<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
FORM 10-Q
(MARK
ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 29, 1997
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Transition period from to
COMMISSION FILE NUMBER 333-04261
AMERIKING, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE
(STATE OR OTHER JURISDICTION
OF INCORPORATION OR ORGANIZATION)
2215 ENTERPRISE DRIVE, SUITE 1502
WESTCHESTER, ILLINOIS
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
36-3970707
(I.R.S. EMPLOYER
IDENTIFICATION NO.)
60154
(ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE 708-947-2150
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No
The number of shares outstanding of each of the registrant's classes of
common stock as of September 29, 1997 was 902,992 of common stock, $.01 par
value per Share (the "Common Stock").
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<C> <S> <C>
PART I
Item 1. Financial Statements........................................ 2
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of
Operations.................................................. 9
PART II
Item 6. Exhibits, and Reports on Form 8-K........................... 14
</TABLE>
<PAGE>
PART I
Certain statements in this Form 10-Q may constitute "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995. Such forward-looking statements involve known and unknown risks,
uncertainties, and other factors which may cause the actual results,
performance, or achievements of AmeriKing, Inc. ("AmeriKing" or the "Company")
to be materially different from any future results, performance, or
achievements expressed or implied by such forward-looking statements. Such
factors include, among others, the following: general economic and business
conditions; competition; success of operating initiatives; development and
operating costs; advertising and promotional efforts; brand awareness; adverse
publicity; acceptance of new product offerings; availability, locations, and
terms of sites for store development; changes in business strategy or
development plans; quality of management; availability, terms, and deployment
of capital; business abilities and judgment of personnel; availability of
qualified personnel; food, labor, and employee benefit costs; changes in, or
the failure to comply with, governmental regulations; regional weather
conditions; construction schedules; and other factors referenced in this Form
10-Q.
RECENT DEVELOPMENTS
On October 30, 1997, the Company acquired five Burger King restaurants in
the Oshkosh, Wisconsin area (the "Wisconsin Acquisition") which was funded
through the use of the available credit under the Third Amended and Restated
Revolving Credit Agreement and cash on hand. The Wisconsin Acquisition was
accounted for under the purchase method of accounting.
<PAGE>
ITEM 1. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDEX TO THE CONSOLIDATED FINANCIAL STATEMENTS OF AMERIKING, INC. AND
SUBSIDIARY
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Consolidated Balance Sheets as of September 29, 1997 and December 30,
1996..................................................................... 3
Consolidated Statements of Operations for the quarters ended September 29,
1997 and September 30, 1996.............................................. 4
Consolidated Statements of Operations for the three quarters December 31,
1996 to September 29, 1997 and January 2, 1996 to September 30, 1996..... 5
Consolidated Statements of Stockholders' Equity for the three quarters
December 31, 1996 to September 29, 1997 and January 2, 1996 to September
30, 1996................................................................. 6
Consolidated Statements of Cash Flows for the three quarters December 31,
1996 to September 29, 1997 and January 2, 1996 to September 30, 1996..... 7
Notes to Consolidated Financial Statements................................ 8
</TABLE>
2
<PAGE>
AMERIKING, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 29, 1997 AND DECEMBER 30, 1996
<TABLE>
<CAPTION>
SEPTEMBER DECEMBER 30,
29, 1997 1996
------------ ------------
ASSETS
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents......................... $ 7,171,000 $ 5,259,000
Accounts receivable............................... 1,376,000 828,000
Inventories....................................... 1,862,000 1,667,000
Prepaid expenses.................................. 1,763,000 1,338,000
Current portion of deferred income taxes.......... 438,000 438,000
------------ ------------
Total current assets............................ 12,610,000 9,530,000
PROPERTY AND EQUIPMENT.............................. 52,827,000 36,765,000
GOODWILL............................................ 128,525,000 94,324,000
DEFERRED INCOME TAXES............................... 3,426,000 3,426,000
OTHER ASSETS:
Deferred financing costs.......................... 6,899,000 6,577,000
Deferred organization costs....................... 171,000 170,000
Franchise agreements.............................. 5,323,000 4,245,000
------------ ------------
Total other assets.............................. 12,393,000 10,992,000
------------ ------------
TOTAL............................................... $209,781,000 $155,037,000
============ ============
LIABILITIES, SENIOR PREFERRED STOCK
AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and other accrued expenses....... $ 16,543,000 $ 10,333,000
Accrued payroll................................... 2,906,000 3,571,000
Accrued sales tax payable......................... 1,005,000 1,021,000
Accrued interest payable.......................... 3,934,000 911,000
Current portion of long-term debt................. 564,000 525,000
Current portion of capital leases................. 85,000 110,000
------------ ------------
Total current liabilities....................... 25,037,000 16,471,000
LONG-TERM DEBT--Less current portion................ 153,848,000 107,167,000
LONG-TERM DEBT--Related parties..................... 600,000 600,000
OTHER LONG-TERM LIABILITIES......................... 15,000 63,000
------------ ------------
Total liabilities............................... 179,500,000 124,301,000
SENIOR PREFERRED STOCK.............................. 33,344,000 30,303,000
STOCKHOLDERS' EQUITY (DEFICIT):
Preferred stock................................... 75 75
Common stock...................................... 9,030 8,933
Additional paid-in capital........................ 4,148,895 7,277,992
Retained earnings (deficit)....................... (7,221,000) (6,854,000)
------------ ------------
Total stockholders' equity (deficit)............ (3,063,000) 433,000
TOTAL............................................... $209,781,000 $155,037,000
============ ============
</TABLE>
See notes to consolidated financial statements.
3
<PAGE>
AMERIKING, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE QUARTER ENDED SEPTEMBER 29, 1997 AND SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
JULY 1, JULY 2,
1997 TO 1996 TO
SEPTEMBER SEPTEMBER
29, % OF 30, % OF
1997 SALES 1996 SALES
----------- ----- ----------- -----
<S> <C> <C> <C> <C>
SALES
Restaurant food sales.............. $58,314,000 96.9% $51,501,000 96.6%
Non-food sales..................... 1,865,000 3.1 1,826,000 3.4
----------- ----- ----------- -----
Total sales...................... 60,179,000 100.0 53,327,000 100.0
RESTAURANT OPERATING EXPENSES:
Cost of food sales................. 18,263,000 30.4 15,433,000 28.9
Cost of non-food sales............. 1,320,000 2.2 1,705,000 3.2
Restaurant labor and related costs. 15,603,000 25.9 13,097,000 24.6
Occupancy.......................... 6,335,000 10.5 5,555,000 10.4
Depreciation and amortization of
goodwill and franchise agreements. 2,428,000 4.0 1,906,000 3.6
Advertising........................ 3,200,000 5.3 2,543,000 4.8
Royalties.......................... 2,046,000 3.4 1,810,000 3.4
Other operating expenses........... 5,644,000 9.4 4,680,000 8.8
----------- ----- ----------- -----
Total restaurant operating
expenses........................ 54,839,000 91.1 46,729,000 87.7
GENERAL AND ADMINISTRATIVE EXPENSES.. 2,385,000 4.0 1,545,000 2.9
OTHER OPERATING EXPENSES:
Depreciation expense-office........ 138,000 0.2 116,000 0.2
Loss on disposal of fixed assets... 495,000 0.8
Management and directors' fees..... 163,000 0.3 162,000 0.3
----------- ----- ----------- -----
Total other operating expenses... 796,000 1.3 278,000 0.5
----------- ----- ----------- -----
OPERATING INCOME..................... 2,159,000 3.6 4,775,000 8.9
OTHER INCOME (EXPENSE):
Interest expense................... (3,285,000) (5.5) (2,145,000) (4.0)
Interest expense-related party..... (9,000) (975,000) (1.8)
Amortization of deferred costs..... (147,000) (0.2) (257,000) (0.5)
Other income (expense)-net ........ (29,000) (0.1) (3,139,000) (5.9)
----------- ----- ----------- -----
Total other expense.............. (3,470,000) (5.8) (6,516,000) (12.2)
----------- ----- ----------- -----
LOSS BEFORE INCOME TAX BENEFIT....... (1,311,000) (2.2) (1,741,000) (3.3)
INCOME TAX BENEFIT................... (525,000) (0.9) (703,000) (1.3)
----------- ----- ----------- -----
NET LOSS............................. $ (786,000) (1.3)% $(1,038,000) (2.0)%
=========== ===== =========== =====
PREFERRED STOCK DIVIDENDS............ $ 1,223,000 $ 113,000
WEIGHTED AVERAGE NUMBER OF SHARES
OUTSTANDING......................... 902,992 863,290
NET LOSS PER COMMON SHARE............ $ (2.22) $ (1.33)
</TABLE>
See notes to consolidated financial statements.
4
<PAGE>
AMERIKING, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE QUARTERS ENDED SEPTEMBER 29, 1997 AND SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
DECEMBER 31, JANUARY 2,
1996 TO 1996 TO
SEPTEMBER % OF SEPTEMBER % OF
29, 1997 SALES 30, 1996 SALES
------------ ----- ------------ -----
<S> <C> <C> <C> <C>
SALES
Restaurant food sales............ $158,948,000 96.9% $146,151,000 97.5%
Non-food sales................... 5,019,000 3.1 3,822,000 2.5
------------ ----- ------------ -----
Total sales.................... 163,967,000 100.0 149,973,000 100.0
RESTAURANT OPERATING EXPENSES:
Cost of food sales............... 48,834,000 29.8 44,883,000 30.0
Cost of non-food sales........... 4,290,000 2.6 3,593,000 2.4
Restaurant labor and related
costs........................... 41,921,000 25.5 37,406,000 24.9
Occupancy........................ 17,760,000 10.8 15,938,000 10.7
Depreciation and amortization of
goodwill and franchise
agreements...................... 6,505,000 4.0 5,431,000 3.6
Advertising...................... 8,599,000 5.3 7,219,000 4.8
Royalties........................ 5,571,000 3.4 5,126,000 3.4
Provision for disposition of
equipment....................... 650,000 0.4
Other operating expenses......... 14,662,000 8.9 12,767,000 8.5
------------ ----- ------------ -----
Total restaurant operating
expenses...................... 148,792,000 90.7 132,363,000 88.3
GENERAL AND ADMINISTRATIVE
EXPENSES.......................... 6,533,000 4.0 5,108,000 3.4
OTHER OPERATING EXPENSES (INCOME):
Depreciation expense--office..... 415,000 0.3 322,000 0.2
Gain on sale of restaurants...... (1,866,000) (1.1)
Loss on disposal of fixed assets. 566,000 0.3
Management and directors' fees... 478,000 0.3 477,000 0.3
------------ ----- ------------ -----
Total other operating expenses
(income)...................... (407,000) (0.2) 799,000 0.5
------------ ----- ------------ -----
OPERATING INCOME................... 9,049,000 5.5 11,703,000 7.8
OTHER INCOME (EXPENSE):
Interest expense................. (9,196,000) (5.6) (6,148,000) (4.1)
Interest expense--related party.. (27,000) (2,732,000) (1.8)
Amortization of deferred costs... (451,000) (0.3) (736,000) (0.5)
Other income (expense)--net...... 13,000 (3,151,000) (2.1)
------------ ----- ------------ -----
Total other expense............ (9,661,000) (5.9) (12,767,000) (8.5)
------------ ----- ------------ -----
LOSS BEFORE INCOME TAX BENEFIT..... (612,000) (0.4) (1,064,000) (0.7)
INCOME TAXES BENEFIT............... (245,000) (0.2) (426,000) (0.3)
------------ ----- ------------ -----
NET LOSS........................... $ (367,000) (0.2)% $ (638,000) (0.4)%
============ ===== ============ =====
PREFERRED STOCK DIVIDENDS.......... $ 3,468,000 $ 338,000
WEIGHTED AVERAGE NUMBER OF SHARES
OUTSTANDING....................... 899,220 863,290
NET LOSS PER COMMON SHARE.......... $ (4.26) $ (1.13)
</TABLE>
See notes to consolidated financial statements.
5
<PAGE>
AMERIKING, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE THREE QUARTERS ENDED SEPTEMBER 29, 1997 AND THE FISCAL YEARS ENDED
DECEMBER 30, 1996 AND JANUARY 1, 1996
<TABLE>
<CAPTION>
ADDITIONAL RETAINED
PREFERRED COMMON PAID-IN EARNINGS
STOCK STOCK CAPITAL (DEFICIT) TOTAL
--------- ------ ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
INITIAL ISSUANCE OF
STOCK.................. $56 $ 10 $ 5,699,934 $ 5,700,000
Issuance of preferred
stock................ 19 1,899,981 1,900,000
Net income............ $ 241,000 241,000
--- ------ ----------- ----------- -----------
BALANCE--December 31,
1994................... 75 10 7,599,915 241,000 7,841,000
Net income............ 902,000 902,000
--- ------ ----------- ----------- -----------
BALANCE--January 1,
1996................... 75 10 7,599,915 1,143,000 8,743,000
Dividends on senior
preferred stock...... (303,000) (303,000)
Amortization of senior
preferred stock
issuance costs....... (10,000) (10,000)
Recapitalization of
common stock......... 8,923 (8,923)
Net loss.............. (7,997,000) (7,997,000)
--- ------ ----------- ----------- -----------
BALANCE--December 30,
1996................... 75 8,933 7,277,992 (6,854,000) 433,000
Dividends on senior
preferred stock...... (3,041,000) (3,041,000)
Amortization of senior
preferred stock
issuance costs....... (89,000) (89,000)
Exercise of stock
options.............. 97 903 1,000
Net income............ (367,000) (367,000)
--- ------ ----------- ----------- -----------
BALANCE--September 29,
1997................... $75 $9,030 $ 4,148,895 $(7,221,000) $(3,063,000)
=== ====== =========== =========== ===========
</TABLE>
See notes to consolidated financial statements.
6
<PAGE>
AMERIKING, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE QUARTERS ENDED SEPTEMBER 29, 1997 AND SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
DECEMBER 31, JANUARY 2,
1996 1996
SEPTEMBER SEPTEMBER
29, 30,
1997 1996
------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss .......................................... $ (367,000) $ (638,000)
Adjustments to reconcile net loss to net cash
flows
from operating activities:
Depreciation and amortization.................... 7,371,000 6,489,000
Provision for disposition of equipment........... 650,000
Gain on sale of restaurants...................... (1,866,000)
Loss on disposal of fixed assets................. 566,000
Changes in:
Accounts receivable............................ (548,000) 453,000
Inventories.................................... (195,000) (765,000)
Prepaid expenses............................... (425,000) (238,000)
Accounts payable and accrued expenses.......... 8,552,000 5,630,000
------------ ------------
Net cash flows from operating activities..... 13,738,000 10,931,000
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of restaurant franchise agreements,
equipment and goodwill.......................... (55,161,000) (39,415,000)
Cash paid for franchise agreements............... (286,000) (300,000)
Cash paid for property and equipments............ (10,369,000) (4,725,000)
Proceeds from sale of restaurants................ 8,158,000 817,000
------------ ------------
Net cash flows from investing activities..... (57,658,000) (43,623,000)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term debt..................... 49,108,000 91,900,000
Proceeds from subordinated debt-related party.... 15,000,000
Proceeds from exercise of common stock options... 1,000
Cash paid for financing costs.................... (816,000) (2,743,000)
Advances under line of credit.................... 5,000,000
Payments on line of credit....................... (2,500,000)
Payments on long-term debt....................... (2,388,000) (73,070,000)
Payments on capital leases....................... (73,000) (77,000)
------------ ------------
Net cash flows from financing activities..... 45,832,000 33,510,000
------------ ------------
NET CHANGE IN CASH AND CASH EQUIVALENTS............ 1,912,000 818,000
CASH AND CASH EQUIVALENTS--Beginning of period..... 5,259,000 1,887,000
------------ ------------
CASH AND CASH EQUIVALENTS--End of period........... $ 7,171,000 $ 2,705,000
============ ============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for interest......... $ 6,200,000 $ 7,749,000
============ ============
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND
FINANCING ACTIVITIES:
Preferred stock dividends.......................... $ 3,468,000 $ 338,000
============ ============
</TABLE>
See notes to consolidated financial statements.
7
<PAGE>
AMERIKING, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
In the opinion of the Company, the accompanying unaudited consolidated
financial statements contain all of the adjustments necessary (consisting of
normal and recurring accruals) to present fairly the Company's financial
position as of September 29, 1997 and December 30, 1996, the results of
operations for the quarter and three quarters ended September 29, 1997 and
September 30, 1996 and cash flows for three quarters ended September 29, 1997
and September 30, 1996. These financial statements should be read in
conjunction with the Company's annual report on Form 10-K for the fiscal year
ended December 30, 1996 filed on March 28, 1997.
