the
Corporation within 60 days of the date the earliest written consent is received
by the Corporation. If any class of shares is entitled to vote thereon as a
class, such written consent shall be required of the holders of a majority of
the shares of each class of shares entitled to vote thereon.
After obtaining such authorization by written consent, notice shall
promptly be given to those shareholders who have not consented in writing or who
are not entitled to vote on the action. The notice shall fairly summarize the
material features of the authorized action and, if the action be a merger,
consolidation or sale or exchange of assets for which dissenters rights are
provided by law, the notice shall contain a clear statement of the right of
shareholders dissenting therefrom to be paid the fair value of their shares upon
compliance with further provisions of the law regarding the rights of dissenting
shareholders.
SECTION 12. WAIVER OF NOTICE OF MEETINGS OF SHAREHOLDERS. Notice of a
meeting of the shareholders need not be given to any shareholder who signs a
Waiver of Notice either before or after the meeting. Attendance of a shareholder
at a meeting shall constitute a waiver of notice of such meeting and waiver of
any and all objections to the place of the meeting, the time of the meeting, the
manner in which it has been called or convened, or the matters considered at a
meeting except when a shareholder states, at the beginning of the meeting, any
objection to the transaction of business because the meeting is not lawfully
called or convened, or except when a shareholder objects to considering a
particular matter that is not within the purposes described in the meeting
notice.
Neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the shareholders need be specified in any written
Waiver of Notice of such meeting.
ARTICLE II
DIRECTORS
5
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SECTION 1. FUNCTION. All corporate powers shall be exercised by or
under the authority of, and the business and affairs of the Corporation shall be
managed under the direction of, the Board of Directors.
SECTION 2. QUALIFICATION. Directors must be natural persons who are 18
years of age or older, but need not be residents of the State of Delaware,
citizens of the United States of America or shareholders of this Corporation.
SECTION 3. COMPENSATION. The Board of Directors shall have authority to
fix the compensation of directors.
SECTION 4. DUTIES OF DIRECTORS. A director shall perform his duties as
a director, including his duties as a member of any committee of the board upon
which he may serve, in good faith, in a manner he reasonably believes to be in
the best interests of the Corporation, and with such care as an ordinarily
prudent person in a like position would use under similar circumstances.
In performing his duties, a director shall be entitled to rely on
information, opinions, reports or statements, including financial statements and
other financial data, in each case prepared or presented by:
(a) one or more officers or employees of the Corporation whom the
director reasonably believes to be reliable and competent in the matters
presented;
(b) counsel, public accountants or other persons as to matters which
the director reasonably believes to be within such person's professional or
expert competence; or
(c) a committee of the Board upon which he does not serve, duly
designated in accordance with a provision of the Amended and Restated
Certificate of Incorporation or the By-laws, as to matters within its designated
authority, which committee the director reasonably believes to merit confidence.
A director shall not be considered to be acting in good faith if he has
knowledge concerning the matter in question that would cause such reliance
described above to be unwarranted.
In discharging his duties, a director may consider such factors as the
director deems relevant, including the long-term prospects and interests of the
Corporation and its shareholders, and the social, economic, legal, or other
effects of any action on the employees, suppliers, customers of the Corporation
or its subsidiaries, the communities and society in which the Corporation or its
subsidiaries operate, and the economy of the state and the nation.
A person who performs his duties in compliance with this section shall
have no liability by reason of being or having been a director of the
Corporation.
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SECTION 5. PRESUMPTION OF ASSENT. A director of the Corporation who is
present at a meeting of its Board of Directors or a committee of the Board of
Directors at which action on any corporate matter is taken shall be presumed to
have assented to the action taken unless (a) he objects at the beginning of the
meeting (or promptly upon his arrival) to holding it or transacting specified
business at the meeting; or (b) he votes against such action or abstains from
voting in respect thereto.
SECTION 6. NUMBER. Except as may otherwise be provided pursuant to the
Amended and Restated Certificate of Incorporation in connection with rights to
elect directors which may be granted to the holders of any series of Preferred
Stock, the number of directors which shall constitute the whole Board shall
initially be seven. The holders of the Corporation's Class B Common Stock may
increase the number of directors constituting the whole Board to up to a total
of eleven. At such time when there shall be no shares of Class B Common Stock
issued and outstanding, the number of directors constituting the whole Board
shall be fixed by the Board of Directors, but shall not be fewer than five nor
more than eleven. The directors, other than those who may be elected by the
holders of any shares of Preferred Stock under specified circumstances, shall be
divided, with respect to the time for which they severally hold office, into
three classes, designated Class I, Class II and Class III, which shall be nearly
equal in number as is reasonably possible, with the term of office of Class I to
expire at the 2001 annual meeting of shareholders, the term of office of Class
II to expire at the 2002 annual meeting of shareholders and the term of office
of Class III to expire at the 2003 annual meeting of shareholders, with each
director to hold office until his or her successor has been duly elected and
qualified. At each annual meeting of shareholders, commencing with the 2001
annual meeting, directors elected to succeed those directors whose terms shall
expire shall be elected for a term of office to expire at the third succeeding
annual meeting of shareholders after their election, each director to hold
office until his or her successor shall have been duly elected and qualified.
SECTION 7. ELECTION OF DIRECTORS. Except as may otherwise be provided
pursuant to the Amended and Restated Certificate of Incorporation in connection
with the rights to elect directors under specified circumstances which may be
granted to the holders of any series of Preferred Stock, and except as otherwise
provided pursuant to Section 8 of this Article II, directors shall be elected by
the holders of the Corporation's Class B Common Stock; provided, however, that,
in accordance with the Amended and Restated Certificate of Incorporation, (i)
after the payment in full of all of the Corporation's obligations under the
Deferrable Interest Notes, the holders of the Corporation's Class A Common Stock
shall be entitled to elect two directors (the "Class A Directors") and (ii) at
such time when there shall be no shares of Class B Common Stock issued and
outstanding, the holders of Class A Common Stock shall be entitled to elect all
members of the Corporation's Board of Directors. Except as otherwise provided by
applicable law, at each election the persons receiving the greatest number of
votes shall be the persons then elected. Each director shall serve until his or
her successor is elected and qualified or until his or her death, resignation or
removal. The election of directors is subject to any provisions relating thereto
contained in the Amended and Restated Certificate of Incorporation.
SECTION 8. VACANCIES. Except as may otherwise be provided pursuant to
the Amended and Restated Certificate of Incorporation in connection with rights
to elect additional
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directors under specified circumstances which may be granted to the holders of
any series of Preferred Stock, newly created directorships resulting from any
increase in the number of directors, or any vacancies on the Board of Directors
resulting from death, resignation, removal or other causes, shall be filled in
the following manner: (i) vacancies in Class A directorships shall be filled by
the holders of the issued and outstanding shares of Class A Common Stock voting
separately as a single class and (ii) vacancies in Class B directorships shall
be filled by the holders of the issued and outstanding shares of Class B Common
Stock voting separately as a single class; provided, however, that vacancies in
a directorship held by any Creditor Director shall be filled, either by
appointment by the Board of Directors or the vote of stockholders, by
individuals designated by the holders of at least a majority in principal amount
of the outstanding Deferrable Interest Notes in accordance with Section 4.15 of
the Deferrable Interest Notes Indenture. Any director elected in accordance with
the preceding sentence shall hold office until such director's successor shall
have been elected and qualified or until such director's death, resignation or
removal, whichever first occurs. No decrease in the number of directors
constituting the Board shall shorten the term of any incumbent director.
SECTION 9. RESIGNATION OF DIRECTORS. Any director of the Corporation
may resign at any time by giving written notice to the Chairman of the Board,
Chief Executive Officer, President or to the Secretary of the Corporation. The
resignation of any director shall take effect at the time specified therein;
and, unless otherwise specified therein, the acceptance of such resignation
shall not be necessary to make it effective.
SECTION 10. REMOVAL OF DIRECTORS. Subject to the right to elect
directors under specified circumstances which may be granted pursuant to the
Amended and Restated Certificate of Incorporation to the holders of any series
of Preferred Stock and unless otherwise provided by law, any director may be
removed from office with or without cause only by the vote of the holders of the
class of voting stock entitled to elect such director, voting together as a
single class and holding not less than a majority of the issued and outstanding
shares of such class of voting stock; provided, however, that as long as the
Deferrable Interest Notes are outstanding, the Creditor Directors may not be so
removed without the prior written consent of the holders of at least a majority
in principal amount of the outstanding Deferrable Interest Notes. At such time
when there shall be no shares of Class B Common Stock issued and outstanding,
directors elected by the holders of Class A Common Stock may be removed only
with cause by a vote of the holders of not less than a majority of the issued
and outstanding shares of Class A Common Stock.
SECTION 11. QUORUM AND VOTING. A majority of the number of directors
fixed by these By-laws shall constitute a quorum for the transaction of
business. Subject to the provisions of Section 12 of Article II of these
By-laws, the act of the majority of the directors present at a meeting at which
a quorum is present shall be the act of the Board of Directors.
SECTION 12. SUPERMAJORITY VOTING REQUIREMENTS. Notwithstanding any
provision in these By-laws to the contrary, for as long as the Deferrable
Interest Notes are outstanding, the affirmative vote of at least a majority of
the members of the Board of Directors including at least
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one of the Creditor Directors or at least one Class A Director (a "Supermajority
Vote") shall be required to authorize the taking of any of the following actions
on the part of the Corporation:
(a) entering into any contract or other transaction (or series or
related contracts or transactions) with any stockholder, director or beneficial
owner of five percent (5%) or more of the capital stock of the Corporation;
(b) entering into any contract or other transaction (or series of
related contracts or transactions) with any officer of the Corporation
inconsistent with prior practice and involving more than $350,000;
(c) engaging in or committing to engage in the acquisition by the
Corporation or any subsidiary thereof of a majority of the assets or capital
stock of another entity as an entirety;
(d) merging or consolidating the Corporation or any subsidiary thereof
with and/or into another entity, or selling all or substantially all of the
assets of the Corporation or any subsidiary thereof as an entirety; and
(e) authorizing or approving any amendment to the Amended and Restated
Certificate of Incorporation of the Corporation or any amendment by the Board of
Directors to the By-laws of the Corporation.
SECTION 13. DIRECTOR CONFLICTS OF INTEREST. No contract or other
transaction between this Corporation and one or more of its directors or any
other corporation, firm, association or entity in which one or more of the
directors are directors or officers or are financially interested, shall be
either void or voidable because of such relationship or interest or because such
director or directors are present at the meeting of the Board of Directors or a
committee thereof which authorizes, approves or ratifies such contract or
transaction or because his or their votes are counted for such purpose, if:
(a) the fact of such relationship or interest is disclosed or known to
the Board of Directors or committee which authorizes, approves or ratifies the
contract or transaction by a vote or consent sufficient for the purpose without
counting the votes or consents of such interested directors; or
(b) the fact of such relationship or interest is disclosed or known to
the shareholders entitled to vote and they authorize, approve or ratify such
contract or transaction by vote or written consent; or
(c) the contract or transaction is fair and reasonable as to the
Corporation at the time it is authorized by the Board, a committee or the
shareholders.
Common or interested directors may be counted in determining the
presence of a quorum at a meeting of the Board of Directors of a committee
thereof which authorizes, approves or ratifies such contract or transaction.
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SECTION 14. EXECUTIVE AND OTHER COMMITTEES. The Board of Directors, by
resolution adopted by a majority of the full Board of Directors, may designate
from among its members an executive committee and one or more other committees
each of which, to the extent provided in such resolution, shall have and may
exercise all the authority of the Board of Directors, except that no committee
shall have the authority to:
(a) approve or recommend to shareholders actions or proposals required
by law to be approved by shareholders;
(b) designate candidates for the office of director, for purposes of
proxy solicitation or otherwise;
(c) fill vacancies on the Board of Directors or any committee thereof;
(d) adopt, amend or repeal these By-laws or the Amended and Restated
Certificate of Incorporation;
(e) authorize or approve the reacquisition of shares unless pursuant to
a general formula or method specified by the Board of Directors;
(f) adopt an agreement of merger or consolidation; or
(g) authorize or approve the issuance or sale of, or any contract to
issue or sell, shares or designate the terms of a series of a class of shares,
except that the Board of Directors, having acted regarding general authorization
for the issuance or sale of shares, or any contract therefor, and, in the case
of a series, the designation thereof, may, pursuant to a general formula or
method specified by the Board of Directors, by resolution or by adoption of a
stock option or other plan, authorize a committee to fix the terms of any
contract for the sale of the shares and to fix the terms upon which such shares
may be issued or sold, including the price, the rate or manner of payment of
dividends, provisions for redemption, sinking fund, conversion, voting or
preferential rights, and provisions for other features of a class of shares, or
a series of a class of shares, with full power in such committee to adopt any
final resolution setting forth all the terms thereof and to authorize the
statement of the terms of a series for filing with the office of the Secretary
of State.
The Board of Directors, by resolution adopted in accordance with this
section, may designate one or more directors as alternate members of any such
committee, who may act in the place and stead of any absent member or members at
any meeting of such committee.
SECTION 15. CHANGES IN COMMITTEES; RESIGNATIONS, REMOVALS AND
VACANCIES. The Board of Directors shall have power at any time to change or
remove the members of, to fill vacancies in, and to discharge any committee
created pursuant to these By-laws, either with or without cause. Any member of
any such committee may resign at any time by giving written notice to the Board
or the Chairman of the Board or the Secretary. Such resignation shall take
effect upon receipt of such notice or at any later time specified therein; and,
unless otherwise specified therein, acceptance of such resignation shall not be
necessary to make it
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effective. Any vacancy in any committee, whether arising from death,
resignation, an increase in the number of committee members or any other cause,
shall be filled by the Board of Directors in the manner prescribed in these
By-laws for the original appointment of the members of such committee.
SECTION 16. PLACE OF MEETINGS. Regular and special meetings by the
Board of Directors may be held within or without the State of Delaware.
SECTION 17. TIME, NOTICE AND CALL OF MEETINGS. Regular meetings of the
Board of Directors shall be held at times and places specified by the Board of
Directors without notice of the date, time, place or purpose of the meeting.
Written notice of the date, time and place of special meetings of the Board of
Directors shall be given to each director at least 2 days before the meeting.
The notice need not describe the purpose of the special meeting. In addition to
any other regular meetings, a regular meeting of the Board of Directors shall be
held, without other notice than this by-law, immediately after and at the same
place as the annual meeting of shareholders.
Notice of a meeting of the Board of Directors need not be given to any
director who signs a waiver of notice either before or after the meeting.
Attendance of a director at a meeting shall constitute a waiver of notice of
such meeting and waiver of any and all objections to the place of the meeting,
the time of the meeting, or the manner in which it has been called or convened,
except when a director states, at the beginning of the meeting, any objection to
the transaction of business because the meeting is not lawfully called or
convened.
Neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the Board of Directors need be specified in the
notice or waiver of notice of such meeting.
A majority of the directors present, whether or not a quorum exists,
may adjourn any meeting of the Board of Directors to another time and place.
Notice of any such adjourned meeting shall be given to the directors who were
not present at the time of the adjournment and, unless the time and place of the
adjourned meeting are announced at the time of the adjournment, to the other
directors.
Meetings of the Board of Directors may be called by the Chairman of the
Board, by the Chief Executive Officer, by the President of the Corporation, or
by any two directors.
Members of the Board of Directors may participate in a meeting of such
board by means of a conference telephone or similar communications equipment by
means of which all persons participating in the meeting can hear each other at
the same time. Participation by such means shall constitute presence in person
at a meeting.
SECTION 18. ACTION WITHOUT A MEETING. Any action required to be taken
at a meeting of the directors of the Corporation, or any action which may be
taken at a meeting of the directors or a committee thereof, may be taken without
a meeting if a consent in writing, setting forth the action to be taken, signed
by all of the directors, or all the members of the
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committee, as the case may be, is filed in the minutes of the proceedings of the
Board or of the committee. Such consent shall have the same effect as a
unanimous vote and may be described as such in any document.
SECTION 19. ADVISORY DIRECTORS. The Board of Directors shall have the
authority to elect a board of outside directors consisting of two members
initially which number can be increased or decreased by a vote of the
shareholders. The outside directors shall not be shareholders or officers of the
Corporation, and shall not have voting powers, but rather are to act in the
capacity of consulting and advising the Board of Directors at their invitation.
ARTICLE III
OFFICERS
SECTION 1. OFFICERS. The officers of this Corporation shall consist of
a Chairman of the Board, a Chief Executive Officer, a President, a Secretary and
a Treasurer, each of whom shall be elected by the Board of Directors, and shall
serve until their successors are chosen and qualify. Such other officers and
assistant officers and agents as may be deemed necessary may be elected or
appointed by the Board of Directors from time to time.
Any two or more offices may be held by the same person. The failure to
elect a President, Chairman of the Board, Secretary or Treasurer shall not
affect the existence of this Corporation.
SECTION 2. DUTIES. The officers of this Corporation shall have the
following duties:
The Chief Executive Officer of the Corporation shall have overall
responsibility for the Corporation, subject to the directions of the Board of
Directors, and shall preside at all meetings of the shareholders and, unless the
Chairman of the Board of Directors has been elected and is present, shall
preside at all meetings of the Board of Directors.
The President and Chief Operating Officer shall report to the Chief
Executive Officer and the Board of Directors and shall be responsible for the
general and active management of the business, operations and affairs of the
Corporation, subject to the direction of the Chief Executive Officer.
The Chairman of the Board of Directors shall preside at all meetings of
the Board of Directors.
The Secretary shall have custody of, and maintain, all the corporate
records except the financial records, shall have the authority to execute any
and all documents in connection with intellectual property matters, including,
but not limited to, Powers of Attorney, Appointment of Resident Agent forms and
any other documents which are required in connection with the intellectual
property matters of the Corporation, shall prepare the minutes of all meetings
of the shareholders and Board of Directors, shall authenticate records of the
Corporation; shall send all
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notices of meetings out, and shall perform such other duties as may be
prescribed by the Board of Directors or the President.
The Treasurer shall have custody of all corporate funds and financial
records, shall keep full and accurate accounts of receipts and disbursements and
render accounts thereof at the annual meetings of shareholders and whenever else
required by the Board of Directors or the President, and shall perform such
other duties as may be prescribed by the Board of Directors or the President.
SECTION 3. REMOVAL OF OFFICERS. Any officer or agent elected or
appointed by the Board of Directors may be removed by the Board at any time with
or without cause.
Removal of any officer shall be without prejudice to the contract
rights, if any, of the person so removed; however, election or appointment of an
officer or agent shall not of itself create contract rights.
SECTION 4. RESIGNATION OF OFFICERS. An officer may resign at any time
by delivering notice to the Corporation. A resignation is effective when the
notice is delivered unless the notice specifies a later effective date. If a
resignation is made effective at a later date and the Corporation accepts the
future effective date, the Board of Directors may fill the pending vacancy
before the effective date if the Board of Directors provides that the successor
does not take office until the effective date.
ARTICLE IV
STOCK CERTIFICATES
SECTION 1. ISSUANCE. Every holder of shares in this Corporation shall
be entitled to have a certificate, representing all shares to which he is
entitled. The Board of Directors may authorize shares to be issued for
consideration consisting of any tangible or intangible property or benefit to
the Corporation, including cash, promissory notes, services performed, promises
to perform services evidenced by a written contract, or other securities of the
Corporation.
Before the Corporation issues shares, the Board of Directors must
determine that the consideration received for shares to be issued is adequate.
The determination by the Board of Directors is conclusive insofar as the
adequacy of consideration for the issuance of shares relates to whether the
shares are validly issued, fully paid and nonassessable. When it cannot be
determined that outstanding shares are fully paid and nonassessable, there shall
be a conclusive presumption that such shares are fully paid and nonassessable if
the Board of Directors makes a good faith determination that there is no
substantial evidence that the full consideration for such shares has not been
paid.
When the Corporation receives the consideration for which the Board of
Directors authorized the issuance of shares, the shares issued therefor are
fully paid and nonassessable.
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Consideration in the form of a promise to pay money or a promise to perform
services is received by the Corporation at the time of the making of the
promise, unless the agreement specifically provides otherwise.
SECTION 2. FORM. Certificates representing shares in this Corporation
shall be signed by the Chief Executive Officer or by the President or any vice
president and the Secretary or an assistant secretary and may be sealed with the
seal of this Corporation or a facsimile thereof. The signatures of the Chief
Executive Officer or the President or any Vice President and the Secretary or an
Assistant Secretary may be facsimiles if the certificate is manually signed on
behalf of a transfer agent or a registrar, other than the Corporation itself or
an employee of the Corporation. In case any officer who signed or whose
facsimile signature has been placed upon such certificate shall have ceased to
be such officer before such certificate is issued, it may be issued by the
Corporation with the same effect as if he were such officer at the date of its
issuance.
If this Corporation is authorized to issue shares of more than one
class or more than one series of any class, every certificate representing
shares issued by this Corporation shall set forth or fairly summarize upon the
face or back of the certificate, or shall state that the Corporation will
furnish to any shareholder upon request and without charge a full statement of,
the designations, preferences, limitations and relative rights of the shares of
each class or series authorized to be issued, and the variations in the relative
rights and preferences between the shares of each series so far as the same have
been fixed and determined, and the authority of the Board of Directors to fix
and determine the relative rights and preferences of subsequent series.
Every certificate representing shares which are restricted as to the
sale, disposition or other transfer of such shares shall state that such shares
are restricted as to transfer and shall set forth or fairly summarize upon the
certificate, or shall state that the Corporation will furnish to any shareholder
upon request and without charge a full statement of, such restrictions.
Each certificate representing shares shall state upon the face thereof:
the name of the Corporation; that the Corporation is organized under the laws of
the State of Delaware; the name of the person or persons to whom issued; the
number and class of shares; and the designation of the series, if any, which
such certificate represents.
SECTION 3. TRANSFER OF STOCK. Transfer of shares of the Corporation
shall be made only on the stock transfer books of the Corporation by the holder
of record thereof or by his legal representative, who shall furnish proper
evidence of authority to transfer, or by his attorney thereunto authorized by
power of attorney duly executed and filed with the Secretary of the Corporation,
and on surrender for cancellation of the certificate of such shares. The person
in whose name shares stand on the books of the Corporation shall be deemed by
the Corporation to be the owner thereof for all purposes.
SECTION 4. LOST, STOLEN, OR DESTROYED CERTIFICATES. The Corporation
shall issue a new stock certificate in the place of any certificate previously
issued if the holder of record of the certificate (a) makes proof in affidavit
form that it has been lost,
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destroyed or wrongfully taken; (b) requests the issue of a new certificate
before the Corporation has notice that the certificate has been acquired by a
purchaser for value in good faith and without notice of any adverse claim; (c)
gives bond in such form as the Corporation may direct to indemnify the
Corporation, the transfer agent and registrar against any claim that may be made
on account of the alleged loss, destruction or theft of a certificate; and (d)
satisfies any other reasonable requirements imposed by the Corporation.
ARTICLE V
CONTRACTS, LOANS, CHECKS AND DEPOSITS
SECTION 1. CONTRACTS. The Board of Directors may authorize any officer
or officers, agent or agents, to enter into any contract or execute and deliver
any instrument in the name of and on behalf of the Corporation, and such
authority may be general or confined to specific instances.
SECTION 2. LOANS. No loans shall be contracted on behalf of the
Corporation and no evidences of indebtedness shall be issued in its name unless
authorized by a resolution of the Board of Directors. Such authority may be
general or confined to specific instances.
SECTION 3. CHECKS, DRAFTS, ETC. All checks, drafts or other orders for
the payment of money, notes or other evidences of indebtedness issued in the
name of the Corporation shall be signed by such officer or officers, agent or
agents, of the Corporation and in such manner as shall from time to time be
determined by resolution of the Board of Directors.
SECTION 4. DEPOSITS. All funds of the Corporation not otherwise
employed shall be deposited from time to time to the credit of the Corporation
in such banks, trust companies or other depositories as the Board of Directors
may select.
ARTICLE VI
BOOKS AND RECORDS
SECTION 1. BOOKS AND RECORDS. The Corporation shall keep as permanent
records, in accordance with applicable law, minutes of all meetings of its
shareholders and Board of Directors, a record of all actions taken by the
shareholders or Board of Directors without a meeting, a record of all actions
taken by a committee of the Board of Directors in place of the Board of
Directors on behalf of the Corporation, and such books or records and accounts
as may be necessary for the proper conduct of the business of the Corporation.
SECTION 2. INSPECTION OF BOOKS AND RECORDS. The Board of Directors and,
unless otherwise specified by the Board, the Chairman of the Board, the Chief
Executive Officer or the President shall, subject to applicable law, have the
sole power to determine from time to time whether and to what extent and at what
times and places and under what conditions and regulations the accounts, books
and records of the Corporation, or any of them, shall be open to the inspection
of the shareholders; and, except as specifically conferred by law, no
shareholder shall have any right to inspect any account, book, record or
document of the Corporation, unless
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and until authorized to do so by the Board or, unless otherwise specified by the
Board, by order of the Chairman of the Board or by the Chief Executive Officer
or the President.
ARTICLE VII
DISTRIBUTIONS, SHARE DIVIDENDS AND SHARE OPTIONS
SECTION 1. DISTRIBUTIONS. The Board of Directors of this Corporation
may, from time to time, authorize and the Corporation may pay distributions to
the shareholders. A distribution is a direct or indirect transfer of money or
other property (except the Corporation's own shares) or incurrence of
indebtedness by the Corporation to or for the benefit of the shareholders in
respect of any of its shares. A distribution may be in the form of a declaration
or payment of a dividend; a purchase, redemption, or other acquisition of
shares; a distribution of indebtedness; or otherwise.
No distribution may be made if, after giving it effect:
(a) the Corporation would not be able to pay its debts as they become
due in the usual course of business; or
(b) the Corporation's total assets would be less than the sum of its
total liabilities plus the amount that would be needed, if the Corporation were
to be dissolved at the time of the distribution, to satisfy the preferential
rights upon dissolution of shareholders whose preferential rights are superior
to those receiving the distribution.
If the Board of Directors does not fix the record date for determining
shareholders entitled to a distribution (other than one involving a purchase,
redemption, or other acquisition of the Corporation's shares), it is the date
the Board of Directors authorizes the distribution.
The Board of Directors may base a determination that a distribution is
not prohibited either on financial statements prepared on the basis of
accounting practices and principles that are reasonable in the circumstances or
on a fair valuation or other method that is reasonable in the circumstances. In
the case of any distribution based upon such a valuation, each such distribution
shall be identified as a distribution based upon a current valuation of assets,
and the amount per share paid on the basis of such valuation shall be disclosed
to the shareholders concurrent with their receipt of the distribution.
SECTION 2. SHARE DIVIDENDS. Unless the Amended and Restated Certificate
of Incorporation provides otherwise, shares may be issued pro rata and without
consideration to the Corporation's shareholders or to the shareholders of one or
more classes or series. An issuance of shares under this section is a share
dividend.
Shares of one class or series may not be issued as a share dividend in
respect of shares of another class or series unless:
(a) the Amended and Restated Certificate of Incorporation so
authorizes;
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(b) a majority of the votes entitled to be cast by the class or series
to be issued approves the issue; or
(c) there are no outstanding shares of the class or series to be
issued.
If the Board of Directors does not fix the record date for determining
shareholders entitled to a share dividend, it is the date the Board of Directors
authorizes the share dividend.
SECTION 3. SHARE OPTIONS. Unless the Amended and Restated Certificate
of Incorporation provides otherwise, the Corporation may issue rights, options
or warrants for the purchase of its shares. The Board of Directors shall
determine the terms upon which the rights, options or warrants are issued, their
form and content, and the consideration for which the shares are to be issued.
The terms and conditions of stock rights and options which are created
and issued by the Corporation, or its successor, and which entitle the holders
thereof to purchase from the Corporation shares of any class or classes, whether
authorized but unissued shares, treasury shares or shares to be purchased or
acquired by the Corporation, may include restrictions or conditions that
preclude or limit the exercise, transfer, receipt or holding of such rights or
options by any person or persons, including any person or persons owning or
offering to acquire a specified number or percentage of the outstanding common
shares or other securities of the Corporation, or any transferee or transferees
of any such person or persons, or that invalidate or void such rights or options
held by any such person or persons or any such transferee or transferees.
ARTICLE VIII
CORPORATE SEAL
The Board of Directors shall provide a corporate seal which shall have
inscribed thereon the name of the Corporation and such other words and figures
and in such design as may be prescribed by the Board of Directors, and may be
facsimile, engraved, printed or an impression, or other type seal.
ARTICLE IX
FISCAL YEAR
The fiscal year of the Corporation shall, by resolution, be determined
by the Board of Directors.
ARTICLE X
INDEMNIFICATION OF DIRECTORS,
OFFICERS, EMPLOYEES AND AGENTS
17
<PAGE>
SECTION 1. ACTION AGAINST PARTY BECAUSE OF CORPORATE POSITION. The
Corporation shall indemnify any person who was or is a party or is threatened to
be made a party to any threatened, pending or completed claim, action, suit or
proceeding, whether civil, criminal, administrative or investigative (other than
an action by or in the right of the corporation) by reason of the fact that he
is or was a director, officer, employee or agent of the Corporation, or is or
was serving at the request of the Corporation as a director, partner, officer,
employee or agent of another Corporation, partnership, joint venture, trust or
other enterprise, against expenses (including attorneys' fees inclusive of any
appeal), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such claim, action, suit or proceeding if he
acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the Corporation, and with respect to any
criminal action or proceeding, had no reasonable cause to believe his conduct
unlawful. The termination of any claim, action, suit or proceeding by judgment,
order, settlement, conviction, or upon a plea of nolo contendere or its
equivalent, shall not, of itself, create a presumption that the person did not
act in good faith and in a manner which he reasonably believed to be in or not
opposed to the best interests of the Corporation, and, with respect to any
criminal action or proceeding, had reasonable cause to believe that his conduct
was unlawful.
SECTION 2. ACTION BY OR IN THE RIGHT OF CORPORATION. The Corporation
shall indemnify any person who was or is a party or is threatened to be made a
party to any threatened, pending or completed claim, action or suit by or in the
right of the Corporation to procure a judgment in its favor by reason of the
fact that he is or was a director, officer, employee or agent of the
Corporation, or is or was serving at the request of the Corporation as a
director, partner, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against expenses
(including attorneys' fees inclusive of any appeal) actually and reasonably
incurred by him in connection with the defense or settlement of such claim,
action or suit if he acted in good faith and in a manner he reasonably believed
to be in or not opposed to the best interests of the Corporation and except that
no indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable for negligence or
misconduct in the performance of his duty to the Corporation unless and only to
the extent that a court of competent jurisdiction (the "Court") in which such
claim, action or suit was brought shall determine upon application that, despite
the adjudication of liability but in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnity for such expenses
which the Court shall deem proper.
SECTION 3. REIMBURSEMENT IF SUCCESSFUL. To the extent that a director,
officer, employee or agent of the Corporation has been successful on the merits
or otherwise in defense of any claim, action, suit or proceeding referred to in
Sections 1 or 2 of this Article X, or in defense of any claims, issue or matter
therein, he shall be indemnified against expenses (including attorneys fees
inclusive of any appeal) actually and reasonably incurred by him in connection
therewith, notwithstanding that he has not been successful (on the merits or
otherwise) on any other claim, issue or matter in any such claim, action, suit
or proceeding.
SECTION 4. AUTHORIZATION. Any indemnification under Sections 1 and 2 of
this Article X (unless ordered by a court) shall be made by the Corporation only
as authorized in
18
<PAGE>
the specific case upon a determination that indemnification of the director,
officer, employee or agent is proper in the circumstances because he has met the
applicable standard of conduct set forth in Sections 1 and 2. Such determination
shall be made (a) by the Board of Directors by a majority vote of the directors
who were not parties to such action, suit or proceeding, even though less than a
quorum, or (b) if there are no such directors, or if such directors so direct,
by independent legal counsel in a written opinion, or (c) by the shareholders.
SECTION 5. ADVANCED REIMBURSEMENT. Expenses incurred in defending a
civil or criminal action, suit or proceeding may be paid by the Corporation in
advance of the final disposition of such action, suit or proceeding as
authorized by the Board of Directors in the specific case upon receipt of an
undertaking by or on behalf of the director, officer, employee or agent to repay
such amount unless it shall ultimately be determined that he is entitled to be
indemnified by the Corporation as authorized in this Article.
SECTION 6. INDEMNIFICATION NOT EXCLUSIVE. The indemnification provided
by this Article shall not be deemed exclusive of any other rights to which those
indemnified may be entitled under any statute, rule of law, provision of the
Amended and Restated Certificate of Incorporation, by-law, agreement, vote of
shareholders or disinterested directors, or otherwise, both as to action in his
official capacity and as to action in another capacity, while holding such
office, and shall continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of the heirs,
executors and administrators of such a person. Where such other provision
provides broader rights of indemnification than these by-laws, said other
provision shall control. Any person to which this Article applies shall be
deemed to have a contractual right to the indemnification described herein.
SECTION 7. ACTIONS INITIATED BY INDEMNIFIED PARTIES. Notwithstanding
the foregoing sections of this Article X, the Corporation shall not be required
to indemnify any person seeking indemnification in connection with a claim,
action, suit or proceeding (or part thereof) initiated by such person (except
for a suit or action pursuant to the following paragraph of this Section 7)
unless such claim, action, suit or proceeding (or part thereof) was authorized
by the Board of Directors of the Corporation.
If a claim by a person entitled to be indemnified under this Article X
is not paid in full by the Corporation within sixty days after a written claim
has been received by the Corporation, the claimant may at any time thereafter
bring an action against the Corporation to recover the unpaid amount of the
claim and, if successful in whole or in part, the claimant shall be entitled to
be paid also the expense of prosecuting such action. It shall be a defense to
any such action (other than an action brought to enforce a claim for expenses
incurred in connection with any proceeding in advance of its final disposition
where the required undertaking, if any is required, has been tendered to the
Corporation) that the claimant has not met the standards of conduct which make
it permissible under the General Corporation Law of the State of Delaware for
the Corporation to indemnify the claimant for the amount claimed or is otherwise
not entitled to indemnification under this Article X, but the burden of proving
such defense shall be on the Corporation. The failure of the Corporation (in the
manner provided under this Article X and the General Corporation Law of the
State of Delaware) to have made a determination prior to or after the
19
<PAGE>
commencement of such action that indemnification of the claimant is proper in
the circumstances because he or she has met the applicable standard of conduct
set forth in this Article X and the General Corporation Law of the State of
Delaware shall not be a defense to the action or create a presumption that the
claimant has not met the applicable standard of conduct. Unless otherwise
specified in an agreement with the claimant, an actual determination by the
Corporation (in the manner provided under this Article X and the General
Corporation Law of the State of Delaware) after the commencement of such action
that the claimant has not met such applicable standard of conduct shall not be a
defense to the action, but shall create a presumption that the claimant has not
met the applicable standard of conduct.
SECTION 8. INSURANCE. The Corporation shall have power to purchase and
maintain insurance on behalf of any person who is or was a director, officer,
employee or agent of the Corporation, or is or was serving at the request of the
Corporation as a director, partner, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against any
liability asserted against him and incurred by him in any such capacity, or
arising out of his status as such, whether or not the Corporation would have the
power to indemnify him against such liability under the provisions of this
Article.
ARTICLE XI
AMENDMENT
Except as otherwise provided herein, these By-laws may be altered,
amended or repealed or new by-laws may be adopted by the shareholders or by the
Board of Directors at any regular meeting of the shareholders or of the Board of
Directors or at any special meeting of the shareholders or of the Board of
Directors if notice of such alteration, amendment, repeal or adoption of new
by-laws be contained in the notice of such meeting; provided, however, that in
the case of amendments by shareholders, notwithstanding any other provisions of
these By-laws or any other provision of law which might otherwise permit a
lesser vote or no vote, but in addition to any affirmative vote of the holders
of any particular class or series of the capital stock required by law, the
Amended and Restated Certificate of Incorporation or these By-laws, the
affirmative vote of the holders of at least 66 2/3% of all then outstanding
shares of voting stock of the Corporation, voting together as a single class,
shall be required to alter, amend or repeal any provision of these By-laws;
provided, further, however, that any amendment or repeal of any provision of
Section 12 of Article II of these By-laws by the shareholders shall require the
affirmative vote of the holders of at least a majority of all then outstanding
shares of Class A Common Stock, voting as a single class, and Class B Common
Stock, voting as a single class.
ARTICLE XII
DEFINITIONS
The following terms used herein shall the meanings specified below.
"Creditor Directors" shall mean the Creditor Directors and the
Replacement Directors as such terms are defined in Section 4.15 of the
Deferrable Interest Notes Indenture.
20
<PAGE>
"Deferrable Interest Notes" shall mean the 10% Secured Deferrable
Interest Notes due 2005 issued by the Corporation pursuant to the Plan under the
Deferrable Interest Notes Indenture.
"Deferrable Interest Notes Indenture" means the Indenture among the
Corporation, as Issuer, the Subsidiary Guarantors named therein and United
States Trust Company of New York, as trustee, which indenture relates to the
Deferrable Interest Notes, as it may be amended, modified or supplemented from
time to time.
"New Money Investors" means certain persons or entities that have
agreed to purchase for an aggregate purchase price of $30 million to acquire
7,000,000 shares of Class B Common Stock in accordance with the terms of the
Plan.
"Plan" means the Joint Plan of Reorganization proposed by the
Corporation and certain of its subsidiaries, as it may be amended or modified
from time to time, and as confirmed by Order dated January 20, 2000 by the
United States Bankruptcy Court for the District of Delaware.
21
VOTING AGREEMENT AMONG STOCKHOLDERS
(New Money Investors)
This Voting Agreement Among Stockholders (the "Agreement") is entered into
as of ________________, 2000, by and between Planet Hollywood International,
Inc., a corporation organized under the laws of the State of Delaware (the
"Company"), and the undersigned parties, hereinafter collectively called
"Stockholders," and individually called a "Stockholder."
RECITALS
A. On October 12, 1999, the Company and certain of its affiliates
(collectively, the "Debtors") commenced cases under Chapter 11 of Title 11
of the United States Code by filing voluntary petitions in the United
States Bankruptcy Court for the District of Delaware, Case No. 99- 03612
(the "Bankruptcy Court").
B. On November 8, 1999, the Debtors filed their Joint Plan of Reorganization
and Disclosure Statement with the Bankruptcy Court, which was supported by
the Official Committee of Unsecured Creditors for the Debtors.
C. Following a hearing held on December 9, 1999, the Bankruptcy Court
approved the disclosure statement as amended and scheduled a hearing on
confirmation of the reorganization plan for January 20, 2000.
D. On December 13, 1999 the Debtors filed their First Amended Joint Plan of
Reorganization (the "Plan") and First Amended Disclosure Statement (the
"Disclosure Statement") with the Bankruptcy Court. Capitalized terms used,
but not defined, herein shall have the same meanings as in the Plan.
E. A hearing on the confirmation of the Plan was held on January 20, 2000 and
the Plan, as modified by the Confirmation Order, was confirmed by the
Bankruptcy Court pursuant to an order entered January 21, 2000 (the
"Confirmation Order").
F. The terms of the Plan provide that the Stockholders will invest
approximately $30 million in the Company to acquire approximately seven
million of the ten million shares of the Company's New Common Stock to be
issued upon consummation of the Plan.
G. On the date hereof, the Stockholders have also entered into another voting
agreement, separate from this Agreement, providing for the election of
certain initial directors of the Company and agreeing to subsequently vote
in favor of two individuals nominated by the New Indenture Trustee of the
New Secured PIK Notes in certain instances, a copy of which is attached
hereto as Exhibit A and incorporated herein by this reference (the "PIK
Agreement").
Page 1 of 5
<PAGE>
H. The Stockholders desire by this Agreement to make certain additional
agreements with respect to how any New Common Stock held by the
Stockholders shall be voted on certain matters.
