<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 15, 1999
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
CKE RESTAURANTS, INC.
AND OTHER REGISTRANTS
(SEE TABLE OF OTHER REGISTRANTS BELOW)
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
DELAWARE 5812 33-0602639
(STATE OR OTHER JURISDICTION (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
OF INCORPORATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
</TABLE>
401 W. CARL KARCHER WAY
ANAHEIM, CALIFORNIA 92801
(714) 774-5796
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
ANDREW F. PUZDER, ESQ.
EXECUTIVE VICE PRESIDENT AND GENERAL COUNSEL
CKE RESTAURANTS, INC.
401 W. CARL KARCHER WAY
ANAHEIM, CALIFORNIA 92801
(714) 774-5796
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
COPIES TO:
C. CRAIG CARLSON, ESQ.
STRADLING YOCCA CARLSON & RAUTH
660 NEWPORT CENTER DRIVE
NEWPORT BEACH, CALIFORNIA 92660
(949) 725-4000
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As promptly
as practicable after this Registration Statement becomes effective.
If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ] ______
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] ______
CALCULATION OF REGISTRATION FEE
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<S> <C> <C> <C> <C>
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PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED PER UNIT PRICE(1) REGISTRATION FEE(1)
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9 1/8% Senior Subordinated Notes Due
2009..................................... $200,000,000 100% $200,000,000 $55,600
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Guarantees of the 9 1/8% Senior
Subordinated Notes Due 2009.............. $200,000,000 None(2) None(2) None(2)
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</TABLE>
(1) Estimated solely for the purpose of computing the registration fee in
accordance with Rule 457(f) of the Securities Act of 1933, as amended.
(2) Pursuant to Rule 457(n) under the Securities Act of 1933, as amended, no
separate fee is payable for the guarantees.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
TABLE OF OTHER REGISTRANTS
<TABLE>
<CAPTION>
PRIMARY
STANDARD
STATE OF INDUSTRIAL I.R.S.
INCORPORATION CLASSIFICATION EMPLOYER
EXACT NAME OF REGISTRANT OR CODE IDENTIFICATION
AS SPECIFIED IN ITS CHARTER ORGANIZATION NUMBERS NUMBERS
--------------------------- --------------- -------------- --------------
<S> <C> <C> <C>
1233 Corporation Ohio 5812 31-1034769
Boston Pacific Inc., California 5812 33-0607474
Burger Chef Systems, Inc. North Carolina 5812 56-0905056
Carl Karcher Enterprises, Inc. California 5812 95-2415578
Carl's Jr. Region VIII, Inc. Delaware 5812 33-0823059
CBI Restaurants, Inc. Delaware 5812 33-0723490
Central Iowa Food Systems, Inc. Iowa 5812 42-1092707
Fast Food Restaurants, Inc. Pennsylvania 5812 25-1121971
Flagstar Enterprises, Inc. Alabama 5812 57-0900036
Hardee's at Onslow Mall, Inc. North Carolina 5812 56-0995560
</TABLE>
<TABLE>
<CAPTION>
PRIMARY
STANDARD
STATE OF INDUSTRIAL I.R.S.
INCORPORATION CLASSIFICATION EMPLOYER
EXACT NAME OF REGISTRANT OR CODE IDENTIFICATION
AS SPECIFIED IN ITS CHARTER ORGANIZATION NUMBERS NUMBERS
--------------------------- --------------- -------------- --------------
<S> <C> <C> <C>
Hardee's Food Systems, Inc. North Carolina 5812 56-0732584
HED, Inc. North Carolina 5812 56-1253195
HFS Georgia, Inc. Georgia 5812 56-1765724
HFS Ventures, Inc. North Carolina 5812 56-1771069
Spardee's Realty, Inc. Alabama 5812 58-1864855
Taco Bueno Equipment Company Texas 5812 75-1510677
Taco Bueno Restaurants, Inc. Texas 5812 75-1833978
Taco Bueno Texas, L.P. Texas 5812 75-2426189
Taco Bueno West, Inc. Delaware 5812 75-2426200
</TABLE>
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<PAGE> 2
SUBJECT TO COMPLETION
PROSPECTUS
APRIL 15, 1999
$200,000,000
CKE RESTAURANTS, INC.
[CARL'S JR. LOGO]
OFFER TO EXCHANGE OUR
9 1/8% SENIOR SUBORDINATED NOTES DUE 2009
FOR ANY AND ALL OF OUR OUTSTANDING
9 1/8% SENIOR SUBORDINATED NOTES DUE 2009
------------------------
- CKE Restaurants, Inc., 401 W. Carl Karcher Way, Anaheim, California
92801, (714) 774-5796.
- We are offering to exchange, for all outstanding notes that are validly
tendered and not validly withdrawn before the expiration of the exchange
offer, an equal amount of a new series of notes which are registered
under the Securities Act of 1933.
- The terms of the exchange notes to be issued are substantially identical
to the outstanding notes, except for some of the transfer restrictions
and registration rights relating to the outstanding notes.
- You may tender outstanding notes only in denominations of $1,000 and
multiples of $1,000.
- You may withdraw tender of outstanding notes at any time prior to the
expiration of the exchange offer.
- The exchange offer will expire at 5:00 p.m., New York City time, on
, 1999, unless extended.
- The exchange of notes should not be a taxable exchange for U.S. federal
income tax purposes.
- We will not receive any proceeds from the exchange offer.
- The exchange offer is subject to customary conditions, including the
condition that the exchange offer not violate applicable law or any
applicable interpretation of the staff of the SEC.
------------------------
HOLDERS OF OUTSTANDING NOTES SHOULD CAREFULLY CONSIDER THE RISK FACTORS
BEGINNING ON PAGE 15
OF THIS PROSPECTUS IN CONNECTION WITH THIS EXCHANGE OFFER.
------------------------
Neither the SEC nor any state securities commission has approved or
disapproved of these securities or passed upon the adequacy or accuracy of this
prospectus. Any representation to the contrary is a criminal offense.
The date of this prospectus is , 1999.
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES OR ACCEPT AN OFFER TO BUY THESE SECURITIES UNTIL THIS
PROSPECTUS IS DELIVERED IN FINAL FORM. THIS PROSPECTUS IS NOT AN OFFER TO SELL
THESE SECURITIES AND WE ARE NOT SOLICITING OFFERS TO BUY THESE SECURITIES IN ANY
STATE WHERE SUCH OFFER OR SALE IS NOT PERMITTED.
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
Disclosure Regarding Forward-Looking
Statements........................... 2
Where You Can Find More Information.... 3
Prospectus Summary..................... 5
Risk Factors........................... 15
The Exchange Offer..................... 23
Use of Proceeds........................ 32
Capitalization......................... 32
Description of Certain Indebtedness.... 33
Description of the Exchange Notes...... 35
Certain United States Federal Income
Tax Considerations................... 73
Plan of Distribution................... 77
Legal Matters.......................... 77
Experts................................ 77
</TABLE>
------------------------
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
The information contained in this prospectus and in the other documents
referenced herein contains forward-looking statements that involve a number of
risks and uncertainties. Forward-looking statements can be identified by the use
of forward-looking terminology such as "believes," "expects," "may," "will,"
"should," "seeks," "pro forma" or "anticipates," or other variations thereof
(including their use in the negative), or by discussions of strategies, plans or
intentions. A number of factors could cause results to differ materially from
those anticipated by such forward-looking statements. Among these factors are:
- Our ability to grow and implement cost-saving strategies;
- Increases in our operating costs, including commodity costs and the
minimum wage;
- Our ability to compete in the quick-service restaurant industry;
- Our ability to pay principal and interest on our substantial debt;
- Our ability to borrow in the future;
- Our ability and the ability of our franchisees, suppliers and vendors to
implement an effective Year 2000 readiness program;
- Adverse legislation or regulation;
- Adverse weather conditions;
- Our ability to sustain or increase historical revenues and profit
margins; and
- Continuation of certain trends and general economic conditions in our
industry.
In addition, such forward-looking statements are necessarily dependent upon
assumptions and estimates that may prove to be incorrect. Accordingly, while we
believe that the plans, intentions and expectations reflected in such
forward-looking statements are reasonable, we can give no assurance that such
plans, intentions or expectations will be achieved. The information contained in
this offering prospectus and in the other documents referenced herein, including
the Risk Factors section hereof, identifies important factors that could cause
such differences.
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WHERE YOU CAN FIND MORE INFORMATION
We have filed with the SEC a Registration Statement under the Securities
Act of 1933, as amended (the "Securities Act"), covering the exchange notes to
be issued in exchange for the outstanding notes pursuant to this prospectus. As
permitted by SEC rules, this prospectus omits important information included in
the Registration Statement. For further information pertaining to the exchange
notes, we refer you to the Registration Statement and its exhibits. Any
statement made in this prospectus concerning the contents of any contract,
agreement or other document is not necessarily complete. If we have filed any
such contract, agreement or document as an exhibit to the Registration
Statement, you should read the exhibit for a more complete understanding of the
document or matter involved. Each such statement is qualified in its entirely by
reference to the actual document.
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. Our SEC filings are available to the public over the
internet at the SEC's web site at www.sec.gov. You may also read and copy any
document we file with the SEC at its public reference facilities at:
450 Fifth Street, N.W.
Washington, D.C. 20549
7 World Trade Center, Suite 1300
New York, New York 10048
Citicorp Center
500 West Madison Street, Suite 1400
Chicago, Illinois 60661-2511.
You can also obtain copies of the documents at prescribed rates by writing
to the Public Reference Section of the SEC at 450 Fifth Street, N.W.,
Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further
information on the operation of the public reference facilities. Our SEC filings
are also available at the office of the New York Stock Exchange. For further
information on obtaining copies of our public filings at the New York Stock
Exchange, you should call (212) 656-5060.
We "incorporate by reference" into this prospectus the information we file
with the SEC, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
an important part of this prospectus and information that we file subsequently
with the SEC will automatically update this prospectus. We have filed the
following documents with the SEC and they are incorporated herein by reference:
(1) our Annual Report on Form 10-K for the fiscal year ended January
31, 1999, and
(2) our Current Reports on Form 8-K dated April 1, 1998 (as amended),
February 19, 1999, February 25, 1999 and March 18, 1999;
This prospectus also incorporates by reference any future filings we make
with the SEC pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), until the offering of
securities covered by this prospectus is completed.
We will provide a copy of the information we incorporate by reference, at
no cost, to each person to whom this prospectus is delivered. To request a copy
of any or all of this information, you should contact us at the following
address and telephone number:
General Counsel
CKE Restaurants, Inc.
401 West Carl Karcher Way
Anaheim, California 92801
(714) 774-5796
To obtain timely delivery, you must request this information by ,
1999.
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You should rely only on the information incorporated by reference or
included in this prospectus. We have not authorized anyone else to provide you
with different information. You should not assume that the information in this
prospectus is accurate as of any date other than the date on the front cover of
this prospectus.
We are required by the indenture that governs the outstanding notes, and
which will govern the exchange notes, to furnish the trustee for the notes with
annual reports containing consolidated financial statements audited by our
independent public accountants and with quarterly reports containing unaudited
condensed consolidated financial statements for each of the first three fiscal
quarters of each fiscal year. The trustee for the notes is Chase Manhattan Bank
and Trust Company, National Association.
4
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PROSPECTUS SUMMARY
"We," "us," "our" and similar terms, as well as references to "CKE" or the
"Company" refer to CKE Restaurants, Inc. and its subsidiaries except where it is
clear that such terms mean only CKE Restaurants, Inc. "Hardee's" refers to
Hardee's Food Systems, Inc., and "FEI" refers to Flagstar Enterprises, Inc. The
following summary contains basic information about the exchange offer. It likely
does not contain all the information that is important to you. For a more
complete understanding of the exchange offer, we encourage you to read this
entire document and the documents we have referred to you.
CKE RESTAURANTS, INC.
We own, operate and franchise 3,801 quick-service restaurants, primarily
under the Carl's Jr., Hardee's and Taco Bueno brand names. Our Hardee's and
Carl's Jr. chains are the fourth and seventh largest quick-service hamburger
restaurant chains in the United States, respectively, based on domestic
system-wide sales. Based upon publicly available data, Carl's Jr. and Taco Bueno
restaurants operated by us generate restaurant-level operating margins that are
among the highest of the major quick-service restaurant chains.
- Carl's Jr.(R) -- Carl's Jr. was founded in 1956 and is located primarily
in the Western United States, with a leading market presence in
California. The Carl's Jr. menu features several charbroiled hamburgers,
chicken sandwiches, steak sandwiches and other signature items, including
the Famous Star, Western Bacon Cheeseburger(R), Super Star(R),
Charbroiler Chicken Sandwiches(R), Crispy Chicken Sandwiches(R) and the
Charbroiler Sirloin Steak Sandwich. Carl's Jr. differentiates itself from
its competitors by offering menu items that are generally made-to-order,
meet exacting quality standards and have a strong reputation for quality
and taste. As of January 31, 1999, our Carl's Jr. system included 861
restaurants, of which we operate 539 restaurants and our franchisees and
licensees operate 322 restaurants.
- Hardee's(R) -- We acquired Hardee's in July 1997. This acquisition
enabled us to expand the scope of our operations and become one of the
leading nationwide operators of quick-service hamburger restaurants.
Hardee's was founded in 1961 and has significant market presence in the
Southeastern and Midwestern United States. We believe there is
significant value in Hardee's and Carl's Jr.'s complementary geographic
markets and relative menu strengths. Hardee's strength is in its
breakfast menu, which generates approximately 30% of its overall
revenues. This represents one of the highest percentages in the
quick-service hamburger restaurant industry. Since the original
acquisition, we have acquired an additional 697 Hardee's restaurants from
franchisees in key markets, including 557 restaurants operated by FEI,
then the largest Hardee's franchisee. These additional acquisitions have
enabled us to exercise further control over and strengthen the Hardee's
brand. As of January 31, 1999, our Hardee's system included 2,804
restaurants, of which we operated 1,403 restaurants and our franchisees
and licensees operated 1,401 restaurants.
- Taco Bueno(R) -- We own and operate 111 Taco Bueno quick-service Mexican
restaurants located in Texas and Oklahoma. Taco Bueno differentiates
itself from its competitors by offering a diverse menu featuring generous
portions of freshly prepared, high quality food items. In addition to
typical quick-service Mexican offerings, such as burritos, tacos,
tostadas and combination meals, Taco Bueno features a number of signature
menu items, such as its Mexidips & Chips, Muchaco and Bueno Chilada
Platter.
STRATEGY
Our strategy is to improve the operations of underperforming restaurant
assets. We believe that our ability to deliver high-quality food with superior
service in a clean and friendly environment is critical to our operating
success. We have developed food, labor and customer service management practices
that allow us to effectively monitor restaurant-level operations, control costs,
benchmark restaurant performance statistics and communicate system-wide best
practices across restaurant concepts. As a result of our
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strategies, we have dramatically improved the operating results of Carl's Jr.
and Taco Bueno. From fiscal 1994 through fiscal 1999, company-operated Carl's
Jr. average unit sales increased from $992,000 to $ , while we improved
restaurant-level operating margins from 17.8% to %. In October 1996, we
acquired Taco Bueno. Since then, we have increased average unit sales of our
Taco Bueno restaurants from $600,000 to $ . In addition, we aggressively
promote and enhance awareness of each of our brands through innovative
advertising and remodeling programs.
The revitalization of Hardee's is the most important element of our growth
strategy. We believe that we can successfully turn around Hardee's based on the
success we have experienced at Carl's Jr. and Taco Bueno. Through our
disciplined approach, we believe that Hardee's profitability will continue to
improve and that we will be successful in increasing same-store sales. The key
elements of our growth strategy are to:
- Revitalize the Hardee's Brand to Grow Same-Store Sales. We are continuing
to focus on revitalizing the brand to generate same-store sales growth.
Same-store sales growth has improved consistently over the last eight
months principally as a result of enhancements we have made to the
Hardee's menu. We introduced certain made-to-order lunch and dinner menu
items that are currently served in our Carl's Jr. restaurants, such as
the Famous Star, and eliminated unprofitable product offerings. In order
to accelerate this same-store sales growth momentum, we are converting
our Hardee's restaurants into a new "Star Hardee's" format, which we
designed to revitalize the Hardee's brand with the menu and operating
qualities of Carl's Jr. In addition to the menu enhancements, a Star
Hardee's conversion involves installing charbroilers in the kitchens,
remodeling the interior and exterior of the restaurant, introducing
Carl's Jr.-style limited table service, adding "all-you-can-drink"
beverage bars and installing new signage that accents the Hardee's name
with the Carl's Jr. Star logo. We intend to accelerate our Star Hardee's
conversion program and build new restaurant units in this format. In
addition, our franchisees have also begun converting their restaurants to
the Star Hardee's format and continue to support our initiatives. We also
plan to enhance brand awareness through new advertising campaigns that
promote Hardee's to our target audience of high-volume lunch and dinner
customers. As of January 31, 1999, 120 Hardee's had been converted to
Star Hardee's, and results to date have been positive, with sales
averaging more than 10% above pre-conversion levels. We plan to convert
another 300 to 400 restaurants in fiscal 2000, and our Hardee's
franchisees advise us that they plan to convert up to 100 restaurants to
the Star Hardee's format during that period.
- Continue to Increase Hardee's Profitability. We have dramatically
improved restaurant-level operating margins and reduced corporate
overhead by implementing the operating initiatives, management practices
and disciplined operating strategy that we employ at Carl's Jr.
Restaurant-level operating margins of our company-operated Hardee's
restaurants increased % for fiscal 1999, compared with 6.2% for the
year ended December 31, 1996. We expect to improve further the
profitability of our Hardee's restaurants by installing and upgrading
point of sale and back office management information systems, as well as
continuing the implementation of our customer-focused, disciplined
operating strategy.
- Expand Successful Carl's Jr. and Taco Bueno Chains. We intend to
continue expanding our Carl's Jr. and Taco Bueno chains by opening new
restaurants and continuing our innovative advertising campaigns. In
fiscal 1999, combined system growth of Carl's Jr. restaurants totaled 80,
the highest in the history of the brand. In fiscal 2000, we plan to open
75 to 100 new Carl's Jr. restaurants in established markets. In addition,
we plan to continue dual-branding our Carl's Jr. restaurants with The
Green Burrito, a strategy which is intended to attract Mexican food
customers to Carl's Jr. restaurants. We also intend to open 15 to 30 Taco
Bueno restaurants per year over the next three fiscal years.
- Pursue Strategic Joint Venture Arrangements. We may pursue joint venture
agreements with compatible retailers, such as superstores, convenience
stores and service stations, to further expand
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Carl's Jr., Taco Bueno and Hardee's. This strategy will allow us to
partner with other entities that own or have access to more real estate
sites than we do, therefore allowing us to expand at a faster pace than
if we had to negotiate for sites on an individual basis. These joint
venture agreements may require us to contribute cash for development and
to provide operational and management support services.
- Opportunistically Pursue Strategic Acquisitions. While we are not
currently contemplating any significant additional acquisitions or
investments, we will continue to evaluate opportunities to expand our
operations by making strategic acquisitions of, or investments in,
underperforming restaurant companies.
------------------------
Our principal executive offices are located at 401 W. Carl Karcher Way,
Anaheim, California 92801, and our telephone number is (714) 774-5796. Our web
site address is www.ckr.com.
THE EXCHANGE OFFER
THE EXCHANGE OFFER............ In this exchange offer, we are offering to
exchange $1,000 principal amount of our 9 1/8%
Senior Subordinated Notes due 2009, which notes
have been registered under the Securities Act
(the "Exchange Notes"), for each $1,000
principal amount of our outstanding 9 1/8%
Senior Subordinated Notes due 2009 (the "Old
Notes"). As of the date of this prospectus,
$200.0 million in aggregate principal amount of
Old Notes are outstanding. In this prospectus,
we sometimes use the term "Notes" to refer to
the Exchange Notes together with the Old Notes.
Old Notes may be tendered for exchange in whole
or in part in integral multiples of $1,000
principal amount.
REGISTRATION RIGHTS AGREEMENT We are making the exchange offer to satisfy our
obligations under a Registration Rights
Agreement relating to the Old Notes, dated
March 4, 1999, that we entered into with Morgan
Stanley & Co. Inc, BancBoston Robertson
Stephens, Inc., Bear, Stearns & Co., Inc., U.S.
Bancorp Libra, a division of U.S. Bancorp
Investments, Inc., and Paribas Corporation, who
were the Initial Purchasers of the Old Notes.
For a description of the procedures for
tendering Old Notes, see "The Exchange
Offer -- Procedures for Tendering Old Notes."
EXPIRATION DATE............... The exchange offer will expire at 5:00 p.m.,
New York City time, on , 1999,
unless extended at our option.
CONDITIONS TO THE EXCHANGE
OFFER......................... The exchange offer is subject to conditions,
some of which we may waive at our sole
discretion. The exchange offer is not
conditioned upon any minimum aggregate
principal amount of Old Notes being tendered.
We reserve the right, in our sole and absolute
discretion, subject to applicable law, at any
time and from time to time to:
- delay the acceptance of the Old Notes;
- terminate the exchange offer if specified
conditions have not been satisfied;
- extend the expiration date of the exchange
offer and retain all Old Notes tendered
pursuant to the exchange offer, subject,
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<PAGE> 9
however, to the right of holders of Old Notes
to withdraw their tendered Old Notes prior to
such extended expiration date; and
- waive any condition or otherwise amend the
terms of the exchange offer in any respect.
See "The Exchange Offer -- Conditions to the
Exchange Offer" and "The Exchange
Offer -- Expiration Date; Extensions and
Amendments."
You will have certain rights against us under
the Registration Rights Agreement if one of
these conditions occurs and prevents the
exchange offer from taking place.
WITHDRAWAL RIGHTS............. You may withdraw the tender of your Old Notes
at any time until the expiration date by
delivering a written notice of such withdrawal
to the Exchange Agent. See "The Exchange
Offer -- Withdrawal Rights."
PROCEDURES FOR TENDERING OLD
NOTES......................... To tender Old Notes, you must complete and sign
a Letter of Transmittal according to its
instructions and mail, fax or hand-deliver it,
together with any other required documents, to
the Exchange Agent, either with the Old Notes
to be tendered or in compliance with the
specified procedures for guaranteed delivery of
Old Notes.
Certain brokers, dealers, commercial banks,
trust companies and other nominees may also
effect tenders by book-entry transfer.
If your Old Notes are registered in the name of
a broker, dealer, commercial bank, trust
company or other nominee, you are urged to
contact such nominee promptly if you wish to
tender Old Notes in the exchange offer. See
"The Exchange Offer -- Procedures for Tendering
Old Notes."
Please do not send your Letter of Transmittal
or certificates representing Old Notes to us.
You should only send those documents to the
Exchange Agent. You should direct questions
regarding how to tender Old Notes and requests
for information to the Exchange Agent.
RESALES OF EXCHANGE NOTES..... We believe that the Exchange Notes issued in
the exchange offer may be offered for resale,
resold and otherwise transferred by you without
compliance with the registration and prospectus
delivery requirements of the Securities Act,
provided that:
- you acquire the Exchange Notes issued in the
exchange offer in the ordinary course of your
business;
- you are not participating, and have no
arrangement or understanding with any person
to participate, in the distribution, as that
term is defined under the Securities Act, of
the Exchange Notes; and
- you are not an "affiliate" of CKE
Restaurants, Inc. within the meaning of Rule
405 under the Securities Act.
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<PAGE> 10
Our belief is based upon interpretations by the
staff of the SEC, as set forth in no-action
letters issued to third parties unrelated to
us. The staff of the SEC has not considered the
exchange offer in the context of a no-action
letter, and we cannot assure you that the staff
of the SEC would make a similar determination.
If our belief is not accurate and you transfer
an Exchange Note without delivering a
prospectus meeting the requirements of the
Securities Act or without an exemption from
registration of your Exchange Notes from such
requirements, you may incur liability under the
Securities Act. We do not and will not assume
or indemnify you against such liability.
Each broker-dealer that receives Exchange Notes
for its own account in exchange for Old Notes
which such broker acquired as a result of
market-making or other trading activities then
such broker-dealer must acknowledge that it
will deliver a prospectus meeting the
requirements of the Securities Act in
connection with any resales of such Exchange
Notes.
EXCHANGE AGENT................ The Exchange Agent with respect to the exchange
offer is Chase Manhattan Bank and Trust
Company, National Association. The addresses,
and telephone and facsimile number of the
Exchange Agent are set forth in this prospectus
under "The Exchange Offer -- Exchange Agent"
and in the Letter of Transmittal.
USE OF PROCEEDS............... We will not receive any cash proceeds from the
issuance of the Exchange Notes offered hereby.
See "Use of Proceeds."
CERTAIN UNITED STATES FEDERAL
INCOME TAX CONSIDERATIONS..... There should be no United States federal income
tax consequences arising from the exchange of
Old Notes for Exchange Notes in this exchange
offer. However, you should review the
information set forth under "Certain United
States Federal Income Tax Considerations" prior
to tendering Old Notes in the exchange offer.
See "The Exchange Offer" for more detailed information concerning this
exchange offer.
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<PAGE> 11
TERMS OF THE EXCHANGE NOTES
The exchange offer relates to the exchange of up to $200.0 million
principal amount of Exchange Notes for up to an equal principal amount of Old
Notes. The form and terms of the Exchange Notes are identical to the form and
terms of the Old Notes, except that the Exchange Notes will be registered under
the Securities Act. Therefore, the Exchange Notes will not be subject to some of
the transfer restrictions, registration rights and the provisions providing for
an increase in the interest rate of the Old Notes under certain circumstances
relating to the registration of the Exchange Notes. The Exchange Notes issued in
the Exchange Offer will evidence the same indebtedness as the Old Notes, which
they will replace, and will be issued pursuant to, and entitled to the benefits
of, the same Indenture. The following summary is provided solely for your
convenience. This summary is not intended to be complete. You should read the
full text and more specific details contained elsewhere in this prospectus. For
a more detailed description of the Notes, see "Description of the Exchange
Notes."
Issuer..................... CKE Restaurants, Inc.
Total Amount of
Exchange Notes Offered... $200.0 million aggregate principal amount of 9 1/8%
Senior Subordinated Notes due 2009.
Maturity Date.............. May 1, 2009.
Interest Rate.............. 9 1/8% per year.
Interest Payment Dates..... Interest on the Exchange Notes will be payable
semi-annually in cash and in arrears on each May 1
and November 1, beginning on May 1, 1999.
Subsidiary Guarantees...... Each of our subsidiaries and any future restricted
subsidiaries will guarantee the Exchange Notes. If
we cannot make payments on the Exchange Notes when
they are due, our subsidiary guarantors must make
them instead.
Ranking.................... The Exchange Notes and the subsidiary guarantees
are unsecured senior subordinated obligations of
CKE and will rank junior to our senior indebtedness
and to the senior indebtedness of our subsidiary
guarantors.
At January 31, 1999, assuming we had completed the
issuance of the Old Notes at that time, the
Exchange Notes would have been subordinated to
$ million of our and our subsidiary
guarantors' senior indebtedness. Approximately
$ million would have been available for
future borrowing under our senior credit facility.
Optional Redemption........ We may redeem some or all of the Notes beginning on
May 1, 2004, at the redemption price described in
the "Description of Notes" section under the
heading "Optional Redemption," plus accrued
interest to the date of redemption.
Mandatory Offer
to Repurchase............ If we sell certain assets or experience specific
kinds of changes of control, we must offer to
repurchase the Exchange Notes at the price listed
in "Description of Exchange Notes."
Certain Covenants.......... The indenture governing the Exchange Notes contains
covenants that will limit our ability and our
subsidiaries' ability to:
- borrow money;
- pay dividends on, redeem or repurchase our
capital stock;
10
<PAGE> 12
- make investments;
- incur liens on our assets to secure debt;
- merge or consolidate with another company;
and
- transfer or sell substantially all of our
assets.
These covenants are subject to important exceptions
and qualifications which are described in
"Description of Exchange Notes" under the heading
"Certain Covenants."
11
<PAGE> 13
SUMMARY CONSOLIDATED FINANCIAL DATA
The following tables summarize certain of our historical financial
information. Our fiscal year is the 52- or 53-week period ending on the last
Monday in January of each year. For example, references to fiscal 1999 refer to
the 52-week period ended January 25, 1999. For clarity of presentation, we have
presented all fiscal years in this prospectus as if the fiscal year ended on
January 31. The following summary financial and restaurant operating data should
be read in conjunction with Management's Discussion and Analysis of Financial
Condition and Results of Operations, and with our consolidated financial
statements, which are incorporated herein by reference.
<TABLE>
<CAPTION>
FISCAL YEAR ENDED JANUARY 31,
-------------------------------------
1997 1998 1999
--------- ---------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
CONSOLIDATED STATEMENTS OF INCOME DATA:
Total revenues(1)............................... $ 613,380 $1,149,659 $
Operating income................................ 44,139 86,191
Interest expense................................ 9,877 16,914
Depreciation and amortization................... 27,002 46,402
Net income...................................... 22,302 46,757 (2)
OTHER FINANCIAL DATA:
EBITDA(3)....................................... $ 73,589 $ 139,956 $ (4)
EBITDA margin(5)................................ 12.0% 12.2% %
Capital expenditures............................ $ 49,223 $ 89,210 $
Ratio of earnings to fixed charges(6)........... 2.9x 3.3x x
Cash flows provided by operating activities..... $ 56,988 $ 74,337 $
Cash flows used in investing activities......... $(113,064) $ (428,488) $
Cash flows provided by financing activities..... $ 78,343 $ 338,203 $
</TABLE>
<TABLE>
<CAPTION>
JANUARY 31, 1999
-----------------------------
ACTUAL AS ADJUSTED(7)
---------- ---------------
(IN THOUSANDS)
<S> <C> <C>
CONSOLIDATED BALANCE SHEET DATA:
Property and equipment, net............................... $ $
Total assets..............................................
Total long-term debt and capital lease obligations,
including current portion..............................
Stockholders' equity......................................
</TABLE>
(Footnotes on following page)
12
<PAGE> 14
- -------------------------
(1) Fiscal 1997, fiscal 1998 and fiscal 1999 include $94.3 million, $195.2
million, and $ million, respectively, of revenues generated from other
restaurant concepts we acquired during fiscal 1997.
(2) Includes an extraordinary gain of $ million, net of applicable income tax
expense, on early retirement of debt.
(3) As used herein, "EBITDA" represents income before extraordinary items plus
(a) interest expense, (b) income tax expense and (c) depreciation and
amortization. We have included information concerning EBITDA in this
prospectus because we believe that such information is used by certain
investors as one measure of an issuer's historical ability to service debt.
EBITDA should not be considered as an alternative to, or more meaningful
than, earnings from operations or other traditional indications of an
issuer's operating performance.
(4) Excludes a $15.0 million charge to our investment in Boston West L.L.C.
("Boston West").
(5) EBITDA margin represents EBITDA divided by total revenues.
(6) For purposes of calculating the ratio of earnings to fixed charges (a)
earnings represent income before income taxes and extraordinary item and
fixed charges and (b) fixed charges consist of interest on all
indebtedness, interest related to capital lease obligations, amortization
of debt issuance costs and a portion of rental expense that is
representative of the interest factor (deemed by us to be one-third).
(7) As adjusted to give effect to the sale of the Old Notes and the application
of the net proceeds of $194.8 million therefrom.
13
<PAGE> 15
SUMMARY RESTAURANT OPERATING AND OTHER DATA
<TABLE>
<CAPTION>
FISCAL YEAR ENDED JANUARY 31,
-------------------------------------
1997 1998 1999
---------- ---------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
CARL'S JR. RESTAURANTS:
Restaurants open (at end of period):
Company-operated restaurants.............................. 415 443
Franchised and licensed restaurants....................... 258 265
-------- -------- --------
Total................................................... 673 708
======== ======== ========
System-wide restaurant revenues:
Company-operated restaurants.............................. $443,304 $488,495
Franchised and licensed restaurants....................... 204,700 214,534
-------- -------- --------
Total system-wide revenues.............................. $648,004 $703,029
======== ======== ========
Operating income............................................ $ 48,660 $ 61,457
Average annual sales per company-operated restaurant(1)..... $ 1,114 $ 1,157
Percentage increase in comparable company-operated
restaurant sales(2)....................................... 10.7% 4.8%
Company-operated restaurant-level operating margins......... 23.1% 24.2%
General and administrative expenses as a percentage of
consolidated total revenues............................... 5.4% 5.2%
</TABLE>
<TABLE>
<CAPTION>
FISCAL YEAR ENDED 28 WEEKS 28 WEEKS FISCAL YEAR
DECEMBER 31, ENDED ENDED ENDED
----------------------- JULY 15, JANUARY 31, JANUARY 31,
1995 1996 1997 1998 1999(3)
---------- ---------- ---------- ----------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
HARDEE'S RESTAURANTS:(4)
Restaurants open (at end of period):
Company-operated restaurants(5).......... 733 808 782 863
Franchised and licensed restaurants...... 2,600 2,417 2,329 2,175
---------- ---------- ---------- ---------- ----------
Total.................................. 3,333 3,225 3,111 3,038
========== ========== ========== ========== ==========
System-wide restaurant revenues:
Company-operated restaurants............. $ 596,593 $ 645,409 $ 346,481 $ 339,942
Franchised and licensed restaurants...... 2,582,514 2,350,733 1,152,442 1,123,034
---------- ---------- ---------- ---------- ----------
Total system-wide revenues............. $3,179,107 $2,996,142 $1,498,923 $1,462,976
========== ========== ========== ========== ==========
Operating income (loss).................... $ 19,578 $ (17,822) $ 8,683 $ 23,463
Average annual sales per company-operated
restaurant(6)............................ $ 888 $ 848 $ 831 $ 803
Percentage (decrease) in comparable
company-operated
restaurant sales......................... (6.8)% (4.4)% (0.4)% (7.2)%
Company-operated restaurant-level operating
margins.................................. 8.4% 6.2% 7.8% 12.9%
General and administrative expenses as a
percentage of
combined total revenues.................. 10.5% 10.7% 8.3% 7.6%
</TABLE>
- -------------------------
(1) Calculated on a 52-week trailing basis for all periods presented.
(2) Includes only Carl's Jr. restaurants open throughout the full periods being
compared.
(3) Fiscal year 1999 includes operating results of FEI from and after April 1,
1998.
(4) Except as otherwise noted, company-operated Hardee's restaurant data for the
two fiscal years ending December 31, 1996 and for the 28 weeks ended July
15, 1997 excludes the results of Hardee's restaurants sold or closed prior
to December 31, 1996 and July 15, 1997, respectively.
(5) The number of company-operated restaurants open at December 31, 1995
excludes 131 restaurants that were closed on or prior to December 31, 1996.
(6) Calculated on a 12-month trailing basis for all periods presented, other
than fiscal 1999, which is presented on a 52-week trailing basis.
14
<PAGE> 16
RISK FACTORS
You should carefully consider the following factors and other information
in this prospectus in connection with tendering your Old Notes in the exchange
offer. Some information in this prospectus may contain "forward looking"
statements that discuss future expectations of our financial condition or
results of operations. The risk factors noted in this section and other factors
described in this prospectus could cause actual results to differ materially
from those contained in any forward-looking statements.
SUBSTANTIAL LEVERAGE -- OUR SUBSTANTIAL INDEBTEDNESS COULD ADVERSELY AFFECT OUR
FINANCIAL HEALTH AND PREVENT US FROM FULFILLING OUR OBLIGATIONS UNDER THESE
NOTES.
We have a significant amount of indebtedness. The following chart shows
certain important credit statistics, and is presented assuming we had completed
the initial offering of the Notes as of the date or at the beginning of the
period specified below:
<TABLE>
<CAPTION>
AT JANUARY 31, 1999
-----------------------
(DOLLARS IN THOUSANDS)
<S> <C>
Long-term debt and capital lease obligations, including
current portion........................................... $ --
Stockholders' equity........................................ $ --
Debt to capitalization ratio................................ --
</TABLE>
<TABLE>
<CAPTION>
FISCAL 1999
-----------------------
<S> <C>
Ratio of earnings to fixed charges.......................... --
</TABLE>
Our substantial indebtedness could have important consequences to you. For
example, it could:
- make it more difficult for us to satisfy our obligations with respect to
these Exchange Notes;
- increase our vulnerability to general adverse economic and industry
conditions;
- require us to dedicate a substantial portion of our cash flow from
operations to payments on our indebtedness, thereby reducing the
availability of our cash flow to fund working capital, capital
expenditures, and other general corporate purposes;
- limit our flexibility in planning for, or reacting to, changes in our
business and the industry in which we operate;
- place us at a competitive disadvantage compared to our competitors that
have less debt; and
- limit, along with the financial and other restrictive covenants in our
indebtedness, among other things, our ability to borrow additional funds.
Failure to comply with those covenants could result in an event of
default which, if not cured or waived, could have a material adverse
effect on us.
UNCERTAINTIES RELATED TO THE REVITALIZATION OF HARDEE'S -- WE WILL CONTINUE TO
FACE CHALLENGES IN OUR ATTEMPT TO IMPROVE OUR HARDEE'S OPERATIONS.
Revitalizing Hardee's will continue to challenge our management team.
Hardee's is a well-established but underperforming brand. When we acquired
Hardee's, it was experiencing declining system-wide same-store sales and a
declining market share in the quick-service hamburger restaurant industry. Our
initial revitalization strategy for Hardee's focused on managing costs and
realizing purchasing strategies. While we have been able to improve our Hardee's
restaurant-level operating margins, we are continuing to focus on increasing
sales by revitalizing the Hardee's brand. Specifically, we are investing large
amounts of capital into reconfiguring our Hardee's restaurants' kitchens,
replacing equipment, and remodeling restaurants to the Star Hardee's format. We
cannot assure you that these strategies will be successful. If we are unable to
achieve anticipated sales improvements and further improvements in
restaurant-level operating margins in our Hardee's restaurants on a timely
basis, cash flows generated from Hardee's operations may not be adequate to
support our turnaround strategies for Hardee's. Our success will also depend, in
part, on our Hardee's franchisees. Hardee's franchisees are not required to
participate in implementing our strategies and we cannot assure you that all
Hardee's franchisees will participate. If
15
<PAGE> 17
Hardee's franchisees do not implement our strategies we may not achieve our
goals in the desired timeframe or at all. Failure to accomplish our goals could
have a material adverse effect on our financial condition and results of
operations.
GROWTH STRATEGY -- OUR ABILITY TO EXPAND OUR RESTAURANT CHAINS DEPENDS ON
FACTORS BEYOND OUR CONTROL.
Our growth strategy includes, among other things, opening additional
company-operated and franchised restaurants, remodeling our restaurants and
dual-branding our restaurant concepts. The success of our growth strategy will
depend on numerous factors, many of which are beyond our control and the control
of our franchisees, including:
- the hiring, training and retention of qualified management and other
restaurant personnel;
- the ability to obtain necessary governmental permits and approvals;
- competition for desirable site locations;
- the availability of appropriate financing; and
- general economic conditions.
To manage our planned expansion, we must ensure the continuing adequacy of
our existing systems and procedures, including our supply and distribution
arrangements, restaurant management, financial controls and information systems.
Given the improvements realized in the same-store sales growth in our
company-operated Carl's Jr. restaurants, we cannot assure you that we will be
able to maintain the current level of same-store sales growth. In addition, we
experienced a same-store sales decline of 1.3% at our company-operated Carl's
Jr. restaurants for the quarter ended January 31, 1999.
ACQUISITION STRATEGY -- ACQUIRING AND INVESTING IN UNDERPERFORMING RESTAURANT
BUSINESSES INVOLVES SPECIAL RISKS.
We have a record of acquiring underperforming restaurant companies and
improving their operations. We are not currently contemplating any significant
acquisitions of other restaurant companies. However, we will continue to
evaluate investment opportunities in other restaurant companies. Acquisitions
involve the following risks that could adversely affect our operating results:
- the diversion of management's attention;
- the assimilation of the operations and personnel of the acquired
companies; and
- the potential loss of key employees.