The results of operations for the quarter and three quarters ended September
29, 1997 and September 30, 1996 are not necessarily indicative of the results
to be expected for the full fiscal year.
Inventories--Inventories consist primarily of restaurant food and supplies
and are stated at the lower of cost or market. Cost is determined using the
first-in, first-out (FIFO) method.
Net Income (Loss) Per Common Share--Net income per share was computed by
deducting from the Company's net income dividends payable to the holders of
Class A1, Class A2 and Class B Preferred Stock (collectively, the "Preferred
Stock") and 13% Senior Exchangeable Preferred Stock due 2008, (the "Senior
Preferred Stock"), and amortization of the issuance costs on the Senior
Preferred Stock and using the weighted average number of common stock of the
Company (the "Common Stock"), and common stock equivalent shares outstanding
on a post-split basis.
2. LONG-TERM DEBT
On September 23, 1997, First National Bank of Boston ("FNBB") and the other
lenders thereto committed to increase the borrowing capacity of the Revolver
from $50 million to $75 million as permitted under the Third Amended and
Restated Revolving Credit Agreement. The Third Amended and Restated Revolving
Credit Agreement calls for no principal amortization and matures in June 2002.
On September 23, 1997, $25.8 million was borrowed against the Revolver to
finance the acquisition of 30 restaurants in the Charlotte, North Carolina
area (the "Charlotte Acquisition").
3. ACQUISITIONS
On June 16, 1997, the Company successfully completed the acquisition of 26
restaurants in the Fayetteville and Raleigh/Durham areas (the "North Carolina
Acquisition") from a franchisee for an aggregate purchase price of
approximately $26.6 million.
On August 23, 1997, the Company successfully completed the acquisition of 2
restaurants in the Chicago area (the "Illinois Acquisition") from a franchisee
for an aggregate purchase price of approximately $0.7 million.
On September 22, 1997, the Company successfully completed the Charlotte
Acquisition from a franchisee for an aggregate purchase price of approximately
$27.7 million.
The acquisitions have been accounted for under the purchase method of
accounting and, accordingly, the operating results of each acquired franchisee
have been included in the consolidated statement of operations since the dates
of acquisition.
Pro Forma Operating Results (Unaudited)--The following are the pro forma
operating results for the quarter and the three quarters ended September 29,
1997 and September 30, 1996 as if all of the 1997
8
<PAGE>
acquisitions by the Company had occurred on January 2, 1996. The pro forma
results give effect to changes in depreciation and amortization resulting from
valuing property and franchise agreements at their estimated fair value and
recording the excess of purchase price over the net assets acquired (000's
omitted):
<TABLE>
<CAPTION>
THREE QUARTERS QUARTER
--------------------------- ---------------------------
DECEMBER 31, JANUARY 2, JULY 1, JULY 2,
1996 TO 1996 TO 1997 TO 1996 TO
SEPTEMBER 29, SEPTEMBER 30, SEPTEMBER 29, SEPTEMBER 30,
1997 1996 1997 1996
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Total Sales............. $201,888 $200,489 $67,512 $69,149
Operating Income........ $ 10,601 $ 15,217 $ 2,341 $ 5,930
</TABLE>
The pro forma results of operations are not necessarily indicative of the
actual operating results that would have occurred had the acquisitions been
consummated at the beginning of the respective periods.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
OVERVIEW
The Company operates Burger King restaurants through its wholly owned
subsidiaries, each of which is a party to a BKC franchise agreement. BKC
franchise agreements require a one-time franchise fee (currently $40,000), a
monthly royalty fee of 3.5% of each restaurant's gross sales and a monthly
advertising contribution of 4.0% of gross sales. Most franchise agreements
provide for a term of 20 years, and, at the option of the franchisee and BKC, a
renewal franchise agreement may be granted by BKC upon payment of the then
current franchise fee provided that the restaurant meets BKC's operating
standards applicable at that time and the franchisee is not in default under
the relevant franchise agreement. In addition, the Company has reached a
separate agreement with BKC in which the Company has committed to spend 1% of
gross sales on local advertising to supplement BKC's national advertising
activities.
As the Company acquires additional Burger King restaurants, it capitalizes
the value of franchise agreements based on the number of years remaining on the
terms of the agreement and the franchise fee in effect at the time of
acquisition (currently, $40,000 over a 20 year term or $2,000 per year) and it
capitalizes excess cost over fair value of the other net assets acquired and
amortizes goodwill expense for financial statement purposes over a 35-year
period. The Company generally purchases assets and is able to deduct goodwill
amortization expense for tax purposes over a 15-year period.
Restaurant sales include food sales and merchandise sales. Merchandise sales
include convenience store sales at the Company's dual-use facilities (of which
the Company currently has ten), as well as sales of promotional products at the
Company's restaurants. Historically, merchandise sales have contributed less
than 3.0% to restaurant sales. Promotional products, which account for the
majority of merchandise sales, are generally sold at or near the Company's
costs.
EBITDA represents operating income plus depreciation and amortization
(including losses on disposal of fixed assets, gains on sale of restaurants,
and provisions for disposition of restaurants and equipment) and management and
director's fees. While EBITDA should not be construed as a substitute for
operating income or a better indicator of liquidity than cash flow from
operating activities, which are determined in accordance with generally
accepted accounting principles, EBITDA is included to provide additional
information with respect to the ability of the Company to meet its future debt
service, capital expenditure and working capital requirements. In addition,
management believes that certain investors find EBITDA to be a useful tool for
measuring the ability of the Company to service its debt. EBITDA is not
necessarily a measure of the Company's ability to fund its cash needs. See the
Consolidated Statements of Cash Flows of the Company and the related notes to
the Consolidated Financial Statements included herein.
The Company includes in the comparable restaurant sales analysis discussed
below only those restaurants that have been in operation for a minimum of
thirteen months. For a restaurant not operating for the entire prior annual
period, the sales for the interim period in the prior year are compared to that
for the comparable interim period in the indicated year.
9
<PAGE>
QUARTER ENDED SEPTEMBER 29, 1997 COMPARED TO QUARTER ENDED SEPTEMBER 30, 1996
Restaurant Sales. Total sales increased $6.9 million or 12.8% during the
quarter ended September 29, 1997, to $60.2 million from $53.3 million during
the quarter ended September 30, 1996, due primarily to the inclusion of the 58
restaurants purchased in 1997. In addition, the Company developed 8
restaurants, sold 10 restaurants, and closed 3 restaurants in 1997. Newly
acquired restaurants accounted for $8.6 million of the total increase in
restaurant sales, while new restaurant development accounted for $2.6 million
of the increase in sales. Total sales were reduced by $3.3 million during the
quarter due to the restaurants that were sold/closed in 1997. Sales at the
comparable restaurants, including only those restaurants owned by the Company
at September 30, 1996, decreased $1.0 million or (2.1%) for the quarter ended
September 29, 1997. Burger King domestic system sales were significantly
impacted by the beef recall at Hudson Beef and the extensive media coverage of
the tainted beef at one of Hudson Beef's processing plants. The Company
experienced negative comparable sales of 15.2% for the two weeks ended
September 1, 1997 which was consistent with results across the country.
Restaurant Operating Expenses. Total restaurant operating expenses increased
$8.1 million, or 17.4% during the quarter ended September 29, 1997, to $54.8
million from $46.7 million during the quarter ended September 30, 1996. As a
percentage of sales, restaurant operating expenses increased 3.4%, to 91.1%
during the quarter ended September 29, 1997 from 87.7% during the quarter
ended September 30, 1996.
Cost of food sales increased $2.8 million during the quarter ended September
29, 1997, and increased 1.5% as a percentage of sales to 30.4% during the
quarter ended September 29, 1997 from 28.9% during the quarter ended September
30, 1996. The percentage increase in cost of food sales was due to heavily
promoted discounting. Burger King Corporation extended the promotion of the
new Big King sandwich at 99 cents to restore traffic counts after the Hudson
Beef recall.
Cost of non-food sales decreased $0.4 million during the quarter ended
September 29, 1997, and decreased 1.0% as a percentage of sales to 2.2% during
the quarter ended September 29, 1997 from 3.2% during the quarter ended
September 30, 1996. The percentage decrease in cost of non-food sales is due
to an increase in convenience store sales with higher margins and a decrease
in the sale of Burger King promotional products. The North Carolina
Acquisition included 5 convenience stores.
Restaurant labor and related expenses increased $2.5 million during the
quarter ended September 29, 1997, and increased 1.3% as a percentage of
restaurant sales to 25.9% during the quarter ended September 29, 1997 from
24.6% during the quarter ended September 30, 1996. The increase in restaurant
labor and related expenses was primarily due to an increase in the federal
minimum wage and fixed salaries against a lower same-store sales base.
Depreciation and amortization increased $0.5 million during the quarter
ended September 29, 1997, to $2.4 million during the quarter ended September
29, 1997 from $1.9 million during the quarter ended September 30, 1996. As a
percentage of sales, depreciation and amortization expense increased 0.4% to
4.0% during the quarter ended September 29, 1997 from 3.6% during the quarter
ended September 30, 1996. The increase was due primarily to the increase in
goodwill amortization resulting from the purchase method of accounting for the
newly acquired restaurants.
Occupancy expense increased $0.8 million, and increased 0.1% as a percentage
of sales to 10.5% during the quarter ended September 29, 1997 from 10.4%
during the quarter ended September 30, 1996. The increase in occupancy expense
is due to the inclusion of newly acquired and developed restaurants which was
partially offset by the savings associated with the restaurants that the
Company sold or closed in 1997.
Other operating expenses including advertising and royalties increased $1.9
million during the quarter ended September 29, 1997 and increased 1.1% as a
percentage of sales to 18.1% during the quarter ended September 29, 1997 from
17.0% during the quarter ended September 30, 1996. This increase is primarily
due to a 0.5% increase in local advertising pursuant to the BKC Agreement and
amortization of start-up costs related to new restaurant development.
10
<PAGE>
General and Administrative Expenses. General and administrative expenses
increased $0.8 million during the quarter ended September 29, 1997 and
increased 1.1% as a percent of sales to 4.0% during the quarter ended September
29, 1997 from 2.9% during the quarter ended September 30, 1996. The increase in
general and administrative expenses is due to staff increases and related costs
associated with the newly acquired and developed restaurants.
EBITDA. Earnings before interest, taxes, depreciation, and amortization
decreased $1.4 million or 20.6% to $5.6 million for the quarter ended September
29, 1997 from $7.0 million for the quarter ended September 30, 1996. As a
percentage of restaurant sales, EBITDA decreased 3.9%, to 9.2% for the quarter
ended September 29, 1997 from 13.1% for the quarter ended September 30, 1996.
Operating Income. Operating income decreased $2.6 million or 54.8% to $2.2
million during the quarter ended September 29, 1997 from $4.8 million during
the quarter ended September 30, 1996. As a percentage of sales, operating
income decreased 5.3%, to 3.6% during the quarter ended September 29, 1997 from
8.9% during the quarter ended September 30, 1996. This decrease is a primarily
a result of an increase in restaurant operating expenses.
THREE QUARTERS ENDED SEPTEMBER 29, 1997 COMPARED TO THREE QUARTERS ENDED
SEPTEMBER 30, 1996
Restaurant Sales. Total sales increased $14.0 million or 9.3% during the
three quarters ended September 29, 1997, to $164.0 million from $150.0 million
during the three quarters ended September 30, 1996, due primarily to the
inclusion of the 58 restaurants purchased in 1997. In addition, the Company
developed 8 restaurants, sold 10 restaurants, and closed 3 restaurants in 1997.
Newly acquired restaurants accounted for $13.6 million of the total increase in
restaurant sales, while new restaurant development accounted for $6.9 million
of the increase in sales. Total sales were reduced by $5.9 million due to the
restaurants sold/closed during 1997. Sales at the comparable restaurants,
including only those restaurants owned by the Company at September 30, 1996,
decreased $0.6 million or (0.4%) for the three quarters ended September 29,
1997. Burger King domestic system sales were significantly impacted by the beef
recall at Hudson Beef and the extensive media coverage of the tainted beef at
one of Hudson Beef's processing plants. The Company experienced negative
comparable sales of 15.2% for the two weeks ended September 1, 1997 which was
consistent with results across the country.
Restaurant Operating Expenses. Total restaurant operating expenses increased
$16.4 million, or 12.4% during the three quarters ended September 29, 1997, to
$148.8 million from $132.4 million during the three quarters ended September
30, 1996, due primarily to the inclusion of the 58 restaurants purchased in
1997. In addition, the company developed 8 restaurants, sold 10 restaurants and
closed 3 restaurants in 1997. As a percentage of sales, restaurant operating
expenses increased 2.4% to 90.7% during the three quarters ended September 29,
1997 from 88.3% during the three quarters ended September 30, 1996.
Cost of food sales increased $4.0 million during the three quarters ended
September 29, 1997, but decreased 0.2% as a percentage of sales to 29.8% during
the three quarters ended September 29, 1997 from 30.0% during the three
quarters ended September 30, 1996. The decrease in cost of food sales is
primarily the result of improved cost controls at the restaurant level which
was partially offset by discounting in the most recent quarter.
Cost of non-food sales increased $0.7 million during the three quarters ended
September 29, 1997, and increased 0.2% as a percentage of sales to 2.6% during
the three quarters ended September 29, 1997 from 2.4% during the three quarters
ended September 30, 1996. The percentage increase in cost of non-food sales is
due to an increase in the sale of Burger King promotional products with low
profit margins.
Restaurant labor and related expenses increased $4.5 million during the three
quarters ended September 29, 1997, and increased 0.6% as a percentage of
restaurant sales to 25.5% during the three quarters ended September 30, 1997
from 24.9% during the three quarters ended September 30, 1996. The increase in
restaurant labor and related expenses was primarily due to an increase in the
federal minimum wage and fixed salaries against a lower same-store sales base.
11
<PAGE>
Depreciation and amortization increased $1.1 million during the three
quarters ended September 29, 1997, to $6.5 million during the three quarters
ended September 29, 1997 from $5.4 million during the three quarters ended
September 30, 1996. As a percentage of sales, depreciation and amortization
expense increased 0.4% to 4.0% during the three quarters ended September 29,
1997 from 3.6% during the three quarters ended September 30, 1996. The increase
was due primarily to the increase in goodwill amortization resulting from the
purchase method of accounting for the newly acquired restaurants.
Occupancy expense increased $1.8 million during the three quarters ended
September 29, 1997, and increased 0.1% as a percentage of sales to 10.8% during
the three quarters ended September 29, 1997 from 10.7% during the three
quarters ended September 30, 1996. The increase in occupancy expense is due to
the inclusion of newly acquired and developed restaurants which was partially
offset by the savings associated with the restaurants that the Company sold or
closed in 1997.
Other operating expenses including advertising and royalties increased $4.4
million during the three quarters ended September 29, 1997 and increased 1.3%
as a percentage of sales to 18.0% during the three quarters ended September 29,
1997 from 16.7% during the three quarters ended September 30, 1996. This
increase is primarily the result of a 0.5% increase in local advertising
pursuant to the BKC Agreement, the provision for disposition of equipment of
$0.7 million, and amortization of start-up costs related to new restaurant
development.
General and Administrative Expenses. General and administrative expenses
increased $1.4 million during the three quarters ended September 29, 1997 and
increased 0.6% as a percent of sales to 4.0% during the three quarters ended
September 29, 1997 from 3.4% during the three quarters ended September 30,
1996. The increase in general and administrative expenses is due to staff
increases and related costs associated with the newly acquired and developed
restaurants.
EBITDA. Earnings before interest, taxes, depreciation, and amortization
decreased $1.8 million or 10.1% to $16.2 million for the three quarters ended
September 29, 1997 from $18.0 million for the three quarters ended September
30, 1996. As a percentage of restaurant sales, EBITDA decreased 2.1%, to 9.9%
for the three quarters ended September 29, 1997 from 12.0% for the three
quarters ended September 30, 1996.
Operating Income. Operating income decreased $2.7 million or 22.7% to $9.0
million during the three quarters ended September 29, 1997 from $11.7 million
during the three quarters ended September 30, 1996. As a percentage of sales,
operating income decreased 2.3%, to 5.5% during the three quarters ended
September 29, 1997 from 7.8% during the three quarters ended September 30,
1996. This decrease is a primarily a result of an increase in restaurant
operating expenses which was partially offset by the gain of $1.9 million
realized upon the sale of the 10 stores.
LIQUIDITY AND CAPITAL RESOURCES
Net cash flows from operating activities increased $2.8 million during the
three quarters ended September 29, 1997, to $13.7 million, from $10.9 million
during the three quarters ended September 30, 1996. The increase is primarily
due to an increase in accounts payable and other accrued expenses associated
with newly acquired restaurants.