I. The Stockholders have agreed that entering into this Agreement is in the
best interest of the Company and will promote harmonious relationships
between them with respect to the affairs of the Company.
In consideration of the foregoing recitals and of the mutual covenants and
conditions set forth below, the Stockholders agree as follows:
SECTION ONE
ELECTION OF DIRECTORS
A. Except as otherwise provided in the PIK Agreement, the Stockholders
each covenant and agree that on the proposal (whether or not made at a
stockholders' meeting) to remove any directors, or to elect directors other than
the New Money Directors (as such term is defined in the PIK Agreement), or to
fill any vacancy on the Board of Directors or any newly created directorship,
they will each vote all their shares of New Common Stock (however acquired) and,
if applicable, vote as a director of the Company, or cause their designees to
vote as directors, in accordance with the direction of Robert Earl; provided
that Robert Earl is serving (i) on the Board of Directors (or has a designee
serving on the Board of Directors) or (ii) as an executive officer of the
Company.
B. Notwithstanding the foregoing paragraph A, but subject to the terms of
the PIK Agreement, it is expressly acknowledged by the parties that each
Stockholder shall at all times have the right to nominate a single candidate for
election to the Board of Directors upon sixty (60) days prior written notice to
all other Stockholders and Robert Earl, and if such nomination is timely made,
the Stockholders agree that they shall vote all their shares of New Common Stock
(however acquired) and, if applicable, vote as a director of the Company, or
cause their designees to vote as directors, to ensure that such candidate is
elected to the Board of Directors; provided, that the Stockholder making such
nomination, at the time of such nomination, (i) does not already have a
representative or designee sitting on the Board of Directors and (ii) owns at
least seven hundred fifty thousand (750,000) shares of the issued and
outstanding New Common Stock.
SECTION TWO
ELECTION OF CHIEF EXECUTIVE OFFICER
The Stockholders each covenant and agree that they shall at all times vote
all their shares of New Common Stock (however acquired) and, if applicable, vote
as a director of the Company, or cause their designees to vote as directors, to
ensure that Robert Earl is elected as Chief Executive Officer of the Company,
provided, that Robert Earl agrees to accept such election and is serving as
Page 2 of 5
<PAGE>
Chief Executive Officer in accordance with any employment or consulting
agreement which he may have with the Company.
SECTION THREE
VOTING ON OTHER MATTERS
The Stockholders each covenant and agree that on the proposal (whether or
not made at a stockholders' meeting) to amend the Company's Articles of
Incorporation or Bylaws, or to remove officers, or to issue shares of the
Company's securities, they will each vote all their shares of New Common Stock
(however acquired) and, if applicable, vote as a director of the Company, or
cause their designees to vote as directors, in accordance with the direction of
Robert Earl; provided that Robert Earl is serving (i) on the Board of Directors
(or has a designee serving on the Board of Directors) or (ii) as an executive
officer of the Company.
SECTION FOUR
REPRESENTATION
Each Stockholder represents to the others that it is, or will be, the sole
beneficial owner of all New Common Stock owned of record by it. Each Stockholder
further represents to the others that it will not transfer any of its shares of
New Common Stock to a related party for the purpose of avoiding the terms of
this Agreement.
SECTION FIVE
SPECIFIC PERFORMANCE
The parties acknowledge and agree that it is not possible to measure in
money the damages that will accrue to a party hereto, or to a person obligated
under or benefitted by this Agreement, by reason of failure to perform any of
the obligations under this Agreement. Therefore, if any party or person shall
institute any action or proceeding to enforce the provisions hereof, any person,
including the Company, against whom such action or proceeding is brought hereby
agrees that the terms and provisions of this Agreement shall be specifically
enforceable and waives the claim or defense therein that such party or person
has or have an adequate remedy at law, and such person shall not urge in any
action or proceeding the claim or defense that such remedy at law exists.
SECTION SIX
PARTIES BOUND, BENEFIT OF AGREEMENT
This Agreement shall be binding on and shall inure to the benefit of the
parties to this Agreement, and their respective heirs, executors,
administrators, legal representatives, and assigns.
SECTION SEVEN
TERMINATION
Page 3 of 5
<PAGE>
This Agreement shall terminate upon: (1) the written agreement of
Robert Earl (if alive), the Company and all Stockholders; (2) the death of the
last surviving Stockholder; or (3) the acquisition by the Company or one
shareholder of all of the issued and outstanding shares of New Common Stock,
with the result that there is only one shareholder of the Company.
SECTION EIGHT
GOVERNING LAW AND ARBITRATION
This agreement shall be governed by, and interpreted and construed under
and in accordance with the laws of Delaware. In the event a dispute arises under
this Agreement which cannot be resolved, such dispute shall be submitted to
arbitration in accordance with the Commercial Arbitration Rules of the American
Arbitration Association then in effect. All such arbitration shall take place at
the office of the American Arbitration Association located in Orlando, Florida.
The award or decision rendered by the arbitrator(s) (including an allocation of
the costs of arbitration) shall be final, binding and conclusive and judgment
may be entered upon such award by any court. The arbitration provisions of this
Agreement shall not prevent any party from obtaining injunctive relief from a
court of competent jurisdiction to enforce the obligations of the other party
hereunder for which such party may require provisional relief pending a decision
on the merits by the arbitrator(s). The arbitrator(s) shall have authority to
award any remedy or relief that a court of the State of Delaware could grant in
conformity with applicable law, including the authority to award attorneys' fees
or punitive damages. If any party to this Agreement brings an arbitration or
action to enforce its rights under this Agreement, the prevailing party shall be
entitled to recover its costs and expenses, including without limitation
reasonable attorneys' fees and fees of experts, incurred in connection with such
action, including any appeal of such action.
SECTION NINE
MODIFICATION
No modification, rescission, cancellation, amendment, or termination of
this Agreement shall be effective unless it is in writing and is signed by all
parties to this Agreement.
SECTION TEN
COUNTERPARTS
This agreement may be executed in two or more counterparts, each of which
shall be deemed an original and all of which, taken together, shall constitute
the Agreement.
[remainder of page intentionally left blank]
Page 4 of 5
<PAGE>
In witness whereof, the parties have executed this Agreement effective as
of the day and year first above written.
HOLST TRUST MAGNETIC LIGHT PROFITS
By: Lauren Investments Holdings Limited, a LIMITED, a company organized
British Virgin Islands corporation, as truunder the laws of the British
Virgin of the Holst Trust, a British Virgin IslanIslands
Trust U/A/D 9/10/99
By:____________________________
By:_____________________________________ printed name:___________________
printed name:_____________________________ title:_________________________
title:____________________________________
By:_____________________________________ CLAUDIO GONZALEZ, an
printed name:_____________________________ individual
title:____________________________________
------------------------------
Claudio Gonzalez
LEISURE VENTURES PTE LTD., a company PLANET HOLLYWOOD
organized under the laws of Singapore INTERNATIONAL, INC., a
Delaware corporation
By:_____________________________________ By:____________________________
printed name:_____________________________ printed name:___________________
title:____________________________________ title:__________________________
KINGDOM PLANET HOLLYWOOD LTD., a
company organized under the laws of the Cayman Islands
By:_____________________________________
printed name:_____________________________
title:____________________________________
ACKNOWLEDGED AND AGREED TO BY:
ROBERT EARL, an individual
------------------------------
Robert Earl
Page 5 of 5
VOTING AGREEMENT AMONG STOCKHOLDERS
(Creditor Directors)
This Voting Agreement Among Stockholders (the "Agreement") is entered into
as of ________________, 2000, by and between Planet Hollywood International,
Inc., a corporation organized under the laws of the State of Delaware (the
"Company") and the undersigned parties, hereinafter collectively called
"Stockholders," and individually called a "Stockholder".
RECITALS
A. On October 12, 1999, the Company and certain of its affiliates
(collectively, the "Debtors") commenced cases under Chapter 11 of Title 11
of the United States Code by filing voluntary petitions in the United
States Bankruptcy Court for the District of Delaware, Case No. 99- 03612
(the "Bankruptcy Court").
B. On November 8, 1999, the Debtors filed their Joint Plan of Reorganization
and Disclosure Statement with the Bankruptcy Court, which was supported by
the Official Committee of Unsecured Creditors for the Debtors.
C. Following a hearing held on December 9, 1999, the Bankruptcy Court
approved the disclosure statement as amended and scheduled a hearing on
confirmation of the reorganization plan for January 20, 2000.
D. On December 13, 1999 the Debtors filed their First Amended Joint Plan of
Reorganization (the "Plan") and First Amended Disclosure Statement (the
"Disclosure Statement") with the Bankruptcy Court. Capitalized terms used,
but not defined, herein shall have the same meanings as in the Plan.
E. A hearing on the confirmation of the Plan was held on January 20, 2000 and
the Plan, as modified by the Confirmation Order, was confirmed by the
Bankruptcy Court pursuant to an order entered January 21, 2000 (the
"Confirmation Order").
F. The terms of the Plan provide that the Stockholders will invest
approximately $30 million in the Company to acquire approximately seven
million shares of New Class B Common Stock out of the ten million shares
of the Company's New Common Stock to be issued upon consummation of the
Plan.
G. The Stockholders desire by this Agreement to make certain agreements with
respect to how any New Class B Common Stock held by the Stockholders shall
be voted on certain matters.
H. The Stockholders have agreed that entering into this Agreement is in the
best interest of the Company and will promote harmonious relationships
between them with respect to the affairs of the Company.
Page 1 of 6
<PAGE>
In consideration of the foregoing recitals and of the mutual covenants and
conditions set forth below, the Stockholders agree as follows:
SECTION ONE
ELECTION OF DIRECTORS
A. The Stockholders each covenant and agree that they shall initially vote
their shares of New Class B Common Stock and, if applicable, vote as a director
of the Company, or cause their designees to vote as directors, to ensure that
the following five individuals (the "New Money Directors") are elected to the
Company's Board of Directors immediately following consummation of the Plan:
1. Robert Earl 4. Steven Grapstein
2. Thomas Avallone 5. Mustafa Al Hejailan
3. Claudio Gonzalez
B. The Stockholders each further covenant and agree that they shall
initially vote their shares of New Class B Common Stock and, if applicable, vote
as a director of the Company, or cause their designees to vote as directors, to
ensure that the two individuals nominated to serve as directors by the
Creditors' Committee are elected to the Company's Board of Directors immediately
following consummation of the Plan, as Class III directors with terms expiring
at the 2003 annual meeting of shareholders.
C. Subsequent to the initial election of directors immediately following
consummation of the Plan, and until the Company's New Secured PIK Notes have
been paid in full, the Stockholders each further covenant and agree that they
each vote all their shares of New Class B Common Stock (however acquired) and,
if applicable, vote as a director of the Company, or cause their designees to
vote as directors, in favor of two directors (the "Creditor Directors")
nominated by the holders of at least a majority in principal amount of the
outstanding New Secured PIK Notes in accordance with Section 4.15 of the New
Secured PIK Notes Indenture. The Stockholders acknowledge and agree that, in
accordance with the Company's Amended and Restated Certificate of Incorporation
as in effect upon consummation of the Plan, (i) subsequent to the payment in
full of the New Secured PIK Notes, the holders of the Company's New Class A
Common Stock shall be entitled to elect two persons to serve on the Company's
Board of Directors, and (ii) at such time when there shall be no shares of New
Class B Common Stock issued and outstanding, the holders of the New Class A
Common Stock shall be entitled to elect all members of the Company's Board of
Directors.
SECTION TWO
REPRESENTATION
Page 2 of 6
<PAGE>
Each Stockholder represents to the others that it is, or will be, the sole
beneficial owner of all New Class B Common Stock owned of record by it. Each
Stockholder further represents to the others that it will not transfer any of
its shares of New Class B Common Stock to a related party for the purpose of
avoiding the terms of this Agreement.
SECTION THREE
FILING OF AGREEMENT
A copy of this Agreement shall be filed with the Secretary of the Company
and may be inspected by any Stockholder, any holder of a certificate
representing shares of New Common Stock, or any other interested person at the
principal place of business of the Company during regular business hours.
SECTION FOUR
SPECIFIC PERFORMANCE
The parties acknowledge and agree that it is not possible to measure in
money the damages that will accrue to a party hereto, or to a person obligated
under or benefitted by this Agreement, by reason of failure to perform any of
the obligations under this Agreement. Therefore, if any party or person shall
institute any action or proceeding to enforce the provisions hereof, any person,
including the Company, against whom such action or proceeding is brought hereby
agrees that the terms and provisions of this Agreement shall be specifically
enforceable and waives the claim or defense therein that such party or person
has or have an adequate remedy at law, and such person shall not urge in any
action or proceeding the claim or defense that such remedy at law exists.
SECTION FIVE
PARTIES BOUND, BENEFIT OF AGREEMENT
A. This Agreement shall be binding on and shall inure to the benefit of
the parties to this Agreement, and their respective heirs, executors,
administrators, legal representatives, and assigns.
B. The parties hereto agree and acknowledge that for so long as the
Company's New Secured PIK Notes have not been paid in full, holders of the New
Secured PIK Notes are third party beneficiaries in, to and under this Agreement.
During such period, and in the event of a material uncured breach by any party
of any provision of this Agreement which affects or may affect the interests of
the holders of the New Secured PIK Notes, the parties agree that the holders of
the New Secured PIK Notes and the New Indenture Trustee of the New Secured PIK
Notes may bring a direct suit or action to enforce such provision, and in this
regard, the New Indenture Trustee of the New Secured PIK Notes shall have the
right to utilize any remedy against a party that would otherwise be available to
any other party.
Page 3 of 6
<PAGE>
SECTION SIX
TERMINATION
This Agreement shall automatically terminate, without any action by any
party, once the Company's New Secured PIK Notes have been paid in full and are
no longer outstanding.
SECTION SEVEN
GOVERNING LAW AND ARBITRATION
This agreement shall be governed by, and interpreted and construed under
and in accordance with the laws of Delaware. In the event a dispute arises under
this Agreement which cannot be resolved, such dispute shall be submitted to
arbitration in accordance with the Commercial Arbitration Rules of the American
Arbitration Association then in effect. All such arbitration shall take place at
the office of the American Arbitration Association located in Orlando, Florida.
The award or decision rendered by the arbitrator(s) (including an allocation of
the costs of arbitration) shall be final, binding and conclusive and judgment
may be entered upon such award by any court. The arbitration provisions of this
Agreement shall not prevent any party from obtaining injunctive relief from a
court of competent jurisdiction to enforce the obligations of the other party
hereunder for which such party may require provisional relief pending a decision
on the merits by the arbitrator(s). The arbitrator(s) shall have authority to
award any remedy or relief that a court of the State of Delaware could grant in
conformity with applicable law, including the authority to award attorneys' fees
or punitive damages. If any party to this Agreement brings an arbitration or
action to enforce its rights under this Agreement, the prevailing party shall be
entitled to recover its costs and expenses, including without limitation
reasonable attorneys' fees and fees of experts, incurred in connection with such
action, including any appeal of such action.
SECTION EIGHT
MODIFICATION
No modification, rescission, cancellation, amendment, or termination of
this Agreement shall be effective unless it is in writing and is signed by all
parties to this Agreement. Furthermore, no modification, rescission,
cancellation, amendment, or termination of this Agreement which affects or may
affect the interests of the holders of the New Secured PIK Notes shall be
effective unless it is in writing and is signed by the New Indenture Trustee of
the New Secured PIK Notes.
SECTION NINE
COUNTERPARTS
This agreement may be executed in two or more counterparts, each of which
shall be deemed an original and all of which, taken together, shall constitute
the Agreement.
Page 4 of 6
<PAGE>
[remainder of page intentionally left blank]
Page 5 of 6
<PAGE>
In witness whereof, the parties have executed this Agreement effective as
of the day and year first above written.
HOLST TRUST MAGNETIC LIGHT PROFITS
By: Lauren Investments Holdings Limited, a LIMITED, a company organized
British Virgin Islands corporation, as truunder the laws of the British
Virgin of the Holst Trust, a British Virgin IslanIslands
Trust U/A/D 9/10/99
By:____________________________
By:_____________________________________ printed name:___________________
printed name:_____________________________ title:_________________________
title:____________________________________
By:_____________________________________ CLAUDIO GONZALEZ, an
printed name:_____________________________ individual
title:____________________________________
------------------------------
Claudio Gonzalez
LEISURE VENTURES PTE LTD., a company PLANET HOLLYWOOD
organized under the laws of Singapore INTERNATIONAL, INC., a
Delaware corporation
By:_____________________________________ By:____________________________
printed name:_____________________________ printed name:___________________
title:____________________________________ title:_________________________
KINGDOM PLANET HOLLYWOOD LTD., a
company organized under the laws of the Cayman Islands
By:_____________________________________
printed name:_____________________________
title:____________________________________
6 of 6
EXHIBIT 10.1
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NOTE PURCHASE AGREEMENT
BY AND AMONG
PLANET HOLLYWOOD INTERNATIONAL, INC.,
EACH OF THE PURCHASERS PARTY HERETO
AND
WILMINGTON TRUST COMPANY,
AS AGENT
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DATED AS OF MAY 8, 2000
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THIS AGREEMENT IS SUBJECT TO AN INTERCREDITOR AND SUBORDINATION AGREEMENT DATED
AS OF THE DATE HEREOF BY AND AMONG THE CIT GROUP/BUSINESS CREDIT, INC., FOR
ITSELF AND AS AGENT, WLR RECOVERY FUND L.P., WILMINGTON TRUST COMPANY, AS AGENT,
UNITED STATES TRUST COMPANY OF NEW YORK, AS JUNIOR SUBORDINATED TRUSTEE AND THE
OTHER PERSONS AND ENTITIES SIGNATORY THERETO (THE "INTERCREDITOR AGREEMENT"),
WHICH MATERIALLY AFFECTS CERTAIN PAYMENT RIGHTS, SUBORDINATES CERTAIN
OBLIGATIONS AND CERTAIN SECURITY INTERESTS AND LIENS, AND LIMITS RIGHTS TO
ENFORCEMENT OF THE PARTIES TO THIS AGREEMENT. ALL PERSONS OR OTHER ENTITIES
WHICH AT ANY TIME HOLD INDEBTEDNESS HEREUNDER OR WHICH IS SECURED HEREBY ARE
BOUND BY THE TERMS OF THE INTERCREDITOR AGREEMENT, WHICH WILL BE MADE AVAILABLE
UPON REQUEST TO ANY PARTY HERETO.
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TABLE OF CONTENTS
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ARTICLE 1
DEFINITIONS
1.1. Definitions............................................................................................1
ARTICLE 2
LOANS AND WARRANTS
2.1. Loans................................................................................................19
2.2. Notes................................................................................................19
2.3. Notice of Borrowing; Making of Loans.................................................................19
2.4. Reduction of Current Commitment......................................................................20
2.5. Purchase and Sale of Warrants........................................................................20
ARTICLE 3
PAYMENT OF LOANS
3.1. Payments..............................................................................................21
3.2. Interest..............................................................................................22
3.3. Optional Prepayments..................................................................................22
3.4. Mandatory Prepayments.................................................................................22
3.5. Notice of Prepayments.................................................................................24
3.6. Application of Payments...............................................................................24
3.7. Fees and Expenses.....................................................................................24
3.8. Conversion Option.....................................................................................25
ARTICLE 4
CONDITIONS TO EFFECTIVENESS
4.1. Conditions to Effectiveness...........................................................................32
4.2. Conditions to Subsequent Loans........................................................................37
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
5.1. Organization and Good Standing........................................................................38
5.2. Authority and Authorization...........................................................................39
5.3. Execution and Binding Effect..........................................................................39
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5.4. Governmental Approvals................................................................................39
5.5. Absence of Conflicts..................................................................................40
5.6. Subsidiaries..........................................................................................40
5.7. Litigation............................................................................................40
5.8. Financial Condition...................................................................................40
5.9. Compliance with Law...................................................................................41
5.10. ERISA.................................................................................................41
5.11. Taxes.................................................................................................41
5.12. Full Disclosure.......................................................................................42
5.13. Operating Lease Obligations; Existing Liens; Unpaid Rent..............................................42
5.14. Environmental Matters.................................................................................42
5.15. Schedules.............................................................................................43
5.16. Insurance.............................................................................................43
5.17. Financial Accounting Practices........................................................................43
5.18. No Material Adverse Effect............................................................................43
5.19. Real Property; Leases.................................................................................43
5.20. Location of Bank Accounts.............................................................................44
5.21. No Event of Default...................................................................................45
5.22. Capitalized Leases....................................................................................45
5.23. Inventory and Memorabilia.............................................................................45
5.24. Collateral............................................................................................45
5.25. Tradenames............................................................................................45
5.26. Intellectual Property.................................................................................45
5.27. Nature of Business....................................................................................46
5.28. Adverse Agreements....................................................................................46
5.29. Holding Company and Investment Company Acts...........................................................46
5.30. Permits...............................................................................................46
5.31. Priority; Title.......................................................................................46
5.32. Labor Relations; Collective Bargaining Agreements.....................................................46
5.33. Note Documents........................................................................................47
5.34. Solvency..............................................................................................47
5.35. Intentionally Omitted.................................................................................47
5.36. TSP Agreement.........................................................................................47
5.37. Use of Proceeds.......................................................................................48
5.38. Stock and Capitalization..............................................................................48
5.39. No Solicitation or Registration.......................................................................50
5.40. Ownership of Planet Hollywood Memorabilia, Inc. and the Memorabilia...................................50
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5.41. Corporate Structure...................................................................................50
5.42. No Prohibited Transaction.............................................................................50
5.43. Material Contracts....................................................................................50
5.44. Inactive Guarantors...................................................................................50
5.45. Foreign Entities......................................................................................50
5.46. Electing Holders......................................................................................50
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS
6.1. Representations of Each Purchaser.....................................................................51
ARTICLE 7
AFFIRMATIVE COVENANTS
7.1. Payments and Taxes....................................................................................52
7.2. Company Parties.......................................................................................53
7.3. TSP Agreement.........................................................................................54
7.4. Intentionally Omitted.................................................................................54
7.5. Reporting Requirements................................................................................54
7.6. Compliance with Laws..................................................................................58
7.7. Preservation of Existence.............................................................................58
7.8. Keeping of Records and Books of Account...............................................................58
7.9. Inspection Rights.....................................................................................58
7.10. Maintenance of Properties.............................................................................59
7.11. Insurance.............................................................................................59
7.12. Environmental.........................................................................................61
7.13. Further Assurances....................................................................................61
7.14. Financial Accounting Practices........................................................................61
7.15. Cash Management System................................................................................62
7.16. Store Openings and Closings...........................................................................63
7.17. Memorabilia and Inventory.............................................................................63
7.18. Change in Collateral; Collateral Records..............................................................63
7.19. Landlord Waivers......................................................................................64
7.20. Leases................................................................................................64
7.21. Authenticity Documents................................................................................64
7.22. Reservation of Shares.................................................................................64
7.23. Stock Issuable on Conversion or Exercise..............................................................64
7.24. Sale of the Company...................................................................................65
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7.25. HSR Act...............................................................................................65
7.26. Allocation of Value to Warrants.......................................................................65
ARTICLE 8
NEGATIVE COVENANTS
8.1. Liens.................................................................................................65
8.2. Indebtedness..........................................................................................66
8.3. Guarantees............................................................................................67
8.4. Merger, Consolidation, Sale of Assets.................................................................67
8.5. Change in Nature of Business..........................................................................68
8.6. Loans; Advances and Investments.......................................................................68
8.7. Lease Obligations.....................................................................................69
8.8. Dividends; Prepayments................................................................................69
8.9. Transactions with Affiliates..........................................................................70
8.10. Sale Policies.........................................................................................70
8.11. Environmental.........................................................................................70
8.12. ERISA.................................................................................................70
8.13. Subsidiaries..........................................................................................70
8.14. Capital Expenditures..................................................................................71
8.15. Federal Reserve Regulations...........................................................................71
8.16. Intellectual Property.................................................................................71
8.17. No Purchase of Loans or Notes.........................................................................71
8.18. Inactive Guarantors...................................................................................71
8.19. Negative Pledge.......................................................................................71
8.20. Foreign Entities......................................................................................72
ARTICLE 9
INDEMNIFICATION
9.1. Indemnification.......................................................................................72
9.2. Notification..........................................................................................72
9.3. Survival..............................................................................................73
ARTICLE 10
DEFAULTS AND REMEDIES
10.1. Events of Default.....................................................................................73
10.2. Remedies..............................................................................................76
10.3. Remedies Under Note Documents.........................................................................77
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ARTICLE 11
THE AGENT
11.1. Appointment and Authorization.........................................................................77
11.2. Rights of Agent.......................................................................................77
11.3. Actions by Agent......................................................................................77
11.4. Liability of Agent....................................................................................78
11.5. Indemnification.......................................................................................79
11.6. Credit Decision.......................................................................................79
11.7. Resignation of Agent..................................................................................79
11.8. Removal of Agent......................................................................................79
11.9. Successor Agent.......................................................................................79
ARTICLE 12
MISCELLANEOUS
12.1. Survival of Provisions................................................................................80
12.2. Notices...............................................................................................80
12.3. Notes.................................................................................................81
12.4. Successors and Assigns................................................................................82
12.5. Assignments and Participations........................................................................82
12.6. Amendment and Waiver..................................................................................83
12.7. Counterparts; Facsimile Signatures....................................................................84
12.8. GOVERNING LAW.........................................................................................84
12.9. JURISDICTION; VENUE; SERVICE OF PROCESS; WAIVER OF JURY TRIAL.........................................84
12.10. Severability.......................................................................................85
12.11. Remedies...........................................................................................85
12.12. Fees and Expenses..................................................................................85
12.13. Entire Agreement...................................................................................85
12.14. Publicity..........................................................................................86
12.15. Confidentiality....................................................................................86
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EXHIBITS
EXHIBIT A Form of Note
EXHIBIT B Form of Guaranty
EXHIBIT C Form of Intercreditor Agreement
EXHIBIT D Warrant
EXHIBIT E Intentionally Omitted
EXHIBIT F-1 Form of Pledge Agreement-Company
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EXHIBIT F-2 Form of Subsidiary Pledge Agreement
EXHIBIT G Form of Registration Rights Agreement
EXHIBIT H Form of Security Agreement-Company
EXHIBIT I Form of Subsidiary Security Agreement
EXHIBIT J Form of Amended and Restated Certificate of Incorporation
of the Company
EXHIBIT K Form of Section 7.1(b) Certificate
EXHIBIT L Form of Assignment and Acceptance
EXHIBIT M Form of Credit Card Depository Account Agreement
EXHIBIT N Form of Payment Direction Notice
EXHIBIT O Form of Depository Account Agreement
EXHIBIT P Form of Notice Letter to Depository Banks
Exhibit Q Blocked Account Agreement
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SCHEDULES
1.1(A) Active Guarantors
1.1(B) Foreign Entities
1.1(C) Inactive Guarantors
1.1(D) Credit Card Agreements
2.1 Purchasers' Details
3.7(a) Shares to be Issued at Closing
3.9 PH Trademarks
4.1(e)(v) Waivers
5.6 Subsidiaries
5.7 Litigation
5.10 ERISA
5.13 Operating Lease Obligations; Existing Liens; Unpaid Rent
5.14 Environmental Matters
5.16 Insurance
5.19(a) Properties
5.19(b) Leases
5.20 Location of Bank Accounts
5.23 Inventory and Memorabilia
5.25 Tradenames
5.32 Collective Bargaining Agreements
5.36 Members and Membership Interest
5.38(a) Reserved Shares
5.38(b) Outstanding Warrants, Options etc.
5.38(c) Record Holders
5.41 Corporate Structure
5.43 Material Contracts
7.15 State Tax Payments
7.16 Store Openings and Closings
7.17 Permitted Memorabilia and Inventory
7.19 Landlord, Warehouse and Franchisee Waivers
8.1 Liens
8.2 Permitted Indebtedness
8.3 Guaranties
8.6 Investments
8.9 Transactions with Affiliates
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NOTE PURCHASE AGREEMENT, dated as of May 8, 2000, by and among
PLANET HOLLYWOOD INTERNATIONAL, INC. a Delaware corporation (together with its
permitted successors and assigns, the "COMPANY"); each of the PURCHASERS
SIGNATORY HERETO; and WILMINGTON TRUST COMPANY, a Delaware corporation, as agent
for the Purchasers (together with its successors and permitted assigns, the
"AGENT").
INTRODUCTION
In connection with the consummation of the Plan of
Reorganization (as such term is, and all other capitalized terms are, defined
below) of the Company and 23 of its Subsidiaries, the Purchasers are willing to
make certain Loans to the Company upon and in accordance with the terms of this
Agreement.
In consideration of the mutual covenants and agreements set
forth herein and for good and valuable consideration, the receipt and adequacy
of which is hereby acknowledged, the parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
1.1. Definitions.
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(a) In addition to the terms defined elsewhere in this
Agreement, as used herein, and unless the context requires a different meaning,
the following terms have the meanings indicated:
"ACTIVE GUARANTOR" and "ACTIVE GUARANTORS" means (i) the
direct or indirect existing Subsidiaries of any Company Party (other than
Inactive Guarantors) listed as an Active Guarantor on SCHEDULE 1.1(A) annexed
hereto, and (ii) any other entity that, after the Closing Date, becomes a direct
or indirect U.S. Subsidiary of any Company Party and has business operations or
assets located within the United States of America.
"ADDITIONAL SHARES" means any Common Stock of the Company
issued by the Company after the Effective Date other than (i) Shares issued upon
the exercise of the Warrants or the Conversion Option, (ii) stock options
issued, and shares of Common Stock issued upon exercise of such stock options,
pursuant to the Company's existing stock option plans or any stock option plans
hereafter adopted by the Company, (iii) any shares of Common Stock issued
pursuant to any restricted share agreement adopted by the Company or hereafter
adopted by the Company and (iv) shares of Common Stock issued in connection with
any merger, consolidation or reorganization of the Company with and into another
Person, or the sale of all or substantially all of the assets of the Company.
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"AFFILIATE" of a Person shall mean any other Person (other
than a Subsidiary) which, directly or indirectly, is in control of, is
controlled by, or is under common control with, such Person. For purposes of
this definition (i) "CONTROL" of a Person means the power, directly or
indirectly, either to (A) vote twenty percent (20%) or more of the securities
having ordinary voting power for the election of directors of such Person or (B)
direct or cause the direction of the management and policies of such Person
whether by contract or otherwise, and (ii) neither the Agent nor any Purchaser
shall be an Affiliate of any Company Party.
"AGENT" is defined in the introductory paragraph to this
Agreement.
"AGENT ACCOUNT" means an account in the name of the Agent
designated to the Company from time to time into which the Company shall make
all payments to the Agent under this Agreement.
"AGREEMENT" means this Agreement, as the same may be amended,
supplemented or modified in accordance with the terms hereof.
"AGREEMENT REGARDING LEASES" means the Agreement between
Robert Earl and the Purchasers, dated as of the date hereof, with respect to the
Employment Agreement and certain leases.
"ASSET" means any asset, property, right or other interest of
any Company Party as of, and from time to time after, the Closing Date.
"ASSET DISPOSITION PROCEEDS" means the aggregate amount of Net
Proceeds received by on or behalf of the Company or any other Company Party from
Asset Sales (including Asset Sales in respect of Core Assets and non-Core
Assets).
"ASSET SALE" means the sale, assignment, lease, transfer or
other disposition by any Company Party to any Person other than the Company or
any of its wholly-owed Subsidiaries of any Asset; PROVIDED, that the repayment
to any Company Party of any loan or advance permitted under Section 8.6, and the
redemption by any Company Party of any Permitted Investment at maturity, shall
not be an Asset Sale.
"ASSIGNMENT AND ACCEPTANCE AGREEMENT" is defined in Section
12.5(b).
"AUTHENTICITY DOCUMENTS" means all documents and other written
evidence, including, without limitation, computer files, establishing the
authenticity of the Memorabilia or evidencing the chain of title of an item or
items of Memorabilia.
"BANK NOTICE LETTER" means a notice substantially in the form
of the notice annexed as EXHIBIT P.
"BANKRUPTCY COURT" means the United States Bankruptcy Court
for the District of Delaware.
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"BLOCKED ACCOUNT" shall mean the account in the name of the
Agent at the Blocked Account Bank or, if the context shall require, the Blocked
Account under the Working Capital Credit Agreement.
"BLOCKED ACCOUNT AGREEMENT" shall mean each agreement,
substantially in the form of the Agreement attached as EXHIBIT Q, between the
Blocked Account Bank and the Agent delivered to the Agent when required pursuant
to Section 7.15 hereof, as each such Agreement may be modified and supplemented
and in effect from time to time.
"BLOCKED ACCOUNT BANK" shall mean a bank mutually acceptable
to the Company and the Agent.
"BOOK VALUE" means, as to any (x) Inventory in respect of
which such amount is to be determined, the lower of (a) the cost of such
Inventory (as reflected in the ledgers of the Company Parties), or (b) the
market value of such Inventory (both cost and market value being determined in
accordance with GAAP calculated on the first-in, first-out basis) or (y)
Memorabilia in respect of which such amount is to be determined, the value
carried on the date hereof on the books and records of Planet Hollywood
Memorabilia, Inc. or the Company.
"BUDGET" is defined in Section 4.1(e)(xviii).
"BUSINESS DAY" means any day that is not a Saturday, a Sunday
or a day on which banks are required or permitted to be closed in the State of
New York.
"CAPITAL STOCK" of any Person means any and all shares,
interests, participations or other equivalents (however designated) of such
Person's capital stock or membership interests (or equivalent ownership
interests) whether now outstanding or hereafter issued, including, without
limitation, all common stock and preferred stock, and any equity or debt
securities or rights, warrants or options convertible into or exchangeable or
exercisable for such Person's Capital Stock.
"CAPITALIZED LEASE" means any lease which is required under
GAAP to be capitalized on the balance sheet of the lessee.
"CAPITALIZED LEASE OBLIGATIONS" means the aggregate amount
which is required under GAAP to be reported as a liability on the balance sheet
of a Person as lessee under a Capitalized Lease.
"CASH CONCENTRATION ACCOUNT" means the account maintained by a
Company Party in the name of the Company at the Cash Concentration Account Bank
or (b) if the context shall require, the Cash Concentration Account under the
Working Capital Credit Agreement.
"CASH CONCENTRATION ACCOUNT BANK" means a bank selected by the
Agent and reasonably acceptable to the Company.
"CASH EQUIVALENTS" means any (i) direct obligation of the
United States of America (including obligations issued or held in book-entry
form on the books of the Department of the Treasury of
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the United States of America) or obligations the timely payment of the principal
of, or interest on, which are fully guaranteed by the United States of America;
(ii) obligations, debentures, notes or other evidence of indebtedness issued or
guaranteed by any of the following: Export-Import Bank of the United States,
Federal Housing Administration or other agency or instrumentality of the United
States; (iii) repurchase agreements with financial institutions or savings and
loan associations having a combined capital surplus of at least $500,000,000
fully secured by collateral security described in clauses (i) or (ii) of this
definition and continuously having a market value at least equal to the amount
so invested; (iv) interest-bearing demand or time deposits (including
certificates of deposit) which are either (A) insured by the Federal Deposit
Insurance Corporation, or (B) held in banks and savings and loan associations
having a combined capital surplus of at least $500,000,000 fully secured by
collateral security described in clauses (i) or (ii) of this definition and
continuously having a market value at least equal to the amount so invested; (v)
commercial paper rated (on the date of acquisition thereof at least A-l or P-l
or equivalent by S&P or Moody's, respectively (or an equivalent rating by
another nationally recognized credit rating agency of similar standing if
neither of such corporations is then in the business of rating commercial
paper), maturing not more than 90 days from the date of creation thereof; and
(vi) any corporate evidence of indebtedness rated at least "A-" or equivalent by
S&P or Moody's, maturing not more than 90 days from the date of creation
thereof.
"CASUALTY" means any damage to, destruction or loss of or
other casualty with respect to any Asset.
"CIT/WLR" means the CIT Group/Business, Inc., WLR Recovery
Fund L.P. and the other financial institutions which are lenders from time to
time under the Working Capital Credit Agreement.
"CLOSING" is defined in Section 4.1.
"CLOSING DATE" is defined in Section 4.1.
"CODE" means the Internal Revenue Code of 1986, as amended,
and any successor statute of similar import. References to sections of the Code
shall be construed also to refer to any successor sections.
"COLLATERAL" means the collateral described in one or more of
the Security Documents.
"COMMITMENT" means the commitment of the Purchasers to make
Loans under this Agreement in an amount, on any date, not to exceed an aggregate
amount of $10,000,000.00, or such lesser amount to which such original
$10,000,000.00 amount may have been reduced as of such date in accordance with
this Agreement.
"COMMON STOCK", as used in Section 3.8, means New Common
Stock.
"COMPANY PARTIES" means the Company and each of its direct and
indirect Subsidiaries and each other Guarantor, if any.
"CONDEMNATION" means any actual or threatened condemnation,
taking or exercise of the power of eminent domain or similar action or
proceeding.
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"CONDEMNATION PROCEEDS" means, at any time, any award or
payment paid or payable by reason of any Condemnation, whether from the exercise
of the right of Condemnation or any transfer made in lieu thereof or any injury
to in decrease in value of any property in connection with a Condemnation,
including all amounts paid pursuant to any agreement with any condemning
authority that has been made in settlement of any proceeding relating to a
Condemnation and any interest earned on such award, payment or amounts, less the
reasonable costs and expenses (including reasonable attorney's fees and
expenses) of the Company and the Agent and any Purchaser in collecting such
award payment or amounts, which costs and expenses shall be paid out of such
award, payment or amounts.
"CONFIRMATION ORDER" means that certain order of the
Bankruptcy Court, dated January 21, 2000, confirming the Plan of Reorganization,
as the same may be amended from time to time.
"CONSOLIDATED SUBSIDIARY" of a Person at any time means a
Subsidiary or other Affiliate of such Person whose accounts are or should in
accordance with GAAP be consolidated with those of such Person.
"CONSTITUTIVE DOCUMENTS" means (i) with respect to a Person
that is a corporation, such Person's certificate or articles of incorporation
and by-laws, (ii) with respect to a Person that is a limited liability company
or partnership, such Person's certificate of formation and operating or limited
liability company or partnership agreement, (iii) with respect to a Person that
is a partnership, such Person's partnership agreement, (iv) with respect to a
Person that is a trust, such Person's trust instrument or agreement, and (v)
with respect to a Person that is a legal entity (including one of the type
described in clauses (i) through (iv)), any constitutive document of such entity
or other document or agreement analogous to those described in clauses (i)
through this clause (v).
"CONVERSION OPTION" is defined in Section 3.8.
"CONVERSION PRICE" means $4.2857 per Share, as such rate may
be adjusted from time to time in accordance with Section 3.8.
"CONVERTIBLE SECURITIES" means notes, debentures or other
equity or debt securities convertible into shares of capital stock, membership
interests or other equity securities of a specified Person.
"CONVERTING PURCHASER" is defined in Section 3.8(a).
"CORE ASSETS" means any of the following Assets: "Planet
Hollywood" copyrights and globe design and stylized lettering trademarks,
classes 42 and 25; the investment of any Company Party in the Planet Hollywood
restaurant facilities located in Orlando, Florida, London, England, Paris,
France, Las Vegas, Nevada, 1540 Broadway, New York (currently Official All Star
Cafe restaurant), Myrtle Beach, South Carolina, Euro Disney, France, Cannes,
France, Atlantic City, New Jersey, Washington D.C., San Antonio, Texas, St.
Louis, Missouri, Dallas, Texas, Atlanta, Georgia, Miami Beach, Florida
(currently Official All Star Cafe restaurant); joint ventures (excluding Times
Square Partners, ECE de S.A., C.V., Planet Hollywood Asia Pte, Ltd. and
PlanetHollywood Asia.com, Inc.); and Memorabilia reasonably necessary to operate
the foregoing Core Assets.