We cannot assure you that any of our acquisitions or investments will not
materially or adversely affect us or that any such acquisition or investment
will enhance our business.
COMPETITION -- OUR SUCCESS DEPENDS ON OUR ABILITY TO COMPETE WITH OUR MAJOR
COMPETITORS.
The foodservice industry is intensely competitive with respect to the
quality and value of food products offered, concept, service, price, dining
experience and location. We compete with major restaurant chains, some of which
dominate the quick-service restaurant industry. Our competitors also include a
variety of mid-price, full-service casual-dining restaurants, health and
nutrition-oriented restaurants, delicatessens and prepared food stores, as well
as supermarkets and convenience stores. Many of the our competitors have
substantially greater financial, marketing and other resources than we have,
which may give them competitive advantages. Our competitors could also make
changes to pricing or other marketing strategies. As our competitors expand
operations, we expect competition to intensify. Such increased competition could
have a material adverse effect on our financial condition and results of
operations.
THE FOODSERVICE INDUSTRY -- CONSUMER PREFERENCES AND PERCEPTIONS, SEASONALITY
AND GENERAL ECONOMIC CONDITIONS MAY HAVE SIGNIFICANT EFFECTS ON OUR BUSINESS.
Foodservice businesses are often affected by changes in consumer tastes,
national, regional and local economic conditions and demographic trends. The
performance of individual restaurants may be adversely affected by traffic
patterns, demographics and the type, number and locations of competing
restaurants.
16
<PAGE> 18
Restaurant performance may also be affected by adverse weather conditions,
particularly in our Hardee's restaurants, because a significant number of them
are located in areas which experience severe winter conditions. Multi unit
foodservice businesses such as ours can also be materially and adversely
affected by publicity resulting from poor food quality, illness, injury or other
health concerns or operating issues stemming from one or a limited number of
restaurants. We can be similarly affected by consumer concerns with respect to
the nutritional value of quick-service food. In addition, our dependence on
frequent deliveries of food and paper products subjects our restaurants to the
risk that shortages or interruptions in supply, caused by adverse weather or
other conditions, could adversely affect the availability, quality and cost of
ingredients. Unfavorable trends or developments concerning factors such as
inflation, increased food, labor and employee benefit costs (including increases
in hourly wage and unemployment tax rates), increases in the number and
locations of competing quick-service restaurants, regional weather conditions
and the availability of experienced management and hourly employees may also
adversely affect our financial condition and results of operations. Changes in
economic conditions affecting our customers could reduce traffic in some or all
of our restaurants or impose practical limits on pricing, either of which could
have a material adverse effect on our financial condition and results of
operations. Our continued success will depend in part on our management's
ability to anticipate, identify and respond to changing conditions.
GOVERNMENT REGULATIONS -- WE MUST DEVOTE SIGNIFICANT RESOURCES TO COMPLY WITH
EXTENSIVE LEGAL REQUIREMENTS APPLICABLE TO OUR FRANCHISE AND OTHER BUSINESS
OPERATIONS.
We are subject to federal regulation and certain state laws which govern
the offer and sale of franchises. Many state franchise laws impose substantive
requirements on franchise agreements, including limitations on non-competition
provisions and on provisions concerning the termination or non-renewal of a
franchise. Some states require that certain materials be registered before
franchises can be offered or sold in that state. The failure to obtain or retain
licenses or approvals to sell franchises could adversely affect us or our
franchisees. The restaurant industry is also subject to extensive federal, state
and local governmental regulations, including those relating to the preparation
and sale of food and those relating to building and zoning requirements. We and
our franchisees are also subject to laws governing relationships with employees,
including minimum wage requirements, overtime, working and safety conditions and
citizenship requirements. Many of our employees are paid hourly rates based upon
the federal and state minimum wage laws. Recent legislation increasing the
minimum wage has resulted in higher labor costs to us and our franchisees. We
anticipate that increases in the minimum wage may be offset through pricing and
other cost-control efforts; however, we cannot assure you that we or our
franchisees will be able to pass such additional costs on to customers in whole
or in part.
KEY DISTRIBUTORS -- DISRUPTION IN DELIVERIES MAY ADVERSELY AFFECT OUR
RESTAURANTS.
Our profitability is dependent on, among other things, our continuing
ability to offer fresh, high quality food at moderate prices. While we continue
to operate our own distribution business for our Carl's Jr. system, we rely upon
independent distributors for our Hardee's and Taco Bueno restaurants. In
particular, our Hardee's restaurants depend on the distribution services of two
distributors, MBM Corporation ("MBM"), an independent supplier and distributor
of food and other products, and Fast Food Merchandisers, Inc. ("FFM"), which was
recently acquired by MBM. MBM and FFM are responsible for delivering food, paper
and other products from our vendors to our Hardee's restaurants on a regular
basis. MBM and FFM also provide distribution services to a large number of our
Hardee's franchisees. Any disruption in these distribution services would have a
material adverse effect on our business. See "Business -- Purchasing and
Distribution."
YEAR 2000 ISSUES -- THE EFFICIENT OPERATION OF OUR RESTAURANTS RELIES ON OUR
INFORMATION SYSTEMS, WHICH MAY BE DISRUPTED UNDER CERTAIN CIRCUMSTANCES.
We rely on various information systems to manage our restaurant operations,
and regularly make investments to upgrade, enhance or replace such systems. We
are aware that some significant portion of
17
<PAGE> 19
existing electronic equipment, including computers, software and embedded
technology, was not designed to correctly process dates after December 31, 1999.
These systems store dates as having two-digit, rather than four-digit, years,
which could potentially cause erroneous data results or program failures in the
year 2000. We continue to review the impact of such Year 2000 ("Y2K") issues on
our internal computer and non-computer systems as well as on our vendors and
service providers.
Internally, we have nearly completed the process of making the information
systems used by our company-operated Carl's Jr. and Taco Bueno restaurants Y2K
compatible, and will complete the process before the turn of the century. With
respect to our company-operated Hardee's restaurants, our review found a number
of potential Y2K compatibility problems, and we are in the process of replacing
suspect systems with Y2K compatible systems. We expect to complete the
replacement of our company-operated Hardee's restaurants' financial information
systems in July 1999, replace their equipment purchasing information systems in
August 1999 and purchase back-office management information systems in November
1999. We have not identified any other significant areas of non-compliance in
our internal computer or non-computer systems.
We believe our greatest risk with respect to Y2K issues relates to
third-party failure to appropriately address their Y2K non-compliance. Y2K
failures in key suppliers' systems, or in their respective suppliers' systems,
could affect their ability to supply us with material or services, and therefore
affect our ability to operate our restaurants. External Y2K failures could
therefore have an material adverse effect on our revenues and financial
condition. We are in the process of confirming the Y2K compliance of our
important suppliers and have been assured that MBM's, as well as our less
important vendors and service providers', Y2K compliance efforts are on
schedule. We plan to secure alternative suppliers for those who cannot assure us
of their Y2K readiness. In addition, the inability of our multi unit franchisees
to become Y2K compliant may materially adversely affect our ability to receive
royalties from them. External Y2K risks will be addressed as our survey of
suppliers is completed. Although we expect cooperation from the suppliers we are
surveying, we also rely on services such as telephones and utilities, whose Y2K
compliance is outside of our control. Therefore, we may be unable to accurately
assess the Y2K readiness of some third parties, and the impact of such
third-party non-compliance on our operations.
We plan to continue to identify, assess and to resolve all material Y2K
issues by the end of calendar 1999. We have developed or are in the process of
developing contingency plans to address significant internal and external Y2K
issues as they are identified. These contingency plans are expected to be
complete by July 1999. However, the Y2K problem involves pervasive complex
interrelationships, both internally and externally. As a result, we cannot
assure you that we will identify and successfully resolve all Y2K issues, and
the possibility exists that Y2K-related disruptions could have a material
adverse effect on us. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Year 2000."
ADDITIONAL BORROWINGS AVAILABLE -- DESPITE CURRENT INDEBTEDNESS LEVELS, WE AND
OUR SUBSIDIARIES MAY STILL BE ABLE TO INCUR SUBSTANTIALLY MORE DEBT. THIS COULD
FURTHER EXACERBATE THE RISKS DESCRIBED ABOVE.
We and our subsidiaries may be able to incur substantial additional
indebtedness in the future. The terms of the indenture do not fully prohibit us
or our subsidiaries from doing so. Our senior credit facility permits additional
borrowing of up to $ million as of January 31, 1999, and all of those
borrowings would be senior to the Exchange Notes and the subsidiary guarantees.
If new debt is added to our and our subsidiaries' current debt levels, the
related risks that we and they now face could intensify.
ABILITY TO SERVICE DEBT -- TO SERVICE OUR INDEBTEDNESS, WE WILL REQUIRE A
SIGNIFICANT AMOUNT OF CASH. OUR ABILITY TO GENERATE CASH DEPENDS ON MANY FACTORS
BEYOND OUR CONTROL.
Our ability to make payments on and to refinance our indebtedness,
including these Exchange Notes, and to fund planned capital expenditures and
research and development efforts will depend on our ability to generate cash in
the future. Our ability to generate cash from our operations is subject to
general economic, financial, competitive, legislative, regulatory and other
factors that are beyond our control.
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<PAGE> 20
Based on our current level of operations and anticipated cost savings and
operating improvements, we believe our cash flow from operations, available cash
and available borrowings under our credit facility, will be adequate to meet our
future liquidity needs for at least the next few years.
We cannot assure you, however, that our business will generate sufficient
cash flow from operations, that currently anticipated cost savings and operating
improvements will be realized on schedule or that future borrowings will be
available to us under our senior credit facility in an amount sufficient to
enable us to pay our indebtedness, including the Exchange Notes, or to fund our
other liquidity needs. We may need to refinance all or a portion of our
indebtedness, including the Exchange Notes on or before maturity. We cannot
assure you that we will be able to refinance any of our indebtedness, including
our senior credit facility and the Exchange Notes, on commercially reasonable
terms or at all.
SUBORDINATION -- YOUR RIGHT TO RECEIVE PAYMENTS ON THE EXCHANGE NOTES IS JUNIOR
TO OUR EXISTING SENIOR INDEBTEDNESS AND POSSIBLY ALL OF OUR FUTURE BORROWINGS.
FURTHER, THE GUARANTEES OF THE EXCHANGE NOTES ARE JUNIOR TO ALL OUR GUARANTORS'
EXISTING INDEBTEDNESS AND POSSIBLY TO ALL THEIR FUTURE BORROWINGS.
The Exchange Notes and the subsidiary guarantees rank behind all of our and
the subsidiary guarantors' existing senior indebtedness (other than our 4 1/4%
Convertible Notes due 2004 (the "Convertible Notes") and our trade payables) and
all of our and their future borrowings (other than trade payables), except any
future indebtedness that expressly provides that it ranks equal with or junior
to the Exchange Notes and the subsidiary guarantees. As a result, upon any
distribution to our creditors or the creditors of the subsidiary guarantors in a
bankruptcy, liquidation or reorganization or similar proceeding relating to us
or the subsidiary guarantors of our or their property, the holders of senior
indebtedness will be entitled to be paid in full in cash before any payment may
be made with respect to the Exchange Notes or the subsidiary guarantees.
In addition, we may be prohibited from making payments on the Exchange
Notes and the subsidiary guarantees in the event of a payment default on senior
debt and may be blocked for up to 179 of 360 consecutive days in the event of
non-payment defaults on senior debt. In the event of a default on the Exchange
Notes and any resulting acceleration of the Exchange Notes, the holders of
senior indebtedness then outstanding will be entitled to payment in full in cash
of all obligations in respect of such senior indebtedness before any payment or
distribution may be made with respect to the Exchange Notes.
In the event of a bankruptcy, liquidation or reorganization or similar
proceeding relating to us or the subsidiary guarantors, holders of the Exchange
Notes will participate with trade creditors and all other holders of
subordinated indebtedness in the assets remaining after we have paid all of the
senior debt. However, because the indenture requires that amounts otherwise
payable to holders of the Exchange Notes in a bankruptcy or similar proceeding
be paid to holders of senior debt instead, holders of the Exchange Notes may
receive less, ratably, than holders of trade payables in any such proceeding. In
any of these cases, we may not have sufficient funds to pay all of our creditors
and holders of Exchange Notes may receive less, ratably, than the holders of
senior debt.
As of January 31, 1999, the Exchange Notes and the subsidiary guarantees
were subordinated to $ million of senior debt and approximately $
million was available for borrowing as additional senior debt under our senior
credit facility. We will be permitted to borrow substantial additional
indebtedness, including senior debt, in the future under the terms of the
indenture.
FINANCING CHANGE OF CONTROL OFFER -- WE MAY NOT HAVE THE ABILITY TO RAISE THE
FUNDS NECESSARY TO FINANCE THE CHANGE OF CONTROL OFFER REQUIRED BY THE
INDENTURE.
Upon the occurrence of change of control events specified in the indenture,
we will be required to offer to repurchase all outstanding Exchange Notes.
However, it is possible that we will not have sufficient funds at the time of
the change of control to make the required repurchase of Exchange Notes or that
restrictions in our senior credit facility will not allow such repurchases. In
addition, important corporate events such as leveraged recapitalizations that
would increase the level of our indebtedness would not
19
<PAGE> 21
constitute a change of control under the indenture. See "Description of
Notes -- Repurchase at the Option of Holders."
FRAUDULENT CONVEYANCE MATTERS -- FEDERAL AND STATE STATUTES ALLOW COURTS, UNDER
SPECIFIC CIRCUMSTANCES, TO VOID GUARANTEES AND REQUIRE NOTEHOLDERS TO RETURN
PAYMENTS RECEIVED FROM GUARANTORS.
Under the federal bankruptcy law and comparable provisions of state
fraudulent transfer laws, a guarantee could be voided, or claims in respect of a
guarantee could be subordinated to all other debts of that guarantor if the
guarantor, at the time it incurred the indebtedness evidenced by its guarantee:
- received less than reasonably equivalent value or fair consideration for
the incurrence of such guarantee; and
- was insolvent or rendered insolvent by reason of such incurrence; or
- was engaged in a business or transaction for which the guarantor's
remaining assets constituted unreasonably small capital; or
- intended to incur, or believed that it would incur, debts beyond its
ability to pay such debts as they mature.
In addition, any payment by that guarantor pursuant to its guarantee could
be voided and required to be returned to the guarantor, or to a fund for the
benefit of the creditors of the guarantor.
The measures of insolvency for purposes of these fraudulent transfer laws
will vary depending upon the law applied in any proceeding to determine whether
a fraudulent transfer has occurred. Generally, however, a guarantor would be
considered insolvent if:
- the sum of its debts, including contingent liabilities, were greater than
the fair saleable value of all of its assets, or
- if the present fair saleable value of its assets were less than the
amount that would be required to pay its probable liability on its
existing debts, including contingent liabilities, as they become absolute
and mature, or
- it could not pay its debts as they become due.
On the basis of historical financial information, recent operating history
and other factors, we believe that each guarantor, after giving effect to its
guarantee of the Exchange Notes, will not be insolvent, will not have
unreasonably small capital for the business in which it is engaged and will not
have incurred debts beyond its ability to pay such debts as they mature. We
cannot assure you, however, as to what standard a court would apply in making
such determinations or that a court would agree with our conclusions in this
regard.
ENVIRONMENTAL MATTERS -- COMPLIANCE WITH ENVIRONMENTAL LAWS MAY ADVERSELY AFFECT
OUR FINANCIAL HEALTH.
We are subject to various federal, state and local environmental laws.
These laws govern discharges to air and water, as well as handling and disposal
practices for solid and hazardous wastes. These laws may also impose liability
for damages from and the costs of cleaning up sites of spills, disposals or
other releases of hazardous materials. We may be responsible for environmental
conditions relating to our restaurants and the land on which our restaurants are
located, regardless of whether we lease or own the restaurants or land in
question and regardless of whether such environmental conditions were created by
us or by a prior owner or tenant. Although we cannot assure you that all such
environmental conditions have been identified, these conditions include the
presence of asbestos containing materials, leaks from chemical storage tanks and
on-site spills.
We are not aware of any environmental conditions that would have a material
adverse effect on our businesses, assets or results of operations taken as a
whole. Although environmental site assessments prepared for certain properties
recommend limited further investigations or minor repairs, based on the
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information currently available to us, we do not believe any of these other
issues would have a material adverse effect on these properties. Nevertheless,
we cannot assure you that environmental conditions relating to prior, existing
or future restaurants or restaurant sites will not have a material adverse
effect on us. Moreover, there is no assurance that: (1) future laws, ordinances
or regulations will not impose any material environmental liability; or (2) the
current environmental condition of the properties will not be adversely affected
by tenants or other third parties or by the condition of land or operations in
the vicinity of the properties (such as underground storage tanks).
NO PUBLIC MARKET FOR THE EXCHANGE NOTES -- YOU CANNOT BE CERTAIN THAT AN ACTIVE
TRADING MARKET WILL DEVELOP FOR THE EXCHANGE NOTES.
The Exchange Notes will constitute a new issue of securities for which
there is no established trading market. Although we have been advised by the
Initial Purchasers that, following completion of the exchange offer, they intend
to make a market in the Exchange Notes, they are not obligated to do so and any
market-making activities with respect to the Exchange Notes may be discontinued
at any time without notice.
If a market for the Exchange Notes develops, any such market may cease at
any time. In addition, if a public trading market for the Exchange Notes
develops, future trading prices of the Exchange Notes will depend on many
factors, including, among other things:
- prevailing interest rates;
- the market for similar securities;
- our financial conditions and results of operations; and
- other factors beyond our control, including general economic conditions.
We do not intend to list the Exchange Notes on any national securities exchange
or seek approval for quotation through any automated quotation system.
Accordingly, we cannot assure you that an active public or other market will
develop for the Exchange Notes, or of the liquidity of any trading market for
the Exchange Notes following the exchange offer.
If a trading market does not develop or develops but is not maintained,
holders of the Exchange Notes may experience difficulty in reselling the
Exchange Notes or may be unable to sell them at all.
FAILURE TO EXCHANGE OLD NOTES -- IF YOU DO NOT EXCHANGE YOUR OLD NOTES, YOUR OLD
NOTES WILL REMAIN SUBJECT TO TRANSFER RESTRICTIONS.
We have not registered nor do we intend to register any of the Old Notes
under the Securities Act or any state securities laws. Therefore, you may not
offer, sell or otherwise transfer any Old Notes that remain outstanding after
consummation of the exchange offer unless you comply with the registration
requirements of the Securities Act and any other applicable securities laws, or
pursuant to an exemption from all applicable laws or in a transaction not
subject to those laws. In each case, you must comply with other applicable
conditions and restrictions.
Old Notes that remain outstanding after consummation of the exchange offer
will continue to bear a legend reflecting these restrictions on transfer. In
addition, if you do not exchange your Old Notes pursuant to the exchange offer,
you will have no right to require us to register Old Notes, except under certain
limited circumstances. To the extent that you do not successfully tender your
Old Notes in the exchange offer, your ability to sell Old Notes could be
adversely affected.
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DEFECTIVE TENDER -- YOU BEAR THE RISKS OF NOT COMPLYING WITH EXCHANGE OFFER
PROCEDURES.
You are responsible for complying with all exchange offer procedures. You
will only receive Exchange Notes in exchange for your Old Notes if, prior to the
expiration date, you deliver to the Exchange Agent:
(1) your Old Notes or a book-entry confirmation of a book-entry
transfer of the Old Notes into the Exchange Agent's account at DTC;
(2) the Letter of Transmittal, or a facsimile thereof, properly
completed and duly executed by you, with any required signature guarantees;
and
(3) any other documents required by the Letter of Transmittal.
You should allow sufficient time to ensure that the Exchange Agent receives all
required documents prior to the expiration date. Neither we nor the Exchange
Agent has any duty to inform you of defects or irregularities with respect to
the tender of your Old Notes for exchange. See "The Exchange Offer."
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THE EXCHANGE OFFER
PURPOSE AND EFFECT OF THE EXCHANGE OFFER
In connection with the sale of the Old Notes, we entered into the
Registration Rights Agreement with the Initial Purchasers. Pursuant to this
agreement, we agreed to file and to use our best efforts to cause to become
effective with the SEC a registration statement with respect to the exchange of
the Old Notes for Exchange Notes with terms identical in all material respects
to the terms of the Old Notes. A copy of the Registration Rights Agreement has
been filed as an exhibit to the registration statement of which this prospectus
is a part. The exchange offer is being made to satisfy our contractual
obligations under the Registration Rights Agreement.
In the event we are prevented from effecting the exchange offer by
applicable interpretations of the staff of the SEC, or if for any other reason
the exchange offer is not consummated on or prior to September 4, 1999, we have
agreed to use our best efforts to cause to become effective a shelf registration
statement with respect to the resale of the Old Notes and to keep such shelf
registration statement effective until three years after the date of the initial
sale of the Old Notes or until all the Old Notes covered by the shelf
registration statement have been sold pursuant to such shelf registration
statement. We have also agreed that in the event that either the exchange offer
is not consummated or a shelf registration statement is not declared effective
on or prior to September 4, 1999, the interest rate borne by the Old Notes will
be increased by one-half of one percent ( 1/2%) per annum until the earlier of
the consummation of the exchange offer or the effectiveness of the shelf
registration statement, as the case may be.
The exchange offer is not being made to, nor will we accept tenders for
exchange from, holders of Old Notes in any jurisdiction in which the exchange
offer or the acceptance thereof would not be in compliance with the securities
or blue sky laws of such jurisdiction.
Unless the context requires otherwise, the term "holder" with respect to
the exchange offer means any person in whose name the Old Notes are registered
on our books or any other person who has obtained a properly completed bond
power from the registered holder, or any participant in DTC whose name appears
on a security position listing as a holder of Old Notes (which, for purposes of
the exchange offer, include beneficial interests in the Old Notes held by direct
or indirect participants in DTC and Old Notes held in definitive form).
TERMS OF THE EXCHANGE OFFER
We hereby offer, upon the terms and subject to the conditions set forth in
this prospectus and in the accompanying Letter of Transmittal, to exchange
$1,000 principal amount of Exchange Notes for each $1,000 principal amount of
Old Notes properly tendered prior to the expiration date and not properly
withdrawn in accordance with the procedures described below. Holders may tender
their Old Notes in whole or in part in integral multiples of $1,000 principal
amount.
The form and terms of the Exchange Notes will be the same as the form and
terms of the Old Notes except that:
(1) the Exchange Notes will have been registered under the Securities
Act and therefore will not be subject to certain restrictions on transfer
applicable to the Old Notes; and
(2) because the Exchange Notes have been registered, holders of the
Exchange Notes will not be entitled to the benefits of the Registration
Rights Agreement.
The Exchange Notes will evidence the same indebtedness as the Old Notes (which
they will replace) and will be issued pursuant to, and entitled to the benefits
of, the Indenture.
The exchange offer is not conditioned upon any minimum aggregate principal
amount of Old Notes being tendered for exchange. We reserve the right, in our
sole discretion, to purchase or make offers for any Old Notes that remain
outstanding after the expiration date or, as set forth below under
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" -- Conditions to the exchange offer," to terminate the exchange offer. We also
reserve the right, to the extent permitted by applicable law, to purchase Old
Notes in the open market, in privately negotiated transactions or otherwise. The
terms of any such purchases or offers could differ from the terms of this
exchange offer. As of the date of this prospectus, $200.0 million aggregate
principal amount of Old Notes is outstanding.
Holders of Old Notes do not have any appraisal or dissenters' rights in
connection with the exchange offer. Old Notes that are not tendered, or are
tendered but not accepted, in connection with the exchange offer will remain
outstanding and continue to accrue interest in accordance with their terms, but
their rights under the Registration Rights Agreement will expire following the
expiration date of this exchange offer. See "Risk Factors -- If You Do Not
Exchange Your Old Notes, Your Old Notes Will Remain Subject to Transfer
Restrictions."
By tendering Old Notes in exchange for Exchange Notes, each holder will
represent to us that:
(1) any Exchange Notes to be received by such holder will be acquired
in the ordinary course of such holder's business;
(2) such holder has no arrangement or understanding with any person to
participate in a distribution (within the meaning of the Securities Act) of
the Exchange Notes;
(3) such holder is not our "affiliate" (within the meaning of Rule 405
under the Securities Act), or if such holder is our affiliate, that such
holder will comply with the registration and prospectus delivery
requirements of the Securities Act to the extent applicable;
(4) such holder has full power and authority to tender, exchange,
sell, assign and transfer the tendered Old Notes;
(5) we will acquire from such holder good, marketable and unencumbered
title to the tendered Old Notes, free and clear of all liens, restrictions,
charges and encumbrances; and
(6) the Old Notes tendered for exchange are not subject to any adverse
claims or proxies.
Each tendering holder also will warrant and agree that such holder will,
upon request, execute and deliver any additional documents that we or the
Exchange Agent deem to be necessary or desirable to complete the exchange, sale,
assignment, and transfer of the Old Notes tendered pursuant to the exchange
offer. Each broker-dealer that receives Exchange Notes for its own account in
exchange for Old Notes, where such Old Notes were acquired by such broker-dealer
as a result of market-making activities or other trading activities, must
acknowledge that it will deliver a prospectus in connection with any resale of
such Exchange Notes. See "Plan of Distribution."
If any tendered Old Notes are not accepted for exchange because of an
invalid tender, the occurrence of certain other events set forth herein or
otherwise, certificates for any such unaccepted Old Notes will be returned,
without expense, to the tendering holder thereof promptly after the expiration
date.
Holders who tender Old Notes in connection with the exchange offer will not
be required to pay brokerage commissions or fees or, subject to the instructions
in the Letter of Transmittal, transfer taxes with respect to the exchange of Old
Notes in connection with the exchange offer. We will pay all charges and
expenses, other than certain applicable taxes described below, in connection
with the exchange offer. See "-- Fees and Expenses."
OUR BOARD OF DIRECTORS MAKES NO RECOMMENDATION TO HOLDERS OF OLD NOTES
AS TO WHETHER TO TENDER OR REFRAIN FROM TENDERING ALL OR ANY PORTION OF
THEIR OLD NOTES PURSUANT TO THE EXCHANGE OFFER. IN ADDITION, NO ONE HAS
BEEN AUTHORIZED TO MAKE ANY SUCH RECOMMENDATION. HOLDERS OF OLD MUST MAKE
THEIR OWN DECISION WHETHER TO TENDER PURSUANT TO THE EXCHANGE OFFER AND, IF
SO, THE AGGREGATE AMOUNT OF OLD NOTES TO TENDER AFTER READING THIS
PROSPECTUS AND
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THE LETTER OF TRANSMITTAL AND CONSULTING WITH THEIR ADVISERS, IF ANY, BASED
ON THEIR FINANCIAL POSITION AND REQUIREMENTS.
EXPIRATION DATE; EXTENSIONS AND AMENDMENTS
The expiration date of this exchange offer is 5:00 p.m., New York City
time, on , 1999, unless we extend the exchange offer
(in which case the expiration date shall be the latest date and time to which we
extend the exchange offer).
We expressly reserve the right, in our sole and absolute discretion,
subject to applicable law, at any time and from time to time:
(1) to delay the acceptance of the Old Notes for exchange;
(2) to terminate the exchange offer (whether or not any Old Notes have
theretofore been accepted for exchange) if we determine, in our sole and
absolute discretion, that any of the events or conditions referred to under
" -- Conditions to the Exchange Offer" has occurred or exists or has not
been satisfied;
(3) to extend the expiration date of the exchange offer and retain all
Old Notes tendered pursuant to the exchange offer, subject, however, to the
right of holders of Old Notes to withdraw their tendered Old Notes as
described under " -- Withdrawal Rights"; and
(4) to waive any condition or otherwise amend the terms of the
exchange offer in any respect (whether or not any Old Notes have
theretofore been accepted for exchange).
If the exchange offer is amended in a manner that we determine constitutes
a material change, or if we waive a material condition of the exchange offer, we
will promptly disclose such amendment by means of a prospectus supplement that
will be distributed to the registered holders of the Old Notes, and we will
extend the exchange offer to the extent required by Rule 14e-1 under the
Securities Exchange Act of 1934, as amended (the "Exchange Act").
Any such delay in acceptance, termination, extension or amendment will be
followed promptly by oral or written notice thereof to the Exchange Agent (any
such oral notice to be promptly confirmed in writing) and by making a public
announcement thereof, and such announcement in the case of an extension will be
made no later than 9:00 a.m., New York City time, on the next business day after
the previously scheduled expiration date. Without limiting the manner in which
we may choose to make any public announcement, and subject to applicable laws,
we will have no obligation to publish, advertise or otherwise communicate any
such public announcement other than by issuing a release to an appropriate news
agency.
ACCEPTANCE FOR EXCHANGE AND ISSUANCE OF EXCHANGE NOTES
Upon the terms and subject to the conditions of the exchange offer, we will
exchange, and will issue to the Exchange Agent, Exchange Notes for Old Notes
validly tendered and not withdrawn (pursuant to the withdrawal rights described
under " -- Withdrawal Rights") promptly after the expiration date. In all cases,
delivery of Exchange Notes in exchange for Old Notes tendered and accepted for
exchange pursuant to the exchange offer will be made only after timely receipt
by the Exchange Agent of:
(1) Old Notes or a book-entry confirmation of a book-entry transfer of
Old Notes into the Exchange Agent's account at DTC;
(2) the Letter of Transmittal (or facsimile thereof), properly
completed and duly executed, with any required signature guarantees; and
(3) any other documents required by the Letter of Transmittal.
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Accordingly, the delivery of Exchange Notes might not be made to all
tendering holders at the same time, and will depend upon when Old Notes,
book-entry confirmations with respect to Old Notes and other required documents
are received by the Exchange Agent.
The term "book-entry confirmation" means a timely confirmation of a
book-entry transfer of Old Notes into the Exchange Agent's account at DTC.
Subject to the terms and conditions of the exchange offer, we will be
deemed to have accepted for exchange, and thereby exchanged, Old Notes validly
tendered and not withdrawn as, if and when we give oral or written notice to the
Exchange Agent (any such oral notice to be promptly confirmed in writing) of our
acceptance of such Old Notes for exchange pursuant to the exchange offer. Our
acceptance for exchange of Old Notes tendered pursuant to any of the procedures
described above will constitute our binding agreement with the tendering holder
upon the terms and subject to the conditions of the exchange offer. The Exchange
Agent will act as our agent for the purpose of receiving tenders of Old Notes,
Letters of Transmittal and related documents, and as agent for tendering holders
for the purpose of receiving Old Notes, Letters of Transmittal and related
documents and transmitting Exchange Notes to holders who validly tendered Old
Notes. Such exchange will be made promptly after the expiration date. If for any
reason whatsoever the acceptance for exchange or the exchange of any Old Notes
tendered pursuant to the exchange offer is delayed (whether before or after our
acceptance for exchange of Old Notes), or if we extend the exchange offer or are
unable to accept for exchange or exchange Old Notes tendered pursuant to the
exchange offer, then, without prejudice to our rights set forth in this
prospectus, the Exchange Agent may, nevertheless, on our behalf and subject to
Rule 14e-1(c) under the Exchange Act, retain tendered Old Notes and such Old
Notes may not be withdrawn except to the extent tendering holders are entitled
to withdrawal rights as described below under "-- Withdrawal Rights."
PROCEDURES FOR TENDERING OLD NOTES
Valid Tender. Except as set forth below, in order for Old Notes to be
validly tendered pursuant to the exchange offer, either:
(1) A. a properly completed and duly executed Letter of Transmittal
(or facsimile thereof), with any required signature guarantees and any
other required documents, must be received by the Exchange Agent at the
address set forth under "-- Exchange Agent" prior to the expiration date;
and
B. tendered Old Notes must be received by the Exchange Agent, or
such Old Notes must be tendered pursuant to the procedures for book-entry
transfer set forth below and a book-entry confirmation must be received by
the Exchange Agent, in each case prior to the expiration date; or
(2) the guaranteed delivery procedures set forth below must be
complied with.
If less than all of the Old Notes held by a holder are tendered by such
holder, such holder should fill in the amount of Old Notes being tendered in the
appropriate box on the Letter of Transmittal. The entire amount of Old Notes
delivered to the Exchange Agent will be deemed to have been tendered unless
otherwise indicated.
If any Letter of Transmittal, endorsement, bond power, power of attorney,
or any other document required by the Letter of Transmittal is signed by a
trustee, executor, administrator, guardian, attorney-in-fact, officer of a
corporation or other person acting in a fiduciary or representative capacity,
such person should so indicate when signing, and unless waived by us, evidence
satisfactory to us, in our sole discretion, of such person's authority to so act
must be submitted.
Any beneficial owner of Old Notes that are held by or registered in the
name of a broker, dealer, commercial bank, trust company or other nominee or
custodian is urged to contact such entity promptly if such beneficial holder
wishes to participate in the exchange offer.
THE METHOD OF DELIVERY OF OLD NOTES, THE LETTER OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS IS AT THE OPTION AND SOLE RISK OF THE TENDERING
HOLDER, AND DELIVERY WILL BE DEEMED MADE ONLY WHEN
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ACTUALLY RECEIVED BY THE EXCHANGE AGENT. INSTEAD OF DELIVERY BY MAIL, IT IS
RECOMMENDED THAT HOLDERS USE AN OVERNIGHT OR HAND DELIVERY SERVICE. IN ALL
CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE TIMELY DELIVERY AND
PROPER INSURANCE SHOULD BE OBTAINED. NO LETTER OF TRANSMITTAL OR OLD NOTES
SHOULD BE SENT TO US. HOLDERS MAY REQUEST THEIR RESPECTIVE BROKERS,
DEALERS, COMMERCIAL BANKS, TRUST COMPANIES OR NOMINEES TO EFFECT THESE
TRANSACTIONS FOR SUCH HOLDERS.
Book-Entry Transfer. The Exchange Agent will make a request to establish an
account with respect to the Old Notes at DTC for purposes of the exchange offer
within two business days after the date of this prospectus. Any financial
institution that is a participant in DTC's book-entry transfer facility system
may make a book-entry delivery of the Old Notes by causing DTC to transfer such
Old Notes into the Exchange Agent's account at DTC in accordance with DTC's
procedures for transfers. However, although delivery of Old Notes may be
effected through book-entry transfer into the Exchange Agent's account at DTC,
the Letter of Transmittal (or facsimile thereof), properly completed and duly
executed, with any required signature guarantees and any other required
documents, must in any case be delivered to and received by the Exchange Agent
at its address set forth under " -- Exchange Agent" prior to the expiration
date, or the guaranteed delivery procedure set forth below must be complied
with.
DELIVERY OF DOCUMENTS TO DTC DOES NOT CONSTITUTE
DELIVERY TO THE EXCHANGE AGENT.
Signature Guarantees. Certificates for Old Notes need not be endorsed and
signature guarantees on a Letter of Transmittal or a notice of withdrawal, as
the case may be, are unnecessary unless:
(1) a certificate for Old Notes is registered in a name other than
that of the person surrendering the certificate, or
(2) a registered holder completes the box entitled "Special Issuance
Instructions" or "Special Delivery Instructions" in the Letter of
Transmittal.
In the case of (1) or (2) above, such certificates for Old Notes must be duly
endorsed or accompanied by a properly executed bond power, with the endorsement
or signature on the bond power and on the Letter of Transmittal or the notice of
withdrawal, as the case may be, guaranteed by a firm or other entity identified
in Rule 17Ad-15 under the Exchange Act as an "eligible guarantor institution,"
including (as such terms are defined therein):
(1) a bank;
(2) a broker, dealer, municipal securities broker or dealer or
government securities broker or dealer;
(3) a credit union;
(4) a national securities exchange, registered securities association
or clearing agency; or
(5) a savings association that is a participant in a Securities
Transfer Association (each an "Eligible Institution"), unless surrendered
on behalf of such Eligible Institution.
See Instructions 2 and 5 to the Letter of Transmittal.
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Guaranteed Delivery. If a holder desires to tender Old Notes pursuant to
the exchange offer and the certificates for such Old Notes are not immediately
available or time will not permit all required documents to reach the Exchange
Agent before the expiration date, or the procedures for book-entry transfer
cannot be completed on a timely basis, such Old Notes may nevertheless be
tendered, provided that all of the following guaranteed delivery procedures are
complied with:
(1) such tenders are made by or through an Eligible Institution;
(2) prior to the expiration date, the Exchange Agent receives from
such Eligible Institution a properly completed and duly executed Notice of
Guaranteed Delivery, substantially in the form accompanying the Letter of
Transmittal, setting forth the name and address of the holder of Old Notes
and the amount of Old Notes tendered, stating that the tender is being made
thereby and guaranteeing that within three New York Stock Exchange trading
days after the date of execution of the Notice of Guaranteed Delivery, the
certificates for all physically tendered Old Notes, in proper form for
transfer, or a book-entry confirmation, as the case may be, and any other
documents required by the Letter of Transmittal will be deposited by the
Eligible Institution with the Exchange Agent. The Notice of Guaranteed
Delivery may be delivered by hand, or transmitted by facsimile or mail to
the Exchange Agent and must include a guarantee by an Eligible Institution
in the form set forth in the Notice of Guaranteed Delivery; and
(3) the certificates (or book-entry confirmation) representing all
tendered Old Notes, in proper form for transfer, together with a properly
completed and duly executed Letter of Transmittal, with any required
signature guarantees and any other documents required by the Letter of
Transmittal, are received by the Exchange Agent within three New York Stock
Exchange trading days after the date of execution of the Notice of
Guaranteed Delivery.
Determination of Validity. We will make, in our sole discretion, all
determinations regarding the form of documents, validity, eligibility (including
time of receipt) and acceptance for exchange of any tendered Old Notes. Our
determination shall be final and binding on all parties. We reserve the absolute
right, in our sole and absolute discretion, to reject any and all tenders we
determine are not in proper form or the acceptance for exchange of which may, in
the view of our counsel, be unlawful. We also reserve the absolute right,
subject to applicable law, to waive any of the conditions of the exchange offer
as set forth under "-- Conditions to the Exchange Offer" or any defect or
irregularity in any tender of Old Notes of any particular holder whether or not
similar defects or irregularities are waived in the case of other holders.
Our interpretation of the terms and conditions of the exchange offer
(including the Letter of Transmittal and the instructions thereto) will be final
and binding on all parties. No tender of Old Notes will be deemed to have been
validly made until all defects or irregularities with respect to such tender
have been cured or waived. Neither we, any of our affiliates or assigns, the
Exchange Agent or any other person shall be under any duty to give any
notification of any defects or irregularities in tenders or incur any liability
for failure to give any such notification.
RESALES OF EXCHANGE NOTES
Based on interpretations by the staff of the SEC, as set forth in no-action
letters issued to third parties unrelated to us regarding transactions similar
to this exchange offer, we believe that holders of Old Notes (other than as set
forth in the paragraph immediately below and except for our "affiliates" within
the meaning of Rule 405 under the Securities Act) who exchange their Old Notes
for Exchange Notes pursuant to the exchange offer may offer for resale, resell
and otherwise transfer such Exchange Notes without compliance with the
registration and prospectus delivery provisions of the Securities Act, provided
that such Exchange Notes are acquired in the ordinary course of such holders'
business and such holders have no arrangement or understanding with any person
to participate in a distribution (within the meaning of the Securities Act) of
such Exchange Notes. Any holder who tenders Old Notes in the exchange offer with
the intention to participate, or for the purpose of participating, in a
distribution of the Exchange Notes or who is our affiliate may not rely upon
such SEC interpretations and, in the absence of an exemption therefrom, must
comply with the registration and prospectus delivery requirements of the
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Securities Act in connection with any secondary resale transaction. Failure to
comply with such requirements in such instance may result in such holder
incurring liabilities under the Securities Act for which the holder is not
indemnified by us. The staff of the SEC has not considered the exchange offer in
the context of a no-action letter, and there can be no assurance that the staff
of the SEC would make a similar determination with respect to the exchange
offer.