Capital spending for the three quarters ended September 29, 1997 was $65.8
million which included $55.2 million for the acquisition of 58 restaurants in
North Carolina and Illinois. In addition, the Company developed 8 new
restaurants in the three quarters ended September 29, 1997. On April 21, 1997,
the Company sold 10 restaurants resulting in cash proceeds of the $8.2 million.
As discussed in Note 2, on September 23, 1997, the Company increased the
borrowing capacity under its revolving credit facility from $50 million to $75
million. During the three quarters ended September 29, 1997, borrowings of
$49.1 million were drawn on the revolving credit facility to the fund the
acquisitions of 58 restaurants in North Carolina and Illinois and for working
capital purposes. During the third quarter ended September 29, 1997, $2.0
million was repaid on the revolving credit facility.
12
<PAGE>
The Company has budgeted approximately $375,000 for the development of each
of its new restaurants. The Company anticipates it will spend approximately an
additional $3.0 to $5.0 million annually for other capital expenditures. In
connection with certain of its previous acquisitions of Burger King
restaurants, the Company committed to expend up to $2.3 million by September 1,
1997 to upgrade the initial 68 Burger King restaurants it acquired. The Company
has met this commitment. In addition, the Company had committed to BKC that it
would make capital expenditures at its AmeriKing Tennessee Corporation I
restaurants of approximately $1.5 million on or before November 21, 1997. The
Company has also met this commitment. The Company has further committed to BKC
that for the foreseeable future (i) it will make capital expenditures on its
existing restaurants equal to 1% of its gross sales and (ii) it will spend an
amount equal to 1% of its gross sales on local advertising. The Company has
also committed to BKC that it will develop 17 restaurants in fiscal 1997. In
the event the Company fails to develop at least 14 restaurants in fiscal 1997,
the Company will pay BKC $150,000. In addition to the extent the Company
develops 13 or fewer restaurants in fiscal 1997, the Company will be obligated
to pay BKC $75,000 for each restaurant less than 14 it fails to develop. The
actual amount of the Company's cash requirements for capital expenditures
depends on, among other things, the number of new restaurants opened or
acquired and the costs associated with such restaurants and the number of
franchises subject to renewal and the costs associated with bringing the
related restaurants up to BKC's then current design specifications in
connection with these franchise renewals.
The Company is structured as a holding company with no independent
operations, as the Company's operations are conducted exclusively through its
wholly owned subsidiaries. The Company's only significant assets are the
capital stock of its subsidiaries. As a holding company, the Company's cash
flow, its ability to meet its debt service requirements and its ability to pay
cash dividends on the Senior Preferred Stock are dependent upon the earnings of
its subsidiaries and their ability to declare dividends or make other
intercompany transfers to the Company. Under the terms of the indenture
pursuant to which the Senior Notes were offered (the "Indenture"), the
Company's subsidiaries may incur certain indebtedness pursuant to agreements
that may restrict the ability of such subsidiaries to make such dividends or
other intercompany transfers necessary to service the Company's obligations,
including its obligations under the Senior Notes, the Senior Preferred Stock
and any 13% Subordinated Exchange Debentures due 2008 (the "Exchange
Debentures") the Company may exchange pursuant to the Indenture. The Indenture
restricts, among other things, the Company's and its Restricted Subsidiaries'
(as defined in the Indenture) ability to pay dividends or make certain other
restricted payments, including the payment of cash dividends on or the
redemption of the Senior Preferred Stock, to incur additional indebtedness, to
encumber or sell assets, to enter into transactions with affiliates, to enter
into certain guarantees of indebtedness, to make restricted investments, to
merge or consolidate with any other entity and to transfer or lease all or
substantially all of their assets. In addition, (i) the Company's Third Amended
and Restated Credit Agreement (as defined) with the First National Bank of
Boston and other lenders thereto contains other and more restrictive covenants
and prohibits the Company's subsidiaries from declaring dividends or making
other intercompany transfers to the Company in certain circumstances and (ii)
agreements reached with BKC contain restrictions with respect to dividend
payments and intercompany loans.
The Company believes that available cash on hand together with its available
credit of $27.9 million under its Third Amended and Restated Credit Agreement,
will be sufficient to cover its working capital, capital expenditures, planned
development and debt service requirements for the remainder of fiscal 1997 and
fiscal 1998. The Company expects that additional financing will be required in
connection with any significant acquisitions in the future.
13
<PAGE>
PART II
ITEM 6. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
EXHIBITS
The following exhibits are filed as part of this report.
<TABLE>
<C> <S>
10.40 EMPLOYMENT AND NON-INTERFERENCE AGREEMENT, DATED MAY 1, 1997, BETWEEN
AUGUSTUS F. HOTHORN AND NATIONAL RESTAURANT ENTERPRISES, INC.
11 STATEMENT RE: COMPUTATION OF EARNINGS PER SHARE
12 STATEMENT RE: COMPUTATION OF RATIOS
27 FINANCIAL DATA SCHEDULE
</TABLE>
A list of exhibits included as part of this Form 10-Q or incorporated by
reference is set forth in the Index to Exhibits. Included in the Index to
Exhibits are the following exhibits which constitute management contracts or
compensatory plans or arrangements.
1. TJC Consulting Agreement
2. Jaro Employment Agreement
3. Osborn Employment Agreement
4. Hubert Employment Agreement
5. Aaseby Employment Agreement
6. Vasatka Employment Agreement
7. New Osborn Employment Agreement
8. Hothorn Employment Agreement
REPORTS ON FORM 8-K
1. On September 30, 1997, the Company filed a Current Report on Form 8-K,
announcing under Item 2 the consummation of the purchase of 30 restaurants in
the Charlotte, North Carolina area.
14
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THE
REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF WESTCHESTER, STATE OF
ILLINOIS.
Ameriking, Inc.
- -------------------------------------
-------------------------------------
Date Lawrence E. Jaro
Managing Owner, Chairman and Chief
Executive Officer
- -------------------------------------
-------------------------------------
Date Joel Aaseby
Chief Financial Officer and
Corporate Secretary (Principal
Financial and Accounting Officer)
15
<PAGE>
INDEX TO EXHIBITS
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<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
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1.1 FORM OF UNDERWRITING AGREEMENT FOR NOTES OFFERING...... *
1.2 FORM OF UNDERWRITING AGREEMENT FOR UNITS OFFERING...... *
2.1++ PURCHASE AND SALE AGREEMENT, DATED SEPTEMBER 1, 1994,
BETWEEN BURGER KING CORPORATION ("BKC") AND NATIONAL
RESTAURANT ENTERPRISES, INC. ("ENTERPRISES") (Filed as
exhibit 2.1 to AmeriKing's Registration Statement (No.
333-04261) and incorporated herein by reference)....... *
2.2++ PURCHASE AND SALE AGREEMENT, DATED SEPTEMBER 1, 1994,
BETWEEN JARO ENTERPRISES, INC. AND AMERIKING, INC.
(FORMERLY KNOWN AS NRE HOLDINGS, INC.) ("AMERIKING")
(Filed as exhibit 2.2 to AmeriKing's Registration
Statement (No. 333-04261) and incorporated herein by
reference)............................................. *
2.3++ PURCHASE AND SALE AGREEMENT, DATED SEPTEMBER 1, 1994,
BETWEEN JARO RESTAURANTS, INC. AND AMERIKING (Filed as
exhibit 2.3 to AmeriKing's Registration Statement (No.
333-04261) and incorporated herein by reference)....... *
2.4++ PURCHASE AND SALE AGREEMENT, DATED SEPTEMBER 1, 1994,
BETWEEN TABOR RESTAURANTS ASSOCIATES, INC. AND
AMERIKING (Filed as exhibit 2.4 to AmeriKing's
Registration Statement (No. 333-04261) and incorporated
herein by reference)................................... *
2.5++ PURCHASE AND SALE AGREEMENT, DATED SEPTEMBER, 1, 1994,
BETWEEN JB RESTAURANTS, INC. AND AMERIKING (Filed as
exhibit 2.5 to AmeriKing's Registration Statement (No.
333-04261) and incorporated herein by reference)....... *
2.6++ PURCHASE AND SALE AGREEMENT, DATED SEPTEMBER 1, 1994,
BETWEEN CASTLEKING, INC. AND AMERIKING (Filed as
exhibit 2.6 to AmeriKing's Registration Statement (No.
333-04261) and incorporated herein by reference)....... *
2.7++ PURCHASE AND SALE AGREEMENT, DATED SEPTEMBER 1, 1994,
BETWEEN OSBURGER, INC. AND AMERIKING (Filed as exhibit
2.7 to AmeriKing's Registration Statement (No. 333-
04261) and incorporated herein by reference)........... *
2.8++ PURCHASE AND SALE AGREEMENT, DATED SEPTEMBER 1, 1994,
BETWEEN WHITE-OSBORN RESTAURANTS, INC. AND AMERIKING
(Filed as exhibit 2.8 to AmeriKing's Registration
Statement (No. 333-04261) and incorporated herein by
reference)............................................. *
2.9++ PURCHASE AND SALE AGREEMENT, DATED NOVEMBER 30, 1994,
BY AND AMONG SHELDON T. FRIEDMAN, BNB LAND VENTURE,
INC. AND ENTERPRISES (Filed as exhibit 2.9 to
AmeriKing's Registration Statement (No. 333-04261) and
incorporated herein by reference)...................... *
2.10++ ASSET PURCHASE AGREEMENT, DATED JULY 5, 1995, BY AND
AMONG DMW, INC., DANIEL L. WHITE AND AMERIKING COLORADO
CORPORATION I (Filed as exhibit 2.10 to AmeriKing's
Registration Statement (No. 333-04261) and incorporated
herein by reference)................................... *
2.11++ ASSET PURCHASE AGREEMENT, DATED JULY 5, 1995, BY AND
AMONG WSG, INC., DANIEL L. WHITE, SUSAN J. WAKEMAN,
GEORGE ALAIZ, JR. AND AMERIKING COLORADO CORPORATION I
(Filed as exhibit 2.11 to AmeriKing's Registration
Statement (No. 333-04261) and incorporated herein by
reference)............................................. *
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
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<C> <S> <C>
2.12++ PURCHASE AGREEMENT, DATED NOVEMBER 21, 1995, BY AND
AMONG QSC, INC., THE SHAREHOLDERS OF QSC, INC. AND
AMERIKING TENNESSEE CORPORATION I (Filed as exhibit
2.12 to AmeriKing's Registration Statement (No. 333-
04261) and incorporated herein by reference)........... *
2.13++ PURCHASE AGREEMENT, DATED NOVEMBER 21, 1995, BY AND
AMONG RO-LANK, INC., THE SHAREHOLDERS OF RO-LANK, INC.
AND AMERIKING TENNESSEE CORPORATION I (Filed as exhibit
2.13 to AmeriKing's Registration Statement (No. 333-
04261) and incorporated herein by reference)........... *
2.14++ PURCHASE AND SALE AGREEMENT, DATED NOVEMBER 30, 1995,
BY AND AMONG C&N DINING, INC. AND AFFILIATES AND
AMERIKING VIRGINIA CORPORATION I (Filed as exhibit 2.14
to AmeriKing's Registration Statement (No. 333-04261)
and incorporated herein by reference).................. *
2.15++ AMENDMENT NO. 1 TO PURCHASE AND SALE AGREEMENT, DATED
FEBRUARY 7, 1996, BY AND AMONG C&N DINING, INC. AND
AFFILIATES AND AMERIKING VIRGINIA CORPORATION I (Filed
as exhibit 2.15 to AmeriKing's Registration Statement
(No. 333-04261) and incorporated herein by reference).. *
2.16++ ASSET PURCHASE AGREEMENT, DATED FEBRUARY 7, 1996,
BETWEEN THIRTY-FORTY, INC. AND AMERIKING CINCINNATI
CORPORATION I (Filed as exhibit 2.16 to AmeriKing's
Registration Statement (No. 333-04261) and incorporated
herein by reference)................................... *
2.17++ ASSET PURCHASE AGREEMENT, DATED FEBRUARY 7, 1996,
BETWEEN HOUSTON, INC. AND AMERIKING CINCINNATI
CORPORATION I (Filed as exhibit 2.17 to AmeriKing's
Registration Statement (No. 333-04261) and incorporated
herein by reference)................................... *
2.18++ ASSET PURCHASE AGREEMENT, DATED FEBRUARY 7, 1996,
BETWEEN FIFTH & RACE, INC. AND AMERIKING CINCINNATI
CORPORATION I (Filed as exhibit 2.18 to AmeriKing's
Registration Statement (No. 333-04261) and incorporated
herein by reference.................................... *
2.19 ASSET PURCHASE AGREEMENT among F&P ENTERPRISES, INC.,
THE SHAREHOLDERS OF F&P ENTERPRISES, INC. and NATIONAL
RESTAURANT ENTERPRISES, INC. (Filed as exhibit 2.19 to
AmeriKing's Form 10-Q for the quarter ended March 31,
1997 and incorporated herein by reference.............. *
2.20 AMENDMENT NO. 1 TO THE ASSET PURCHASE AGREEMENT among
F&P ENTERPRISES, INC., THE SHAREHOLDERS OF F&P
ENTERPRISES, INC. and NATIONAL RESTAURANT ENTERPRISES,
INC. (Filed as exhibit 2.20 to AmeriKing's Form 10-Q
for the quarter ended March 31, 1997 and incorporated
herein by reference.................................... *
2.21 ASSET PURCHASE AGREEMENT among NORTH FOODS, INC., THE
SHAREHOLDERS OF NORTH FOODS, INC. and NATIONAL
RESTAURANT ENTERPRISES, INC. (Filed as exhibit 2.21 to
AmeriKing's Form 10-Q for the quarter ended March 31,
1997 and incorporated herein by reference.............. *
2.22 ASSET PURCHASE AGREEMENT among NORTH FOODS, INC., THE
SHAREHOLDERS OF NORTH FOODS, INC. and NATIONAL
RESTAURANT ENTERPRISES, INC. (Filed as exhibit 2.22 to
AmeriKing's Form 10-Q for the quarter ended March 31,
1997 and incorporated herein by reference.............. *
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
------- ----------- ------------
<C> <S> <C>
2.23 AMENDMENT NO. 2 TO THE ASSET PURCHASE AGREEMENT dated
June 16, 1997 among F&P ENTERPRISES, INC., THE
SHAREHOLDERS OF F&P ENTERPRISES, INC. AND NATIONAL
RESTAURANT ENTERPRISES, INC. (Filed as exhibit 2.23 to
AmeriKing's Current Report on Form 8-K filed on July
14, 1997 and incorporated herein by reference)......... *
2.24 AMENDMENT NO. 3 TO THE ASSET PURCHASE AGREEMENT dated
June 16, 1997 among F&P ENTERPRISES, INC., THE
SHAREHOLDERS OF F&P ENTERPRISES, INC. AND NATIONAL
RESTAURANT ENTERPRISES, INC. (Filed as exhibit 2.24 to
AmeriKing's Current Report on Form 8-K filed on July
14, 1997 and incorporated herein by reference)......... *
2.25 AMENDMENT NO. 2 TO THE ASSET PURCHASE AGREEMENT dated
June 16, 1997 among NORTH FOODS, INC., THE SHAREHOLDERS
OF NORTH FOODS, INC. AND NATIONAL RESTAURANT
ENTERPRISES, INC. (Filed as exhibit 2.25 to AmeriKing's
Current Report on Form 8-K filed on July 14, 1997 and
incorporated herein by reference)...................... *
2.26 AMENDMENT NO. 3 TO THE ASSET PURCHASE AGREEMENT dated
June 16, 1997 among NORTH FOODS, INC., THE SHAREHOLDERS
OF NORTH FOODS, INC. AND NATIONAL RESTAURANT
ENTERPRISES, INC. (Filed as exhibit 2.26 to AmeriKing's
Current Report on Form 8-K filed on July 14, 1997 and
incorporated herein by reference)...................... *
2.27 REAL ESTATE PURCHASE AGREEMENT dated March 7, 1997
among T&B LEASING, THOMAS FICKLING AND WILLIAM PRENTICE
(the "PARTNERS"), AND CASTLE PROPERTIES, LLC. (Filed as
exhibit 2.27 to AmeriKing's Current Report on Form 8-K
filed on July 14, 1997 and incorporated herein by
reference)............................................. *
2.28 AMENDMENT NO. 1 TO THE REAL ESTATE PURCHASE AGREEMENT
dated April 8, 1997 among T&B LEASING, THOMAS FICKLING
AND WILLIAM PRENTICE (the "PARTNERS") AND CASTLE
PROPERTIES, LLC. (Filed as exhibit 2.28 to AmeriKing's
Current Report on Form 8-K filed on July 14, 1997 and
incorporated herein by reference)...................... *
2.29 AMENDMENT NO. 2 TO THE REAL ESTATE PURCHASE AGREEMENT
dated June 16, 1997 among T&B LEASING, THOMAS FICKLING
AND WILLIAM PRENTICE (the "PARTNERS"),CASTLE
PROPERTIES, LLC AND NATIONAL RESTAURANT ENTERPRISES,
INC. (Filed as exhibit 2.29 to AmeriKing's Current
Report on Form 8-K filed on July 14, 1997 and
incorporated herein by reference)...................... *
2.30 AMENDMENT NO. 3 TO THE REAL ESTATE PURCHASE AGREEMENT
dated June 16, 1997 among T&B LEASING, THOMAS FICKLING
AND WILLIAM PRENTICE, INVESTORS TITLE EXCHANGE
CORPORATION, AND NATIONAL RESTAURANT ENTERPRISES, INC.