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"CREDIT CARD AGREEMENTS" or "CREDIT CARD AGREEMENT" means
those agreements listed on SCHEDULE 1.1(D) hereto, as amended from time to time
in accordance with the terms of this Agreement.
"CREDIT CARD DEPOSITORY ACCOUNT AGREEMENT" means an agreement
substantially in the form of the agreement attached as EXHIBIT M.
"CREDIT CARD OBLIGOR" means any of American Express Travel
Related Services Company, Inc., Master Card, VISA, Diners Club, Discover, and,
after the Closing Date, any other Person that the Agent deems reasonably
acceptable in its sole discretion; PROVIDED, HOWEVER, that on the Closing Date
the Company shall (i) notify each of the above entities (and after the Closing
Date, the credit card obligors subsequently approved as aforesaid) and inform
such Person in writing of the Agent's security interest in the Receivables due
to any of the Company Parties from such Person and direct such Person to remit
all payments with respect to such Receivables directly to the Blocked Account,
such notice and direction to be substantially in the form of EXHIBIT N (the
"PAYMENT DIRECTION NOTICE"), and (ii) deliver a Credit Card Depository Account
Agreement executed by such Person.
"CURRENT MARKET PRICE" per share means, on any date specified
herein for the determination thereof, (a) the average daily Market Price of the
New Class A Common Stock for those days during the 15-day period ending on such
date, on which the national securities exchanges were open for trading, and (b)
if the New Class A Common Stock is not then listed, designated as a national
market system security or quoted in the over-counter market, the Market Price on
such date.
"DEFAULT" shall mean any event which, with the passage of time
or notice or both, would, unless cured or waived, become an Event of Default.
"DEPOSITORY ACCOUNTS" means the lock-box or blocked depository
accounts maintained by the Company or any other Company Party pursuant to
Section 7.15 for the collection of cash of the Company or any other Company
Party.
"DEPOSITORY ACCOUNT AGREEMENT" means each agreement,
substantially in the form of the agreement attached as EXHIBIT O among a
Depository Bank, the Company or any other Company Party and the Agent, delivered
to the Agent when required pursuant to Section 7.15 hereof, as each such
agreement may be modified and supplemented and in effect from time to time.
"DEPOSITORY BANK" means each financial institution at which a
Depository Account is maintained.
"DESIGNATED BORROWING OFFICER" means the Chief Financial
Officer of the Company.
"DESIGNATED FINANCIAL OFFICER" means the Chief Financial
Officer of the Company.
"DISBURSEMENT ACCOUNT" means the deposit account in the name
of the Company maintained at a bank in the United States of America designated
by the Company to the Agent into which there shall be deposited proceeds of
Loans and funds disbursed to the Company by the Agent.
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"DOLLARS" or "$" means, unless otherwise qualified, dollars in
lawful currency of the United States.
"EFFECTIVE DATE" means the Closing Date.
"EMPLOYEE SAVINGS PLAN" means that certain qualified cash or
deferred arrangement plan of the Company administered pursuant to Section
4.01(k) of the Code.
"EMPLOYMENT AGREEMENT" means the Employment Agreement, dated
on or about the date hereof, between Robert Earl and the Company.
"ENVIRONMENTAL ACTION" means any complaint, summons, citation,
notice, directive, order, claim, litigation, investigation, proceeding,
judgment, letter or other communication from any Governmental Authority or any
third party involving a Release (i) from or onto any of the properties presently
or formerly owned or leased by the Company or any other Company Party, or (ii)
from or onto any facilities which received Hazardous Materials from the Company
or any other Company Party, or involving any violation of any Environmental Law.
"ENVIRONMENTAL LAWS" means all federal, state and local laws,
statutes, ordinances and regulations, now or hereafter in effect relating to the
regulation and protection of human health, safety, the environment and natural
resources. Environmental Laws include but are not limited to the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended (42
U.S.C.ss.9601 et seq.) ("CERCLA"); the Hazardous Material Transportation Act, as
amended (49 U.S.C.ss.180 et seq.); the Resource Conservation and Recovery Act,
as amended (42 U.S.C.ss.6901 et seq.) ("RCRA"); the Toxic Substance Control Act,
as amended (15 U.S.C.ss.2601 et seq.); the Clean Air Act, as amended (42
U.S.C.ss.7401 et seq.); the Federal Water Pollution Control Act, as amended (33
U.S.C.ss.1251 et seq.); and their state and local counterparts or equivalents.
"ENVIRONMENTAL LIABILITIES AND COSTS" means all liabilities,
monetary obligations (including any and all remedial or clean-up costs but
excluding ordinary course compliance costs), Remedial Actions, losses, damages,
punitive damages, consequential damages, treble damages, costs and expenses
(including all reasonable fees, disbursements and expenses of counsel, expert
and consulting and costs of investigation and feasibility studies), fines,
penalties, sanctions and interest incurred as a result of any Environmental
Action relating to any environmental condition, violation of Environmental Law,
Remedial Actions or a Release of Hazardous Materials from or onto (i) any
property presently or formerly owned by the Company, or (ii) any facility which
received Hazardous Materials generated by the Company or any other Company
Party.
"ENVIRONMENTAL LIEN" means any Lien securing Environmental
Liabilities and Costs incurred by a Governmental Authority.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and any successor statute of similar import. References to
sections of ERISA shall be construed also to refer to any successor sections.
"ERISA AFFILIATE" of a Person means any Company Party and any
(i) corporation which is a member of the same controlled group of corporations
(within the meaning of Section 414(b) of the Code)
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as any Company Party, (ii) partnership or other trade or business (whether or
not incorporated) under common control (within the meaning of Section 414(c) of
the Code) with any Company Party, or (iii) member of the same affiliated service
group (within the meaning of Section 414(m) of the Code) as any Company Party,
any corporation described in clause (i) above or any partnership or trade or
business described in clause (ii) above.
"EVENT OF DEFAULT" is defined in Section 10.1.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended, and all existing or future rules and regulations thereunder.
"EXCLUDED ASSET SALE" means an Asset Sale described in and
permitted by clauses (i), (ii), (iv) or (vi) of Section 8.4(b).
"EXTENDED MATURITY DATE" is defined in Section 3.1(h).
"FOREIGN ENTITY" and "FOREIGN ENTITIES" means any Subsidiary
that is organized under the laws of a jurisdiction other than the United States
of America (consisting of each State thereof and the District of Columbia). All
Foreign Entities existing as of the Closing Date are listed on SCHEDULE 1.1(B).
"GAAP" means generally accepted accounting principles as such
principles shall be in effect in the United States at the relevant date.
"GOVERNING BODY" means, with respect to any Person that is a
legal entity, the Board of Directors, general partners, managing members,
trustees, managers or similar governing body entitled by the Constitutive
Documents of such Person to control and direct the affairs and management of
such Person.
"GOVERNMENTAL AUTHORITY" means any nation, state, county, city
or political subdivision and any official, agency, arbitrator, authority, court,
department, commission, board, bureau, instrumentality or governmental body of
any thereof.
"GUARANTEE" of any Person means any obligation of such Person
guaranteeing any Indebtedness of any other Person (the "PRIMARY OBLIGOR"),
directly or indirectly through an agreement (i) to purchase or pay (or advance
or supply funds for the purchase or payment of) such Indebtedness or to purchase
(or to advance or supply funds for the purchase of) any security for the payment
of such Indebtedness, (ii) to purchase property, securities or services for the
purpose of assuring the owner of such Indebtedness against loss, 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 Indebtedness; PROVIDED, HOWEVER, that the term Guarantee shall not include
endorsements for collection or deposit, in either case in the ordinary course of
business.
"GUARANTOR" means collectively (i) the Active Guarantors and
the Inactive Guarantors, and (ii) any other entity that, after the Closing Date,
becomes a direct or indirect Subsidiary of any Company Party, and executes a
Guaranty.
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"GUARANTY" means a guaranty containing the joint and several
obligations of each Guarantor, dated as of the date hereof, made by a Guarantor
in favor of the Agent for the benefit of the Purchasers, as the same may at any
time be amended or supplemented or otherwise modified from time to time in
accordance with the terms thereof and hereof, substantially in the form of the
Guaranty attached as EXHIBIT B hereto.
"HAZARDOUS MATERIAL" means (i) any element, compound or
chemical that is defined, listed or otherwise classified as a solid waste,
contaminant, pollutant, toxic pollutant, hazardous substance, extremely
hazardous substance, toxic substance, hazardous waste, or special waste under
any Environmental Law, (ii) petroleum and its refined fractions, (iii) any
polychlorinated biphenyls, (iv) any flammable, explosive or radioactive
material, and (v) any asbestos-containing material.
"HOLDER" means each Purchaser and/or any subsequent direct or
indirect transferee of any Note and/or Warrants or securities issuable upon the
conversion of any Obligations or the exercise of any Warrants.
"HOSPITALITY" means Planet Hospitality Holdings, Inc., a
Florida corporation.
"HSR ACT" means the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as the same may be amended, and the rules and regulations
promulgated thereunder.
"INACTIVE GUARANTOR" and "INACTIVE GUARANTORS" means (i) the
direct or indirect existing Subsidiaries of any Company Party listed as an
Inactive Guarantor on SCHEDULE 1.1(C) annexed hereto, and (ii) any other entity
that, after the Closing Date, becomes a direct or indirect U.S. Subsidiary of
any Company Party, has no business operations (other than those operations that
directly relate to maintaining corporate existence) or assets (unless less than
$50,000), and executes a Guaranty and Subsidiary Security Agreement in
accordance with the terms of this Agreement.
"INDEBTEDNESS" of any Person means (i) indebtedness for
borrowed money; (ii) indebtedness for the deferred purchase price of property or
services (other than current trade payables incurred in the ordinary course of
business and payable in accordance with customary practices); (iii) indebtedness
evidenced by bonds, debentures, notes or other similar instruments (other than
performance, surety and appeal or other similar bonds arising in the ordinary
course of business); (iv) obligations and liabilities secured by a Lien upon
property owned by such Person, whether or not owing by such Person and even
though such Person has not assumed or become liable for the payment thereof; (v)
obligations and liabilities of the type otherwise referred to elsewhere in this
definition directly or indirectly Guaranteed by such Person; (vi) obligations or
liabilities created or arising under any conditional sales contract or other
title retention agreement with respect to property used and/or acquired by such
Person, even though the rights and remedies of the lessor, seller and/or lender
thereunder are limited to repossession of such property; (vii) Capitalized Lease
Obligations; (viii) all liabilities in respect of letters of credit, acceptances
and similar obligations created for the account of such Person, and (ix) net
liabilities of such Person under interest rate cap agreements, interest rate
swap agreements, foreign currency exchange agreements and other hedging
agreements or arrangements calculated on a basis satisfactory to the Agent and
in accordance with accepted practice.
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"INSURANCE POLICIES" means the insurance policies and
coverages required to be maintained by the Company or a Company Party pursuant
to Section 7.4.
"INSURANCE PROCEEDS" means, at any time, all proceeds or
payments to which any Company Party may be or become entitled under any of the
Insurance Policies and any and all unearned premiums accrued, accruing or to
accrue under any Insurance Policies and all proceeds of the conversion,
voluntary or involuntary, of any of the foregoing into cash or liquidated
claims, plus (i) the amount of any deductibles under such policies and (ii) any
interest earned on such proceeds, payments or amounts and less (iii) the
reasonable costs and expenses of the Company and the Agent and any Purchaser in
collecting such proceeds, payments or amounts, which costs and expenses shall be
paid out of such proceeds, payments or amounts.
"INSURANCE REQUIREMENTS" means all provisions of the Insurance
Policies, all requirements of the issuer of any of the Insurance Policies and
all orders, rules, regulations and any other requirements of the National Board
of Fire Underwriters (or any other body exercising similar functions) binding
upon any Company Party or applicable to the applicable Asset or any adjoining
vaults, sidewalks, parking areas or driveways or any use or condition thereof.
"INTELLECTUAL PROPERTY" means all trademarks, service marks,
trade names, business names, trade dress, trade styles, designs, logos, slogans,
domain names and other source or business identifiers (together with all the
goodwill of the business symbolized thereby), design patents, utility patents,
and copyrights (including all applications, registrations, rights to apply for
registration and recording thereof and all extensions, reissues, divisions,
continuations, continuations in part and extensions or renewals thereof), and
all rights in inventions, invention disclosures, trade secrets, customer lists,
formulae, proprietary information and technology, know-how, licenses, permits,
authorizations, franchises, and advertising campaigns or other advertising
devices, products, processes, methods, substances or parts, and all other
intellectual property rights and other general intangibles of like nature, and
any licenses or user rights to the foregoing.
"INTERCREDITOR AGREEMENT" means the Intercreditor and
Subordination Agreement dated as of the date hereof among the Working Capital
Agent, the PIK Trustee, the Agent, and consented to by the Company and the PIK
Holders and Purchasers signatory thereto, in form and substance satisfactory to
the Purchasers and the Agent establishing, among other things, the lien priority
among the parties thereto, as the same may at any time be amended or
supplemented or otherwise modified from time to time in accordance with the
terms thereof and hereof, in the form of the Intercreditor Agreement attached as
EXHIBIT C hereto.
"INVENTORY" means all goods and merchandise of the Company and
each Company Party, including, but not limited to, all raw materials, work in
process, finished goods, materials and supplies of every nature used or usable
in connection with the shipping, storing, advertising or sale of such goods and
merchandise, whether now owned or hereafter acquired and all such property, the
sale or disposition of which would give rise to accounts receivable or cash.
"LEASES" means any lease of real property to which the Company
or any other Company Party is a party as lessee or lessor.
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"LEGAL REQUIREMENT" means (i) with respect to any Person,
including the Company Parties, any constitution, act, statute, law, ordinance,
treaty, rule, regulation or official interpretation of, or any judgment,
injunction, order, decision, decree, license, permit or authorization issued by,
any Governmental Authority and (ii) with respect to any Company Party, any legal
requirement or rule, regulation, by-law, official interpretation, license,
permit, certification or authorization of any self-regulatory organization,
licensing authority, stock exchange or trading system, in each case applicable
to Persons (including brokers and dealers) involved in the business of managing,
trading, underwriting or placing securities, including without limitation those
of the National Association of Securities Dealers, Inc. and the New York Stock
Exchange.
"LIEN" means any mortgage, deed of trust, pledge, lien,
security interest, charge or other encumbrance or security arrangement of any
nature whatsoever, including but not limited to any conditional sale or title
retention arrangement, and any assignment, deposit arrangement or lease intended
as, or having the effect of, security.
"LOAN" means any loan made by the Purchasers to the Company
pursuant to the terms of this Agreement.
"LOSSES" means all damages, claims, fines, fees, penalties,
deficiencies, losses, diminutions in value, expenses (including court costs,
fees and expenses of attorneys, accountants, consultants and other experts) and
other liabilities, and, with respect to any indemnity, includes all attorneys'
fees and expenses in connection with the enforcement and collection of such
indemnity.
"MARKET PRICE" means, per Share of the New Class A Common
Stock, on any date specified herein: (a) if the New Class A Common Stock is then
listed or admitted to trading on any national securities exchange, the closing
price of the New Class A Common Stock on such date; (b) if the New Class A
Common Stock is not then listed or admitted to trading on any national
securities exchange but is traded on the Nasdaq National Market or the Nasdaq
SmallCap Market, the last sale price of the New Class A Common Stock on such
date; or (c) if there shall have been no trading on such date, the average of
the reported closing bid and asked price of the New Class A Common Stock, on
such date as reported by such national securities exchange or Nasdaq; or (d) if
neither (a), (b) nor (c) is applicable, the fair market value per share
determined in good faith by the Board of Directors of the Company.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on
(i) the condition (financial or otherwise), operations, performance, properties
or Assets or business of (x) the Company or (y) all Company Parties taken as a
whole, (ii) the ability of (x) the Company or (y) all Company Parties
collectively, to pay or perform their Obligations in accordance with their
terms, (iii) the legality, validity or enforceability of this Agreement or any
other Note Document or the priority of any Lien, (iv) the legality, validity or
enforceability of the issuance of any Shares in connection with this Agreement,
the conversion of any of the Obligations or the exercise of any Warrants or
otherwise, or (v) the saleability or the value of the Memorabilia taken as a
whole, as determined by a third-party appraiser acceptable to the Agent (or,
prior to the Working Capital Termination Date, the Working Capital Agent) in its
sole discretion.
"MATERIAL CONTRACTS" means any and all contracts, instruments,
guaranties, licenses or other arrangements to which the Company or any Guarantor
is a party as to which the breach,
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nonperformance, cancellation or failure to renew by any party thereto would or
could reasonably be expected to have a Material Adverse Effect.
"MATURITY DATE" means the second anniversary of the date
hereof, as such date may be extended pursuant to Section 3.1(h) hereof, or any
earlier date on which the Loans and the Notes shall be due and payable in full
in accordance with the terms of this Agreement.
"MEMBERSHIP INTEREST" means the 20% membership interest in
Times Square Partners LLC currently held by Hospitality.
"MEMORABILIA" means (i) all memorabilia, collectibles,
souvenirs, keepsakes or any other tangible personal property (and the ownership
and Authenticity Documents related thereto) owned by any Company Party the
market value of which is to any extent derived from any association with (A) a
celebrity, entertainer or athlete or any other person reasonably understood to
be a celebrity, entertainer or athlete, or (B) any motion picture, television
program, series of television programs or sports or entertainment event, and
(ii) all memorabilia, collectibles, souvenirs or keepsakes recognized as such by
the Agent, to or in which any Company Party has a right of ownership (including,
without limitation, all items at any time appearing on the Memorabilia Report
and any Memorabilia Change Report).
"MEMORABILIA AGENT" means the Working Capital Agent until the
Working Capital Facility Termination Date, and thereafter, the Agent.
"MEMORABILIA CHANGE REPORT" is defined in Section 7.5(f).
"MEMORABILIA REPORT" means the master report listing all items
of Memorabilia generated by a computer program maintained by the Company which
identifies the Memorabilia by item number, and which otherwise complies with
Section 7.5(f) as the same is updated, amended or supplemented from time to
time.
"MULTIEMPLOYER PLAN" means a "multiemployer plan" as defined
in Section 3(37) of ERISA and subject to Title IV of ERISA which is, or within
the immediately preceding six (6) years was, contributed to (or required to be
contributed to) by the Company or any ERISA Affiliate.
"NET CASH PROCEEDS" means with respect to any Asset Sale or
multiple Asset Sales to one Person or a group of related Persons, any aggregate
payments of cash or Cash Equivalents received by a Company Party from or in
respect of any such Asset Sale(s), net of repayment of Indebtedness (other than
Indebtedness in respect of the Working Capital Facility) secured by a Permitted
Lien on the Asset which is the subject of the Asset Sale having a priority
senior to the priority of the Lien of the Agent on such Asset and also net of
reasonable direct out of pocket expenses and customary fees of such sale(s) and
net of taxes paid (or anticipated to be paid and that are escrowed for such
purpose); PROVIDED, HOWEVER, that no sales commissions or other fees in
connection with any such sale(s) shall be paid to any Affiliate of any Company
Party. "Net Cash Proceeds" shall include all payments or other distributions to
a Company Party of cash or property in respect of the Membership Interest.
"NET PROCEEDS" means with respect to any Asset Sale or
multiple Asset Sales to one Person or a group of related Persons, the sum of all
Net Cash Proceeds and all non-cash proceeds received by a Company Party from or
in respect of any such Asset Sale(s).
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"NEW CLASS A COMMON STOCK" means the Class A shares of
authorized common stock, par value $.01 per share, of the Company.
"NEW CLASS B COMMON STOCK" means the Class B shares of
authorized common stock, par value $.01 per share, of the Company.
"NEW COMMON STOCK" means collectively, the New Class A Common
Stock, the New Class B Common Stock, par value $.01 per share, of the Company,
and any other common stock of the Company authorized to be issued.
"NEW MONEY INVESTORS" means those certain Persons that are
acquiring 7.0 million shares of New Class B Common Stock of the Company for an
aggregate purchase price of not less than $30,000,000.00 pursuant to the Plan of
Reorganization.
"NOTE" means one or more of the promissory notes from the
Company to one or more of the Purchasers in respect of one or more Loans.
"NOTE DOCUMENTS" means (i) this Agreement, (ii) the Notes,
(iii) each Guaranty, (iv) the Security Documents, (v) the Registration Rights
Agreement, (vi) the Intercreditor Agreement, (vii) the Blocked Account
Agreement, the Depository Account Agreements, each Payment Direction Notice, and
each Credit Card Depository Account Agreement, (viii) the Warrants, and (ix) all
other documents and instruments executed and/or delivered in connection
herewith.
"NOTE PERCENTAGE" means, as to each Purchaser at any time, the
ratio of the percentage of the outstanding principal amount of Loans made by
such Purchaser (or such Purchaser's interest therein, as applicable) at such
time to the aggregate outstanding principal amount of all Loans at such time;
PROVIDED, that the initial Note Percentage of each Purchaser is set forth on
SCHEDULE 2.1.
"NOTE RATE" means 14% per annum.
"NOTICE OF BORROWING" is defined in Section 2.3.
"OBLIGATIONS" means all Loans, advances, debts, liabilities,
and other obligations for monetary amounts (whether or not such amounts are
liquidated, contingent or otherwise determinable) owing by a Company Party or
all of them to the Agent or any Purchaser, or any Subsidiary or Affiliate of the
Agent or a Purchaser, and all other covenants, duties and obligations, in each
case of any kind or nature, direct or indirect, present or future, secured or
unsecured, whether or not evidenced by any note, agreement or other instrument,
arising under this Agreement, the Notes or any of the other Note Documents,
whether at maturity or by prepayment, acceleration, declaration of default or
otherwise, including, without limitation, the principal amount of the Notes, as
well as all interest thereon (including all amounts in respect of interest that
accrues after the commencement of any case, proceeding or other action relating
to the bankruptcy, insolvency or reorganization of any Company Party, whether or
not a claim in respect thereof is allowed in any such case, proceeding or other
action), and all other fees, charges, costs, expenses, attorneys' fees and any
other sum chargeable to a Company Party under any of the Note Documents.
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"OPERATING LEASE OBLIGATIONS" means all obligations and
indebtedness of the Company and its Subsidiaries in respect of leases of
property (whether real, personal or mixed), other than Capitalized Lease
Obligations.
"OPTION PLAN" means one or more stock option plans to be
implemented by the Company providing for the issuance to management and
Celebrities (as defined in the Plan of Reorganization) of options to purchase up
to 1.0 million shares of New Class A Common Stock on a fully diluted basis.
"OVERDUE RATE" means the Note Rate then in effect from time to
time, plus 2% per annum.
"PAYMENT DIRECTION NOTICE" means a notice and direction
substantially in the form of the notice and direction annexed as EXHIBIT N.
"PAYMENT OFFICE" means the place designated by the Agent in
writing from time to time at which payments are to be made by the Company or any
other Company Party under this Agreement or any other Note Document.
"PBGC" means the Pension Benefit Guaranty Corporation or any
successor thereto.
"PERMITTED INVESTMENTS" means (a) direct obligations of the
United States of America or of any agency thereof or obligations guaranteed as
to principal and interest by the United States of America or of any agency
thereof, in either case maturing not more than 180 days from the date of
acquisition thereof by such Person; (b) deposit accounts with or certificates of
deposit issued by any bank or trust company organized under the laws of the
United States of America or any state thereof and having capital, surplus and
undivided profits of at least $500,000,000, maturing not more than ninety (90)
days from the date of acquisition thereof by such Person; (c) commercial paper
rated A-1 or better or P-1 or better by Standard & Poor's Corporation ("S&P") or
Moody's Investors Services, Inc. ("MOODY'S"), respectively, maturing not more
than ninety (90) days from the date of acquisition thereof by such Person; and
(d) investments in money market funds rated AAAm or AAAm-G by S&P and Aaa by
Moody's.
"PERMITTED LIENS" is defined in Section 8.1.
"PERMITTED PIK NOTE PAYMENTS" means any payment of principal
or interest required to be made under the PIK Notes, but only to the extent that
all Company Parties have, on a consolidated basis, cash plus availability for
the borrowing under a working capital credit facility (which, as of the Closing
Date, is the Working Capital Facility), as of each date of determination (as
determined by the Agent in its reasonable judgment) of at least $25,000,000.
"PERSON" means an individual, corporation, partnership,
limited liability company, limited liability partnership, trust, unincorporated
association, joint venture, joint-stock company, government (including political
subdivisions), Governmental Authority or agency, or any other entity.
"PH TRADEMARKS" means the trademarks listed on SCHEDULE 3.9.
"PIK HOLDERS" means the holders of the PIK Notes.
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"PIK INDENTURE" means the indenture, dated as of the date
hereof, among the Company, as issuer, the Guarantors, and the PIK Trustee, as
trustee, pursuant to which the PIK Notes were issued, as the same may be
amended, modified, supplemented or restated from time to time.
"PIK NOTES" means the 10% Secured Deferrable Interest Notes
Due 2005 issued pursuant to the PIK Indenture, as the same may be modified,
supplemented or restated from time to time.
"PIK TRUSTEE" means United States Trust Company of New York,
as trustee under the PIK Indenture, and its successors and assigns, pursuant to
which the PIK Notes were issued.
"PLAN" means an employee benefit plan defined in Section 3(3)
of ERISA (other than a Multiemployer Plan) in respect of which the Company or
any ERISA Affiliate is, or within the immediately preceding six (6) years was,
an "employer" as defined in Section 3(5) of ERISA, or in respect of which the
Company or any ERISA Affiliate has any liability under ERISA.
"PLAN OF REORGANIZATION" means that certain Plan of
Reorganization of the Company and certain of its Subsidiaries, dated December
13, 1999, which was entered on January 21, 2000, as amended, restated,
supplemented or otherwise modified, and as confirmed by the Confirmation Order.
"PLEDGE AGREEMENT" means the Pledge Agreement substantially in
the form of EXHIBIT F-1 hereto by the Company in favor of the Agent for the
benefit of the Purchasers, as amended, modified or supplemented from time to
time in accordance with the terms thereof and hereof.
"PRIME RATE" means the interest rate per annum publicly
announced from time to time by the Bank of New York, New York as its Prime Rate,
such interest rate to change automatically from time to time effective as of the
announced effective date of each change in the Prime Rate. The Prime Rate is not
intended to be the lowest rate of interest charged by the Bank of New York to
any borrower.
"PROPERTY" means any property; any assets; any evidences of
indebtedness of the Company or other Person; any capital stock of the Company or
any other Person; any Rights; or any Convertible Securities.
"PURCHASER" means each Purchaser signatory hereto and any
subsequent direct or indirect transferee of such Person's interest in the Loans,
this Agreement, any Notes and the other Note Documents.
"RECEIVABLES" means with respect to any Credit Card Obligor,
the amount owed by such Credit Card Obligor to the Company or any other Company
Party under a charge account agreement arising from sale of merchandise or
services by the Company or any other Company Party.
"REGION III" means Planet Hollywood (Region III), Inc., a
Florida corporation.
"REGISTRATION RIGHTS AGREEMENT" means the Registration Rights
Agreement, dated as of the date hereof, between the Purchasers, the Company, the
New Money Investors and certain other parties thereto, as the same may at any
time be amended or supplemented or otherwise modified from time to time in
accordance with the terms thereof and hereof, substantially in the form of the
Registration Rights Agreement attached as EXHIBIT G hereto.
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"RELEASE" means any spilling, leaking, pumping, pouring,
emitting, emptying, injection, discharging, injecting, escaping, leaching,
dumping or disposing (including abandonment or discarding of barrels, containers
and other closed receptacles containing any hazardous substance, pollutant or
contaminant) of a Hazardous Material into the indoor or outdoor environment or
onto or from any property presently or formerly owned or operated by the Company
or any other Company Party, or at any disposed facility that received Hazardous
Materials generated by the Company or any other Company Party including the
migration of Hazardous Materials through or in the air, soil, surface water,
groundwater or property.
"REMEDIAL ACTION" shall mean all actions taken to (i) monitor,
assess, evaluate, investigate, clean up, remove, remediate, treat, contain or in
any other way address Hazardous Materials in the indoor or outdoor environment;
(ii) prevent or minimize a Release or threatened Release of Hazardous Materials
so that the Release or threatened Release does not migrate or endanger or
threaten to endanger public health or welfare or the environment; or (iii)
perform pre-remedial studies and investigations and post-remedial operation and
maintenance activities, or any other actions authorized by 42 U.S.C. ss. 9601.
"REPORTABLE EVENT" shall mean any of the events described in
Section 4043(c) of ERISA with respect to a Plan (other than events for which the
notice requirements have been waived).
"REQUIRED PURCHASERS" means, on any date, Purchasers holding
at least 66 2/3% of the principal amount of Notes outstanding on such date.
"RIGHTS" means warrants, options or other rights to acquire
capital stock, membership interests or other equity securities of a specified
Person.
"SECTION 7.1(B) CERTIFICATE" is defined in Section 7.1(b).
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SECURITY" has the meaning specified in section 2(1) of the
Securities Act.
"SECURITY AGREEMENT" means the Security Agreement dated as of
the date hereof among the Company and the Agent for the benefit of the
Purchasers, in form and substance satisfactory to the Purchasers and the Agent,
substantially in the form of EXHIBIT H hereto, as the same may at any time be
amended or supplemented or otherwise modified from time to time in accordance
with the terms thereof and hereof.
"SECURITY DOCUMENTS" means (i) the Security Agreement, (ii)
the Subsidiary Security Agreements, (iii) the Pledge Agreement, (iv) the
Subsidiary Pledge Agreements, (v) the Assignment for Security (Trademark),
substantially in the form of Exhibit A to the Security Agreement, and (vi) the
Assignment for Security (Copyrights), substantially in the form of Exhibit B to
the Security Agreement, in each case to be executed pursuant to the Security
Agreement and Subsidiary Security Agreements.
"SHARE" means a share of New Class A Common Stock of the
Company.
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"SOLVENT" means, with respect to any Person on a particular
date, that on such date (a) the fair value of the property of such Person is not
less than the total amount of its liabilities, (b) the present fair salable
value of the assets of such Person is not less than the amount that will be
required to pay the probable liability of such Person on its existing debts as
they become absolute and matured, (c) such Person is able to pay its debts and
other liabilities as they mature in the normal course of business, (d) such
Person does not intend to, and does not believe that it will, incur debts or
liabilities beyond such Person's ability to pay as such debts and liabilities
mature, and (e) such Person is not engaged in business or a transaction for
which such Person's property would constitute unreasonably small capital.
"SPECIAL DISTRIBUTION" has the meaning given it in Section
3.8(i).
"SPECIAL NOTICE" means the notice sent by a holder to the
Company indicating its preference to have any Special Distribution set aside for
its benefit upon any exercise of the Conversion Option.
"SUBSIDIARY" means Planet Hollywood Memorabilia Inc., Region
III, Hospitality and, with respect to any Person, any corporation, limited or
general partnership, limited liability company, limited liability partnership,
trust, association or other business entity of which an aggregate of more than
50% of the outstanding stock or other interests entitled to vote in the election
of the Board of Directors or governing body performing like functions of such
corporation (irrespective of whether, at the time, stock of any other class or
classes of such corporation shall have or might have voting power by reason of
the happening of any contingency), managers, trustees or other controlling
persons, or an equivalent controlling interest therein, of such Person is, at
the time, directly or indirectly, owned or controlled by such Person and/or one
or more Subsidiaries of such Person; PROVIDED, HOWEVER, that if the Company has
the power to direct or cause the direction of the management and/or policies of
such Person, then the language "more than 50%" in this definition shall read 50%
or more.
"SUBSIDIARY PLEDGE AGREEMENT" means the Pledge Agreement
substantially in the form of EXHIBIT F-2 hereto by each Guarantor in favor of
the Agent for the benefit of the Purchasers, as amended, modified or
supplemented from time to time in accordance with the terms thereof and hereof.
"SUBSIDIARY SECURITY AGREEMENT" means the Security Agreement
made by each Guarantor in favor of the Agent for the benefit of the Purchasers,
substantially in the form of EXHIBIT I hereto, as the same may at any time be
amended or supplemented or otherwise modified from time to time in accordance
with the terms thereof and hereof.
"TAXES" is defined in Section 7.1.
"TERMINATION DATE" means the earlier of the Maturity Date and
any earlier date pursuant to which this Agreement and/or the Commitment may be
terminated as provided herein.
"TERMINATION EVENT" shall mean (i) a Reportable Event with
respect to any Plan, (ii) the withdrawal of the Company or any ERISA Affiliate
from a Plan during a plan year in which the Company or any ERISA Affiliate was a
"substantial employer" as defined in Section 4001(a)(2) of ERISA, (iii) the
imposition of an obligation on the Company or any ERISA Affiliate under Section
4041 of ERISA to
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provide affected parties written notice of intent to terminate a Plan in a
distress termination described in Section 4041(c) of ERISA, or (iv) the
institution by the PBGC of proceedings to terminate a Plan.
"TSP" means Times Square Partners LLC, a New York limited
liability company.
"TSP AGREEMENT" means the Amended and Restated Limited
Liability Company Operating Agreement of TSP, dated as of December 3, 1997,
among Intell Times Square LLC, Madison Broadway Associates LLC, SPE Times
Square, Inc., Hospitality and Ned White.
"U.S. SUBSIDIARIES" or "U.S. SUBSIDIARY" means any Subsidiary
that has (i) its domicile in the United States of America, and/or (ii) its
principal place of business or Assets in the United States of America.
"WARRANTS" means the Warrants granted by the Company to a
Purchaser to purchase Shares of the Company's New Class A Common Stock,
substantially in the form of EXHIBIT D.
"WORKING CAPITAL AGENT" means the Person designated as the
"Agent" from time to time under the Working Capital Credit Agreement.
"WORKING CAPITAL CREDIT AGREEMENT" means the Revolving Credit
Agreement dated on or about the date of this Agreement, among the Company,
CIT/WLR, certain Subsidiaries and the Working Capital Agent, as amended,
modified or supplemented from time to time in accordance with the terms thereof.
"WORKING CAPITAL FACILITY" means the revolving credit facility
granted from CIT/WLR pursuant to the Working Capital Credit Agreement.
"WORKING CAPITAL FACILITY TERMINATION DATE" means the earlier
of (x) the Maturity Date hereunder, (y) the maturity date under and as defined
in the Working Capital Credit Agreement, and (z) any earlier date pursuant to
which the Working Capital Credit Agreement may be terminated as expressly
provided therein.
(b) Descriptive headings are for convenience only and shall
not control or affect the meaning or construction of any provision of this
Agreement.
(c) Whenever any party makes any representation, warranty or
other statement to such party's knowledge, such party will be deemed to have
made reasonable inquiry into the subject matter of such representation, warranty
or other statement.
(d) Except as otherwise expressly provided in this Agreement,
the following rules of interpretation apply to this Agreement: (i) the singular
includes the plural and the plural includes the singular; (ii) "or" and "any"
are not exclusive and "include" and "including" are not limiting; (iii) a
reference to any agreement or other contract includes permitted supplements and
amendments; (iv) a reference to a law includes any amendment or modification to
such law and any rules or regulations issued thereunder; (v) a reference to a
person includes its permitted successors and assigns; and (vi) a reference in
this Agreement to an Article, Section, Annex, Exhibit or Schedule is to the
Article, Section, Annex, Exhibit or Schedule of this Agreement.
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ARTICLE 2
LOANS AND WARRANTS
2.1. Loans. Subject to the terms and conditions of this
Agreement, and relying upon the representations and warranties herein set forth,
each Purchaser severally agrees to make Loans to the Company at any time and
from time to time on or after the date hereof to, but not including, the
Termination Date, in an aggregate principal amount not exceeding at any one time
its Note Percentage of the Commitment at such time. No Purchaser shall have an
obligation to make Loans hereunder on or after the Termination Date or which,
when added to the aggregate amount of all outstanding and contemporaneous Loans
at such time, would cause the aggregate amount of all Loans at any time to
exceed the Commitment at such time. Once borrowed, amounts repaid may not be
reborrowed.
2.2. Notes. Subject to Section 12.3 (and other applicable
provisions of this Agreement), the obligation of the Company to repay the unpaid
principal amount of the Loans, and to pay interest thereon, shall be evidenced
by a Note in the principal amount of $10,000,000.00, in the form of Exhibit A
hereto.
2.3. Notice of Borrowing; Making of Loans.
(a) Whenever the Company desires to borrow, the Designated
Borrowing Officer shall provide telephonic notice of a proposed borrowing or
written notice of such proposed borrowing (a "NOTICE OF BORROWING") to the Agent
not later than 12:00 noon (New York City time) at least one (1) Business Day
before the date of such proposed borrowing. The Notice of Borrowing shall set
forth (i) the date, which shall be a Business Day, on which such borrowing is to
occur and (ii) the principal amount of the Loan being borrowed. If requested by
the Agent, any such telephonic notice shall be confirmed by the Designated
Borrowing Officer in writing by delivery to the Agent on or before the close of
business on the date on which such Loan is to be made (but prior to such Loan
being made) of a notice containing the original or facsimile signature of the
Designated Borrowing Officer. The Agent shall provide each Purchaser with prompt
notice of each Notice of Borrowing. Except as otherwise provided in subsection
2.3(e), on the date specified in such notice, each Purchaser shall, subject to
the terms and conditions of this Agreement, fund its Note Percentage of such
Loan in immediately available funds by wire transfer to the Agent at its Office
not later than 1:30 p.m. (New York City time). Unless the Agent determines that
any applicable conditions in Section 4.2 have not been satisfied, the Agent
shall make the funds so received from the Purchasers available to the Company
not later than 2:30 p.m. (New York City time) on the date specified in such
notice in immediately available funds by depositing such proceeds in the
Disbursement Account.
(b) Reliance on Designated Borrowing Officer. The Agent and
each Purchaser shall be entitled to rely conclusively on the Designated
Borrowing Officer's authority to request a Loan on behalf of the Company until
the Agent and such Purchaser receives written notice to the contrary. The Agent
and the Purchasers shall have no duty to verify the authenticity of the
signature appearing on any written Notice of Borrowing and, with respect to an
oral request for a Loan, the Agent and the Purchasers shall have no duty to
verify the identity of any Person representing himself or herself as a
Designated Borrowing Officer.
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(c) No Liability. The Agent and the Purchasers shall not incur
any liability to the Company or any other Person in acting upon any telephonic
notice referred to above which the Agent and the Purchasers believe in good
faith to have been given by the Designated Borrowing Officer or for otherwise
acting in good faith under this Section 2.3; and, upon the funding of a Loan by
the Purchasers in accordance with this Agreement pursuant to any such telephonic
notice, the Company shall have effected a Loan hereunder.
(d) Amount of Borrowings. Each Notice of Borrowing pursuant to
this Section 2.3 shall be irrevocable, and the Company shall be bound to make a
borrowing in accordance therewith. Each Loan shall be in a minimum amount of
$500,000.
(e) Several Obligations of Purchasers. All Loans under this
Agreement shall be made by the Purchasers simultaneously and proportionately to
their Note Percentages, it being understood that no Purchaser shall be
responsible for any default by any other Purchaser in such other Purchaser's
obligation to make a Loan requested hereunder nor shall the commitment or
obligation of any Purchaser to make its Note Percentage of a Loan be increased
or decreased as a result of the default by any other Purchaser in such other
Purchaser's obligation to make its share of a Loan requested hereunder.
(f) Availability Under Working Capital Facility.
Notwithstanding anything to the contrary set forth elsewhere herein, the Company
shall not be permitted to borrow and no Purchaser shall be required to lend
hereunder at any time that the Company may borrow any amount under the Working
Capital Loan Facility.