Each broker-dealer that receives Exchange Notes for its own account in
exchange for Old Notes, where such Old Notes were acquired by such broker-dealer
as a result of market-making activities or other trading activities, must
acknowledge that it will deliver a prospectus in connection with any resale of
such Exchange Notes. The Letter of Transmittal states that by so acknowledging
and by delivering a prospectus, a broker-dealer will not be deemed to admit that
it is an "underwriter" within the meaning of the Securities Act. We have agreed
to furnish additional copies of this prospectus, as amended or supplemented, to
any broker-dealer that reasonably requests such documents for use in connection
with any such resale, except that we are not required to amend or supplement
this prospectus for a period exceeding 90 days after the expiration date. See
"Plan of Distribution."
WITHDRAWAL RIGHTS
Except as otherwise provided herein, tenders of Old Notes may be withdrawn
at any time prior to the expiration date. In order for a withdrawal to be
effective, a written, telegraphic or facsimile transmission of such notice of
withdrawal must be timely received by the Exchange Agent at its address set
forth under "-- Exchange Agent" prior to the expiration date. Any such notice of
withdrawal must specify the name of the person who tendered the Old Notes to be
withdrawn, the aggregate principal amount of Old Notes to be withdrawn, and (if
certificates for such Old Notes have been tendered) the name of the registered
holder of the Old Notes as set forth on the Old Notes, if different from that of
the person who tendered such Old Notes. If certificates for Old Notes have been
delivered or otherwise identified to the Exchange Agent, the notice of
withdrawal must specify the certificate number on the particular Old Notes to be
withdrawn and the signature on the notice of withdrawal must be guaranteed by an
Eligible Institution, except in the case of Old Notes tendered for the account
of an Eligible Institution. If Old Notes have been tendered pursuant to the
procedures for book-entry transfer set forth in "-- Procedures for Tendering Old
Notes," the notice of withdrawal must specify the name and number of the account
at DTC to be credited with the withdrawal of Old Notes and must otherwise comply
with the procedures of DTC. Withdrawals of tenders of Old Notes may not be
rescinded. Old Notes properly withdrawn will not be deemed validly tendered for
purposes of the exchange offer, but may be re-tendered at any subsequent time
prior to the expiration date by following any of the procedures described above
under "-- Procedures for Tendering Old Notes."
We will make, in our sole discretion, all determinations regarding the
validity, form and eligibility (including time of receipt) of such withdrawal
notices. Our determination shall be final and binding on all parties. We shall
not be, nor shall our affiliates, the Exchange Agent or any other person shall
be under any duty to give any notification of any defects or irregularities in
any notice of withdrawal or incur any liability for failure to give any such
notification. Any Old Notes which have been tendered but which are withdrawn
will be returned to the holder thereof promptly after withdrawal.
INTEREST ON THE EXCHANGE NOTES
Interest on the Exchange Notes will accrue at the rate of 9 1/8% per annum
and will be payable in cash semi-annually on May 15 and November 15 of each
year, commencing May 15, 1999.
CONDITIONS TO THE EXCHANGE OFFER
Notwithstanding any other provisions of the exchange offer or any extension
of the exchange offer, we will not be required to accept for exchange, or to
exchange, any Old Notes for any Exchange Notes, and may, at any time and from
time to time, terminate the exchange offer or waive any conditions to or amend
the exchange offer in any respect (whether or not any Old Notes have theretofore
been accepted for exchange), if we determine, in our sole and absolute
discretion, that the exchange offer violates applicable law or any applicable
interpretation of the staff of the SEC.
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<PAGE> 31
If such waiver or amendment constitutes a material change to the exchange
offer, we will promptly disclose such waiver by means of a prospectus supplement
that will be distributed to the registered holders of the Old Notes, and we will
extend the exchange offer to the extent required by Rule 14e-1 under the
Exchange Act.
TERMINATION
Notwithstanding any other term of the exchange offer, we will not be
required to accept for exchange, or Exchange Notes for any Old Notes not
theretofore accepted for exchange, and may terminate or amend the exchange offer
as provided herein before the acceptance of such Old Notes, if:
(1) any action or proceeding is instituted or threatened in any court
or by or before any governmental agency with respect to the exchange offer,
which, in our judgment, might materially impair the Company's ability to
proceed with the Exchange Offer, or
(2) any law, statute, rule or regulation is proposed, adopted or
enacted, or any existing law, statute, rule or regulation is interpreted by
the staff of the SEC in a manner, which, in our judgment, might materially
impair our ability to proceed with the exchange offer.
If we determine to terminate the exchange offer as set forth above, we may:
(1) refuse to accept any Old Notes and return any Old Notes that have
been tendered to the holders thereof,
(2) extend the exchange offer and retain all Old Notes tendered prior
to the expiration of the exchange offer, subject to the rights of such
holders of tendered Old Notes to withdraw their tendered Old Notes, or
(3) waive such termination event with respect to the exchange offer
and accept all properly tendered Old Notes that have not been withdrawn.
If such waiver constitutes a material change in the exchange offer, we will
disclose such change by means of a supplement to this prospectus that will be
distributed to each registered holder of Old Notes, and we will extend the
exchange offer for a period of five to ten business days, depending upon the
significance of the waiver and the manner of disclosure to the registered
holders of the Old Notes, if the exchange offer would otherwise expire during
such period.
Notwithstanding any other provisions of the exchange offer, and subject to
its obligations pursuant to the Registration Rights Agreement, we shall not be
required to accept for exchange, or to issue Exchange Notes in exchange for, any
Old Notes, and may terminate or amend the exchange offer, if, at any time before
the acceptance of such Exchange Notes for exchange, any of the following events
shall occur:
(1) any injunction, order or decree shall have been issued by any
court or any governmental agency that would prohibit, prevent or otherwise
materially impair our ability to proceed with the exchange offer; or
(2) the exchange offer will violate any applicable law or any
applicable interpretation of the staff of the SEC.
The foregoing conditions are solely for our benefit and we may assert them
in whole or in part at any time and from time to time in our sole discretion.
Our failure at any time to exercise any of the foregoing rights shall not be
deemed a waiver of any such right, and such right shall be deemed an ongoing
right which may be asserted at any time and from time to time.
In addition, we will not accept for exchange any Old Notes tendered, and no
Exchange Notes will be issued in exchange for any such Old Notes, if at such
time any stop order is threatened by the SEC or in effect with respect to the
registration statement of which this prospectus is a part or with respect to the
qualification of the Indenture under the Trust Indenture Act of 1939.
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<PAGE> 32
The exchange offer is not conditioned on any minimum principal amount of
Old Notes being tendered for exchange.
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The exchange of the Old Notes for the Exchange Notes will not be a taxable
exchange for federal income tax purposes, and holders of Old Notes should not
recognize any taxable gain or loss or any interest income as a result of such
exchange.
EXCHANGE AGENT
Chase Manhattan Bank and Trust Company, National Association, has been
appointed as Exchange Agent for the exchange offer. Delivery of the Letters of
Transmittal and any other required documents, questions, requests for
assistance, and requests for additional copies of this prospectus or of the
Letter of Transmittal should be directed to the Exchange Agent as follows:
CHASE MANHATTAN BANK AND TRUST COMPANY, N.A.
101 CALIFORNIA STREET, SUITE 2725
SAN FRANCISCO, CALIFORNIA 94111-5830
TEL. (415) 954-9581
FAX (415) 693-8850
ATTN: CECIL D. BOBEY
ASSISTANT VICE PRESIDENT
DELIVERY TO OTHER THAN THE ABOVE ADDRESSES OR FACSIMILE NUMBER WILL NOT
CONSTITUTE A VALID DELIVERY.
FEES AND EXPENSES
We will bear all of the expenses of soliciting tenders of Old Notes for
exchange. The principal solicitation is being made by mail. Additional
solicitation may be made personally or by telephone or other means by our
officers, directors or employees.
We have not retained any dealer-manager or similar agent in connection with
the exchange offer. We will not make any payments to brokers, dealers or others
soliciting acceptances of the exchange offer. We have agreed to pay the Exchange
Agent reasonable and customary fees for its services and will reimburse it for
its reasonable out-of-pocket expenses in connection with such services. We will
also pay brokerage houses and other custodians, nominees and fiduciaries the
reasonable out-of-pocket expenses incurred by them in forwarding copies of this
prospectus and related documents to the beneficial owners of the Old Notes, and
in handling or tendering for their customers.
Holders who tender their Old Notes for exchange will not be obligated to
pay any transfer taxes in connection therewith, except that if Exchange Notes
are to be delivered to, or are to be issued in the name of, any person other
than the registered holder of the Old Notes tendered, or if a transfer tax is
imposed for any reason other than the exchange of Old Notes in connection with
the exchange offer, then the amount of any such transfer tax (whether imposed on
the registered holder or any other persons) will be payable by the tendering
holder. If satisfactory evidence of payment of such taxes or exemption therefrom
is not submitted with the Letter of Transmittal, the amount of such transfer
taxes will be billed directly to such tendering holder.
ACCOUNTING TREATMENT
The Exchange Notes will be recorded at the same carrying value as the Old
Notes, which is face value, as reflected in our accounting records on the date
of the exchange. Accordingly, we will not recognize any gain or loss for
accounting purposes upon the consummation of the exchange offer. We will
amortize the expenses of the exchange offer over the term of the Exchange Notes
under generally accepted accounting principles.
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<PAGE> 33
USE OF PROCEEDS
The exchange offer is intended to satisfy certain of our obligations under
the Registration Rights Agreement. We will not receive any proceeds from the
issuance of the Exchange Notes offered hereby. In consideration for issuing the
Exchange Notes as contemplated in this prospectus, we will receive, in exchange,
an equal number of Old Notes in like principal amount. The form and terms of the
Exchange Notes will be identical in all material respects to the form and terms
of the Old Notes, except as otherwise described herein under "The Exchange
Offer -- Terms of the Exchange Offer."
We received approximately $194.8 million in net proceeds from the sale of
the Old Notes, after deducting estimated offering expenses. We used the net
proceeds from the Old Notes to repay a portion of the indebtedness outstanding
under our then existing senior credit facility, as well as for fees and expenses
relating to the amendment and restating of our senior credit facility. As of
January 31, 1999, the outstanding principal amount of indebtedness under our
senior credit facility was $ million. Amounts borrowed under our senior
credit facility bear interest at rates which are variable, based principally on
the London Interbank Offered Rate ("LIBOR"). For the fiscal year ended January
31, 1999, the weighted average interest rate on outstanding borrowings under our
senior credit facility was %. We used proceeds of outstanding borrowings
under our senior credit facility primarily to finance our acquisitions of
Hardee's and FEI. Indebtedness outstanding under our senior credit facility
matures on February 28, 2004. See "Description of Certain Indebtedness -- Senior
Credit Facility."
CAPITALIZATION
The following table sets forth our consolidated capitalization as of
January 31, 1999(1) on a historical basis, and (2) as adjusted to reflect the
sale of the Old Notes and the application of the net proceeds therefrom to repay
a portion of the outstanding borrowings under our senior credit facility, as if
such transactions had occurred on that date. You should read the information set
forth in the following table in conjunction with our consolidated financial
statements, which we have included elsewhere in this prospectus.
<TABLE>
<CAPTION>
AS OF JANUARY 31, 1999
-------------------------
ACTUAL AS ADJUSTED
---------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Cash and cash equivalents................................... $ $
========== ==========
Current portion of long-term debt and capital lease
obligations............................................... $ $
========== ==========
Long-term debt:
Senior credit facility.................................... $ $
9 1/8% Senior Subordinated Notes due 2009................. --
4 1/4% Convertible Subordinated Notes due 2004............
Other debt................................................
Capital lease obligations.................................
---------- ----------
Total long-term debt.................................
---------- ----------
Stockholders' equity:
Preferred stock: $0.01 par value, 5,000,000 shares
authorized;
no shares issued or outstanding........................ -- --
Common stock: $0.01 par value, 100,000,000 shares
authorized;
51,850,249 shares issued and outstanding...............
Additional paid-in capital................................
Retained earnings.........................................
---------- ----------
Total stockholders' equity...........................
---------- ----------
Total capitalization.............................. $ $
========== ==========
</TABLE>
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<PAGE> 34
DESCRIPTION OF CERTAIN INDEBTEDNESS
SENIOR CREDIT FACILITY
The following description is a summary of the material provisions of our
senior credit facility. See "Use of Proceeds," "Capitalization" and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources."
Our senior credit facility consists of a $500.0 million revolving credit
facility, which includes a $75.0 million letter of credit sub-facility. Our
lenders' commitments will be reduced after two years by at least $50.0 million
each year, and the senior credit facility will mature in February 2004. Assuming
we had completed the issuance of the Old Notes on January 31, 1999, we would
have had $ million of borrowings outstanding under the senior credit
facility.
We are required to repay borrowings under the senior credit facility with
the proceeds from certain asset sales (unless the net proceeds of such sales are
reinvested in our business), from the issuance of certain equity securities or
from the issuance of additional indebtedness. Of the various options we have
regarding interest rates, we have selected LIBOR plus a margin, with future
margin adjustments dependent on certain financial ratios from time to time.
Our borrowings and other obligations under the senior credit facility are
general senior secured obligations, secured by a pledge of the capital stock of
certain of our present and future subsidiaries, which subsidiaries guarantee
such borrowings and other obligations, and are secured by certain of our and
such subsidiaries' franchise rights, accounts receivable, contract rights,
general intangibles (including trademarks) and other assets. The senior credit
facility contains a number of significant covenants, including:
- restrictions on our ability to incur additional indebtedness and incur
liens on our assets;
- requirements that we satisfy specified financial tests as a precondition
to the acquisition of other businesses; and
- limitations on making capital expenditures and certain restricted
payments (including dividends and repurchases of stock).
In addition, we are required to comply with minimum EBITDA requirements, minimum
interest coverage and fixed charge coverage ratios, minimum consolidated
tangible net worth requirements and maximum leverage ratios.
The senior credit facility contains customary events of default, including
a default triggered by a default in payment of other material outstanding
indebtedness which permits the acceleration thereof, a change of control
(including the acquisition by any person or persons acting in concert of 20% or
more of the combined voting power of all of our voting stock). Upon the
occurrence of an event of default, the lenders who are parties to the senior
credit facility would be able to declare all borrowings under the senior credit
facility to be due and payable. Upon the occurrence of an event of default
triggered by certain events of bankruptcy, insolvency or reorganization, such
borrowings would immediately become due and payable.
Upon any event of default or any such acceleration, the lenders would also
be able to seek to liquidate the collateral pledged as security for the senior
credit facility and enforce the related subsidiary guarantees.
CONVERTIBLE SUBORDINATED NOTES
In March 1998 we issued $197.2 million aggregate principal amount of
Convertible Notes, the net proceeds of which were used to finance our
acquisition of FEI and to prepay $24.1 million of other indebtedness. As of
January 31, 1999, we have repurchased $35.0 million aggregate principal amount
of Convertible Notes in privately negotiated transactions for approximately
$28.8 million in cash, including accrued interest.
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<PAGE> 35
The Convertible Notes are convertible at the option of the holders, unless
previously redeemed, into shares of our Common Stock at a conversion price of
$43.82 per share, subject to adjustment in certain events.
The Convertible Notes are subordinated to all our existing and future
Senior Indebtedness (as defined in the related indenture) and effectively
subordinated to all indebtedness and other liabilities of our subsidiaries.
The Convertible Notes are not redeemable by us prior to March 20, 2001.
Thereafter, we may redeem the Convertible Notes at our option, in whole or in
part, at any time, at redemption prices ranging from 102.125% of the principal
amount thereof, until March 14, 2002, to 100% at March 15, 2004, together with
accrued interest.
Upon the occurrence of any Fundamental Change (as defined in the related
indenture) prior to the maturity of the Convertible Notes, each holder of
Convertible Notes shall have the right, at such holder's option, to require us
to redeem all or any part of such holder's Convertible Notes at a purchase price
equal to 100% of the principal amount thereof, subject to adjustment, together
with accrued interest.
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<PAGE> 36
DESCRIPTION OF THE EXCHANGE NOTES
Except as otherwise indicated below, the following summary applies to both
the Old Notes and the Exchange Notes. As used herein, the term "Notes" shall
mean the Old Notes and the Exchange Notes, unless otherwise indicated. The terms
of the Exchange Notes are substantially identical to the Old Notes in all
material respects (including interest rate and maturity), except that the
Exchange Notes will not be subject to the restrictions on transfer and the
Registration Rights Agreement covenants regarding registration. The Old Notes
are subject to all such terms, and holders of the Old Notes are referred to the
Indenture (as defined below) and the Trust Indenture Act of 1939 (the "Trust
Indenture Act") for a statement thereof.
The Old Notes, and the Exchange Notes will be, under an Indenture, dated as
of March 4, 1999 (the "Indenture"), among CKE, the Subsidiary Guarantors and
Chase Manhattan Bank and Trust Company, National Association, as trustee (the
"Trustee"). The terms of the Notes include those stated in the Indenture and
those made part of the Indenture by reference to the Trust Indenture Act.
The following description is a summary of the material provisions of the
Indenture. It does not restate the Indenture in its entirety. You can find the
definitions of certain terms used in this description under the subheading
"Certain Definitions" below. We urge you to read the Indenture because it, and
not this description, defines your rights as holders of the Notes. You may
obtain copies of the Indenture by following the directions under the subheading
"Additional Information" below.
GENERAL INFORMATION ABOUT THE NOTES
The Notes will be general unsecured obligations of the Company and will be
subordinated in right of payment to all existing and future Senior Indebtedness
of the Company.
Assuming we had completed the issuance of the Old Notes on January 31,
1999, the Company would have had total Senior Indebtedness of approximately
$ million outstanding as of such date. The Indenture will permit us to incur
additional Indebtedness, including additional Senior Indebtedness, in certain
circumstances.
PRINCIPAL, MATURITY AND INTEREST
The Exchange Notes will be initially limited to $200.0 million aggregate
principal amount, and will mature on May 1, 2009. Subject to the covenants
described below and applicable law, we may issue additional Notes under the
Indenture. The Exchange Notes offered hereby and any additional Notes
subsequently issued will be treated as a single class for all purposes under the
Indenture.
Interest on the Notes will accrue at the rate of 9 1/8% per annum payable
semi-annually in arrears on May 1 and November 1, commencing on May 1, 1999, to
the Holders of record on the immediately preceding April 15 and October 15.
Interest on the Notes will accrue from the date of original issuance or, if
interest has already been paid, from the date it was most recently paid.
Interest will be computed on the basis of a 360-day year comprised of twelve
30-day months. If a Holder has given wire transfer instructions to the Company,
the Company will make all principal, premium, interest and Additional Interest
payments on those Notes in accordance with those instructions. All other
payments on the Notes will be made at the office or agency of the Trustee within
the City and State of New York unless the Company elects to make interest
payments by check mailed to the Holders at their address set forth in the
register of Holders. The Company will issue the Notes in denominations of $1,000
and integral multiples of $1,000.
SUBSIDIARY GUARANTEES
The Company's payment obligations under the Notes will be jointly and
severally guaranteed (the "Subsidiary Guarantees") by all of the Subsidiaries of
the Company, and by any future Restricted Subsidiaries of the Company. Each
Subsidiary Guarantee will be subordinated to the prior payment in full
35
<PAGE> 37
of all Senior Indebtedness of the Subsidiary Guarantor on the same basis as the
Notes are subordinated to Senior Indebtedness of the Company. The obligations of
each Subsidiary Guarantor under its Subsidiary Guarantee will be limited so as
not to constitute a fraudulent conveyance under applicable law.
As of the date of the Indenture, all of our Subsidiaries will be
"Restricted Subsidiaries." However, under the circumstances described below
under the subheading "Covenants -- Definitions -- Restricted and Unrestricted
Subsidiaries," we will be permitted to designate certain of our Subsidiaries as
"Unrestricted Subsidiaries." Unrestricted Subsidiaries will not be subject to
many of the restrictive covenants in the Indenture. Unrestricted Subsidiaries
will not guarantee these Notes.
No Subsidiary Guarantor will be permitted to consolidate with or merge with
or into (whether or not such Subsidiary Guarantor is the surviving Person),
another corporation, Person or entity whether or not affiliated with such
Subsidiary Guarantor unless:
(1) subject to the provisions of the following paragraph, the Person
formed by or surviving any such consolidation or merger (if other than such
Subsidiary Guarantor) assumes all the obligations of such Subsidiary
Guarantor under the Subsidiary Guarantee and the Indenture pursuant to a
supplemental indenture in form and substance reasonably satisfactory to the
Trustee;
(2) immediately after giving effect to such transaction, no Default or
Event of Default exists; and
(3) except in the case of a merger of a Subsidiary Guarantor with and
into the Company or another Subsidiary Guarantor, the Company would be
permitted by virtue of the Company's pro forma Interest Coverage Ratio,
immediately after giving effect to such transaction, to incur at least
$1.00 of additional Indebtedness pursuant to the Interest Coverage Ratio
test set forth in the covenant described below under the caption
"Covenants -- Limitation on Indebtedness."
The Indenture will provide that in the event of (i) a sale or other
disposition of all of the assets of any Subsidiary Guarantor, by way of merger,
consolidation or otherwise, (ii) a sale or other disposition of all of the
capital stock of any Subsidiary Guarantor, or (iii) the designation of any
Subsidiary Guarantor as an Unrestricted Subsidiary in accordance with the
Indenture, then the Subsidiary Guarantor (in the event of a sale or other
disposition, by way of such a merger, consolidation or otherwise, of all of the
capital stock of such Subsidiary Guarantor, or in the event of its designation
as an Unrestricted Subsidiary) or the corporation acquiring the property (in the
event of a sale or other disposition of all of the assets of the Subsidiary
Guarantor) will be released and relieved of any obligations under its Subsidiary
Guarantee; provided that the Net Cash Proceeds of such sale or other disposition
are applied in accordance with the applicable provisions of the Indenture. See
"Covenants -- Asset Sales."
REGISTRATION RIGHTS
We entered into the Registration Rights Agreement with the Initial
Purchasers, for the benefit of the Holders of Old Notes. Pursuant to the
Registration Rights Agreement, we agreed to file the Registration Statement (of
which this prospectus is a part) with the SEC. The Registration Rights Agreement
provides that we will use our best efforts, at our cost, to file and cause to
become effective the Registration Statement. Upon such Registration Statement
being declared effective, the Company shall offer the Exchange Notes in return
for surrender of the Notes. Such offer shall remain open for not less than 20
business days after the date notice of the Exchange Offer is mailed to Holders.
For each Old Note surrendered to the Company under the Exchange Offer, the
Holder will receive an Exchange Note of equal principal amount. Interest on each
Exchange Note shall accrue from the last interest payment date on which interest
was paid on the Notes so surrendered or, if no interest has been paid on such
Notes, from the Closing Date. In the event that applicable interpretations of
the staff of the Securities and Exchange Commission (the "Commission") do not
permit the Company to effect the Exchange Offer, or under certain other
circumstances, the Company shall, at its cost, use its best efforts to cause to
become effective a shelf registration statement (the "Shelf Registration
Statement") with respect to resales of the Notes and to keep the Shelf
Registration Statement effective until the expiration of the time period
36
<PAGE> 38
referred to in Rule 144(k) under the Securities Act after the Closing Date, or
such shorter period that will terminate when all Notes covered by the Shelf
Registration Statement have been sold pursuant to the Shelf Registration
Statement. The Company shall, in the event of such a shelf registration, provide
to each Holder copies of the prospectus, notify each Holder when the Shelf
Registration Statement for the Notes has become effective and take certain other
actions as are required to permit resales of the Notes. A Holder that sells its
Notes pursuant to the Shelf Registration Statement generally will be required to
be named as a selling security holder in the related prospectus and to deliver a
prospectus to purchasers, will be subject to certain of the civil liability
provisions under the Securities Act in connection with such sales and will be
bound by the provisions of the Registration Rights Agreement that are applicable
to such a Holder (including certain indemnification obligations).
In the event that the Exchange Offer is not consummated or the Shelf
Registration Statement is not declared effective on or prior to the date that is
six months after the Closing Date, the annual interest rate borne by the Notes
will be increased by 0.5% from such date six months after the Closing Date until
the Exchange Offer is consummated or the Shelf Registration Statement is
declared effective ("Additional Interest").
If the Company effects the Exchange Offer, the Company will be entitled to
close the Exchange Offer 20 business days after the commencement thereof,
provided that it has accepted all notes theretofore validly surrendered in
accordance with the terms of the Exchange Offer. Old notes not tendered in the
Exchange Offer shall bear interest at the rate of 9 1/8% per annum and be
subject to all of the terms and conditions specified in the Indenture and to the
transfer restrictions in "Transfer Restrictions."
This summary of certain provisions of the Registration Rights Agreement
does not purport to be complete and is subject to, and is qualified in its
entirety by reference to, all the provisions of the Registration Rights
Agreement, a copy of which has been filed as an exhibit to the Registration
Statement of which this prospectus is a part.
SUBORDINATION
The payment of principal of and premium, interest and Additional Interest,
if any, on the Notes will be subordinated to the prior payment in full of all
Senior Indebtedness of the Company.
Upon any distribution to creditors of the Company:
(1) in a liquidation, winding up or dissolution of the Company;
(2) in a bankruptcy, reorganization, insolvency, receivership or
similar proceeding relating to the Company or its property;
(3) in an assignment for the benefit of creditors; or
(4) in any marshaling of the Company's assets and liabilities,
the holders of Senior Indebtedness will be entitled to receive payment in full
in cash of all Obligations due in respect of Senior Indebtedness (including
interest after the commencement of any such proceeding at the rate specified in
the applicable Senior Indebtedness whether or not allowed or allowable as a
claim in any such proceeding) before the Holders will be entitled to receive any
payment or distribution of any kind (except that Holders may receive Permitted
Junior Securities and payments made from the trust described under "-- Legal
Defeasance and Covenant Defeasance") with respect to the Notes. In addition,
until all Obligations due with respect to Senior Indebtedness are paid in full,
any distribution to which Holders would be entitled (whether by reason of
payment, set-off, redemption or subordination provisions or otherwise) shall be
made to the holders of Senior Indebtedness (except that Holders may receive
Permitted Junior Securities and payments made from the trust previously
established pursuant to the provisions described under "-- Legal Defeasance and
Covenant Defeasance").
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<PAGE> 39
The Company also may not make any payment or other distribution of any kind
in respect of the Notes (except in Permitted Junior Securities or from the trust
previously established pursuant to the provisions described under "-- Legal
Defeasance and Covenant Defeasance") if:
(1) a payment default on Designated Senior Indebtedness occurs and is
continuing beyond any applicable grace period; or
(2) any other default occurs and is continuing on Designated Senior
Indebtedness that permits holders of such Designated Senior Indebtedness to
accelerate its maturity and the Trustee receives a notice of such default
(a "Payment Blockage Notice") from the holders of any Designated Senior
Indebtedness or a representative thereof.
Payments on the Notes may and shall be resumed:
(1) in the case of a payment default, upon the date on which such
default is cured or waived in writing; and
(2) in case of a nonpayment default, the earlier of the date on which
such nonpayment default is cured or waived in writing or 179 days after the
date on which the applicable Payment Blockage Notice is received, unless
the maturity of any Designated Senior Indebtedness has been accelerated.
No new Payment Blockage Notice may be delivered unless and until 360 days
have elapsed since the effectiveness of the immediately prior Payment Blockage
Notice.
No nonpayment default that existed or was continuing on the date of
delivery of any Payment Blockage Notice to the Trustee shall be, or be made, the
basis for a subsequent Payment Blockage Notice unless such default shall have
been cured or waived for a period of not less than 90 days (any subsequent
action or breach of any financial covenants for a period commencing after the
date of commencement of such blockage period that in either case would give rise
to an event of default pursuant to any provisions under which an event of
default previously existed or was continuing shall constitute a new event of
default for this purpose).
The Company must promptly notify holders of Senior Indebtedness if payment
of the Notes is accelerated because of an Event of Default.
As a result of the subordination provisions described above, in the event
of a liquidation or insolvency of the Company, Holders may recover less ratably
than creditors of the Company who are holders of Senior Indebtedness. See "Risk
Factors -- Subordination."
OPTIONAL REDEMPTION
Prior to May 1, 2002, the Company may on any one or more occasions redeem
up to 35% of the aggregate principal amount of Notes originally issued under the
Indenture at a redemption price of 109.125% of the principal amount thereof,
plus accrued and unpaid interest and Additional Interest, if any, to the
redemption date, with the net cash proceeds of one or more sales by the Company
of its Capital Stock (other than Disqualified Stock); provided that
(1) at least 65% of the aggregate principal amount of Notes remains
outstanding immediately after the occurrence of such redemption (excluding
Notes held by the Company and its Subsidiaries); and
(2) the redemption occurs within 90 days of the date of the closing of
each such sale of Capital Stock.
Except pursuant to the preceding paragraph, the Notes will not be
redeemable at the Company's option prior to May 1, 2004.
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<PAGE> 40
In addition, on and after May 1, 2004, the Company may redeem all or a part
of the Notes upon not less than 30 nor more than 60 days' notice, at the
redemption prices (expressed as percentages of principal amount) set forth below
plus accrued and unpaid interest and Additional Interest, if any, thereon to the
applicable redemption date, if redeemed during the twelve-month period beginning
on May 1 of the years indicated below:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
---- ----------
<S> <C>
2004........................................................ 104.563%
2005........................................................ 103.042%
2006........................................................ 101.521%
2007 and thereafter......................................... 100.000%
</TABLE>
If less than all of the Notes are to be redeemed at any time, the Trustee
will select Notes for redemption as follows:
(1) if the Notes are listed, in compliance with the requirements of
the principal national securities exchange on which the Notes are listed;
or
(2) if the Notes are not so listed, on a pro rata basis, by lot or by
such method as the Trustee shall deem fair and appropriate.
No Notes of $1,000 or less shall be redeemed in part. Notices of redemption
shall be mailed by first class mail at least 30 but not more than 60 days before
the redemption date to each Holder of Notes to be redeemed at its registered
address. Notices of redemption may not be conditional.
If any Note is to be redeemed in part only, the notice of redemption that
relates to that Note shall state the portion of the principal amount thereof to
be redeemed. A new Note in principal amount equal to the unredeemed portion of
the original Note will be issued in the name of the Holder thereof upon
cancellation of the original Note. Notes called for redemption become due on the
date fixed for redemption. On and after the redemption date, interest ceases to
accrue on Notes or portions of them called for redemption.
CERTAIN DEFINITIONS
Set forth below are certain defined terms used in the Indenture. Reference
is made to the Indenture for the full definition of all terms as well as any
other capitalized term used herein for which no definition is provided.
"Acquired Indebtedness" means Indebtedness of a Person existing at the time
such Person becomes a Restricted Subsidiary or assumed in connection with an
Asset Acquisition from such Person by a Restricted Subsidiary and not Incurred
by such Person in connection with, or in anticipation of, such Person becoming a
Restricted Subsidiary or such Asset Acquisition; provided that Indebtedness of
such Person which is redeemed, defeased, retired or otherwise repaid at the time
of or immediately upon consummation of the transactions by which such Person
becomes a Restricted Subsidiary or such Asset Acquisition shall not be Acquired
Indebtedness.
"Additional Interest" means all additional interest then owing pursuant to
the Registration Rights Agreement.
"Adjusted Consolidated Net Income" means, for any period, the aggregate net
income (or loss) of the Company and its Restricted Subsidiaries for such period
determined on a consolidated basis in conformity with GAAP; provided that the
following items shall be excluded in computing Adjusted Consolidated Net Income
(without duplication):
(1) the net income of any Person (other than the Company or a
Restricted Subsidiary), except to the extent of the amount of dividends or
other distributions actually paid to the Company or any of its Restricted
Subsidiaries by such Person during such period;
(2) solely for the purposes of calculating the amount of Restricted
Payments that may be made pursuant to clause (C) of the first paragraph of
the "Limitation on Restricted Payments" covenant
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described below (and in such case, except to the extent includable pursuant
to clause (1) above), the net income (or loss) of any Person accrued prior
to the date it becomes a Restricted Subsidiary or is merged into or
consolidated with the Company or any of its Restricted Subsidiaries or all
or substantially all of the property and assets of such Person are acquired
by the Company or any of its Restricted Subsidiaries;
(3) the net income of any Restricted Subsidiary to the extent that the
declaration or payment of dividends or similar distributions by such
Restricted Subsidiary of such net income to the Company or any Restricted
Subsidiary is not at the time of such determination permitted by the
operation of the terms of its charter or any agreement, instrument,
judgment, decree, order, statute, rule or governmental regulation
applicable to such Restricted Subsidiary;
(4) any gains or losses (on an after-tax basis) attributable to Asset
Sales;
(5) except for purposes of calculating the amount of Restricted
Payments that may be made pursuant to clause (C) of the first paragraph of
the "Restricted Payments" covenant described below, the amount of dividends
or other distributions actually paid to the Company or any of its
Restricted Subsidiaries by any Unrestricted Subsidiary during such period;
and
(6) all extraordinary gains and extraordinary losses (on an after-tax
basis).
"Affiliate" means, as applied to any Person, any other Person directly or
indirectly controlling, controlled by, or under direct or indirect common
control with, such Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as applied to any Person, means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities, by contract or otherwise; provided that the
beneficial ownership of 10% or more of the voting securities of a Person shall
be deemed to be control.
"Asset Acquisition" means (1) an investment by the Company or any of its
Restricted Subsidiaries in any other Person pursuant to which such Person shall
become a Restricted Subsidiary or shall be merged into or consolidated with the
Company or any of its Restricted Subsidiaries; provided that such Person's
primary business is related, ancillary or complementary to the businesses of the
Company and its Restricted Subsidiaries on the date of such investment or (2) an
acquisition by the Company or any of its Restricted Subsidiaries of the property
and assets of any Person other than the Company or any of its Restricted
Subsidiaries that constitute substantially all of a division or line of business
of such Person; provided that the property and assets acquired are related,
ancillary or complementary to the businesses of the Company and its Restricted
Subsidiaries on the date of such acquisition.
"Asset Disposition" means the sale or other disposition by the Company or
any of its Restricted Subsidiaries (other than to the Company or another
Restricted Subsidiary) of (1) all or substantially all of the Capital Stock of
any Restricted Subsidiary of the Company or (2) all or substantially all of the
assets that constitute a division or line of business of the Company or any of
its Restricted Subsidiaries.
"Asset Sale" means any sale, transfer or other disposition (including by
way of merger, consolidation or sale-leaseback transaction) in one transaction
or a series of related transactions by the Company or any of its Restricted
Subsidiaries to any Person other than the Company or any of its Restricted
Subsidiaries of (1) all or any of the Capital Stock of any Restricted
Subsidiary, (2) all or substantially all of the property and assets of the
Company or any of its Restricted Subsidiaries or (3) any other property and
assets of the Company or any of its Restricted Subsidiaries (other than the
Capital Stock or other Investment in an Unrestricted Subsidiary) outside the
ordinary course of business of the Company or such Restricted Subsidiary and, in
each case, that is not governed by the provisions of the Indenture applicable to
mergers, consolidations and sales of assets of the Company; provided that "Asset
Sale" shall not include:
(1) sales or other dispositions of inventory, receivables and other
current assets in the ordinary course of business;
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(2) sales, transfers or other dispositions of assets with a Fair
Market Value not in excess of $2 million in any transaction or series of
related transactions;
(3) sales, transfers or other dispositions of assets constituting a
Restricted Payment permitted to be made under the "Restricted Payments"
covenant;
(4) sales, transfers or other dispositions of property or equipment
that has become worn out, obsolete or damaged or otherwise unsuitable for
use in connection with the business of the Company or its Restricted
Subsidiaries;
(5) the sale, transfer or other disposition of any property or assets
by the Company or any Restricted Subsidiary to the Company or any
Subsidiary Guarantor;
(6) the sale, transfer or other disposition to a franchisee of the
Company or a Restricted Subsidiary, within twelve months of the acquisition
thereof, of any restaurant that has been acquired by the Company or such
Restricted Subsidiary from a franchisee of the Company or such Restricted
Subsidiary, if the consideration received in such sale, transfer or other
disposition is at least equal to the Fair Market Value of such restaurant;
(7) the sale, transfer or other disposition of real property on which
a restaurant is located in exchange for other real property on which a
restaurant will be located, which acquired real property has a fair market
value at least equal to the fair market value of the real property being
sold, transferred or disposed of; and
(8) the sale of property acquired or constructed for cash
consideration equal to or greater than the Fair Market Value of such
property in a sale and leaseback transaction in which such property is
leased to the Company or the Restricted Subsidiary that sold such property;
provided, that to the extent that the proceeds from such sale are not
invested in property or assets (other than current assets) of a nature or
type that are used in a business similar or related to the nature or type
of the property and assets of, or the business of, the Company and its
Restricted Subsidiaries on or before the date that is 12 months following
such sale, such sale shall be deemed to constitute an "Asset Sale"
occurring as of such date.
"Average Life" means, at any date of determination with respect to any debt
security, the quotient obtained by dividing (1) the sum of the products of (A)
the number of years from such date of determination to the dates of each
successive scheduled principal payment of such debt security and (B) the amount
of such principal payment by (2) the sum of all such principal payments.
"Capital Stock" means, with respect to any Person, any and all shares,
interests, participations or other equivalents (however designated, whether
voting or non-voting) in equity of such Person, whether outstanding on the
Closing Date or issued thereafter, including, without limitation, all Common
Stock and Preferred Stock.
"Capitalized Lease" means, as applied to any Person, any lease of any
property (whether real, personal or mixed) of which the discounted present value
of the rental obligations of such Person as lessee, in conformity with GAAP, is
required to be capitalized on the balance sheet of such Person.
"Capitalized Lease Obligations" means the discounted present value of the
rental obligations under a Capitalized Lease.
"Change of Control" means such time as:
(1) a plan relating to the liquidation or dissolution of the Company
is adopted;
(2) the liquidation or dissolution of the Company;
(3) individuals who at the beginning of any 24-month period
constituted the Board of Directors of the Company (together with any new or
replacement directors whose election by the Board of Directors or whose
nomination by the Board of Directors for election by the Company's
stockholders was approved by a vote of at least a majority of the members
of the Board of Directors then still in
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office who either were members of the Board of Directors on the Closing
Date or whose election or nomination for election was so approved) cease
for any reason to constitute a majority of the members of the Board of
Directors of the Company during such 24-month period; or
(4) (A) any "person" or "group" (as such terms are used in Section
13(d)(3) or Section 14(d)(2) of the Exchange Act, including any group
acting for the purpose of acquiring, holding or disposing of securities
within the meaning of Rule 13d-5(b)(1) under the Exchange Act), other than
the Principals and their Related Parties, becomes the "beneficial owner"
(as defined in Rule 13d-3 under the Exchange Act), directly or indirectly,
of more than 35% of the Voting Stock of the Company; or
(B) any "person" (as defined above) or "group" (as defined above)
becomes the "beneficial owner" (as defined above), directly or indirectly,
of both (i) more of the Voting Stock of the Company than is at the time
"beneficially owned" (as defined above) by the Principals and their Related
Persons in the aggregate and (ii) more than 15% of the Voting Stock of the
Company.
For purposes of this definition, any transfer of an equity interest of an entity
that was formed for the purpose of acquiring Voting Stock of the Company will be
deemed to be a transfer of such portion of such Voting Stock as corresponds to
the portion of the equity of such entity that has been so transferred.
"Closing Date" means the initial date on which the Notes are originally
issued under the Indenture.
"Common Stock" means, with respect to any Person, any and all shares,
interests, participations or other equivalents (however designated, whether
voting or non-voting) of such Person's common equity, whether outstanding on the
Closing Date or issued thereafter.