(Filed as exhibit 2.30 to AmeriKing's Current Report on
Form 8-K filed on July 14, 1997 and incorporated herein
by reference).......................................... *
2.31 REAL ESTATE PURCHASE AGREEMENT dated March 7, 1997
among W&W INVESTMENTS LIMITED PARTNERSHIP, THOMAS
FICKLING AND WILLIAM PRENTICE (the "GENERAL PARTNERS"),
AND CASTLE PROPERTIES, LLC. (Filed as exhibit 2.31 to
AmeriKing's Current Report on Form 8-K filed on July
14, 1997 and incorporated herein by reference)......... *
2.32 AMENDMENT NO. 1 TO THE REAL ESTATE PURCHASE AGREEMENT
dated April 8, 1997 among W&W INVESTMENTS LIMITED
PARTNERSHIP, THOMAS FICKLING AND WILLIAM PRENTICE (the
"PARTNERS") AND CASTLE PROPERTIES, LLC. (Filed as
exhibit 2.32 to AmeriKing's Current Report on Form 8-K
filed on July 14, 1997 and incorporated herein by
reference)............................................. *
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
------- ----------- ------------
<C> <S> <C>
2.33 AMENDMENT NO. 2 TO THE REAL ESTATE PURCHASE AGREEMENT
dated June 16, 1997 among W&W INVESTMENT LIMITED
PARTNERSHIP, THOMAS FICKLING AND WILLIAM PRENTICE (the
"GENERAL PARTNERS"), CASTLE PROPERTIES, LLC AND NATIONAL
RESTAURANT ENTERPRISES, INC. (Filed as exhibit 2.33 to
AmeriKing's Current Report on Form 8-K filed on July 14,
1997 and incorporated herein by reference).............. *
2.34 STOCK PURCHASE AGREEMENT DATED JULY 22, 1997 among THE
SHAREHOLDERS OF B&J RESTAURANTS, INC., and NATIONAL
RESTAURANT ENTERPRISES, INC. (Filed as exhibit 2.34 to
AmeriKing's Form 10-Q for the quarter ended June 30,
1997)................................................... *
3.1 AMENDED AND RESTATED CERTIFICATE OF INCORPORATION OF
AMERIKING (Filed as exhibit 3.1 to AmeriKing's
Registration Statement (No. 333-04261) and incorporated
herein by reference).................................... *
3.2 AMENDED AND RESTATED BYLAWS OF AMERIKING (Filed as
exhibit 3.2 to AmeriKing's Registration Statement (No.
333-04261) and incorporated herein by reference)........ *
4.1 STOCKHOLDERS AGREEMENT, DATED SEPTEMBER 1, 1994, BY AND
AMONG AMERIKING AND THE STOCKHOLDERS APPEARING ON THE
SIGNATURE PAGES THERETO (Filed as exhibit 4.1 to
AmeriKing's Registration Statement (No. 333-04261) and
incorporated herein by reference)....................... *
4.2 CONSENT AND AMENDMENT NO. 1 TO STOCKHOLDERS AGREEMENT,
DATED NOVEMBER 30, 1994, BY AND AMONG AMERIKING AND THE
STOCKHOLDERS APPEARING ON THE SIGNATURE PAGES THERETO
(Filed as exhibit 4.2 to AmeriKing's Registration
Statement (No. 333-04261) and incorporated herein by
reference).............................................. *
4.3 CONSENT AND AMENDMENT NO. 2 TO STOCKHOLDERS AGREEMENT,
DATED FEBRUARY 7, 1996, BY AND AMONG AMERIKING AND THE
STOCKHOLDERS APPEARING ON THE SIGNATURE PAGES THERETO
(Filed as exhibit 4.3 to AmeriKing's Registration
Statement (No. 333-04261) and incorporated herein by
reference).............................................. *
4.4 AMENDED AND RESTATED STOCKHOLDERS AGREEMENT BY AND AMONG
AMERIKING AND THE STOCKHOLDERS APPEARING ON THE
SIGNATURE PAGES THERETO (Filed as exhibit 4.4 to
AmeriKing's Form 10-K for the year ended December 30,
1996 and incorporated herein by reference).............. *
4.5 MANAGEMENT SUBSCRIPTION AGREEMENT, DATED SEPTEMBER 1,
1994, BY AND AMONG AMERIKING, TABOR RESTAURANT
ASSOCIATES, INC., JARO ENTERPRISES, INC., JARO
RESTAURANTS, INC., JB RESTAURANTS, INC., CASTLEKING,
INC., WHITE-OSBORN RESTAURANTS, INC., OSBURGER, INC.,
LAWRENCE JARO, WILLIAM OSBORN, GARY HUBERT, JOEL AASEBY,
DONALD STAHURSKI AND SCOTT VASATKA (Filed as exhibit 4.5
to AmeriKing's Registration Statement (No. 333-04261)
and incorporated herein by reference)................... *
4.6 STOCK OPTION AGREEMENT, DATED SEPTEMBER 1, 1994, BETWEEN
AMERIKING AND SCOTT VASATKA (Filed as exhibit 4.6 to
AmeriKing's Registration Statement (No. 333-04261) and
incorporated herein by reference)....................... *
4.7 STOCK OPTION AGREEMENT, DATED SEPTEMBER 1, 1994, BETWEEN
AMERIKING AND DONALD STAHURSKI (Filed as exhibit 4.7 to
AmeriKing's Registration Statement (No. 333-04261) and
incorporated herein by reference)....................... *
</TABLE>
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4.8 WARRANT AGREEMENT, DATED SEPTEMBER 1, 1994, BETWEEN
AMERIKING AND THE FIRST NATIONAL BANK OF BOSTON (Filed
as exhibit 4.8 to AmeriKing's Registration Statement
(No. 333-04261) and incorporated herein by reference).. *
4.9 COMMON STOCK PURCHASE WARRANT, DATED SEPTEMBER 1, 1994,
BETWEEN AMERIKING AND BANCBOSTON INVESTMENTS INC.
(Filed as exhibit 4.9 to AmeriKing's Registration
Statement (No. 333-04261) and incorporated herein by
reference)............................................. *
4.10 FIRST AMENDMENT TO COMMON STOCK PURCHASE WARRANT, DATED
NOVEMBER 30, 1994 (Filed as exhibit 4.10 to AmeriKing's
Registration Statement (No. 333-04261) and incorporated
herein by reference)................................... *
4.11 SECOND AMENDMENT TO COMMON STOCK PURCHASE WARRANT,
DATED FEBRUARY 7, 1996 (Filed as exhibit 4.11 to
AmeriKing's Registration Statement (No. 333-04261) and
incorporated herein by reference)...................... *
4.12 AMENDED AND RESTATED NOTE, DATED FEBRUARY 7, 1996, FROM
AMERIKING TO MCIT PLC IN THE AGGREGATE PRINCIPAL AMOUNT
OF$11,000,000 (Filed as exhibit 4.12 to AmeriKing's
Registration Statement (No. 333-04261) and incorporated
herein by reference)................................... *
4.13 AMENDED AND RESTATED DEFERRED LIMITED INTEREST
GUARANTY, DATED FEBRUARY 7, 1996, FROM ENTERPRISES TO
MCIT PLC (Filed as exhibit 4.13 to AmeriKing's
Registration Statement (No. 333-04261) and incorporated
herein by reference)................................... *
4.14 AMENDED AND RESTATED NOTE, DATED FEBRUARY 7, 1996, FROM
AMERIKING TO JARO ENTERPRISES, INC. IN THE AGGREGATE
PRINCIPAL AMOUNT OF $1,224,000 (Filed as exhibit 4.14
to AmeriKing's Registration Statement (No. 333-04261)
and incorporated herein by reference).................. *
4.15 AMENDED AND RESTATED NOTE, DATED FEBRUARY 7, 1996, FROM
AMERIKING TO JARO RESTAURANTS, INC. IN THE AGGREGATE
PRINCIPAL AMOUNT OF $112,000 (Filed as exhibit 4.15 to
AmeriKing's Registration Statement (No. 333-04261) and
incorporated herein by reference)...................... *
4.16 AMENDED AND RESTATED NOTE, DATED FEBRUARY 7, 1996, FROM
AMERIKING TO JB RESTAURANTS, INC. IN THE AGGREGATE
PRINCIPAL AMOUNT OF $2,019,000 (Filed as exhibit 4.16
to AmeriKing's Registration Statement (No. 333-04261)
and incorporated herein by reference).................. *
4.17 AMENDED AND RESTATED NOTE, DATED FEBRUARY 7, 1996, FROM
AMERIKING TO CASTLEKING, INC. IN THE AGGREGATE
PRINCIPAL AMOUNT OF $385,769 (Filed as exhibit 4.17 to
AmeriKing's Registration Statement (No. 333-04261) and
incorporated herein by reference)...................... *
4.18 AMENDED AND RESTATED NOTE, DATED FEBRUARY 7, 1996, FROM
AMERIKING TO WHITE-OSBORN RESTAURANTS, INC. IN THE
AGGREGATE PRINCIPAL AMOUNT OF $659,231 (Filed as
exhibit 4.18 to AmeriKing's Registration Statement (No.
333-04261) and incorporated herein by reference)....... *
4.19 SECURITIES PURCHASE AGREEMENT, DATED NOVEMBER 30, 1994,
BETWEEN AMERIKING AND BANCBOSTON INVESTMENTS, INC.
(Filed as exhibit 4.19 to AmeriKing's Registration
Statement (No. 333-04261) and incorporated herein by
reference)............................................. *
4.20 COMMON STOCK PURCHASE WARRANT, DATED NOVEMBER 30, 1994,
BETWEEN AMERIKING AND BANCBOSTON INVESTMENTS, INC.
(Filed as exhibit 4.20 to AmeriKing's Registration
Statement (No. 333-04261) and incorporated herein by
reference)............................................. *
</TABLE>
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4.21 JUNIOR SUBORDINATED NOTE, DATED NOVEMBER 30, 1994, FROM
AMERIKING TO BANCBOSTON INVESTMENTS, INC. IN THE
AGGREGATE PRINCIPAL AMOUNT OF $600,000 (Filed as
exhibit 4.21 to AmeriKing's Registration Statement (No.
333-04261) and incorporated herein by reference)....... *
4.22 SECURED PROMISSORY NOTE, DATED NOVEMBER 21, 1995, FROM
AMERIKING TENNESSEE CORPORATION I TO BKC IN THE
AGGREGATE PRINCIPAL AMOUNT OF $6,920,700 (Filed as
exhibit 4.22 to AmeriKing's Registration Statement (No.
333-04261) and incorporated herein by reference)....... *
4.23 AMENDMENT TO SECURED PROMISSORY NOTE, DATED MAY 21,
1996, FROM AMERIKING TENNESSEE CORPORATION I TO BKC IN
THE AGGREGATE PRINCIPAL AMOUNT OF $6,093,067 (Filed as
exhibit 4.23 to AmeriKing's Registration Statement (No.
333-04261) and incorporated herein by reference)....... *
4.24 GUARANTY, DATED NOVEMBER 21, 1995, FROM LAWRENCE JARO
AND WILLIAM OSBORN TO BKC (Filed as exhibit 4.24 to
AmeriKing's Registration Statement (No. 333-04261) and
incorporated herein by reference)...................... *
4.25 RATIFICATION OF GUARANTY, MAY 21, 1996, FROM LAWRENCE
JARO AND WILLIAM OSBORN TO BKC (Filed as exhibit 4.25
to AmeriKing's Registration Statement (No. 333-04261)
and incorporated herein by reference).................. *
4.26 PROMISSORY NOTE, DATED NOVEMBER 29, 1995, FROM
AMERIKING COLORADO CORPORATION I TO FRANCHISE
ACCEPTANCE CORPORATION LIMITED IN THE AGGREGATE
PRINCIPAL AMOUNT OF $1,865,000 (Filed as exhibit 4.26
to AmeriKing's Registration Statement (No. 333-04261)
and incorporated herein by reference).................. *
4.27 AMENDMENT TO PROMISSORY NOTE, DATED DECEMBER 14, 1995,
FROM AMERIKING COLORADO CORPORATION I TO FRANCHISE
ACCEPTANCE CORPORATION LIMITED (Filed as exhibit 4.27
to AmeriKing's Registration Statement (No. 333-04261)
and incorporated herein by reference).................. *
4.28 COMMON STOCK PURCHASE WARRANT, DATED FEBRUARY 7, 1996,
FROM AMERIKING TO PMI MEZZANINE FUND, L.P. (Filed as
exhibit 4.28 to AmeriKing's Registration Statement (No.
333-04261) and incorporated herein by reference)....... *
4.29 SENIOR SUBORDINATED NOTE, DATED FEBRUARY 7, 1996, FROM
ENTERPRISES TO PMI MEZZANINE FUND, L.P IN THE AGGREGATE
PRINCIPAL AMOUNT OF $15,000,000. (Filed as exhibit 4.29
to AmeriKing's Registration Statement (No. 333-04261)
and incorporated herein by reference).................. *
4.30 SUBORDINATED GUARANTY, DATED FEBRUARY 7, 1996, FROM
AMERIKING VIRGINIA CORPORATION I AND AMERIKING
CINCINNATI CORPORATION I TO PMI MEZZANINE FUND, L.P.