2.4. Reduction of Current Commitment. At any time or from time
to time, and without penalty or premium, the Company may reduce the Commitment
to an amount (which may be zero) not less than the sum of (i) the unpaid
principal amount of all Loans then outstanding plus (ii) the principal amount of
all Loans not yet made as to which notice has been given by the Company under
Section 2.3 hereof. Any reduction shall be in an amount which is an integral
multiple of $500,000. Reduction of the Commitment shall be made by providing not
less than two (2) Business Days' written notice (which notice shall be
irrevocable) to such effect to the Agent (which notice the Agent shall promptly
transmit to each Purchaser). Reductions of the Commitment are irrevocable and
may not be reinstated. Each such reduction shall reduce each Purchaser's Note
Percentage of the Commitment proportionately.
2.5. Warrants. Subject to the terms and conditions set forth
herein, the Company shall issue to the Purchasers, and the Purchasers shall
acquire from the Company, the Warrants for Shares as set forth in SCHEDULE 2.1.
ARTICLE 3
PAYMENT OF LOANS
3.1. Payments.
(a) Principal. The entire outstanding principal amount of the
Loans shall be due and payable upon the earliest of (i) the occurrence of an
Event of Default (other than under Sections 10.1(l) or
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(m)) following which the Agent elects to accelerate the maturity and payment of
the Obligations, (ii) automatically upon the occurrence of an Event of Default
under Sections 10.1(l) or (m), and (iii) the Maturity Date.
(b) Manner of Payment. All payments (including prepayments) of
principal, interest, fees and expenses and other amounts payable hereunder or
under any of the other Note Documents shall be made to the Agent, for the
benefit of the Purchasers, at the Payment Office not later than 1:00 P.M. (New
York Time) on the due date therefor in lawful money of the United States of
America in federal funds or other funds immediately available to Agent. Upon
receipt by the Agent of each such payment, the Agent shall promptly distribute
to each Purchaser, at its address for notices set forth on SCHEDULE 2.1, such
Purchaser's pro rata share of such payment in accordance with such Purchaser's
Note Percentage and shall wire advice of the amount of such credit to each
Purchaser.
(c) Date of Payment. If any payment becomes due and payable on
a day other than a Business Day, the due date thereof shall be extended to the
next succeeding Business Day and interest thereon shall be payable at the
applicable Note Rate (or Overdue Rate) during such extension.
(d) Overdue Payments. Any amount that is due and payable by
any Company Party under this Agreement, the Notes or any other Note Document
that is not paid when due shall bear interest, for each day from (and including)
the date such amount was due and payable to (but excluding) the date of payment
thereof, at the Overdue Rate in effect from time to time.
(e) Maximum Charges. In no event whatsoever shall interest and
other charges hereunder exceed the highest rate permissible under law. In the
event interest and other charges as computed hereunder would otherwise exceed
the highest rate permitted under law, such excess amount shall be first applied
to any unpaid principal balance owed by the Company, and if the then remaining
excess amount is greater than the previously unpaid principal balance, the
Purchaser shall promptly refund such excess amount to the Company and the
provisions hereof shall be deemed amended to provide for such permissible rate.
(f) No Right of Set Off. No Company Party shall have the right
to set off any amounts owed under this Agreement against any amounts, if any,
owed or claimed to be owed, now or in the future to any Company Party or other
person by the Agent or any Purchaser or any of their Affiliates resulting from
any claims, rights, damages, demands, causes of action or liabilities of any
nature whatsoever, known or unknown, contingent or fixed, whether due or to
become due, that any Company Party has had, now has or may have at any future
time by reason of any cause, matter or thing whatsoever, directly or indirectly.
(g) Costs, Fees and Expenses. Each Company Party shall pay all
costs, fees and expenses and all other amounts payable pursuant to this
Agreement or the other Note Documents as and when provided herein or in the
other Note Documents.
(h) Extension of Maturity Date. The Company shall have (i) a
single right to extend the Maturity Date to the 90th day after the initial
Maturity Date (the "EXTENDED MATURITY DATE") upon delivery to the Agent of
written notice of such extension on or before the 10th day prior to the initial
Maturity Date, together with an extension fee of $75,000.00, and (ii) a single
right to extend the Extended
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Maturity Date to the 88th day after the Extended Maturity Date upon delivery to
the Agent of written notice of such additional extension on or before the 10th
day prior to the Extended Maturity Date, together with an additional extension
fee of $75,000.00. Both such extension rights may be exercised simultaneously by
delivery of a single notice, timely given, together with payment of $150,000.00
in respect of both of the foregoing extension fees.
3.2. Interest. The outstanding principal amount of each Loan
from time to time shall bear interest (a) from (and including) the date of the
making of such Loan to (but excluding) the date of payment in full thereof, at
the Note Rate in effect from time to time, and (b) upon and during the
continuance of an Event of Default, and from and after the Maturity Date, at the
Overdue Rate in effect from time to time. The Company shall pay such accrued
interest to Agent monthly, in arrears, on the 1st day of each calendar month
prior to the Maturity Date (commencing on June 1, 2000) and at maturity.
Interest shall be computed on the basis of a 360-day year of twelve 30-day
months.
3.3. Optional Prepayments.
Subject to Sections 3.5 and 3.8, the Company shall have the
option at any time and from time to time to prepay the outstanding Loans, either
in whole or in part (but if in part, then in units of $1,000,000 or an integral
multiple of $100,000 in excess thereof) by payment of the principal amount of
the Loans, or portion thereof to be prepaid, together with accrued interest
thereon to but not including the date of such prepayment.
3.4. Mandatory Prepayments.
(a) Core Assets; Non-Core Assets During Default.
(i) Upon any Asset Sale (x) at any time that no
Default or Event of Default has occurred and is continuing, with
respect to a Core Asset, and (y) after the occurrence and during the
continuance of a Default or an Event of the Default, with respect to a
non-Core Asset, the Company shall pay, or shall cause any other
applicable Company Party to pay, the Net Cash Proceeds therefrom first,
to the Working Capital Agent in repayment of any Indebtedness then due
and payable under the Working Capital Credit Agreement and the balance
remaining to the Agent in repayment of the Obligations hereunder.
(ii) Upon any Asset Sale with respect to a Core Asset
after the occurrence and during the continuance of a Default or an
Event of the Default, the Company shall pay, or shall cause any other
applicable Company Party to pay, the Net Cash Proceeds therefrom first,
to the Working Capital Agent in repayment of any Indebtedness then due
and payable under the Working Capital Credit Agreement, then (without
duplication) an amount equal to the undrawn amount of all outstanding
letters of credit under the Working Capital Credit Agreement (which
amount shall be held by the Working Capital Agent as cash collateral in
respect of such letters of credit), and the balance remaining to the
Agent in repayment of the Obligations hereunder.
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(b) Assets Sales Generally.
----------------------
(i) Subject to Sections 3.4(a) and 3.4(b)(ii) and
(iii), upon any Asset Sale (other than an Excluded Asset Sale) with
respect to any Asset other than a Core Asset, the Company shall pay, or
shall cause the applicable Company Party to pay, the Net Cash Proceeds
therefrom to the Working Capital Agent in repayment of Indebtedness
then due and payable under the Working Capital Credit Agreement and may
retain any balance remaining.
(ii) From and after the date that the aggregate
amount of Asset Disposition Proceeds from Asset Sales of non-Core
Assets equals or exceeds $7,000,000.00, then upon any Asset Sale (other
than an Excluded Asset Sale) with respect to any Asset (including Core
Assets and non-Core Assets), the Company shall pay, or shall cause any
other applicable Company Party to pay, the Net Cash Proceeds therefrom
first, to the Working Capital Agent in repayment of any Indebtedness
then due and payable under the Working Capital Credit Agreement and the
balance remaining to the Agent in repayment of the Obligations
hereunder.
(iii) Upon and during the continuance of a Default or
an Event of Default, if any Asset Sale, Casualty or Condemnation shall
occur with respect to any Collateral or any other Asset of any Company
Party, then the Company shall pay (or shall cause any other applicable
Company Party to pay) the Net Cash Proceeds, Insurance Proceeds or
Condemnation Proceeds therefrom, as the case may be (A) first, to the
Working Capital Agent in repayment of any outstanding Indebtedness then
due and payable under the Working Capital Credit Agreement, and (B)
second, the balance remaining, if any, to the Agent in respect of the
Obligations hereunder; PROVIDED, HOWEVER, that if (1) any such balance
under clause (B) is paid to the Agent while a Default (but before an
Event of Default) exists, (2) such Default is cured before the
expiration of any applicable grace period therefor, and (3) the Company
or any other Company Party is not otherwise required to pay the same to
the Agent under this Section 3.4, then promptly after receipt from the
Company of evidence of such timely cure, and provided that no further
Default or Event of Default shall then have occurred and be continuing,
the Agent shall return such balance to the Company.
(c) Reduction of Commitments.
------------------------
(i) Subject to Section 3.4(c)(iii), the Commitment
hereunder shall be permanently reduced from time to time by (A) the
amount of all Asset Disposition Proceeds received by or on behalf of
the Company or any other Company Party from time to time from Asset
Sales in respect of Core Assets, and (B) the amount of Asset
Disposition Proceeds in excess of $7,000,000.00 received by or on
behalf of the Company or any other Company Party from time to time from
Asset Sales (other than Excluded Asset Sales) in respect of non-Core
Assets.
(ii) Subject to Section 3.4(c)(iii), the
$15,000,000.00 commitment under the Working Capital Credit Facility
shall be permanently reduced by the amount of all Asset Disposition
Proceeds from Asset Sales (other than Excluded Asset Sales) received
from time to time by or on behalf of the Company or any other Company
Party at any time that any Obligations hereunder are outstanding.
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(iii) For the purpose of Sections 3.4(c)(i) and (ii)
only, Asset Disposition Proceeds shall not include any Net Proceeds
that are not cash or Cash Equivalents until such time as such amounts
have been reduced to cash or Cash Equivalents, whereupon the reductions
described in Sections 3.4(c)(i) and (ii) shall be made in respect of
such amounts.
3.5. Notice of Prepayments. The Company shall give written
notice of any optional prepayment of any Loans under Section 3.3 to the Agent
and each Purchaser not less than 45 days nor more than 60 days before the date
fixed in such notice for such prepayment of such Loans. Such notice shall
specify (a) the date of prepayment and (b) the principal amount of Loans to be
prepaid on such date, together with the amount of accrued interest thereon. Any
such notice of prepayment shall be irrevocable and, having been so given, the
aggregate principal amount of the Loans specified in such notice, together with
accrued interest thereon, if any, shall be due and payable on the prepayment
date set forth in such notice.
3.6. Application of Payments. All payments (including
prepayments) shall be applied in the following manner: first, to any unpaid
fees, costs and expenses due to the Agent or any Purchaser hereunder or under
any other Note Document; second, to the payment of all other Obligations other
than principal and interest; third, to accrued and unpaid interest on the Loans;
and last, to the outstanding principal amount of the Loans. All partial
prepayments shall be applied on all outstanding Notes, if more than one, ratably
in accordance with the unpaid principal amounts thereof.
3.7. Fees and Expenses.
(a) In General. As a condition precedent to the Purchasers'
obligation to make any Loans, the Company shall pay or deliver to the Agent or
the Purchasers, as applicable, at Closing the following fees and expenses: (i)
to the Purchaser, the outstanding balance due of the $400,000 commitment fee in
respect of this Agreement, (ii) to the Agent, for delivery to the Persons listed
on SCHEDULE 3.7(A) hereto, a total of 350,000 Shares, (iii) to the Agent, the
Agent's agency fee of $36,000, (iv) to the Purchasers, the Warrants, and (v) to
the Purchasers and the Agent, respectively, all costs and expenses of the
Purchasers and the Agent, including without limitation, all reasonable legal and
accounting fees and expenses, appraisals, investigations and other due
diligence, title and lien searches and the filing and recording of UCC financing
statements and other liens and security interests, and all other reasonable
costs and expenses in connection with the negotiation and preparation of and for
this Agreement and the other Note Documents, and all amounts owed under the
Commitment Letter between the Company and Bay Harbour Management, L.C. dated as
of February 3, 2000.
(b) Unpaid Amounts. To the extent that on the Closing Date the
Company or any other Company Party does not pay any portion of any amounts due
on the Closing Date, including under clause (v) of Section 3.7 (a), then from
and after the Closing Date such unpaid portion shall be added to and shall be a
part of the Obligations.
3.8. Conversion Option.
(a) Right to Convert. From time to time while any Obligations
are outstanding, each Purchaser (a "CONVERTING PURCHASER") shall have the right
to convert all or any portion of its Note
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Percentage of the outstanding Obligations into Shares of New Class A Common
Stock at a rate per Share equal to the Conversion Price (the "CONVERSION
OPTION").
(b) Exercise of Option. To elect to convert any of the
Obligations into Shares, the Converting Purchaser shall give written notice to
the Company of such election setting forth (i) the effective date of such
election, (ii) the amount of the Obligations to be converted, including the
portion thereof that constitutes principal under the Loans, and (iii) the
corresponding number of Shares to be received by such Converting Purchaser. On
the effective date of such a conversion, (A) the outstanding amount of the
Obligations hereunder shall be reduced by an amount equal to the amount of
Obligations being converted (and, if necessary, the Notes amended to reflect the
same), and (B) the Company shall be deemed to have made, effective as of such
date, each of the representations with respect to the Shares set forth in (1)
the second and third sentences of Section 5.38(a) and (2) Sections 5.38(c),
5.38(d), 5.38(e), and 5.38(f). Within five (5) business days after the effective
date of such election, the Company shall deliver to such Converting Purchaser
certificates representing such number of Shares, together with any payment due
under Sections 3.8(c) and (d).
(c) No Fractional Shares. No fractional Shares shall be issued
upon the conversion of any Obligations. Instead of any fractional Share which
would otherwise be issuable upon any conversion, the Company shall pay to the
Converting Purchaser in cash (by certified check, or wire transfer, of same-day
funds) on the effective date of such conversion in respect of such fraction an
amount equal to the amount of principal and interest constituting such
fractional amount.
(d) Interest. At the option of each Converting Purchaser, any
accrued but unpaid interest on the principal amount of the Obligations being
converted shall be either (i) payable to such Converting Purchaser in cash (by
certified check, or wire transfer, of same-day funds) on the effective date of
such conversion or (ii) converted into Shares at the Conversion Price in effect
as of such date.
(e) Adjustments. The Conversion Price and therefore the number
of Shares issuable upon conversion, shall be subject to the following
adjustments:
(i) MECHANICAL ADJUSTMENTS. In case the Company shall
at any time or from time to time after the Effective Date:
(A) split or subdivide the outstanding
shares of Common Stock into a larger number of shares;
(B) pay a dividend or make a distribution
on the outstanding shares of any Common Stock in Capital Stock
of the Company in any transaction, in each case, without
payment of any consideration by such holder thereof; or
(C) decrease the outstanding shares of any
Common Stock into a smaller number of shares by virtue of a
combination or reverse stock split;
then, and in each such case, the Conversion Price in effect immediately
prior to such event shall be proportionately adjusted (and any other
appropriate actions shall be taken by the Company) so that
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each Converting Purchaser shall thereafter be entitled to receive the
number of Shares or other Securities of the Company which such
Converting Purchaser would have owned or had been entitled to receive
upon or by reason of any of the events described above, had it
exercised its Conversion Option effective immediately prior to the
happening of such event (taking into account the effect of Section
3.8(e)(xvi)). An adjustment made pursuant to this clause (i) shall
become effective as of (x) the record date of such transaction (or the
date of such transaction if no record date is fixed), or (y) in the
case of Rights or Convertible Securities that are not immediately
exercisable or exchangeable for or convertible into underlying Capital
Stock, the date on which such Rights or Convertible Securities become
exercisable, exchangeable or convertible.
(ii) DISTRIBUTIONS OF CASH OR PROPERTY. If the
Company shall at any time or from time to time after the Effective Date
distribute Property or cash (other than cash dividends paid in the
ordinary course) to any holder of shares of its Common Stock, including
without limitation in connection with a voluntary or involuntary
dissolution, liquidation or winding up of the Company, then, and in
each such case, the Conversion Price in effect immediately prior to
such event shall be proportionately adjusted (and any other appropriate
actions shall be taken by the Company) so that each Converting
Purchaser shall thereafter be entitled to receive Shares or, if
applicable, Property or cash, with a fair market value equal to the
fair market value of the Property or cash such holder would have owned
or been entitled to receive had its Conversion Option been exercised
immediately prior to such transaction at the Conversion Price then in
effect (taking into account the effect of Section 3.8(e)(xvi)) . Such
adjustment shall be made whenever any such distribution is made and
shall become effective on the date of such distribution.
(iii) ISSUANCES BELOW CURRENT MARKET PRICE. If from
time to time after the date hereof the Company shall issue or sell
Additional Shares at a consideration per share that is less than the
Current Market Price in effect immediately prior to such issuance,
then, as of the record date of such transaction (or the date of such
transaction if no record date is fixed), the Conversion Price shall be
adjusted to equal the Conversion Price in effect immediately prior to
such date multiplied by a fraction, (A) the numerator of which shall be
(1) the number of shares of Common Stock outstanding immediately prior
to such date (taking into account the effect of Section 3.8(e)(xvi)),
plus (2) the number of shares of Common Stock that the aggregate
consideration received for such Additional Shares would purchase at a
price per share equal to such Conversion Price and (B) the denominator
of which shall be (1) the number of shares of Common Stock outstanding
immediately prior to such date (taking into account the effect of
Section 3.8(e)(xvi)), plus (2) the number of Additional Shares so
issued. For purposes of this Section 3.8, the issuance of any
Additional Shares or other securities, warrants, options or rights
includes any sale by the Company and any reissuance or resale by the
Company.
(iv) RIGHTS AND CONVERTIBLE SECURITIES. If the
Company issues any Rights entitling the Purchasers to subscribe for or
purchase either any Additional Shares or Convertible Securities that
are convertible into or exchangeable for, with or without payment of
additional consideration, Additional Shares (such Rights being called
"COMMON STOCK RIGHTS" and such Convertible Securities being called
"COMMON STOCK EQUIVALENTS"), and the consideration per share for which
Additional Shares may at any time thereafter be issuable pursuant to
such Common Stock Rights or Common Stock Equivalents (when added to the
consideration per share of Common Stock, if any, received for such
Common Stock Rights), is less than the Current Market
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Price, the Conversion Price shall be adjusted as provided in Section
3.8(e)(iii) on the basis that (A) the maximum number of Additional
Shares issuable pursuant to all such Common Stock Rights or necessary
to effect the conversion or exchange of all such Common Stock
Equivalents shall be deemed to have been issued and (B) the aggregate
consideration (plus the consideration, if any, received for such Common
Stock Rights or Common Stock Equivalents) for such maximum number of
Additional Shares shall be deemed to be the consideration received and
receivable by the Company for the issuance of such Additional Shares
pursuant to such Common Stock Rights or Common Stock Equivalents.
(v) FURTHER ADJUSTMENT. If the Company issues Common
Stock Equivalents and the consideration per share of which Additional
Shares may at any time thereafter be issuable pursuant to such Common
Stock Equivalents is less than the Current Market Price, the Conversion
Price shall be adjusted as provided in Section 3.8(e)(iii) on the basis
that (A) the maximum number of Additional Shares necessary to effect
the conversion or exchange of all such Common Stock Equivalents shall
be deemed to have been issued and (B) the aggregate consideration for
such number of Additional Shares shall be deemed to be the
consideration received and receivable by the Company for the issuance
of such Additional Shares pursuant to such Common Stock Equivalents. No
adjustment of the Conversion Price shall be made under this Section
3.8(e)(v) upon the issuance of any Common Stock Equivalents issued
pursuant to the exercise of any Common Stock Rights, to the extent that
such adjustment was previously made upon the issuance of such Common
Stock Rights pursuant to Section 3.8(e)(iv).
(vi) RELEVANT CONVERSION PRICE. For purposes of
Sections 3.8(e)(iv) and 3.8(e)(v), the relevant Conversion Price shall
be the Conversion Price in effect immediately prior to the earlier of
(A) the record date for the holders of Common Stock entitled to receive
the Common Stock Rights or Common Stock Equivalents and (B) the initial
issuance of the Common Stock Rights or Common Stock Equivalents, and
the adjustment provided for in either such Section shall become
effective immediately after the earlier of the times specified in
clauses (A) and (B).
(vii) NO ADJUSTMENT. No adjustment of the Conversion
Price shall be made under Section 3.8(e)(iv) or 3.8(e)(v) upon the
issuance of any Additional Shares pursuant to the exercise of any
Common Stock Rights or of any conversion or exchange rights pursuant to
any Common Stock Equivalents if such adjustment was previously made in
connection with the issuance of such Common Stock Rights or Common
Stock Equivalents (or in connection with the issuance of any Common
Stock Rights therefor) pursuant to Section 3.8(e)(iv) or 3.8(e)(v).
(viii) (a) EXPIRATION. If any Common Stock Rights (or
any portions thereof) that gave rise to an adjustment pursuant to
Section 3.8(e)(iv) or any conversion or exchange rights pursuant to any
Common Stock Equivalents that gave rise to an adjustment pursuant to
Section 3.8(e)(iv) or 3.8(e)(v) expire or terminate without the
exercise thereof, the Conversion Price shall be readjusted (but to no
greater extent than originally adjusted) on the basis of (A)
eliminating from the computation Additional Shares corresponding to
such expired or terminated Common Stock Rights or conversion or
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exchange rights, (B) treating the Additional Shares, if any, actually
issued or issuable pursuant to the previous exercise of such Common
Stock Rights or conversion or exchange rights as having been issued for
the consideration actually received and receivable therefor and (C)
treating any such Common Stock Rights or conversion or exchange rights
that remain outstanding as being subject to exercise on the basis of
the consideration payable upon the exercise or conversion thereof as is
in effect at such time; PROVIDED, HOWEVER, that any consideration
actually received by the Company in connection with the issuance of
such Common Stock Rights shall form part of the readjustment
computation even though such Common Stock Rights expired without being
exercised.
(b) Modification of Terms. The Conversion Price shall
be readjusted as provided in Section 3.8(e)(iii) and any applicable
provisions of Section 3.8(e)(iv) or 3.8(e)(v) if, following the initial
adjustment, there is any increase in the number of Additional Shares
issuable, or any decrease in the consideration payable upon any
issuance of Additional Shares, pursuant to any antidilution provisions
of any Common Stock Rights or Common Stock Equivalents.
(ix) ADDITIONAL SHARES. (A) If any Additional Shares,
Common Stock Rights or Common Stock Equivalents are issued for cash,
the consideration received therefor shall be deemed to be the amount of
cash received.
(B) If any Additional Shares, Common Stock
Rights or Common Stock Equivalents are offered by the Company
for subscription, the consideration received therefor shall be
deemed to be the subscription price.
(C) If any Additional Shares, Common Stock
Rights or Common Stock Equivalents are sold to underwriters or
dealers for public offering without a subscription offering,
the consideration received therefor shall be deemed to be the
public offering price.
(D) In any case not covered by Section
3.8(e)(ix)(A), (B) or (C), in determining the amount of any
consideration received by the Company in whole or in part
other than in cash, the amount of such consideration shall be
deemed to be the fair market value of such consideration as
determined in good faith by the Board of Directors of the
Company, and evidence of such determination shall be filed
with the minutes of the Company. If Additional Shares are
issued as part of a unit with Common Stock Rights, the
consideration received for the Common Stock Rights shall be
deemed to be the portion of the consideration received for
such unit determined in good faith at the time of issuance by
the Board of Directors of the Company, and evidence of such
determination shall be filed with the minutes of the Company.
If the Board of Directors of the Company does not make any
such determination, the consideration received for the Common
Stock Rights shall be deemed to be zero. In either event, the
consideration received for the Additional Shares shall be
deemed to be the consideration received for such unit less the
consideration deemed to have been received for the Common
Stock Rights.
(E) In any case covered by Section
3.8(e)(ix)(A), (B), (C) or (D), in determining the amount of
consideration received by the Company, (I) any amounts
received or receivable for accrued interest or accrued
dividends shall be excluded and (II) any compensation,
underwriting commissions or concessions or expenses paid or
incurred in connection therewith shall not be deducted.
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(F) In any case covered by Section
3.8(e)(ix)(A), (B), (C) or (D), there shall be added to the
consideration received by the Company at the time of issuance
or sale (I) the minimum aggregate amount of additional
consideration payable to the Company upon the exercise of
rights that relate to Common Stock Equivalents and (II) the
minimum aggregate amount of consideration payable upon the
conversion or exchange thereof.
(G) If any Additional Shares, Common Stock
Rights or Common Stock Equivalents are issued in connection
with any merger, consolidation or other reorganization in
which the Company is the surviving corporation, the amount of
consideration received therefor shall be deemed to be the fair
market value, as determined in good faith by the Board of
Directors of the Company, of such portion of the assets and
business of the non-surviving person or persons as the Board
of Directors of the Company determines in good faith to be
attributable to such Additional Shares, Common Stock Rights or
Common Stock Equivalents, and evidence of such determination
shall be filed with the minutes of the Company.
(x) DE MINIMIS CHANGES IN CONVERSION PRICE.
Notwithstanding anything herein to the contrary, no adjustment under
this Section 3.8(e) need be made to the Conversion Price unless such
adjustment would require an increase or decrease of at least 1% of the
Conversion Price then in effect. Any lesser adjustment shall be carried
forward and shall be made at the time of and together with the next
subsequent adjustment, which, together with any adjustment or
adjustments so carried forward, shall amount to an increase or decrease
of at least 1% of the number of Shares issuable upon any conversion of
any Obligations. Any adjustment to the Conversion Price carried forward
and not theretofore made shall be made immediately prior to the
conversion of any of the Obligations pursuant hereto.
(xi) EFFECT OF ADJUSTMENT. Intentionally Omitted.
(xii) OTHER SECURITIES. If at any time, as a result
of an adjustment made pursuant to this Section 3.8(e), a Purchaser
shall become entitled to purchase any Securities other than Shares, the
number or amount of such other Securities so purchasable and the
purchase price of such Securities shall be subject to adjustment from
time to time in a manner and on terms as nearly equivalent as
practicable to the provisions contained in Section 3.8(e)(i) through
Section 3.8(e)(vi), inclusive, and all other relevant provisions of
this Section 3.8 that are applicable to Shares shall be applicable to
such other Securities.
(xiii) UPWARD ADJUSTMENTS. Notwithstanding anything
contrary contained in this Section 3.8(e), the Company shall be
entitled to make such adjustments in the Conversion Price, in addition
to those otherwise required by this Section 3.8(e), as the Board of
Directors of the Company in its discretion shall determine to be
advisable in order that any stock dividend, subdivision or combination
of shares, distribution of Rights or Convertible Securities exercisable
or exchangeable for or convertible into additional Shares or other
Securities of the Company hereafter made by the Company to its
shareholders shall not be taxable; PROVIDED, HOWEVER, that
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any such adjustment shall be made, as nearly as practicable, in a
manner which treats all holders of convertible debt of the Company with
similar protections on an equal basis.
(xiv) OTHER ADJUSTMENTS. In case the Company at any
time or from time to time shall take any action which could have a
dilutive effect on the number of Shares that may be issued upon any
exercise of the Conversion Option, other than an action described in
any of Sections 3.8(e)(i) through 3.8(e)(viii), inclusive, then the
Conversion Price shall be adjusted in such manner and at such time as
the Board of Directors of the Company reasonably determines to be
equitable under the circumstances (such determination to be evidenced
in a resolution, a certified copy of which shall be mailed to the
Purchasers and the Agent).
(xv) MISCELLANEOUS. Adjustments shall be made
pursuant to this Section 3.8(e) successively whenever any of the events
referred to in Sections 3.8(e)(i) through 3.8(e)(vi), inclusive, shall
occur. If any Conversion Option shall be exercised subsequent to the
record date for any of the events referred to in this Section 3.8(e),
but prior to the effective date thereof, appropriate adjustments shall
be made immediately after such effective date so that the Converting
Purchaser on such record date shall have received, in the aggregate,
the kind and number of Shares or other Securities or Property or cash
that it would have owned or been entitled to receive on such effective
date had such Conversion Option been exercised prior to such record
date.
(xvi) ADJUSTMENTS IN RESPECT OF NEW CLASS B COMMON
STOCK. Without limiting the generality of the foregoing, the Company
acknowledges and agrees that the Conversion Price on the date hereof
was agreed to and determined by reference to the fully diluted
aggregate number of shares of New Class A Common Stock and New Class B
Common Stock outstanding on the date hereof (the "HOLDER'S
PROPORTIONATE INTEREST"). If at any time any of the events referred to
in Section 3.8(e) occur in respect of New Class B Common Stock but not
New Class A Common Stock, the Conversion Price shall be appropriately
adjusted so that an event with respect to New Class B Common Stock does
not have a dilutive effect on the Holder's Proportionate Interest.
(f) Reclassification. If the Company, by reclassification of
securities or otherwise, will change any of the securities as to which purchase
rights under this Conversion Option exist into the same or a different number of
securities of any other class or classes, this Conversion Option will thereafter
represent the right to acquire such number and kind of securities as would have
been issuable as the result of such change with respect to the securities that
were subject to the purchase rights under this Conversion Option immediately
prior to such reclassification or other change and the Conversion Price
therefore will be appropriately adjusted, all subject to further adjustment as
provided in this Section 3.8.
(g) Adjustment for Capital Reorganization, Merger or
Consolidation. In case of any capital reorganization of the Capital Stock of the
Company (other than a combination, reclassification, exchange or subdivision of
shares otherwise provided for herein), or any merger or consolidation of the
Company with or into another Person, or the sale of all or substantially all the
assets of the Company then, and in each such case, as a part of such
reorganization, merger, consolidation, sale or transfer, lawful provision will
be made so that the Purchasers will thereafter be entitled to receive upon
exercise of this Conversion Option, during the period specified herein and upon
payment of the Conversion Price then in effect, the number of shares of stock or
other securities or property (including cash) of the successor Person resulting
from such reorganization, merger, consolidation, sale or transfer that a holder
of the shares
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deliverable upon exercise of this Conversion Option would have been entitled to
receive in such reorganization, consolidation, merger, sale or transfer if this
Conversion Option had been exercised immediately before such reorganization,
merger, consolidation, sale or transfer, all subject to further adjustment as
provided in this Section 3.8. The foregoing provisions of this Section 3.8(g)
will similarly apply to successive reorganizations, consolidations, mergers,
sales and transfers and to the stock or securities of any other Person that are
at the time receivable upon the exercise of this Conversion Option. If the
per-share consideration payable to the Converting Purchaser for shares in
connection with any such transaction is in a form other than cash or marketable
securities, then the value of such consideration will be determined in good
faith by the Board of Directors of the Company. In all events, appropriate
adjustment (as determined in good faith by the Board of Directors of the
Company) will be made in the application of the provisions of this Conversion
Option with respect to the rights and interests of the Purchasers after the
transaction, to the end that the provisions of this Conversion Option will be
applicable after that event, as near as reasonably may be, in relation to any
shares or other property deliverable after that event upon exercise of this
Conversion Option.
(h) Notice of Adjustment. Whenever the Conversion Price is
adjusted, as herein provided, the Company shall promptly (and in any case within
five Business Days after the effective date of any such adjustment) give to each
Purchaser and the Agent notice of such adjustment or adjustments and shall
promptly (and in any case within five Business Days after the effective date of
such adjustment or adjustments) deliver to each Purchaser and the Agent a
certificate of the Company's chief financial officer setting forth (i) the
Conversion Price after such adjustment; (ii) a brief statement of the facts
requiring such adjustment; and (iii) the computation by which such adjustment
was made.
(i) Special Distributions. If a Purchaser so elects by sending
a Special Notice to the Company, in the event that the Company shall declare a
dividend or make any other distribution (including, without limitation, in cash,
in capital stock (which shall include, without limitation, any options, warrants
or other rights to acquire capital stock) of the Company, whether or not
pursuant to a shareholder rights plan, "poison pill" or similar arrangement or
in other Property) to holders of New Class A Common Stock or other Securities
for which this Conversion Option may then be exercisable (a "SPECIAL
DISTRIBUTION"), then the Board of Directors of the Company shall set aside the
amount of such dividend or distribution that such Purchaser would have been
entitled to receive had it exercised its Conversion Option prior to the record
date for such dividend or distribution (taking into account the effect of
Section 3.8(e)(xvi)). Upon the exercise of its Conversion Option, the Converting
Purchaser shall be entitled to receive the Special Distributions that such
Converting Purchaser would have received had its Conversion Option been
exercised immediately prior to the record date for each such Special
Distribution or distribution. The Company shall notify each Purchaser and the
Agent not less than ten Business Days prior to the occurrence of each Special
Distribution of its intent to make such Special Distribution. If a Purchaser
elects to have such Special Distribution set aside for its benefit upon exercise
of its Conversion Option rather than have an adjustment made to the Conversion
Price as provided in Section 3.8(e), the Purchaser shall notify the Company by
sending a Special Notice prior to the date of any such Special Distribution.
(j) Transfer Taxes. The Company will pay any and all stamp,
delivery, transfer, documentary and similar taxes or charges that may be payable
by it or by any Purchaser in respect of the issuance or delivery of the Shares
or other Securities on conversion of any Obligations pursuant hereto.
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(k) HSR Act. The Company shall make all filings with, and
obtain all approvals, consents and actions by, any Governmental Authority
necessary to ensure that any conversion of any Obligations complies with the HSR
Act. If the effective date of any conversion would occur before the date of
expiration or early termination of the waiting period under the HSR Act, such
date shall be automatically extended until the date of such expiration or early
termination or such later date on which all necessary consents and approvals are
obtained thereunder.
ARTICLE 4
CONDITIONS TO EFFECTIVENESS
4.1. Conditions to Effectiveness. This Agreement and the
obligation of the Purchasers to make an initial Loan shall become effective (the
"CLOSING") on the date on which all of the following conditions shall have been
satisfied (or waived by the Agent, in writing)(the "CLOSING DATE"):
(a) Representations and Warranties. Each of the
representations and warranties of the Company Parties contained in this
Agreement or in any other Note Document shall be true and correct in all
respects at and as of the Closing.
(b) Covenants. Each Company Party shall have performed and
complied with in all respects each of the covenants and agreements required to
be performed or complied with in this Agreement or any other Note Document by
such Company Party on or before the Closing Date.
(c) No Default. There shall not be any Default or Event of
Default, both immediately before and immediately after the Closing.
(d) Working Capital Facility. The Working Capital Facility
shall have been provided by CIT/WLR in the amount of $15,000,000.00 on terms and
conditions satisfactory to the Agent and the Purchasers.
(e) Delivery of Documents. The Agent shall have received the
following, each in form and substance satisfactory to the Agent and the
Purchasers and, unless indicated otherwise, dated the Closing Date:
(i) Note. The Note, duly executed by the Company;
(ii) Security Documents. Each Security Document, duly
executed and delivered by, as applicable, the Company and each Active
Guarantor and Inactive Guarantor existing as of the Closing Date;
(iii) Guaranty. The Guaranty, duly executed and
delivered by, as applicable, the Company and each Active Guarantor and
Inactive Guarantor existing as of the Closing Date;
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(iv) Registration Rights Agreement. The Registration
Rights Agreement, duly executed and delivered by each party thereto;
(v) Intercreditor Agreement. The Intercreditor
Agreement, duly executed and delivered by each party thereto;
(vi) Warrants. The Warrants, duly executed and
delivered by the Company;
(vii) Closing Certificate. A certificate from each
Company Party (other than the Inactive Guarantors), dated the Closing
Date and signed by the Chief Executive Officer or the Chief Financial
Officer of such Company Party, certifying that the conditions set forth
in Sections 4.1(a), (b), (c), (d), (e), (f), (j), (o), (p), (s), (u),
(v) and (w) have been performed and satisfied in full on and as of such
date;
(viii) Authority. A certificate, dated the Closing
Date and signed by the Secretary or an Assistant Secretary of each
Company Party (other than the Inactive Guarantors), attaching good
standing certificates from the Secretary of State of such Company
Party's jurisdiction of incorporation or organization, certifying as to
the accuracy and completeness of attached copies of the Constitutive
Documents of such Company Party, and resolutions of the Governing Body
of such Company Party authorizing and approving (A) each Note Document
to which such Company Party is a party and the transactions
contemplated hereby and thereby and (B) the execution, delivery and
performance by such Company Party of each Note Document;
(ix) Incumbency. A certificate of authorized officers
of each Company Party (other than Inactive Guarantors), certifying the
names and true signatures of the officers of each Company Party
authorized to sign each Note Document to which such Company Party is or
will be a party and the other documents to be executed and delivered by
such Company Party in connection therewith, together with evidence of
the incumbency of such authorized officers;
(x) Amended and Restated Certificate of Incorporation
of the Company. The Certificate of Incorporation of the Company,
amended and restated to be in the form attached as EXHIBIT J, and a
true and correct copy of such amended and restated Certificate of
Incorporation as on file with and certified by the Secretary of State
of Delaware;
(xi) By-Laws of the Company. The By-Laws of the
Company, amended in a form satisfactory to the Agent, in its sole
discretion;
(xii) Charter of the Guarantors. A copy of the
charter of each of Hospitality and Region III, certified as of a date
not more than ten (10) Business Days prior to the Closing Date by the
appropriate official(s) of the state of incorporation of each such
company and as of the Closing Date by an authorized officer of each
such company;
(xiii) By-Laws of the Guarantors. A copy of the
By-Laws of each Guarantor (other than Inactive Guarantors), certified
as of the Closing Date by an authorized officer of the such Guarantor;
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(xiv) Legal Opinions. An opinion of (A) Stroock &
Stroock & Lavan, LLP counsel to the Company and the Guarantors (other
than Inactive Guarantors) (as to bankruptcy matters, New York law and
Delaware law,); (B) Gray, Harris & Robinson, P.A., Florida counsel to
the Company and Guarantors as to matters governed under Florida law,
and (C) law firms qualified in Texas, Minnesota and Nevada as to due
authorization, execution and delivery of the Note Documents under the
laws of such states;
(xv) Financial Statements. A copy of the financial
statements and projections of the Company referred to in Section 5.8
hereof certified by the Designated Financial Officer;
(xvi) Plans. A certificate of an authorized officer
of each Company Party stating that it has no Plans or any Multiemployer
Plans other than the Planet Hollywood Employee Savings Plan;
(xvii) Insurance. Evidence in form and substance
satisfactory to the Agent and the Purchasers that the Agent has been
named as an additional insured and loss payee on each of the insurance
policies required to be obtained by the Company or any other Company
Party herein or in any Security Document and that each such policy is
in full force and effect together with a report of a reputable
insurance broker certifying such insurance complies with the
requirements of this Agreement and the other Note Documents;
(xviii) Lien Evidence. Evidence (including a listing
of all effective financing statements which name as debtor each Company
Party, tax Liens and judgment Liens) establishing the absence of any
Liens on the Collateral (other than Permitted Liens) and upon the
request of the Agent, the execution and delivery of any public filings
deemed necessary or desirable by the Agent;
(xix) Employment Agreement. The Employment Agreement,
and the Agreement Regarding Leases, each duly executed by Robert Earl;
(xx) Financing Statements. Appropriate financing
statements on Form UCC-1, duly executed by each Company Party and duly
filed in such office or offices as may be necessary or, in the opinion
of the Agent, desirable to perfect the security interests purported to
be created by the Note Documents and evidence that all necessary filing
fees and taxes or other expenses related to such filings have been paid
in full; and
(xxi) Other Deliveries. Such other agreements,
instruments, approvals, opinions and other documents as the Agent or
the Purchasers may reasonably request in connection with the
transactions contemplated by the Note Documents, all in forms and
substance reasonably satisfactory to the Agent and the Purchasers, in
their sole discretion.
(f) Lien Priority. The Liens in favor of the Purchasers
pursuant to the Note Documents shall be valid and perfected second priority
liens on the Collateral, subject to no Liens other than Permitted Liens.
(g) Compliance. The Agent shall have received evidence
reasonably satisfactory to the Agent of the Company Parties' and each
Guarantor's compliance with all Environmental Laws, ERISA, tax and labor
matters.
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(h) Due Diligence. The Purchasers shall have completed the due
diligence to its satisfaction, including, without limitation, the Company
Parties' books and records and the results of such review shall be in form and
substance satisfactory to the Agent.