"Consolidated EBITDA" means, for any period, Adjusted Consolidated Net
Income for such period plus, to the extent such amount was deducted in
calculating such Adjusted Consolidated Net Income, (1) Consolidated Interest
Expense, (2) income taxes (other than income taxes (either positive or negative)
attributable to extraordinary gains or losses or sales of assets), (3)
depreciation expense, (4) amortization expense and (5) all other non-cash items
reducing Adjusted Consolidated Net Income less all non-cash items increasing
Adjusted Consolidated Net Income; provided, that if any Restricted Subsidiary is
not a Wholly Owned Restricted Subsidiary, Consolidated EBITDA shall be reduced
(to the extent not otherwise reduced in accordance with GAAP) by an amount equal
to (A) the amount of the Adjusted Consolidated Net Income attributable to such
Restricted Subsidiary multiplied by (B) the percentage ownership interest in the
income of such Restricted Subsidiary not owned on the last day of such period by
the Company or any of its Restricted Subsidiaries.
"Consolidated Interest Expense" means, for any period, the aggregate amount
of:
(1) interest in respect of Indebtedness, including, without
limitation, amortization of original issue discount on any Indebtedness and
the interest portion of any deferred payment obligation, calculated in
accordance with the effective interest method of accounting; all
commissions, discounts and other fees and charges owed with respect to
letters of credit and bankers' acceptance financing; the net costs
associated with Interest Rate Agreements; and the foregoing to the extent
it relates to Indebtedness that is Guaranteed by or secured by the assets
of Company or any of its Restricted Subsidiaries);
(2) all but the principal component of rentals in respect of
Capitalized Lease Obligations paid, accrued or scheduled to be paid or to
be accrued by the Company and its Restricted Subsidiaries during such
period;
(3) all interest capitalized during such period; and
(4) the product of (a) all dividend payments, whether or not in cash,
on any series of Preferred Stock of the Company or any of its Restricted
Subsidiaries, other than dividend payments on Capital Stock payable solely
in Capital Stock of the Company (other than Disqualified Stock) or to the
Company or a Restricted Subsidiary of the Company, times (b) a fraction,
the numerator of which is
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one and the denominator of which is one minus the then current combined
federal, state and local statutory tax rate of such Person, expressed as a
decimal, in each case, on a consolidated basis and in accordance with GAAP;
excluding, however, (A) any amount of such interest of any Restricted Subsidiary
if the net income of such Restricted Subsidiary is excluded in the calculation
of Adjusted Consolidated Net Income pursuant to clause (3) of the definition
thereof (but only in the same proportion as the net income of such Restricted
Subsidiary is excluded from the calculation of Adjusted Consolidated Net Income
pursuant to clause (3) of the definition thereof) and (B) any premiums, fees and
expenses (and any amortization thereof) payable in connection with the offering
of the Notes or the establishment of the Credit Agreement, all as determined on
a consolidated basis in conformity with GAAP.
"Consolidated Net Worth" means, at any date of determination, stockholders'
equity as set forth on the most recently available quarterly or annual
consolidated balance sheet of the Company and its Restricted Subsidiaries (which
shall be as of a date not more than 135 days prior to the date of such
computation, and which shall not take into account Unrestricted Subsidiaries
except as investments), less any amounts attributable to Disqualified Stock or
any equity security convertible into or exchangeable for Indebtedness, the cost
of treasury stock and the principal amount of any promissory notes receivable
from the sale of the Capital Stock of the Company or any of its Restricted
Subsidiaries, each item to be determined in conformity with GAAP (excluding the
effects of foreign currency exchange adjustments under Financial Accounting
Standards Board Statement of Financial Accounting Standards No. 52).
"Credit Agreement" means the second amended and restated credit agreement,
to be entered into on the Closing Date, among the Company, Paribas and the
lenders party thereto, together with any agreements, instruments and documents
executed or delivered by the Company or any of its Subsidiaries pursuant to or
in connection with such credit agreement (including without limitation any
guarantees and security documents), in each case as such credit agreement or
such agreements, instruments or documents may be amended (including any
amendment and restatement thereof), supplemented, extended, renewed, replaced or
otherwise modified from time to time, and including any agreement extending the
maturity of, refinancing or otherwise restructuring (including, without
limitation, the inclusion of additional borrowers thereunder that are
Subsidiaries) all or any portion of the Indebtedness or commitments or letters
of credit under such agreement or any successor agreement, as such agreement may
be amended, renewed, extended, substituted, replaced, restated and otherwise
modified from time to time, whether or not with the same agent or lenders and
irrespective of any change in the terms and conditions thereof, including
increasing the amount of Indebtedness incurred thereunder or available to be
borrowed thereunder.
"Currency Agreement" means any foreign exchange contract, currency swap
agreement or other similar agreement or arrangement.
"Default" means any event that is, or after notice or passage of time or
both would be, an Event of Default.
"Designated Senior Indebtedness" means (1) any Obligations under the Credit
Agreement and (2) any other Indebtedness constituting Senior Indebtedness that,
at the date of determination, has commitments for or an aggregate principal
amount outstanding of at least $25 million and that is specifically designated
by the issuer, in the instrument creating or evidencing such Senior Indebtedness
as "Designated Senior Indebtedness."
"Disqualified Stock" means any class or series of Capital Stock of any
Person that by its terms or otherwise is (1) required to be redeemed prior to
the Stated Maturity of the Notes, (2) redeemable at the option of the holder of
such class or series of Capital Stock at any time prior to the 91st day
following the Stated Maturity of the Notes or (3) convertible into or
exchangeable for Capital Stock referred to in clause (1) or (2) above or
Indebtedness having a scheduled maturity prior to the Stated Maturity of the
Notes; provided that any Capital Stock that would not constitute Disqualified
Stock but for provisions thereof giving holders thereof the right to require
such Person to repurchase or redeem such Capital Stock upon the occurrence of an
"asset sale" or "change of control" occurring prior to the Stated Maturity of
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the Notes shall not constitute Disqualified Stock if the "asset sale" or "change
of control" provisions applicable to such Capital Stock are no more favorable to
the holders of such Capital Stock than the provisions contained in "Asset Sales"
and "Repurchase of Notes upon a Change of Control" covenants described below and
such Capital Stock specifically provides that such Person will not repurchase or
redeem any such stock pursuant to such provision prior to the Company's
repurchase of such Notes as are required to be repurchased pursuant to the
"Asset Sales" and "Repurchase of Notes upon a Change of Control" covenants
described below.
"Fair Market Value" means the price that would be paid in an arm's-length
transaction between an informed and willing seller under no compulsion to sell
and an informed and willing buyer under no compulsion to buy, as determined in
good faith by the Board of Directors, whose determination shall be conclusive if
evidenced by a resolution of the Board of Directors.
"GAAP" means generally accepted accounting principles in the United States
of America as in effect as of the Closing Date, including, without limitation,
those set forth in the opinions and pronouncements of the Accounting Principles
Board of the American Institute of Certified Public Accountants and statements
and pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as approved by a significant segment of the
accounting profession. Unless otherwise specified, all ratios and computations
contained or referred to in the Indenture shall be computed in conformity with
GAAP applied on a consistent basis.
"Government Securities" means direct obligations of, obligations fully
guaranteed by, or participations in pools consisting solely of obligations of or
obligations guaranteed by, the United States of America for the payment of which
guarantee or obligations the full faith and credit of the United States of
America is pledged and which are not callable or redeemable at the option of the
issuer thereof.
"Guarantee" means any obligation, contingent or otherwise, of any Person
directly or indirectly guaranteeing any Indebtedness of any other Person and,
without limiting the generality of the foregoing, any obligation, direct or
indirect, contingent or otherwise, of such Person:
(1) to purchase or pay (or advance or supply funds for the purchase or
payment of) such Indebtedness of such other Person (whether arising by
virtue of partnership arrangements, or by agreements to keep-well, to
purchase assets, goods, securities or services (unless such purchase
arrangements are on arm's-length terms and are entered into in the ordinary
course of business), to take-or-pay, or to maintain financial statement
conditions or otherwise); or
(2) entered into for purposes of assuring in any other manner the
obligee of such Indebtedness of the payment thereof or to protect such
obligee against loss in respect thereof (in whole or in part); provided
that the term "Guarantee" shall not include endorsements for collection or
deposit in the ordinary course of business.
The term "Guarantee" used as a verb has a corresponding meaning.
"Incur" means, with respect to any Indebtedness, to incur, create, issue,
assume, Guarantee or otherwise become liable for or with respect to, or become
responsible for, the payment of, contingently or otherwise, such Indebtedness,
including an "Incurrence" of Acquired Indebtedness; provided that the accrual of
interest shall not be considered an Incurrence of Indebtedness.
"Indebtedness" means, with respect to any Person at any date of
determination (without duplication):
(1) all indebtedness of such Person for borrowed money;
(2) all obligations of such Person evidenced by bonds, debentures,
notes or other similar instruments;
(3) all obligations of such Person in respect of letters of credit or
other similar instruments (including reimbursement obligations with respect
thereto, but excluding obligations with respect to letters of credit
(including trade letters of credit) securing obligations (other than
obligations described in (1) or (2) above or (5), (6) or (7) below) entered
into in the ordinary course of
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<PAGE> 46
business of such Person to the extent such letters of credit are not drawn
upon or, if drawn upon, to the extent such drawing is reimbursed no later
than the third Business Day following receipt by such Person of a demand
for reimbursement);
(4) all obligations of such Person to pay the deferred and unpaid
purchase price of property or services, which purchase price is due more
than six months after the date of placing such property in service or
taking delivery and title thereto or the completion of such services,
except Trade Payables;
(5) all Capitalized Lease Obligations;
(6) all Indebtedness of other Persons secured by a Lien on any asset
of such Person, whether or not such Indebtedness is assumed by such Person;
provided that the amount of such Indebtedness shall be the lesser of (A)
the Fair Market Value of such asset at such date of determination and (B)
the amount of such Indebtedness;
(7) all Indebtedness of other Persons Guaranteed by such Person to the
extent such Indebtedness is Guaranteed by such Person; and
(8) to the extent not otherwise included in this definition,
obligations under Currency Agreements and Interest Rate Agreements.
The amount of Indebtedness of any Person at any date shall be the outstanding
balance at such date of all unconditional obligations as described above and,
with respect to contingent obligations, the maximum liability upon the
occurrence of the contingency giving rise to the obligation, provided (A) that
the amount outstanding at any time of any Indebtedness issued with original
issue discount is the face amount of such Indebtedness less the remaining
unamortized portion of the original issue discount of such Indebtedness at such
time as determined in conformity with GAAP, (B) that money borrowed and set
aside at the time of the Incurrence of any Indebtedness in order to prefund the
payment of the interest on such Indebtedness shall not be deemed to be
"Indebtedness" so long as such money is held to secure the payment of such
interest and (C) that Indebtedness shall not include any liability for federal,
state, local or other taxes.
"Interest Coverage Ratio" means, on any Transaction Date, the ratio of (1)
the aggregate amount of Consolidated EBITDA for the then most recent four fiscal
quarters prior to such Transaction Date for which reports have been filed with
the Commission or provided to the Trustee pursuant to the "Commission Reports
and Reports to Holders" covenant (the "Four Quarter Period") to (2) the
aggregate Consolidated Interest Expense during such Four Quarter Period. In
making the foregoing calculation:
(A) pro forma effect shall be given to any Indebtedness Incurred or
repaid, retired, redeemed, converted or defeased or any Preferred Stock
issued or redeemed during the period (the "Reference Period") commencing on
the first day of the Four Quarter Period and ending on the Transaction Date
(other than Indebtedness Incurred or repaid under a revolving credit or
similar arrangement to the extent of the commitment thereunder (or under
any predecessor revolving credit or similar arrangement) in effect on the
last day of such Four Quarter Period except to the extent any portion of
such Indebtedness is projected, in the reasonable judgment of the senior
management of the Company, to remain outstanding for a period in excess of
12 months from the date of the Incurrence thereof), in each case as if such
Indebtedness had been Incurred or repaid or Preferred Stock issued or
redeemed on the first day of such Reference Period (and pro forma effect
shall be given to the purchase of any U.S. government securities required
to be purchased with the proceeds of any such Indebtedness and set aside to
prefund the payment of interest on such Indebtedness at the time such
Indebtedness is Incurred);
(B) Consolidated Interest Expense attributable to interest on any
Indebtedness or Preferred Stock (whether existing or being Incurred or
issued) computed on a pro forma basis and bearing a floating interest or
dividend rate shall be computed as if the rate in effect on the Transaction
Date (taking into account any Interest Rate Agreement applicable to such
Indebtedness if such Interest
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Rate Agreement has a remaining term in excess of 12 months or, if shorter,
at least equal to the remaining term of such Indebtedness) had been the
applicable rate for the entire period;
(C) pro forma effect shall be given to Asset Dispositions and Asset
Acquisitions (including giving pro forma effect to the application of
proceeds of any Asset Disposition and to any discharge of or other relief
from Indebtedness to which the Company and its continuing Restricted
Subsidiaries are not liable following any Asset Disposition) and the
designation of Unrestricted Subsidiaries as Restricted Subsidiaries that
occur during such Reference Period as if they had occurred and such
proceeds had been applied and such discharge or relief has occurred on the
first day of such Reference Period; and
(D) pro forma effect shall be given to asset dispositions and asset
acquisitions (including giving pro forma effect to the application of
proceeds of any asset disposition and to any discharge of or other relief
from Indebtedness to which the Company and its continuing Restricted
Subsidiaries are not liable following any asset disposition) that have been
made by any Person that has become a Restricted Subsidiary or has been
merged with or into the Company or any Restricted Subsidiary during such
Reference Period and that would have constituted Asset Dispositions or
Asset Acquisitions had such transactions occurred when such Person was a
Restricted Subsidiary as if such asset dispositions or asset acquisitions
were Asset Dispositions or Asset Acquisitions that occurred on the first
day of such Reference Period;
provided that to the extent that clause (C) or (D) of this sentence requires
that pro forma effect be given to an Asset Acquisition or Asset Disposition,
such pro forma calculation shall be based upon the four full fiscal quarters
immediately preceding the Transaction Date of the Person, or division or line of
business of the Person, that is acquired or disposed for which financial
information is available.
"Interest Rate Agreement" means any interest rate protection agreement,
interest rate future agreement, interest rate option agreement, interest rate
swap agreement, interest rate cap agreement, interest rate collar agreement,
interest rate hedge agreement, option or future contract or other similar
agreement or arrangement.
"Investment" in any Person means any direct or indirect advance, loan or
other extension of credit (including, without limitation, by way of Guarantee or
similar arrangement, but excluding advances to customers, suppliers or
contractors in the ordinary course of business that are, in conformity with
GAAP, recorded as accounts receivable, prepaid expenses or deposits on the
balance sheet of the Company or its Restricted Subsidiaries) or capital
contribution to (by means of any transfer of cash or other property to others or
any payment for property or services for the account or use of others), or any
purchase or acquisition of Capital Stock, bonds, notes, debentures or other
similar instruments issued by, such Person and shall include:
(1) the designation of a Restricted Subsidiary as an Unrestricted
Subsidiary; and
(2) the Fair Market Value of the Capital Stock (or any other
Investment) held by the Company or any of its Restricted Subsidiaries of
(or in) any Person that has ceased to be a Restricted Subsidiary for any
reason;
provided that the Fair Market Value of the Investment remaining in any Person
that has ceased to be a Restricted Subsidiary shall not exceed the aggregate
amount of Investments previously made in such Person valued at the time such
Investments were made less the net reduction of such Investments. For purposes
of the definition of "Unrestricted Subsidiary" and the "Restricted Payments"
covenant described below:
(1) "Investment" shall include the Fair Market Value of the assets
(net of liabilities (other than liabilities to the Company or any of its
Restricted Subsidiaries)) of any Restricted Subsidiary at the time that
such Restricted Subsidiary is designated an Unrestricted Subsidiary;
(2) the Fair Market Value of the assets (net of liabilities (other
than liabilities to the Company or any of its Restricted Subsidiaries)) of
any Unrestricted Subsidiary at the time that such
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Unrestricted Subsidiary is designated a Restricted Subsidiary shall be
considered a reduction in outstanding Investments; and
(3) any property transferred to or from an Unrestricted Subsidiary
shall be valued at its Fair Market Value at the time of such transfer.
Notwithstanding the foregoing, in no event shall any issuance of Capital Stock
(other than Disqualified Stock) of the Company in exchange for Capital Stock,
property or assets of another Person or any redemption or repurchase of the
Notes or other Indebtedness of the Company or any Restricted Subsidiary for cash
constitute an Investment by the Company in such other Person.
"Lien" means any mortgage, pledge, security interest, encumbrance, lien or
charge of any kind (including, without limitation, any conditional sale or other
title retention agreement or lease in the nature thereof or any agreement to
give any security interest).
"Moody's" means Moody's Investors Service, Inc. and its successors.
"Net Cash Proceeds" means:
(1) with respect to any Asset Sale (other than as described in
paragraph (2) below), the proceeds of such Asset Sale in the form of cash
or cash equivalents, including payments in respect of deferred payment
obligations (to the extent corresponding to the principal, but not
interest, component thereof) when received in the form of cash or cash
equivalents (except to the extent such obligations are financed or sold
with recourse to the Company or any Restricted Subsidiary) and proceeds
from the conversion of other property received when converted to cash or
cash equivalents, net of:
(A) brokerage commissions and other fees and expenses (including
fees and expenses of counsel and investment bankers) related to such
Asset Sale;
(B) provisions for all taxes (whether or not such taxes will
actually be paid or are payable) as a result of such Asset Sale without
regard to the consolidated results of operations of the Company and its
Restricted Subsidiaries, taken as a whole;
(C) payments made to repay Indebtedness (other than Senior
Indebtedness) or any other obligation outstanding at the time of such
Asset Sale that either (I) is secured by a Lien on the property or
assets sold or (II) is required to be paid as a result of such sale; and
(D) appropriate amounts to be provided by the Company or any
Restricted Subsidiary as a reserve against any liabilities associated
with such Asset Sale, including, without limitation, pension and other
post-employment benefit liabilities, liabilities related to
environmental matters and liabilities under any indemnification
obligations associated with such Asset Sale, all as determined in
conformity with GAAP; and
(2) with respect to any issuance and sale of Capital Stock (other than
issuances to the Company or to any Wholly-Owned Restricted Subsidiary), the
proceeds of such issuance or sale in the form of cash or cash equivalents,
including payments in respect of deferred payment obligations (to the
extent corresponding to the principal, but not interest, component thereof)
when received in the form of cash or cash equivalents (except to the extent
such obligations are financed or sold with recourse to the Company or any
Restricted Subsidiary) and proceeds from the conversion of other property
received when converted to cash or cash equivalents, net of attorney's
fees, accountants' fees, underwriters' or placement agents' fees, discounts
or commissions and brokerage, consultant and other fees incurred in
connection with such issuance or sale and net of taxes paid or payable as a
result thereof.
"Obligations" means any principal, interest, premium, if any, penalties,
fees, indemnifications, reimbursements, damages or other liabilities payable
under the documentation governing or otherwise in respect of any Indebtedness.
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"Offer to Purchase" means an offer to purchase Notes by the Company from
the Holders commenced by mailing a notice to the Trustee and each Holder
stating:
(1) the covenant pursuant to which the offer is being made and that
all Notes validly tendered will be accepted for payment on a pro rata
basis;
(2) the purchase price and the date of purchase (which shall be a
Business Day no earlier than 30 days nor later than 60 days from the date
such notice is mailed) (the "Payment Date");
(3) that any Note not tendered will continue to accrue interest
pursuant to its terms;
(4) that, unless the Company defaults in the payment of the purchase
price, any Note accepted for payment pursuant to the Offer to Purchase
shall cease to accrue interest on and after the Payment Date;
(5) that Holders electing to have a Note purchased pursuant to the
Offer to Purchase will be required to surrender the Note, together with the
form entitled "Option of the Holder to Elect Purchase" on the reverse side
of the Note completed, to the Paying Agent at the address specified in the
notice prior to the close of business on the Business Day immediately
preceding the Payment Date;
(6) that Holders will be entitled to withdraw their election if the
Paying Agent receives, not later than the close of business on the third
Business Day immediately preceding the Payment Date, a telegram, facsimile
transmission or letter setting forth the name of such Holder, the principal
amount of Notes delivered for purchase and a statement that such Holder is
withdrawing his election to have such Notes purchased; and
(7) that Holders whose Notes are being purchased only in part will be
issued new Notes equal in principal amount to the unpurchased portion of
the Notes surrendered; provided that each Note purchased and each new Note
issued shall be in a principal amount of $1,000 or integral multiples
thereof.
On the Payment Date, the Company shall:
(1) accept for payment on a pro rata basis Notes or portions thereof
tendered pursuant to an Offer to Purchase;
(2) deposit with the Paying Agent money sufficient to pay the purchase
price of all Notes or portions thereof so accepted; and
(3) deliver, or cause to be delivered, to the Trustee all Notes or
portions thereof so accepted together with an Officers' Certificate
specifying the Notes or portions thereof accepted for payment by the
Company.
The Paying Agent shall promptly mail to the Holders of Notes so accepted
payment in an amount equal to the purchase price, and the Trustee shall promptly
authenticate and mail to such Holders a new Note equal in principal amount to
any unpurchased portion of the Note surrendered; provided that each Note
purchased and each new Note issued shall be in a principal amount of $1,000 or
integral multiples thereof. The Company will publicly announce the results of an
Offer to Purchase as soon as practicable after the Payment Date. The Trustee
shall act as the Paying Agent for an Offer to Purchase. The Company will comply
with Rule 14e-1 under the Exchange Act and any other securities laws and
regulations thereunder to the extent such laws and regulations are applicable,
in the event that the Company is required to repurchase Notes pursuant to an
Offer to Purchase. To the extent that the provisions of any securities laws or
regulations conflict with the provisions for such Offer to Purchase, the Company
will comply with the applicable securities laws and regulations and will not be
deemed to have breached its obligations with respect to such Offer to Purchase
by virtue thereof.
"Pari Passu Indebtedness" means all Indebtedness of the Company ranking
pari passu in right of payment with the Notes.
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<PAGE> 50
"Permitted Investment" means:
(1) an Investment in the Company or a Restricted Subsidiary or a
Person which will, upon the making of such Investment, become a Restricted
Subsidiary or be merged or consolidated with or into or transfer or convey
all or substantially all its assets to, the Company or a Restricted
Subsidiary; provided that such person's primary business is related,
ancillary or complementary to the businesses of the Company and its
Restricted Subsidiaries on the date of such Investment;
(2) an Investment by the Company or a Restricted Subsidiary in a joint
venture, in which the Company or such Restricted Subsidiary holds 50% of
the outstanding equity interests, with another operator of retail
facilities for the purpose of developing, acquiring or constructing
properties which include restaurant operations, provided that the aggregate
amount of the such Investments does not exceed $50 million plus the net
reduction in such Investments; provided further, that (A) the consent of
the Company or such Restricted Subsidiary is required for such joint
venture to effect any material transactions, including the acquisition and
sale of assets, incurrence of debt and significant capital commitments and
(B) such joint venture will not create or otherwise cause or suffer to
exist or become effective any consensual encumbrance or restriction which
would unreasonably restrict the ability of the joint venture to distribute
to its owners the net cash flow of the joint venture;
(3) Temporary Cash Investments;
(4) payroll, travel and similar advances to cover matters that are
expected at the time of such advances ultimately to be treated as expenses
in accordance with GAAP;
(5) stock, obligations or securities received in satisfaction of
judgments or good faith settlement of litigation, disputes or other debts;
(6) Interest Rate Agreements and Currency Agreements designed solely
to protect the Company or its Restricted Subsidiaries against fluctuations
in interest rates or foreign currency exchange rates;
(7) Investments in any Person the primary business of which is
related, ancillary or complementary to the businesses of the Company and
its Restricted Subsidiaries; provided that the aggregate amount of such
Investments does not exceed $25 million plus the net reductions in such
Investments;
(8) Investments in prepaid expenses, negotiable instruments held for
collection and lease, utility, workers' compensation and other similar
deposits;
(9) documented loans on commercially reasonable terms to franchisees
of the Company or its Restricted Subsidiaries in the ordinary course of
business of the Company and its Restricted Subsidiaries in an aggregate
principal amount not to exceed $20 million at any time outstanding;
(10) Investments made as a result of the receipt of non-cash
consideration from an Asset Sale that was made in compliance with the
covenant "Asset Sales";
(11) Investments acquired solely for Capital Stock (other than
Disqualified Stock) of the Company;
(12) Advances and loans to employees in the ordinary course of
business not exceeding $2 million in the aggregate at any one time
outstanding;
(13) Investments in Common Stock of Rally's Hamburgers, Inc.
("Rally's") or Checkers Drive-In Restaurants, Inc. ("Checkers") which are
acquired through the exercise of warrants held on the Closing Date by the
Company or a Restricted Subsidiary, provided that the aggregate amount of
such Investment does not exceed $11 million.
(14) Investments in the form of guarantees by the Company or a
Restricted Subsidiary of Indebtedness of a franchisee Incurred to finance
the construction, purchase or remodeling of a retail unit of such
franchisee or capital expenditures of such franchisee; provided that such
obligations of
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<PAGE> 51
the Company and its Restricted Subsidiary are permitted under the
provisions set forth under the heading "Covenants -- Limitations on
Indebtedness."
"Permitted Junior Securities" means Capital Stock of the Company or any
Subsidiary Guarantor or debt securities of the Company or any Subsidiary
Guarantor that are subordinated to all Senior Indebtedness (and any debt
securities issued in exchange for Senior Indebtedness) to substantially the same
extent as, or to a greater extent than, the Notes are subordinated to Senior
Indebtedness pursuant to the Indenture.
"Permitted Lien" means:
(1) Liens securing Senior Indebtedness;
(2) Liens existing on the date of the Indenture;
(3) Liens for taxes, assessments or governmental charges or claims
which are not yet delinquent or which are being contested in good faith by
appropriate proceedings promptly instituted and diligently conducted and if
a reserve or other appropriate provision, if any, as shall be required in
conformity with GAAP shall have been made therefor;
(4) statutory Liens or landlords', carriers', warehousemen's,
mechanics', suppliers', materialmen's, repairmen's or other like Liens
arising in the ordinary course of business and with respect to amounts not
yet delinquent or being contested in good faith by appropriate process of
law, if a reserve or other appropriate provisions, if any, as shall be
required by GAAP shall have been made therefor;
(5) Liens (other than any Lien imposed by the Employee Retirement
Income Security Act of 1974, as amended) incurred or deposits made in the
ordinary course of business in connection with workers' compensation,
unemployment insurance and other types of social security;
(6) attachment or judgment Liens not giving rise to a Default or an
Event of Default;
(7) easements, rights-of-way, restrictions and other similar charges
or encumbrances not interfering with the ordinary conduct of the business
of the Company or any of its Subsidiaries;
(8) leases or subleases granted to others not interfering with the
ordinary conduct of the business of the Company or any of its Subsidiaries;
(9) title defects or irregularities which do not in the aggregate
materially impair the use of the property;
(10) Liens incurred or deposits made to secure the performance of
tenders, bids, leases, statutory obligations, surety and appeal bonds,
government contracts, performance and return-of-money bonds and other
obligations of like nature incurred in the ordinary course of business
(exclusive of obligations for the payment of borrowed money);
(11) Liens in favor of the Company or a Subsidiary Guarantor;
(12) any interest or title of a lessor under Capitalized Lease
Obligations otherwise permitted under the Indenture;
(13) Liens securing Acquired Indebtedness created prior to (and not in
connection with or in contemplation of) the incurrence of such Indebtedness
by the Company or any Restricted Subsidiary; provided that such Lien does
not extend to any property or assets of the Company or any Subsidiary other
than the assets acquired in connection with the incurrence of such Acquired
Indebtedness; and
(14) extensions, renewals or refunding of any Liens referred to in
clauses (1) through (13) above, provided that the renewal, extension or
refunding is limited to all or part of the property securing the original
Lien.
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"Preferred Stock" means, with respect to any Person, any and all shares,
interests, participations or other equivalents (however designated, whether
voting or non-voting) of such Person's preferred or preference stock, whether
outstanding on the Closing Date or issued thereafter.
"Principals" means William P. Foley II and Cannae Limited Partnership so
long as Cannae Limited Partnership is controlled solely by William P. Foley II.
"Related Parties" means, with respect to any Principal:
(1) any spouse, sibling, parent or lineal descendant of the Principal
or any spouse of any sibling or lineal descendant; and
(2) any trust, corporation, partnership or other entity, the
beneficiaries, stockholders, partners, owners or Persons beneficially
holding an 80% or more controlling interest of which consist of one or more
Principals and/or such other Persons referred to in clause (1) above.
"Restricted Subsidiary" means any Subsidiary of the Company other than an
Unrestricted Subsidiary.
"Senior Indebtedness" means the following obligations of the Company or a
Subsidiary Guarantor, whether outstanding on the Closing Date or thereafter
Incurred:
(1) all Indebtedness and all other monetary obligations (including,
without limitation, expenses, fees, indemnifications, damages, principal,
penalties, premiums, if any, interest (including any interest accruing
subsequent to the date of the filing of a petition of bankruptcy at the
rate provided for in the documentation with respect thereto, whether or not
such interest is an allowed claim under applicable law), reimbursement
obligations under letters of credit and indemnities payable in connection
therewith and other liabilities payable) of the Company or a Subsidiary
Guarantor under (or in respect of) the Credit Agreement or any Interest
Rate Agreement or Currency Agreement relating to or otherwise in respect of
the Indebtedness under the Credit Agreement whether outstanding on the
Closing Date or thereafter created, incurred or assumed; and
(2) all other Indebtedness and all other monetary obligations of the
Company (other than the Notes) or a Subsidiary Guarantor, including
principal and interest on such Indebtedness, unless such Indebtedness, by
its terms or by the terms of any agreement or instrument pursuant to which
such Indebtedness is issued, is subordinated in right of payment to any
Senior Indebtedness of the Company or such Subsidiary Guarantor, or is
subordinated in right of payment to, or pari passu with, the Notes or the
Subsidiary Guarantees, as the case may be.
Notwithstanding anything to the contrary in clauses (1) and (2) above,
Senior Indebtedness shall not include:
(1) any Indebtedness of the Company or a Subsidiary Guarantor that,
when Incurred, was without recourse to the Company or the Subsidiary
Guarantor, as the case may be;
(2) any Indebtedness of the Company to a Subsidiary or Affiliate of
the Company;
(3) any Indebtedness of the Company or a Subsidiary Guarantor, as the
case may be, to the extent not permitted by the "Limitation on
Indebtedness" covenant or the "Limitation on Senior Subordinated
Indebtedness" covenant described below;
(4) any repurchase, redemption or other obligation in respect of
Disqualified Stock;
(5) any Indebtedness to any employee of the Company or any of its
Subsidiaries;
(6) any liability for taxes owed or owing by the Company or any of its
Subsidiaries;
(7) any Trade Payables; and
(8) the Company's 4 1/4% Convertible Subordinated Notes due 2004,
which shall be subordinate in right of payment to the Notes.
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<PAGE> 53
"Significant Subsidiary" means, at any date of determination, any
Restricted Subsidiary that, together with its Subsidiaries:
(1) for the most recent fiscal year of the Company, accounted for more
than 10% of the consolidated revenues of the Company and its Restricted
Subsidiaries; or
(2) as of the end of such fiscal year, was the owner of more than 10%
of the consolidated assets of the Company and its Restricted Subsidiaries,
all as set forth on the most recently available consolidated financial
statements of the Company for such fiscal year.
"S&P" means Standard & Poor's Ratings Services, a division of The
McGraw-Hill Companies, and its successors.
"Stated Maturity" means, (1) with respect to any debt security, the date
specified in such debt security as the fixed date on which the final installment
of principal of such debt security is due and payable and (2) with respect to
any scheduled installment of principal of or interest on any debt security, the
date specified in such debt security as the fixed date on which such installment
is due and payable.
"Subsidiary" means, with respect to any Person:
(1) any corporation, association, business trust or other business
entity of which more than 50% of the voting power of the outstanding Voting
Stock is owned, directly or indirectly, by such Person and one or more
other Subsidiaries of such Person; and
(2) without limiting clause (1), any partnership (a) the sole general
partner or the managing general partner of which is such Person or a
Subsidiary of such Person or (b) the only general partners of which are
such Person or of one or more Subsidiaries of such Person (or any
combination thereof).
"Subsidiary Guarantor" means (i) each Restricted Subsidiary of the Company
and (ii) any other Subsidiary of the Company that executes a Subsidiary
Guarantee pursuant to the "Subsidiary Guarantees" covenant set forth below.
"Temporary Cash Investment" means any of the following:
(1) direct obligations of the United States of America or any agency
thereof or obligations fully and unconditionally guaranteed or insured by
the United States of America or any agency thereof;
(2) time deposit accounts, certificates of deposit and money market
deposits maturing within one year of the date of acquisition thereof issued
by a bank or trust company which is organized under the laws of the United
States of America, any state thereof or any foreign country recognized by
the United States of America, and which bank or trust company has capital,
surplus and undivided profits aggregating in excess of $50 million (or the
foreign currency equivalent thereof) and (unless such accounts,
certificates or deposits are fully insured by the FDIC) has outstanding
debt which is rated "A" (or such similar equivalent rating) or higher by at
least one nationally recognized statistical rating organization (as defined
in Rule 436 under the Securities Act) or any money-market fund sponsored by
a registered broker dealer or mutual fund distributor;
(3) repurchase obligations with a term of not more than 30 days for
underlying securities of the types described in clause (1) above entered
into with a bank meeting the qualifications described in clause (2) above;
(4) commercial paper, maturing not more than one year after the date
of acquisition, issued by a corporation (other than an Affiliate of the
Company) organized and in existence under the laws of the United States of
America, any state thereof or any foreign country recognized by the United
States of America with a rating at the time as of which any investment
therein is made of "P-1" (or higher) according to Moody's or "A-1" (or
higher) according to S&P or maturing not more than 180 days after the date
of execution, with a rating at the time of any investment therein of "P-2"
(or higher) according to Moody's or "A-2" (or higher) by S&P;
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<PAGE> 54
(5) securities with maturities of one year or less from the date of
acquisition issued or fully and unconditionally guaranteed by any state,
commonwealth or territory of the United States of America, or by any
political subdivision or taxing authority thereof, and rated at least "A"
by S&P or Moody's; and
(6) other dollar denominated securities issued by any Person
incorporated in the United States rated at least "A" or the equivalent by
S&P or at least "A2" or the equivalent by Moody's and in each case either
(A) maturing not more than one year after the date of acquisition or (B)
which are subject to a repricing arrangement (such as a Dutch auction) not
more than one year after the date of acquisition (and reprices at least
yearly thereafter) which the Person making the investment believes in good
faith will permit such Person to sell such security at par in connection
with such repricing mechanism.
"Trade Payables" means, with respect to any Person, any accounts payable or
any other indebtedness or monetary obligation to trade creditors created,
assumed or Guaranteed by such Person or any of its Restricted Subsidiaries
arising in the ordinary course of business in connection with the acquisition of
goods or services including, without limitation, obligations under (or in
respect of) construction contracts (to the extent such obligations do not
constitute Indebtedness for borrowed money).
"Transaction Date" means, with respect to the Incurrence of any
Indebtedness by the Company or any of its Restricted Subsidiaries, the date such
Indebtedness is to be Incurred and, with respect to any Restricted Payment, the
date such Restricted Payment is to be made.
"Unrestricted Subsidiary" means:
(1) any Subsidiary of the Company that is designated an Unrestricted
Subsidiary by the Board of Directors of the Company in the manner provided
below; and
(2) any Subsidiary of an Unrestricted Subsidiary.
The Board of Directors may designate any Restricted Subsidiary (including
any newly acquired or newly formed Subsidiary of the Company) to be an
Unrestricted Subsidiary unless such Subsidiary owns any Capital Stock of, or
owns or holds any Lien on any property of, the Company or any Restricted
Subsidiary; provided that:
(1) any Guarantee by the Company or any Restricted Subsidiary of any
Indebtedness of the Subsidiary being so designated shall be deemed an
"Incurrence" of such Indebtedness and an "Investment" by the Company or
such Restricted Subsidiary (or both, if applicable) at the time of such
designation;
(2) either (I) the Subsidiary to be so designated has total assets of
$1,000 or less or (II) if such Subsidiary has assets greater than $1,000,
such designation would be permitted under the "Restricted Payments"
covenant described below; and (III) if applicable, the "Incurrence" of
Indebtedness and the "Investment" referred to in clause (1) of this proviso
would be permitted under the "Limitation on Indebtedness" and "Restricted
Payments" covenants described below.
The Board of Directors may designate any Unrestricted Subsidiary to be a
Restricted Subsidiary; provided that:
(1) no Default or Event of Default shall have occurred and be
continuing at the time of or after giving effect to such designation; and
(2) all Liens and Indebtedness of such Unrestricted Subsidiary
outstanding immediately after such designation would, if Incurred at such
time, have been permitted to be Incurred (and shall be deemed to have been
Incurred) for all purposes of the Indenture.
Any such designation by the Board of Directors shall be evidenced to the
Trustee by promptly filing with the Trustee a copy of the Board Resolution
giving effect to such designation and an Officers' Certificate certifying that
such designation complied with the foregoing provisions.
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"Voting Stock" means, with respect to any Person, Capital Stock of any
class or kind ordinarily having the power to vote for the election of directors,
managers or other voting members of the governing body of such Person.
"Wholly Owned Restricted Subsidiary" means, with respect to any Subsidiary
of any Person, the ownership of all of the outstanding Capital Stock of such
Subsidiary (other than any director's qualifying shares) by such Person or one
or more Wholly Owned Restricted Subsidiaries of such Person.
COVENANTS
LIMITATION ON INDEBTEDNESS
The Company will not, and will not permit any of its Restricted
Subsidiaries to, Incur any Indebtedness (other than the Notes and the Subsidiary
Guarantees issued on the Closing Date and any other Indebtedness existing on the
Closing Date) and the Company will not issue any Disqualified Stock and will not
permit its Restricted Subsidiaries to issue any shares of Preferred Stock;
provided that the Company or any Restricted Subsidiary may Incur Indebtedness
and the Company may issue Disqualified Stock and a Restricted Subsidiary may
issue Preferred Stock if, after giving effect to the Incurrence of such
Indebtedness or issuance of Disqualified Stock or issuance of Preferred Stock
and the receipt and application of the proceeds therefrom, the Interest Coverage
Ratio would be greater than 2.5:1.