(Filed as exhibit 4.30 to AmeriKing's Registration
Statement (No. 333-04261) and incorporated herein by
reference)............................................. *
4.31 SECOND AMENDED AND RESTATED REVOLVING CREDIT NOTE,
DATED FEBRUARY 7, 1996, FROM ENTERPRISES TO THE FIRST
NATIONAL BANK OF BOSTON, THE OTHER LENDING INSTITUTIONS
LISTED ON SCHEDULE 1 THERETO, AND THE FIRST NATIONAL
BANK OF BOSTON, AS AGENT (Filed as exhibit 4.31 to
AmeriKing's Registration Statement (No. 333-04261) and
incorporated herein by reference)...................... *
</TABLE>
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4.32 SECOND AMENDED AND RESTATED TERM LOAN A NOTE, DATED
FEBRUARY 7, 1996, FROM ENTERPRISES TO THE FIRST
NATIONAL BANK OF BOSTON, THE OTHER LENDING INSTITUTIONS
LISTED ON SCHEDULE 1 THERETO, AND THE FIRST NATIONAL
BANK OF BOSTON, AS AGENT (Filed as exhibit 4.32 to
AmeriKing's Registration Statement (No. 333-04261) and
incorporated herein by reference)...................... *
4.33 SECOND AMENDED AND RESTATED TERM LOAN B NOTE, DATED
FEBRUARY 7, 1996, FROM ENTERPRISES TO THE FIRST
NATIONAL BANK OF BOSTON, THE OTHER LENDING INSTITUTIONS
LISTED ON SCHEDULE 1 THERETO, AND THE FIRST NATIONAL
BANK OF BOSTON, AS (Filed as exhibit 4.33 to
AmeriKing's Registration Statement (No. 333-04261) and
incorporated herein by reference)...................... *
4.34 LIMITED GUARANTY, DATED SEPTEMBER 1, 1994, FROM
AMERIKING TO THE FIRST NATIONAL BANK OF BOSTON, THE
OTHER LENDING INSTITUTIONS LISTED ON SCHEDULE 1
THERETO, AND THE FIRST NATIONAL BANK OF BOSTON, AS
AGENT (Filed as exhibit 4.34 to AmeriKing's
Registration Statement (No. 333-04261) and incorporated
herein by reference)................................... *
4.35 GUARANTY, DATED FEBRUARY 7, 1996, FROM AMERIKING
VIRGINIA CORPORATION I AND AMERIKING CINCINNATI
CORPORATION I TO THE FIRST NATIONAL BANK OF BOSTON, THE
OTHER LENDING INSTITUTIONS LISTED ON SCHEDULE 1
THERETO, AND THE FIRST NATIONAL BANK OF BOSTON, AS
AGENT (Filed as exhibit 4.35 to AmeriKing's
Registration Statement (No. 333-04261) and incorporated
herein by reference)................................... *
4.36 UNCONDITIONAL GUARANTY OF PAYMENT AND PERFORMANCE,
DATED FEBRUARY 7, 1996, FROM ENTERPRISES TO FFCA
ACQUISITION CORPORATION (Filed as exhibit 4.36 to
AmeriKing's Registration Statement (No. 333-04261) and
incorporated herein by reference)...................... *
4.37 FORM OF AMENDMENT NO. 1 TO COMMON STOCK PURCHASE
WARRANT FROM AMERIKING TO PMI MEZZANINE FUND, L.P...... *
4.38 INDENTURE BETWEEN AMERIKING AND TRUSTEE WITH RESPECT TO
SENIOR NOTES (Filed as exhibit 4.38 to AmeriKing's
Registration Statement (No. 333-04261) and incorporated
herein by reference)................................... *
4.39 FORM OF SENIOR NOTES (ATTACHED TO EXHIBIT 4.38)........ *
4.40 INDENTURE BETWEEN AMERIKING AND TRUSTEE WITH RESPECT TO
EXCHANGE DEBENTURES (Filed as exhibit 4.40 to
AmeriKing's Registration Statement (No. 333-04261) and
incorporated herein by reference)...................... *
4.41 INTENTIONALLY OMITTED.................................. *
4.42 FORM OF EXCHANGE DEBENTURES (ATTACHED TO EXHIBIT 4.40). *
4.43 PROMISSORY NOTE, DATED JULY 18, 1996, FROM AMERIKING
TENNESSEE CORPORATION I TO FRANCHISE ACCEPTANCE
CORPORATION LIMITED IN THE AGGREGATE PRINCIPAL AMOUNT
OF $6,100,000 (Filed as exhibit 4.43 to AmeriKing's
Registration Statement (No. 333-04261) and incorporated
herein by reference)................................... *
4.44 CERTIFICATE OF DESIGNATION RELATING TO THE SENIOR
PREFERRED STOCK (Filed as exhibit 4.44 to AmeriKing's
Registration Statement (No. 333-04261) and incorporated
herein by reference)................................... *
4.45 PROMISSORY NOTE, DATED JULY 18, 1996, FROM AMERIKING
TENNESSEE CORPORATION I TO FRANCHISE ACCEPTANCE
CORPORATION LIMITED IN THE AGGREGATE PRINCIPAL AMOUNT
OF $900,000 (Filed as exhibit 4.45 to AmeriKing's
Registration Statement (No. 333-04261) and incorporated
herein by reference)................................... *
</TABLE>
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4.46 AMENDMENT NO. 1 TO STOCK OPTION AGREEMENT BY AND AMONG
AMERIKING, SCOTT VASATKA AND DONALD STAHURSKI (Filed as
exhibit 4.46 to AmeriKing's Form 10-K for the year
ended December 30, 1996 and incorporated herein by
reference)............................................. *
4.47 AMENDMENT NO.1 TO MANAGEMENT SUBSCRIPTION AGREEMENT
(Filed as exhibit 4.47 to AmeriKing's Form 10-K for the
year ended December 30, 1996 and incorporated herein by
reference)............................................. *
9.1 JARO PROXY AGREEMENT, DATED SEPTEMBER 1, 1994, BY AND
AMONG LAWRENCE JARO, TABOR RESTAURANT ASSOCIATES, INC.,
JARO ENTERPRISES, INC., JARO RESTAURANTS, INC. AND JB
RESTAURANTS, INC. (Filed as exhibit 9.1 to AmeriKing's
Registration Statement (No. 333-04261) and incorporated
herein by reference)................................... *
9.2 OSBORN PROXY AGREEMENT, DATED SEPTEMBER 1, 1994, BY AND
AMONG WILLIAM OSBORN, CASTLEKING, INC., OSBURGER, INC.
AND WHITE-OSBORN, INC. (Filed as exhibit 9.2 to
AmeriKing's Registration Statement (No. 333-04261) and
incorporated herein by reference)...................... *
10.1 SECOND AMENDED AND RESTATED REVOLVING CREDIT AND TERM
LOAN AGREEMENT, DATED FEBRUARY 7, 1996, BY AND AMONG
AMERIKING, ENTERPRISES, THE FIRST NATIONAL BANK OF
BOSTON, THE OTHER LENDING INSTITUTIONS LISTED ON
SCHEDULE 1 THERETO, AND THE FIRST NATIONAL BANK OF
BOSTON, AS AGENT (Filed as exhibit 10.1 to AmeriKing's
Registration Statement (No. 333-04261) and incorporated
herein by reference)................................... *
10.2 SECURITY AGREEMENT, DATED SEPTEMBER 1, 1994, BY AND
AMONG ENTERPRISES AND THE FIRST NATIONAL BANK OF
BOSTON, THE OTHER LENDING INSTITUTIONS LISTED ON
SCHEDULE 1 THERETO, AND THE FIRST NATIONAL BANK OF
BOSTON, AS AGENT (Filed as exhibit 10.2 to AmeriKing's
Registration Statement (No. 333-04261) and incorporated
herein by reference)................................... *
10.3 AMENDMENT TO SECURITY AGREEMENT, DATED FEBRUARY 7,
1996, BY AND AMONG ENTERPRISES AND THE FIRST NATIONAL
BANK OF BOSTON, THE OTHER LENDING INSTITUTIONS LISTED
ON SCHEDULE 1 THERETO, AND THE FIRST NATIONAL BANK OF
BOSTON, AS AGENT (Filed as exhibit 10.3 to AmeriKing's
Registration Statement (No. 333-04261) and incorporated
herein by reference)................................... *
10.4 STOCK PLEDGE AGREEMENT, DATED SEPTEMBER 1, 1994, BY AND
AMONG AMERIKING AND THE FIRST NATIONAL BANK OF BOSTON,
THE OTHER LENDING INSTITUTIONS LISTED ON SCHEDULE 1
THERETO, AND THE FIRST NATIONAL BANK OF BOSTON, AS
AGENT (Filed as exhibit 10.4 to AmeriKing's
Registration Statement (No. 333-04261) and incorporated
herein by reference)................................... *
10.5 AMENDMENT TO STOCK PLEDGE AGREEMENT, DATED FEBRUARY 7,
1996, BY AND AMONG AMERIKING AND THE FIRST NATIONAL
BANK OF BOSTON, THE OTHER LENDING INSTITUTIONS LISTED
ON SCHEDULE 1 THERETO, AND THE FIRST NATIONAL BANK OF
BOSTON AS AGENT (Filed as exhibit 10.5 to AmeriKing's
Registration Statement (No. 333-04261) and incorporated
herein by reference)................................... *
10.6 SECURITY AGREEMENT, DATED FEBRUARY 7, 1996, BY AND
AMONG AMERIKING VIRGINIA CORPORATION I, AMERIKING
CINCINNATI CORPORATION I AND THE FIRST NATIONAL BANK OF
BOSTON (Filed as exhibit 10.6 to AmeriKing's
Registration Statement (No. 333-04261) and incorporated
herein by reference)................................... *
</TABLE>
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10.7 STOCK PLEDGE AGREEMENT, DATED FEBRUARY 7, 1996, BY AND
AMONG ENTERPRISES, AMERIKING VIRGINIA CORPORATION I,
AMERIKING CINCINNATI CORPORATION I AND THE FIRST
NATIONAL BANK OF BOSTON (Filed as exhibit 10.7 to
AmeriKing's Registration Statement (No. 333-04261) and
incorporated herein by reference)...................... *
10.8 AMENDED AND RESTATED PURCHASE AGREEMENT, DATED FEBRUARY
7, 1996, BETWEEN AMERIKING AND MCIT PLC (Filed as
exhibit 10.8 to AmeriKing's Registration Statement (No.
333-04261) and incorporated herein by reference)....... *
10.9 PLEDGE AGREEMENT, DATED SEPTEMBER 1, 1994, BETWEEN
AMERIKING AND MCIT PLC (Filed as exhibit 10.9 to
AmeriKing's Registration Statement (No. 333-04261) and
incorporated herein by reference)...................... *
10.10 SUBORDINATION AGREEMENT, DATED SEPTEMBER 1, 1994, BY
AND AMONG BKC, MCIT PLC AND AMERIKING (Filed as exhibit
10.10 to AmeriKing's Registration Statement (No. 333-
04261) and incorporated herein by reference)........... *
10.11 AMENDMENT AND CONSENT NO. 1 TO SECURITIES PURCHASE
AGREEMENT, DATED FEBRUARY 7, 1996, BETWEEN AMERIKING
AND BANCBOSTON INVESTMENTS, INC. (Filed as exhibit
10.11 to AmeriKing's Registration Statement (No. 333-
04261) and incorporated herein by reference)........... *
10.12 INTERCREDITOR AGREEMENT, DATED FEBRUARY 7, 1996, BY AND
AMONG BKC, AMERIKING VIRGINIA CORPORATION I, AMERIKING
CINCINNATI CORPORATION I, LAWRENCE JARO, WILLIAM
OSBORN, GARY HUBERT, ENTERPRISES, AMERIKING AND THE
FIRST NATIONAL BANK OF BOSTON (Filed as exhibit 10.12
to AmeriKing's Registration Statement (No. 333-04261)
and incorporated herein by reference).................. *
10.13 STOCK PLEDGE AGREEMENT, DATED NOVEMBER 21, 1995,
BETWEEN ENTERPRISES AND BKC (Filed as exhibit 10.13 to
AmeriKing's Registration Statement (No. 333-04261) and
incorporated herein by reference)...................... *
10.14 RATIFICATION OF STOCK PLEDGE AGREEMENT, DATED MAY 21,
1996, BETWEEN ENTERPRISES AND BKC (Filed as exhibit
10.14 to AmeriKing's Registration Statement (No. 333-
04261) and incorporated herein by reference)........... *
10.15 STOCK PLEDGE AGREEMENT, DATED NOVEMBER 21, 1995,
BETWEEN ENTERPRISES AND THE FIRST NATIONAL BANK OF
BOSTON, THE OTHER LENDING INSTITUTIONS LISTED ON
SCHEDULE 1 THERETO, AND THE FIRST NATIONAL BANK OF
BOSTON, AS AGENT (Filed as exhibit 10.15 to AmeriKing's
Registration Statement (No. 333-04261) and incorporated
herein by reference)................................... *
10.16 NOTE PURCHASE AGREEMENT, DATED FEBRUARY 7, 1996, BY AND
AMONG AMERIKING, ENTERPRISES AND PMI MEZZANINE FUND,
L.P. (Filed as exhibit 10.16 to AmeriKing's
Registration Statement (No. 333-04261) and incorporated
herein by reference)................................... *
10.17 FORM OF AMENDMENT NO. 1 TO NOTE PURCHASE AGREEMENT, BY
AND AMONG AMERIKING, ENTERPRISES AND PMI MEZZANINE
FUND, L.P.............................................. *
10.18 SUBORDINATION AGREEMENT, DATED FEBRUARY 7, 1996, BY AND
AMONG AMERIKING, ENTERPRISES, AMERIKING VIRGINIA
CORPORATION I, AMERIKING CINCINNATI CORPORATION I,
AMERIKING TENNESSEE CORPORATION I, AMERIKING COLORADO
CORPORATION I, LAWRENCE JARO, WILLIAM OSBORN, GARY
HUBERT AND BKC (Filed as exhibit 10.18 to AmeriKing's
Registration Statement (No. 333-04261) and incorporated
herein by reference)................................... *
</TABLE>
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10.19 SALE-LEASEBACK AGREEMENT, DATED FEBRUARY 7, 1996, BY
AND AMONG AMERIKING VIRGINIA CORPORATION I, AMERIKING
TENNESSEE CORPORATION I AND FFCA ACQUISITION
CORPORATION (Filed as exhibit 10.19 to AmeriKing's
Registration Statement (No. 333-04261) and incorporated
herein by reference)................................... *
10.20 LEASE, DATED FEBRUARY 7, 1996, BY AND AMONG AMERIKING
VIRGINIA CORPORATION I, AMERIKING TENNESSEE CORPORATION
I AND FFCA ACQUISITION CORPORATION (Filed as exhibit
10.20 to AmeriKing's Registration Statement (No. 333-
04261) and incorporated herein by reference)........... *
10.21 FORM OF FRANCHISE AGREEMENT BETWEEN BKC AND FRANCHISEE
(Filed as exhibit 10.21 to AmeriKing's Registration
Statement (No. 333-04261) and incorporated herein by
reference)............................................. *
10.22 SCHEDULE OF AMERIKING FRANCHISE AGREEMENTS (Filed as
exhibit 10.22 to AmeriKing's Registration Statement
(No. 333-04261) and incorporated herein by reference).. *
10.23 FORM OF LEASE AGREEMENT BETWEEN BKC AND LESSEE (Filed
as exhibit 10.23 to AmeriKing's Registration Statement
(No. 333-04261) and incorporated herein by reference).. *
10.24 SCHEDULE OF AMERIKING LEASE AGREEMENTS (Filed as
exhibit 10.24 to AmeriKing's Registration Statement
(No. 333-04261) and incorporated herein by reference).. *
10.25 FORM OF GUARANTEE, INDEMNIFICATION AND ACKNOWLEDGEMENT
OF BKC FRANCHISE AGREEMENT (Filed as exhibit 10.25 to
AmeriKing's Registration Statement (No. 333-04261) and
incorporated herein by reference)...................... *
10.26 FORM OF GUARANTEE, INDEMNIFICATION AND ACKNOWLEDGMENT
OF BKC LEASE AGREEMENT (Filed as exhibit 10.26 to
AmeriKing's Registration Statement (No. 333-04261) and
incorporated herein by reference)...................... *
10.27 CAPITAL EXPENDITURE AGREEMENT, DATED SEPTEMBER 1, 1994,
BY AND AMONG AMERIKING, ENTERPRISES AND BKC (Filed as
exhibit 10.27 to AmeriKing's Registration Statement
(No. 333-04261) and incorporated herein by reference).. *
10.28 CAPITAL EXPENDITURE AGREEMENT, DATED NOVEMBER 21, 1995,
BY AND AMONG ENTERPRISES, AMERIKING TENNESSEE
CORPORATION I AND BKC (Filed as exhibit 10.28 to
AmeriKing's Registration Statement (No. 333-04261) and
incorporated herein by reference)...................... *
10.29 LETTER AGREEMENT, DATED FEBRUARY 7, 1996, BETWEEN
ENTERPRISES AND BKC (Filed as exhibit 10.29 to
AmeriKing's Registration Statement (No. 333-04261) and
incorporated herein by reference)...................... *
10.30 NAPARLO DEVELOPMENT AGREEMENT, DATED FEBRUARY 7, 1996,
BETWEEN AMERIKING VIRGINIA CORPORATION I AND JOSEPH J.
NAPARLO (Filed as exhibit 10.30 to AmeriKing's
Registration Statement (No. 333-04261) and incorporated
herein by reference)................................... *
10.31 MANAGEMENT CONSULTING AGREEMENT, DATED SEPTEMBER 1,
1994, BY AND AMONG TJC MANAGEMENT CORPORATION,
AMERIKING AND ENTERPRISES (Filed as exhibit 10.31 to
AmeriKing's Registration Statement (No. 333-04261) and
incorporated herein by reference)...................... *
10.32 INTENTIONALLY OMITTED.................................. *
</TABLE>
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10.33 INTERCOMPANY MANAGEMENT CONSULTING AGREEMENT, DATED
SEPTEMBER 1, 1994 BETWEEN ENTERPRISES AND AMERIKING
(Filed as exhibit 10.33 to AmeriKing's Registration
Statement (No. 333-04261) and incorporated herein by
reference)............................................. *
10.34 AMENDED AND RESTATED TAX SHARING AGREEMENT, DATED
FEBRUARY 7, 1996, BETWEEN ENTERPRISES AND AMERIKING
(Filed as exhibit 10.34 to AmeriKing's Registration
Statement (No. 333-04261) and incorporated herein by
reference)............................................. *
10.35 EMPLOYMENT AND NON-INTERFERENCE AGREEMENT, DATED
SEPTEMBER 1, 1994, BETWEEN LAWRENCE JARO AND
ENTERPRISES (Filed as exhibit 10.35 to AmeriKing's
Registration Statement (No. 333-04261) and incorporated
herein by reference)................................... *
10.36 EMPLOYMENT AND NON-INTERFERENCE AGREEMENT, DATED
SEPTEMBER 1, 1994, BETWEEN WILLIAM OSBORN AND
ENTERPRISES (Filed as exhibit 10.36 to AmeriKing's
Registration Statement (No. 333-04261) and incorporated
herein by reference)................................... *
10.37 EMPLOYMENT AND NON-INTERFERENCE AGREEMENT, DATED
SEPTEMBER 1, 1994, BETWEEN GARY HUBERT AND ENTERPRISES
(Filed as exhibit 10.37 to AmeriKing's Registration
Statement (No. 333-04261) and incorporated herein by
reference)............................................. *
10.38 EMPLOYMENT AND NON-INTERFERENCE AGREEMENT, DATED
SEPTEMBER 1, 1994, BETWEEN JOEL AASEBY AND ENTERPRISES
(Filed as exhibit 10.38 to AmeriKing's Registration
Statement (No. 333-04261) and incorporated herein by
reference)............................................. *
10.39 EMPLOYMENT AND NON-INTERFERENCE AGREEMENT, DATED
SEPTEMBER 1, 1994, BETWEEN SCOTT VASATKA AND
ENTERPRISES (Filed as exhibit 10.39 to AmeriKing's
Registration Statement (No. 333-04261) and incorporated
herein by reference)................................... *
10.40 EMPLOYMENT AND NON-INTERFERENCE AGREEMENT, DATED MAY 1,
1997, BETWEEN AUGUSTUS F. HOTHORN AND NATIONAL
RESTAURANT ENTERPRISES, INC............................