(i) Court Order Approving Note Documents. The Confirmation
Order shall not have been amended or modified (without the consent of the
Purchasers) and there shall have been no appeal or stay with respect thereto. A
court order in form and substance acceptable to the Purchasers shall be entered
approving the Note Documents and the transactions completed thereby and such
other matters as may be requested by the Purchasers including, without
limitation, a finding with respect to the binding nature of (a) the
Intercreditor Agreement on the parties thereto or the parties purported to be
bound thereby, including, without limitation, the PIK Holders, (b) the
Conversion Option and (c) the Warrants, and such Order shall not be subject to
any application for a stay pending appeal or other reconsideration with respect
thereto and shall not be subject to any such stay or other injunctive relief
affecting the enforceability thereof.
(j) Plan of Reorganization; Limitation on Plan of
Reorganization Payments. The Plan of Reorganization, and all ancillary
documents, shall be satisfactory to the Purchasers in all respects, and all
conditions precedent to the occurrence of the Effective Date under the Plan of
Reorganization shall have been satisfied and performed in full. No payments to
fund the Plan of Reorganization or pay any creditor on account of a prepetition
claim on the Closing Date shall exceed $66,000,000. In addition, no payments to
fund the Plan of Reorganization pursuant to the Confirmation Order or thereafter
(with respect to amounts not fixed on the Effective Date of the Plan of
Reorganization) shall exceed $66,000,000 plus $7,900,000.
(k) Certain Post-Confirmation Obligations. The Purchasers
shall be satisfied as to the nature of any post-confirmation obligations arising
from pre-petition obligations (including any continuing guarantee obligations).
(l) Certified Copy of Confirmation Order. The Purchasers shall
have received a certified copy of the Confirmation Order.
(m) Purchase Permitted by Law. The making of the Loans, the
issuance and performance of the Warrants and the consummation of the
transactions contemplated by this Agreement and the other Note Documents (i)
shall not be prohibited by any applicable Legal Requirement and (ii) shall not
subject any Purchaser to any penalty or, in its reasonable judgment, other
onerous condition under or pursuant to any Legal Requirement. No action or
proceeding by or before any Governmental Authority or arbitrator shall be
pending or threatened challenging or seeking to restrain or prohibit the
transactions contemplated by this Agreement and the other Note Documents. No
order, decree, temporary restraining order, preliminary injunction, permanent
injunction or other order issued by any Governmental Authority or arbitrator
preventing the transactions contemplated by this Agreement and the other Note
Documents shall be in effect.
(n) Times Square Letter. Hospitality shall have delivered a
direction letter in form and substance satisfactory to the Agent to Times Square
Partners and SPF Times Square Inc. directing distributions from Times Square
Partners LLC to be delivered to the Working Capital Agent.
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(o) No Litigation. No action, suit, proceeding, claim or
dispute shall have been brought or otherwise arisen at law, in equity, in
arbitration or before any Governmental Authority against any Company Party which
would, if adversely determined, after giving effect to the transactions
contemplated by the Note Documents, have a Material Adverse Effect.
(p) No Material Adverse Change. Since December 31, 1999, there
shall have been no Material Adverse Effect (other than with respect to the
Inactive Guarantors), excluding events related to the bankruptcy case of the
Company.
(q) Legality. The Loans shall qualify as a legal investment
for each Purchaser under the laws and regulations of each jurisdiction to which
such Purchaser is subject (without reference to any so-called "BASKET" provision
(such as Section 1405(a)(8) of the New York Insurance Law) which permits the
making of an investment without restrictions as to the character of the
particular investment being made); and such Purchaser shall have received such
certificates of the Company and information concerning the Company and each
other Company Party and the Collateral and the Loans as such Purchaser shall
reasonably request to establish such facts.
(r) Intentionally Omitted.
(s) Receipt of New Money. The Company shall have received not
less than $30,000,000.00 in cash from the New Money Investors.
(t) Intentionally Omitted.
(u) Fees and Expenses. The Company shall have paid to the
Purchasers all of the fees and expenses described in Section 3.7.
(v) Warehouse Waivers. The Company shall have delivered to the
Agent the warehouse waivers for the warehouses listed in SCHEDULE 4.1(V) in form
and substance satisfactory to the Agent.
(w) Memorabilia Report. The Memorabilia Report shall have been
delivered to the Agent, dated the Closing Date and updated to reflect all
transactions from the date of the prior report, including, without limitation,
new acquisitions, sold Memorabilia, transfers of the location and changes in the
ownership of the Memorabilia.
4.2. Conditions to Subsequent Loans. The obligation of each
Purchaser to make any Loan after the Closing Date shall be subject to the
fulfillment, in a manner satisfactory to the Purchasers, of each of the
following conditions precedent:
(a) Payment of Fees. The Company shall have paid all fees,
costs, expenses, taxes and other amounts payable by the Company or any other
Company Party pursuant this Agreement or any other Note Document.
(b) Representations and Warranties; No Event of Default. The
statements set forth in the following clauses (i) and (ii) shall be true and
complete (and the submission by the Company to the
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Agent of a Notice of Borrowing with respect to a Loan and the Company's
acceptance of the proceeds of such Loan) shall be deemed to be a representation
and warranty by the Company on the date of such Loan to that effect:
(i) each of the representations and warranties
contained in this Agreement and in each other Note Document and each
certificate or other writing delivered to the Agent or the Purchasers
pursuant hereto on or prior to the date of such Loan are complete and
correct on and as of such date as though made on and as of such date
(except for representations and warranties which relate to a specific
date); and
(ii) no Default or Event of Default has occurred and
is continuing or would result from the making of the Loan to be made on
such date.
(c) Legality. The making of such Loan shall not contravene any
law, rule or regulation applicable to the Agent or the Purchasers.
(d) Borrowing Notice. The Agent shall have received a Notice
of Borrowing pursuant to Section 2.3 hereof no later than 12:00 noon (New York
City time) on the date of a proposed borrowing of a Loan.
(e) Receipt of Documents. The Agent shall have received such
other agreements, instruments, approvals and other documents, each in form and
substance reasonably satisfactory to the Purchasers, as the Purchasers may
reasonably request.
(f) Proceedings. All proceedings in connection with the making
of such Loan and the other transactions contemplated by this Agreement, and all
documents incidental thereto, shall be reasonably satisfactory to the
Purchasers.
(g) Commitment. The aggregate unpaid principal amount of the
Loans does not exceed, and after giving effect to the requested Loan will not
exceed, the Commitment.
(h) Plan of Reorganization and Confirmation Order in Full
Force and Effect. The Plan of Reorganization and the Confirmation Order shall be
in full force and effect and shall not have been appealed, reversed, modified,
amended or stayed (or application therefor made), except for appeals,
modifications and amendments that are acceptable to the Lenders and not adverse
to their interests.
(i) Maturity Date. The Maturity Date, as extended, shall not
have occurred.
(j) Working Capital Facility. The Working Capital Termination
Date shall not have occurred (unless the Working Capital Termination is the
originally scheduled maturity date of the Working Capital Facility on the second
anniversary of the date hereof, as extended).
(k) No Bankruptcy. The Company shall have delivered to the
Agent a certificate signed by the Chief Financial Officer of the Company in
which he or she represents and warrants that neither the Company nor any Company
Party intends to file for the protection of any bankruptcy or other insolvency
laws and that no such bankruptcy or insolvency or similar proceedings (whether
federal or state,
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voluntary or involuntary) have been commenced by or have been threatened against
the Company or any Company Party.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Agent and the
Purchasers as follows (it being agreed that, except for Section 5.44, none of
such representations and warranties shall apply to the Inactive Guarantors):
5.1. Organization and Good Standing. The Company and each
other Company Party, and each of their respective Subsidiaries, (i) is a
corporation, partnership or limited liability company duly organized, validly
existing and in good standing, in the case of the Company, under the laws of the
state of Delaware, and in the case of each other Company Party, under the laws
of the state of its organization as set forth on SCHEDULE 5.6, (ii) has all
requisite power and authority to conduct its business as now conducted and as
presently contemplated and to consummate the transactions contemplated hereby
(including without limitation the issuance of the Shares); other than only any
inaccuracy or inability to perform with respect to this representation and
warranty that, individually or in the aggregate, would not result in and could
not reasonably be expected to result in a Material Adverse Effect, and (iii) is
duly qualified to do business and is in good standing in each jurisdiction in
which the character of the properties owned or leased by it or in which the
transaction of its business makes such qualification necessary; other than only
any inaccuracy or inability to perform with respect to this representation and
warranty that, individually or in the aggregate, would not result in and could
not reasonably be expected to result in a Material Adverse Effect.
5.2. Authority and Authorization. The execution, delivery and
performance by the Company and the other Company Parties of each Note Document
to which it is a party and the authorization, issuance (or reservation for
issuance, as the case may be), and delivery of the Shares (including in
connection with the Conversion Option and the Warrants), (i) have been duly
authorized by all necessary corporate action, (ii) do not and will not
contravene its charter or by-laws, any applicable law or any contractual
restriction binding on or otherwise affecting it or any of its properties or
result in a default under any agreement or instrument to which the Company or
any of the other Company Parties is a party or by which they or their respective
properties may be subject; other than only any inaccuracy or inability to
perform with respect to this representation and warranty with respect to
contractual restrictions that, individually or in the aggregate, would not
result in and could not reasonably be expected to result in a Material Adverse
Effect, (iii) do not and will not result in or require the creation of any Lien
(other than pursuant to any such Note Document) upon or with respect to any of
its properties, and (iv) do not and will not result in any suspension,
revocation, impairment, forfeiture or nonrenewal of any permit, license,
authorization or approval applicable to its operations or any of its properties;
other than only any inaccuracy or inability to perform with respect to this
representation and warranty that, individually or in the aggregate, would not
result in and could not reasonably be expected to result in a Material Adverse
Effect.
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5.3. Execution and Binding Effect. As of the Closing Date,
this Agreement and each of the other Note Documents required to be executed and
delivered on or prior to the date hereof have been duly and validly executed and
delivered by the Company and each Company Party that is a party thereto and
constitute legal, valid and binding obligations of the Company and each Company
Party that is a party thereto enforceable in accordance with the terms hereof or
thereof. Each Note Document that is not required to be executed and delivered by
the Company or any other Company Party prior to the Closing Date, when executed
and delivered, will be validly executed and delivered by the Company or such
other Company Party and will constitute legal, valid and binding obligations of
the Company or such other Company Party enforceable against each such party in
accordance with the terms thereof, except as enforceability may be limited by
(a) applicable bankruptcy, insolvency, fraudulent conveyance, fraudulent
transfer, reorganization, moratorium or similar laws from time to time in effect
affecting generally the enforcement of creditors' rights and remedies, and (b)
general principles of equity, including, without limitation, principles of
reasonableness, good faith and fair dealing and an implied covenant of good
faith and fair dealing (regardless of whether enforcement is sought in equity or
at law), principles requiring consideration of the impracticability or
impossibility of performance at any time, and principles affording defenses
based on unconscionability, and such principles may include a requirement that a
creditor act reasonably and in good faith.
5.4. Governmental Approvals. Other than (a) as obtained
heretofore, or (b) with respect to the filing of UCC-1 forms with the
appropriate filing officer, no authorization, consent, approval, license,
exemption or other action by, and no registration, qualification, designation,
declaration or filing with, any Governmental Authority is or will be necessary
in connection with the execution and delivery by the Company or the other
Company Parties of each Note Document to which such is a party, consummation of
the transactions therein contemplated, performance of or compliance with the
terms and conditions thereof or to ensure the legality, validity, enforceability
and admissibility in evidence thereof.
5.5. Absence of Conflicts. Neither the execution and delivery
of this Agreement or the other Note Documents to which the Company or any other
Company Party is a party nor consummation of the transactions herein or therein
contemplated (including without limitation, the issuance of the Shares on the
date hereof and in connection with the Conversion Option and the Warrants) nor
performance of or compliance with the terms and conditions hereof or thereof
will (a) violate any Legal Requirement, (b) conflict with or result in a breach
of or default under its charter or by-laws, or any material agreement or
instrument to which the Company or any other Company Party are a party or by
which it or any of their properties (now owned or hereafter acquired) may be
subject or bound, or (c) result in the creation or imposition of any Lien upon
any property (now owned or hereafter acquired) of the Company or any other
Company Party, except the Lien in favor of the Agent with respect to the
Collateral and the Permitted Liens described in 8.1(f); other than only any
inaccuracy or inability to perform with respect to this representation and
warranty that, individually or in the aggregate, would not result in and could
not reasonably be expected to result in a Material Adverse Effect.
5.6. Subsidiaries. SCHEDULE 5.6 hereto is a complete and
correct description of the name, jurisdiction of organization and ownership of
the outstanding equity interests of each Subsidiary of the Company and each
other Company Party in existence on the Closing Date. All shares of such stock
owned by the Company and each other Company Party of one or more of their
Subsidiaries, as indicated in such Schedule, are owned free and clear of all
Liens.
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5.7. Litigation. Except as set forth in the financial
statements referred to in Section 5.8 hereof and described on SCHEDULE 5.7
hereto, there is not, to the best knowledge of the Company, any pending or
threatened proceeding by or before any Governmental Authority, arbitrator or
grand jury against or affecting the Company or any ERISA Affiliate with respect
to any Environmental Law or ERISA, which, if adversely decided, can reasonably
be expected to have a Material Adverse Effect.
5.8. Financial Condition. The Company has heretofore furnished
to the Purchasers a balance sheet of the Company and its Consolidated
Subsidiaries for the fiscal year ended December 31, 1998, and the related
statements of operations and cash flows for the fiscal year then ended, as
examined and reported on by PriceWaterhouseCoopers LLP, independent certified
public accountants, and a balance sheet and related statements of operations and
cash flows of the Company and its Consolidated Subsidiaries for and as of the
end of the nine (9) month period ended September 30, 1999, as certified by the
Designated Financial Officer. Such financial statements present fairly, in all
material respects, the financial condition of the Company and its Consolidated
Subsidiaries as of the end of such fiscal year and as of the end of such period,
as applicable, and the results of its operations and the cash flows for the
fiscal year then ended and for the period then ended, as applicable, all in
conformity with GAAP applied on a basis consistent with that of the preceding
fiscal year, subject (in the case of the interim financial statements) to
year-end adjustments. Except as disclosed therein and in the Plan of
Reorganization, the Company and the Subsidiaries do not have any material
contingent liabilities (including liabilities for taxes), unusual forward or
long term commitments or unrealized or anticipated losses from unfavorable
commitments.
5.9. Compliance with Law. Each of the Company and the other
Company Parties is not in violation of its charter or by-laws, any law
(including but not limited to violations pertaining to the conduct of its
business or the use, maintenance or operation of the real and personal
properties owned or possessed by it) or any material term of any agreement or
instrument binding on or otherwise affecting it or any of its properties, except
for the noncompliance with any law, agreement or instrument which could not, in
the aggregate for all such instances of noncompliance, have a Material Adverse
Effect.
5.10. ERISA. Except as disclosed on SCHEDULE 5.10 hereto, (i)
each Plan is in substantial compliance with ERISA and the Code, (ii) no
Termination Event has occurred nor is reasonably expected to occur with respect
to any Plan, (iii) the most recent annual report (Form 5500 Series) with respect
to each Plan, including Schedule B (Actuarial Information) thereto, copies of
which have been filed with the Internal Revenue Service, is complete and correct
and fairly presents the funding status of such Plan; and to the best of the
Company's knowledge, there has been no material adverse change in such funding
status since the date of such report; (iv) no Plan has an Unfunded Current
Liability (other than an Unfunded Current Liability resulting from interest rate
fluctuations) in excess of $100,000; (v) no Plan had an accumulated or waived
funding deficiency or permitted decreases which would create a deficiency in its
funding standard account within the meaning of Section 412 of the Code at any
time during the previous sixty (60) months in excess of $100,000, (vi) all
contributions required to be made with respect to a Plan have been timely made;
(vii) neither the Company nor any ERISA Affiliate has incurred any liability to
or on account of a Plan pursuant to Section 409, 502(i), 502(1), 515, 4062,
4063, 4064, 4069, 4201, 4204, or 4212(c) of ERISA or Section 401(a)(29), 4971 or
4975 of the Code or reasonably expects to incur any liability (including any
indirect, contingent, or secondary liability) under any of the foregoing
Sections with respect to any Plan in excess of $100,000; (viii) no proceedings
have been instituted to terminate or appoint a trustee to administer any Plan;
(ix) no condition exists which presents a material risk to the Company or any
ERISA Affiliate of incurring a material liability to or on account of a Plan
pursuant to the foregoing
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provisions of ERISA and the Code. Neither the Company nor any of its ERISA
Affiliates has incurred any withdrawal liability under ERISA; (x) no Lien
imposed under the Code or ERISA exists or is likely to arise on account of any
Plan; and (xi) there are no pending or, to the knowledge of the Company,
threatened claims, actions, proceedings, or lawsuits (other than ordinary course
claims for benefits) asserted against any Plan or its assets, any fiduciary with
respect to any Plan, the Company, or any ERISA Affiliate. Neither the Company
nor any ERISA Affiliate has incurred any withdrawal liability under ERISA with
respect to any Multiemployer Plan, and neither the Company nor any ERISA
Affiliate expects to incur a material withdrawal liability. Except as required
by Section 4980B of the Code, or as otherwise disclosed on SCHEDULE 5.10 hereto,
neither the Company nor any ERISA Affiliate maintains a welfare plan (as defined
in Section 3(1) of ERISA) which provides benefits or coverage after a
participant's termination of employment. All Plans in existence on the Closing
Date are set forth on SCHEDULE 5.10 hereto.
5.11. Taxes. All Tax returns required to be filed by the
Company and each other Company Party have been properly prepared, executed and
filed. All taxes, assessments, fees and other governmental charges upon the
Company and each other Company Party or upon any of their respective properties,
income, sales or franchises which are shown thereon as due and payable have been
paid. The reserves and provisions for taxes, if any, on the books of the Company
are adequate for all open years and for its current fiscal period. The Company
does not know of any proposed additional assessment or basis for any material
assessment for additional taxes (whether or not reserved against), which, if
assessed, would cause the condition described in Section 4.1(j) or hereof to be
untrue. The federal income tax liabilities of the Company have been finally
determined by the Internal Revenue Service, or the time for audit has expired,
for all fiscal periods ended on or prior to January 1, 1995 and all such
liabilities (including all deficiencies assessed following audit) have been
satisfied.
5.12. Full Disclosure. No representation or warranty made by
the Company or any other Company Party under this Agreement or any other Note
Document is false or misleading in any material respect and no Note Document or
Schedule or Exhibit thereto and no certificate, report, statement or other
document or information furnished to the Agent or the Purchasers in connection
herewith or therewith or with the consummation of the transactions contemplated
hereby and thereby, contains, taken as a whole. any material misstatement of
fact or omits to state a material fact or any fact necessary to make the
statements contained herein or therein not misleading. To the extent the Company
furnishes any projections of the financial position and results of operations of
the Company and the other Company Parties for, or as at the end of, certain
future periods, such projections are prepared in good faith on the basis of
assumptions, methods and tests stated therein which are reasonably believed by
the Company to have been reasonable and information reasonably believed by the
Company to have been accurate based upon the information available to the
Company at the time such projections were furnished to the Purchasers. The
Company has disclosed to the Purchasers all relevant information that to the
best of its knowledge is reasonably likely to result in a Material Adverse
Effect.
5.13. Operating Lease Obligations; Existing Liens; Unpaid
Rent. On the Closing Date, the Company and the other Company Parties do not have
any obligations as lessee for the payment of rent for any real property other
than the Operating Lease Obligations set forth in SCHEDULE 5.13 hereto. There
are no Liens on any assets of the Company other than (i) the Lien created as of
the Closing Date in favor of the Agent under the Security Documents, (ii) Liens
securing Capitalized Lease Obligations of the Company and (iii) Permitted Liens.
As of the Closing Date, the outstanding rent for the leased distribution
centers, warehouses and retail stores of the Company and each other Company
Party is current as of May 1, 2000.
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5.14. Environmental Matters. Except as disclosed in SCHEDULE
5.14 hereto (i) none of the operations of the Company or any other Company Party
is the subject of any federal, state or local investigation to determine whether
any Remedial Action is needed to address the presence, disposal, Release or
threatened Release, except for such matters which are not reasonably likely to
result in Environmental Liabilities and Costs of $500,000 or more in the
aggregate together with other such Environmental Liabilities and Costs, (ii) the
Company Parties do not have any contingent liability in connection with any
Release, except for such matters which are not reasonably likely to result in
Environmental Liabilities and Costs of $500,000 or more in the aggregate
together with other such Environmental Liabilities and Costs, (iii) the
operations of the Company Parties are in compliance with all Environmental Laws,
except those laws where a failure to comply is not reasonably likely to result
in Environmental Liabilities and Costs of $500,000 or more in the aggregate
together with such other Environmental Liabilities and Costs; (iv) there has
been no Release at any of the properties owned or operated by any Company Party
or any predecessor in interest or title, or at any disposal or treatment
facility which received Hazardous Materials generated by any Company Party or
any predecessor in interest or title, except for such matters which are not
reasonably likely to result in Environmental Liabilities and Costs of $500,000
or more in the aggregate together with other such Environmental Liabilities and
Costs; (v) no Environmental Actions have been asserted against any Company Party
or any predecessor in interest or title nor do the Company Parties have
knowledge or notice of any threatened or pending Environmental Action against
any Company Party or any predecessor in interest or title, except for such
matters which, if adversely determined, are not reasonably likely to result in
Environmental Liabilities and Costs of $500,000 or more in the aggregate
together with other such Environmental Liabilities and Costs; (vi) the Company
Parties have obtained all permits, approvals, authorizations and licenses
required by Environmental Laws necessary for their operations, and all such
permits, approvals, authorizations and licenses are in effect and the Company
Parties are in compliance with all terms and conditions of such permits,
approvals, authorizations and licenses, (vii) no Environmental Actions have been
asserted against any facilities that may have received Hazardous Materials
generated by the Company Parties or any predecessor in interest or title, except
for such matters which, if adversely determined, are not reasonably likely to
result in Environmental Liabilities and Costs of $500,000 or more in the
aggregate together with other such Environmental Liabilities and Costs.
5.15. Schedules. All of the information which is required to
be attached to this Agreement is set forth on the Schedules attached hereto, is
correct and accurate (other inaccuracies of DE MINIMIS effect) and does not omit
to state any information material thereto.
5.16. Insurance. The Company and the other Company Parties
keep their properties adequately insured and maintain (a) insurance to such
extent and against such risks, including fire, as is customary with companies in
the same or similar businesses, (b) workmen's compensation insurance in the
amount required by applicable law, (c) public liability insurance in the amount
customary with companies in the same or similar business against claims for
personal injury or death on properties owned, occupied or controlled by it, and
(d) such other insurance as may be required by law or by the Note Documents.
SCHEDULE 5.16 hereto sets forth a list of all insurance maintained by the
Company and the other Company Parties on the Closing Date.
5.17. Financial Accounting Practices. The Company and the
other Company Parties make and keep books, records and accounts which, in
reasonable detail, accurately and fairly reflect their respective transactions
and dispositions of their respective assets and maintain a system of internal
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accounting controls sufficient to provide reasonable assurances that (a)
transactions are executed in accordance with management's general or specific
authorization, and (b) transactions are recorded as necessary (i) to permit
preparation of financial statements in conformity with GAAP except as previously
disclosed to the Purchasers and (ii) to maintain accountability for assets.
5.18. No Material Adverse Effect. Since December 31, 1999,
there has not been any Material Adverse Effect (other than with respect to the
Inactive Guarantors), excluding events related to the bankruptcy case of the
Company.
5.19. Real Property; Leases.
(a) Properties. SCHEDULE 5.19(A) hereto sets forth a complete
and accurate description and list as of the Closing Date of the location, by
state and street address, of all real property owned and leased by the Company
and the other Company Parties, together with, in the case of real property that
is owned, a statement as to whether such real property is the subject of a
contract of sale (and, if so, a statement as to the status of such sale).
(b) Leases. As of the Closing Date, the Company and the other
Company Parties have valid leasehold interests (as lessee) in the Leases
described in SCHEDULE 5.19(B) hereto. None of the Leases is subject to any Lien
except Liens granted to the Agent pursuant to the Security Documents and
Permitted Liens. SCHEDULE 5.19(B) hereto sets forth with respect to each Lease,
the commencement date, termination date, renewal options (if any) and annual
base rents. Each such Lease is valid and enforceable in accordance with its
terms in all material respects and is in full force and effect. No consent or
approval of any landlord or other third party in connection with the Leases is
necessary for the Company or any of the other Company Parties to enter into and
execute the Note Documents. Neither the Company nor any of the other Company
Parties or, to the knowledge of the Company or any of the other Company Parties,
any other party to any Lease is in default of its obligations thereunder and
neither the Company nor any of the other Company Parties nor any other party to
any such Lease has at any time delivered or received any notice of default which
remains uncured under any such Lease and, as of the Closing Date, no event has
occurred which, with the giving of notice or the passage of time, or both, would
constitute a default under any such Lease, except for defaults the consequence
of which, individually or in the aggregate, would not have, and could not
reasonably be expected to have, a Material Adverse Effect.
(c) Permits. All permits required to have been issued to the
Company or the other Company Parties with respect to the real property owned or
leased by the Company or any of the other Company Parties to enable such
property to be lawfully occupied and used for all of the purposes for which it
is currently occupied and used (separate and apart from any other properties),
have been lawfully issued and are in full force and effect, and all such real
property complies in all material respects with all applicable legal and
insurance requirements, except where the failure to obtain such permits or such
instances of non-compliance with applicable legal and insurance requirements,
individually or in the aggregate, would not result in and could not reasonably
be expected to result in a Material Adverse Effect.
(d) No Condemnation. Neither the Company nor any of the other
Company Parties has received any notice, nor has any knowledge, of any pending,
threatened or contemplated condemnation proceeding affecting any real property
owned or leased by the Company or any other Company Parties.
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(e) No Casualty. No portion of any real property owned or
leased by the Company or any of the other Company Parties has suffered any
damage by fire or other casualty loss which has not heretofore been completely
repaired and restored to its condition existing prior to such casualty or which
if not repaired or restored is not reasonably likely to result in a Material
Adverse Effect. Except as disclosed to the Agent in writing, no portion of any
of the real property owned or leased by the Company or any of the other Company
Parties is located in a special flood hazard area as designated by any
Governmental Authority.
5.20. Location of Bank Accounts. SCHEDULE 5.20 hereto sets
forth a complete and accurate list as of the Closing Date of all deposit and
other accounts, including all Depository Accounts, maintained by the Company and
the other Company Parties together with a description thereof (I.E., the bank at
which such deposit or other account is maintained and the account number and the
purpose thereof).
5.21. No Event of Default. No event has occurred and is
continuing and no condition exists which constitutes an Event of Default or
Default.
5.22. Capitalized Leases. As of the Closing Date, Capitalized
Lease Obligations of the Company and the other Company Parties do not exceed
$5,000,000 in the aggregate.
5.23. Inventory and Memorabilia. There is no location at which
the Company or any other Company Party has any Inventory or Memorabilia (except
for Inventory in transit) other than (a) those locations listed on SCHEDULE 5.23
hereto and, (b) any other locations approved in writing by the Agent. SCHEDULE
5.23 hereto contains a true, correct and complete list, as of the Closing Date,
of the legal names and addresses of each warehouse at which Inventory or
Memorabilia of the Company is stored. None of the receipts received by the
Company from any warehouse states that the goods covered thereby are to be
delivered to bearer or to the order of a named Person or to a named Person and
such named Person's assigns.
5.24. Collateral. The Company has good and marketable title to
the Collateral.
5.25. Tradenames. SCHEDULE 5.25 hereto sets forth a complete
and accurate list as of the Closing Date of all tradenames used by the Company
and the other Company Parties.
5.26. Intellectual Property. Each of the Company and the other
Company Parties owns all right, title and interest in or is authorized licensee
of or otherwise has the right to use all material Intellectual Property that is
necessary for the operations of their respective businesses and, to the
knowledge of the Company and the other Company Parties, without infringement
upon or conflict with the rights of any other Person with respect thereto,
except for the failure to obtain the right to use licenses, permits, patents,
patent applications, trademarks, trademark applications, service marks, trade
names, copyrights, copyright applications, franchises, authorizations and other
intellectual property rights that are necessary for the operations of their
respective businesses and the ownership and sale of Memorabilia, and
infringements upon and conflicts with respect thereto, which, individually or in
the aggregate, would not result in and could not reasonably be expected to
result in a Material Adverse Effect. To the best knowledge of the Company and
the other Company Parties, none of the Intellectual Property necessary for the
operations of their businesses infringes upon or conflicts with any rights owned
by any other Person,
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and no claim or litigation regarding any of the foregoing is pending or
threatened, except where such infringements, conflicts and pending or threatened
litigation, individually or in the aggregate, would not result in and could not
reasonably be expected to result in a Material Adverse Effect. To the knowledge
of the Company and the other Company Parties, there are no Intellectual Property
rights owned by any other Person or any statute, law, rule, regulation, standard
or code is pending or proposed, which, individually or in the aggregate, could
have a Material Adverse Effect. To the best knowledge of the Company and the
other Company Parties, none of the Intellectual Property necessary for the
operations of their businesses is being infringed, misappropriated or otherwise
violated in any material respect by any other Person.
5.27. Nature of Business. The Company is not engaged in any
business other than (a) the operation of restaurants and retail stores selling
Planet Hollywood-related and Official All-Star Cafe-related merchandise, and (b)
the sale and licensing of intellectual property and merchandise related thereto,
and the operation of websites in connection therewith and other reasonably
related activities (subject to the restrictions contained in the Note Documents
related to the Memorabilia, including without limitation, minimum sales prices
and application of Net Proceeds).
5.28. Adverse Agreements. Neither the Company nor any of the
other Company Parties is a party to any agreement or instrument, or subject to
any charter or other corporate restriction or any judgment, order, regulation,
ruling or other requirement of a court or other Governmental Authority or
regulatory body which would result in a Material Adverse Effect, or, to the best
knowledge of the Company, could reasonably be expected to result in a Material
Adverse Effect.
5.29. Holding Company and Investment Company Acts. Neither the
Company nor any of the other Company Parties is (a) 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, as amended, or (b) an "INVESTMENT COMPANY" or an "AFFILIATED PERSON" or
"PROMOTER" of, or "PRINCIPAL UNDERWRITER" of or for, an "INVESTMENT COMPANY", as
such terms are defined in the Investment Company Act of 1940, as amended.
5.30. Permits. The Company and the other Company Parties have
all material permits, licenses, authorizations and approvals required for them
lawfully to own and operate their business.
5.31. Priority; Title. The Liens granted under the Security
Documents constitute and shall at all times constitute perfected second priority
Liens on the Collateral. The Collateral is subject to no other Liens other than
Permitted Liens. The Company is the sole and absolute owner of all of the
Collateral, with the full right to pledge, sell, consign, transfer and create
Liens therein. No Person has any right of first refusal, option or other
preferential right to purchase any Collateral. The Company will at its expense
warrant and, at the Agent's request, defend the same from any and all claims and
demands of any other Person other than the Permitted Liens. The Company will not
grant, create or permit to exist, any Lien upon the Collateral, or any proceeds
thereof, in favor of any other Person other than Permitted Liens. The Company
and the other Company Parties have good and marketable title or a valid
leasehold interest in all of their other properties and assets, free and clear
of all Liens except Permitted Liens.
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5.32. Labor Relations; Collective Bargaining Agreements.
(a) Collective Bargaining Agreements. Set forth on SCHEDULE
5.32 hereto is a list (including dates of termination) of all collective
bargaining agreements between or applicable to the Company or any of the U.S.
Subsidiaries and any union, labor organization or other bargaining agent in
respect of the employees of the Company or any of the U.S. Subsidiaries.
(b) No Unfair Labor Practices. Neither the Company nor any of
the U.S. Subsidiaries is engaged in any unfair labor practice that would result
in or could reasonably be expected to result in a Material Adverse Effect. There
is (i) no significant unfair labor practice complaint pending against the
Company or any of the U.S. Subsidiaries or, to the best knowledge of the Company
or any of the U.S. Subsidiaries, threatened against any of them, before the
National Labor Relations Board, and no significant grievance or significant
arbitration proceeding arising out of or under any Collective Bargaining
Agreement is now pending against the Company or any of the U.S. Subsidiaries or,
to the best knowledge of the Company or any of the U.S. Subsidiaries, threatened
against any of them, (ii) no significant strike, labor dispute, slowdown or
stoppage is pending against the Company or any of the U.S. Subsidiaries or, to
the best knowledge of the Company or any of the U.S. Subsidiaries, threatened
against the Company or any of the U.S. Subsidiaries, and (iii) to the best
knowledge of the Company or any of the U.S. Subsidiaries, no union
representation question existing with respect to the employees of the Company or
any of the U.S. Subsidiaries, except where (with respect to any matter specified
in clause (i), (ii) or (iii) above), either individually or in the aggregate,
such actual or threatened complaint, grievance, or arbitration proceeding,
strike, labor dispute, slowdown or stoppage or union representation question
would not result in and could not reasonably be expected to result in a Material
Adverse Effect.
5.33. Note Documents. The Note Documents create and grant to
the Agent, for the benefit of the Purchasers, a legal, valid and perfected
second priority Lien on the Collateral, subject to no other Liens except for
Permitted Liens.
5.34. Solvency. After giving effect to the transactions
contemplated by this Agreement and the Note Documents, the Company and the
Guarantors are, on a consolidated basis, Solvent.
5.35. Intentionally Omitted.
5.36. TSP Agreement.
(a) TSP Agreement. The Company has delivered to the Agent a
true and complete copy of the TSP Agreement. Except for the TSP Agreement, there
are no documents, instruments or agreements affecting or with respect to the
Membership Interest to which any Company Party is a party or bound or under
which any Company Party has any interest or estate, or which are binding on the
Membership Interest. The TSP Agreement is the valid and binding obligation of
each Company Party that is a party thereto, enforceable against and by each such
Company Party in accordance with its terms except (i) as limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other laws of general
application affecting enforcement of creditors' rights and (ii) general
principles of equity that restrict the availability of equitable remedies.
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(b) Title. Hospitality has good and marketable right, title
and interest in, to and under the Membership Interest, free and clear of any
Liens, except for the Permitted Liens and the right of first refusal of the
other members of TSP under and in accordance with the terms of the TSP
Agreement.
(c) No Default. No default or event of default has occurred
under or with respect to the TSP Agreement, pursuant to the terms thereof.
Hospitality has fully performed all of its obligations under the TSP Agreement
which are required to be performed on or prior to the date hereof, and its
right, title and interest of any Company Party in the Membership Interest is not
subject to any defense, offset, counterclaim or claim (other than Permitted
Liens), nor have any of the foregoing been asserted or alleged against any
Company Party with respect to the Membership Interest, nor has any Company Party
asserted any of the same against any other party to the TSP Agreement.
(d) Consents. All consents, licenses, approvals and
authorizations of, or designations or declarations with, any Governmental
Authority or any other Person required to be obtained, effected, given or
received in connection with the execution, delivery and performance of the TSP
Agreement by any Company Party have been duly obtained, effected, given and
received, are in full force and effect and do not subject the provisions of the
Membership Interest to any limitation, either specific or general in nature.
(e) Members and Membership Interests. SCHEDULE 5.36 hereto
sets forth or attaches a true and complete list setting forth (i) each member of
TSP, (ii) the percentage membership interest in TSP currently owned by each such
Person, (iii) the current balance of such Person's capital account in TSP, (iv)
a copy of each Schedule K-1 received by a Company Party with respect to the
Membership Interest and each tax return filed by TSP, and (v) a description,
including the principal amount, interest, term and lender, of all debt of TSP.
5.37. Use of Proceeds. The proceeds of each Loan shall be used
only for general corporate purposes. No part of such funds will be used,
directly or indirectly, for the purpose of purchasing or carrying any "MARGIN
STOCK" within the meaning of Regulations T, U or X of the Board of Governors of
the Federal Reserve System. The assets of the Company and its Subsidiaries do
not and will not include an amount of "MARGIN STOCK" that would cause the
provisions of Rule 221.2(g)(2)(i) of Regulation U to be inapplicable and the
Company and its Subsidiaries have no present intention of purchasing such an
amount of "MARGIN STOCK."
5.38. Stock and Capitalization.
(a) Shares. As of the Closing Date, the authorized capital
stock of the Company consists of (i) 100 million shares of New Class A Common
Stock, par value $.01 per share, of which 3.0 million are issued and outstanding
and 10.4 million are reserved for issuance as set forth in SCHEDULE 5.38(A),
(ii) 25 million shares of New Class B Common Stock, par value $.01 per share, of
which 7 million are issued and outstanding and (iii) 100 million shares of
Preferred Stock, par value $.01 per share, none of which are outstanding. All
Shares issued on the Closing Date and all other outstanding shares of stock are
duly authorized, validly issued, fully paid and non-assessable and are not
subject to any preemptive or subscription right. All Shares issued on the
Closing Date (w) have been duly authorized and validly issued and are fully paid
and non-assessable, (x) have the rights, preferences and privileges described in
the Amended and Restated Certificate of Incorporation of the Company and (y)
have not been issued in violation of, and are not and
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will not be subject to, any preemptive or subscription rights, and do not and
will not result in the antidilution provisions of any security of the Company
becoming applicable, and (z) are free and clear of any Liens; and the Purchasers
have good title thereto.
(b) No Other Rights. Except as expressly set forth
in SCHEDULE 5.38(B), there are no outstanding warrants, options,
rights, other securities, agreements, subscriptions or other
commitments, arrangements or undertakings pursuant to which the
Company is or may become obligated to issue, deliver or sell, or
cause to be issued, delivered or sold, any additional capital stock
or other securities of the Company or to issue, grant, extend or
enter into any such warrant, option, right, security, agreement,
subscription or other commitment, arrangement or undertaking. There
are no outstanding options, rights, other securities, agreements or
other commitments, arrangements or undertakings pursuant to which the
Company is or may become obligated to redeem, repurchase or otherwise
acquire or retire any capital stock or other securities of the
Company, or any securities of the type described in this Section,
which are presently outstanding or may be issued in the future.
Except as set forth on SCHEDULE 5.38(B) no Company Party is a party
to, or has knowledge of any, voting trusts, proxies or any other
agreements or understandings with respect to the voting of any
capital stock or membership or similar ownership interests of any
Company Party.
(c) Record Holders. Set forth on SCHEDULE 5.38(C)
is a true, correct and complete list of the record holders of 10% or
more of shares of capital stock of the Company. Each of such holders
so owning the number of shares set forth opposite such holder's name
on SCHEDULE 5.38(C), holds such shares free and clear of all Liens
except for Permitted Liens described in Sections 8.1(a) and (f) or
any other restriction on the right to vote, sell or otherwise dispose
of such capital stock. Except as set forth on SCHEDULE 5.38(C), there
are no bonds, debentures, notes or other indebtedness or securities
of the Company having the right to vote (or convertible into, or
exchangeable for, securities having the right to vote) on any matters
on which stockholders of the Company may vote.
(d) Registration Rights Agreements. Other than the
rights granted in the Registration Rights Agreement, there are no
outstanding rights which permit the holder thereof to cause the
Company to file a registration statement under the Securities Act or
which permit the holder thereof to include securities of the Company
in a registration statement filed by the Company under the Securities
Act or any state securities laws and there are no outstanding
agreements or other commitments which otherwise relate to the
registration of any securities of the Company under the Securities
Act or any state securities laws, including "piggyback" rights.