Notwithstanding the foregoing, the Company and any Restricted Subsidiary
(except as specified below) may Incur each and all of the following:
(1) Indebtedness of the Company and its Subsidiaries under the Credit
Agreement; provided that the aggregate principal amount of all Indebtedness
outstanding under the Credit Agreement after giving effect to each such
incurrence, including the principal amount of all Indebtedness incurred to
refinance or replace any Indebtedness incurred pursuant to this clause (1),
does not exceed $500 million less (A) the aggregate amount of all permanent
principal repayments, if any (which are accompanied by a corresponding
permanent commitment reduction), made from time to time after the Closing
Date with respect to such Indebtedness (other than repayments made in
connection with a refinancing thereof) and (B) reductions in Indebtedness
under the Credit Agreement resulting from the application of Asset Sale
proceeds (which are accompanied by a corresponding permanent commitment
reduction);
(2) Indebtedness owed (A) by a Restricted Subsidiary to the Company;
provided that if such Indebtedness exceeds $1 million it shall be evidenced
by a promissory note or (B) by the Company or a Restricted Subsidiary to
any Restricted Subsidiary; provided that any event which results in any
such Restricted Subsidiary ceasing to be a Restricted Subsidiary or any
subsequent transfer of such Indebtedness (other than to the Company or
another Restricted Subsidiary) shall be deemed, in each case, to constitute
an Incurrence of such Indebtedness not permitted by this clause (2);
(3) Indebtedness issued in exchange for, or the net proceeds of which
are used to refinance or refund, then outstanding Indebtedness (other than
Indebtedness Incurred under clause (1), (2) or (4) of this paragraph) and
any refinancings thereof in an amount not to exceed the amount so
refinanced or refunded (plus premiums, accrued interest, fees and
expenses); provided that Indebtedness the proceeds of which are used to
refinance or refund the Notes or Indebtedness that is pari passu with, or
subordinated in right of payment to, the Notes shall only be permitted
under this clause (3) if:
(A) in case the Notes are refinanced in part or the Indebtedness to
be refinanced is pari passu with the Notes, such new Indebtedness, by
its terms or by the terms of any agreement or instrument pursuant to
which such new Indebtedness is outstanding, is expressly made pari passu
with, or subordinate in right of payment to, the remaining Notes;
(B) in case the Indebtedness to be refinanced is subordinated in
right of payment to the Notes, such new Indebtedness, by its terms or by
the terms of any agreement or instrument
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<PAGE> 56
pursuant to which such new Indebtedness is issued or remains
outstanding, is expressly made subordinate in right of payment to the
Notes at least to the extent that the Indebtedness to be refinanced is
subordinated to the Notes; and
(C) such new Indebtedness, determined as of the date of Incurrence
of such new Indebtedness, does not mature prior to the Stated Maturity
of the Indebtedness to be refinanced or refunded, and the Average Life
of such new Indebtedness is at least equal to the remaining Average Life
of the Indebtedness to be refinanced or refunded;
and provided further that in no event may Indebtedness of the Company
that is pari passu with or subordinated in right of payment to the Notes
be refinanced by means of any Indebtedness of any Restricted Subsidiary
pursuant to this clause (3);
(4) Indebtedness (A) in respect of performance, surety or appeal bonds
provided in the ordinary course of business; (B) under Currency Agreements
and Interest Rate Agreements; provided that such agreements (I) are
designed solely to protect the Company or its Restricted Subsidiaries
against fluctuations in foreign currency exchange rates or interest rates
and (II) do not increase the Indebtedness of the obligor outstanding at any
time other than as a result of fluctuations in foreign currency exchange
rates or interest rates or by reason of fees, indemnities and compensation
payable thereunder; and (C) arising from agreements providing for
indemnification, adjustment of purchase price or similar obligations, or
from Guarantees or letters of credit, surety bonds or performance bonds
securing any obligations of the Company or any of its Restricted
Subsidiaries pursuant to such agreements, in any case Incurred in
connection with the disposition of any business, assets or Restricted
Subsidiary (other than Guarantees of Indebtedness Incurred by any Person
acquiring all or any portion of such business, assets or Restricted
Subsidiary for the purpose of financing such acquisition), in a principal
amount not to exceed the gross proceeds actually received by the Company or
any Restricted Subsidiary in connection with such disposition;
(5) Indebtedness of the Company, to the extent the net proceeds
thereof are promptly (A) used to purchase Notes tendered in an Offer to
Purchase made as a result of a Change in Control or (B) deposited to
defease the Notes as described below under "-- Legal Defeasance and
Covenant Defeasance";
(6) Indebtedness evidenced by letters of credit issued in the ordinary
course of business of the Company or any Restricted Subsidiary to secure
workers' compensation and other insurance coverage;
(7) Capitalized Lease Obligations secured by Liens described in
paragraph (12) of the definition of "Permitted Liens," provided, that the
aggregate principal amount thereof incurred in any fiscal year, shall not
exceed $15 million; and
(8) Indebtedness, in addition to Indebtedness permitted under clauses
(1) through (7) above, in an aggregate principal amount outstanding at any
time not to exceed $25 million less any amount of such Indebtedness
permanently repaid as provided under the "Asset Sales" covenant described
below.
Notwithstanding any other provision of this "Limitation on Indebtedness"
covenant, the maximum amount of Indebtedness that the Company or a Restricted
Subsidiary may Incur pursuant to this "Limitation on Indebtedness" covenant
shall not be deemed to be exceeded, with respect to any outstanding
Indebtedness, due solely to the result of fluctuations in the exchange rates of
currencies.
For purposes of determining any particular amount of Indebtedness under
this "Limitation on Indebtedness" covenant,
(1) Indebtedness Incurred under the Credit Agreement first shall be
treated as Incurred pursuant to clause (1) of the second paragraph of this
"Limitation on Indebtedness" covenant to the full extent of Indebtedness
permitted under such clause (it being understood that additional principal
amounts of Indebtedness under the Credit Agreement may be incurred to the
full extent permitted under any other provision of the Indenture);
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(2) Guarantees, Liens or obligations with respect to letters of credit
supporting Indebtedness otherwise included in the determination of such
particular amount shall not be included; and
(3) any Liens granted pursuant to the equal and ratable provisions
referred to in the "Liens" covenant described below shall not be treated as
Indebtedness.
For purposes of determining compliance with this "Limitation on Indebtedness"
covenant, in the event that an item of Indebtedness meets the criteria of more
than one of the types of Indebtedness described in the above clauses (other than
Indebtedness referred to in clause (1) of the preceding sentence), the Company,
in its sole discretion, shall classify, and from time to time may reclassify,
such item of Indebtedness and only be required to include the amount and type of
such Indebtedness in one of such clauses.
NO SENIOR SUBORDINATED INDEBTEDNESS
The Company will not Incur any Indebtedness that is subordinate in right of
payment to any Senior Indebtedness unless such Indebtedness is pari passu with,
or subordinated in right of payment to, the Notes. No Subsidiary Guarantor will
Incur any Indebtedness that is subordinate in right of payment to any Senior
Indebtedness unless such Indebtedness is pari passu with, or subordinated in
right of payment to, any Subsidiary Guarantee executed by the Subsidiary
Guarantor.
LIENS
The Company will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, create, incur, assume or suffer to
exist any Lien of any kind securing Indebtedness or trade payables on any asset
now owned or hereafter acquired, except Permitted Liens, unless the Indebtedness
under the Notes and the Subsidiary Guarantees are secured on an equal and
ratable basis with the Indebtedness secured.
RESTRICTED PAYMENTS
The Company will not, and will not permit any Restricted Subsidiary to,
directly or indirectly:
(1) declare or pay any dividend or make any distribution on or with
respect to its Capital Stock (other than (A) dividends or distributions
payable solely in shares of its Capital Stock (other than Disqualified
Stock) or in options, warrants or other rights to acquire shares of such
Capital Stock and (B) pro rata dividends or distributions on Common Stock
of Restricted Subsidiaries held by minority stockholders) held by Persons
other than the Company or any of its Restricted Subsidiaries;
(2) purchase, redeem, retire or otherwise acquire for value any shares
of Capital Stock of (A) the Company or an Unrestricted Subsidiary
(including options, warrants or other rights to acquire such shares of
Capital Stock) held by any Person or (B) a Restricted Subsidiary (including
options, warrants or other rights to acquire such shares of Capital Stock)
held by any Affiliate of the Company (other than a Wholly Owned Restricted
Subsidiary) or any holder (or any Affiliate of such holder) of 5% or more
of the Capital Stock of the Company;
(3) make any voluntary or optional principal payment, or voluntary or
optional redemption, repurchase, defeasance, or other acquisition or
retirement for value, of Indebtedness of the Company that is pari passu
with or subordinated in right of payment to the Notes or the Subsidiary
Guarantees; or
(4) make any Investment, other than a Permitted Investment, in any
Person (such payments or any other actions described in clauses (1) through
(4) above being collectively "Restricted Payments")
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if, at the time of, and after giving effect to, the proposed Restricted
Payment:
(A) a Default or Event of Default shall have occurred and be
continuing;
(B) the Company could not Incur at least $1.00 of Indebtedness under
the first paragraph of the "Limitation on Indebtedness" covenant; or
(C) the aggregate amount of all Restricted Payments (the amount, if
other than in cash, to be determined in good faith by the Board of
Directors, whose determination shall be conclusive and evidenced by a Board
Resolution) made after the Closing Date shall exceed the sum of:
(I) 50% of the aggregate amount of the Adjusted Consolidated Net
Income (or, if the Adjusted Consolidated Net Income is a loss, minus
100% of the amount of such loss) (determined by excluding income
resulting from transfers of assets by the Company or a Restricted
Subsidiary to an Unrestricted Subsidiary) accrued on a cumulative basis
during the period (taken as one accounting period) beginning on November
3, 1998 and ending on the last day of the last fiscal quarter preceding
the Transaction Date for which reports have been filed with the
Commission or provided to the Trustee pursuant to the "Commission
Reports and Reports to Holders" covenant; plus
(II) the aggregate Net Cash Proceeds received by the Company after
the Closing Date from the issuance and sale permitted by the Indenture
of its Capital Stock (other than Disqualified Stock) to a Person who is
not a Subsidiary of the Company, including an issuance or sale permitted
by the Indenture of Indebtedness of the Company for cash subsequent to
the Closing Date upon the conversion of such Indebtedness into Capital
Stock (other than Disqualified Stock) of the Company, or from the
issuance to a Person who is not a Subsidiary of the Company of any
options, warrants or other rights to acquire Capital Stock of the
Company (in each case, exclusive of any Disqualified Stock or any
options, warrants or other rights that are redeemable at the option of
the holder, or are required to be redeemed, prior to the 91st day
following the Stated Maturity of the Notes); plus
(III) an amount equal to the net reduction in Investments (other
than reductions in Permitted Investments) in any Person resulting from
payments of interest on Indebtedness, dividends, repayments of loans or
advances, or other transfers of assets, in each case to the Company or
any Restricted Subsidiary or from the Net Cash Proceeds from the sale of
any such Investment (except, in each case, to the extent any such
payment or proceeds are included in the calculation of Adjusted
Consolidated Net Income), or from redesignations of Unrestricted
Subsidiaries as Restricted Subsidiaries (valued in each case as provided
in the definition of "Investments"), not to exceed, in each case, the
amount of Investments previously made by the Company or any Restricted
Subsidiary in such Person or Unrestricted Subsidiary.
The foregoing provision shall not be violated by reason of:
(1) the payment of any dividend within 60 days after the date of
declaration thereof if, at said date of declaration, such payment would
comply with the foregoing paragraph;
(2) the redemption, repurchase, defeasance or other acquisition or
retirement for value of Indebtedness that is pari passu with or
subordinated in right of payment to the Notes including premium, if any,
and accrued and unpaid interest, with the proceeds of, or in exchange for,
Indebtedness Incurred under clause (3) of the second paragraph of the
"Limitation on Indebtedness" covenant;
(3) the repurchase, redemption or other acquisition of Capital Stock
of the Company or an Unrestricted Subsidiary (or options, warrants or other
rights to acquire such Capital Stock) in exchange for, or out of the
proceeds of a substantially concurrent offering of, shares of Capital Stock
(other than Disqualified Stock) of the Company (or options, warrants or
other rights to acquire such Capital Stock);
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(4) the making of any principal payment or the repurchase, redemption,
retirement, defeasance or other acquisition for value of Indebtedness of
the Company which is subordinated in right of payment to the Notes in
exchange for, or out of the proceeds of, a substantially concurrent
offering of shares of the Capital Stock (other than Disqualified Stock) of
the Company (or options, warrants or other rights to acquire such Capital
Stock) or upon conversion of such Indebtedness to such shares of Capital
Stock;
(5) payments or distributions to dissenting stockholders pursuant to
applicable law pursuant to or in connection with a consolidation, merger or
transfer of assets that complies with the provisions of the Indenture
applicable to mergers, consolidations and transfers of all or substantially
all of the property and assets of the Company;
(6) payments of amounts required for any repurchase, redemption,
retirement or other acquisition of any Capital Stock of the Company or any
options or rights to acquire such Capital Stock of the Company owned by any
director, officer or employee of the Company or its Subsidiaries pursuant
to any management equity subscription agreement, stock option agreement or
similar agreement, or otherwise upon the death, disability, retirement or
termination of employment or departure from the Board of Directors of the
Company; provided that the aggregate price paid for all such repurchased,
redeemed, retired or acquired Capital Stock of the Company or options shall
not exceed in the aggregate $2 million;
(7) the payment of regular dividends of the Company payable on its
Common Stock for the eight fiscal quarters following the Closing Date at a
per annum rate not to exceed $.08 per share, as adjusted for stock splits
and other changes in the Company's Capital Stock; or
(8) other Restricted Payments in an aggregate amount not to exceed $75
million;
provided that, except in the case of clauses (1) and (3), no Default or Event of
Default shall have occurred and be continuing or occur as a consequence of the
actions or payments set forth therein.
Each Restricted Payment permitted pursuant to the preceding paragraph
(other than the Restricted Payment referred to in clause (2) thereof, an
exchange of Capital Stock for Capital Stock or Indebtedness referred to in
clause (3) or (4) thereof and a Restricted Payment referred to in clause (8)
thereof which involves an Investment), and the Net Cash Proceeds from any
issuance of Capital Stock referred to in clauses (3) and (4), shall be included
in calculating whether the conditions of clause (C) of the first paragraph of
this "Restricted Payments" covenant have been met with respect to any subsequent
Restricted Payments. In the event the proceeds of an issuance of Capital Stock
of the Company are used for the redemption, repurchase or other acquisition of
the Notes, or Indebtedness that is pari passu with the Notes, then the Net Cash
Proceeds of such issuance shall be included in clause (C) of the first paragraph
of this "Restricted Payments" covenant only to the extent such proceeds are not
used for such redemption, repurchase or other acquisition of Indebtedness.
DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING RESTRICTED SUBSIDIARIES
The Company will not, and will not permit any Restricted Subsidiary to,
create or otherwise cause or suffer to exist or become effective any consensual
encumbrance or restriction of any kind on the ability of any Restricted
Subsidiary to:
(1) pay dividends or make any other distributions permitted by
applicable law on any Capital Stock of such Restricted Subsidiary owned by
the Company or any other Restricted Subsidiary;
(2) pay any Indebtedness owed to the Company or any other Restricted
Subsidiary;
(3) make loans or advances to the Company or any other Restricted
Subsidiary; or
(4) transfer any of its property or assets to the Company or any other
Restricted Subsidiary.
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The foregoing provisions shall not restrict any encumbrances or
restrictions:
(1) existing on the Closing Date in the Credit Agreement, the
Indenture or any other agreements in effect on the Closing Date, and any
modifications, extensions, restatements, refinancings, renewals,
substitutions or replacements of such agreements; provided that the
encumbrances and restrictions in any such modifications, extensions,
restatements, refinancings, renewals, substitutions or replacements are no
less favorable in any material respect to the Holders than those
encumbrances or restrictions that are then in effect and that are being
modified, extended, refinanced, renewed, substituted or replaced;
(2) existing under or by reason of applicable law;
(3) existing with respect to any Person or the property or assets of
such Person acquired by the Company or any Restricted Subsidiary, existing
at the time of such acquisition and not incurred in contemplation thereof,
which encumbrances or restrictions are not applicable to any Person or the
property or assets of any Person other than such Person or the property or
assets of such Person so acquired;
(4) in the case of clause (4) of the first paragraph of this "Dividend
and Other Payment Restrictions Affecting Restricted Subsidiaries" covenant,
(A) that restrict in a customary manner the subletting, assignment or
transfer of any property or asset that is a lease, license, conveyance or
contract or similar property or asset, (B) existing by virtue of any
transfer of, agreement to transfer, option or right with respect to, or
Lien on, any property or assets of the Company or any Restricted Subsidiary
not otherwise prohibited by the Indenture or (C) arising or agreed to in
the ordinary course of business, not relating to any Indebtedness, and that
do not, individually or in the aggregate, detract from the value of
property or assets of the Company or any Restricted Subsidiary in any
manner material to the Company or any Restricted Subsidiary;
(5) with respect to a Restricted Subsidiary and imposed pursuant to an
agreement that has been entered into for the sale or disposition of all or
substantially all of the Capital Stock of, or property and assets of, such
Restricted Subsidiary; or
(6) contained in the terms of any Indebtedness or any agreement
pursuant to which such Indebtedness was issued if (A) the encumbrance or
restriction applies only in the event of a payment default or a default
with respect to a financial covenant contained in such Indebtedness or
agreement (other than a covenant directly or indirectly including such
encumbrance or restriction itself), (B) the encumbrance or restriction is
not materially more disadvantageous to the Holders of the Notes than is
customary in comparable financings and (C) the Company determines that any
such encumbrance or restriction will not materially affect the Company's
ability to make principal or interest payments on the Notes.
Nothing contained in this "Limitation on Dividend and Other Payment
Restrictions Affecting Restricted Subsidiaries" covenant shall prevent the
Company or any Restricted Subsidiary from (1) creating, incurring, assuming or
suffering to exist any Liens otherwise permitted in the "Limitation on Liens"
covenant or (2) restricting the sale or other disposition of property or assets
of the Company or any of its Restricted Subsidiaries that secure Indebtedness of
the Company or any of its Restricted Subsidiaries.
SUBSIDIARY GUARANTEES
If the Company or any of its Restricted Subsidiaries acquires or creates
another Restricted Subsidiary after the date of the Indenture, then that newly
acquired or created Restricted Subsidiary must execute a Subsidiary Guarantee
and deliver an opinion of counsel, in accordance with the terms of the Indenture
pursuant to which such Subsidiary will become a Subsidiary Guarantor, on a
senior subordinated basis (pursuant to subordination provisions substantially
similar to those described above under the caption "-- Subordination"), of the
Company's payment obligations under the Notes and the Indenture.
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TRANSACTIONS WITH AFFILIATES
The Company will not, and will not permit any Restricted Subsidiary to,
directly or indirectly, enter into, renew or extend any transaction (including,
without limitation, the purchase, sale, lease or exchange of property or assets,
or the rendering of any service) with any holder (or any Affiliate of such
holder) of 5% or more of any class of Capital Stock of the Company or with any
Affiliate of the Company or any Restricted Subsidiary, except upon fair and
reasonable terms no less favorable to the Company or such Restricted Subsidiary
than could be obtained, at the time of such transaction or, if such transaction
is pursuant to a written agreement, at the time of the execution of the
agreement providing therefor, in a comparable arm's-length transaction with a
Person that is not such a holder or an Affiliate.
The foregoing limitation does not limit, and shall not apply to:
(1) transactions (A) approved by a majority of the disinterested
members of the Board of Directors or (B) for which the Company or a
Restricted Subsidiary delivers to the Trustee a written opinion of a
nationally recognized investment banking firm stating that the transaction
is fair to the Company or such Restricted Subsidiary from a financial point
of view;
(2) any transaction solely between the Company and any of its Wholly
Owned Restricted Subsidiaries or solely between Wholly Owned Restricted
Subsidiaries;
(3) customary directors' fees, indemnification and similar
arrangements, employee salaries and bonuses, employment agreements and
arrangements or compensation or employee benefit arrangements (including
options) in the ordinary course of business;
(4) any payments or other transactions pursuant to any tax-sharing
agreement between the Company and any other Person with which the Company
files a consolidated tax return or with which the Company is part of a
consolidated group for tax purposes;
(5) loans or advances to officers or employees of the Company or any
Restricted Subsidiary made in the ordinary course of business of the
Company or such Restricted Subsidiary to pay business related travel
expenses or reasonable relocation costs of such officers or employees in
connection with their employment by the Company or such Restricted
Subsidiary;
(6) any Restricted Payments not prohibited by the "Limitation on
Restricted Payments" covenant; and
(7) transactions relating to or arising from service relationships or
expense-sharing arrangements with Checkers, Rally's, Santa Barbara
Restaurant Group, Inc., Boston West L.L.C., Fidelity National Financial,
Inc. and their respective subsidiaries in effect on the Closing Date,
provided that such arrangements do not involve the Company or a Restricted
Subsidiary providing goods and services for an amount below the Company's
or such Restricted Subsidiary's incremental cost thereof.
Notwithstanding the foregoing, any transaction or series of related
transactions covered by the first paragraph of this "Limitation on Transactions
with Shareholders and Affiliates" covenant and not covered by clauses (2)
through (7) above, (a) the aggregate amount of which exceeds $2 million in
value, must be approved or determined to be fair in the manner provided for in
clause (1) (A) or (B) above and (b) the aggregate amount of which exceeds $10
million in value, must be determined to be fair in the manner provided for in
clause (1) (B) above.
ASSET SALES
The Company will not, and will not permit any Restricted Subsidiary to,
consummate an Asset Sale, unless:
(1) the Company or such Restricted Subsidiary receives consideration
at least equal to the Fair Market Value of the assets sold or disposed of;
and
(2) at least 75% of the consideration (excluding contingent
liabilities assumed by the transferred of such assets) received consists of
cash or Temporary Cash Investments or the assumption of Senior
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Indebtedness of the Company or a Subsidiary Guarantor, provided that the
Company or such Restricted Subsidiary is irrevocably released from all
liability under such Indebtedness.
In the event and to the extent that the Company or any of its Restricted
Subsidiaries receive the Net Cash Proceeds from one or more Asset Sales, then
the Company shall or shall cause the relevant Restricted Subsidiary to:
(1) within twelve months after the date Net Cash Proceeds so received
(A) apply an amount equal to such excess Net Cash Proceeds to permanently
repay (which are accompanied by a corresponding permanent commitment
reduction) Senior Indebtedness of the Company or a Subsidiary Guarantor or
(B) invest an equal amount, or the amount not so applied pursuant to clause
(A) (or enter into a definitive agreement committing to so invest within 12
months after the date of such agreement), in property or assets (other than
current assets) of a nature or type or that are used in a business (or in a
company having property and assets of a nature or type, or engaged in a
business) similar or related to the nature or type of the property and
assets of, or the business of, the Company and its Restricted Subsidiaries
existing on the date of such investment; and
(2) apply (no later than the end of the 12-month period referred to in
(1) above) such excess Net Cash Proceeds (to the extent not applied
pursuant to clause (1)) as provided in the next paragraph of this
"Limitation on Asset Sales" covenant.
The amount of such excess Net Cash Proceeds required to be applied (or to
be committed to be applied) during such 12-month period as set forth in clause
(1) of the preceding paragraph and not applied as so required by the end of such
period shall constitute "Excess Proceeds." If, as of the first day of any
calendar month, the aggregate amount of Excess Proceeds not theretofore subject
to an Offer to Purchase pursuant to this "Limitation on Asset Sales" covenant
totals at least $5 million, the Company must commence, not later than the
fifteenth Business Day of such month, an Offer to Purchase to the Holders of the
Notes and, to the extent required by the terms of any Pari Passu Indebtedness,
an Offer to Purchase to all holders of such Pari Passu Indebtedness, the maximum
principal amount of Notes and any such Pari Passu Indebtedness that may be
purchased out of the Excess Proceeds, at an offer price equal to 100% of the
principal amount thereof, plus, in each case, accrued and unpaid interest and
Additional Interest, if any, to the Payment Date. If the aggregate principal
amount of Notes and any such Pari Passu Indebtedness tendered by holders thereof
exceeds the amount of Excess Proceeds, the Notes and Pari Passu Indebtedness
shall be purchased on a pro rata basis. Upon the completion of any such Offers
to Purchase, the amount of Excess Proceeds shall be reset at zero.
REPURCHASE OF NOTES UPON A CHANGE OF CONTROL
The Company must commence, within 30 days of the occurrence of a Change of
Control, and consummate an Offer to Purchase for all Notes then outstanding, at
a purchase price equal to 101% of the principal amount thereof, plus accrued
interest and Additional Interest, if any, to the Payment Date.
There can be no assurance that the Company will have sufficient funds
available at the time of any Change of Control to make any debt payment
(including repurchases of Notes) required by the foregoing covenant (as well as
may be contained in other securities of the Company which might be outstanding
at the time). The above covenant requiring the Company to repurchase the Notes
will, unless consents are obtained, require the Company to repay all
indebtedness then outstanding which by its terms would prohibit such Note
repurchase, either prior to or concurrently with such Note repurchase.
The Company will not be required to make an Offer to Purchase pursuant to
this covenant if a third party makes an Offer to Purchase in compliance with
this covenant and repurchases all Notes validly tendered and not withdrawn under
such Offer to Purchase. Further, the ability of the Company to repurchase Notes
upon a Change of Control may be limited by the terms of the Company's Senior
Indebtedness and the subordination provisions of the Indenture.
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PAYMENTS FOR CONSENT
The Company will not, and will not permit any of its Subsidiaries to,
directly or indirectly, pay or cause to be paid any consideration to or for the
benefit of any Holder for or as an inducement to any consent, waiver or
amendment of any of the terms or provisions of the Indenture or the Notes unless
such consideration is offered to be paid and is paid to all Holders that
consent, waive or agree to amend in the time frame set forth in the solicitation
documents relating to such consent, waiver or agreement.
COMMISSION REPORTS AND REPORTS TO HOLDERS
Whether or not required by the rules and regulations of the Commission, so
long as any Notes are outstanding, the Company will furnish to the Holders:
(1) all quarterly and annual financial information that would be
required to be contained in a filing with the Commission on Forms 10-Q and
10-K if the Company were required to file such Forms, including a
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and, with respect to the annual information only, a report
thereon by the Company's certified independent accountants; and
(2) all current reports that would be required to be filed with the
Commission on Form 8-K if the Company were required to file such reports.
If the Company has designated any of its Subsidiaries as Unrestricted
Subsidiaries, then the quarterly and annual financial information required by
the preceding paragraph shall include a reasonably detailed presentation, either
on the face of the financial statements or in the footnotes thereto, and in
Management's Discussion and Analysis of Financial Condition and Results of
Operations, of the financial condition and results of operations of the Company
and its Restricted Subsidiaries separate from the financial condition and
results of operations of the Unrestricted Subsidiaries of the Company.
In addition, whether or not required by the rules and regulations of the
Commission, the Company will file a copy of all such information and reports
referred to in clauses (1) and (2) above with the Commission for public
availability (unless the Commission will not accept such a filing) and make such
information available to securities analysts and prospective investors upon
request. In addition, the Company has agreed that, for so long as any Notes
remain outstanding, they will furnish to the Holders and to securities analysts
and prospective investors, upon their request, the information required to be
delivered pursuant to Rule 144A(d)(4) under the Securities Act.
EVENTS OF DEFAULT AND REMEDIES
Each of the following is an Event of Default:
(1) default for 30 days in the payment when due of interest on, or
Additional Interest, if any, with respect to, the Notes, whether or not
prohibited by the subordination provisions of the Indenture;
(2) default in payment when due of the principal of or premium, if
any, on the Notes, whether or not prohibited by the subordination
provisions of the Indenture;
(3) failure by the Company or any of its Subsidiaries to comply with
the provisions described under the captions "Covenants -- Merger,
Consolidation or Sale of Assets," "-- Repurchase of Notes Upon a Change of
Control," "-- Asset Sales;"
(4) failure by the Company or any of its Subsidiaries to comply with
the provisions described under the captions "Covenants -- Restricted
Payments" or "-- Limitation on Indebtedness," which failure continues for a
period of 30 days or more;
(5) failure by the Company or any of its Subsidiaries for 30 days
after notice to comply with any of the other agreements in the Indenture;
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(6) default under any Indebtedness of the Company or any of its
Restricted Subsidiaries (or the payment of which is Guaranteed by the
Company or any of its Restricted Subsidiaries) whether such Indebtedness or
Guarantee now exists, or is created after the date of the Indenture, if
that default:
(a) is caused by a failure to pay principal of or premium, if any,
or interest on such Indebtedness prior to the expiration of the grace
period provided in such Indebtedness on the date of such default (a
"Payment Default"); or
(b) results in the acceleration of such Indebtedness prior to its
express maturity,
and, in each case, the principal amount of any such Indebtedness,
together with the principal amount of any other such Indebtedness under
which there has been a Payment Default or the maturity of which has been
so accelerated, aggregates $5 million or more;
(7) failure by the Company or any of its Restricted Subsidiaries to
pay final judgments aggregating in excess of $5 million, which judgments
are not paid, discharged or stayed for a period of 60 days;
(8) except as permitted by the Indenture, any Subsidiary Guarantee
shall be held in any judicial proceeding to be unenforceable or invalid or
shall cease for any reason to be in full force and effect or any Subsidiary
Guarantor, or any Person acting on behalf of any Subsidiary Guarantor,
shall deny or disaffirm its obligations under its Guarantee;
(9) certain events of bankruptcy or insolvency with respect to the
Company or any of its Restricted Subsidiaries.
If any Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in principal amount of the then outstanding Notes may
declare all the Notes to be due and payable immediately. In the case of an Event
of Default arising from certain events of bankruptcy or insolvency, with respect
to the Company, any Restricted Subsidiary that is a Significant Subsidiary or
any group of Restricted Subsidiaries that, taken together, would constitute a
Significant Subsidiary, all outstanding Notes will become due and payable
immediately without further action or notice.
Holders may not enforce the Indenture or the Notes except as provided in
the Indenture. Subject to certain limitations, Holders of a majority in
principal amount of the then outstanding Notes may direct the Trustee in its
exercise of any trust or power. The Trustee may withhold from Holders notice of
any continuing Default or Event of Default (except a Default or Event of Default
relating to the payment of principal or interest) if it determines that
withholding notice is in their interest.
At any time after a declaration of acceleration, but before a judgment or
decree for payment of the money due has been obtained by the Trustee, the
Holders of a majority in principal amount of the Notes, by written notice to the
Company and the Trustee, may rescind and annul such declaration and its
consequences if all Events of Default, other than the non-payment of the
principal of, premium, if any, and interest on, all such Notes that have become
due solely by such declaration of acceleration, have been cured or waived and
the rescission would not conflict with any judgment, order or decree of any
court of competent jurisdiction.
The Holders of at least a majority in aggregate principal amount of the
outstanding Notes may direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee or exercising any trust or
power conferred on the Trustee. However, the Trustee may refuse to follow any
direction that conflicts with law or the Indenture, that may involve the Trustee
in personal liability or that the Trustee determines in good faith may be unduly
prejudicial to the rights of Holders not joining in the giving of such direction
and may take any other action it deems proper that is not inconsistent with any
such direction received from Holders.
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A Holder may not pursue any remedy with respect to the Indenture or the
Notes unless:
(1) the Holder gives the Trustee written notice of a continuing Event
of Default;
(2) the Holders of at least 25% in aggregate principal amount of
outstanding Notes make a written request to the Trustee to pursue the
remedy;
(3) such Holder or Holders offer the Trustee indemnity satisfactory to
the Trustee against any costs, liability or expense;
(4) the Trustee does not comply with the request within 60 days after
receipt of the request and the offer of indemnity; and
(5) during such 60-day period, the Holders of a majority in aggregate
principal amount of the outstanding Notes do not give the Trustee a
direction that is inconsistent with the request.
However, such limitations do not apply to the right of any Holder to receive
payment of the principal of or premium, if any, or interest on, such Note or to
bring suit for the enforcement of any such payment, on or after the due date
expressed in the Notes, which right shall not be impaired or affected without
the consent of the Holder.
The Holders of a majority in aggregate principal amount of the Notes then
outstanding, by notice to the Trustee, may on behalf of the Holders of all of
the Notes waive any existing Default or Event of Default and its consequences
under the Indenture, except a continuing Default or Event of Default in the
payment of interest on, or the principal of, the Notes.
In the case of any Event of Default occurring by reason of any willful
action or inaction taken or not taken by or on behalf of the Company with the
intention of avoiding payment of the premium that the Company would have had to
pay if the Company then had elected to redeem the Notes pursuant to the optional
redemption provisions of the Indenture, an equivalent premium shall also become
and be immediately due and payable to the extent permitted by law upon the
acceleration of the Notes. If an Event of Default occurs prior to May 1, 2004,
by reason of any willful action (or inaction) taken (or not taken) by or on
behalf of the Company with the intention of avoiding the prohibition on
redemption of the Notes prior to May 1, 2004, then the premium specified in the
Indenture shall also become immediately due and payable to the extent permitted
by law upon the acceleration of the Notes.
The Company is required to deliver to the Trustee annually a statement
regarding compliance with the Indenture. Upon becoming aware of any Default or
Event of Default, the Company is required to deliver to the Trustee a statement
specifying such Default or Event of Default.
MERGER, CONSOLIDATION, OR SALE OF ASSETS
The Company will not consolidate with, merge with or into, or sell, convey,
transfer, or otherwise dispose of all or substantially all of its property and
assets (as an entirety or substantially an entirety in one transaction or a
series of related transactions) to, any Person or permit any Person to merge
with or into the Company unless:
(1) the Company shall be the continuing Person, or the Person (if
other than the Company) formed by such consolidation or into which the
Company is merged or that acquired or leased such property and assets of
the Company shall be a corporation organized and validly existing under the
laws of the United States of America or any state or jurisdiction thereof
and shall expressly assume, by a supplemental indenture, executed and
delivered to the Trustee, all of the obligations of the Company on all of
the Notes and under the Indenture;
(2) immediately after giving effect to such transaction, no Default or
Event of Default exists;
(3) immediately after giving effect to such transaction on a pro forma
basis, the Company or any Person becoming the successor obligor of the
Notes shall have a Consolidated Net Worth equal to or greater than the
Consolidated Net Worth of the Company immediately prior to such
transaction;
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(4) immediately after giving effect to such transaction on a pro forma
basis as if the transaction had occurred at the beginning of the applicable
four-quarter period, the Company, or any Person becoming the successor
obligor of the Notes, as the case may be, could Incur at least $1.00 of
Indebtedness under the first paragraph of the "Limitation on Indebtedness"
covenant; and
(5) the Company delivers to the Trustee an Officers' Certificate
(attaching the arithmetic computations to demonstrate compliance with
clauses (3) and (4)) and Opinion of Counsel, in each case stating that such
consolidation, merger or transfer and such supplemental indenture complies
with this provision and that all conditions precedent provided for herein
relating to such transaction have been complied with.
In addition, the Company may not, directly or indirectly, lease all or
substantially all of its properties or assets, in one transaction or a series of
related transactions, to any other Person.
Upon the occurrence of any transaction described above in which the Company
is not the continuing corporation, the successor corporation formed by such a
consolidation or into which the Company is merged or to which such transfer is
made will succeed to, and be substituted for, and may exercise every right and
power of, the Company under the Indenture and the Notes with the same effect as
if such successor corporation had been named as the Company therein.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
The Company may, at its option and at any time, elect to have all of its
obligations discharged with respect to the outstanding Notes and all obligations
of each Subsidiary Guarantor discharged with respect to its Guarantee ("Legal
Defeasance") except for:
(1) the rights of Holders of outstanding Notes to receive payments in
respect of the principal of, premium, if any, and interest and Additional
Interest, if any, on such Notes when such payments are due from the trust
referred to below;
(2) the Company's obligations with respect to the Notes concerning
issuing temporary Notes, registration of Notes, mutilated, destroyed, lost
or stolen Notes and the maintenance of an office or agency for payment and
money for security payments held in trust;
(3) the rights, powers, trusts, duties and immunities of the Trustee,
and the Company's obligations in connection therewith; and
(4) the Legal Defeasance provisions of the Indenture.
In addition, the Company may, at its option and at any time, elect to have
the obligations of the Company and each Subsidiary Guarantor released with
respect to certain covenants that are described in the Indenture ("Covenant
Defeasance") and thereafter any omission to comply with those covenants shall
not constitute a Default or Event of Default with respect to the Notes. In the
event Covenant Defeasance occurs, certain events (not including non-payment,
bankruptcy, receivership, rehabilitation and insolvency events) described under
"Events of Default" will no longer constitute an Event of Default with respect
to the Notes.
In order to exercise either Legal Defeasance or Covenant Defeasance:
(1) the Company must irrevocably deposit with the Trustee, in trust,
for the benefit of the Holders, cash in U.S. dollars, non-callable
Government Securities, or a combination thereof, in such amounts as will be
sufficient, in the opinion of a nationally recognized firm of independent
public accountants, to pay the principal of, premium, if any, and interest
and Additional Interest, if any, on the outstanding Notes on the stated
maturity or on the applicable redemption date, as the case may be, and the
Company must specify whether the Notes are being defeased to maturity or to
a particular redemption date;
(2) in the case of Legal Defeasance, the Company shall have delivered
to the Trustee an Opinion of Counsel reasonably acceptable to the Trustee
confirming that (a) the Company has
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received from, or there has been published by, the Internal Revenue Service
a ruling or (b) since the date of the Indenture, there has been a change in
the applicable federal income tax law, in either case to the effect that,
and based thereon such opinion of counsel shall confirm that, the Holders
of the outstanding Notes will not recognize income, gain or loss for
federal income tax purposes as a result of such Legal Defeasance and will
be subject to federal income tax on the same amounts, in the same manner
and at the same times as would have been the case if such Legal Defeasance
had not occurred;
(3) in the case of Covenant Defeasance, the Company shall have
delivered to the Trustee an Opinion of Counsel reasonably acceptable to the
Trustee confirming that the Holders of the outstanding Notes will not
recognize income, gain or loss for federal income tax purposes as a result
of such Covenant Defeasance and will be subject to federal income tax on
the same amounts, in the same manner and at the same times as would have
been the case if such Covenant Defeasance had not occurred;
(4) no Default or Event of Default shall have occurred and be
continuing either: (A) on the date of such deposit (other than a Default or
Event of Default resulting from the borrowing of funds to be applied to
such deposit); or (B) insofar as Events of Default from bankruptcy or
insolvency events are concerned, at any time in the period ending on the
91st day after the date of deposit;
(5) such Legal Defeasance or Covenant Defeasance will not result in a
breach or violation of, or constitute a default under any material
agreement or instrument (other than the Indenture) to which the Company or
any of its Restricted Subsidiaries is a party or by which the Company or
any of its Restricted Subsidiaries is bound;
(6) the Company must have delivered to the Trustee an opinion of
counsel to the effect that after the 91st day following the deposit, the
trust funds will not be subject to the effect of any applicable bankruptcy,
insolvency, reorganization or similar laws affecting creditors' rights
generally;
(7) the Company must deliver to the Trustee an Officers' Certificate
stating that the deposit was not made by the Company with the intent of
preferring the Holders over the other creditors of the Company with the
intent of defeating, hindering, delaying or defrauding creditors of the
Company or others; and
(8) the Company must deliver to the Trustee an Officers' Certificate
and an opinion of counsel, each stating that all conditions precedent
relating to the Legal Defeasance or the Covenant Defeasance have been
complied with.
AMENDMENT, SUPPLEMENT AND WAIVER
Except as provided below, the Indenture, the Notes or any Subsidiary
Guarantee may be amended or supplemented with the consent of the Holders of at
least a majority in principal amount of the Notes then outstanding (including,
without limitation, consents obtained in connection with a purchase of, or
tender offer or exchange offer for, Notes), and any existing default or
compliance with any provision of the Indenture, the Notes or any Subsidiary
Guarantee may be waived with the consent of the Holders of a majority in
principal amount of the then outstanding Notes (including consents obtained in
connection with a tender offer or exchange offer for Notes).
Without the consent of each Holder affected, an amendment or waiver may not
(with respect to any Notes held by a non-consenting Holder):
(1) reduce the principal amount of Notes whose Holders must consent to
an amendment, supplement or waiver;
(2) reduce the principal of or change the fixed maturity of any Note
or alter the provisions with respect to the redemption of the Notes (other
than provisions relating to the covenants described above under the
captions "Covenants -- Repurchase of Notes Upon a Change in Control" and
"Covenants -- Asset Sales");
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(3) reduce the rate of or change the time for payment of interest on
any Note;
(4) waive a Default or Event of Default in the payment of principal of
or premium, interest or Additional Interest, if any, on the Notes (except a
rescission of acceleration of the Notes by the Holders of at least a
majority in aggregate principal amount of the Notes and a waiver of the
payment default that resulted from such acceleration);
(5) make any Note payable in money other than that stated in the
Notes;
(6) make any change in the provisions of the Indenture relating to
waivers of past Defaults or the rights of Holders to receive payments of
principal of or premium, interest or Additional Interest, if any, on the
Notes;
(7) waive a redemption payment with respect to any Note (other than a
payment required by one of the covenants described above under the captions
"Covenants -- Repurchase of Notes Upon a Change in Control" and
"Covenants -- Asset Sales"); or
(8) make any change in the preceding amendment and waiver provisions.