10.41 FORM OF INDEMNIFICATION AGREEMENT BY AND AMONG
AMERIKING AND EACH OF THE SIGNATORIES TO THIS
REGISTRATION STATEMENT (Filed as exhibit 10.41 to
AmeriKing's Registration Statement (No. 333-04261) and
incorporated herein by reference)...................... *
10.42 INTENTIONALLY OMITTED..................................
10.43 INTENTIONALLY OMITTED..................................
10.44 LEASE AGREEMENT FOR WESTCHESTER, ILLINOIS HEADQUARTERS
(Filed as exhibit 10.44 to AmeriKing's Registration
Statement (No. 333-04261) and incorporated herein by
reference)............................................. *
10.45 LOAN AND SECURITY AGREEMENT, DATED NOVEMBER 29, 1995,
BETWEEN AMERIKING COLORADO CORPORATION I AND FRANCHISE
ACCEPTANCE CORPORATION LIMITED (Filed as exhibit 10.45
to AmeriKing's Registration Statement (No. 333-04261)
and incorporated herein by reference).................. *
10.46 LOAN AND SECURITY AGREEMENT, DATED JULY 21, 1996,
BETWEEN AMERIKING TENNESSEE CORPORATION I AND FRANCHISE
ACCEPTANCE CORPORATION LIMITED (Filed as exhibit 10.46
to AmeriKing's Registration Statement (No. 333-04261)
and incorporated herein by reference).................. *
10.47 FORM OF INTERCREDITOR AGREEMENT BY AND AMONG BKC,
AMERIKING, AND THE TRUSTEE AS REPRESENTATIVE OF THE
HOLDERS OF SENIOR NOTES UNDER THE INDENTURE (ATTACHED
TO EXHIBIT 4.38)....................................... *
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
------- ----------- ------------
<C> <S> <C>
10.48 RESTATED EMPLOYMENT AND NON-INTERFERENCE AGREEMENT
BETWEEN WILLIAM OSBORN AND ENTERPRISES (Filed as
exhibit 10.48 to AmeriKing's Form
10-K for the year ended December 30, 1996 and
incorporated herein by reference)...................... *
10.49 RECAPITALIZATION AGREEMENT AMONG AMERIKING AND THE
STOCKHOLDERS APPEARING ON THE SIGNATURE PAGES THERETO
(Filed as exhibit 10.49 to AmeriKing's Form 10-K for
the year ended December 30, 1996 and incorporated
herein by reference) .................................. *
10.50 MEMORANDUM OF UNDERSTANDING BETWEEN BKC AND THE COMPANY
(Filed as exhibit 10.50 to AmeriKing's Registration
Statement (No. 333-04261) and incorporated herein by
reference)............................................. *
10.51 AMENDMENT TO SECOND AMENDED AND RESTATED REVOLVING
CREDIT AND LOAN AGREEMENT, DATED MAY 14, 1996, BY AND
AMONG AMERIKING, ENTERPRISES, THE FIRST NATIONAL BANK
OF BOSTON, THE OTHER LENDING INSTITUTIONS LISTED ON
SCHEDULE I THERETO AND THE FIRST NATIONAL BANK OF
BOSTON, AS AGENT (Filed as exhibit 10.51 to AmeriKing's
Form 10-K for the year ended December 30, 1996 and
incorporated herein by reference)...................... *
10.52 ASSIGNMENT AND ACCEPTANCE DATED MAY 14, 1996, BY AND
AMONG AMERIKING, ENTERPRISES, THE FIRST NATIONAL BANK
OF BOSTON AND THE OTHER LENDING INSTITUTIONS, LISTED
THERETO AND THE FIRST NATIONAL BANK OF BOSTON, AS AGENT
(Filed as exhibit 10.52 to AmeriKing's Form 10-K for
the year ended December 30, 1996 and incorporated
herein by reference)................................... *
10.53 FORM OF OPERATING AGREEMENT BY AND AMONG BKC, AMERIKING
ENTERPRISES, AMERIKING COLORADO CORPORATION I,
AMERIKING ILLINOIS CORPORATION I, AMERIKING TENNESSEE
CORPORATION I, AMERIKING VIRGINIA CORPORATION I AND
AMERIKING CINCINNATI CORPORATION I (Filed as exhibit
10.53 to AmeriKing's Form 10-K for the year ended
December 30, 1996 and incorporated herein by
reference)............................................. *
10.54 THIRD AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT
dated as of June 17, 1997 among NATIONAL RESTAURANT
ENTERPRISES, INC., AMERIKING INC. and BANKBOSTON, N.A.
....................................................... *
11++++ STATEMENT RE: COMPUTATION OF EARNINGS PER SHARE........
12++++ STATEMENTS RE: COMPUTATION OF RATIOS...................
21 SUBSIDIARIES OF AMERIKING (Filed as exhibit 10.21 to
AmeriKing's Registration Statement (No. 333-04261) and
incorporated herein by reference)...................... *
23.1 CONSENT OF MAYER, BROWN & PLATT (Filed as exhibit 23.1
to AmeriKing's Registration Statement (No. 333-04261)
and incorporated herein by reference).................. *
23.2 CONSENT OF DELOITTE & TOUCHE (Filed as exhibit 23.2 to
AmeriKing's Registration Statement (No. 333-04261) and
incorporated herein by reference)...................... *
24 POWER OF ATTORNEY......................................
25 T-1 FOR EXCHANGE DEBENTURE INDENTURE................... *
26 T-1 FOR SENIOR NOTE INDENTURE.......................... *
27++++ FINANCIAL DATA SCHEDULE................................
</TABLE>
- --------
* Previously filed.
++The schedules and exhibits to these agreements have not been filed pursuant
to Item 601(b)(2) of Regulation S-K. Such schedules and exhibits will be
filed supplementally upon the request of the Securities and Exchange
Commission.
++++Superseding exhibit.
<PAGE>
Execution Copy II
-----------------
EMPLOYMENT AND NON-INTERFERENCE AGREEMENT
-----------------------------------------
This Employment and Non-Interference Agreement (this "Agreement") dated as
of May 1, 1997, is by and between Augustus F. Hothorn (the "Executive") and
National Restaurant Enterprises, Inc., a Delaware corporation (the "Company")
and a wholly owned subsidiary of AmeriKing, Inc., a Delaware corporation
("Parent");
W I T N E S S E T H:
-------------------
WHEREAS, the Company wishes to obtain the future services of the Executive
for the Company; and
WHEREAS, the Executive is willing, upon the terms and conditions herein set
forth, to provide services hereunder; and
WHEREAS, the Company wishes to secure the Executive's non-interference,
upon the terms and conditions herein set forth;
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein, and intending to be legally bound hereby, the parties hereto
agree as follows:
1. Nature of Employment
Subject to Section 3, the Company hereby employs the Executive, and the
Executive agrees to accept such employment, during the Term of Employment (as
defined in Section 3(a)), as Senior Vice President, Development of the Company
and to undertake such duties and responsibilities as may be reasonably assigned
to the Executive in good faith from time to time by the Chairman, Chief
Executive Officer or the Board of Directors of the Company or the Parent.
2. Extent of Employment
(a) During the Term of Employment, the Executive shall perform his
obligations hereunder faithfully and to the best of his ability at the principal
executive offices of the Company, under the direction of the Chairman, Chief
Executive Officer and Board of Directors of the Company (the "Board of
Directors"), and shall abide by the rules, customs
<PAGE>
and usages from time to time established by the Company and AmeriKing, Inc. (the
"Parent").
(b) During the Term of Employment, the Executive shall devote all of his
business time, energy and skill as may be reasonably necessary for the
performance of his duties, responsibilities and obligations hereunder (except
for vacation periods and reasonable periods of illness or other incapacity),
consistent with the expectations of the Board of Directors and norms in the
industry for similar positions. The Executive shall not, without the prior
written consent of the Company, render to others services of any kind for
compensation, and will not engage in any other business activity that would
interfere with the performance of his duties for the Company.
(c) Nothing contained herein shall require the Executive to follow any
directive or to perform any act which would violate any of the Burger King
Corporation franchise entity form of ownership guidelines, the Burger King
Uniform Franchise Offering Circular as amended or updated from time to time, and
any other franchise and other regulations and requirements, from time to time in
effect (collectively, the "Burger King Regulations") of the Burger King
Corporation, or any laws, ordinances, regulations or rules of any governmental,
regulatory or administrative body, agent or authority, any court or judicial
authority, or any public, private or industry regulatory authority. The
Executive shall act in good faith in accordance with all Burger King Regulations
and laws, ordinances, regulations or rules of any governmental, regulatory or
administrative body, agent or authority, any court or judicial authority, or any
public, private or industry regulatory authority to the extent the Executive
knows or has reasonable notice of such Burger King regulations, laws,
ordinances, regulations or rules.
(d) During the term of his employment, the Executive shall live in the
Chicago area and generally perform his duties under this Agreement from the
Company's offices in the Chicago area, unless otherwise directed by the
Chairman, Chief Executive Officer or the Board of Directors and agreed to by the
Executive; provided, that if the Company's offices are moved and the senior
executives of the Company move to the new office location, the Executive shall
also move to the new office location.
3. Term of Employment; Termination
(a) The "Term of Employment" shall commence on May 19, 1997 or such other
date as the Company and the Executive may agree (the "Effective Date") and
shall, subject to the terms and conditions of this Agreement, continue for an
initial term of three years. Should the Executive's employment be earlier
terminated by the Company pursuant to Section 3(b) or by the Executive pursuant
to Section 3(c), the Term of Employment shall end on the Termination Date (as
defined in Section 3(b)).
(b) Subject to the obligation of the Company to make any payments
pursuant to Section 3(e), the Term of Employment may be terminated at any time
by the Company:
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<PAGE>
(i) upon the death of the Executive;
(ii) in the event the Executive is Disabled for 90 days (which need
not be continuous) during a twelve continuous month period (or any shorter
period). For the purposes of this Agreement, the Executive shall be deemed
to be Disabled if because of a physical or mental disability the Executive
is unable to perform, and does not perform, his duties under this
Agreement. In the event of a dispute as to whether the Executive is
Disabled, the Company and the Executive agree to submit such dispute to a
licensed, practicing physician mutually satisfactory to the Company and the
Executive who shall be selected and who shall examine the Executive within
30 days, and the Executive agrees to submit to such tests and examination
as such physician shall deem appropriate;
(iii) for Cause (as defined in Section 3(c));
(iv) for any other reason not referred to in clauses (i) through
(iii) or for no reason in either case after 60 days' prior written notice
from the Company, such that this Agreement, subject to the provisions of
Section 3(e), shall be construed as terminable at will by the Company.
The Executive acknowledges that no representations or promises have been
made concerning the grounds for termination or the future operation of the
Company's business, and that nothing contained herein or otherwise stated by or
on behalf of the Company modifies or amends the right of the Company to
terminate the Executive at any time, with or without Cause. Termination shall
become effective upon the "Termination Date", which shall be as follows. If
termination of the Term of Employment occurs:
(A) under Sections 3(b)(i) or 3(c)(i) - the date of death of the
Executive;
(B) under Sections 3(b)(ii) or 3(c)(ii) - as of the date the Executive is
Disabled for the period provided in such Sections, as agreed to by the
Company and the Executive, or as determined by a physician selected under
such Sections;
(C) under Sections 3(b)(iii), 3(b)(iv), 3(c)(iii) or 3(c)(iv) - the date a
party to this Agreement delivers to the other party a notice of termination
or resignation specifying the reason(s) therefor, as the case may be,
subject to the requirements for advance notice and the opportunity to cure
provided in this Agreement, if and to the extent applicable;
(D) under Section 3(f) - the next anniversary of the Effective Date
occurring more than 120 days after notice of termination is delivered by
either party to the other under such Section; or
-2-
<PAGE>
(E) upon the mutual agreement of the parties - the effective date of such
mutual agreement.
(c) Subject to the obligation of the Company to make any payments pursuant
to Section 3(e), the Term of Employment may be terminated at any time by the
Executive:
(i) upon the death of the Executive;
(ii) in the event the Executive is Disabled;
(iii) as a result of material reduction in the Executive's authority,
perquisites, position or responsibilities (other than such a reduction
which affects all of the Company's senior executives on a substantially
equal or proportionate basis) or the Company's willful, material violation
of its obligations under this Agreement, in each case, after 60 days' prior
written notice to the Company and its Board of Directors and the Company's
failure thereafter to cure such reduction or violation; or
(iv) voluntarily or for any reason not referred to in clauses (i)
through (iii) or for no reason, in either case, after 60 days' prior
written notice to the Company and its Board of Directors.
(d) For the purposes of this Section 3, "Cause" shall mean any of the
following:
(i) The Executive's conviction of a serious felony or a crime
involving embezzlement, conversion of property or moral turpitude;
(ii) a final, non-appealable finding of the Executive's fraud,
embezzlement or conversion of property; (iii) a final non-appealable
finding of the Executive's breach of any of his fiduciary duties to
the Company or its stockholders (which shall include, but not be
limited to, a duty to discharge the Executive's duties and
responsibilities in good faith and with a degree of diligence, care
and skill commensurate with the Executive's position in the Company)
or making of a willful misrepresentation or omission which breach,
misrepresentation or omission might reasonably be expected to
materially adversely affect the business, properties, assets,
condition (financial or other) or prospects of the Company; provided,
that, the Executive has been given notice and within 30 days of such
notice fails to cure the breach, misrepresentation or omission; (iv)
the Executive's continual neglect or failure to discharge his duties,
responsibilities or obligations prescribed by this Agreement or any
other agreement between the Executive and the Company other than as a
result of the Executive's being Disabled; provided, that, the
Executive has been given notice and within 30 days of such notice
fails to cure the neglect or failure; (v) the Executive's drunkenness
or substance abuse, which materially interferes with the Executive's
ability to discharge his duties, responsibilities and obligations
prescribed by this Agreement; provided that the Executive has been
-3-
<PAGE>
given notice and within 30 days of such notice fails to cure such
drunkenness or abuse; (vi) the Executive's material and knowing
violation of any obligations imposed upon the Executive, personally,
as opposed to upon the Company, under this Agreement, the Certificate
of Incorporation or By-Laws of the Company, each as amended to date,
provided, that the Executive has been given notice and within 90 days
of such notice fails to cure the violation; (vii) the Executive's
engagement in egregious misconduct which materially injures the
Company or does not conform to the standard of conduct of the
Company's executive officers as set forth in the Company's Code of
Ethics and Policy Manual or as stipulated by the Board of Directors;
provided, that, the Executive has been given written notice and within
30 days of such notice fails to cure such misconduct; or (viii) the
Executive's personal (as opposed to the Company's) material and
knowing failure, to observe or comply with Burger King Regulations
whether as an officer, stockholder or otherwise, in any material
respect or in any manner which might reasonably have a material
adverse effect in respect of the Company's ongoing business,
operations, conditions, franchises, other business relationships or
properties, provided, that the Executive has been given notice and
within 90 days of such notice fails to cure the failure.