(e) Registration Rights Exemption. Assuming that
the representations and warranties of a Purchaser set forth in
Section 6.1(b) is true and correct, the offering, issuance and
delivery of (i) the Notes, (ii) Shares being issued on the Closing
Date, (iii) the Warrants, (iv) the Shares or other Securities into or
for which the Obligations and the Warrants are convertible or
exercisable and (v) any other Securities to be issued to such
Purchaser at any time under this Agreement or the Warrants are exempt
from the registration requirements of the Securities Act, and it is
not necessary to make or obtain any filings, registrations,
qualifications, notifications or consents or approvals of or with any
Governmental Authority (including without limitation under the
Securities Act, the Exchange Act, the Investment Company Act of 1940,
as amended, or any state securities or "blue sky" laws) in connection
therewith.
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(f) Anti-Dilution and Other Adjustments. The
consummation of the transactions contemplated by the Note Documents
(including the creation and exercise of the Conversion Option and the
issuance and exercise of any Warrants) will not trigger the
anti-dilution provisions or other price adjustment mechanisms of any
outstanding securities, subscriptions, options, warrants, puts,
calls, contracts, preemptive rights, demands, commitments, conversion
rights or other agreements or arrangements of any character or nature
whatsoever under which any Company Party is or may become obligated
to issue, sell, acquire, redeem or repurchase such Company Party's
capital stock or membership or similar ownership interests or rights
or securities convertible into exchangeable or exercisable for such
capital stock or membership or similar ownership interests.
5.39. No Solicitation or Registration. Neither the Company nor
any Subsidiary of the Company nor, to the Company's knowledge, anyone acting on
its behalf has offered the Notes, the Shares or the Warrants or any similar
securities to, or solicited any offer to purchase the same from, any Person, or
has taken any other action, which would require the registration of the Notes,
the Shares or the Warrants under Section 5 of the Securities Act.
5.40. Ownership of Planet Hollywood Memorabilia, Inc. and the
Memorabilia. As of the date hereof, (a) the Company owns one hundred percent
(100%) of the capital stock of Planet Hollywood Memorabilia, Inc., (b) Planet
Hollywood Memorabilia, Inc. owns one hundred percent (100%) of the Memorabilia,
all of which was duly and properly transferred from the Company to it pursuant
to an order, dated December 13, 1999, of the United States District Court for
the District of Delaware, and has good and valid title to the Memorabilia, free
and clear of all Liens other than Permitted Liens and (c) prior to the transfer
described in clause (b) hereof, the Company was the sole owner of and had good
and marketable title to one hundred percent (100%) of the Memorabilia.
5.41. Corporate Structure. The corporate chart evidencing the
corporate structure of the Company Parties annexed as SCHEDULE 5.41 hereto
accurately reflects as of the Closing Date the corporate structure of the
Company Parties in all material respects.
5.42. No Prohibited Transaction. No transaction contemplated
by this Agreement is a non-exempt prohibited transaction within the meaning of
Section 4975 of the Code or Section 406 of ERISA. In making the representation
set forth in the preceding sentence, the Company relies on the representation of
the Purchasers made pursuant to Section 6.1(a) of this Agreement.
5.43. Material Contracts. SCHEDULE 5.43 hereto sets forth a
complete listing of all Material Contracts.
5.44. Inactive Guarantors. None of the Inactive Guarantors has
(a) any business operations (other than those operations that directly relate to
maintaining corporate existence), or (b) assets having an aggregate value in
excess of $50,000.
5.45. Foreign Entities. Each of the Foreign Entities has
substantially all of its operations or assets located outside the United States
of America.
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5.46. Electing Holders. As of the date hereof, the parties
executing the Intercreditor Agreement, in their capacity as Electing Holders of
Class 5 Claims, represent at least 85% of such Electing Holders of Class 5
Claims pursuant to Section 5.5 of the Plan.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS
6.1. Representations of Each Purchaser. Each Purchaser hereby
represents and warrants, for itself only, as follows:
(a) Source of Funds. With respect to each source of funds (a
"SOURCE") for a Loan:
(i) if such Purchaser is an insurance company, the
Source is an "INSURANCE COMPANY GENERAL ACCOUNT" within the meaning of
the United States Department of Labor's Prohibited Transaction
Exemption ("PTE") 95-60 (issued July 12, 1995) and the purchase of
Notes by such Purchaser is eligible for and satisfies the requirements
of PTE 95-60; or
(ii) the Source is either (x) an insurance company
pooled separate account, within the meaning of PTE 90-1 (issued January
29, 1990), or (y) a bank collective investment fund, within the meaning
of PTE 91-38 (issued July 12, 1991) and, except as such Purchaser has
disclosed to the Company in writing pursuant to this subsection (ii),
no employee benefit plan or group of plans maintained by the same
employer or employee organization beneficially owns more than 10% of
all assets allocated to such pooled separate account or collective
investment fund; or
(iii) (A) the Source constitutes assets of an
"INVESTMENT FUND" (within the meaning of Part V of the QPAM Exemption)
managed by a "QUALIFIED PROFESSIONAL ASSET MANAGER" or "QPAM" (within
the meaning of Part V of the QPAM Exemption), (B) no employee benefit
plan's assets that are included in such investment fund, when combined
with the assets of all other employee benefit plans established or
maintained by the same employer or by an affiliate (within the meaning
of Section V(c)(1) of the QPAM Exemption) of such employer or by the
same employee organization and managed by such QPAM, exceed 20% of the
total client assets managed by such QPAM, (C) the conditions of Part
I(c) and (g) of the QPAM Exemption are satisfied, (D) neither the QPAM
nor a person controlling or controlled by the QPAM (applying the
definition of "CONTROL" in Section V(e) of the QPAM Exemption) owns a
5% or more interest in the Company and (E) both (1) the identity of
such QPAM and (2) the names of all employee benefit plans whose assets
are included in such investment fund have been disclosed to the Company
in writing pursuant to this subsection (iii); or
(iv) the Source is a governmental plan; or
(v) the Source is one or more employee benefit plans,
or a separate account or trust fund comprised of one or more employee
benefit plans, each of which has been identified to the Company in
writing pursuant to this subsection (v); or
(vi) the Source does not include assets of any
employee benefit plan, other than a plan exempt from the coverage of
ERISA; or
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(vii) the Source is a separate account that is
maintained solely in connection with such Purchaser's fixed contractual
obligations, under which the amounts payable, or credited, to such plan
and to any participant or beneficiary of such plan (including any
annuitant) are not affected in any manner by the investment performance
of the separate account.
As used in this Section, the terms "EMPLOYEE BENEFIT PLAN",
"GOVERNMENTAL PLAN", "PARTY IN INTEREST" and "SEPARATE ACCOUNT" shall have the
respective meanings assigned to such terms in Section 3 of ERISA, and the term
"QPAM EXEMPTION" means Prohibited Transaction Class Exemption 84-14 issued by
the United States Department of Labor.
(b) Accredited Investor. Such Purchaser is an "ACCREDITED
INVESTOR" as such term is defined in Rule 501(a) promulgated under the
Securities Act.
ARTICLE 7
AFFIRMATIVE COVENANTS
The Company hereby covenants to and agrees with the Agent and
the Purchasers as follows (it being agreed that except for Section 7.13 such
covenants shall not apply to any Inactive Guarantor):
7.1. Payments and Taxes.
(a) Payments. The Company will duly and punctually pay the
principal of, premium (if any) and interest on the Notes in accordance with
their terms and this Agreement and all other Obligations in accordance with this
Agreement and the other Note Documents, free and clear of, and without reduction
for or on account of, any present or future income, stamp or other taxes,
levies, imposts, duties, charges, fees, deductions or withholding, now or
hereafter imposed, levied, collected, withheld or assessed by any governmental
authority, excluding, in the case of any Purchaser, net income and franchise
taxes imposed on such Purchaser by the jurisdiction under the laws of which such
Purchaser is organized or any political subdivision or taxing authority thereof
or therein (such non-excluded taxes, "TAXES"). If any Taxes are required to be
withheld from any amounts payable to any Purchaser hereunder, under any Note or
under any other Note Document, the amounts so payable to such Purchaser shall be
increased to the extent necessary to yield to such Purchaser (after payment of
all Taxes) interest or any such other amounts payable hereunder at the rates or
in the amounts specified in this Agreement, the applicable Note or such other
Note Document. If the Company fails to pay any Taxes when due to the appropriate
taxing authority, the Company shall indemnify each Purchaser for any incremental
taxes, interest or penalties that may become payable by such Purchaser as a
result of any such failure.
(b) Taxes. Each Purchaser that is not a United States person
(as such term is defined in Section 7701(a)(30) of the Code) for U.S. Federal
income tax purposes (each, a "NON-U.S. PURCHASER") agrees to deliver to the
Company and the Agent on or prior to the Closing Date (or, in the case of a
Non-U.S. Purchaser that is an assignee or transferee of an interest under this
Agreement pursuant to Section 12.5 (unless such Non-U.S. Purchaser was already a
Purchaser hereunder immediately prior to such assignment or transfer), on the
date of such assignment or transfer to such Non-U.S. Purchaser, (i) two accurate
and complete original signed copies of Internal Revenue Service Form W-8ECI,
Form W-8IMY,
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or Form W-8BEN (or successor forms) certifying that such Non-U.S. Purchaser is
entitled as of such date to a complete exemption from United States withholding
tax with respect to payments to be made under this Agreement and under any Note,
or (ii) if such Non-U.S. Purchaser is not a "BANK" within the meaning of Section
881(c)(3)(A) of the Code and cannot deliver either Internal Revenue Service Form
W-8ECI, Form W-8IMY or Form W-8BEN (or any successor forms) (with respect to
certifying a complete exemption under an income tax treaty), (x) a certificate
substantially in the form of EXHIBIT K (any such certificate, a "SECTION 7.1(B)
CERTIFICATE"), and (y) two accurate and complete original signed copies of
Internal Revenue Service Form W-8BEN or Form W-8IMY. In addition, each Non-U.S.
Purchaser agrees that from time to time after the Closing Date, when the passage
of time or a change in facts or circumstances renders the previous certification
obsolete or inaccurate in any material respect, such Non-U.S. Purchaser will
deliver to the Company and the Agent two new accurate and complete original
signed copies of either Internal Revenue Service Form W-8ECI, Form W-8BEN, or
Form W-8IMY, (with respect to a complete exemption under an income tax treaty)
or Form W-8IMY or Form W-8BEN and a Section 7.1(b) Certificate, as the case may
be, or such Non-U.S. Purchaser shall immediately notify the Company and the
Agent of its inability to deliver any such form or Section 7.1(b) Certificate,
in which case such Non-U.S. Purchaser shall not be required to deliver any such
form or Section 7.1(b) Certificate. Notwithstanding anything to the contrary
contained in Section 7.1(a), but subject to the immediately succeeding sentence,
(x) the Company shall be entitled, to the extent required to do so by law, to
deduct or withhold income taxes imposed by the United States from interest
payable hereunder or under a Note for the account of any Non-U.S. Purchaser to
the extent that such Non-U.S. Purchaser has not provided to the Company Internal
Revenue Service Forms required to be provided to the Company pursuant to this
Section 7.1(b), and (y) the Company shall not be obligated pursuant to Section
7.1(a) to make increased payments to a Non-U.S. Purchaser in respect of income
taxes imposed by the United States if such Non-U.S. Purchaser has not provided
to the Company the Internal Revenue Service Forms required to be provided to the
Company pursuant to this Section 7.1(b). Notwithstanding anything to the
contrary contained in the preceding sentence or elsewhere in this Section 7.1,
the Company agrees to pay any additional amounts and to indemnify each Non-U.S.
Purchaser in the manner set forth in Section 7.1(a) in respect of any United
States income Taxes deducted or withheld by it (and, if any Non-U.S. Purchaser
is a withholding foreign partnership within the meaning of Treas. Reg.
ss.1-1441-5, in respect of any United States income Taxes withheld by such
Non-U.S. Purchaser with respect to amounts received by such Non-U.S. Purchaser
pursuant to this Agreement) if such Taxes would not have been deducted or
withheld but for any change that is effective after the Closing Date in any
governmental rule, regulation, guideline or order, or in the interpretation
thereof.
(c) Failure to Perform. If the Company fails to perform its
obligations under this Section 7.1, the Company shall indemnify the Agent and
the Purchasers for any incremental taxes, interest or penalties that may become
payable as a result of any such failure. The indemnity in this Section 7.1 shall
survive the payment of the Obligations and the discharge or release of any Lien
granted under any Note Document.
7.2. Company Parties. The Company shall cause each other
Company Party to observe and perform its respective obligations under this
Agreement and under the other Note Documents.
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7.3. TSP Agreement.
(a) Compliance with Documents. Hospitality will
perform, observe and comply in all material respects with all of its
obligations under the TSP Agreement, and will use its best efforts to
cause each other party to the TSP Agreement to perform, observe and
comply in all material respects with all of such other party's
obligations under the TSP Agreement and also with all mortgages and
all other agreements with respect to the ownership, use and operation
of the Membership Interest.
(b) No Modifications, Waivers or Extensions. No
Company Party will, in each case without the Agent's prior written
consent, which consent shall not be unreasonably withheld, (i) amend,
modify, terminate or waive any provision of the TSP Agreement or vote
to permit the amendment, modification, termination or waiver of the
TSP Agreement or any provision of any such document, (ii) fail to
exercise promptly and diligently each and every material right which
it may have under the TSP Agreement (other than any right of
termination or "put" right or other right the exercise of which would
be adverse to the interests of the Company or the Agent hereunder,
which rights it shall not exercise without the Agent's prior written
consent, which consent shall not be unreasonably withheld) or (iii)
fail to deliver the Agent a copy of each demand, notice or document
received or given by it relating in any way to the TSP Agreement or
the Membership Interest. In no event shall Hospitality withdraw from
or cause or consent to the dissolution of TSP without the Agent's
prior written consent, which consent shall not be unreasonably
withheld.
(c) Other Actions. The Company will not, and will
not permit any other Company Party to, take any action which would
violate or be inconsistent with any of the terms of this Agreement or
any other Note Document in any material respect, or which would have
the effect of impairing the position or interests of the Agent or any
Purchaser under any Note Document or the TSP Agreement in any
material respect.
7.4. Intentionally Omitted.
7.5. Reporting Requirements. The Company will furnish to the
Purchasers and the Agent:
(a) Annual Reports. As soon as practicable and in any event
within ninety (90) days after the close of each fiscal year of the Company, a
consolidated (and consolidating) statement of operations and cash flows of the
Company and its Consolidated Subsidiaries for such fiscal year and a
consolidated (and consolidating) balance sheet of the Company and its
Consolidated Subsidiaries as of the close of such fiscal year, and notes to
each, all in reasonable detail, setting forth in comparative form the
corresponding figures for the preceding fiscal year, which statements and
balance sheet shall be certified by PriceWaterhouseCoopers or other independent
certified public accountants of recognized national standing selected by the
Company and reasonably satisfactory to the Agent. The certificate or report of
such accountants (the "ACCOUNTANT'S OPINION") shall be without an exception or
qualification arising out of the scope of the audit with respect to such
statements and balance sheet being prepared in compliance with GAAP and shall in
any event contain a written statement of such accountants substantially to the
effect that (i) such accountants examined such statements and balance sheet in
accordance with generally accepted
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auditing standards and accordingly made such tests of accounting records and
such other auditing procedures as such accountants considered necessary in the
circumstances and (ii) in the opinion of such accountants such statements and
balance sheet present fairly, in all material respects, the financial position
of the Company and its Consolidated Subsidiaries as of the end of such fiscal
year and the results of its operations and the changes in its financial position
for such fiscal year, in conformity with GAAP (except for changes in application
in which such accountants concur). A copy of the Accountant's Opinion shall be
delivered to the Agent and each Purchaser and signed by such independent public
accountants. Each set of statements and balance sheets delivered pursuant to
this Section 7.5(a) shall be accompanied by a certificate dated the date of the
delivery of such statements and balance sheet by the Designated Financial
Officer stating in substance that he or she has reviewed this Agreement and that
in making the examination necessary for this certification, he or she did not
become aware of any Event of Default or Default, or if he or she did become so
aware, such certificate shall state the nature and period of existence thereof
if determinable.
(b) Quarterly Reports. As soon as practicable and in any event
within forty-five (45) days after the close of each fiscal quarter of the
Company, unaudited consolidated (and consolidating) statements of operations and
cash flows of the Company and its Consolidated Subsidiaries and an unaudited
consolidated (and consolidating) balance sheet of the Company and its
Consolidated Subsidiaries as of the close of such fiscal quarter, all in
reasonable detail setting forth in comparative form the corresponding figures
for the corresponding fiscal quarter for the preceding fiscal year, which
statements and balance sheet shall be certified by the Designated Financial
Officer as presenting fairly, in all material respects, the financial position
of the Company and its Consolidated Subsidiaries as of the end of such quarter
and the results of its operations and the changes in its financial position for
such quarter, in conformity with GAAP applied in a manner consistent except as
otherwise disclosed therein with that of the most recent audited financial
statements furnished to the Purchasers, subject to year-end adjustments. Each
set of statements and balance sheets delivered pursuant to this Section 7.5(b)
shall be accompanied by a certificate of the Designated Financial Officer dated
the date of the delivery of such statements and balance sheet stating that he or
she has reviewed this Agreement and that to the best of his or her knowledge he
or she did not become aware of any Event of Default or Default, or if he or she
did become so aware, such certificate shall state the nature and period of
existence thereof, if determinable.
(c) Monthly Reports. As soon as practicable and in any event
within thirty (30) days after the end of each fiscal month of the Company that
is not the end of a fiscal quarter, unaudited consolidated (and consolidating)
statements of operations and cash flows for the Company and its Consolidated
Subsidiaries for such fiscal month and for the period from the beginning of such
fiscal year to the end of such fiscal month, and an unaudited consolidated (and
consolidating) balance sheet of the Company and its Consolidated Subsidiaries as
of the end of such fiscal month, all in reasonable detail, setting forth in
comparative form the corresponding figures for the corresponding fiscal month
during the preceding fiscal year (except for the balance sheet, which shall set
forth in comparative form the corresponding balance sheet as of the prior fiscal
year end), and accompanied by a certificate of the Designated Financial Officer
stating that (i) such statements present fairly, in all material respects, the
financial position of the Company and its Consolidated Subsidiaries as of the
end of such fiscal month and the results of its operations and cash flows for
such fiscal month, in conformity with GAAP applied in a manner consistent except
as otherwise disclosed therein with that of the most recent adjusted financial
statements furnished to the Purchasers, subject to year-end adjustments, and
(ii) he has reviewed this Agreement and that to the best of his or her knowledge
he or she did not become aware of any Event of
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Default or Default, or if he or she did become so aware, such certificate shall
state the nature and period of existence thereof, if determinable.
(d) Intentionally Omitted.
(e) Defaults and Events of Default. As soon as possible, and
in any event within five (5) days, after the occurrence of a Default or an Event
of Default or a Material Adverse Effect, the written statement of the Designated
Financial Officer of the Company, setting forth the details of such Default or
Event of Default, Material Adverse Effect and the action which such the Company
proposes to take with respect thereto.
(f) Memorabilia Reports. (i) By 12:00 noon New York City time
three (3) Business Days after Sunday of each week, or more often if required by
the Memorabilia Agent, a report of all Memorabilia that was, during such week,
(w) bought, sold or otherwise disposed of by the Company or any Guarantor, or
(x) transferred or moved by the Company or any Guarantor, including, without
limitation, the old and the new location for each such item of Memorabilia so
transferred or moved, in each case, unless the aggregate of all such Memorabilia
bought, sold, transferred or moved has a Book Value at any time of less than
$50,000 (the "MEMORABILIA CHANGE REPORT"); PROVIDED, HOWEVER, that (y) any such
purchases, sales, transfers or movements must be made in accordance with the
terms of this Agreement and (z) in calculating the Book Value of Memorabilia
aggregating $50,000 as aforesaid, transfers and other movements of Memorabilia
among the Company and Guarantors to locations where the Agent has filed a UCC
financing statement are not required to be counted in the calculation of such
$50,000 threshold; and (ii) on the last day of each fiscal quarter (or such more
frequent period as is required by the Memorabilia Agent), the Memorabilia
Report.
(g) Other Reports. Promptly after receipt by the Company,
copies of all accountants' management letters, business plans and other reports
which have or could reasonably be expected to have a direct or indirect bearing
on the Collateral.
(h) Financial Information. Promptly upon becoming available, a
copy of (i) all reports, financial statements or other information delivered by
the Company to its shareholders, (ii) all reports, proxy statements, financial
statements and other information generally distributed by the Company to its
creditors or the financial community in general, and (iii) any audit or other
reports submitted to the Company by independent accountants in connection with
any annual, interim or special audit of the Company.
(i) Lease Reports. On the last day of each fiscal month, a
certification of the Designated Financial Officer indicating that all rent and
other charges due and payable by any Company Party with respect to the Leases
are current, and that no default has occurred or is continuing (after giving
effect to grace periods) pursuant to any of the Leases as of the date of such
certification; PROVIDED, HOWEVER, that, in the event any of the foregoing
payments are due and payable (whether or not disputed) or a potential default
exists under one or more of the Leases, then such certification shall identify
all such outstanding payments and defaults.
(j) ERISA Matters. (i) As soon as possible and in any event
within ten (10) days after the Company or any ERISA Affiliate knows or has
reason to know that a Termination Event with
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respect to any Plan has occurred, or that the Company or any ERISA Affiliate has
failed to make a required installment to a Plan within the meaning of Section
412(m) of the Code, a statement of the Designated Financial Officer of the
Company describing such Termination Event and the action, if any, which the
Company or ERISA Affiliate proposes to take with respect thereto, (ii) promptly
and in any event within two (2) Business Days after receipt thereof by the
Company or any ERISA Affiliate from the PBGC, copies of each notice received by
the Company or any ERISA Affiliate of the PBGC's intention to terminate any Plan
or to have a trustee appointed to administer any Plan, (iii) promptly and in any
event within thirty (30) days after the filing thereof with the Internal Revenue
Service, copies of each Schedule B (Actuarial Information) to the annual report
(Form 5500 Series) with respect to each Plan and Multiemployer Plan, (iv)
promptly and in any event within five (5) Business Days after receipt thereof by
the Company or any ERISA Affiliate from a sponsor of a Multiemployer Plan or
from the PBGC, a copy of each notice received by the Company or any ERISA
Affiliate concerning the imposition or amount of withdrawal liability under
Section 4202 of ERISA or indicating that such Multiemployer Plan may enter
reorganization status under Section 4241 of ERISA, (v) promptly and in any event
within ten (10) days after the Company or any ERISA Affiliate takes action to
establish an employee Plan as defined in Section 3(3) of ERISA, a statement of
the Financial Officer of the Company describing such employee Plan and a copy of
such employee Plan, and (vi) promptly and in any event within five (5) days
after the Company files any notice with the PBGC under Section 4043(b) of ERISA,
a copy of such notice.
(k) Environmental Matters. Promptly after, and in any event
within five (5) days after, an officer of the Company learns of any of the
following, notice thereof:
(i) the receipt by the Company or any other Company
Party of notification that any real or personal property of the Company
or any other Company Party is subject to any Environmental Lien;
(ii) notice of violation of any Environmental Law
which could reasonably be expected to subject the Company or any other
Company Party to Environmental Liabilities and Costs of $500,000 or
more;
(iii) notice of the commencement of any judicial or
administrative proceeding or investigation alleging a violation by the
Company or any other Company Party of any Environmental Law, which if
adversely determined, could reasonably be expected to subject the
Company or any other Company Party to Environmental Liabilities and
Costs of $500,000 or more; and
(iv) any of the foregoing (without regard to the
monetary amount thereof) that could reasonably be expected to have a
Material Adverse Effect.
(l) Governmental Investigations. Promptly after submission to
any Governmental Authority all documents and information furnished to such
Governmental Authority in connection with any investigation of the Company or
any other Company Party which, if adversely determined, could result in a
Material Adverse Effect; PROVIDED, HOWEVER, that the Company and the other
Company Parties shall not be required to disclose any documents and information
that counsel has advised the Company should not be disclosed under any
applicable law.
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(m) Legal Proceedings. Promptly after the commencement thereof
but in any event not later than five (5) days after service of process with
respect thereto on, or the obtaining of knowledge thereof by, the Company or any
other Company Party, notice of each action, suit or proceeding involving the
Company or any other Company Party before any court or other Governmental
Authority or other regulatory body or any arbitrator which, if adversely
determined, could have a Material Adverse Effect.
(n) Other Information. Promptly upon request, such other
information concerning the condition or operations, financial or otherwise, of
the Company and the other Company Party as the Agent or any Purchaser from time
to time may reasonably request.
7.6. Compliance with Laws. The Company shall comply, and cause
each other Company Party to comply, with all applicable Legal Requirements
(including but not limited to Environmental Laws and compliance in respect of
products that they sell or service they perform, conduct of their businesses, or
use, maintenance or operation of real and personal properties owned or possessed
by them), except for non-compliance (other than non-compliance in the payment of
taxes or any other non-compliance which could result in a Lien on any
Collateral), that, individually or in the aggregate, will not result in and
could not reasonably be expected to result in a Material Adverse Effect.
7.7. Preservation of Existence. Subject to Section 8.4(a)
hereof, the Company shall maintain and preserve, and cause each other Company
Party to maintain and preserve its existence, rights and privileges, and become
or remain duly qualified and in good standing in each jurisdiction in which the
character of the properties owned or leased by them or in which the transaction
of their business makes such qualification necessary; except where instances of
failure to qualify or remain in good standing or failure to maintain rights and
privileges, individually or in the aggregate, will not result in and could not
reasonably be expected to result in a Material Adverse Effect.
7.8. Keeping of Records and Books of Account. The Company
shall keep, and cause each other Company Party to keep, adequate records and
books of account, with complete entries made in accordance with GAAP.
7.9. Inspection Rights.
(a) Collateral. The Company shall permit, and cause each of
the Subsidiaries to permit, the Agent or any Purchaser, or any agents or
representatives thereof or such professionals or other Persons as the Agent may
designate (i) to examine and inspect the books and records of the Company and
the other Company Parties and take copies and extracts therefrom, (ii) to verify
materials, leases, notes, receivables, deposit accounts and other assets and
liabilities of the Company and the other Company Parties from time to time, and
(iii) to inspect and to conduct appraisals and/or valuations of the Collateral
at the distribution centers and retail stores of the Company and the other
Company Parties; PROVIDED, HOWEVER, that, so long as an Event of Default has not
occurred and is not continuing, (x) the Agent and its representatives shall be
limited to four (4) visits per calendar year to the Company's corporate
headquarters (or such other locations if deemed necessary by the Agent) for
purposes of conducting any such actions described in clauses (i) through (iii)
above, with all expenses related to such visits to be borne by the Company in
accordance with Section 7.9(c) hereof, and (y) all such actions described in
clauses (i) through (iv) above shall be conducted at reasonable times and during
normal business hours. In addition, the Company and its Subsidiaries will cause
to be conducted a physical Inventory count on or about March 31,
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2000 and shall promptly after such count becomes available provide to the Agent
a copy of the written results of such physical Inventory count. The Agent will
use reasonable efforts to minimize the disruption of the Company's business in
connection with the exercise of its rights under this paragraph.
(b) Valuations. The Company shall permit and cause the
Subsidiaries to permit, the Agent or any Purchaser, or any agents or
representatives thereof or such professionals or other Persons as the Agent may
designate to examine and re-evaluate the value of the Collateral, including
without limitation the Memorabilia.
(c) Costs and Expenses. All reasonable out-of-pocket expenses
of the Agent and the Purchasers, as the case may be, in connection with the
inspection rights set forth in subsection 7.9(a) and (b) shall be payable by the
Company. Such expenses shall include without limitation the (i) reasonable fees
and expenses including with respect to retaining a third party consultants, (ii)
reasonable out-of-pocket travel expenses (including those incurred in connection
with periodic field audits by employees of the Agent or the Purchasers, as the
case may be), (iii) reasonable out-of-pocket fees and expenses incurred by the
Agent or the Purchasers, as the case may be, in connection with the monitoring
of the Collateral, and (iv) out-of-pocket messenger and delivery expenses, and
out-of pocket duplicating expenses. So long as no Event of Default shall be in
existence, the Agent and the Purchasers agree to advise the Company of their
respective intention to retain third parties (other than legal counsel) at any
time after the Closing Date and to consult with the Company regarding same.
7.10. Maintenance of Properties. The Company shall maintain
and preserve, and cause each other Company Party to maintain and preserve, all
of their properties (including all real properties leased or owned by them)
which are necessary or useful in the proper conduct of their business in good
working order and condition, ordinary wear and tear excepted, and comply, and
cause each of its Subsidiaries to comply, at all times with the provisions of
all Leases to which each of them is a party as lessee or under which each of
them occupies property, so as to prevent any loss or forfeiture thereof or
thereunder; except where any failure to maintain and preserve their properties
or failure to comply with the provisions of their Leases, individually or in the
aggregate, would not result in and could not reasonably be expected to result in
a Material Adverse Effect.
7.11. Insurance.
(a) Maintenance of Insurance. The Company shall maintain, and
cause each other Company Party to maintain, with responsible and reputable
insurance companies or associations insurance (including, without limitation,
comprehensive general liability, hazard, rent and business interruption
insurance) with respect to their properties and business, in such amounts and
covering such risks, as is required by any Governmental Authority or other
regulatory body having jurisdiction with respect thereto or as is carried
generally in accordance with sound business practice by companies in similar
businesses similarly situated and in any event in amount, adequacy and scope
reasonably satisfactory to the Agent as of the Closing Date and with such
deductibles or self-insured retentions as are in accordance with normal industry
practice and all applicable laws, rules and regulations; PROVIDED, HOWEVER, that
in no event will any such deductible or self-insured retention in respect of
liability claims or in respect of casualty damage exceed, in each such case,
$250,000 per occurrence. Subject to the Intercreditor Agreement, each insurance
policy referred to in this Section 7.11 shall specify the Agent (for the benefit
of the Purchasers) as loss payee thereof and contain a standard endorsement
satisfactory to the Agent effecting such
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specification and, all policies covering the Collateral are to be made payable
to the Agent, in case of loss, under a standard non-contributory "LENDER" or
"SECURED PARTY" clause and are to contain such other provisions as the Agent may
require to fully protect the Agent's interest in the Collateral and to any
payments to be made under such policies. All original policies or true copies
thereof are to be delivered to the Agent, premium prepaid, with the additional
insured endorsement in the Agent's favor, and shall provide for not less than
thirty (30) days prior written notice to the Agent of the exercise of any right
of modification or cancellation. At the Company's request, the Agent may arrange
for such insurance, but at the Company's expense and without any responsibility
on the Agent's part for obtaining the insurance, the solvency of the insurance
companies, the adequacy of the coverage, or the collection of claims.
(b) Modification of Insurance. After the Closing Date, the
Company shall have the right to change insurance carriers to one or more other
insurance carriers having the same rating from A.M. Best & Co. or to modify
existing insurance policies upon notice to the Agent, without the Agent's
consent; PROVIDED, however, that on the effective date of such changes and
modifications, (i) the Company Parties remain insured in such amounts and
covering such risks as is required by any Governmental Authority or other
regulatory body having jurisdiction with respect thereto, (ii) such insurance is
adequate in amount and scope as is carried generally in accordance with sound
business practice by companies in similar businesses similarly situated, (iii)
the amount, adequacy and scope of such insurance is substantially similar to
that in existence as of the Closing Date, (iv) a loss payee endorsement is
delivered to Agent simultaneously with the effective date thereto (there being
no grace period for any Event of Default based on the requirements of this
Section), and (v) such insurance otherwise complies with all other requirements
of this Agreement.
(c) Prosecution of Claims. Subject to the Intercreditor
Agreement, upon the occurrence and during the continuance of an Event of
Default, the Agent shall have the sole right, in the name of the Agent and the
Company, to file claims under any insurance policies insuring any of the
Collateral, provided that the Agent gives prompt notice thereof to the Company,
to receive, receipt and give acquittance for any payments that may be payable
thereunder, and to execute any and all endorsements, receipts, releases,
assignments, reassignments or other documents that may be necessary to effect
the collection, compromise or settlement of any claims under any such insurance
policies.
(d) Delivery of Policies. Except as otherwise provided in
Section 7.4(c), the Company shall, if so requested by the Agent, deliver to the
Agent a copy of its policies of its insurance and will deliver on the date
hereof, and thereafter as often as the Agent may reasonably request, a report of
a reputable insurance broker certifying such insurance to be adequate and
customary. The Company shall also, at the request of the Agent, execute and
deliver instruments of assignment of such insurance policies and cause the
respective insurers to acknowledge notice of such assignment.
7.12. Environmental. The Company shall comply, and cause each
other Company Party to comply in all material respects, with the requirements of
all Environmental Laws and provide to the Agent all documentation in connection
with such compliance that the Agent may reasonably request; and not cause or
permit the Collateral or any property or facility owned, operated or occupied by
the Company or any other Company Party to be used for any activities involving,
directly or indirectly, the use, generation, treatment, storage,
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release or disposal of any Hazardous Materials except in compliance with
applicable Legal Requirements, and except where instances of non-compliance with
the requirements of all Environmental Laws or the use of the Collateral or any
property or facility owned, operated or occupied by a Company Party for any
activities involving, directly or indirectly, the use, generation, treatment,
storage, release or disposal of any Hazardous Materials, individually or in the
aggregate, would not result in and could not reasonably be expected to result in
a Material Adverse Effect. On behalf of the Company and each other Company
Party, the Company hereby agrees to defend, indemnify, and hold harmless the
Agent and the Purchasers, their employees, agents, officers, and directors, from
and against any Losses and Environmental Liabilities and Costs arising out of
(i) any Release, or threatened Release on any property presently or formerly
owned or occupied by any of the Company or any other Company Party (or their
predecessors in interest or title) or at any disposal facility which received
Hazardous Materials generated by the Company or any other Company Party; (ii)
any violation of Environmental Laws, (iii) any Environmental Actions, (iv) any
personal injury (including wrongful death) or property damage (real or personal)
arising out of or related to exposure to Hazardous Materials used, handled,
generated, transported or deposited by the Company or any other Company Party
(or any predecessor in interest or title); and/or (v) the breach of any
representation or warranty made by the Company in Section 5.14 hereof or the
breach of any covenant made by any of the Company or any other Company Party in
this Section 7.12. This indemnity shall survive the payment of the Obligations
and discharge or release of any Lien granted under any Note Document.
7.13. Further Assurances. The Company shall do, execute,
acknowledge, deliver, record, file, register and perform, and cause each of its
U.S. Subsidiaries (or any other entity as to which the Purchasers at any time
have a Lien on the assets or ownership interest thereof) to do, execute,
acknowledge, deliver, record, file, register and perform, at the sole cost and
expense of the Company all such further acts, deeds, conveyances, mortgages,
assignments, estoppel certificates, financing statements, continuation
statements, notices of assignment, transfers and assurances as the Agent may
reasonably require from time to time in order (a) to carry out more effectively
the purposes of this Agreement or any other Note Document, (b) to subject the
Collateral to valid and perfected first (or second, as the case may be) priority
Liens, (c) to perfect and maintain the validity, effectiveness and priority of
any of the Note Documents and the Liens intended to be created thereby, and (d)
to better assure, convey, grant, assign, transfer and confirm unto the Agent and
the Purchasers the rights now or hereafter intended to be granted to the Agent
and the Purchasers under this Agreement, any other Note Document or any other
instrument under which the Company or any other Company Party may be or may
hereafter become bound to convey, mortgage or assign any of its assets or other
rights to the Agent and the Purchasers.
7.14. Financial Accounting Practices. The Company shall make
and keep books, records and accounts which, in reasonable detail, accurately and
fairly reflect the transactions and dispositions of assets of the Company and
each other Company Party and maintain a system of internal accounting controls
sufficient to provide reasonable assurances that (a) transactions are executed
in accordance with management's general or specific authorization, (b)
transactions are recorded as necessary (i) to permit preparation of financial
statements in conformity with GAAP, and (ii) to maintain accountability for
assets, and (c) the recorded accountability for assets is compared with the
existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
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7.15. Cash Management System.
Subject, at all times, to Section 3.4, from and after the
Working Capital Facility Termination Date:
(a) Cash Management. (i) The Company shall cause all cash and
all proceeds from Receivables, other accounts receivable and the sale of
Inventory and Memorabilia or any other Collateral to be deposited into the
Depository Accounts in the ordinary course of business of each of the Company
Parties consistent with past practice but in any event not less than twice each
week, (ii) cause all remittances on credit card sales to be transferred from the
Depository Account into the Blocked Account on a daily basis (or to be sent
directly into the Blocked Account) and execute and deliver to the Agent the
Blocked Account Agreement, (iii) cause all funds in the Depository Accounts to
be transferred into the Blocked Account in the ordinary course of business of
the Company consistent with past practice but in any event not less than twice
each week (except for the amounts needed to make the payments to state taxing
authorities in the amounts, to the states and with the periodicy set forth in
SCHEDULE 7.15 for a period of up to sixty (60) days), such funds transfer to be
automatic and under the control of the Agent pursuant to notice letters to
Depository Accounts Banks (or Depository Account Agreements reflecting same) and
Credit Card Obligors, (iv) deposit the Net Cash Proceeds of Asset Sales in the
Blocked Account, (v) permit the Agent to cause all funds transferred to the
Blocked Account to be applied to reduce the Obligations outstanding from time to
time with any excess amounts to be applied to the Cash Concentration Account,
(vi) take all such actions as the Agent deems necessary or advisable to send all
cash, all proceeds from the sale of Inventory and Memorabilia, all remittances
or other proceeds of Collateral to the Blocked Account to be applied to the
Obligations, (vii) upon request by the Agent (A) execute and deliver to the
Agent a Bank Notice Letter for each Depository Bank listed on SCHEDULE 5.20 to
this Agreement, and use its best efforts to obtain the Depository Account
Agreements, (B) deliver to the Agent a credit card bank depository agreement,
satisfactory to the Agent, duly executed by the Company or any other Company
Party and each credit card servicer of the Company or any other Company Party,
and (C) take such other actions as the Agent deems necessary or advisable to
grant to the Agent dominion and control over the funds in the Blocked Account.
The requirements of this Section 7.15(a) must be completed within twenty-five
(25) days of the Working Capital Facility Termination Date.
(b) Depository Accounts. Each Company Party shall promptly,
but in any event not later than five (5) days, after the opening of any new
Depository Account, notify the Agent in writing of the creation of such new
Depository Account and shall at the time of such notice execute and deliver to
the Agent a Bank Notice Letter. Upon and during the continuance of an Event of
Default, each Company Party shall, upon the request of the Agent, use its best
efforts to cause each Depository Bank maintaining a Depository Account which has
not previously delivered a Depository Account Agreement as aforesaid to
promptly, and in any event within thirty (30) days after the date of such
request, enter into a Depository Account Agreement. If, after any such request
by the Agent, a Company Party is unable to obtain a Depository Account Agreement
from any financial institution that receives remittances or other proceeds of
sales of Inventory within such thirty (30) day period, such Company Party shall
promptly thereafter terminate such accounts and establish new accounts at a
financial institution that will enter into a Depository Account Agreement.
(c) Credit Card Obligors. Each Company Party shall promptly,
but in any event not later than five (5) days, after the establishment of any
new credit card relationship, notify the Agent in
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writing of the creation of such new relationship and, at the time of such
notice, shall execute and deliver to the Agent a Payment Direction Notice, and
thereafter shall use its best efforts (but not requiring any payment to be made
by such Company Party) to deliver to the Agent a credit card bank depository
account agreement, in form and substance satisfactory to the Agent, duly
executed by such Company Party and such new credit card servicer.
7.16. Store Openings and Closings. The Company shall be
permitted to close the retail/restaurant locations set forth on SCHEDULE 7.16
hereto. At no time during the term of this Agreement shall the Company Parties,
collectively, (a) close in any single fiscal year more than eight (8)
retail/restaurant locations in addition to those locations set forth on SCHEDULE
7.16, or (b) open in any single fiscal year more than three (3) new locations
owned by any Company Party.