Notwithstanding the preceding, without the consent of any Holder of Notes,
the Company and the Trustee may amend or supplement the Indenture, the Notes or
any Subsidiary Guarantee:
(1) to cure any ambiguity, defect or inconsistency;
(2) to provide for uncertificated Notes in addition to or in place of
certificated Notes;
(3) to provide for the assumption of the Company's obligations to
Holders in the case of a merger or consolidation or sale of all or
substantially all of the Company's assets;
(4) to provide for additional Subsidiary Guarantors or for the release
or assumption of a Subsidiary Guarantee in compliance with the Indenture;
(5) to make any change that would provide any additional rights or
benefits to the Holders or that does not adversely affect the legal rights
under the Indenture of any such Holder;
(6) to comply with requirements of the Commission in order to effect
or maintain the qualification of the Indenture under the Trust Indenture
Act; or
(7) to provide for the issuance of additional Notes in accordance with
the limitations set forth in the Indenture.
TRANSFER AND EXCHANGE
A Holder may transfer or exchange Notes in accordance with the Indenture.
The Registrar and the Trustee may require a Holder, among other things, to
furnish appropriate endorsements and transfer documents and the Company may
require a Holder to pay any taxes and fees required by law or permitted by the
Indenture. The Company is not required to transfer or exchange any Note selected
for redemption. Also, the Company is not required to transfer or exchange any
Note for a period of 15 days before a selection of Notes to be redeemed.
The registered Holder of a Note will be treated as the owner of it for all
purposes.
NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND STOCKHOLDERS
No director, officer, employee, incorporator or stockholder of the Company
or any Subsidiary Guarantor, as such, shall have any liability for any
obligations of the Company or any Subsidiary Guarantor under the Notes, the
Indenture or any Guarantee, or for any claim based on, in respect of, or by
reason of, such obligations or their creation. Each Holder by accepting a Note
waives and releases all such liability. The waiver and release are part of the
consideration for issuance of the Notes. The waiver may not be effective to
waive liabilities under the federal securities laws and it is the view of the
Commission that such a waiver is against public policy.
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CONCERNING THE TRUSTEE
If the Trustee becomes a creditor of the Company or any Subsidiary
Guarantor, its right to obtain payment of claims in certain cases, or to realize
on certain property received in respect of any such claim as security or
otherwise will be limited. The Trustee will be permitted to engage in other
transactions. However, if it acquires any conflicting interest, it must
eliminate such conflict within 90 days, apply to the Commission for permission
to continue or resign.
The Holders of a majority in principal amount of the then outstanding Notes
will have the right to direct the time, method and place of conducting any
proceeding for exercising any remedy available to the Trustee, subject to
certain exceptions. The Indenture provides that in case an Event of Default
shall occur and be continuing, the Trustee will be required, in the exercise of
its power, to use the degree of care of a prudent man in the conduct of his own
affairs. Subject to such provisions, the Trustee will be under no obligation to
exercise any of its rights or powers under the Indenture at the request of any
Holder, unless such Holder shall have offered to the Trustee security and
indemnity satisfactory to it against any loss, liability or expense.
ADDITIONAL INFORMATION
Anyone who receives this prospectus may obtain a copy of the Indenture and
Registration Rights Agreement without charge by writing to CKE Restaurants,
Inc., 401 W. Carl Karcher Way, Anaheim, California 92801, Attention: General
Counsel.
BOOK ENTRY; DELIVERY AND FORM
Old Notes offered and sold to Qualified Institutional Buyers ("QIBs") in
reliance on Rule 144A under the Securities Act are represented by a single,
permanent Global Note in definitive, fully registered book-entry form (the "Rule
144A Global Note") and are registered in the name of Cede & Co., as nominee of
DTC on behalf of purchasers of the Old Notes represented thereby for credit to
the respective accounts of such purchasers (or to such other accounts as they
may direct) at DTC.
Old Notes originally offered and sold in reliance on Regulation S under the
Securities Act, if any, are initially represented by a single, permanent Global
Note in definitive, fully registered book-entry form (the "Regulation S Global
Note") registered in the name of Cede & Co., as nominee of DTC and deposited on
behalf of the purchasers of the Old Notes represented thereby with a custodian
for DTC for credit to the respective accounts of such purchasers (or to such
other accounts as they directed) at the Euroclear System ("Euroclear") or Cedel
Bank, societe anonyme ("Cedel"). Prior to the 40th day after the later of the
commencement of the issuance of the Original Notes and the Issue Date, interests
in the Regulation S Global Note may only be held through Euroclear or Cedel.
Old Notes held by QIBs who elected to take physical delivery of their
certificates instead of holding their interest through the Rule 144A Global Note
(and which are thus ineligible to trade through DTC) (the "Series A Non-Global
Purchasers") are issued in fully registered form ("Certificated Notes"). Upon
the transfer of such Certificated Notes to a QIB or in an offshore transaction
under Rule 903 or 904 of Regulation S under the Securities Act, such
Certificated Notes will, unless such Rule 144A Global Note has previously been
exchanged in whole for Certificated Notes, be exchanged for an interest in the
Rule 144A Global Note and/or the Regulation S Global Note upon delivery of
appropriate certifications to the Trustee. Transfers of Certificated Notes, any
interest in the Rule 144A Global Note and any interest in the Regulation S
Global Note are subject to certain restrictions.
EXCHANGE NOTES
Exchange Notes issued in exchange for Old Notes originally offered and sold
(i) to QIBs in reliance on Rule 144A under the Securities Act or (ii) in
reliance on Regulation S under the Securities Act will be represented by a
single, permanent Global Note in definitive, fully registered book-entry form
(the "Exchange Global Note" and together with the Rule 144A Global Note and the
Regulation S Global
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Note, the "Global Notes"), which will be registered in the name of Cede & Co.,
as nominee of DTC on behalf of persons who receive Exchange Notes represented
thereby for credit to the respective accounts of such persons (or to such other
accounts as they may direct) at DTC.
Exchange Notes issued in exchange for Old Notes will be issued, upon
request, in fully registered form (together with the Certificated Notes, the
"Certificated Notes"), but otherwise such holders will only be entitled to
registration of their respective Exchange Notes in book-entry form under the
Exchange Global Note.
Except as set forth below, the Global Notes may be transferred, in whole
and not in part, only to another nominee of DTC or to a successor of DTC or its
nominee. Beneficial interests in the Global Notes may not be exchanged for Notes
in certificated form except in the limited circumstances described below. See
"-- Exchange of Book-Entry Notes for Certificated Notes." Except in the limited
circumstances described below, owners of beneficial interests in the Global
Notes will not be entitled to receive physical delivery of Certificated Notes
(as defined below).
Initially, the Trustee will act as Paying Agent and Registrar. The Notes
may be presented for registration of transfer and exchange at the offices of the
Registrar.
DEPOSITORY PROCEDURES
The following description of the operations and procedures of DTC,
Euroclear and Cedel are provided solely as a matter of convenience. These
operations and procedures are solely within the control of the respective
settlement systems and are subject to changes by them from time to time. The
Company takes no responsibility for these operations and procedures and urges
investors to contact the system or their participants directly to discuss these
matters.
DTC has advised the Company that DTC is a limited-purpose trust company
created to hold securities for its participating organizations (collectively,
the "Participants") and to facilitate the clearance and settlement of
transactions in those securities between Participants through electronic
book-entry changes in accounts of its Participants. The Participants include
securities brokers and dealers (including the Initial Purchasers), banks, trust
companies, clearing corporations and certain other organizations. Access to
DTC's system is also available to other entities such as banks, brokers, dealers
and trust companies that clear through or maintain a custodial relationship with
a Participant, either directly or indirectly (collectively, the "Indirect
Participants"). Persons who are not Participants may beneficially own securities
held by or on behalf of DTC only through the Participants or the Indirect
Participants. The ownership interests in, and transfers of ownership interests
in, each security held by or on behalf of DTC are recorded on the records of the
Participants and Indirect Participants.
DTC has also advised the Company that, pursuant to procedures established
by it, (1) upon deposit of the Global Notes, DTC will credit the accounts of
Participants designated by the Initial Purchasers with portions of the principal
amount of the Global Notes and (2) ownership of such interests in the Global
Notes will be shown on, and the transfer of ownership thereof will be effected
only through, records maintained by DTC (with respect to the Participants) or by
the Participants and the Indirect Participants (with respect to other owners of
beneficial interest in the Global Notes).
Investors in the Rule 144A Global Notes may hold their interests therein
directly through DTC, if they are Participants in such system, or indirectly
through organizations (including Euroclear and Cedel) which are Participants in
such system. Investors in the Regulation S Global Notes must initially hold
their interests therein through Euroclear or Cedel, if they are participants in
such systems, or indirectly through organizations that are participants in such
systems. After the expiration of the Restricted Period (but not earlier),
investors may also hold interests in the Regulation S Global Notes through
Participants in the DTC system other than Euroclear and Cedel. Euroclear and
Cedel will hold interests in the Regulation S Global Notes on behalf of their
participants through customers' securities accounts in their respective names on
the books of their respective depositories, which are Morgan Guaranty Trust
Company of New York, Brussels office, as operator of Euroclear, and Citibank,
N.A., as operator of Cedel. All interests in a
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Global Note, including those held through Euroclear or Cedel, may be subject to
the procedures and requirements of DTC. Those interests held through Euroclear
or Cedel may also be subject to the procedures and requirements of such systems.
The laws of some states require that certain persons take physical delivery in
definitive form of securities that they own. Consequently, the ability to
transfer beneficial interests in a Global Note to such persons will be limited
to that extent. Because DTC can act only on behalf of Participants, which in
turn act on behalf of Indirect Participants and certain banks, the ability of a
person having beneficial interests in a Global Note to pledge such interests to
persons or entities that do not participate in the DTC system, or otherwise take
actions in respect of such interests, may be affected by the lack of a physical
certificate evidencing such interests.
Except as described below, owners of interest in the Global Notes will not
have Notes registered in their names, will not receive physical delivery of
Notes in certificated form and will not be considered the registered owners or
"Holders" thereof under the Indenture for any purpose.
Payments in respect of the principal of, and premium, if any, Additional
Interest, if any, and interest on a Global Note registered in the name of DTC or
its nominee will be payable to DTC in its capacity as the registered Holder
under the Indenture. Under the terms of the Indenture, the Company and the
Trustee will treat the persons in whose names the Notes, including the Global
Notes, are registered as the owners thereof for the purpose of receiving such
payments and for any and all other purposes whatsoever. Consequently, neither
the Company, the Trustee nor any agent of the Company or the Trustee has or will
have any responsibility or liability for (1) any aspect of DTC's records or any
Participant's or Indirect Participant's records relating to or payments made on
account of beneficial ownership interest in the Global Notes, or for
maintaining, supervising or reviewing any of DTC's records or any Participant's
or Indirect Participant's records relating to the beneficial ownership interests
in the Global Notes or (2) any other matter relating to the actions and
practices of DTC or any of its Participants or Indirect Participants. DTC has
advised the Company that its current practice, upon receipt of any payment in
respect of securities such as the Notes (including principal and interest), is
to credit the accounts of the relevant Participants with the payment on the
payment date, in amounts proportionate to their respective holdings in the
principal amount of beneficial interest in the relevant security as shown on the
records of DTC, unless DTC has reason to believe it will not receive payment on
such payment date. Payments by the Participants and the Indirect Participants to
the beneficial owners of Notes will be governed by standing instructions and
customary practices and will be the responsibility of the Participants or the
Indirect Participants and will not be the responsibility of DTC, the Trustee or
the Company. Neither the Company nor the Trustee will be liable for any delay by
DTC or any of its Participants in identifying the beneficial owners of the
Notes, and the Company and the Trustee may conclusively rely on and will be
protected in relying on instructions from DTC or its nominee for all purposes.
Except for trades involving only Euroclear and Cedel participants, interest
in the Global Notes are expected to be eligible to trade in DTC's Same-Day Funds
Settlement System and secondary market trading activity in such interests will,
therefore, settle in immediately available funds, subject in all cases to the
rules and procedures of DTC and its Participants. See "-- Same Day Settlement
and Payment."
Subject to the transfer restrictions set forth under "Transfer
Restrictions," transfers between Participants in DTC will be effected in
accordance with DTC's procedures, and will be settled in same day funds, and
transfers between participants in Euroclear and Cedel will be effected in the
ordinary way in accordance with their respective rules and operating procedures.
Subject to compliance with the transfer restrictions applicable to the
Notes described herein, cross-market transfers between the Participants in DTC,
on the one hand, and Euroclear or Cedel participants, on the other hand, will be
effected through DTC in accordance with DTC's rules on behalf of Euroclear or
Cedel, as the case may be, by its respective depositary; however, such
cross-market transactions will require delivery of instructions to Euroclear or
Cedel, as the case may be, by the counterparty in such system in accordance with
the rules and procedures and within the established deadlines (Brussels time) of
such system. Euroclear or Cedel, as the case may be, will, if the transaction
meets its settlement requirements, deliver instructions to its respective
depositary to take action to effect final settlement on its
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behalf by delivering or receiving interests in the relevant Global Note in DTC,
and making or receiving payment in accordance with normal procedures for
same-day funds settlement applicable to DTC. Euroclear participants and Cedel
participants may not deliver instructions directly to the depositories for
Euroclear or Cedel.
DTC has advised the Company that it will take any action permitted to be
taken by a Holder only at the direction of one or more Participants to whose
account DTC has credited the interests in the Global Notes and only in respect
of such portion of the aggregate principal amount of the Notes as to which such
Participant or Participants has or have given such direction. However, if there
is an Event of Default under the Notes, DTC reserves the right to exchange the
Global Notes for legended Notes in certificated form, and to distribute such
Notes to its Participants.
Although DTC, Euroclear and Cedel have agreed to the foregoing procedures
to facilitate transfers of interests in the Regulation S Global Notes and in the
Rule 144A Global Notes among Participants in DTC, Euroclear and Cedel, they are
under no obligation to perform or to continue to perform such procedures, and
such procedures may be discontinued at any time. Neither the Company nor the
Trustee nor any of their respective agents will have any responsibility for the
performance by DTC, Euroclear or Cedel or their respective participants or
indirect participants of their respective obligations under the rules and
procedures governing their operations.
EXCHANGE OF BOOK-ENTRY NOTES FOR CERTIFICATED NOTES
A Global Note is exchangeable for Certificated Notes if (1) DTC (A)
notifies the Company that it is unwilling or unable to continue as depositary
for the Global Notes and the Company thereupon fails to appoint a successor
depositary or (B) has ceased to be a clearing agency registered under the
Exchange Act, (2) the Company, at its option, notifies the Trustee in writing
that it elects to cause the issuance of the Certificated Notes or (3) there
shall have occurred and be continuing a Default or Event of Default with respect
to the Notes. In addition, beneficial interests in a Global Note may be
exchanged for Certificated Notes upon request but only upon compliance with
procedures set forth in the Indenture. In all cases, Certificated Notes
delivered in exchange for any Global Note or beneficial interests therein will
be registered in the names, and issued in any approved denominations, requested
by or on behalf of the depositary (in accordance with its customary procedures)
and will bear the applicable restrictive legend referred to in "Transfer
Restrictions," unless the Company determines otherwise in compliance with
applicable law.
EXCHANGE OF CERTIFICATED NOTES FOR BOOK-ENTRY NOTES
Notes issued in certificated form may not be exchanged for beneficial
interests in any Global Note unless the transferor first delivers to the Trustee
a written certificate (in the form provided in the Indenture) to the effect that
such transfer will comply with the appropriate transfer restrictions applicable
to such Notes. See "Transfer Restrictions."
EXCHANGES BETWEEN REGULATION S NOTES AND RULE 144A NOTES
Prior to the expiration of the Restricted Period, beneficial interests in
the Regulation S Global Note may be exchanged for beneficial interests in the
Rule 144A Global Note only if such exchange occurs in connection with a transfer
of the Notes pursuant to Rule 144A and the transferor first delivers to the
Trustee a written certificate (in the form provided in the Indenture) to the
effect that the Notes are being transferred to a person who the transferor
reasonably believes to be a QIB within the meaning of Rule 144A, purchasing for
its own account or the account of a QIB in a transaction meeting the
requirements of Rule 144A and in accordance with all applicable securities laws
of the states of the United States and other jurisdictions.
Beneficial interest in a Rule 144A Global Note may be transferred to a
person who takes delivery in the form of an interest in the Regulation S Global
Note, whether before or after the expiration of the Restricted Period, only if
the transferor first delivers to the Trustee a written certificate (in the form
provided in the Indenture) to the effect that such transfer is being made in
accordance with Rule 903 or 904 of Regulation S or Rule 144 (if available) and
that, if such transfer occurs prior to the expiration of
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the Restricted Period, the interest transferred will be held immediately
thereafter through Euroclear or Cedel.
Transfers involving an exchange of a beneficial interest in the Regulation
S Global Note for a beneficial interest in a Rule 144A Global Note or vice versa
will be effected in DTC by means of an instruction originated by the Trustee
through the DTC Deposit/Withdraw at Custodian system. Accordingly, in connection
with any such transfer, appropriate adjustments will be made to reflect a
decrease in the principal amount of the Regulation S Global Note and a
corresponding increase in the principal amount of the Rule 144A Global Note or
vice versa, as applicable. Any beneficial interest in one of the Global Notes
that is transferred to a person who takes delivery in the form of an interest in
the other Global Note will, upon transfer, cease to be an interest in such
Global Note and will become an interest in the other Global Note and,
accordingly, will thereafter be subject to all transfer restrictions and other
procedures applicable to beneficial interest in such other Global Note for so
long as it remains such an interest. The policies and practices of DTC may
prohibit transfers of beneficial interests in the Regulation S Global Note prior
to the expiration of the Restricted Period.
SAME DAY SETTLEMENT AND PAYMENT
The Indenture will require that payments in respect of the Notes
represented by the Global Notes (including principal, premium, if any, interest
and Additional Interest, if any) be made by wire transfer of immediately
available funds to the accounts specified by the Global Note Holder. With
respect to Notes in certificated form, the Company will make all payments of
principal, premium, if any, interest and Additional Interest, if any, by wire
transfer of immediately available funds to the accounts specified by the Holders
thereof or, if no such account is specified, by mailing a check to each such
Holder's registered address. The Notes represented by the Global Notes are
expected to be eligible to trade in the PORTAL market and to trade in the
Depositary's Same-Day Funds Settlement System, and any permitted secondary
market trading activity in such Notes will, therefore, be required by the
Depositary to be settled in immediately available funds. The Company expects
that secondary trading in any certificated Notes will also be settled in
immediately available funds.
Because of time zone differences, the securities account of a Euroclear or
Cedel participant purchasing an interest in a Global Note from a Participant in
DTC will be credited, and any such crediting will be reported to the relevant
Euroclear or Cedel participant, during the securities settlement processing day
(which must be a business day for Euroclear and Cedel) immediately following the
settlement date of DTC. DTC has advised the Company that cash received in
Euroclear or Cedel as a result of sales of interests in a Global Note by or
through a Euroclear or Cedel participant to a Participant in DTC will be
received with value on the settlement date of DTC, but will be available in the
relevant Euroclear or Cedel cash account only as of the business day for
Euroclear or Cedel following DTC's settlement date.
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CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following is a general discussion of certain material United States
federal income and estate tax considerations relating to the purchase, ownership
and disposition of the Notes. This discussion is based upon the Internal Revenue
Code of 1986, as amended (the "Code"), existing and proposed Treasury
Regulations, and judicial decisions and administrative interpretations
thereunder, as of the date hereof, all of which are subject to change, possibly
with retroactive effect, or different interpretations. We cannot assure you that
the Internal Revenue Service (the "IRS") will not challenge one or more of the
tax considerations described herein, and we have not obtained, nor do we intend
to obtain, a ruling from the IRS or an opinion of counsel with respect to the
United States federal tax considerations resulting from acquiring, holding or
disposing of the Notes.
In this discussion, we do not purport to address all tax considerations
that may be important to a particular holder in light of the holder's
circumstances (such as the alternative minimum tax provisions of the Code), or
to certain categories of investors (such as certain financial institutions,
insurance companies, tax-exempt organizations, dealers in securities, or persons
who hold the Notes as part of a hedge, conversion transaction, straddle or other
risk reduction transaction) that may be subject to special rules. This
discussion is limited to holders who hold the Notes as capital assets. This
discussion also does not address the tax considerations arising under the laws
of any foreign, state or local jurisdiction. This discussion is applicable only
to purchasers of the Old Notes in the March 1999 offering thereof and does not
address other purchasers.
YOU SHOULD CONSULT YOUR OWN TAX ADVISORS AS TO THE PARTICULAR TAX
CONSIDERATIONS TO YOU OF THE ACQUISITION, OWNERSHIP AND DISPOSITION OF THE
NOTES, INCLUDING THE EFFECT AND APPLICABILITY OF STATE, LOCAL OR FOREIGN TAX
LAWS.
U.S. HOLDERS
As used herein, the term "U.S. Holder" means a holder of an Exchange Note
that is:
(1) a citizen or resident of the United States for United States
federal income tax purposes, including an alien individual who is a lawful
permanent resident of the United States or meets the "substantial presence"
test prescribed under the Code;
(2) a corporation, partnership or other entity created or organized in
or under the laws of the United States or of any political subdivision
thereof;
(3) an estate, the income of which is subject to United States federal
income taxation regardless of its source; or
(4) a trust, the administration of which is subject to the primary
supervision of a court within the United States and which has one or more
United States persons with authority to control all substantial decisions,
or if the trust was in existence on August 20, 1996 and has elected to
continue to be treated as a United States person.
As used herein, the term "Non-U.S. Holder" means a holder of an Exchange
Note that is not a U.S. Holder.
Interest on Notes. Interest on the Exchange Notes will be taxable to a
U.S. Holder as ordinary income at the time it is paid or accrued, depending on
such holder's method of tax accounting.
Sale, Exchange, Retirement or Other Taxable Disposition of the Notes. Upon
the sale, exchange, retirement or other taxable disposition of an Exchange Note,
a U.S. Holder will recognize gain or loss equal to the difference between the
fair market value of the proceeds received in exchange for the Exchange Note
(except to the extent attributable to the payment of accrued interest, which
generally will be taxable as ordinary income) and the U.S. Holder's adjusted tax
basis in the Exchange Note.
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<PAGE> 75
A U.S. Holder's adjusted tax basis in an Exchange Note will generally equal
the price paid by the U.S. Holder for the Exchange Note decreased by any
repayments of principal received thereon. Gain or loss realized on the sale,
exchange or retirement of an Exchange Note will be capital gain or loss. For
U.S. Holders who are individuals, the gain generally is taxed at ordinary income
tax rates if the Exchange Note is held for 12 months or less, and at a maximum
statutory federal income tax rate of 20% if the Exchange Note is held for more
than 12 months.
Exchange Offer. The Exchange Notes should not differ materially in kind or
extent from the Old Notes, and therefore a U.S. Holder's exchange of Old Notes
for Exchange Notes should not constitute a taxable disposition of the Notes for
United States federal income tax purposes. As a result, a U.S. Holder should not
recognize taxable income, gain or loss on such exchange, such holder's holding
period for the Exchange Notes should generally include the holding period for
the Old Notes so exchanged, and such holder's adjusted tax basis in the Old
Notes should generally be the same as such holder's adjusted tax basis in the
Old Notes so exchanged.
Payments of Additional Interest. We intend to take the position for United
States federal income tax purposes that payments of Additional Interest, as
described above under "Description of the Notes -- Registration Rights," if paid
as required therein, should be taxable to a U.S. Holder as additional interest
income when received or accrued, in accordance with such holder's method of tax
accounting. This position is based in part on the assumption that as of the date
of issuance of the Notes, the possibility that Additional Interest will have to
be paid is a "remote" or "incidental" contingency. Our determination that such
possibility is a remote or incidental contingency is binding on a U.S. Holder,
unless such holder explicitly discloses to the IRS, on such holder's return for
the year during which the Note is acquired, that such holder is taking a
different position. Regardless of our position, however, the IRS may take the
contrary position that the payment of Additional Interest is not a remote or
incidental contingency, which could cause the Notes to be treated as having been
issued with original issue discount. Such contrary position could affect the
timing and character of both the holder's income from the Notes and our
deduction with respect to the payments of Additional Interest.
In the event that Additional Interest is in fact paid pursuant to our
failure to register the Exchange Notes for sale to the public, the Notes will be
deemed to be retired and reissued for purposes of the original issue discount
rules. If the payment of additional amounts of Additional Interest is not a
remote or incidental contingency at the time of such deemed re-issuance, the
Notes could be treated as reissued with original issue discount.
If the Notes are treated as issued or reissued with original issue
discount, then U.S. Holders may be required to include payments of Additional
Interest (as well as amounts that would otherwise be considered de minimis
original issue discount) in taxable income on a constant yield basis, regardless
of the holder's method of tax accounting, and in certain circumstances treat
gain realized on the disposition of the Notes as interest income rather than
capital gain.
If we do fail to register the Exchange Notes for sale to the public,
holders should consult their tax advisers concerning the appropriate tax
treatment of the payment of Additional Interest on the Notes.
NON-U.S. HOLDERS
In the following discussion, we summarize the principal United States
federal income and estate tax considerations resulting from the acquisition,
ownership and disposition of the Notes by Non-U.S. Holders.
Interest on Notes. Subject to the discussion below of backup withholding,
interest paid on the Notes to a Non-U.S. Holder generally will not be subject to
United States federal income tax if:
(1) such interest is not effectively connected with the conduct of a
trade or business within the United States by such Non-U.S. Holder;
(2) the Non-U.S. Holder does not actually or constructively own 10% or
more of the total voting power of all classes of our stock entitled to
vote;
74
<PAGE> 76
(3) the Non-U.S. Holder is not a controlled foreign corporation with
respect to which we are a "related person" within the meaning of the Code;
and
(4) the beneficial owner, under penalty of perjury, certifies that the
owner is not a United States person and provides the owner's name and
address.
If certain requirements are satisfied, the certification described in
clause (4) above may be provided by a securities clearing organization, a bank,
or other financial institution that holds customers' securities in the ordinary
course of its trade or business.
Under Treasury Regulations, which generally are effective for payments made
after December 31, 1999, subject to certain transition rules, the certification
described in clause (4) above may also be provided by a qualified intermediary
on behalf of one or more beneficial owners (or other intermediaries), provided
that such intermediary has entered into a withholding agreement with the IRS and
certain other conditions are met. A holder that is not exempt from tax under
these rules will be subject to United States federal income tax withholding at a
rate of 30% unless
(1) the interest is effectively connected with the conduct of a United
States trade or business, in which case the interest will be subject to the
United States federal income tax on net income that applies to United
States persons generally (and, with respect to corporate holders and under
certain circumstances, the branch profits tax); or
(2) the rate of withholding is reduced or eliminated by an applicable
income tax treaty; and
(3) in either case, the Non-U.S. Holder provides us with proper
certification as to the holder's exemption from withholding.
In the event any Additional Interest we are required to pay pursuant to a
failure to register the Exchange Notes for sale to the public is treated as
interest, the tax treatment of such payments should be the same as other
interest payments received by a Non-U.S. Holder. However, the IRS may treat such
payments as other than interest, in which case they would be subject to United
States federal withholding tax at a rate of 30%, unless the holder qualifies for
a reduced rate of tax or an exemption under a tax treaty.
Gain on Disposition of the Notes. A Non-U.S. Holder generally will not be
subject to United States federal income tax on gain realized on the sale,
exchange or redemption of a Note, including an exchange of a Note for an
Exchange Note, unless:
(1) in the case of an individual Non-U.S. Holder, such holder is
present in the United States for 183 days or more in the year of such sale,
exchange or redemption, and either:
(A) has a "tax home" in the United States and certain other
requirements are met; or
(B) the gain from the disposition is attributable to an office or
other fixed place of business in the United States;
(2) the Non-U.S. Holder is subject to tax pursuant to the provisions
of U.S. tax law applicable to certain U.S. expatriates; or
(3) the gain is effectively connected with the conduct of a United
States trade or business of the Non-U.S. Holder.
U.S. Federal Estate Tax. A Note held by an individual who at the time of
death is not a citizen or resident of the United States (as specially defined
for United States federal estate tax purposes) will not be subject to United
States federal estate tax if the individual did not actually or constructively
own 10% or more of the total combined voting power of all classes of our stock
and, at the time of the individual's death, payments with respect to such Note
would not have been effectively connected with the conduct by such individual of
a trade or business in the United States.
75
<PAGE> 77
OPTIONAL REDEMPTION
At certain times and subject to certain conditions, we are entitled to
redeem all or a portion of the Notes. Treasury regulations contain special rules
for determining the yield to maturity and maturity date on a debt instrument in
the event the debt instrument provides for a contingency that could result in
the acceleration or deferral of one or more payments. We believe that under
these rules the redemption provisions of the Notes should not affect the
computation of the yield to maturity or maturity date of the Notes.
BACKUP WITHHOLDING AND INFORMATION REPORTING
U.S. Holders. Information reporting will apply to payments of interest on
or the proceeds of the sale or other disposition of the Notes made by us with
respect to certain non-corporate U.S. Holders. A U.S. Holder will further be
subject to backup withholding at the rate of 31% with respect to interest,
principal and premium, if any, we pay on a Note, unless the holder (1) is an
entity (including corporations, tax-exempt organizations and certain qualified
nominees) that is exempt from withholding and, when required, demonstrates this
fact; or (2) provides us with a correct taxpayer identification number,
certifies that the taxpayer identification number is correct and that the holder
has not been notified by the IRS that it is subject to backup withholding due to
underreporting of interest or dividends, and otherwise complies with applicable
requirements of the backup withholding rules. Any amount withheld under the
backup withholding rules is allowable as a credit against the U.S. Holder's
United States federal income tax liability, provided that the required
information is furnished to the IRS.
Non-U.S. Holders. We will, when required, report to the IRS and to each
Non-U.S. Holder the amount of any interest paid to, and the tax withheld with
respect to, such holder, regardless of whether any tax was actually withheld on
such payments. Copies of these information returns may also be made available to
the tax authorities of the country in which the Non-U.S. Holder resides under
the provisions of a specific treaty or agreement.
Under current Treasury Regulations, backup withholding and information
reporting will not apply to payments of interest on or principal of the Notes by
us or our agent to a Non-U.S. Holder if the Non-U.S. Holder certifies as to its
Non-U.S. Holder status under penalties of perjury or otherwise establishes an
exemption (provided that neither we nor our agent have actual knowledge that the
holder is a U.S. person or that the conditions of any other exemptions are not
in fact satisfied). The payment of the proceeds on the disposition of Notes to
or through the United States office of a United States or foreign broker will be
subject to information reporting and backup withholding unless the owner
provides the certification described above or otherwise establishes an
exemption. The proceeds of the disposition by a Non-U.S. Holder of Notes to or
through a foreign office of a broker generally will not be subject to backup
withholding or information reporting. However, if such broker is a U.S. person,
a controlled foreign corporation or a foreign person deriving 50% or more of its
gross income from all sources for certain periods from activities that are
effectively connected with the conduct of a United States trade or business,
information reporting requirements will apply unless such broker has documentary
evidence in its files of the holder's status as a Non-U.S. Holder and has no
actual knowledge to the contrary or unless the holder otherwise establishes an
exemption.
Backup withholding is not an additional tax. Any amounts withheld under the
backup withholding rules may be refunded or credited against the Non-U.S.
Holder's United States federal income tax liability provided that the required
information is furnished to the IRS.
New Treasury Regulations relating to withholding tax on income paid to
Non-U.S. Holders will generally be effective for payments made after December
31, 1999, subject to certain transition rules. In general, these new regulations
do not significantly alter the substantive withholding and information reporting
requirements, but rather unify current certification procedures and forms, and
clarify reliance standards. The new regulations also alter the procedures for
claiming benefits of an income tax treaty and permit the shifting of primary
responsibility for withholding to certain financial intermediaries acting on
behalf of beneficial owners under some circumstances. On January 15, 1999, the
IRS issued Notice 99-8,
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<PAGE> 78
proposing certain changes to these new withholding regulations for non-resident
aliens and foreign corporations and providing a model "qualified intermediary"
withholding agreement to be entered into with the IRS to allow certain
institutions to certify on behalf of their non-U.S. customers or account holders
who invest in U.S. securities. We strongly urge prospective Non-U.S. Holders to
consult their own tax advisors for information on the impact, if any, of these
new withholding regulations.
PLAN OF DISTRIBUTION
Each broker-dealer that receives Exchange Notes for its own account
pursuant to the exchange offer must acknowledge that it will deliver a
prospectus in connection with any resale of such Exchange Notes. This
prospectus, as it may be amended or supplemented from time to time, may be used
by a broker-dealer in connection with resales of Exchange Notes received in
exchange for Old Notes where such Old Notes were acquired as a result of
market-making activities or other trading activities.
We will not receive any proceeds from any sale of Exchange Notes by
broker-dealers. Exchange Notes received by broker-dealers for their own account
pursuant to the exchange offer may be sold from time to time in one or more
transactions in the over-the-counter market, in negotiated transactions, through
the writing of options on the Exchange Notes or a combination of such methods of
resale, at market prices prevailing at the time of resale, at prices related to
such prevailing market prices or negotiated prices. Any such resale may be made
directly to purchasers or to or through brokers or dealers who may receive
compensation in the form of commissions or concessions from any such
broker-dealer or the purchasers of any such Exchange Notes. Any broker-dealer
that resells Exchange Notes that were received by it for its own account in the
exchange offer and any broker or dealer that participates in a distribution of
such Exchange Notes may be deemed to be an "underwriter" within the meaning of
the Securities Act, and any profit on any such resale of Exchange Notes and any
commissions or concessions received by such persons may be deemed to be
underwriting compensation under the Securities Act. The Letter of Transmittal
states that by acknowledging that it will deliver and by delivering a
prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
We will promptly send additional copies of this prospectus and any
amendment or supplement to this prospectus to any broker-dealer that requests
such documents in the Letter of Transmittal, except that we are not required to
amend or supplement this prospectus for a period exceeding 90 days after the
expiration date. We have agreed to pay all expenses incident to the exchange
offer (including the expenses of one counsel for the holders of the Notes) other
than commissions or concessions of any brokers or dealers and will indemnify
holders of the Old Notes (including any broker-dealers) against certain
liabilities, including certain liabilities under the Securities Act.
LEGAL MATTERS
The validity of the Exchange Notes offered hereby will be passed upon for
us by Stradling Yocca Carlson & Rauth, a Professional Corporation, Newport
Beach, California.
EXPERTS
Our consolidated financial statements as of January 31, 1998 and 1999, and
for each of the years in the three-year period ended January 31, 1999, have been
incorporated by reference in the Registration Statement and this prospectus, in
reliance upon the report of KPMG LLP, independent certified public accountants,
whose report is incorporated by reference herein, and upon the authority of said
firm as experts in accounting and auditing.
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<PAGE> 79
[CKE LOGO]
<PAGE> 80
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Our Certificate of Incorporation limits, to the maximum extent permitted by
Delaware law, the personal liability of directors for monetary damages for
breach of their fiduciary duties as a director. Our Bylaws provide that we shall
indemnify our officers and directors and may indemnify our employees and other
agents to the fullest extent permitted by Delaware law.
Section 145 of the DGCL provides that a corporation may indemnify any
person made a party to an action (other than an action by or in the right of the
corporation) by reason of the fact that he or she was a director, officer,
employee or agent of the corporation or was serving at the request of the
corporation against expenses (including attorneys' fees), judgments, fines, and
amounts paid in settlement actually and reasonably incurred by him or her in
connection with such action if he or she acted in good faith and in a manner he
or she reasonably believed to be in, or not opposed to, the best interests of
the corporation and, with respect to any criminal action (other than an action
by or in the right of the corporation), has no reasonable cause to believe his
or her conduct was unlawful.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) The following exhibits are filed herewith or incorporated by reference
herein:
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT TITLE
- ------- -------------
<S> <C>
4.1 Indenture, dated as of March 4, 1999, by and among the
Registrant, the Subsidiary Guarantors and Chase Manhattan
Bank and Trust Company, National Association, as trustee,
previously filed and incorporated herein by reference to the
Registrant's Current Report on Form 8-K as of February 25,
1999.
4.2 Form of Note (included in Exhibit 4.1 hereto).
4.3 Registration Rights Agreement, dated as of March 4, 1999, by
and among the Registrant, the Subsidiary Guarantors and the
Initial Purchasers.
5.1 Opinion of Stradling Yocca Carlson & Rauth, a Professional
Corporation.*
23.1 Consent of KPMG LLP.*
23.2 Consent of Stradling Yocca Carlson & Rauth, a Professional
Corporation (included in Exhibit 5.1 hereto).
24.1 Power of Attorney (contained on signature page hereto).
25.1 Statement of Eligibility of Trustee under the Trust
Indenture Act of 1939 on Form T-1.
99.1 Form of Letter of Transmittal to be used in connection with
the exchange offer.
99.2 Form of Notice of Guaranteed Delivery.
</TABLE>
- ---------------
* To be filed by amendment.
ITEM 22. UNDERTAKINGS
Each of the undersigned registrants hereby undertakes:
(1) that, for purposes of determining any liability under the
Securities Act of 1933, each filing of the registrant's annual report
pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act
of 1934 (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the registration statement shall
be deemed to be a new registration statement relating to the securities
offered
II-1
<PAGE> 81
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof;
(2) for the purposes of determining any liability under the Securities
Act of 1933, the information omitted from the form of prospectus filed as
part of this registration statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the registrants pursuant to Rule
424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be
part of this registration statement as of the time it was declared
effective;
(3) for the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof;
(4) to respond to requests for information that is incorporated by
reference into the prospectus pursuant to Items 4, 10(b), 11 or 13 of this
Form, within one business day of receipt of such request, and to send the
incorporated documents by first class mail or other equally prompt means.
This includes information contained in documents filed subsequent to the
effective date of the registration statement through the date of responding
to the request; and
(5) to supply by means of a post-effective amendment all information
concerning a transaction, and the company being acquired involved therein,
that was not the subject of and included in the registration statement when
it became effective.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person in the successful defense
of any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
II-2
<PAGE> 82
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Santa Barbara, State of
California, on the day of , 1999.
CKE RESTAURANTS, INC.,
and the Subsidiary Guarantors set
forth below:
1233 Corporation
Boston Pacific Inc.
Burger Chef Systems, Inc.
Carl Karcher Enterprises, Inc.
Carl's Jr. Region VIII, Inc.
CBI Restaurants, Inc.
Central Iowa Food Systems, Inc.
Fast Food Restaurants, Inc.
Flagstar Enterprises, Inc.
Hardee's at Onslow Mall, Inc.
Hardee's Food Systems, Inc.
HED, Inc.
HFS Georgia, Inc.
HFS Ventures, Inc.
Spardee's Realty, Inc.
Taco Bueno Equipment Company
Taco Bueno Restaurants, Inc.(1)
Taco Bueno Texas, L.P.
Taco Bueno West, Inc.
By: /s/ CARL A. STRUNK
------------------------------------
Carl A. Strunk
Executive Vice President
(1) On its behalf and as General
Partner of Taco Bueno Texas, L.P.
II-3
<PAGE> 83
POWER OF ATTORNEY
We, the undersigned, do hereby make, constitute and appoint Carl A. Strunk
and Andrew F. Puzder, and each of them acting individually, our true and lawful
attorneys and agents, with power to act without any other and with full power of
substitution, to do any and all acts and things in our name and behalf in our
capacities as directors and officers and to execute, deliver and file any and
all instruments for us and in our names in the capacities indicated below, which
said attorneys and agents, or either of them, may deem necessary or advisable to
enable said corporation to comply with the Securities Act of 1933, as amended,
and any rules, regulations, and requirements of the Securities and Exchange
Commission, in connection with this registration statement, including
specifically, but without limitation, power and authority to sign for use or any
of us, in our names and in the capacities indicated below, any and all
amendments (including post-effective amendments) to this registration statement,
or any related registration statement that is to be effective upon filing
pursuant to Rule 462(b) under the Securities Act of 1933, as amended, and any
and all documents in support thereof or supplemental thereto; and we do hereby
ratify and confirm all that the said attorneys and agents, or any of them, shall
do or cause to be done by virtue thereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this registration statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ WILLIAM P. FOLEY II Chairman of the Board and April 15, 1999
- ------------------------------------------ Chief Executive Officer
William P. Foley II CKE Restaurants, Inc.,
and
Director
CKE Restaurants, Inc.,
and each Subsidiary Guarantor
/s/ C. THOMAS THOMPSON Director or Executive Officer April 15, 1999
- ------------------------------------------ of each Subsidiary Guarantor
C. Thomas Thompson
/s/ CARL A. STRUNK Executive Vice President April 15, 1999
- ------------------------------------------ CKE Restaurants, Inc.