(e) In the event the Executive's Term of Employment is terminated pursuant
to
(i) Section 3(b)(i) or (ii) or 3(c)(i) or (ii), the Company will
pay to the Executive (or his estate or representative) the full amounts to
which he would be entitled under Section 4(a) for the period from
Termination Date through the first anniversary of such Termination Date;
(ii) Section 3(b)(iii) or 3(c)(iv), there will be no amounts owing
by the Company to the Executive from and after the Termination Date, except
for accrued but unused vacation pay and sick pay which shall be paid to the
Executive in accordance with Company practices; and
(iii) Section 3(b)(iv) or 3(c)(iii), the Company will pay the
Executive the full amounts to which he would be entitled under Section 4(a)
from the Termination Date through the later of the first anniversary of
such Termination Date or the third anniversary of the Effective Date,
payable in each case in two installments, half payable upon the Termination
Date and half payable upon the last day of such period;
provided, that, in the event the Executive's Term of Employment is terminated
following any Change of Control during the Original Term) other than pursuant to
Sections 3(b)(i), or (iii), or 3(c)(i) or (iv), the Executive shall be entitled
to receive, in addition to any amounts determined pursuant to Section 3(e)(i)-
(iii) above, an amount equal to (x) the Incremental Market Value as of such
Termination Date plus (y) the full amount he would be entitled as
-4-
<PAGE>
base compensation pursuant to Section 4(a) from the Termination Date through the
later of the first anniversary of the Termination Date or the third anniversary
of the Effective Date.
Termination of the Term of Employment will not terminate Sections 7, 8, 10
through 21, or any other provisions not associated specifically with the Term of
Employment.
In the event the Executive is terminated and the Company is obligated to make
payments pursuant to this Section 3(e), the Company's payment obligations under
this Section 3(e) will be mitigated and reduced on a dollar-for-dollar basis, to
the extent of the Executive receives, during the period for which payments are
owed by the Company pursuant to this Section 3(e). any compensation for services
provided following the Termination Date to a third party.
(f) Upon the conclusion of the initial three year term of this Agreement
(the "Original Term") and upon each succeeding anniversary of the Effective
Date, the Executive's Term of Employment will be automatically renewed for
another year; provided, that neither the Company nor the Executive terminates
this Agreement pursuant to Section 3 during the Original Term; and provided,
further, that, following the Original Term, neither the Company nor the
Executive provides notice of termination to the other at least 120 days before
the anniversary of this Agreement.
4. Compensation. (a) During the Term of Employment, the Company shall
pay to the Executive, as base compensation for his services hereunder, in
biweekly installments, a base salary at a rate of $200,000 per annum, as
increased on an annual basis to reflect the increase in the United States
Government cost of living index for the Chicago, Illinois area. Notwithstanding
the minimum increase set forth above, the Board of Directors in their sole
discretion, may establish a higher compensation level.
(b) During the Term of Employment, the Company may pay, to the Executive
an annual bonus of up to 50% of his annual base compensation based on the
Executive's performance, as determined and approved by the Board of Directors,
in its sole discretion. Such bonus will be at the full discretion of the Board
of Directors, and may not be paid at all. The Executive acknowledges that no
such bonuses have been agreed upon or promised. If the Board of Directors
decides to pay a bonus, it is to be paid within thirty days after the issuance
of audited financial statements of the Parent. The Board of Directors in their
sole discretion may establish a higher bonus level based on the performance of
the Executive.
(c) In the event the Executive remains employed by the Company on the
Measurement Date, the Executive shall be entitled to receive long term incentive
compensation equal to 3.5% of the Incremental Market Value as of the Measurement
Date. In the event the Executive's employment is terminated pursuant to Section
3(b)(i),(ii) or (iv), or Section 3(c)(iii), at any time after the third
anniversary of the Effective Date and prior to the Measurement Date, the
Executive shall be entitled to receive 3.5% of the Incremental Market Value as
of the Termination Date. An example of the calculation of such long term
-5-
<PAGE>
incentive compensation is set forth in Exhibit A attached hereto. The Executive
agrees that, other than as set forth in this Section 4(c) and in Section 3(e),
above, the Executive shall not be entitled to receive any portion of such long
term incentive compensation as measured by the Incremental Market Value and no
other form of long term incentive compensation has been agreed upon or promised
by the Company other than as set forth in this Agreement.
(d) During the Term of Employment, the Executive shall receive an
automobile allowance of $800 per month and reimbursements for automobile
insurance, repairs, maintenance and business-related fuel not to exceed $6,000
per annum.
(e) On the Executive's first day of employment at the Company pursuant to
the terms of this Agreement, which shall have been previously executed by the
Executive and the Company, the Company shall pay to the Executive a signing
bonus of $25,000.
5. Reimbursement of Expenses
During the Term of Employment, the Company shall reimburse the Executive
for documented travel, entertainment and other expenses reasonably incurred by
the Executive in connection with the performance of his duties hereunder and, in
each case, in accordance with the rules, customs and usages promulgated by the
Company from time to time in effect.
6. Benefits
During the Term of Employment, the Executive shall be entitled to
perquisites and benefits (including health, short and long term disability,
pension and life insurance benefits and directors and officers insurance
consistent with past practice, or as increased from time to time), as
established from time to time by the Board of Directors for executives of the
Company.
7. Confidential Information
(a) During and after the Term of Employment, the Executive will not,
directly or indirectly in one or a series of transactions, disclose to any
person, or use or otherwise exploit for the Executive's own benefit or for the
benefit of anyone other than the Company, any Confidential Information (as
defined in Section 9), whether prepared by the Executive or not; provided,
however, that any Confidential Information may be disclosed to officers,
representatives, employees and agents of the Company who need to know such
Confidential Information in order to perform the services or conduct the
operations required or expected of them in the Business (as defined in Section
9). The Executive shall use his best efforts to prevent the removal of any
Confidential Information from the premises of the Company, except as required in
his normal course of employment by the Company. The Executive shall use his
best efforts to cause all persons or entities to whom any Confidential
Information shall be disclosed by him hereunder to observe the terms and
conditions set forth herein as though each such person or entity was bound
hereby. The Executive shall have no
-6-
<PAGE>
obligation hereunder to keep confidential any Confidential Information if and to
the extent disclosure of any thereof is specifically required by law; provided,
however, that in the event disclosure is required by applicable law, the
Executive shall provide the Company with prompt notice of such requirement,
prior to making any disclosure, so that the Company may seek an appropriate
protective order. At the request of the Company, the Executive agrees to
deliver to the Company, at any time during the Term of Employment, or
thereafter, all Confidential Information which he may possess or control. The
Executive agrees that all Confidential Information of the Company (whether now
or hereafter existing) conceived, discovered or made by him during the Term of
Employment exclusively belongs to the Company (and not to the Executive). The
Executive will promptly disclose such Confidential Information to the Company
and perform all actions reasonably requested by the Company to establish and
confirm such exclusive ownership. Upon Termination, the Executive shall
promptly return, and in no event later than 30 days following Termination, all
Confidential Information held by the Executive to the Company.
(b) The terms of this Section 7 shall survive the termination of this
Agreement regardless of who terminates this Agreement, or the reasons therefor.
8. Non-Interference/Non-Disparagement
(a) The Executive acknowledges that his employment by the Company gives him
the opportunity to have special knowledge of the Company and its Confidential
Information and the capabilities of individuals employed by or affiliated with
the Company and that interference in these relationships would cause irreparable
injury to the Company. In consideration of this Agreement, the Executive
covenants and agrees that:
(i) From the date hereof until the first anniversary of expiration or
termination of the Term of Employment (the "Restricted Period"), the
Executive will not, without the express written approval of the Board of
Directors of the Company, anywhere in the Market, directly or indirectly,
in one or a series of transactions, own, manage, operate, control, invest
or acquire an interest in, or otherwise engage or participate in, whether
as a proprietor, partner, stockholder, lender, director, officer, employee,
joint venturer, investor, lessor, supplier, agent, representative or other
participant, in any quick service hamburger restaurant business which
competes, directly or indirectly, with the Business in the Market
("Competitive Business") without regard to (A) whether the Competitive
Business has its office, manufacturing or other business facilities within
or without the Market, (B) whether any of the activities of the Executive
referred to above occur or are performed within or without the Market or
(C) whether the Executive resides, or reports to an office, within or
without the Market; provided, however, that (x) the Executive may, anywhere
in the Market, directly or indirectly, in one or a series of transactions,
own, invest or acquire an interest in up to five percent (5%) of the
capital stock of a corporation whose capital stock is traded publicly, (y)
the Executive may accept employment with a successor company to the
Company, (z) the Executive may work for the Burger King
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<PAGE>
Corporation or may own and operate independent Burger King franchisees,
provided that none of such Burger King franchisees are owned or operated,
directly or indirectly, in any way by a Competitive Business.
(ii) During the Restricted Period (which shall not include any period
of violation of this Agreement by the Executive or period which is required
for litigation to enforce the rights hereunder), the Executive will not
without the express prior written approval of the Board of Directors of the
Company (A) directly or indirectly, in one or a series of transactions,
recruit, solicit or otherwise induce or influence any proprietor, partner,
stockholder, lender, director, officer, employee, sales agent, joint
venturer, investor, lessor, supplier, customer, agent, representative or
any other person which has a business relationship with the Company or had
a business relationship with the Company within the twenty-four (24) month
period preceding the date of the incident in question, to discontinue,
reduce or modify such employment, agency or business relationship with the
Company, or (B) employ or seek to employ or cause any Competitive Business
to employ or seek to employ any person or agent who is then (or was at any
time within six (6) months prior to the date the Executive or the
Competitive Business employs or seeks to employ such person) employed or
retained by the Company. Also during the Restricted Period, the Executive
will not disparage or make public statements that damage Parent, the
Company and their respective business. Notwithstanding the foregoing,
nothing herein shall prevent the Executive from providing a letter of
recommendation to an employee with respect to a future employment
opportunity.
(iii) The scope and term of this Section 8 would not preclude him
from earning a living with an entity that is not a Competitive Business.
(b) The Executive covenants and agrees that during the Term of Employment
and for a period of three years after Termination, he shall not make any false,
defamatory or disparaging statements about the Company, Parent, any existing or
future subsidiary of the Company or Parent or any director or officer of the
Company, Parent or any subsidiary that are reasonably likely to cause material
damage to the Business of the Company, Parent or subsidiary or to the directors
or officers of the Company, Parent or any subsidiary.
(c) Upon a final, non-appealable finding that the Executive has breached
his obligations in any material respect under this Section 8, the Company, in
addition to pursuing all available remedies under this Agreement, at law or
otherwise, and without limiting its right to pursue the same shall cease all
payments to the Executive under this Agreement or any other agreement.
-8-
<PAGE>
9. Definitions
"Burger King Regulations" is defined in Section 1.
"Business" means (a) the construction, development, operations, ownership
and promotion of restaurants in which the Burger King Corporation is either (i)
the exclusive franchisor or (ii) co-franchisor in a dual-use restaurant, or (b)
any similar or incidental business conducted, or engaged in, by the Company or
the Parent prior to the date hereof or at any time during the Term of
Employment.
"Change of Control" means (i) a transaction or series of transactions
(other than pursuant to a registered public offering of the Parent's voting
stock) the result of which is that more than 50% of the voting stock of Parent
is acquired and held by a person or entity other than those stockholders of
Parent set forth on Exhibit B attached hereto, (ii) a transaction or series of
transactions (other than pursuant to a registered public offering of the
Company's voting stock) the result of which is that more than 50% of the voting
stock of the Company is acquired and held by a person or entity other than
Parent or an affiliate of Parent, (iii) a merger or consolidation of Parent in
which Parent is not the surviving entity or (iv) the sale of all or
substantially all of the assets of Parent or the Company.
"Confidential Information" means any confidential information including,
without limitation, any study, data, calculations, software storage media or
other compilation of information, patent, patent application, copyright,
trademark, trade name, service mark, service name, "know-how", trade secrets,
customer lists, details of client or consultant contracts, pricing policies,
operational methods, marketing plans or strategies, product development
techniques or plans, business acquisition plans or any portion or phase of any
scientific or technical information, ideas, discoveries, designs, computer
programs (including source of object codes), processes, procedures, formulae,
improvements or other proprietary or intellectual property of the Company,
whether or not in written or tangible form, and whether or not registered, and
including all files, records, manuals, books, catalogues, memoranda, notes,
summaries, plans, reports, records, documents and other evidence thereof. The
term "Confidential Information" does not include, and there shall be no
obligation hereunder with respect to, information that becomes generally
available to the public other than as a result of a disclosure by the Executive
not permissible hereunder.
"Executive" means Augustus F. Hothorn or his estate, if deceased.
"Incremental Market Value" means the theoretical market value of new Burger
King restaurants developed by Parent, the Company or any of their wholly-owned
subsidiaries during the five year period from the Effective Date to the
Measurement Date, or during such period as set forth in Section 4(c) or Section
3(e) of this Agreement. For purposes of this Agreement, "theoretical market
value" means an amount equal to the "pro forma cash flow" (as reasonably
determined by the Board of Directors in their sole discretion using generally
accepted accounting principles) of the newly developed Burger King restaurants
multiplied by
-9-
<PAGE>
five (5) less all gross capitalized costs (excluding any costs associated with
the purchase and improvement of land and the construction of new Burger King
restaurants, but including any costs related to furniture, fixtures and
equipment) incurred by the Company or the Parent (including gross capitalized
internal development costs allocated to such restaurants prior to any deduction
for depreciation and amortization of such costs) to develop such restaurants.
"Pro forma cash flow" of the newly developed Burger King restaurants is to be
based on (i) the actual cash flows of the Burger King restaurants developed by
the Executive and open for a period of 12 months or more and (ii) the projected
cash flows of the Burger King restaurants developed by the Executive and open
for a period of less than 12 months. For purposes of this Agreement, actual
cash flow shall be equal to restaurant revenues (defined as all sums charged by
such restaurants in their capacity as Burger King franchisees for goods,
merchandise or services sold at, from or away from such restaurant, including
premiums and telephone orders; provided, however, that such sums shall not
include (x) any federal, state, county or city sales or excise tax, or other
similar taxes collected by such restaurants, in their capacity from customers
based upon sales, (y) cash received as payment in credit transactions where the
extension of credit itself has already been included such sums and (z) any
amounts received for not-for-profit sales of nonfood items approved for use in
connection with promotional campaigns, if any, of Burger King Corporation) less
cost of goods sold and all operating expenses, including general and
administrative expenses and lease expenses (whether payable to a third party or
to the Company, Parent or their respective affiliates, allocable to such
restaurant but excluding depreciation and amortization allocable to the
restaurant, all of the foregoing on an arms-length basis).
"Market" means any county in the United States of America and each similar
jurisdiction in any other country in which the Business was conducted by or
engaged in by the Company prior to the date hereof or is conducted or engaged
in, or for which a restaurant site is in development, by the Company at any time
during the Term of Employment.
"Measurement Date" means the fifth anniversary of the Effective Date.
10. Notice
Any notice, request, demand or other communication required or permitted to
be given under this Agreement shall be given in writing and if delivered
personally, or sent by certified or registered mail, return receipt requested,
as follows (or to such other addressee or address as shall be set forth in a
notice given in the same manner):
-10-
<PAGE>
If to the Executive: Augustus F. Hothorn
Sutherland, 5 Hartwell Drive
Beaconsfield, Bucks HP9 1JA
England
with a copy to:
McGlinchey Stafford
643 Magazine Street
New Orleans, Louisiana 70130-3477
Attention: James M. Fantaci, Esq.
If to Company: 2215 Enterprise Drive
Suite 1502
Westchester, IL 60154
Attention: Chief Executive Officer
with a copy to:
Mayer, Brown & Platt
1675 Broadway
Suite 1900
New York, New York 10019
Attention: James B. Carlson, Esq.
Any such notices shall be deemed to be given on the date personally delivered or
such return receipt is issued.
11. The Executive's Representation
The Executive hereby warrants and represents to the Company that: (i) the
Executive has carefully reviewed this Agreement and has consulted with such
advisors as the Executive considers appropriate in connection with this
Agreement, (ii) the Executive is not subject to any covenants, agreements or
restrictions, including without limitation any covenants, agreements or
restrictions arising out of the Executive's prior employment or the Burger King
Regulations which would be breached or violated by the Executive's execution of
this Agreement or by the Executive's performance of his duties hereunder and
(iii) the Executive will not knowingly breach or violate any provision of the
Burger King Regulations in any material respect or in any manner which might
reasonably have a material adverse effect in respect of the Company's ongoing
business, operations, conditions, franchises, or other business relationships or
properties.
-11-
<PAGE>
12. Other Matters
(a) The Executive agrees and acknowledges that the obligations owed to the
Executive under this Agreement are solely the obligations of the Company, and
that none of the Company's stockholders, directors, officers or lenders will
have any obligations or liabilities in respect of this Agreement and the subject
matter hereof.