7.17. Memorabilia and Inventory. The Company shall maintain,
hold for safe-keeping and preserve the Memorabilia and Inventory at all
locations including those originally located at closed stores in a manner
consistent with maintaining its maximum value. Subject to Section 7.18, the
Memorabilia and Inventory shall not be moved to any location outside the United
States of America or to any other location other than those locations listed on
SCHEDULE 7.17 without the prior written consent of the Agent; PROVIDED, HOWEVER,
that no such consent shall be required for Memorabilia moved outside the United
States to franchisees pursuant to contractual obligations with such franchisees
so long as advance written notification of same is provided to the Agent
adequately describing the Memorabilia so transferred and the Book Value
attributable to the same.
7.18. Change in Collateral; Collateral Records. The Company
shall give the Agent (a) not less than twenty (20) days' prior written notice of
any change in the location of any Collateral, other than to locations, that as
of the date hereof, are known to the Agent and with respect to which the Agent
has filed financing statements and otherwise has fully perfected its Liens
thereon, and (b) prompt notice of any other change in the location of any
Collateral. Notwithstanding the foregoing, no Memorabilia shall be moved outside
the United States or to franchisee locations without the prior written consent
of the Agent, to the extent that the Book Value of the aggregate amount of
Memorabilia so moved exceeds $300,000 (with exchanges of Memorabilia being
permitted within such limit). The Company shall also advise the Agent promptly,
in sufficient detail, of any material adverse change relating to the type,
quantity or mix of the Collateral or the security interests granted therein. The
Company and each other Company Party agrees to execute and deliver to the Agent
for the benefit of the Agent from time to time, the Memorabilia Report and such
written statements and schedules as the Agent may reasonably require,
designating, identifying or describing the Collateral. The Memorabilia Report
shall be updated weekly to reflect any sale or other movement of Memorabilia.
Any failure, however, to promptly give the Agent such statements or schedules
shall not affect, diminish, modify or otherwise limit the Agent's security
interest in the Collateral.
7.19. Landlord Waivers. Except to the extent required to be
delivered on or prior to the Closing Date under Section 4.1 hereof, the Company
shall, and shall cause the other Company Parties to, use their respective best
efforts to obtain and deliver to the Agent a fully executed landlord waiver, in
form and substance satisfactory to the Agent, from each of the Company's and
each Guarantor's landlords identified on SCHEDULE 7.19 hereto.
7.20. Leases. The Company shall, and shall cause each other
Company Party to (a) comply in all material aspects with all of their respective
obligations under Leases and (b) not modify,
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amend, extend or otherwise change any of the terms, covenants or conditions of
any such Leases if such modification, amendment, extension or other change could
reasonably be expected to result in a Material Adverse Effect.
7.21. Authenticity Documents.
(a) The Company shall, and shall cause each of the U.S.
Subsidiaries to, deliver to the Memorabilia Agent all Authenticity Documents
existing as of the Closing Date within ten (10) days after the Closing Date, and
all other Authenticity Documents within ten (10) days after receipt thereof with
respect to each item of Memorabilia whether now owned or hereafter acquired, in
each case, (i) in a form to facilitate retrieval of such Documents (notated by
item number corresponding to the Memorabilia Report), and (ii) accompanied by a
master list of the Authenticity Documents being delivered. The Company shall
identify such Authenticity Documents in a manner that will facilitate retrieval
by the Memorabilia Agent of Authenticity Documents.
(b) The Company shall, and shall cause each of the U.S.
Subsidiaries to, deliver the Authenticity Documents to the Agent within ten (10)
days after the Working Capital Facility Termination Date.
7.22. Reservation of Shares. The Company shall at all times
reserve and keep available out of its authorized New Class A Common Stock or
other equity securities, solely for the purpose of issue or delivery upon
conversion of any or all of the Obligations pursuant to Section 3.8 or exercise
of all outstanding Warrants as provided therein, such number of Shares of New
Class A Common Stock or other equity securities as would be issuable or
deliverable upon the conversion in full of all of the Obligations and exercise
in full of all of the Warrants. The Company shall issue the New Class A Common
Stock or other equity securities for which the Warrants are exercisable upon the
exercise of the Warrants in accordance with the provisions thereof and shall
otherwise comply with the terms thereof. The Company shall deliver the New Class
A Common Stock or other equity securities into which the Obligations are
convertible to the Agent for delivery to the Purchaser or other Holder, as the
case may be, in accordance with the provisions of Section 3.8.
7.23. Stock Issuable on Conversion or Exercise. All Shares of
New Class A Common Stock or other Securities of the Company issuable upon the
conversion of any Obligations hereunder or the exercise of any Warrants, when
issued and delivered in accordance with the terms hereof and thereof for the
consideration expressed herein or therein, will be duly authorized, validly
issued and fully paid and non-assessable and subject to no preemptive rights.
7.24. Sale of the Company. In the event of a sale or transfer
of all or substantially all of the capital stock of the Company (by way of
merger or otherwise), the Company shall, if requested by any Purchaser or any
Holder of Warrants, use its reasonable best efforts to cause such transaction to
be structured in a manner that requires the purchaser(s) to purchase the
Warrants from the Purchasers or such other Holders at a price equal to the
consideration each Purchaser or Holder would have received had it exercised its
Warrants immediately prior to the consummation of such transaction, less the
exercise price of such Warrants.
7.25. HSR Act. The Company shall make all filings with, and
obtain all approvals, consents and actions by, any Governmental Authority
necessary to ensure that any exercise of Warrants
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complies with the HSR Act, and shall pay all applicable filing fees payable
under the HSR Act on the part of any Holder of Warrants in connection with such
exercise and all fees and expenses of any Holder incurred in connection with the
preparation of such filings and the obtaining of such clearance.
7.26. Allocation of Value to Warrants. The Company shall
allocate $130,000 ($0.65 per warrant) to the value of the Warrants.
ARTICLE 8
NEGATIVE COVENANTS
Until the payment of all principal of and interest on the
Notes and all other Obligations due at any time under this Agreement, the Notes
or any other Note Documents, including all fees, expenses and amounts due at
such time in respect of indemnity obligations, the Company covenants and agrees
for the benefit of the Purchasers and the Agent that it will not:
8.1. Liens. Create or suffer to exist, or permit any other
Company Party to create or suffer to exist, any Lien upon or with respect to any
of their properties, rights or other Assets, whether now owned or hereafter
acquired, or assign or otherwise transfer, or permit any of their respective
Subsidiaries to assign or otherwise transfer, any right to receive income, other
than the following (the "PERMITTED LIENS"):
(a) Liens created pursuant to the Note Documents;
(b) Liens existing on the Closing Date and extensions and
renewals thereof; PROVIDED that such extensions and renewals do not change the
principal, interest, or other financial terms or obligations thereof, as set
forth in SCHEDULE 8.1 hereof;
(c) Liens in connection with any taxes, assessments,
governmental charges, levies, or claims that are not yet due and payable or
which the Company is contesting in good faith and by appropriate proceedings
diligently conducted, so long as reserves or other appropriate provisions as may
be required by GAAP have been made therefor and so long as the failure to pay
the same would not result in and could not reasonably be expected to result in a
Material Adverse Effect;
(d) Liens created by operation of law, other than
Environmental Liens arising in the ordinary course of business which secure
amounts not overdue for a period of more than sixty (60) days, which are being
contested in good faith by appropriate proceedings and which have been bonded or
with respect to which a stay of enforcement is in effect;
(e) deposits (including utility security deposits), pledges or
Liens (other than Liens arising under ERISA), securing (i) obligations incurred
in respect of workers' compensation, unemployment insurance or other forms of
governmental insurance or benefits, (ii) the performance of bids, tenders,
leases, contracts (other than for the payment of money) and statutory
obligations, or (iii) obligations on surety or appeal bonds, but only to the
extent such deposits, pledges or Liens are incurred or otherwise arise in the
ordinary course of business and secure obligations which are not past due;
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(f) Liens in favor of the Working Capital Agent and the PIK
Trustee, subject to the Intercreditor Agreement;
(g) purchase money Liens solely on the asset being acquired;
PROVIDED, that each such Lien does not exceed $3,000,000 in amount;
(h) judgment Liens that do not constitute an Event of Default;
(i) Intentionally Omitted;
(j) existing Liens on assets acquired after the Closing Date;
(k) in the case of the Inactive Guarantors, involuntary Liens;
(l) mechanic's Liens in an aggregate amount not to exceed
$50,000;
(m) precautionary UCC filings in connection with property not
constituting Collateral hereunder (e.g. leases of telecopier machines); and
(n) statutory landlord's liens arising under a Lease with
respect to the interest of the Company or Guarantors as a lessee or sublessee
under such Lease, but not including any liens or encumbrances arising out of any
default thereunder.
8.2. Indebtedness. Create, incur or suffer to exist, or permit
any of its U.S. Subsidiaries to create, incur or suffer to exist, any
Indebtedness, other than:
(a) Indebtedness created hereunder;
(b) Indebtedness existing on the date hereof, as set forth in
SCHEDULE 8.2 hereto or related to the Inactive Guarantors (to the extent such
Indebtedness is in existence on the date hereof); (including subsequent
refinancings so long as all such refinancings do not increase the principal
amount thereof);
(c) Indebtedness in connection with Capitalized Leases
permitted by Section 9.7 of this Agreement (including subsequent refinancings so
long as all such refinancings do not increase the principal amount thereof);
(d) Indebtedness evidenced by the PIK Notes under the PIK
Indenture in an aggregate principal amount not to exceed $95,000,000 (including
subsequent refinancings so long as all such refinancings do not increase the
original principal amount thereof, and such Indebtedness, refinancings and liens
under the PIK Indenture, and the PIK Trustee thereunder, are subject to the
Intercreditor Agreement);
(e) Indebtedness under the Working Capital Credit Agreement
(including subsequent refinancings) in an aggregate principal amount not to
exceed $15,000,000.00 at any time (including subsequent refinancings so long as
all such refinancings do not increase the original principal amount thereof, and
such Indebtedness and refinancings thereof, and the lenders thereunder, are
subject to the Intercreditor Agreement);
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(f) Indebtedness secured by the Liens (and subject to the
limitation in amount) referred to in Section 8.1(g); and
(g) Indebtedness incurred pursuant to, and in accordance with
the requirements of, Subsections 8.6(e) and (f) hereof.
8.3. Guarantees. Become liable, or permit any other Company
Party to become liable, under any Guarantee in connection with any Indebtedness
of any other Person, other than:
(a) guaranties by endorsement of negotiable instruments for
deposit or collection in the ordinary course of business;
(b) guaranties existing on the date hereof, as set forth in
SCHEDULE 8.3 hereto, but not any renewal or other modification thereof;
(c) guaranties of Indebtedness described in Section 8.2; and
(d) guaranties of Indebtedness of non-wholly owned
Subsidiaries or joint ventures so long as such guaranties are unsecured and
expressly subordinated to the prior payment in full of the Obligations in form
and substance reasonably satisfactory to the Purchasers (such subordination to
be satisfactory if such subordination has the same terms of subordination as
applicable to the Indebtedness created by the PIK Indenture under the
Intercreditor Agreement).
8.4. Merger, Consolidation, Sale of Assets.
(a) Merger or Consolidation. Merge or consolidate with any
Person, or permit any other Company Party to merge or consolidate with any
Person; PROVIDED, HOWEVER, that the Company or any Guarantors may merge with any
other Company Party so long as there is no material impact on any Company Party
or on the Collateral or on any Lien in favor of the Agent (as determined by the
Agent in its sole determination).
(b) Asset Sales. Effect or permit any Asset Sale, by it or any
other Company Party (other than Inactive Guarantors), whether in one transaction
or in a series of related transactions; PROVIDED, HOWEVER, that
(i) the Company and the other Company Parties may
sell Inventory and Receivables in the ordinary course of business,
(ii) the Company and the other Company Parties may
dispose of obsolete or worn-out property (other than Inventory or
Memorabilia) in the ordinary course of business for fair market value,
if the proceeds are used to promptly replace such assets,
(iii) so long as no Event of Default has occurred and
is continuing, the Company and the Active Guarantors may sell
Memorabilia, upon delivery to the Agent of a request by the Company to
release the Authenticity Documents relating to such Memorabilia and a
certification by a Designated Financial Officer that such Memorabilia
is to be sold at a price such that the Net Proceeds of such sale are
greater than eighty percent (80%) of the current Book Value
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of such Memorabilia; PROVIDED, that (x) the Net Cash Proceeds of such
sale are applied as required under the Working Capital Credit Agreement
and this Agreement and (y) the non-cash portion of the Net Proceeds
thereof shall not exceed in the aggregate at any time $500,000,
(iv) so long as no Default or Event of Default has
occurred and is continuing, the Company Parties may effect Asset Sales
of loans, advances and investments permitted by Section 8.6 (other than
Section 8.6(d)), in each case for fair market value; PROVIDED, that the
non-cash portion of such Net Proceeds, together with all other non-cash
Net Proceeds in respect of all other Asset Sales, shall not exceed in
the aggregate at any time $2,000,000,
(v) [omitted],
(vi) the Company Parties may effect Asset Sales of
Assets among the Active Guarantors or from any Active Guarantor to the
Company so long as such Asset Sales are made in exchange for adequate
and fair consideration under applicable law (except that no such Asset
Sales shall be permitted from the Company to any Guarantor) and
PROVIDED, THAT all Liens created under the Note Documents are perfected
and continue to be perfected with the priority required under the Note
Documents, and
(vii) so long as no Default or Event of Default has
occurred and is continuing, the Company Parties may effect Asset Sales
of Assets not otherwise described in this Section 8.4(b), in each case
for fair market value; PROVIDED, that (x) the Net Cash Proceeds of such
Asset Sales are applied as required under the Working Capital Credit
Agreement and this Agreement and (y) the non-cash portion of such Net
Proceeds, together with all other non-cash Net Proceeds in respect of
all other Asset Sales, shall not exceed in the aggregate at any time
$2,000,000 (the foregoing in no way limiting the grant by the Company
and the Guarantors of a perfected second priority Lien on the
Collateral, in each case which attaches to proceeds thereof).
8.5. Change in Nature of Business. Make, or permit any of the
other Company Parties (other than Inactive Guarantors) to make, any change in
the nature of its business as carried on at the date hereof.
8.6. Loans, Advances and Investments. Make, or permit any of
the other Company Parties to make, any loan or advance to any Person or purchase
or otherwise acquire, or permit any of the other Company Parties to purchase or
otherwise acquire, any capital stock, properties, assets or obligations of, or
any interest in, any Person, other than:
(a) Permitted Investments;
(b) Receivables for goods sold owing to the Company or any of
the other Company Parties if created or acquired in the ordinary course of
business and payable or dischargeable in accordance with the customary trade
terms of the Company or the other Company Parties, as the case may be (but not
covered by (e) or (f) of this Section 8.6);
(c) loans and advances to employees in the ordinary course of
business in an aggregate principal amount not to exceed $150,000 (inclusive of
relocation expenses) at any time outstanding;
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(d) investments existing on the date hereof, as set forth in
SCHEDULE 8.6 hereto; or
(e) loans and advances made from the Company to any Active
Guarantor or any Foreign Entity so long as the aggregate amount of such loans
and advances does not exceed $4,000,000 (minus all amounts in (f) below) and
PROVIDED THAT (x) the Agent has been granted a perfected second priority Lien in
the ownership interest held by the Active Guarantor or Foreign Entity (limited
in the case of the stock of a Foreign Entity to 66 2/3 of the shares or other
ownership interest) in the jurisdiction governing perfection and such Lien is
perfected (and evidence of same has been delivered to the Agent in form and
substance reasonably satisfactory to it) and if the interest pledged is of an
entity formed outside of the United States the Agent shall determine whether
such perfection has occurred based on advice of counsel), and (y) all such loans
and advances are evidenced by a note or other ownership interest, pledged (and
delivered) to the Agent hereunder as described above and subordinated to the
prior payment in full of the Obligations; PROVIDED, FURTHER, that,
notwithstanding anything herein to the contrary, loans and advances from any
Company Party to an Inactive Guarantor shall not be permitted; or
(f) loans and advances made by the Company or any Active
Guarantor to (or investments made with respect to) any joint venture created
after the date hereof in which the Company or any Active Guarantor has an
interest in an aggregate amount not to exceed $4,000,000 (minus all amounts in
(e) above); PROVIDED, HOWEVER, that no such amount shall be permitted to be
loaned or advanced hereunder by the Company or any Active Guarantor in such
joint ventures unless prior to such loan or advance all such loans and advances
are evidenced by a note pledged to the Agent hereunder which is subordinated to
the prior payment of the full amount of the Obligations.
8.7. Lease Obligations. Create, incur or suffer to exist, or
permit any of the other Company Parties to create, incur or suffer to exist, any
obligations as lessee for the payment of rent for any real or personal property
in connection with any sale and leaseback transaction without the prior written
consent of the Agent.
8.8. Dividends, Prepayments. Declare or pay any dividends,
purchase or otherwise acquire for value any of its capital stock now or
hereafter outstanding, return any capital to its stockholders as such, make any
other payment or distribution of assets to its stockholders as such, or make any
payment or prepayment of principal of, premium, if any, or interest on, or
redeem, defease or otherwise retire, any other Indebtedness, or permit any of
the other Company Parties to do any of the foregoing or to purchase or otherwise
acquire for value any stock of the Company, other than (a) the payment of
dividends or other distributions by any Guarantor to the Company or (b) subject
to the Intercreditor Agreement, the payment of Permitted PIK Note Payments, (c)
dividends or distributions payable in capital stock or other equity interests,
warrants to purchase capital stock or other equity interests or split-ups or
reclassifications of its capital stock or other equity interests into additional
shares of its capital stock or other equity interests, (d) prepayments of other
Indebtedness not in excess of $500,000 in the aggregate, and (e) except to the
extent limited by clauses (b) and (d) of this Section, payments with respect to
Indebtedness permitted under Section 8.2.
8.9. Transactions with Affiliates. Except as set forth in
SCHEDULE 8.9 hereto, (a) enter into or be a party to, or permit any of the other
Company Parties to enter into or be a party to, any transaction with any
Affiliate of the Company except as otherwise provided herein or in the ordinary
course of business in a manner and to an extent consistent with past practice
and necessary or desirable for the
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prudent operation of its business for fair consideration and on terms no less
favorable to the Company or the other Company Parties as are available from
unaffiliated third parties, or (b) subject to Section 8.6 hereof, engage in any
loan or capital investment (or any transaction which is the substantive
equivalent thereof) with Affiliates of the Company.
8.10. Sale Policies. Engage in policies or procedures with
respect to the selling price of Inventory, which policies and procedures are
inconsistent in any material respect with the past practices of the Company or
good retail practice absent the prior written consent of the Agent.
8.11. Environmental. Permit the use, handling, generation,
storage, treatment, Release or disposal of any Hazardous Material at property
owned or leased by the Company except in compliance with Environmental Laws and,
so long as such use, handling, generation, storage, treatment, Release or
disposal of Hazardous Materials would not result in Environmental Liabilities
and Costs in excess of $500,000 in the aggregate together with such
Environmental Liabilities and Costs.
8.12. ERISA.
(a) Engage in any prohibited transaction described in Section
406 of ERISA or 4975 of the Code for which a statutory or class exemption is not
available or a private exemption has not previously been obtained from the
Department of Labor;
(b) permit, or permit any ERISA Affiliate to permit, any Lien
to arise under ERISA or Section 412(n) of the Code;
(c) amend or permit any ERISA Affiliate to amend any Plan in a
manner that would require security under Section 307 of ERISA; or
(d) request or permit any ERISA Affiliate to request a waiver
of the minimum funding requirements under Section 412 of the Code in respect of
any Plan.
8.13. Subsidiaries. Create or acquire any Subsidiaries not
existing on the Closing Date; PROVIDED, HOWEVER, that the Company may create or
acquire (a) one or more U.S. Subsidiaries after the Closing Date with the
consent of the Agent; PROVIDED, that each such U.S. Subsidiary promptly, and in
no event later than ten (10) Business Days after creation or acquisition, as the
case may be, becomes a Guarantor under the Note Documents, enters into a
Subsidiary Security Agreement and a Subsidiary Pledge Agreement and takes all
actions reasonably requested by the Agent to ensure that Liens in favor of the
Agent are created and are or remain perfected with respect to the Collateral or
(b) one or more Foreign Entities so long as no assets currently owned by a U.S.
Subsidiary (other than Memorabilia transferred or moved in accordance with
Sections 7.17 and 7.18) are transferred to any Foreign Entity and substantially
all of such Foreign Entity's assets are located outside of the United States.
8.14. Capital Expenditures. Make or be committed to make, or
permit any other Company Party to make or be committed to make, any expenditure
(by purchase or capitalized lease) for fixed or capital assets, other than
expenditures (including obligations under Capitalized Leases) which would not
cause the aggregate amount of all such expenditures to exceed $6,000,000 per
annum (on a cumulative basis such that amounts not used in any one (1) year may
be used in subsequent years);
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PROVIDED, HOWEVER, that amounts permitted to be expended pursuant to Section 8.6
shall not be deemed to be capital expenditures hereunder.
8.15. Federal Reserve Regulations. Permit the proceeds of any
Note to be used for any purpose which violates or is inconsistent with the
provisions of Regulation T, U or X of the Board of Governors of the Federal
Reserve System.
8.16. Intellectual Property. At any time take or fail to take,
or knowingly permit to be taken or not taken, any acts which would in any way
challenge or impair its or any of its Subsidiaries rights in any of the
Intellectual Property necessary for the operations of their businesses, except
only when the taking or failure to take any such action would not result in, and
could not reasonably be expected to result in, individually or in the aggregate,
a Material Adverse Effect; PROVIDED, that the Company shall have the right to
allow any trademark (other than the PH Trademarks) to lapse if the Company
determines to do so in its reasonable business judgment and there would be no
Material Adverse Effect.
8.17. No Purchase of Loans or Notes. Purchase or otherwise
acquire, or permit any other Company Party or other Affiliate of the Company or
any other Company Party to purchase or otherwise acquire, any of the Loans or
the Notes or any interest therein.
8.18. Inactive Guarantors. Permit any Inactive Guarantor to
engage in business or other activity of any kind other than that which is
directly related to the maintenance of its organization existence.
8.19. Negative Pledge. Mortgage, encumber, hypothecate or
otherwise pledge, or permit any other Company Party to mortgage, encumber,
hypothecate or otherwise pledge, any (a) Leases or other real property
interests, (b) shares of or interest in any Guarantors or Foreign Entities not
pledged to the Agent hereunder, (c) any interest of the Company or any Guarantor
in any foreign or domestic joint venture, (d) any Assets in any Foreign Entity
or any joint venture, or (e) any interest in TSP; PROVIDED, HOWEVER, that the
interests or Assets described in clauses (c) and (d) may be subject to a pledge
in favor of a third party if such joint venture or Foreign Entity is not, and
will not be, the recipient of any loans or advances under Section 8.6(e) or (f)
hereof. If, notwithstanding the previous sentence, the Company grants a security
interest in the capital stock of Hospitality, or Hospitality grants a security
interest in the Membership Interest or any other interest in TSP, in violation
of the same, the Company shall automatically and without the requirement of
notice to or action by any Person be deemed to have granted to the Agent a prior
and superior security interest therein (subject only to the lien of the Working
Capital Agent therein), and shall take all actions reasonably requested by the
Agent to effect the same.
8.20. Foreign Entities. Permit any Foreign Entity, now
existing or hereafter formed, to own (by acquisition or transfer from the
Company or any Guarantor) or otherwise take possession of any asset that is
located within the United States of America (other than assets having an
aggregate Book Value of not more than $50,000 at any time); PROVIDED, HOWEVER,
that, notwithstanding anything to the contrary in this Section 8.20, the Company
and the Active Guarantors shall be entitled to transfer or move Inventory and
Memorabilia in accordance with the terms of Sections 7.17 and 7.18 hereof).
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ARTICLE 9
INDEMNIFICATION
9.1. Indemnification. In addition to all other sums due
hereunder or provided for in this Agreement, the Company agrees to indemnify and
hold harmless each Purchaser, the Agent and their respective Affiliates and
their respective officers, directors, agents, employees, partners, members and
shareholders (each, an "INDEMNIFIED PERSON") to the fullest extent permitted by
law from and against any and all Losses resulting from (a) any breach of any
representation or warranty, covenant or agreement of any Company Party in this
Agreement or any other Note Document (without giving effect to any materiality
or material adverse effect or knowledge qualification contained therein), (b)
any matter disclosed in the Schedules to this Agreement or any other Note
Document or (c) any legal, administrative or other actions (including actions
brought by any equity holders of the Company or derivative actions brought by
any Person claiming through a Company Party or in a Company Party's name),
proceedings or investigations (whether formal or informal), or written threats
thereof, based upon, relating to or arising out of this Agreement or any other
Note Document or any of the transactions contemplated hereby or thereby
(including without limitation the use of proceeds of the Loans, other than
Losses that result from the Indemnified Person's gross negligence or willful
misconduct, as determined by a court of competent jurisdiction. In connection
with the obligation of the Company Parties to indemnify for expenses as set
forth above, the Company Parties further agree, jointly and severally, to
reimburse each Indemnified Person for all such expenses (including reasonable
fees, disbursements and other charges of counsel) as they are incurred by such
Indemnified Person.
9.2. Notification. Each Indemnified Person under this Article
will, promptly after the receipt of notice of the commencement of any action, or
other proceeding against such Indemnified Person in respect of which indemnity
may be sought from the Company under this Article, notify the Company in writing
of the commencement thereof. The failure of any Indemnified Person so to notify
the Company of any such action shall not relieve the Company from any liability
which it may have to such Indemnified Person hereunder. In case any such action
or other proceeding shall be brought against any indemnified party and it shall
notify the Company of the commencement thereof, the Company shall be entitled to
participate therein and, to the extent that it may wish, to assume the defense
thereof, with counsel reasonably satisfactory to such indemnified party;
PROVIDED, HOWEVER, that any indemnified party may, at its own expense, retain
separate counsel to participate in such defense. Notwithstanding the foregoing,
in any action or proceeding in which the Company, on the one hand, and an
Indemnified Person, on the other hand, are, or are reasonably likely to become,
parties, such Indemnified Person shall have the right to employ separate counsel
at the Company's expense and to control its own defense of such action or
proceeding if, in the opinion of such Indemnified Person, (a) there are or may
be legal defenses available to such Indemnified Person or to other Indemnified
Persons that are different from or additional to those available to the Company
or (b) any conflict or potential conflict exists between the Company, on the one
hand, and such Indemnified Person, on the other hand, that would make such
separate representation advisable; PROVIDED, HOWEVER, that in no event shall the
Company be required to pay fees and expenses under this Article for more than
one firm of attorneys for such Indemnified Person in any jurisdiction in any one
legal action or group of related legal actions. The Company shall not consent to
the entry of any judgment or enter into any settlement which does not include as
an unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Person of a release from all liability in respect to such claim or
litigation or which requires action other than the payment of money by the
Indemnified Person. The rights
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accorded to Indemnified Persons hereunder shall be in addition to any rights and
remedies that any Indemnified Person may have at law or in equity, by separate
agreement or otherwise.
9.3. Survival. The provisions of this Article 9 shall survive
the payment of the Obligations and discharge or release of any Lien granted
under any Note Document.
ARTICLE 10
DEFAULTS AND REMEDIES
10.1. Events of Default. Each of the following shall
constitute an "EVENT OF DEFAULT":
(a) The Company or any Guarantor shall (i) fail to make any
payment of principal or interest under this Agreement or any Note when due, (ii)
except as set forth in clause (iii), fail to pay when due any other amount
payable under this Agreement or any other Note Document (including but not
limited to the making of deposits in the Depository Accounts, the Blocked
Account or the Cash Concentration Account) or (iii) fail to pay fees, expenses
and any other DE MINIMIS amounts required hereunder and such failure under this
clause (iii) shall have continued unremedied for a period of two (2) days; or
(b) Any representation or warranty made by the Company or any
Guarantor under this Agreement or any other Note Document or any statement made
by the Company or any Guarantor in any financial statement, certificate, report
or document furnished to the Agent or the Purchasers pursuant to or in
connection with this Agreement or any other Note Document (other than those
related to an Inactive Guarantor, except with respect to its inactivity), shall
prove to have been false or misleading in any material respect as of the time
when made (including by omission of material information necessary to make such
representation, warranty or statement, in light of the circumstances under which
it was made, not misleading); or
(c) The Company or any Guarantor shall default in the
performance or observance of any covenant contained in Article 7 hereof (subject
to the grace periods applicable under this Agreement to the covenants contained
in Article 7, including such grace periods contained in subsection 10.1(d)
hereof) or Article 8 hereof; or
(d) The Company or any Guarantor shall default in the
performance or observance of (i) the covenants contained in Section 7.5 (other
than paragraphs (e) and (f) thereof) and such default shall have continued
unremedied for a period of five (5) days, (ii) the covenants contained in
paragraphs (e) and (f) of Section 7.5 and such default shall have continued
unremedied for a period of three (3) days, or (iii) any other covenant,
agreement or duty under this Agreement or any other Note Document (to the extent
not otherwise set forth in this Section 10.1) and such default shall have
continued unremedied for the period specified herein or in such other Note
Document with respect to such covenant, agreement or duty, or if not otherwise
specified, then for a period of thirty (30) days; or
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(e) There shall be an "EVENT OF DEFAULT" under and as defined
in the Working Capital Credit Agreement or the PIK Indenture after the
expiration of applicable grace periods thereunder, if any; or
(f) The Company or any other Company Party (other than
Inactive Guarantors so long as no Company Party, Active Guarantor or Foreign
Entity is or may be liable thereon) shall have entered into any consent or
settlement decree or agreement or similar arrangement with a Governmental
Authority or any judgment, order, decree or similar action shall have been
entered against any such Person, in each case based on or arising from the
violation of or pursuant to any Environmental Law, or the generation, storage,
transportation, treatment, disposal or Release of any Hazardous Material and, in
connection with any of the foregoing, any such Person shall incur Environmental
Liabilities and Costs which are unstayed, due and owing in an amount in excess
of $500,000 in the aggregate together with other such Environmental Liabilities
and Costs; or
(g) Any material provision of any Note Document shall at any
time for any reason be declared to be null and void, or the validity or
enforceability thereof shall be contested by the Company or any other Company
Party, or a proceeding shall be commenced by the Company or any other Company
Party, or by any Governmental Authority or other regulatory body having
jurisdiction over the Company or any other Company Party, seeking to establish
the invalidity or unenforceability thereof, or the Company or any other Company
Party shall deny in writing that the Company or any other Company Party has any
liability or obligation purported to be created under any Note Document; or
(h) The Company or any of its ERISA Affiliates shall have made
a complete or partial withdrawal from a Multiemployer Plan, and, as a result of
such complete or partial withdrawal, the Company or such ERISA Affiliate incurs
a withdrawal liability in an annual amount exceeding $200,000; or a
Multiemployer Plan enters reorganization status under Section 4241 of ERISA,
and, as a result thereof, the Company's or such ERISA Affiliate's annual
contribution requirement with respect to such Multiemployer Plan increases in an
annual amount exceeding $500,000; or
(i) (i) Any Plan shall fail to satisfy the minimum funding
standard required for any plan year or part thereof or a waiver of such standard
or extension of any amortization period is sought or granted under Section 412
of the Code, any Plan shall have had or is likely to have a trustee appointed to
administer such Plan, any Plan is, shall have been or is likely to be terminated
or to be the subject of termination proceedings under ERISA, any Plan shall have
an Unfunded Current Liability, a contribution required to be made to a Plan has
not been timely made, any Company Party or any ERISA Affiliate has incurred or
is likely to incur a liability to or on account of a Plan under Section 409,
502(i), 502(1), 515, 4062, 4063, 4064, 4069, 4201, 4204 or 4212 of ERISA or
Section 401(a)(29), 4971 or 4975 of the Code, or such Company Party has incurred
or is likely to incur liabilities pursuant to one or more employee welfare
benefit plans (as defined in Section 3(1) of ERISA) that provide benefits to
retired employees or other former employees (other than as required by Section
601 of ERISA); and (ii) there shall result from any such event or events the
imposition of a Lien or the granting of a security interest, or there shall
result from any such event or events a liability or a material risk of incurring
a liability which would result in a Material Adverse Effect; or
(j) Robert Earl shall (i) cease to be Chairman of the Board of
Directors or Chief Executive Officer of the Company or (ii) breach or be in
default of any of his obligations under the
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Agreement Regarding Leases after the expiration of any applicable grace period
applicable thereto, if any; or
(k) Except as set forth in Section 10.1(e), the Company or any
U.S. Subsidiary shall fail to pay any principal or interest on any of its
Indebtedness in excess of $200,000, or any interest or premium thereon, when due
(whether by scheduled maturity, required prepayment, acceleration, demand or
otherwise) and such failure shall continue after the applicable grace period, if
any, specified in the agreement or instrument relating to such Indebtedness, or
any other default under any agreement or instrument relating to any such
Indebtedness, or any other event, shall occur and shall continue after the
applicable grace period, if any, specified in such agreement or instrument, if
the effect of such default or event is to accelerate, or to permit the
acceleration of, the maturity of such Indebtedness; or any such Indebtedness in
excess of such amount shall be declared to be due and payable, or required to be
prepaid (other than by a regularly scheduled required prepayment), prior to the
stated maturity thereof; or
(l) The Company or any U.S. Subsidiary (other than an Inactive
Guarantor) (i) shall institute any proceeding or voluntary case seeking to
adjudicate it a bankrupt or insolvent, or seeking dissolution, liquidation,
winding up, reorganization, arrangement, adjustment, protection, relief or
composition of it or its debts under any law relating to bankruptcy, insolvency,
reorganization or relief of debtors, or seeking the entry of an order for relief
or the appointment of a receiver, trustee, custodian or other similar official
for the Company or any U.S. Subsidiary or for any substantial part of its
property, (ii) shall be generally not paying its debts as such debts become due,
or shall admit in writing its inability to pay its debts generally, (iii) shall
make a general assignment for the benefit of creditors, or (iv) shall take any
action to authorize or effect any of the actions set forth above in this
subsection (m); or
(m) Any proceeding shall be instituted against the Company or
any U.S. Subsidiary (other than an Inactive Guarantor) seeking to adjudicate it
a bankrupt or insolvent, or seeking dissolution, liquidation, winding up,
reorganization, arrangement, adjustment, protection, relief of debtors, or
seeking the entry of an order for relief or the appointment of a receiver,
trustee, custodian or other similar official for the Company or any U.S.
Subsidiary or for any substantial part of its property, and either such
proceeding shall remain undismissed or unstayed for a period of forty-five (45)
days or any of the actions sought in such proceeding (including, without
limitation, the entry of an order for relief against it or the appointment of a
receiver, trustee, custodian or other similar official for it or for any
substantial part of its property) shall occur; or
(n) Any Security Document, after delivery thereof pursuant
hereto, shall for any reason fail or cease to create a valid and perfected and,
except to the extent permitted by the terms hereof or thereof, second priority
Lien on or security interest in any Collateral purported to be covered thereby;
or
(o) One or more judgments or orders (other than a judgment
described in subsections (f) or (g) of this Section 10.1) for the payment of
money exceeding any applicable insurance or bond coverage by more than
$1,000,000 in the aggregate shall be rendered against the Company or any U.S.
Subsidiary (other than Inactive Guarantors, so long as no Company Party, Active
Guarantor or Foreign Entity is or may be liable thereon) and either (i)
enforcement proceedings shall have been commenced by any creditor upon any such
judgment or order, or (ii) there shall be any period of twenty (20) consecutive
days during which a stay of enforcement of any such judgment or order, by reason
of a pending appeal or otherwise, shall not be in effect.
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10.2. Remedies. If an Event of Default shall occur and be
continuing or shall exist, the Agent may, and upon the direction of the Required
Purchasers shall, by notice to the Company:
(a) terminate the Commitment and declare the unpaid principal
amount of the Loans and all other Obligations, all interest accrued thereon, all
fees hereunder and all other amounts owing by the Company or any other Company
Party hereunder or under the Notes or any other Note Document to be immediately
due and payable in full, without presentment, demand, protest or further notice
of any kind, all of which are hereby expressly waived, and an action therefor
shall immediately accrue; and/or
(b) give notice to the Company or any other Company Party of
the occurrence and continuance of an Event of Default; and/or
(c) apply all funds deposited in the Depository Accounts to
the payment, in whole or in part, of the Obligations; and/or
(d) set-off amounts in the Depository Account or any other
accounts under the dominion and control of the Agent and apply such amounts to
the Obligations of the Company hereunder and under the Note Documents;
PROVIDED, HOWEVER, that upon the occurrence of any Event of Default described in
subsections (l) or (m) of Section 10.1, the Commitment shall immediately and
automatically terminate, and the Loans and all other Obligations, all interest
accrued thereon, all fees hereunder and all other amounts owing by the Company
or any other Company Party hereunder or under the Notes or any other Note
Document shall become and be immediately and automatically due and payable in
full, in each case without presentment, demand, protest or further notice of any
kind, all of which are expressly waived by the Company and each other Company
Party.
10.3. Remedies Under Note Documents. If an Event of Default
occurs, each of the Agent and the Purchasers may also exercise all rights and
remedies which it may have hereunder or under any other Note Document or at law
or in equity or otherwise. All such remedies shall be cumulative and not
exclusive.
ARTICLE 11
THE AGENT
11.1. Appointment and Authorization. Each Purchaser hereby
appoints and authorizes the Agent to take such actions as agent on its behalf
and to exercise such powers under this Agreement and the other Note Documents as
are delegated to the Agent by the terms hereof and the other Note Documents,
together with all such powers as are reasonably incidental thereto. Subject to
Section 12.6(b), any notice or direction to the Agent from the Required
Purchasers shall be deemed to be a notice or direction to the Agent from all
Purchasers and shall be binding on all of the Purchasers, and the Agent shall be
entitled to rely thereon as if given by all of the Purchasers. By its execution
hereof, the Agent accepts such appointment and agrees to exercise the rights and
perform the duties of the Agent for the benefit of the Purchasers and to comply
with any directions or instructions given to it in any notice from Purchasers
constituting not less than the Required Purchasers, all in accordance with the
terms of this Agreement and the other Note Documents.
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11.2. Rights of Agent. The Agent shall have the same rights
and powers under the Note Documents as are given solely to the Purchasers.
Except as otherwise provided in this Agreement or to the extent that it would
prevent the Agent from fulfilling its obligations to the Purchasers hereunder,
the Agent may accept deposits from, lend money to, and generally engage in any
kind of business with the Company Parties.
11.3. Actions by Agent.
(a) Obligations of Agent. The obligations of the Agent under
this Agreement are only those expressly set forth herein. Without limiting the
generality of the foregoing, (i) the Agent shall not be required at any time to
take any action with respect to any Default or Event of Default except as
expressly provided in Article 10 hereof, but subject to Section 11.3(c) hereof,
and (ii) in no event shall the Agent have any implied duties under this
Agreement. In addition, the Agent shall not execute or consent to any amendment,
supplement or modification of or to any provision of this Agreement, the Notes
or any other Note Document, any waiver of any provision of this Agreement, the
Notes or any other Note Document, or any consent to any departure by the Company
or any other Company Party from the terms of any provision of this Agreement,
the Notes or any other Note Document without the prior written direction of the
Required Purchasers.
(b) Collateral Agent. Upon the request of the Required
Purchasers, the Agent, and to the extent necessary the Company and each Company
Party, shall execute and deliver a supplemental agreement and all other
instruments and agreements, with terms reasonably acceptable to the Agent,
necessary or proper to appoint another bank or trust company, or one or more
persons approved by the Required Purchasers, to act as collateral agent of all
or part of the Collateral, in any such case with such powers as may be provided
in such supplemental agreement, and to vest in such bank, trust company or
person as such security agent or separate trustee, as the case may be, any
property, title, right or power of the Agent deemed necessary or advisable by
the Required Purchasers.