Carl A. Strunk and each Subsidiary Guarantor
and
Director
Carl's Jr. Region VIII, Inc.
/s/ ANDREW F. PUZDER Director April 15, 1999
- ------------------------------------------ Carl's Jr. Region VIII, Inc.
Andrew F. Puzder
/s/ RORY J. MURPHY Director April 15, 1999
- ------------------------------------------ Each Subsidiary Guarantor
Rory J. Murphy listed on Annex A-1
/s/ BYRON ALLUMBAUGH Director April 15, 1999
- ------------------------------------------ CKE Restaurants, Inc.
Byron Allumbaugh
/s/ PETER CHURM Director April 15, 1999
- ------------------------------------------ CKE Restaurants, Inc.
Peter Churm
</TABLE>
II-4
<PAGE> 84
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ CARL L. KARCHER Director April 15, 1999
- ------------------------------------------ CKE Restaurants, Inc.
Carl L. Karcher
Chairman Emeritus , 1999
- ------------------------------------------ and Director
Carl N. Karcher CKE Restaurants, Inc.,
and
Director
Carl Karcher Enterprises, Inc.
Vice Chairman of the Board , 1999
- ------------------------------------------ and Director
Daniel D. (Ron) Lane CKE Restaurants, Inc.,
and
Director
Boston Pacific, Inc.
/s/ W. HOWARD LESTER Director April 15, 1999
- ------------------------------------------ CKE Restaurants, Inc.
W. Howard Lester
/s/ FRANK P. WILLEY Director April 15, 1999
- ------------------------------------------ CKE Restaurants, Inc.,
Frank P. Willey and Each Subsidiary Guarantor
listed on Annex A-2
</TABLE>
II-5
<PAGE> 85
ANNEX A-1
<TABLE>
<S> <C>
1233 Corporation Hardee's Food Systems, Inc.
Burger Chef Systems, Inc. HED, Inc.
Central Iowa Food Systems, Inc. HFS Georgia, Inc.
Fast Food Restaurants, Inc. HFS Ventures, Inc.
Flagstar Enterprises, Inc. Spardee's Realty, Inc.
Hardee's at Onslow Mall, Inc.
</TABLE>
ANNEX A-2
<TABLE>
<S> <C>
CBI Restaurants, Inc. Taco Bueno Restaurants, Inc.(1)
Taco Bueno Equipment Company Taco Bueno West, Inc.
</TABLE>
II-6
<PAGE> 86
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- ------- ----------------------
<S> <C>
4.1 Indenture, dated as of March 4, 1999, by and among the
Registrant, the Subsidiary Guarantors and Chase Manhattan
Bank and Trust Company, National Association, as trustee,
previously filed and incorporated herein by reference to the
Registrant's Current Report on Form 8-K as of February 25,
1999.
4.2 Form of Note (included in Exhibit 4.1 hereto).
4.3 Registration Rights Agreement, dated as of March 4, 1999, by
and among the Registrant, the Subsidiary Guarantors and the
Initial Purchasers.
5.1 Opinion of Stradling Yocca Carlson & Rauth, a Professional
Corporation.*
23.1 Consent of KPMG LLP.*
23.2 Consent of Stradling Yocca Carlson & Rauth, a Professional
Corporation (included in Exhibit 5.1 hereto).
24.1 Power of Attorney (contained on signature page hereto).
25.1 Statement of Eligibility of Trustee under the Trust
Indenture Act of 1939 on Form T-1.
99.1 Form of Letter of Transmittal to be used in connection with
the exchange offer.
99.2 Form of Notice of Guaranteed Delivery.
</TABLE>
- ---------------
* To be filed by amendment
<PAGE> 1
EXHIBIT 4.3
- --------------------------------------------------------------------------------
REGISTRATION RIGHTS AGREEMENT
Dated March 4, 1999
among
CKE RESTAURANTS, INC.,
THE SUBSIDIARY GUARANTORS NAMED HEREIN and
MORGAN STANLEY & CO. INCORPORATED
BANCBOSTON ROBERTSON STEPHENS INC.
BEAR, STEARNS & CO. INC.
U.S. BANCORP INVESTMENTS, INC.
PARIBAS CORPORATION
- --------------------------------------------------------------------------------
<PAGE> 2
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made and
entered into March 4, 1999, among CKE RESTAURANTS, INC., a Delaware corporation
(the "Company"), the Subsidiary Guarantors (as defined) and MORGAN STANLEY & CO.
INCORPORATED, BANCBOSTON ROBERTSON STEPHENS INC., BEAR, STEARNS & CO. INC., U.S.
BANCORP INVESTMENTS, INC. and PARIBAS CORPORATION (collectively, the "Initial
Purchasers").
This Agreement is made pursuant to the Purchase Agreement dated
February 24, 1999, among the Company, the Subsidiary Guarantors and the Initial
Purchasers (the "Purchase Agreement"), which provides for the sale by the
Company to the Initial Purchasers of an aggregate of $200,000,000 principal
amount of the Company's 9 1/8% Senior Subordinated Notes Due 2009 (the
"Securities"). In order to induce the Initial Purchasers to enter into the
Purchase Agreement, the Company and the Subsidiary Guarantors have agreed to
provide to the Initial Purchasers and their direct and indirect transferees the
registration rights set forth in this Agreement. The execution of this Agreement
is a condition to the closing under the Purchase Agreement.
In consideration of the foregoing, the parties hereto agree as
follows:
1. Definitions.
As used in this Agreement, the following capitalized defined
terms shall have the following meanings:
"1933 Act" shall mean the Securities Act of 1933, as amended from
time to time.
"1934 Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time.
"Closing Date" shall mean the Closing Date as defined in the
Purchase Agreement.
"Company" shall have the meaning set forth in the preamble and
shall also include the Company's successors.
"Exchange Offer" shall mean the exchange offer by the Company of
Exchange Securities for Registrable Securities pursuant to Section 2(a)
hereof.
"Exchange Offer Registration" shall mean a registration under the
1933 Act effected pursuant to Section 2(a) hereof.
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"Exchange Offer Registration Statement" shall mean an exchange
offer registration statement on Form S-4 (or, if applicable, on another
appropriate form) and all amendments and supplements to such
registration statement, in each case including the Prospectus contained
therein, all exhibits thereto and all material incorporated by reference
therein.
"Exchange Securities" shall mean securities issued by the Company
under the Indenture containing terms identical to the Securities (except
that (i) interest thereon shall accrue from the last date on which
interest was paid on the Securities or, if no such interest has been
paid, from May 1, 1999 and (ii) the Exchange Securities will not contain
restrictions on transfer) and to be offered to Holders of Securities in
exchange for Securities pursuant to the Exchange Offer.
"Holder" shall mean the Initial Purchasers, for so long as they
own any Registrable Securities, and each of their successors, assigns
and direct and indirect transferees who become registered owners of
Registrable Securities under the Indenture; provided that for purposes
of Sections 4 and 5 of this Agreement, the term "Holder" shall include
Participating Broker-Dealers (as defined in Section 4(a)).
"Indenture" shall mean the Indenture relating to the Securities
dated as of March 4, 1999 among the Company, the Subsidiary Guarantors
and Chase Manhattan Bank and Trust Company, National Association, as
trustee, and as the same may be amended from time to time in accordance
with the terms thereof.
"Initial Purchasers" shall have the meaning set forth in the
preamble.
"Majority Holders" shall mean the Holders of a majority of the
aggregate principal amount of outstanding Registrable Securities;
provided that whenever the consent or approval of Holders of a specified
percentage of Registrable Securities is required hereunder, Registrable
Securities held by the Company or any of its affiliates (as such term is
defined in Rule 405 under the 1933 Act) (other than the Initial
Purchasers or subsequent Holders of Registrable Securities if such
subsequent holders are deemed to be such affiliates solely by reason of
their holding of such Registrable Securities) shall not be counted in
determining whether such consent or approval was given by the Holders of
such required percentage or amount.
"Person" shall mean an individual, partnership, limited liability
company, corporation, trust or unincorporated organization, or a
government or agency or political subdivision thereof.
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"Prospectus" shall mean the prospectus included in a Registration
Statement, including any preliminary prospectus, and any such prospectus
as amended or supplemented by any prospectus supplement, including a
prospectus supplement with respect to the terms of the offering of any
portion of the Registrable Securities covered by a Shelf Registration
Statement, and by all other amendments and supplements to such
prospectus, and in each case including all material incorporated by
reference therein.
"Purchase Agreement" shall have the meaning set forth in the
preamble.
"Registrable Securities" shall mean the Securities; provided,
however, that the Securities shall cease to be Registrable Securities
(i) when a Registration Statement with respect to such Securities shall
have been declared effective under the 1933 Act and such Securities
shall have been disposed of pursuant to such Registration Statement,
(ii) when such Securities have been sold to the public pursuant to Rule
144(k) (or any similar provision then in force, but not Rule 144A) under
the 1933 Act or (iii) when such Securities shall have ceased to be
outstanding.
"Registration Expenses" shall mean any and all expenses incident
to performance of or compliance by the Company or the Subsidiary
Guarantors with this Agreement, including without limitation: (i) all
SEC, stock exchange or National Association of Securities Dealers, Inc.
registration and filing fees, (ii) all fees and expenses incurred in
connection with compliance with state securities or blue sky laws
(including reasonable fees and disbursements of counsel for any
underwriters or Holders in connection with blue sky qualification of any
of the Exchange Securities or Registrable Securities), (iii) all
expenses of any Persons in preparing or assisting in preparing, word
processing, printing and distributing any Registration Statement, any
Prospectus, any amendments or supplements thereto, any underwriting
agreements, securities sales agreements and other documents relating to
the performance of and compliance with this Agreement, (iv) all rating
agency fees, (v) all fees and disbursements relating to the
qualification of the Indenture under applicable securities laws, (vi)
the fees and disbursements of the Trustee and its counsel, (vii)the fees
and disbursements of counsel for the Company and the Subsidiary
Guarantors and, in the case of a Shelf Registration Statement, the fees
and disbursements of one counsel for the Holders (which counsel shall be
selected by the Majority Holders and which counsel may also be counsel
for the Initial Purchasers) and (viii) the fees and disbursements of the
independent public accountants of the Company and the Subsidiary
Guarantors, including the expenses of any special audits or "cold
comfort" letters required by or incident to such performance and
compliance, but excluding fees and expenses of counsel to the
underwriters (other than fees and expenses set forth in clause (ii)
above) or the Holders and underwriting discounts and commissions
<PAGE> 5
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and transfer taxes, if any, relating to the sale or disposition of
Registrable Securities by a Holder.
"Registration Statement" shall mean any registration statement of
the Company and the Subsidiary Guarantors that covers any of the
Exchange Securities or Registrable Securities pursuant to the provisions
of this Agreement and all amendments and supplements to any such
Registration Statement, including post-effective amendments, in each
case including the Prospectus contained therein, all exhibits thereto
and all material incorporated by reference therein.
"SEC" shall mean the Securities and Exchange Commission.
"Shelf Registration" shall mean a registration effected pursuant
to Section 2(b) hereof.
"Shelf Registration Statement" shall mean a "shelf" registration
statement of the Company and the Subsidiary Guarantors pursuant to the
provisions of Section 2(b) of this Agreement which covers all of the
Registrable Securities (but no other securities unless approved by the
Holders whose Registrable Securities are covered by such Shelf
Registration Statement) on an appropriate form under Rule 415 under the
1933 Act, or any similar rule that may be adopted by the SEC, and all
amendments and supplements to such registration statement, including
post-effective amendments, in each case including the Prospectus
contained therein, all exhibits thereto and all material incorporated by
reference therein.
"Subsidiary Guarantors" shall mean the following entities: Carl
Karcher Enterprises, Inc., a California corporation, Boston Pacific,
Inc., a California corporation, CBI Restaurants, Inc., a Delaware
corporation, Taco Bueno West, Inc., a Delaware corporation, Carl's Jr.
Region VIII, Inc., a Delaware corporation, Taco Bueno Restaurants, Inc.,
a Texas corporation, Taco Bueno Equipment Company, a Texas corporation,
Taco Bueno Texas, L.P., a Texas limited partnership, Hardee's Food
Systems, Inc., a North Carolina corporation, Burger Chef Systems, Inc.,
a North Carolina corporation, HED, Inc., a North Carolina corporation,
HFS Ventures, Inc., a North Carolina corporation, Hardee's at Onslow
Mall, Inc., a North Carolina corporation, Central Iowa Food Systems,
Inc., an Iowa corporation, Fast Food Restaurants, Inc., a Pennsylvania
corporation, HFS Georgia, Inc., a Georgia corporation, 1233 Corporation,
an Ohio corporation, Flagstar Enterprises, Inc., an Alabama corporation
and Spardee's Realty, Inc., an Alabama corporation.
"Trustee" shall mean the trustee with respect to the Securities
under the Indenture.
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"Underwriter" shall have the meaning set forth in Section 3
hereof.
"Underwritten Registration" or "Underwritten Offering" shall mean
a registration in which Registrable Securities are sold to an
Underwriter for reoffering to the public.
2. Registration Under the 1933 Act.
(a) To the extent not prohibited by any applicable law or
applicable interpretation of the Staff of the SEC, the Company and the
Subsidiary Guarantors shall use their best efforts to cause to be filed an
Exchange Offer Registration Statement covering the offer by the Company and the
Subsidiary Guarantors to the Holders to exchange all of the Registrable
Securities for Exchange Securities and to have such Registration Statement
remain effective until the closing of the Exchange Offer. The Company and the
Subsidiary Guarantors shall commence the Exchange Offer promptly after the
Exchange Offer Registration Statement has been declared effective by the SEC and
use its best efforts to have the Exchange Offer consummated not later than 60
days after such effective date. The Company and the Subsidiary Guarantors shall
commence the Exchange Offer by mailing the related exchange offer Prospectus and
accompanying documents to each Holder stating, in addition to such other
disclosures as are required by applicable law:
(i) that the Exchange Offer is being made pursuant to this
Registration Rights Agreement and that all Registrable Securities
validly tendered will be accepted for exchange;
(ii) the dates of acceptance for exchange (which shall be a
period of at least 20 business days from the date such notice is mailed)
(the "Exchange Dates");
(iii) that any Registrable Security not tendered will remain
outstanding and continue to accrue interest, but will not retain any
rights under this Registration Rights Agreement;
(iv) that Holders electing to have a Registrable Security
exchanged pursuant to the Exchange Offer will be required to surrender
such Registrable Security, together with the enclosed letters of
transmittal, to the institution and at the address (located in the
Borough of Manhattan, The City of New York) specified in the notice
prior to the close of business on the last Exchange Date; and
(v) that Holders will be entitled to withdraw their election, not
later than the close of business on the last Exchange Date, by sending
to the institution and at the address (located in the Borough of
Manhattan, The City of New York) specified in the notice a telegram,
telex, facsimile transmission or letter setting forth the name of such
<PAGE> 7
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Holder, the principal amount of Registrable Securities delivered for
exchange and a statement that such Holder is withdrawing his election to
have such Securities exchanged.
As soon as practicable after the last Exchange Date, the Company
and the Subsidiary Guarantors shall:
(i) accept for exchange Registrable Securities or portions
thereof tendered and not validly withdrawn pursuant to the Exchange
Offer; and
(ii) deliver, or cause to be delivered, to the Trustee for
cancellation all Registrable Securities or portions thereof so accepted
for exchange and issue by the Company, and cause the Trustee to promptly
authenticate and mail to each Holder, an Exchange Security equal in
principal amount to the principal amount of the Registrable Securities
surrendered by such Holder.
The Company and the Subsidiary Guarantors shall use their best efforts to
complete the Exchange Offer as provided above and shall comply with the
applicable requirements of the 1933 Act, the 1934 Act and other applicable laws
and regulations in connection with the Exchange Offer. The Exchange Offer shall
not be subject to any conditions, other than that the Exchange Offer does not
violate applicable law or any applicable interpretation of the Staff of the SEC.
The Company shall inform the Initial Purchasers of the names and addresses of
the Holders to whom the Exchange Offer is made, and the Initial Purchasers shall
have the right, subject to applicable law, to contact such Holders and otherwise
facilitate the tender of Registrable Securities in the Exchange Offer.
(b) In the event that (i) the Company and the Subsidiary
Guarantors determine that the Exchange Offer Registration provided for in
Section 2(a) above is not available or may not be consummated as soon as
practicable after the last Exchange Date because it would violate applicable law
or the applicable interpretations of the Staff of the SEC, (ii) the Exchange
Offer is not for any other reason consummated by September 4, 1999 or (iii) the
Exchange Offer has been completed and in the opinion of counsel for the Initial
Purchasers a Registration Statement must be filed and a Prospectus must be
delivered by the Initial Purchasers in connection with any offering or sale of
Registrable Securities, the Company and the Subsidiary Guarantors shall use
their best efforts to cause to be filed as soon as practicable after such
determination, date or notice of such opinion of counsel is given to the
Company, as the case may be, a Shelf Registration Statement providing for the
sale by the Holders of all of the Registrable Securities and to have such Shelf
Registration Statement declared effective by the SEC. In the event the Company
and the Subsidiary Guarantors are required to file a Shelf Registration
Statement solely as a result of the matters referred to in clause (iii) of the
preceding sentence, the Company and the Subsidiary Guarantors shall use their
best efforts to file and have declared effective by the SEC both an Exchange
Offer Registration Statement pursuant to Section 2(a) with respect to all
<PAGE> 8
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Registrable Securities and a Shelf Registration Statement (which may be a
combined Registration Statement with the Exchange Offer Registration Statement)
with respect to offers and sales of Registrable Securities held by the Initial
Purchasers after completion of the Exchange Offer. The Company and the
Subsidiary Guarantors agree to use their best efforts to keep the Shelf
Registration Statement continuously effective until the expiration of the period
referred to in Rule 144(k) with respect to the Registrable Securities or such
shorter period that will terminate when all of the Registrable Securities
covered by the Shelf Registration Statement have been sold pursuant to the Shelf
Registration Statement. The Company and the Subsidiary Guarantors further agree
to supplement or amend the Shelf Registration Statement if required by the
rules, regulations or instructions applicable to the registration form used by
the Company for such Shelf Registration Statement or by the 1933 Act or by any
other rules and regulations thereunder for shelf registration or if reasonably
requested by a Holder with respect to information relating to such Holder, and
to use its best efforts to cause any such amendment to become effective and such
Shelf Registration Statement to become usable as soon as thereafter practicable.
The Company and the Subsidiary Guarantors agree to furnish to the Holders of
Registrable Securities copies of any such supplement or amendment promptly after
its being used or filed with the SEC.
(c) The Company shall pay all Registration Expenses in connection
with the registration pursuant to Section 2(a) and Section 2(b). Each Holder
shall pay all underwriting discounts and commissions and transfer taxes, if any,
relating to the sale or disposition of such Holder's Registrable Securities
pursuant to the Shelf Registration Statement.
(d) An Exchange Offer Registration Statement pursuant to Section
2(a) hereof or a Shelf Registration Statement pursuant to Section 2(b) hereof
will not be deemed to have become effective unless it has been declared
effective by the SEC; provided, however, that, if, after it has been declared
effective, the offering of Registrable Securities pursuant to a Shelf
Registration Statement is interfered with by any stop order, injunction or other
order or requirement of the SEC or any other governmental agency or court, such
Registration Statement will be deemed not to have become effective during the
period of such interference until the offering of Registrable Securities
pursuant to such Registration Statement may legally resume. In the event the
Exchange Offer is not consummated and the Shelf Registration Statement is not
declared effective on or prior to September 4, 1999, the interest rate on the
Securities will be increased by 0.5% per annum until the Exchange Offer is
consummated or the Shelf Registration Statement is declared effective by the
SEC.
(e) Without limiting the remedies available to the Initial
Purchasers and the Holders, the Company and the Subsidiary Guarantors
acknowledge that any failure by the Company and the Subsidiary Guarantors to
comply with its obligations under Section 2(a) and Section 2(b) hereof may
result in material irreparable injury to the Initial Purchasers or the
<PAGE> 9
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Holders for which there is no adequate remedy at law, that it will not be
possible to measure damages for such injuries precisely and that, in the event
of any such failure, the Initial Purchasers or any Holder may obtain such relief
as may be required to specifically enforce the Company's and the Subsidiary
Guarantors' obligations under Section 2(a) and Section 2(b) hereof.
3. Registration Procedures.
In connection with the obligations of the Company and the
Subsidiary Guarantors with respect to the Registration Statements pursuant to
Section 2(a) and Section 2(b) hereof, the Company and each Subsidiary Guarantor
shall as expeditiously as possible:
(a) prepare and file with the SEC a Registration Statement on the
appropriate form under the 1933 Act, which form (x) shall be selected by the
Company and (y) shall, in the case of a Shelf Registration, be available for the
sale of the Registrable Securities by the selling Holders thereof and (z) shall
comply as to form in all material respects with the requirements of the
applicable form and include all financial statements required by the SEC to be
filed therewith, and use its best efforts to cause such Registration Statement
to become effective and remain effective in accordance with Section 2 hereof;
(b) prepare and file with the SEC such amendments and
post-effective amendments to each Registration Statement as may be necessary to
keep such Registration Statement effective for the applicable period and cause
each Prospectus to be supplemented by any required prospectus supplement and, as
so supplemented, to be filed pursuant to Rule 424 under the 1933 Act; to keep
each Prospectus current during the period described under Section 4(3) and Rule
174 under the 1933 Act that is applicable to transactions by brokers or dealers
with respect to the Registrable Securities or Exchange Securities;
(c) in the case of a Shelf Registration, furnish to each Holder
of Registrable Securities, to counsel for the Initial Purchasers, to counsel for
the Holders and to each Underwriter of an Underwritten Offering of Registrable
Securities, if any, without charge, as many copies of each Prospectus, including
each preliminary Prospectus, and any amendment or supplement thereto and such
other documents as such Holder or Underwriter may reasonably request, in order
to facilitate the public sale or other disposition of the Registrable
Securities; and the Company consents to the use of such Prospectus and any
amendment or supplement thereto in accordance with applicable law by each of the
selling Holders of Registrable Securities and any such Underwriters in
connection with the offering and sale of the Registrable Securities covered by
and in the manner described in such Prospectus or any amendment or supplement
thereto in accordance with applicable law;
<PAGE> 10
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(d) use its best efforts to register or qualify the Registrable
Securities under all applicable state securities or "blue sky" laws of such
jurisdictions as any Holder of Registrable Securities covered by a Registration
Statement shall reasonably request in writing by the time the applicable
Registration Statement is declared effective by the SEC, to cooperate with such
Holders in connection with any filings required to be made with the National
Association of Securities Dealers, Inc. and do any and all other acts and things
which may be reasonably necessary or advisable to enable such Holder to
consummate the disposition in each such jurisdiction of such Registrable
Securities owned by such Holder; provided, however, that neither the Company nor
any Subsidiary Guarantor shall be required to (i) qualify as a foreign
corporation or as a dealer in securities in any jurisdiction where it would not
otherwise be required to qualify but for this Section 3(d), (ii) file any
general consent to service of process or (iii) subject itself to taxation in any
such jurisdiction if it is not so subject;
(e) in the case of a Shelf Registration, notify each Holder of
Registrable Securities, counsel for the Holders and counsel for the Initial
Purchasers promptly and, if requested by any such Holder or counsel, confirm
such advice in writing (i) when a Registration Statement has become effective
and when any post-effective amendment thereto has been filed and becomes
effective, (ii) of any request by the SEC or any state securities authority for
amendments and supplements to a Registration Statement and Prospectus or for
additional information after the Registration Statement has become effective,
(iii) of the issuance by the SEC or any state securities authority of any stop
order suspending the effectiveness of a Registration Statement or the initiation
of any proceedings for that purpose, (iv) if, between the effective date of a
Registration Statement and the closing of any sale of Registrable Securities
covered thereby, the representations and warranties of the Company and the
Subsidiary Guarantors contained in any underwriting agreement, securities sales
agreement or other similar agreement, if any, relating to the offering cease to
be true and correct in all material respects or if the Company or the Subsidiary
Guarantors receive any notification with respect to the suspension of the
qualification of the Registrable Securities for sale in any jurisdiction or the
initiation of any proceeding for such purpose, (v) of the happening of any event
during the period a Shelf Registration Statement is effective which makes any
statement made in such Registration Statement or the related Prospectus untrue
in any material respect or which requires the making of any changes in such
Registration Statement or Prospectus in order to make the statements therein not
misleading and (vi) of any determination by the Company and the Subsidiary
Guarantors that a post-effective amendment to a Registration Statement would be
appropriate;
(f) make every reasonable effort to obtain the withdrawal of any
order suspending the effectiveness of a Registration Statement at the earliest
possible moment and provide immediate notice to each Holder of the withdrawal of
any such order;
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(g) in the case of a Shelf Registration, furnish to each Holder
of Registrable Securities, without charge, at least one conformed copy of each
Registration Statement and any post-effective amendment thereto (without
documents incorporated therein by reference or exhibits thereto, unless
requested);
(h) in the case of a Shelf Registration, cooperate with the
selling Holders of Registrable Securities to facilitate the timely preparation
and delivery of certificates representing Registrable Securities to be sold and
not bearing any restrictive legends and enable such Registrable Securities to be
in such denominations (consistent with the provisions of the Indenture) and
registered in such names as the selling Holders may reasonably request at least
one business day prior to the closing of any sale of Registrable Securities;
(i) in the case of a Shelf Registration, upon the occurrence of
any event contemplated by Section 3(e)(v) hereof, use its best efforts to
prepare and file with the SEC a supplement or post-effective amendment to a
Registration Statement or the related Prospectus or any document incorporated
therein by reference or file any other required document so that, as thereafter
delivered to the purchasers of the Registrable Securities, such Prospectus will
not contain any untrue statement of a material fact or omit to state a material
fact necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading. The Company agrees to notify the
Holders to suspend use of the Prospectus as promptly as practicable after the
occurrence of such an event, and the Holders hereby agree to suspend use of the
Prospectus until the Company has amended or supplemented the Prospectus to
correct such misstatement or omission;
(j) a reasonable time prior to the filing of any Registration
Statement, any Prospectus, any amendment to a Registration Statement or
amendment or supplement to a Prospectus or any document which is to be
incorporated by reference into a Registration Statement or a Prospectus after
initial filing of a Registration Statement, provide copies of such document to
the Initial Purchasers and their counsel (and, in the case of a Shelf
Registration Statement, the Holders and their counsel) and make such of the
representatives of the Company and the Subsidiary Guarantors as shall be
reasonably requested by the Initial Purchasers or their counsel (and, in the
case of a Shelf Registration Statement, the Holders or their counsel) available
for discussion of such document, and shall not at any time file or make any
amendment to the Registration Statement, any Prospectus or any amendment of or
supplement to a Registration Statement or a Prospectus or any document which is
to be incorporated by reference into a Registration Statement or a Prospectus,
of which the Initial Purchasers and their counsel (and, in the case of a Shelf
Registration Statement, the Holders and their counsel) shall not have previously
been advised and furnished a copy or to which the Initial Purchasers or their
counsel (and, in the case of a Shelf Registration Statement, the Holders or
their counsel) shall reasonably object;
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(k) obtain a CUSIP number for all Exchange Securities or
Registrable Securities, as the case may be, not later than the effective date of
a Registration Statement;
(l) cause the Indenture to be qualified under the Trust Indenture
Act of 1939, as amended (the "TIA"), in connection with the registration of the
Exchange Securities or Registrable Securities, as the case may be, cooperate
with the Trustee and the Holders to effect such changes to the Indenture as may
be required for the Indenture to be so qualified in accordance with the terms of
the TIA and execute, and use its best efforts to cause the Trustee to execute,
all documents as may be required to effect such changes and all other forms and
documents required to be filed with the SEC to enable the Indenture to be so
qualified in a timely manner;
(m) in the case of a Shelf Registration, make available for
inspection by a representative of the Holders of the Registrable Securities, any
Underwriter participating in any disposition pursuant to such Shelf Registration
Statement, and attorneys and accountants designated by the Holders, at
reasonable times and in a reasonable manner, all financial and other records,
pertinent documents and properties of the Company and the Subsidiary Guarantors,
and cause the respective officers, directors and employees of the Company and
the Subsidiary Guarantors to supply all information reasonably requested by any
such representative, Underwriter, attorney or accountant in connection with a
Shelf Registration Statement;
(n) in the case of a Shelf Registration, use its best efforts to
cause all Registrable Securities to be listed on any securities exchange or any
automated quotation system on which similar securities issued by the Company are
then listed if requested by the Majority Holders, to the extent such Registrable
Securities satisfy applicable listing requirements;
(o) use its best efforts to cause the Exchange Securities or
Registrable Securities, as the case may be, to be rated by two nationally
recognized statistical rating organizations (as such term is defined in Rule
436(g)(2) under the 1933 Act);
(p) if reasonably requested by any Holder of Registrable
Securities covered by a Registration Statement, (i) promptly incorporate in a
Prospectus supplement or post-effective amendment such information with respect
to such Holder as such Holder reasonably requests to be included therein and
(ii) make all required filings of such Prospectus supplement or such
post-effective amendment as soon as the Company has received notification of the
matters to be incorporated in such filing; and
(q) in the case of a Shelf Registration, enter into such
customary agreements and take all such other actions in connection therewith
(including those requested by the Holders of a majority of the Registrable
Securities being sold) in order to expedite or facilitate the disposition of
such Registrable Securities including, but not limited to, an Underwritten
Offering
<PAGE> 13
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and in such connection, (i) to the extent possible, make such representations
and warranties to the Holders and any Underwriters of such Registrable
Securities with respect to the business of the Company and its subsidiaries, the
Registration Statement, Prospectus and documents incorporated by reference or
deemed incorporated by reference, if any, in each case, in form, substance and
scope as are customarily made by issuers to underwriters in underwritten
offerings and confirm the same if and when requested, (ii) obtain opinions of
counsel to the Company and the Subsidiary Guarantors (which counsel and
opinions, in form, scope and substance, shall be reasonably satisfactory to the
Holders and such Underwriters and their respective counsel) addressed to each
selling Holder and Underwriter of Registrable Securities, covering the matters
customarily covered in opinions requested in underwritten offerings, (iii)
obtain "cold comfort" letters from the independent certified public accountants
of the Company (and, if necessary, any other certified public accountant of any
subsidiary of the Company, or of any business acquired by the Company for which
financial statements and financial data are or are required to be included in
the Registration Statement) addressed to each selling Holder and Underwriter of
Registrable Securities, such letters to be in customary form and covering
matters of the type customarily covered in "cold comfort" letters in connection
with underwritten offerings, and (iv) deliver such documents and certificates as
may be reasonably requested by the Holders of a majority in principal amount of
the Registrable Securities being sold or the Underwriters, and which are
customarily delivered in underwritten offerings, to evidence the continued
validity of the representations and warranties of the Company and the Subsidiary
Guarantors made pursuant to clause (i) above and to evidence compliance with any
customary conditions contained in an underwriting agreement.
In the case of a Shelf Registration Statement, the Company and
the Subsidiary Guarantors may require each Holder of Registrable Securities to
furnish to the Company such information regarding the Holder and the proposed
distribution by such Holder of such Registrable Securities as the Company or a
Subsidiary Guarantor may from time to time reasonably request in writing.
In the case of a Shelf Registration Statement, each Holder agrees
that, upon receipt of any notice from the Company of the happening of any event
of the kind described in Section 3(e)(v) hereof, such Holder will forthwith
discontinue disposition of Registrable Securities pursuant to a Registration
Statement until such Holder's receipt of the copies of the supplemented or
amended Prospectus contemplated by Section 3(i) hereof, and, if so directed by
the Company, such Holder will deliver to the Company (at its expense) all copies
in its possession, other than permanent file copies then in such Holder's
possession, of the Prospectus covering such Registrable Securities current at
the time of receipt of such notice. If the Company shall give any such notice to
suspend the disposition of Registrable Securities pursuant to a Registration
Statement, the Company shall extend the period during which the Registration
Statement shall be maintained effective pursuant to this Agreement by the number
of days during
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the period from and including the date of the giving of such notice to and
including the date when the Holders shall have received copies of the
supplemented or amended Prospectus necessary to resume such dispositions. The
Company may give any such notice only twice during any 365 day period and any
such suspensions may not exceed 30 days for each suspension and there may not be
more than two suspensions in effect during any 365 day period.
The Holders of Registrable Securities covered by a Shelf
Registration Statement who desire to do so may sell such Registrable Securities
in an Underwritten Offering. In any such Underwritten Offering, the investment
banker or investment bankers and manager or managers (the "Underwriters") that
will administer the offering will be selected by the Majority Holders of the
Registrable Securities included in such offering.
4. Participation of Broker-Dealers in Exchange Offer.
(a) The Staff of the SEC has taken the position that any
broker-dealer that receives Exchange Securities for its own account in the
Exchange Offer in exchange for Securities that were acquired by such
broker-dealer as a result of market-making or other trading activities (a
"Participating Broker-Dealer"), may be deemed to be an "underwriter" within the
meaning of the 1933 Act and must deliver a prospectus meeting the requirements
of the 1933 Act in connection with any resale of such Exchange Securities.
The Company and the Subsidiary Guarantors understand that it is
the Staff's position that if the Prospectus contained in the Exchange Offer
Registration Statement includes a plan of distribution containing a statement to
the above effect and the means by which Participating Broker-Dealers may resell
the Exchange Securities, without naming the Participating Broker-Dealers or
specifying the amount of Exchange Securities owned by them, such Prospectus may
be delivered by Participating Broker-Dealers to satisfy their prospectus
delivery obligation under the 1933 Act in connection with resales of Exchange
Securities for their own accounts, so long as the Prospectus otherwise meets the
requirements of the 1933 Act.
(b) In light of the above, notwithstanding the other provisions
of this Agreement, the Company and the Subsidiary Guarantors agree that the
provisions of this agreement as they relate to a Shelf Registration shall also
apply to an Exchange Offer Registration to the extent, and with such reasonable
modifications thereto as may be, reasonably requested by the Initial Purchasers
or by one or more Participating Broker-Dealers, in each case as provided in
clause (ii) below, in order to expedite or facilitate the disposition of any
Exchange Securities by Participating Broker-Dealers consistent with the
positions of the Staff recited in Section 4(a) above; provided that:
(i) the Company shall not be required to amend or supplement the
Prospectus contained in the Exchange Offer Registration Statement, as
would otherwise be
<PAGE> 15
14
contemplated by Section 3(i), for a period exceeding 90 days after the
last Exchange Date (as such period may be extended pursuant to the
penultimate paragraph of Section 3 of this Agreement) and Participating
Broker-Dealers shall not be authorized by the Company to deliver and
shall not deliver such Prospectus after such period in connection with
the resales contemplated by this Section 4; and
(ii) the application of the Shelf Registration procedures set
forth in Section 3 of this Agreement to an Exchange Offer Registration,
to the extent not required by the positions of the Staff of the SEC or
the 1933 Act and the rules and regulations thereunder, will be in
conformity with the reasonable request to the Company by the Initial
Purchasers or with the reasonable request in writing to the Company by
one or more broker-dealers who certify to the Initial Purchasers and the
Company in writing that they anticipate that they will be Participating
Broker-Dealers; and provided further that, in connection with such
application of the Shelf Registration procedures set forth in Section 3
to an Exchange Offer Registration, the Company shall be obligated (x) to
deal only with one entity representing the Participating Broker-Dealers,
which shall be Morgan Stanley & Co. Incorporated unless it elects not to
act as such representative, (y) to pay the fees and expenses of only one
counsel representing the Participating Broker-Dealers, which shall be
counsel to the Initial Purchasers unless such counsel elects not to so
act and (z) to cause to be delivered only one, if any, "cold comfort"
letter with respect to the Prospectus in the form existing on the last
Exchange Date and with respect to each subsequent amendment or
supplement, if any, effected during the period specified in clause (i)
above.
(c) The Initial Purchasers shall have no liability to the Company
and the Subsidiary Guarantors or any Holder with respect to any request that it
may make pursuant to Section 4(b) above.
5. Indemnification and Contribution.
(a) The Company and the Subsidiary Guarantors agree to indemnify
and hold harmless the Initial Purchasers, each Holder and each Person, if any,
who controls any Initial Purchaser or any Holder within the meaning of either
Section 15 of the 1933 Act or Section 20 of the 1934 Act, or is under common
control with, or is controlled by, any Initial Purchaser or any Holder, from and
against all losses, claims, damages and liabilities (including, without
limitation, any legal or other expenses reasonably incurred by the Initial
Purchasers, any Holder or any such controlling or affiliated Person in
connection with defending or investigating any such action or claim) caused by
any untrue statement or alleged untrue statement of a material fact contained in
any Registration Statement (or any amendment thereto) pursuant to which Exchange
Securities or Registrable Securities were registered under the 1933 Act,
including all documents incorporated therein by
<PAGE> 16
15
reference, or caused by any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, or caused by any untrue statement or alleged untrue
statement of a material fact contained in any Prospectus (as amended or
supplemented if the Company shall have furnished any amendments or supplements
thereto), or caused by any omission or alleged omission to state therein a
material fact necessary to make the statements therein in light of the
circumstances under which they were made not misleading, except insofar as such
losses, claims, damages or liabilities are caused by any such untrue statement
or omission or alleged untrue statement or omission based upon information
relating to the Initial Purchasers or any Holder furnished to the Company in
writing by any Initial Purchaser or any selling Holder expressly for use
therein. In connection with any Underwritten Offering permitted by Section 3,
the Company and the Subsidiary Guarantors will, jointly and severally, also
indemnify the Underwriters, if any, selling brokers, dealers and similar
securities industry professionals participating in the distribution, their
officers and directors and each Person who controls such Persons (within the
meaning of the 1933 Act and the 1934 Act) to the same extent as provided above
with respect to the indemnification of the Holders, if requested in connection
with any Registration Statement.
(b) Each Holder agrees, severally and not jointly, to indemnify
and hold harmless the Company, the Subsidiary Guarantors, the Initial Purchasers
and the other selling Holders, and each of their respective directors, officers
who sign the Registration Statement and each Person, if any, who controls the
Company or any of the Subsidiary Guarantors, any Initial Purchaser and any other
selling Holder within the meaning of either Section 15 of the 1933 Act or
Section 20 of the 1934 Act to the same extent as the foregoing indemnity from
the Company and the Subsidiary Guarantors to the Initial Purchasers and the
Holders, but only with reference to information relating to such Holder
furnished to the Company in writing by such Holder expressly for use in any
Registration Statement (or any amendment thereto) or any Prospectus (or any
amendment or supplement thereto).
(c) In case any proceeding (including any governmental
investigation) shall be instituted involving any Person in respect of which
indemnity may be sought pursuant to either paragraph (a) or paragraph (b) above,
such Person (the "indemnified party") shall promptly notify the Person against
whom such indemnity may be sought (the "indemnifying party") in writing and the
indemnifying party, upon request of the indemnified party, shall retain counsel
reasonably satisfactory to the indemnified party to represent the indemnified
party and any others the indemnifying party may designate in such proceeding and
shall pay the fees and disbursements of such counsel related to such proceeding.