(b) The Executive and the Company hereby agree and acknowledge that this
Agreement replaces and supersedes any prior employment agreement to which the
Executive is a party, and upon the execution of this Agreement, such prior
employment agreement shall automatically be terminated and rendered without
force and effect and that the Executive shall release and discharge the Company
and Parent, and their respective directors, stockholders, officers and lenders
from any further obligations or liabilities thereunder.
13. Validity
If, for any reason, any provision hereof shall be determined to be invalid
or unenforceable, the validity and effect of the other provisions hereof shall
not be affected thereby.
14. Severability
Whenever possible, each provision of this Agreement will be interpreted in
such manner as to be effective and valid under applicable law, but if any
provision of this Agreement is held to be invalid, illegal or unenforceable in
any respect under any applicable law or rule in any jurisdiction, such
invalidity, illegality or unenforceability will not affect any other provision
or any other jurisdiction, but this Agreement will be reformed, construed and
enforced in such jurisdiction as if such invalid, illegal or unenforceable
provision had never been contained herein. If any court determines that any
provision of Section 8 or any other provision hereof is unenforceable because of
the power to reduce the scope or duration of such provision, as the case may be
and, in its reduced form, such provision shall then be enforceable.
15. Waiver of Breach; Specific Performance
The waiver by the Company or the Executive of a breach of any provision of
this Agreement by the other party shall not operate or be construed as a waiver
of any other breach of such other party. Each of the parties (and third party
beneficiaries) to this Agreement will be entitled to enforce its rights under
this breach of any provision of this Agreement and to exercise all other rights
existing in its favor. The parties hereto agree and acknowledge that money
damages may not be an adequate remedy for any breach of the provisions of
Sections 7 and 8 of this Agreement and that any party (and third party
beneficiaries) may in its sole discretion apply to any court of law or equity of
competent jurisdiction for specific performance and/or injunctive relief,
including temporary restraining
-12-
<PAGE>
orders, preliminary injunctions and permanent injunctions in order to enforce or
prevent any violations of the provisions of this Agreement. In the event either
party takes legal action to enforce any of the terms or provisions of this
Agreement, the nonprevailing party shall pay the successful party's costs and
expenses, including but not limited to, reasonable attorneys' fees, incurred in
such action.
16. Assignment; Third Parties
Neither the Executive nor the Company may assign, transfer, pledge,
hypothecate, encumber or otherwise dispose of this Agreement or any of his or
its respective rights or obligations hereunder, without the prior written
consent of the other. The parties agree and acknowledge that each of the
Companies and the stockholders and investors therein are intended to be third
party beneficiaries of, and have rights and interests in respect of, the
Executive's agreements set forth in Sections 7 and 8.
17. Amendment; Entire Agreement
This Agreement may not be changed orally but only by an agreement in
writing agreed to by the party against whom enforcement of any waiver, change,
modification, extension or discharge is sought. This Agreement embodies the
entire agreement and understanding of the parties hereto in respect of the
subject matter of this Agreement, and supersedes and replaces all prior
Agreements, understandings and commitments with respect to such subject matter.
18. Litigation
THIS AGREEMENT SHALL BE GOVERNED BY, CONSTRUED, APPLIED AND ENFORCED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF ILLINOIS. EACH OF THE PARTIES HERETO
ACKNOWLEDGES AND AGREES THAT IN THE EVENT OF ANY BREACH OF THIS AGREEMENT, THE
NON-BREACHING PARTY WOULD BE IRREPARABLY HARMED AND COULD NOT BE MADE WHOLE BY
MONETARY DAMAGES, AND THAT, IN ADDITION TO ANY OTHER REMEDY TO WHICH THEY MAY BE
ENTITLED AT LAW OR IN EQUITY, THE PARTIES SHALL BE ENTITLED TO SUCH EQUITABLE OR
INJUNCTIVE RELIEF AS MAY BE APPROPRIATE. EACH PARTY AGREES THAT JURISDICTION
AND VENUE WILL BE PROPER IN CHICAGO, ILLINOIS AND WAIVES ANY OBJECTIONS BASED
UPON FORUM NON CONVENIENS. EACH PARTY WAIVES PERSONAL SERVICE OF PROCESS AND
AGREES THAT A SUMMONS AND COMPLAINT COMMENCING AN ACTION OR PROCEEDING SHALL BE
PROPERLY SERVED AND SHALL CONFER PERSONAL JURISDICTION IF SERVED BY REGISTERED
OR CERTIFIED MAIL TO THE PARTY AT THE ADDRESS SET FORTH IN THIS AGREEMENT, OR AS
OTHERWISE PROVIDED BY THE LAWS OF THE STATE OF ILLINOIS OR THE UNITED STATES.
THE CHOICE OF FORUM SET FORTH IN THIS SECTION 18 SHALL NOT BE DEEMED TO PRECLUDE
THE ENFORCEMENT OF ANY
-13-
<PAGE>
JUDGMENT OBTAINED IN ANY OTHER FORUM OR THE TAKING OF ANY ACTION UNDER THIS
AGREEMENT TO ENFORCE SAME IN ANY OTHER APPROPRIATE JURISDICTION.
19. Arbitration
ANY DISPUTE BETWEEN OR AMONG THE PARTIES TO THIS AGREEMENT RELATING TO OR
IN RESPECT OF THIS AGREEMENT, ITS NEGOTIATION, EXECUTION, PERFORMANCE, SUBJECT
MATTER, OR ANY COURSE OF CONDUCT OR DEALING OR ACTIONS UNDER OR IN RESPECT OF
THIS AGREEMENT, INCLUDING, WITHOUT LIMITATION ANY CLAIM UNDER THE SECURITIES
ACT, THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, ANY OTHER STATE OR FEDERAL
LAW RELATING TO SECURITIES OR FRAUD OR BOTH, THE RACKETEER INFLUENCED AND
CORRUPT ORGANIZATIONS ACT, AS AMENDED, OR FEDERAL OR STATE COMMON LAW, SHALL BE
SUBMITTED TO, AND RESOLVED EXCLUSIVELY PURSUANT TO, ARBITRATION IN ACCORDANCE
WITH THE COMMERCIAL ARBITRATION RULES OF THE AMERICAN ARBITRATION ASSOCIATION.
SUCH ARBITRATION SHALL TAKE PLACE IN CHICAGO, ILLINOIS, AND SHALL BE SUBJECT TO
THE SUBSTANTIVE LAW OF THE STATE OF ILLINOIS. DECISIONS AS TO FINDINGS OF FACT
AND CONCLUSIONS OF LAW PURSUANT TO SUCH ARBITRATION SHALL BE FINAL, CONCLUSIVE
AND BINDING ON THE PARTIES, SUBJECT TO CONFIRMATION, MODIFICATION OR CHALLENGE
PURSUANT TO 9 U.S.C. (S)(S) 1 ET SEQ. ANY FINAL AWARD SHALL BE ENFORCEABLE AS A
JUDGMENT OF A COURT OF RECORD.
20. Further Action
the Executive and the Company agree to perform any further acts and to
execute and deliver any documents which may be reasonable to carry out the
provisions hereof.
21. Counterparts
This Agreement may be executed in counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument.
22. Successors and Assigns
This Agreement shall be binding upon the parties hereto and their
respective successors and assigns, including but not limited to any successor of
the Company as a result of a Change of Control.
-14-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have set their hands as of the day
and year first written above.
EXECUTIVE:
/s/ Augustus F. Hothorn
----------------------------------------------
Name: Augustus F. Hothorn
NATIONAL RESTAURANT ENTERPRISES, INC.
By /s/ Lawrence E. Jaro
-------------------------------------------
Name: Lawrence E. Jaro
Title: Chairman and Chief Executive Officer
-15-
<PAGE>
EXHIBIT A
A. F. Hothorn
Long Term Incentive Compensation
ILLUSTRATIVE EXAMPLE
<TABLE>
<S> <C>
New Restaurant Cash Flow
Actual Prior 12 months Cash Flow-Restaurants Open Greater-than 12 months $12,000,000
Projected Full 12 months Cash Flow-Restaurants Open Less-than 12 months $3,000,000
Total Cash Flow $15,000,000
Theoretical Market Value (5 times New Restaurant Cash Flow) $75,000,000
Non-Real Estate Cost to Develop New Restaurants $40,000,000
Incremental Market Value (Theoretical Mrkt. Value minus Non-Real Estate Cost to Develop) $35,000,000
A.F. Hothorn Long Term Incentive (3.5% of Incremental Market Value) $1,225,000
</TABLE>
<PAGE>
EXHIBIT B
AmeriKing, Inc. Stockholders
Lawrence Jaro
William Osborn
Gary Hubert
Joel Aaseby
Scott Vasatka (1)
Donald Stahurski (1)
The Jordan Investors (2)
MCIT PLC
Leucadia Investors
(1) Assumes the exercise of option to purchase 4,851 shares of common stock of
AmeriKing, Inc.
(2) Includes John W. Jordan II, David W. Salaznick, Jonathan F. Boucher, John
R. Lowden, Adam E. Max, John M. Camp III, A. Richard Caputo, Jr., Paul R.
Rodzevik, James E. Jordan, Jr., JIT Partners, Thomas H. Quinn, Dennis Hogerty
and Jerald Dunn.
<PAGE>
Exhibit 11
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
AmeriKing, Inc.
Calculation of Earnings per Common Share
(Dollars in thousands, except per share amounts)
- ----------------------------------------------------------------------------------------------------------------
Three Quarters Quarter
- ----------------------------------------------------------------------------------------------------------------
December 31, January 2, July 1, July 2,
1996 to 1996 to 1997 to 1996 to
September 29, September 30, September 29, September 30,
1997 1996 1997 1996
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net loss $ (367) $ (638) $ (786) $(1,038)
- ----------------------------------------------------------------------------------------------------------------
Earnings available to stockholders
- ----------------------------------------------------------------------------------------------------------------
Dividends
- ----------------------------------------------------------------------------------------------------------------
Preferred Stock (338) (338) (113) (113)
- ----------------------------------------------------------------------------------------------------------------
Senior Preferred Stock (3,041) (1,080)
- ----------------------------------------------------------------------------------------------------------------
Amortization of issuance costs (89) (30)
------- -------
- ----------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------
Earnings available to common stockholders (3,835) (976) (2,009) (1,151)
- ----------------------------------------------------------------------------------------------------------------
Weighted average number of shares outstanding 899.22 863.29 902.99 863.29
- ----------------------------------------------------------------------------------------------------------------
Fully diluted weighted average number of shares
outstanding 999.99 969.99 999.99 969.99
- ----------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------
Net loss per common share (weighted average) $ (4.26) $ (1.13) $ (2.22) $ (1.33)
- ----------------------------------------------------------------------------------------------------------------
Net loss per common share (fully diluted) $ (3.84) $ (1.01) $ (2.01) $ (1.19)
- ----------------------------------------------------------------------------------------------------------------
Total Shares
------------
- ----------------------------------------------------------------------------------------------------------------
Weighted average number of common shares:
- ----------------------------------------------------------------------------------------------------------------
Original shares 863.29 863.29 863.29 863.29
- ----------------------------------------------------------------------------------------------------------------
Option shares 5.93 9.70
- ----------------------------------------------------------------------------------------------------------------
Common stock units 30.00 30.00
------- -------
- ----------------------------------------------------------------------------------------------------------------
Total 899.22 863.29 902.99 863.29
- ----------------------------------------------------------------------------------------------------------------
Fully diluted weighted average number of
common shares:
- ----------------------------------------------------------------------------------------------------------------
Original shares 969.99 969.99 969.99 969.99
- ----------------------------------------------------------------------------------------------------------------
Common stock units 30.00 30.00
------- -------
- ----------------------------------------------------------------------------------------------------------------
Total 999.99 969.99 999.99 969.99
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Exhibit 12
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
AmeriKing, Inc.
Calculation of Ratio of Earnings to Fixed Charges
(Dollars in thousands)
- --------------------------------------------------------------------------------------------------------------
Three Quarters Ended Three Quarters Ended
September 29, 1997 September 30, 1996
- --------------------------------------------------------------------------------------------------------------
W/O PIK With PIK W/O PIK With PIK
Dividends Dividends Dividends Dividends
--------- --------- --------- ---------
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
EARNINGS
- --------------------------------------------------------------------------------------------------------------
Loss before income taxes benefit $ (612) $ (612) $(1,064) $(1,064)
- --------------------------------------------------------------------------------------------------------------
Interest expense 9,223 9,223 8,880 8,880
- --------------------------------------------------------------------------------------------------------------
Amortization of deferred financing costs 405 405 692 692
- --------------------------------------------------------------------------------------------------------------
Portion of rents representative of interest 3,870 3,870 3,463 3,463
- --------------------------------------------------------------------------------------------------------------
Preferred stock PIK dividends 338 338
- --------------------------------------------------------------------------------------------------------------
Total Earnings $12,886 $13,224 $11,971 $12,309
- --------------------------------------------------------------------------------------------------------------
FIXED CHARGES
- --------------------------------------------------------------------------------------------------------------
Interest expense $ 9,223 $ 9,223 $ 8,880 $ 8,880
- --------------------------------------------------------------------------------------------------------------
Amortization of deferred financing costs 405 405 692 692
- --------------------------------------------------------------------------------------------------------------
Portion of rents representative of interest 3,870 3,870 3,463 3,463
- --------------------------------------------------------------------------------------------------------------
Preferred stock PIK dividends 338 338
- --------------------------------------------------------------------------------------------------------------
Total Fixed Charges $13,498 $13,836 $13,035 $13,373
- --------------------------------------------------------------------------------------------------------------
RATIO OF EARNINGS TO FIXED CHARGES 0.95 0.96 0.92 0.92
- --------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Exhibit 12
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
AmeriKing, Inc.
Calculation of Ratio of Earnings to Fixed Charges
(Dollars in thousands)
- ------------------------------------------------------------------------------------------------------------
Quarter Ended Quarter Ended
September 29, 1997 September 30, 1996
- ------------------------------------------------------------------------------------------------------------
W/O PIK With PIK W/O PIK With PIK
Dividends Dividends Dividends Dividends
---------- ---------- --------- ---------
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
EARNINGS
- -------------------------------------------------------------------------------------------------------------
Loss before income taxes benefit $(1,311) $(1,311) $(1,741) $(1,741)
- -------------------------------------------------------------------------------------------------------------
Interest expense 3,294 3,294 3,120 3,120
- -------------------------------------------------------------------------------------------------------------
Amortization of deferred financing costs 131 131 243 243
- -------------------------------------------------------------------------------------------------------------
Portion of rents representative of interest 1,394 1,394 1,207 1,207
- -------------------------------------------------------------------------------------------------------------
Preferred stock PIK dividends 113 113
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
Total Earnings $ 3,508 $ 3,621 $ 2,829 $ 2,942
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
FIXED CHARGES
- -------------------------------------------------------------------------------------------------------------
Interest expense $ 3,294 $ 3,294 $ 3,120 $ 3,120
- -------------------------------------------------------------------------------------------------------------
Amortization of deferred financing costs 131 131 243 243
- -------------------------------------------------------------------------------------------------------------
Portion of rents representative of interest 1,394 1,394 1,207 1,207
- -------------------------------------------------------------------------------------------------------------
Preferred stock PIK dividends 113 113
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
Total Fixed Charges $ 4,819 $ 4,932 $ 4,570 $ 4,683
- -------------------------------------------------------------------------------------------------------------
RATIO OF EARNINGS TO FIXED CHARGES 0.73 0.73 0.62 0.63
- -------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND> This schedule contains summary financial information extracted from the
fiscal 1997 Consolidated Financial Statements of Ameriking, Inc. and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-29-1997
<PERIOD-END> SEP-29-1997
<CASH> 7,171
<SECURITIES> 0
<RECEIVABLES> 1,376
<ALLOWANCES> 0
<INVENTORY> 1,862
<CURRENT-ASSETS> 12,610
<PP&E> 64,847
<DEPRECIATION> 12,020
<TOTAL-ASSETS> 209,781
<CURRENT-LIABILITIES> 25,037
<BONDS> 154,448
33,344
0
<COMMON> 9
<OTHER-SE> (3,072)
<TOTAL-LIABILITY-AND-EQUITY> 209,781
<SALES> 60,179
<TOTAL-REVENUES> 60,179
<CGS> 19,583
<TOTAL-COSTS> 54,839
<OTHER-EXPENSES> 2,686
<LOSS-PROVISION> 495
<INTEREST-EXPENSE> 3,294
<INCOME-PRETAX> (1,311)
<INCOME-TAX> (525)
<INCOME-CONTINUING> (786)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (786)
<EPS-PRIMARY> (2.22)
<EPS-DILUTED> (2.01)
</TABLE>