(c) Knowledge of Agent. The Agent shall not be deemed to have
knowledge of the occurrence of a Default or an Event of Default under any Note
Document unless it shall have received written notice thereof from a Company
Party or from a Purchaser, which notice, in the case of notice from a Purchaser,
shall refer to the applicable Note Document and state that it is a notice of a
Default or an Event of Default. The Agent shall take such action with respect to
a Default or an Event of Default as shall be directed by the Required
Purchasers; PROVIDED, HOWEVER, that unless and until the Agent shall have
received such directions, the Agent may (but shall not be obligated to) take
such action, or refrain from taking such action, with respect to such Default or
Event of Default as it shall deem advisable in the best interests of the
Purchasers.
(d) Property Held for Benefit of Purchasers. The Agent shall
hold any Collateral and any other documents or instruments delivered by a
Company Party in connection with the Obligations, and all payments and proceeds
received in connection therewith (except payments of fees and reimbursable costs
and expenses of Agent), in the name of Agent for the undivided benefit and
protection of the Purchasers, to be held and distributed in accordance with the
terms and conditions of this Agreement, including Section 3.1(b).
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11.4. Liability of Agent. Neither the Agent, nor any of its
directors, officers, agents or employees, shall be liable for any action taken
or not taken by the Agent in connection with the Note Documents (a) with the
consent or at the request of the Required Purchasers or (b) in the absence of
the gross negligence or willful misconduct of the Agent. The Agent shall not be
compelled to do any act under the Note Documents or to take any action toward
the execution or enforcement of the powers created by the Note Documents, or to
prosecute or defend any suit in respect of the Note Documents, (x) if it in good
faith believes that such action is unlawful or would subject it to material
liability or (y) unless indemnified to its reasonable satisfaction against any
and all loss, cost, liability and expense it may incur in connection therewith.
Neither the Agent nor any of its directors, officers, agents or employees shall
be responsible for or have any duty to ascertain, inquire into or verify (i) any
statement, warranty or representation made in connection with the Note
Documents, (ii) the performance or observance of any of the covenants or
agreements of any Company Party, (iii) the legality, validity, effectiveness,
enforceability, sufficiency or genuineness of the Note Documents or any other
instrument or writing furnished in connection therewith or (iv) receipt by any
other Purchaser of any certificates required to be delivered by the Company
hereunder. The Agent shall not incur any liability by acting in reliance upon
any notice, consent, certificate, statement, or other writing (which may be a
bank wire, telex or similar writing) reasonably believed by it to be genuine or
to be signed by the proper party or parties. The Agent makes no representation
as to, and shall have no responsibility to ascertain, inquire into or verify,
the value or condition of the Collateral or any part thereof or as to the title
of the Company or any other party to the Collateral or the validity, sufficiency
or enforceability thereof or the security afforded thereby. The Agent shall not,
under any circumstances or any event whatsoever, have any liability for any
error or omission or delivery of any kind made in the settlement, collection or
payment of any of the Collateral or of any instrument received in payment
therefor or for any damage resulting therefrom other than as a result of the
Agent's gross negligence or willful misconduct.
11.5. Indemnification. Each Purchaser shall severally, in
accordance with its Note Percentage, without giving effect to any participations
in all or any portion of its Notes sold by such Purchaser to any other Person,
indemnify the Agent (to the extent not reimbursed by the Company) and the
Agent's Indemnified Persons against any obligation, damage, penalty, judgment,
cost, expense (including attorneys' fees and disbursements), claim, demand,
suit, action, loss (including unpaid fees or disbursements due and owing to the
Agent) or liability (including any liability under any laws relating to
environmental protection and any liability for such Indemnified Person's own
negligence, but not including any liability that results from such Indemnified
Person's gross negligence or willful misconduct) that such Indemnified Person
may suffer or incur in connection with the Note Documents or the Collateral or
any action taken or omitted by such Indemnified Person thereunder. The
obligations of each Purchaser under this Section shall survive payment of the
Obligations and termination of this Agreement.
11.6. Credit Decision. Each Purchaser acknowledges that it
has, independently and without reliance upon the Agent, and based on such
documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into the Note Documents. Each Purchaser also
acknowledges that it will, independently and without reliance upon Agent, and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking any
action under the Note Documents.
11.7. Resignation of Agent. The Agent may resign at any time
by giving written notice thereof to the other Purchasers and the Company. Upon
any such resignation, the Required Purchasers
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shall have the right (but not the obligation) to appoint a successor Agent,
without the consent of the Company. If no successor Agent shall have been so
appointed by the Required Purchasers and shall have accepted such appointment,
within 30 days after the giving of notice of resignation, then the retiring
Agent may, on behalf of the other Purchasers, appoint a successor Agent, which
shall be a commercial bank organized under the laws of the United States of
America or of any State thereof and having a combined capital and surplus of at
least $500,000,000.
11.8. Removal of Agent. The Required Purchasers shall have the
right, in their sole discretion, to remove Agent as Agent hereunder and, without
the consent of the Company, appoint a successor Agent, upon 30 days' prior
written notice thereof to the Agent; PROVIDED, that if the Agent defaults in the
performance or observance of any of its obligations under this Agreement or is
grossly negligent in the performance of its obligations hereunder or engages in
willful misconduct, then such removal shall be effective immediately upon notice
to the Agent thereof.
11.9. Successor Agent. Upon the written acceptance of its
appointment as Agent by a successor Agent, such successor Agent shall thereupon
succeed to and become vested with all the rights and duties of the retiring
Agent, and the retiring Agent shall be discharged from its duties and
obligations under this Agreement. After any retiring Agent's resignation or
removal hereunder as Agent, the provisions of this Article shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was Agent.
ARTICLE 12
MISCELLANEOUS
12.1. Survival of Provisions. All of the representations and
warranties made in this Agreement or any other Note Documents shall survive the
execution and delivery of this Agreement or such Note Document, the making of
any Loans and the payment of the Notes upon redemption or otherwise, and the
termination of this Agreement.
12.2. Notices. All notices, demands and other communications
provided for or permitted hereunder shall be made in writing and shall be by
facsimile, courier services or personal delivery to the following addresses, or
to such other addresses as shall be designated from time to time by a party in
accordance with this Section:
(a) if to the Purchasers:
to their respective addresses
set forth on Schedule 2.1
with a copy:
to their respective counsel (if any) at the
addresses set forth on Schedule 2.1, or as
any such Purchaser shall notify the Company
in accordance with this Section
(b) if to the Company:
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Planet Hollywood International, Inc.
Corporate Office
8669 Commodity Circle
Orlando, Florida 32819
Attention: Chief Financial Officer
Telephone: (407) 352-6886
Telecopier: (407) 352-7310
(c) if to the Agent:
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
Attention: Corporate Trust Administration
Telephone: (302) 651-8584
Telecopier: (302) 651-8882
All notices and communications under this Agreement shall be
deemed to have been duly given (a) when delivered by hand, if personally
delivered, (b) when delivered to a courier, if delivered by commercial overnight
courier service, (c) when receipt is acknowledged, if sent by facsimile.
The Agent shall promptly deliver a copy of each notice and
other communication received from the Company or any other Company Party
hereunder or under any other Note Document to each Purchaser (with such copies
as such Purchaser may request) at the address for such Purchaser (and for such
copies) given to the Agent in a notice from such Purchaser to the Agent in
accordance with this Section.
12.3. Notes.
(a) Registered Notes.
(i) At the request of the Agent, the Company shall
cause to be kept a register for the registration and transfer of the
Notes (the "NOTE REGISTER") at the office of the Company, and the
Company will cause to be registered or transferred on the Note Register
as hereinafter provided and under such reasonable regulations as it may
prescribe, any Note issued pursuant to this Agreement.
(ii) At any time and from time to time the registered
holder of any Note which has been duly registered as hereinabove
provided may, subject to compliance with any applicable securities laws
and the provisions of Article 6, transfer such Note upon surrender
thereof at the Company duly endorsed and accompanied by an Assignment
and Acceptance Agreement duly executed by the registered holder of such
Note or its attorney duly authorized in writing; PROVIDED, that the
Company may decline to exchange or register the transfer of any Note
during the period of five Business Days preceding the due date for any
payment of principal or interest on the Notes.
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(iii) The Person in whose name any registered Note
shall be registered shall be deemed and treated as the owner and holder
thereof for all purposes of this Agreement. Payment of or on account of
the principal, premium, if any, interest and all other amounts
(including the Origination Fee) in respect of any registered Note shall
be made to or upon the written order of such registered holder.
(b) Exchange of Notes. At any time and from time to
time, upon not less than three Business Days' notice to that effect
given by the holder of any Note initially delivered or of any Note
substituted therefor pursuant to this Section 12.3 (except in the case
of a lost, stolen, or mutilated certificate sought to be exchanged
pursuant to Section 12.3(c), as soon as practicable), and, upon
surrender of such Note at the office of the Company, the Company shall
deliver in exchange therefor, without expense to the holder, except as
set forth below, one or more Notes for the same aggregate principal
amount as the then unpaid principal amount of the Note so surrendered,
in the denomination of not less than U.S. $10,000.00 (unless the
aggregate principal amount of all Notes held by such holder is less
than $10,000.00), or any amount in excess thereof as such holder shall
specify, dated as of the date to which interest has been paid on the
Note so surrendered, or, if such surrender is prior to the payment of
any interest thereon, then dated as of the date of issue, payable to
such Person or Persons, or registered assigns, as may be designated by
such holder and otherwise permitted hereunder, and otherwise of the
same form and tenor as the Notes so surrendered for exchange. The
Company may require the payment of a sum sufficient to cover any stamp
tax or governmental charges imposed upon such exchange or transfer.
(c) Loss, Theft or Mutilation of Notes. Upon receipt
of evidence reasonably satisfactory to the Company of the loss, theft,
mutilation or destruction of any Notes, and in the case of any such
loss, theft or destruction upon delivery of a bond of indemnity in such
form and amount as shall be reasonably satisfactory to the Company, or
in the event of such mutilation upon surrender and cancellation of the
Note, the Company shall deliver without expense to the holder thereof,
a new Note, of like tenor, in lieu of such lost, stolen, destroyed or
mutilated Note. If any Purchaser is the owner of any such lost, stolen
or destroyed Note, then the affidavit of an authorized officer, of such
owner, setting forth the fact of loss, theft or destruction and of its
ownership of the Note at the time of such loss, theft or destruction
shall be accepted as satisfactory evidence thereof and no further
indemnity shall be required as a condition to the execution and
delivery of a new Note other than the written agreement of such owner
to indemnify the Company.
12.4. Successors and Assigns. This Agreement shall inure to
the benefit of and be binding upon the successors and permitted assigns and
permitted transferees of the parties hereto. Except as expressly provided in any
provision of any Note Document, no Person other than the parties hereto and
their successors and permitted assigns is intended to be a beneficiary of this
Agreement or any such Note Document.
12.5. Assignments and Participations.
(a) By Company Parties. No Company Party may assign
any of its rights or obligations under this Agreement or any other Note Document
without the written consent of the Agent, and any such purported assignment
shall be void and of no effect.
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(b) By Purchasers. Each Purchaser and any subsequent
holder of Notes may, at any time or from time to time, sell, agree to sell or
assign or transfer to one or more Persons, all or any portion of its interest in
the Loans, this Agreement and the other Note Documents; PROVIDED, that the
parties to each such assignment shall execute and deliver to the Company with a
copy to the Agent, for its acceptance and recording in the Note Register, an
Assignment and Acceptance in the form of EXHIBIT L attached hereto (an
"ASSIGNMENT AND ACCEPTANCE AGREEMENT"), together with the Note or Notes subject
to such assignment. In the event of any such sale, assignment or transfer of a
Note, upon surrender for exchange of any Note at the office of the Company
designated for notices in accordance with Section 12.2, the Company shall
execute and deliver in exchange therefor, without expense to the holder, one or
more new Notes in the same aggregate principal amount as the then unpaid
principal amount of the Note so surrendered as such holder shall specify, dated
as of the date to which interest has been paid on the Note so surrendered (or,
if no interest has been paid, the date of such surrendered Note), in the name of
such Person or Persons as may be designated by such holder in writing, and
otherwise of the same form and tenor as the Note so surrendered for exchange.
Every Note surrendered for transfer shall be duly endorsed, or accompanied by a
written instrument of transfer duly executed by the holder of such Note or its
attorney duly authorized in writing.
(c) Disclosure of Information. The Purchaser and any
subsequent holder of Notes may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this Section,
disclose to the assignee or participant or proposed assignee or participant any
information relating to the Company or any of its Subsidiaries furnished to the
Purchaser or such holder by or on behalf of the Company or such Subsidiary;
provided that prior to any such disclosure, each such assignee or participant
and proposed assignee or participant shall agree with the Purchaser or such
holder to preserve the confidentiality of any confidential information relating
to the Company or any of its Subsidiaries received from the Purchaser.
(d) Additional Information. For so long as any Notes
remain outstanding, the Company shall make available at its expense,
upon request, to each Purchaser and any prospective holder of Notes,
the information specified in Rule 144(A)(d)(4) under the Securities
Act, unless the Company is then subject to Section 13 or 15(d) of the
Exchange Act. At the written request of a Purchaser holding such
securities who proposes to sell any of such securities in compliance
with Rule 144, the Company shall furnish to such Purchaser, within two
business days after receipt of such request, a written statement as to
whether or not the Company is in compliance with the filing
requirements of the Exchange Act, or otherwise has publicly available
information, as set forth in Rule 144(c).
(e) Participations. Each Purchaser may sell
participations to one or more Persons in or to all or a portion of its
rights and obligations under this Agreement and the other Note
Documents (including, without limitation, all or a portion of its
Commitment and the Loans owing to it); PROVIDED HOWEVER that (i) such
Purchaser's obligations under this Agreement (including, without
limitation, its Commitment hereunder) and the other Note Documents
shall remain unchanged; (ii) such Purchaser shall remain solely
responsible to the other parties hereto for the performance of such
obligations, and the Company, the Agent and the other Purchaser shall
continue to deal solely and directly with such Purchaser in connection
with such Purchaser's rights and obligations under this Agreement and
the other Note Documents; and (iii) a participant shall not be entitled
to require such Purchaser to take or omit to take any action hereunder
except (A) action directly effecting an extension of the maturity dates
or decrease in the principal amount
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of the Loans, or (B) action directly effecting an extension of the due
dates of or a decrease in the rate of interest payable on the Loans or
the fees payable under this Agreement, or (C) actions directly
effecting a release of all or a substantial portion of the Collateral
(except as otherwise provided of this Agreement or any other Note
Document).
12.6. Amendment and Waiver.
(a) No Waiver. No failure or delay on the part of any
Purchaser in exercising any right, power or remedy hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise
of any such right, power or remedy preclude any other or further
exercise thereof or the exercise of any other right, power or remedy.
The remedies provided for herein are cumulative and are not exclusive
of any remedies that may be available to any Purchaser at law, in
equity or otherwise.
(b) Amendments. Any amendment, supplement or
modification of or to any provision of this Agreement, the Notes or any
other Note Document, any waiver of any provision of this Agreement, the
Notes or any other Note Document, and any consent to any departure by
the Company or any other Company Party from the terms of any provision
of this Agreement, the Notes or any other Note Document, shall be
effective (i) only if it is made or given in writing and signed by the
Company and the Agent, and (ii) only in the specific instance and for
the specific purpose for which made or given. However, without the
consent of each Purchaser affected, an amendment may not:
(i) reduce the rate of or extend the time for payment of interest
on any Loan;
(ii) reduce the principal of or extend the maturity of any Loan;
(iii) change the time at which any Loan shall or may be prepaid;
(iv) make any Loan payable in money other than that stated in this
Agreement or the Notes; or
(v) make any change to this Section 12.6(b).
(c) No Additional Notice. Except where notice is specifically
required by this Agreement, no notice to or demand on any Company Party in any
case shall entitle any Company Party to any other or further notice or demand in
similar or other circumstances.
12.7. Counterparts; Facsimile Signatures. This Agreement may
be executed in any number of counterparts and by the parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.
This Agreement may also be executed by any party hereto by facsimile signature,
which shall be deemed to be an original signature of such party hereon.
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12.8. Governing Law. This Agreement has been negotiated,
executed and delivered in the State of New York and shall be governed by and
construed in accordance with the laws of the State of New York, without regard
to principles of conflicts of law.
12.9. Jurisdiction; venue; service of process; Waiver of jury
trial. Each party to this Agreement hereby irrevocably agrees that any legal
action or proceeding arising out of or relating to this Agreement or any NOTE
Document or any agreements or transactions contemplated hereby or thereby may be
brought in the courts of the State of New York located in New York COUNTY or of
the United States of America for the Southern District of New York and hereby
expressly submits to the personal jurisdiction and venue of such courts for the
purposes thereof and expressly waives any claim of improper venue and any claim
that such courts are an inconvenient forum. Each party hereby irrevocably
consents to the service of process of any of the aforementioned courts by notice
in the manner specified in Section 12.2. EACH PARTY TO THIS AGREEMENT
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY RIGHT TO TRIAL
BY JURY IN ANY SUCH action or PROCEEDING.
12.10. Severability. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstance, is
held invalid, illegal or unenforceable in any respect for any reason, the
validity, legality and enforceability of any such provision in every other
respect and of the remaining provisions hereof shall not be in any way impaired,
unless the provisions held invalid, illegal or unenforceable shall substantially
impair the benefits of the remaining provisions hereof.
12.11. Remedies. If a breach of this Agreement or any other
Note Document occurs and is continuing, the Agent and the Purchasers may pursue
any available remedy by proceeding at law or in equity to enforce the
performance (including, without limitation, the specific performance) of the
provision at issue. Except as otherwise provided by law, a delay or omission by
the Agent or the Purchasers in exercising any right or remedy accruing upon any
such breach shall not impair the right or remedy or constitute a waiver of or
acquiescence in any such breach. No remedy is exclusive of any other remedy. All
available remedies are cumulative.
12.12. Fees and Expenses. Within 10 days after demand
therefor, the Company or other applicable Company Party will pay to the Agent
and each Purchaser (a) the amount of any and all reasonable costs and expenses,
including the reasonable fees, costs, expenses and other client charges of
counsel for the Agent and each Purchaser and of any experts and agents
(including, without limitation, any Person which may act as agent of the Agent
or any Purchaser), which the Agent or any Purchaser may incur in connection with
(i) the preparation, negotiation, execution, delivery, recordation,
administration, amendment, waiver or other modification or termination of this
Agreement or any other Note Document or (ii) the custody, preservation, use or
operation of, the Collateral, and (b) the amount of any and all costs and
expenses, including the fees, costs, expenses and other client charges of
counsel for the Agent and each Purchaser and of any experts and agents
(including, without limitation, any Person which may act as agent of the Agent
or any Purchaser), which the Agent or any Purchaser may incur in connection with
(i) the sale of, collection from, or other realization upon, any Collateral,
(ii) the exercise or enforcement of any of the
-83-
<PAGE>
rights of the Agent and each Purchaser hereunder, or (iii) the failure by any
Company Party to perform or observe any of the provisions of this Agreement or
any other Note Document. In connection with any demand for payment under this
Section 12.12 the Agent shall deliver to the Company a certificate setting forth
in reasonable detail any amount or amounts that the Agent or any Purchaser is
entitled to receive pursuant to this Section 12.12 and such certificate shall be
conclusive and binding on the Company absent manifest error.
12.13. Entire Agreement. This Agreement, together with the
other Note Documents, is intended by the parties as a final expression of their
agreement and intended to be a complete and exclusive statement of the agreement
and understanding of the parties hereto in respect of the subject matter
contained herein and therein. There are no restrictions, promises, warranties or
undertakings, other than those set forth or referred to herein or therein. This
Agreement, together with the other Note Documents, supersedes all prior
agreements and understandings among the parties with respect to such subject
matter.
12.14. Publicity. Except as may be required by applicable law,
no party hereto shall issue a press release or announcement or otherwise make
any public disclosure concerning this Agreement or any other Note Document or
the transactions contemplated hereby and thereby, without prior approval by the
other parties hereto. If any announcement is required by law to be made by a
party hereto, prior to making such announcement such party will deliver a draft
of such announcement to the other parties and shall give other parties an
opportunity to comment thereon.
12.15. Confidentiality. Upon delivering to any Purchaser or
the Agent, or permitting any Purchaser or the Agent to inspect, any written
information pursuant to this Agreement or the other Note Documents, each
Purchaser and the Agent shall treat such information as confidential. Each
Purchaser and the Agent agrees to hold such information in confidence from the
date of disclosure thereof. Subject to the other provisions of this Section
12.15, each Purchaser and the Agent may disclose confidential information to its
officers, directors, employees, attorneys, accountants or other professionals
engaged by any Purchaser or the Agent only after determining that such third
party has been instructed to hold such information in confidence to the same
extent as if it were a Purchaser. Notwithstanding the foregoing, the provisions
of this Section 12.15 shall not apply to information within any one of the
following categories or any combination thereof: (i) information the substance
of which, at the time of disclosure by any Purchaser or the Agent, has become
publicly available or has been disclosed to or is known to any creditor (other
than information as to which such creditor is then under an obligation of
nondisclosure), or any Person other than (A) a director, officer, employee or
agent of the Company or a professional engaged by the Company or (B) a Person
who is then under an obligation of nondisclosure (otherwise than as a
consequence of a wrongful act of any Purchaser or the Agent), (ii) information
which any Purchaser or the Agent had in its possession prior to receipt thereof
from the disclosing party, or (iii) information received by any Purchaser or the
Agent from a third party having no obligations of nondisclosure with respect
thereto. Nothing contained in this Section 12.15 shall prevent any disclosure
(x) believed in good faith by any Purchaser or the Agent to be required by any
law or guideline or interpretation or application thereof by any Governmental
Authority, arbitrator or grand jury charged with the interpretation or
administration thereof or compliance with any request or directive of any
Governmental Authority, arbitrator or grand jury (whether or not having the
force of law), (y) determined by counsel for any Purchaser or the Agent to be
necessary or advisable in connection with enforcement or preservation of rights
under or in connection with this Agreement or any other Note Document or (z) of
any information which has been made public by a Person other than any Purchaser
or the Agent who, to the Agent's or such Purchaser's actual knowledge,
-84-
<PAGE>
was then under an obligation of nondisclosure. The Purchasers and the Agent
shall have the right to disclose any confidential information described in this
Section 12.15 to an assignee or prospective assignee of the Agent or any
Purchaser or to a participant or prospective participant in the Notes hereunder;
PROVIDED that the assigning or selling Agent or Purchaser shall have obtained
from such assignee or prospective assignee or participant or prospective
participant an agreement to hold such information in confidence to the same
extent as if it were a Purchaser.
-85-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Note
Purchase Agreement to be executed and delivered by their respective officers or
partners hereunto duly authorized as of the date first written above.
COMPANY
PLANET HOLLYWOOD INTERNATIONAL, INC.
By: _________________________________________
Name:
Title:
AGENT
WILMINGTON TRUST COMPANY, as Agent
By: _________________________________________
Name:
Title:
PURCHASERS
BAY HARBOUR MANAGEMENT, L.C.
(for its managed accounts, or its assigns)
By: _________________________________________
Name:
Title:
[Signature Page to Note Purchase Agreement]
-86-
<PAGE>
[Signature Page to Note Purchase Agreement]
-87-
<PAGE>
Exhibit A
Form of Note
THIS NOTE IS SUBJECT TO AN INTERCREDITOR AND SUBORDINATION AGREEMENT DATED AS OF
THE DATE HEREOF BY AND AMONG THE CIT GROUP/BUSINESS CREDIT, INC., FOR ITSELF AND
AS AGENT, WLR RECOVERY FUND L.P., WILMINGTON TRUST COMPANY, AS AGENT, UNITED
STATES TRUST COMPANY OF NEW YORK, AS JUNIOR SUBORDINATED TRUSTEE AND THE OTHER
PERSONS AND ENTITIES SIGNATORY THERETO (THE "INTERCREDITOR AGREEMENT"), WHICH
MATERIALLY AFFECTS CERTAIN PAYMENT RIGHTS, SUBORDINATES CERTAIN OBLIGATIONS AND
CERTAIN SECURITY INTERESTS AND LIENS, AND LIMITS RIGHTS TO ENFORCEMENT OF THE
PARTIES TO THIS NOTE. ALL PERSONS OR OTHER ENTITIES WHICH AT ANY TIME HOLD
INDEBTEDNESS HEREUNDER OR WHICH IS SECURED HEREBY ARE BOUND BY THE TERMS OF THE
INTERCREDITOR AGREEMENT, WHICH WILL BE MADE AVAILABLE UPON REQUEST TO ANY PARTY
HERETO.
SECURED
CONVERTIBLE TERM NOTE
$10,000,000.00 New York, New York
May 8, 2000
FOR VALUE RECEIVED, the undersigned, PLANET HOLLYWOOD
INTERNATIONAL, INC., a Delaware corporation (the "COMPANY"), HEREBY AND
UNCONDITIONALLY PROMISES TO PAY to the order of BAY HARBOUR MANAGEMENT, L.C., or
its assigns ("PURCHASER"), to such account or place in New York as the holder
hereof may designate in writing, (i) the principal sum of TEN MILLION AND NO
United States Dollars ($10,000,000.00), or such lesser amount as shall be
outstanding from time to time, together with (ii) interest on the unpaid
principal amount of this Note from the date hereof until such principal amount
is paid in full, and (iii) all other Obligations, in each case in the amounts,
at such rate or rates, and payable at such times, as are provided in the Note
Purchase Agreement, dated as of the date hereof, as amended from
<PAGE>
time to time, between the Company, the Agent and Purchaser, among others (the
"NOTE PURCHASE AGREEMENT").
Capitalized terms used in this Note without definition shall
have the respective meanings assigned to such terms in the Note Purchase
Agreement.
The Company promises to pay interest on any overdue principal
and, to the extent permitted by law, overdue interest and other amounts, from
their due dates until the dates paid at such rate or rates (including the
Overdue Rate), and the times and places, as provided in the Note Purchase
Agreement.
Principal of and interest on, and all other amounts due under,
this Note are payable in lawful money of the United States of America in
immediately available funds to Purchaser (or the Agent) as specified in the Note
Purchase Agreement. The Company shall pay the principal amount under this Note,
if not sooner paid in full, on May 8, 2002 (such date, or any earlier date
pursuant to the Note Purchase Agreement, the "MATURITY Date").
All borrowings and payments of the principal of any Loan shall
be recorded by the holder hereof and, prior to any transfer hereof, appropriate
notations to evidence the foregoing information with respect to such Loans shall
be endorsed by the holder hereof, on the schedule attached hereto, or on a
continuation of such schedule attached to and made a part hereof; PROVIDED that
the failure of the holder hereof to make any such recordation or endorsement
shall not affect the obligations of the Company hereunder or under the Note
Purchase Agreement or any other Note Document.
This Note may be transferred by Purchaser to any other Person,
by duly completing and executing the form of endorsement attached hereto and an
Assignment and Acceptance Agreement.
This Note is the Note (or, if more than one, then is one of
the Notes) referred to in, and is entitled to the benefits of, the Note Purchase
Agreement. Among other things, the Note Purchase Agreement (i) provides for the
making of the Loans evidenced by this Note by Purchaser to the Company on the
terms and subject to the conditions contained therein, and (ii) contains
provisions for acceleration of the maturity of this Note upon the happening of
certain stated events and also for prepayments of principal of this Note prior
to the final maturity of this Note upon the terms and conditions therein
specified.
This Note is secured by the property described in the Note
Purchase Agreement and the other Note Documents (the "COLLATERAL").
All or any portion of the Obligations evidenced by this Note
may be converted into Shares of the Company (or other Securities) at the times
and rates and on such other terms as set forth in the Note Purchase Agreement.
To the extent permitted by applicable Legal Requirements, the
Company hereby waives all benefit that might accrue to the Company by virtue of
any present or future moratorium laws exempting any of the Collateral, or any
other property, real or personal, or any part of the proceeds arising from any
sale of any such property, from attachment, levy, or sale under execution, or
providing for any stay of execution to be issued on any judgment recovered on
this Note (excepting only any stay of execution) or in
A-2
<PAGE>
any action to foreclose or otherwise realize upon the Collateral, exemption from
civil process, or extension of time for payment.
THE COMPANY HEREBY WAIVES PRESENTMENT, DEMAND, DILIGENCE,
PROTEST AND NOTICE OF PROTEST, NOTICE OF INTENT TO ACCELERATE, NOTICE OF
ACCELERATION, DEMAND, DISHONOR AND NON-PAYMENT OF THIS NOTE OR ANY OTHER NOTICE
OF ANY KIND WHATSOEVER (EXCEPT AS EXPRESSLY REQUIRED UNDER THE NOTE DOCUMENTS).
THE NONEXERCISE BY THE HOLDER OF ANY OF ITS RIGHTS HEREUNDER IN ANY PARTICULAR
INSTANCE SHALL NOT CONSTITUTE A WAIVER THEREOF IN THAT OR ANY SUBSEQUENT
INSTANCE.
Notwithstanding anything in this Note or in any other Note
Document to the contrary, if at any time the interest rate payable under the
Note Purchase Agreement, together with all fees and charges which are treated as
interest under applicable Legal Requirements, including the Overdue Rate
(collectively, the "Charges"), as provided in the Note Purchase Agreement or in
any other document executed in connection therewith, or otherwise contracted
for, charged, received, taken or reserved by Purchaser, shall exceed the maximum
lawful rate (the "LEGAL RATE") which may be contracted for, charged, taken,
received or reserved by Purchaser in accordance with applicable Legal
Requirements, the interest rate applicable to this Note and any other Note
Document, together with all Charges payable to Purchaser, shall be limited to
the Legal Rate and any interest or Charges not so limited, taken, received or
reserved by Purchaser at such time shall be spread, prorated or amortized over
the term of the Note Purchase Agreement to the fullest extent permitted by Legal
Requirements.
If any term or provision of this Note or the Note Purchase
Agreement or the application thereof to any circumstance shall, in any
jurisdiction and to any extent, be invalid, illegal or unenforceable, such term
or such provisions shall be ineffective as to such jurisdiction to the extent of
such invalidity, illegality or unenforceability without invalidating or
rendering unenforceable any remaining terms and provisions hereof or thereof or
the application of such term or provision to circumstances other than those as
to which it is held invalid, illegal or unenforceable.
Purchaser shall not by any act, delay, omission or otherwise
be deemed to have waived any of its rights, remedies or privileges hereunder and
no waiver shall be valid unless in writing, signed by Purchaser, and then only
to the extent therein set forth. A waiver by Purchaser of any right, remedy or
privilege hereunder on any one occasion shall not be construed as a bar to any
right, remedy or privilege which Purchaser would otherwise have had on any
future occasion. No failure to exercise nor any delay in exercising on the part
of Purchaser any right, power or privilege hereunder or under the other Note
Documents shall be deemed a waiver of any default or acquiescence therein or
shall preclude any other or further exercise thereof or the exercise of any
other right, power or privilege. All rights and remedies existing hereunder or
under the other Note Documents are cumulative and not exclusive of each other
and any rights or remedies otherwise available.
A-3
<PAGE>
THIS NOTE SHALL IN ALL RESPECTS BE GOVERNED BY, AND BE
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK,
WITHOUT GIVING EFFECT TO THE CONFLICTS-OF-LAWS RULES AND PRINCIPLES THEREOF.
PLANET HOLLYWOOD INTERNATIONAL, INC.
By: ________________________________
Name:
Title:
A-4
<PAGE>
PAYMENTS OF PRINCIPAL
Amount of Principal Amount of Principal
Date Borrowed Repaid Notation Made By
---- ------------------- ------------------- ----------------
<PAGE>
ENDORSEMENT
Pay to the order of __________________________________________________
without recourse.
By:________________________________
Name:
Title:
<PAGE>
SCHEDULE 1.1(A)
ACTIVE GUARANTORS
<PAGE>
SCHEDULE 1.1(B)
FOREIGN ENTITIES
<PAGE>
SCHEDULE 1.1(C)
INACTIVE GUARANTORS
<PAGE>
SCHEDULE 1.1(D)
CREDIT CARD AGREEMENTS
<PAGE>
SCHEDULE 2.1
PURCHASERS' DETAILS
<TABLE>
<CAPTION>
Initial Note
Name Percentage Warrants Address for Notices Counsel's Address
- ---- ---------- -------- ------------------- -----------------
<S> <C> <C> <C> <C>
Bay Harbour 100% 200,000 885 Third Avenue Covington & Burling
Management, L.C. 34th Floor 1330 Avenue of the Americas
New York, New York 10022 New York, New York 10019
Attention: Jeffrey Attention: Andrew Baraff Wertheim
</TABLE>
<PAGE>
SCHEDULE 3.7(a)
SHARES TO BE ISSUED AT CLOSING
- ------------------------------------------------------------------------
NAME AND ADDRESS NUMBER OF SHARES
- ------------------------------------------------------------------------
OTA Limited Partnership 1,400
401 City Avenue
Suite 526
Bala Cynwyd, PA 19004
Contact: David Tattersall
(610) 668-0404
Triage Capital Management L.P. 2,100
401 City Avenue
Suite 526
Bala Cynwyd, PA 19004
Contact: David Tattersall
(610) 668-0404
Dominion Resources Inc. Retirement Plan 21,764
Custodian - State Street Bank
Bay Harbour Management, L.C.
885 3rd Avenue, 34th Floor
New York, NY 10022
Contact: Jeffrey Wertheim
(212) 371-2211
Benjamin & Genevieve Fleming 32
TTEES FBO Benjamin & Genevieve
Fleming Trust U/A/D 03/20/1984
22629 Dekalb Drive
Calabasas, CA 91302
Retail High Yield 32
c/o Paul Zingarini
TFI Retail Trading
390 Greenwich Street
New York, NY 10013-2375
A-1
<PAGE>
Paribas Multi Manager Fund 748
c/o Bay Harbour Management, L.C.
777 South Harbour Island Blvd.
Suite 270
Tampa, FL
Contact: Jeffrey Wertheim
(212) 371-2211
or
885 3rd Avenue, 33rd Floor
New York, NY 10022
Contact: Jeffrey Wertheim
(212) 371-2211
Nader Tavakoli 1,400
Eaglerock Capital
551 Fifth Avenue, 34th Floor
New York, NY 10176
(212) 692-5413
Bennett Offshore Restructuring Fund Inc. 12,075
2 Stamford Plaza
Suite 1501
281 Tresser Blvd.
Stamford, CT 06901-3284
Contact: Steve Landzberg
(203) 353-3101
Bennett Restructuring Fund LP 20,586
2 Stamford Plaza
Suite 1501
281 Tresser Blvd.
Stamford, CT 06901-3284
Contact: Steve Landzberg
(203) 353-3101
Bay Harbour 90-1, Ltd. 91,095
P.O. Box 418
Tampa, FL 33601-0418
Contact: Jeffrey Wertheim
(212) 371-2211
Trophy Hunter Investment Ltd. 53,025
P.O. Box 418
Tampa, FL 33601-0418
Contact: Jeffrey Wertheim
(212) 371-2211
A-2
<PAGE>
Lipstick Ltd. 16,020
P.O. Box 418
Tampa, FL 33601-0418
Contact: Jeffrey Wertheim
(212) 371-2211
Bay Harbour 98-1 LP 4,041
PO Box 418
Tampa, FL 33601-0418
Contact: Jeffrey Wertheim
(212) 371-2211
Bay Harbour Partners 93,943
Charlotte House
Charlotte Street
P.O. Box N 9204
Nassau Bahamas
Contact: Jeffrey Wertheim
(212) 371-2211
Richard L. Van Der Molen 64
532 Fair Oaks
Oak Park, IL 60302-2244
Contact: (708) 524-8072
James A. Petty 32
1211 Belmont Drive
Manchester, TN 37355-2405
Bank of America Securities LLC 2,800
9 West 57th Street
47th Floor
New York, NY 10019
Contact: Jeffrey Peskin
(212) 583-8190
Mark Schlise Trust 48
Anthony L. Schlise Trustee
567 Darby Way
Longwood, Florida 32779-3389
Rita M. Schlise 16
567 Darby Way
Longwood, Florida 32779-3389
F/B/O Barry W. Blank Trust 477
Barry W. Blank Trustee
P.O. Box 32056
Phoenix, Arizona 85064-2056
A-3
<PAGE>
F/B/O Cary N. May 32
Delaware Charter Guaranty & Trust, Trustee
P.O. Box 8963
Wilmington, Delaware 19899-8963
Greyhound Lines, Inc. Amalgamated Council Retirement & 4,534
Disability Trust
Custodian - Union Bank of California
(Ref. # 00277-15)
475 Sansome Street
11th Floor
San Francisco, CA 94111
Contact: Ms. Kwai-Chu Jacoby
(415) 291-7739
Jeffrey Wertheim
(212) 371-2211
FBO Carleton & Barbara Block Family Trust 16
Carleton Block Trustee
19401 Hiawatha Street
Northridge, CA 91326
[unidentified Holder] 16
c/o Prudential Securities Inc.
111 Eighth Avenue
5th Floor - Reorg Dept.
New York, NY 10013-5239
Contact: Genevieve Simms
(212) 747-1710
[unidentified Holder] 0
c/o Prudential Securities Inc.
111 Eighth Avenue
5th Floor - Reorg Dept.
New York, NY 10013-5239
Contact: Genevieve Simms
(212) 747-1710
NON-ELECTING AMOUNT - BAY HARBOUR 23,705
Bay Harbour 90-1, Ltd.
P.O. Box 418
Tampa, FL 33601-0418
Contact: Jeffrey Wertheim
(212) 371-2211
- ------------------------------------------------------------------------
TOTAL 350,000
- ------------------------------------------------------------------------
A-4
<PAGE>
SCHEDULE 4.1(V)
WAIVERS
<PAGE>
SCHEDULE 5.6
SUBSIDIARIES
<PAGE>
SCHEDULE 5.7
LITIGATION
<PAGE>
SCHEDULE 5.10
ERISA
<PAGE>
SCHEDULE 5.13
OPERATING LEASE OBLIGATIONS; EXISTING LIENS; UNPAID RENT
<PAGE>
SCHEDULE 5.14
ENVIRONMENTAL MATTERS
<PAGE>
SCHEDULE 5.16
INSURANCE
<PAGE>
SCHEDULE 5.19
(A) PROPERTIES
(B) LEASES
<PAGE>
SCHEDULE 5.20
LOCATION OF BANK ACCOUNTS
<PAGE>
SCHEDULE 5.23
INVENTORY AND MEMORABILIA
<PAGE>
SCHEDULE 5.25
TRADENAMES
<PAGE>
SCHEDULE 5.32
COLLECTIVE BARGAINING AGREEMENTS
<PAGE>
SCHEDULE 5.36
MEMBERS AND MEMBERSHIP INTEREST
<PAGE>
SCHEDULE 5.38(a)
RESERVED SHARES
<PAGE>
SCHEDULE 5.38(b)
OUTSTANDING WARRANTS, OPTIONS ETC.
<PAGE>
SCHEDULE 5.38(c)
RECORD HOLDERS
<PAGE>
SCHEDULE 5.41
CORPORATE STRUCTURE
<PAGE>
SCHEDULE 5.43
MATERIAL CONTRACTS
<PAGE>
SCHEDULE 7.15
STATE TAX PAYMENTS
<PAGE>
SCHEDULE 7.16
STORE OPENINGS AND CLOSINGS
<PAGE>
SCHEDULE 7.17
PERMITTED MEMORABILIA AND INVENTORY
<PAGE>
SCHEDULE 7.19
LANDLORD, WAREHOUSE AND FRANCHISEE WAIVERS
<PAGE>
SCHEDULE 8.1
LIENS
<PAGE>
SCHEDULE 8.2
PERMITTED INDEBTEDNESS
<PAGE>
SCHEDULE 8.3
GUARANTIES
<PAGE>
SCHEDULE 8.6
INVESTMENTS
<PAGE>
SCHEDULE 8.9
TRANSACTIONS WITH AFFILIATES