In any such proceeding, any indemnified party shall have the right to retain its
own counsel, but the fees and expenses of such counsel shall be at the expense
of such indemnified party unless (i) the indemnifying party and the indemnified
party shall have mutually agreed to the retention of such counsel or (ii) the
named parties to any such proceeding (including any impleaded parties) include
both the
<PAGE> 17
16
indemnifying party and the indemnified party and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. It is understood that the indemnifying party
shall not, in connection with any proceeding or related proceedings in the same
jurisdiction, be liable for (a) the fees and expenses of more than one separate
firm (in addition to any local counsel) for the Initial Purchasers and all
Persons, if any, who control any Initial Purchaser within the meaning of either
Section 15 of the 1933 Act or Section 20 of the 1934 Act, (b) the fees and
expenses of more than one separate firm (in addition to any local counsel) for
the Company and the Subsidiary Guarantors, its directors, its officers who sign
the Registration Statement and each Person, if any, who controls the Company or
any of its Subsidiary Guarantors within the meaning of either such Section and
(c) the fees and expenses of more than one separate firm (in addition to any
local counsel) for all Holders and all Persons, if any, who control any Holders
within the meaning of either such Section, and that all such fees and expenses
shall be reimbursed as they are incurred. In such case involving the Initial
Purchasers and Persons who control the Initial Purchasers, such firm shall be
designated in writing by Morgan Stanley & Co. Incorporated. In such case
involving the Holders and such Persons who control Holders, such firm shall be
designated in writing by the Majority Holders. In all other cases, such firm
shall be designated by the Company. The indemnifying party shall not be liable
for any settlement of any proceeding effected without its written consent but,
if settled with such consent or if there be a final judgment for the plaintiff,
the indemnifying party agrees to indemnify the indemnified party from and
against any loss or liability by reason of such settlement or judgment.
Notwithstanding the foregoing sentence, if at any time an indemnified party
shall have requested an indemnifying party to reimburse the indemnified party
for fees and expenses of counsel as contemplated by the second and third
sentences of this paragraph, the indemnifying party agrees that it shall be
liable for any settlement of any proceeding effected without its written consent
if (i) such settlement is entered into more than 30 days after receipt by such
indemnifying party of the aforesaid request and (ii) such indemnifying party
shall not have reimbursed the indemnified party for such fees and expenses of
counsel in accordance with such request prior to the date of such settlement. No
indemnifying party shall, without the prior written consent of the indemnified
party, effect any settlement of any pending or threatened proceeding in respect
of which such indemnified party is or could have been a party and indemnity
could have been sought hereunder by such indemnified party, unless such
settlement includes an unconditional release of such indemnified party from all
liability on claims that are the subject matter of such proceeding.
(d) If the indemnification provided for in paragraph (a) or
paragraph (b) of this Section 5 is unavailable to an indemnified party or
insufficient in respect of any losses, claims, damages or liabilities, then each
indemnifying party under such paragraph, in lieu of indemnifying such
indemnified party thereunder, shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages or
liabilities in such
<PAGE> 18
17
proportion as is appropriate to reflect the relative fault of the indemnifying
party or parties on the one hand and of the indemnified party or parties on the
other hand in connection with the statements or omissions that resulted in such
losses, claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative fault of the Company and the Subsidiary Guarantors,
on the one hand, or by the Holders, on the other hand, shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company and the Subsidiary Guarantors, on
the one hand, or by the Holders, on the other hand, and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission. The Holders' respective obligations to contribute
pursuant to this Section 5(d) are several in proportion to the respective
principal amount of Registrable Securities of such Holder that were registered
pursuant to a Registration Statement.
(e) The Company, the Subsidiary Guarantors and each Holder agree
that it would not be just or equitable if contribution pursuant to this Section
5 were determined by pro rata allocation or by any other method of allocation
that does not take account of the equitable considerations referred to in
paragraph (d) above. The amount paid or payable by an indemnified party as a
result of the losses, claims, damages and liabilities referred to in paragraph
(d) above shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses reasonably incurred by such indemnified party
in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 5, no Holder shall be required to
indemnify or contribute any amount in excess of the amount by which the total
price at which Registrable Securities were sold by such Holder exceeds the
amount of any damages that such Holder has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission. No Person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the 1933 Act) shall be entitled to contribution from any
Person who was not guilty of such fraudulent misrepresentation. The remedies
provided for in this Section 5 are not exclusive and shall not limit any rights
or remedies which may otherwise be available to any indemnified party at law or
in equity.
The indemnity and contribution provisions contained in this
Section 5 shall remain operative and in full force and effect regardless of (i)
any termination of this Agreement, (ii) any investigation made by or on behalf
of the Initial Purchasers, any Holder or any Person controlling any Initial
Purchaser or any Holder, or by or on behalf of the Company and the Subsidiary
Guarantors, its officers or directors or any Person controlling the Company or
any of its Subsidiary Guarantors, (iii) acceptance of any of the Exchange
Securities and (iv) any sale of Registrable Securities pursuant to a Shelf
Registration Statement.
<PAGE> 19
18
6. Miscellaneous.
(a) No Inconsistent Agreements. The Company and the Subsidiary
Guarantors have not entered into, and on or after the date of this Agreement
will not enter into, any agreement which is inconsistent with the rights granted
to the Holders of Registrable Securities in this Agreement or otherwise
conflicts with the provisions hereof. The rights granted to the Holders
hereunder do not in any way conflict with and are not inconsistent with the
rights granted to the holders of the Company's and the Subsidiary Guarantors'
other issued and outstanding securities under any such agreements.
(b) Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given unless the Company has obtained the written consent of Holders
of at least a majority in aggregate principal amount of the outstanding
Registrable Securities affected by such amendment, modification, supplement,
waiver or consent; provided, however, that no amendment, modification,
supplement, waiver or consent to any departure from the provisions of Section 5
hereof shall be effective as against any Holder of Registrable Securities unless
consented to in writing by such Holder.
(c) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, registered
first-class mail, telex, telecopier, or any courier guaranteeing overnight
delivery (i) if to a Holder, at the most current address given by such Holder to
the Company by means of a notice given in accordance with the provisions of this
Section 6(c), which address initially is, with respect to the Initial
Purchasers, the address set forth in the Purchase Agreement; and (ii) if to the
Company, initially at the Company's address set forth in the Purchase Agreement
and thereafter at such other address, notice of which is given in accordance
with the provisions of this Section 6(c).
All such notices and communications shall be deemed to have been
duly given: at the time delivered by hand, if personally delivered; five
business days after being deposited in the mail, postage prepaid, if mailed;
when answered back, if telexed; when receipt is acknowledged, if telecopied; and
on the next business day if timely delivered to an air courier guaranteeing
overnight delivery.
Copies of all such notices, demands, or other communications
shall be concurrently delivered by the Person giving the same to the Trustee, at
the address specified in the Indenture.
<PAGE> 20
19
(d) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors, assigns and transferees of each
of the parties, including, without limitation and without the need for an
express assignment, subsequent Holders; provided that nothing herein shall be
deemed to permit any assignment, transfer or other disposition of Registrable
Securities in violation of the terms of the Purchase Agreement. If any
transferee of any Holder shall acquire Registrable Securities, in any manner,
whether by operation of law or otherwise, such Registrable Securities shall be
held subject to all of the terms of this Agreement, and by taking and holding
such Registrable Securities such Person shall be conclusively deemed to have
agreed to be bound by and to perform all of the terms and provisions of this
Agreement and such Person shall be entitled to receive the benefits hereof. The
Initial Purchasers (in their capacity as Initial Purchasers) shall have no
liability or obligation to the Company and the Subsidiary Guarantors with
respect to any failure by a Holder to comply with, or any breach by any Holder
of, any of the obligations of such Holder under this Agreement.
(e) Purchases and Sales of Securities. The Company and each
Subsidiary Guarantor shall not, and shall use its best efforts to cause its
affiliates (as defined in Rule 405 under the 1933 Act) not to, purchase and then
resell or otherwise transfer any Securities.
(f) Third Party Beneficiary. The Holders shall be third party
beneficiaries to the agreements made hereunder between the Company and the
Subsidiary Guarantors, on the one hand, and the Initial Purchasers, on the other
hand, and shall have the right to enforce such agreements directly to the extent
it deems such enforcement necessary or advisable to protect its rights or the
rights of Holders hereunder.
(g) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(h) Headings. The headings in this Agreement are for convenience
of reference only and shall not limit or otherwise affect the meaning hereof.
(i) Governing Law. This Agreement shall be governed by the laws
of the State of New York.
(j) Severability. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstance, is
held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions contained herein shall not be affected or impaired thereby.
<PAGE> 21
20
IN WITNESS WHEREOF, the parties have executed this Agreement as
of the date first written above.
CKE RESTAURANTS, INC.
By: ___________________________________
Name: Carl A. Strunk
Title: Executive Vice President and
Chief Financial Officer
CARL KARCHER ENTERPRISES, INC.
By: ___________________________________
Name: Carl A. Strunk
Title: Executive Vice President
BOSTON PACIFIC, INC.
By: ___________________________________
Name: Carl A. Strunk
Title: Executive Vice President
CBI RESTAURANTS, INC.
By: ___________________________________
Name: Carl A. Strunk
Title: Executive Vice President
<PAGE> 22
21
TACO BUENO WEST, INC.
By: ___________________________________
Name: Carl A. Strunk
Title: Executive Vice President
CARL'S JR. REGION VIII, INC.
By: ___________________________________
Name: Carl A. Strunk
Title: Executive Vice President
TACO BUENO RESTAURANTS, INC.
By: ___________________________________
Name: Carl A. Strunk
Title: Executive Vice President
TACO BUENO EQUIPMENT COMPANY
By: ___________________________________
Name: Carl A. Strunk
Title Executive Vice President
TACO BUENO TEXAS, L.P.
By: TACO BUENO RESTAURANTS, INC.
By: ___________________________________
<PAGE> 23
22
Name: Carl A. Strunk
Title Executive Vice President
HARDEE'S FOOD SYSTEMS, INC.
By: ___________________________________
Name: Carl A. Strunk
Title: Executive Vice President
BURGER CHEF SYSTEMS, INC.
By: ___________________________________
Name: Carl A. Strunk
Title: Executive Vice President
HED, INC.
By: ___________________________________
Name: Carl A. Strunk
Title: Executive Vice President
HFS VENTURES, INC.
By: ___________________________________
Name: Carl A. Strunk
Title: Executive Vice President
HARDEE'S AT ONSLOW MALL, INC.
<PAGE> 24
23
By: ___________________________________
Name: Carl A. Strunk
Title: Executive Vice President
CENTRAL IOWA FOOD SYSTEMS, INC.
By: ___________________________________
Name: Carl A. Strunk
Title: Executive Vice President
FAST FOOD RESTAURANTS, INC.
By: ___________________________________
Name: Carl A. Strunk
Title: Executive Vice President
HFS GEORGIA, INC.
By: ___________________________________
Name: Carl A. Strunk
Title: Executive Vice President
1233 CORPORATION
By: ___________________________________
Name: Carl A. Strunk
Title: Executive Vice President
<PAGE> 25
24
FLAGSTAR ENTERPRISES, INC.
By: ___________________________________
Name: Carl A. Strunk
Title: Executive Vice President
SPARDEE'S REALTY, INC.
By: ___________________________________
Name: Carl A. Strunk
Title: Executive Vice President
<PAGE> 26
25
Confirmed and accepted as of
the date first above written:
MORGAN STANLEY & CO. INCORPORATED
BANCBOSTON ROBERTSON STEPHENS INC.
BEAR, STEARNS & CO. INC.
U.S. BANCORP INVESTMENTS, INC.
PARIBAS CORPORATION
By: MORGAN STANLEY & CO. INCORPORATED
By: ___________________________________
Name: Bryan W. Andrzejewski
Title: Vice President
<PAGE> 1
EXHIBIT 25.1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------------
FORM T-1
Statement of Eligibility and Qualification Under the
Trust Indenture Act of 1939 of a Corporation
Designated to Act as Trustee
-----------------------
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT
TO SECTION 305(B)(2)____
-------------------------
CHASE MANHATTAN BANK AND TRUST COMPANY,
NATIONAL ASSOCIATION
(Exact name of trustee as specified in its charter)
95-4655078
(I.R.S. Employer Identification No.)
Suite 2725
101 California Street, San Francisco, California
(Address of principal executive offices)
94111
(Zip Code)
------------------
CKE RESTAURANTS, INC.
(Exact name of Obligor as specified in its charter)
Delaware
(State or other jurisdiction of incorporation or organization)
33-0602639
(I.R.S. Employer Identification No.)
401 W. Carl Karcher Way
Anaheim, California
(Address of principal executive offices)
92803
(Zip Code)
--------------------------------
Senior Subordinated Notes
(Title of Indenture securities)
<PAGE> 2
ITEM 1. GENERAL INFORMATION.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to
which it is subject.
Comptroller of the Currency, Washington, D.C.
Board of Governors of the Federal Reserve System, Washington,
D.C.
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
ITEM 2. AFFILIATIONS WITH OBLIGOR.
If the Obligor is an affiliate of the trustee, describe each such
affiliation.
None.
ITEM 4. TRUSTEESHIPS UNDER OTHER INDENTURES
(a) Title of the securities outstanding under each such other
indenture. $197,225,000 4 1/4% Convertible Subordinated
Notes Due 2004 issued under Indenture dated as of
March 13, 1998
ITEM 16. LIST OF EXHIBITS.
List below all exhibits filed as part of this statement of eligibility.
Exhibit 1. Articles of Association of the Trustee as Now in Effect (see
Exhibit 1 to Form T-1 filed in connection with Registration
Statement No. 333-41329 which is incorporated herein by
reference).
Exhibit 2. Certificate of Authority of the Trustee to Commence Business
(see Exhibit 2 to Form T-1 filed in connection with
Registration Statement No. 333-41329, which is incorporated
herein by reference).
Exhibit 3. Authorization of the Trustee to Exercise Corporate Trust
Powers (contained in Exhibit 2).
Exhibit 4. Existing By-Laws of the Trustee (see Exhibit 4 to Form T-1
filed in connection with Registration Statement No.
333-41329, which is incorporated herein by reference).
Exhibit 5. Not Applicable
Exhibit 6. The consent of the Trustee required by Section 321 (b) of the
Act (see Exhibit 6 to Form T-1 filed in connection with
Registration Statement No. 333-41329, which is incorporated
herein by reference).
Exhibit 7. A copy of the latest report of condition of the Trustee,
published pursuant to law or the requirements of its
supervising or examining authority.
<PAGE> 3
Exhibit 8. Not Applicable
Exhibit 9. Not Applicable
<PAGE> 4
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, the
Trustee, Chase Manhattan Bank and Trust Company, National Association, has duly
caused this statement of eligibility and qualification to be signed on its
behalf by the undersigned, thereunto duly authorized, all in the City of San
Francisco, and State of California, on the 10th day of March, 1999.
CHASE MANHATTAN BANK AND TRUST COMPANY,
NATIONAL ASSOCIATION
By /s/ Cecil D. Bobey
-------------------------------------
Cecil D. Bobey
Assistant Vice President
<PAGE> 5
EXHIBIT 7. Report of Condition of the Trustee.
================================================================================
CONSOLIDATED REPORT OF CONDITION OF Chase Manhattan Bank and Trust Company, N.A.
--------------------------------------------
(Legal Title)
LOCATED AT 1800 Century Park East, Ste. 400 Los Angeles, CA 94111
---------------------------------------------------------------------
(Street) (City) (State) (Zip)
AS OF CLOSE OF BUSINESS ON December 31, 1998
------------------
ASSETS DOLLAR AMOUNTS IN THOUSANDS
<TABLE>
<S> <C> <C>
1. Cash and balances due from
a. Noninterest-bearing balances and currency and coin (1,2) 2,069
b. Interest bearing balances (3) 0
2. Securities
a. Held-to-maturity securities (from Schedule RC-B, column A) 0
b. Available-for-sale securities (from Schedule RC-B, column D) 1,338
3. Federal Funds sold (4) and securities purchased agreements to resell 62,100
4. Loans and lease financing receivables:
a. Loans and leases, net of unearned income (from Schedule RC-C) 53
b. LESS: Allowance for loan and lease losses 0
c. LESS: Allocated transfer risk reserve 0
d. Loans and leases, net of unearned income, allowance, and
reserve (item 4.a minus 4.b and 4.c) 53
5. Trading assets 0
6. Premises and fixed assets (including capitalized leases) 328
7. Other real estate owned (from Schedule RC-M) 0
8. Investments in unconsolidated subsidiaries and associated companies
(from Schedule RC-M) 0
9. Customers liability to this bank on acceptances outstanding 0
10. Intangible assets (from Schedule RC-M) 1,381
11. Other assets (from Schedule RC-F) 2,063
12a. TOTAL ASSETS 69,332
b. Losses deferred pursuant to 12 U.S.C. 1823 (j) 0
c. Total assets and losses deferred pursuant to 12 U.S.C. 1823 (j)
(sum of items 12.a and 12.b) 69,332
</TABLE>
(1) includes cash items in process of collection and unposted debits.
(2) The amount reported in this item must be greater than or equal to the
sum of Schedule RC-M, items 3.a and 3.b
(3) includes time certificates of deposit not held for trading.
(4) Report "term federal funds sold" in Schedule RC, item 4.a "Loans and
leases, net of unearned income" and in Schedule RC-C, part 1.
5
<PAGE> 6
LIABILITIES
<TABLE>
<S> <C> <C>
13. Deposits:
a. In domestic offices (sum of totals of columns A and C from
Schedule RC-E) 38,607
(1) Noninterest-bearing 7,302
(2) Interest-bearing 31,305
b. In foreign offices, Edge and Agreement subsidiaries, and IBF' (1)
Noninterest-bearing (2) Interest-bearing
14. Federal funds purchased (2) and securities sold under agreements to
repurchase 0
15. a. Demand notes issued to the U.S. Treasury 0
b. Trading liabilities 0
16. Other borrowed money (includes mortgage indebtedness and obligations
under capitalized leases):
a. With a remaining maturity of one year or less 0
b. With a remaining maturity of more than one year through three years 0
c. With a remaining maturity of more than three years 0
17. Not applicable
18. Bank's liability on acceptances executed and outstanding 0
19. Subordinated notes and Debentures (3) 0
20. Other liabilities (from Schedule RC-G) 5,708
21. Total liabilities (sum of items 13 through 20) 44,315
22. Not applicable
EQUITY CAPITAL
23. Perpetual preferred stock and related surplus 0
24. Common stock-- 600
25. Surplus (exclude all surplus related to preferred stock) 12,590
26. a. Undivided profits and capital reserves 11,826
b. Net unrealized holding gains (losses) on available-for-sale securities 1
27. Cumulative foreign currency translation adjustments
28. a. Total equity capital (sum of items 23 through 27) 25,017
b. Losses deferred pursuant to 12 U.S.C. 1823 (j) 0
c. Total equity capital and losses deferred pursuant to 12 U.S.C. 1823 (j)
(sum of items 28.a and 28.b) 25,017
29. Total liabilities, equity capital, and losses deferred pursuant to 12 U.S.C.
1823 (j) (sum of items 21 and 28.c) 69,332
</TABLE>
6
<PAGE> 1
LETTER OF TRANSMITTAL
CKE RESTAURANTS, INC.
OFFER TO EXCHANGE ALL OUTSTANDING
9 1/8% SENIOR SUBORDINATED NOTES DUE 2009
FOR
9 1/8% SENIOR SUBORDINATED NOTES DUE 2009
PURSUANT TO THE PROSPECTUS DATED , 1999
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME,
ON , 1999, UNLESS THE EXCHANGE OFFER IS EXTENDED
(THE "EXPIRATION DATE").
The Exchange Agent for the Exchange Offer is:
CHASE MANHATTAN BANK AND TRUST COMPANY, NATIONAL ASSOCIATION
By Mail, Hand or Overnight Delivery:
CHASE MANHATTAN BANK AND TRUST COMPANY, NATIONAL ASSOCIATION
c/o Chase Bank of Texas, National Association
Corporate Trust Services
1201 Main Street, 18th Floor
Dallas, TX 75202
Attention: Frank Ivins (CONFIDENTIAL)
By Facsimile Transmission:
(For Eligible Institutions Only)
(214) 672-5746
Confirm by Telephone:
Frank Ivins (214) 672-5678
Delivery of this Letter of Transmittal to an address other than as set
forth above or transmission of this Letter of Transmittal via facsimile to a
number other than as set forth above will not constitute a valid delivery.
HOLDERS WHO WISH TO BE ELIGIBLE TO RECEIVE NEW NOTES FOR THEIR OLD NOTES
PURSUANT TO THE EXCHANGE OFFER MUST VALIDLY TENDER (AND NOT WITHDRAW) THEIR OLD
NOTES TO THE EXCHANGE AGENT PRIOR TO THE EXPIRATION DATE.
By execution hereof the undersigned acknowledges receipt of the Prospectus
dated , 1999 (the "Prospectus"), of CKE Restaurants, Inc., a
Delaware corporation (the "Company"), which, together with this Letter of
Transmittal and the instructions hereto (the "Letter of Transmittal"),
constitute the Company's offer (the "Exchange Offer") to exchange $1,000
principal amount of its 9 1/8% Series B Subordinated Notes due 2009 (the "New
Notes") that have been registered under the Securities Act of 1933, as amended
(the "Securities Act") pursuant to a Registration Statement of which the
Prospectus forms a part, for each $1,000 principal amount of its outstanding
9 1/8% Senior Subordinated Notes due 2009 (the "Old Notes"), upon the terms and
subject to the conditions set forth in the Prospectus.
This Letter of Transmittal is to be completed by holders of Old Notes
either if certificates representing Old Notes are to be forwarded herewith or if
tenders of Old Notes are to be made by book-entry transfer to an account
maintained by Chase Manhattan Bank and Trust Company, National Association (the
"Exchange Agent") at The Depository Trust Company (the "DTC") pursuant to the
procedures set forth in the Prospectus under the heading "The Exchange
Offer -- Procedures for Tendering." Delivery of documents to the DTC does not
constitute delivery to the Exchange Agent.
<PAGE> 2
Holders of Old Notes whose certificates for such Old Notes are not
immediately available or who cannot deliver their Certificates and all other
required documents to the Exchange Agent on or prior to the Expiration Date or
who cannot complete the procedures for book-entry transfer on a timely basis,
must tender the Old Notes according to the guaranteed delivery procedures set
forth in the Prospectus under the heading "The Exchange Offer -- Guaranteed
Delivery Procedures."
The undersigned has completed, executed and delivered this Letter of
Transmittal to indicate the action the undersigned desires to take with respect
to the Exchange Offer. Holders who wish to tender their Old Notes must complete
this Letter of Transmittal in its entirety.
<TABLE>
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------
DESCRIPTION OF OLD NOTES
- ---------------------------------------------------------------------------------------------------------------------
NAME(S) AND ADDRESS(ES) OF HOLDER(S) CERTIFICATE AGGREGATE PRINCIPAL AMOUNT OF OLD
(PLEASE FILL IN IF BLANK) NUMBER(S)* NOTES TENDERED (IF LESS THAN ALL)**
- ---------------------------------------------------------------------------------------------------------------------
$
---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
Total Principal Amount of Old Notes Tendered: $
- ---------------------------------------------------------------------------------------------------------------------
* Need not be completed by Holders tendering by book-entry transfer.
** Need not be completed by Holders who wish to tender with respect to all Old Notes listed. See Instruction 2.
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
[ ] CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH THE DTC AND
COMPLETE THE FOLLOWING:
Name of Tendering Institution:
-----------------------------------------------
DTC Book-Entry Account Number:
-----------------------------------------------
Transaction Code Number:
-----------------------------------------------------
[ ] CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE
OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE EXCHANGE AGENT AND COMPLETE
THE FOLLOWING:
Name of Holder of Old Notes:
--------------------------------------------
Window Ticket Number (if any):
------------------------------------------
Date of Execution of Notice of Guaranteed Delivery:
---------------------
Name of Eligible Institution which Guaranteed Delivery:
-----------------
If Guaranteed Delivery is to be made by Book-Entry Transfer:
Name of Tendering Institution:
------------------------------------------
DTC Book-Entry Account Number:
------------------------------------------
Transaction Code Number:
------------------------------------------------
2
<PAGE> 3
[ ] CHECK HERE IF TENDERED BY BOOK-ENTRY TRANSFER AND ANY NON-EXCHANGED OLD
NOTES ARE TO BE RETURNED BY CREDITING THE DTC ACCOUNT NUMBER SET FORTH
ABOVE.
Ladies and Gentlemen:
The undersigned hereby tenders to the Company the aggregate principal
amount of Old Notes indicated in this Letter of Transmittal, upon the terms and
subject to the conditions of the Exchange Offer. Subject to, and effective upon,
the acceptance for exchange of the Old Notes tendered hereby, the undersigned
hereby sells, assigns and transfers to, or upon the order of, the Company all
right, title and interest in and to such Old Notes as are being tendered hereby
and hereby irrevocably constitutes and appoints the Exchange Agent as
attorney-in-fact of the undersigned with respect to such Old Notes, with full
power of substitution (such power of attorney being an irrevocable power coupled
with an interest), to: (a) deliver such Old Notes in registered certificated
form, or transfer ownership of such Old Notes through book-entry transfer at the
DTC, to or upon the order of the Company, upon receipt by the Exchange Agent, as
the undersigned's agent, of the same aggregate principal amount of New Notes;
and (b) receive, for the account of the Company, all benefits and otherwise
exercise, for the account of the Company, all rights of beneficial ownership of
the Old Notes tendered hereby in accordance with the terms of the Exchange
Offer.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, sell, assign and transfer the Old Notes
tendered hereby and that the Company will acquire good, marketable and
unencumbered title thereto, free and clear of all security interests, liens,
restrictions, charges, encumbrances, conditional sale agreements or other
obligations relating to their sale or transfer, and not subject to any adverse
claim when the same are accepted by the Company. The undersigned hereby further
represents that any New Notes acquired in exchange for the Old Notes tendered
hereby will have been acquired in the ordinary course of business of the person
receiving such New Notes, whether or not such person is the undersigned, that
neither the holder of such Old Notes nor any such other person is engaged in, or
intends to engage in, a distribution of such New Notes, and that neither the
holder of such Old Notes nor any such other person is an "affiliate," as defined
in Rule 405 under the Securities Act of 1933, as amended (the "Securities Act"),
of the Company. The undersigned has read and agrees to all of the terms of the
Exchange Offer.
The undersigned also acknowledges that the Company is making this Exchange
Offer in reliance on the position of the staff of the Securities and Exchange
Commission (the "Commission"), as set forth in certain interpretive letters
issued to third parties in other transactions. Based on the Commission
interpretations, the Company believes that the New Notes issued in exchange for
the Old Notes pursuant to the Exchange Offer may be offered for resale, resold
and otherwise transferred by holders thereof (other than a broker-dealer who
purchased Old Notes directly from the Company for resale pursuant to Rule 144A
under the Securities Act or any other available exemption under the Securities
Act or any such holder that is an "affiliate" of the Company within the meaning
of Rule 405 under the provisions of the Securities Act) without further
compliance with the registration and prospectus delivery provisions of the
Securities Act, provided that such New Notes are acquired in the ordinary course
of such holders' business and such holders are not engaged in, and do not intend
to engage in, a distribution of such New Notes and have no arrangement with any
person to participate in the distribution of such New Notes. However, the
Company does not intend to request the Commission to consider, and the
Commission has not considered, the Exchange Offer in the context of an
interpretive letter, and there can be no assurance that the staff of the
Commission would make a similar determination with respect to the Exchange Offer
as in other circumstances.
If the undersigned is not a broker-dealer, the undersigned represents that
it is not engaged in, and does not intend to engage in, a distribution of New
Notes and has no arrangement or understanding to participate in a distribution
of New Notes. If any holder is an affiliate of the Company, is engaged in or
intends to engage in or has any arrangement or understanding with respect to the
distribution of the New notes to be acquired pursuant to the Exchange Offer,
such holder (i) could not rely on the applicable interpretations of the staff of
the Commission and (ii) must comply with the registration and prospectus
delivery requirements of the Securities Act in connection with any resale
transaction. If the undersigned is a broker-dealer that will receive New Notes
for its own account in exchange for Old Notes acquired as a result of
market-making or other trading activities (a "Participating Broker-Dealer"), it
represents that the Old Notes to be exchanged for the New Notes were acquired by
it as a result of market-making or other trading activities and acknowledges
that it will deliver a prospectus in connection with any resale of such New
Notes; however, by so acknowledging and by delivering a prospectus, such
Participating Broker-Dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
The undersigned will, upon request, execute and deliver any additional
documents deemed by the Company to be necessary or desirable to complete the
sale, assignment and transfer of the Old Notes tendered hereby. All authority
3
<PAGE> 4
conferred or agreed to be conferred in this Letter of Transmittal and every
obligation of the undersigned hereunder shall be binding upon the successors,
assigns, heirs, executors, administrators, trustees in bankruptcy and legal
representatives of the undersigned and shall not be affected by, and shall
survive, the death or incapacity of the undersigned. This tender may be
withdrawn only in accordance with the procedures set forth in "The Exchange
Offer -- Withdrawal Rights" section of the Prospectus.
Unless otherwise indicated herein in the box entitled "Special Issuance
Instructions" below, please deliver the New Notes (and, if applicable,
substitute certificates representing Old Notes for any Old Notes not exchanged)
in the name of the undersigned or, in the case of a book-entry delivery of Old
Notes, please credit the account indicated above maintained at the DTC.
Similarly, unless otherwise indicated under the box entitled "Special Delivery
Instructions" below, please send the New Notes (and, if applicable, substitute
certificates representing Old Notes for any Old Notes not exchanged) to the
undersigned at the address shown above in the box entitled "Description of Old
Notes."
4
<PAGE> 5
SPECIAL ISSUANCE AND DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 3 AND 4)
Unless otherwise indicated in the box entitled "Special Issuance
Instruction" or the box entitled "Special Delivery Instructions" in this Letter
of Transmittal, certificates for New Notes delivered in exchange for tendered
Old Notes, and any Old Notes delivered herewith but not exchanged, will be
registered in the name of the undersigned and will be delivered to the
undersigned at the address shown below the signature of the undersigned. If a
New Note is to be issued to a person other than the person(s) signing this
Letter of Transmittal, or if the New Note is to be mailed to someone other than
the person(s) signing this Letter of Transmittal or to person(s) signing this
Letter of Transmittal at an address different than the address shown on this
Letter of Transmittal, the appropriate boxes of this Letter of Transmittal
should be completed. If Notes are surrendered by Holder(s) that have completed
either the box entitled "Special Issuance Instruction" or the box entitled
"Special Delivery Instructions" in this Letter of Transmittal, signature(s) on
this Letter of Transmittal must be guaranteed by an Eligible Institution
(defined in Instruction 3).
To be completed ONLY if the New Notes are to be issued in the name of
someone other than the undersigned or are to be delivered to someone other than
the undersigned or to the undersigned at an address other than that provided
above.
- ------------------------------------------------------------
- ------------------------------------------------------------
<TABLE>
<S> <C>
SPECIAL ISSUANCE INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS
Issue New Notes to: Deliver New Notes to:
Name Name
(PLEASE PRINT: FIRST, MIDDLE & LAST NAME) (PLEASE PRINT: FIRST, MIDDLE & LAST NAME)
Address Address
(NUMBER AND STREET) (NUMBER AND STREET)
- ---------------------------------------------- ----------------------------------------------
(CITY, STATE AND ZIP CODE) (CITY, STATE AND ZIP CODE)
- ----------------------------------------------
(TAX IDENTIFICATION OR SOCIAL SECURITY NO.)
</TABLE>
- ------------------------------------------------------------
- ------------------------------------------------------------
THE UNDERSIGNED, BY COMPLETING THE BOX ENTITLED "DESCRIPTION OF OLD NOTES"
ABOVE AND SIGNING THIS LETTER OF TRANSMITTAL, WILL BE DEEMED TO HAVE TENDERED
THE OLD NOTES AS SET FORTH IN SUCH BOX ABOVE.
IMPORTANT: THIS LETTER OF TRANSMITTAL OR, IF APPLICABLE, A FACSIMILE HEREOF
(TOGETHER WITH THE OLD NOTES OR A BOOK-ENTRY CONFIRMATION AND ALL OTHER REQUIRED
DOCUMENTS OR THE NOTICE OF GUARANTEED DELIVERY) MUST BE RECEIVED BY THE EXCHANGE
AGENT PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE.
5
<PAGE> 6
<TABLE>
<S> <C>
-------------------------------------------------------------------------------------------------------
PLEASE SIGN HERE
(TO BE COMPLETED BY ALL TENDERING HOLDERS OF
OLD NOTES REGARDLESS OF WHETHER OLD NOTES ARE
BEING PHYSICALLY DELIVERED HEREWITH)
X Date:
X Date:
Signature of Owner
If a holder is tendering any Old Notes, this Letter of Transmittal must be signed by the holder(s)
of Old Notes exactly as the name(s) of the holder(s) appear(s) on the certificate(s) for the Old Notes
or by any person(s) authorized to become (a) holder(s) by endorsements and documents transmitted
herewith. If signature is by a trustee, executor, administrator, guardian, officer or other person
acting in a fiduciary or representative capacity, such person must provide the following information.
Name(s): Address:
(Please Print) (Include Zip Code)
Capacity: Telephone Number:
(Include Area Code)
SIGNATURE GUARANTEE (SEE INSTRUCTION 3 HEREIN)
CERTAIN SIGNATURES MUST BE GUARANTEED BY AN ELIGIBLE INSTITUTION
Signature(s) Guaranteed by:
(Authorized Signature)
(Title of Officer Signing this Guarantee)
(Name of Eligible Institution Guaranteeing Signatures -- Please Print)
(Address and Telephone Number of Eligible Institution Guaranteeing Signatures)
Date:
- --------------------------------------------------------------------------------------------------------
</TABLE>
6
<PAGE> 7
<TABLE>
<C> <S> <C>
- ---------------------------------------------------------------------------------------------------------------------------
PLEASE COMPLETE SUBSTITUTE FORM W-9
- ---------------------------------------------------------------------------------------------------------------------------
SUBSTITUTE PART 1 -- PLEASE PROVIDE YOUR TIN IN THE BOX AT Social Security Number
FORM W-9 RIGHT AND CERTIFY BY SIGNING AND DATING BELOW. OR ------------------------------
Employer Identification Number
------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
PART 2 -- Certificates -- Under penalties of perjury, I certify that:
DEPARTMENT (1) The number shown on this form is my correct Taxpayer Identification Number (or I
OF THE TREASURY am waiting for a number to be issued to me); and
INTERNAL REVENUE SERVICE (2) I am not subject to backup withholding because: (a) I am exempt from backup
withholding, or (b) I have not been notified by the Internal Revenue Service (the
"IRS") that I am subject to backup withholding as a result of a failure to report
all interest or dividends, or (c) the IRS has notified me that I am no longer
subject to backup withholding. [ ]
----------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<C> <S> <C>
CERTIFICATION INSTRUCTIONS -- You must cross out item (2) above
if you have been notified by the IRS that you are currently
subject to backup withholding because of underreporting interest
or dividends on your tax return. However, if after being
notified by the IRS that you were subject to backup withholding
you received another notification from the IRS that you are no
longer subject to backup withholding, do not cross out item (2).
SIGNATURE
PART 3
PAYER'S REQUEST FOR TAXPAYER
IDENTIFICATION NUMBER (TIN) DATE Awaiting TIN [ ]
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO YOU WITH RESPECT TO OLD NOTES TENDERED IN
CONNECTION WITH THE EXCHANGE OFFER. YOU MUST COMPLETE THE FOLLOWING
CERTIFICATE IF YOU CHECKED THE BOX IN PART 3 OF SUBSTITUTE FORM W-9
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number
has not been issued to me, and either (a) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration Office, or (b)
I intend to mail or deliver an application in the near future. I understand that
because I have not provided a taxpayer identification number, 31% of all
reportable payments made to me thereafter will be withheld until I provide a
number. If I provide a properly certified taxpayer identification number within
60 days, you will refund the tax if I so request.
SIGNATURE ____________________________ DATE ____________________________
7
<PAGE> 8
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER OF CKE RESTAURANTS,
INC. TO EXCHANGE ITS 9 1/8% SENIOR SUBORDINATED NOTES DUE 2009 FOR ALL OF ITS
OUTSTANDING 9 1/8% SENIOR SUBORDINATED NOTES DUE 2009
1. DELIVERY OF THIS LETTER AND OLD NOTES; GUARANTEED DELIVERY PROCEDURES.
This Letter of Transmittal is to be completed by holders of Old Notes
either if certificates for Old Notes are to be forwarded herewith or if tenders
are to be made pursuant to the procedures for delivery by book-entry transfer
set forth in "The Exchange Offer -- Procedures for Tendering Old Notes" section
of the Prospectus. Physically tendered Old Notes, or Book-Entry Confirmation, as
the case may be, as well as a properly completed and duly executed Letter of
Transmittal (or facsimile thereof) and any other documents required by this
Letter, must be received by the Exchange Agent at the address set forth herein
on or prior to the Expiration Date, or the tendering holder must comply with the
guaranteed delivery procedures set forth below.
Holders whose certificates for Old Notes are not immediately available or
who cannot deliver their certificates for Old Notes and all other required
documents to the Exchange Agent on or prior to the Expiration Date, or who
cannot complete the procedure for book-entry transfer on a timely basis, may
tender their Old Notes pursuant to the guaranteed delivery procedures set forth
in "The Exchange Offer -- Guaranteed Delivery Procedures" section of the
Prospectus. Pursuant to such procedures: (i) such tender must be made by or
through an Eligible Institution, (ii) on or prior to the Expiration Date, the
Exchange Agent must have received from the holder and the Eligible Institution a
properly completed and duly executed Notice of Guaranteed Delivery (by facsimile
transmission, mail or hand delivery) setting forth the name and address of the
holder of Old Notes, the certificate number or numbers of the tendered Old
Notes, and the principal amount of tendered Old Notes, stating that the tender
is being made thereby and guaranteeing that, within five New York Stock Exchange
trading days after the Expiration Date, the certificates for the tendered Old
Notes, or a Book-Entry Confirmation of such Old Notes, a duly executed Letter of
Transmittal and any other required documents will be deposited by the Eligible
Institution with the Exchange Agent, and (iii) such properly completed and
executed documents required by the Letter of Transmittal, as well as the
certificates for the tendered Old Notes in proper form for transfer (or
Book-Entry Confirmation of such Old Notes into the Exchange Agent's account at
DTC) must be received by the Exchange Agent within three New York Stock Exchange
trading days after the Expiration Date. Any holder who wishes to tender Old
Notes pursuant to the guaranteed delivery procedures described above must ensure
that the Exchange Agent receives the Notice of Guaranteed Delivery and Letter of
Transmittal relating to such Old Notes prior to 5:00 p.m., New York City time,
on the Expiration Date.
THE METHOD OF DELIVERY OF THIS LETTER, THE OLD NOTES AND ALL OTHER REQUIRED
DOCUMENTS IS AT THE ELECTION AND RISK OF THE TENDERING HOLDERS, BUT THE DELIVERY
WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED OR CONFIRMED BY THE EXCHANGE
AGENT. IF OLD NOTES ARE SENT BY MAIL, IT IS SUGGESTED THAT THE MAILING BE MADE
SUFFICIENTLY IN ADVANCE OF THE EXPIRATION DATE TO PERMIT DELIVERY TO THE
EXCHANGE AGENT PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE.
See "The Exchange Offer" section of the Prospectus.
DO NOT SEND THIS LETTER OF TRANSMITTAL OR ANY OLD NOTES TO THE COMPANY.
2. PARTIAL TENDERS (NOT APPLICABLE TO HOLDERS OF OLD NOTES WHO TENDER BY
BOOK-ENTRY TRANSFER).
If less than the entire principal amount of any submitted Old Note is to be
tendered, the tendering holder(s) should fill in the aggregate principal amount
to be tendered in the box above entitled "Description of Old Notes -- Aggregate
Principal Amount of Old Notes Tendered." A reissued certificate representing the
balance of non-tendered principal of any submitted Old Notes will be sent to
such tendering holder, unless otherwise provided in the appropriate box on this
Letter of Transmittal, promptly after the Expiration Date. THE ENTIRE PRINCIPAL
AMOUNT OF ANY OLD NOTES DELIVERED TO THE EXCHANGE AGENT WILL BE DEEMED TO HAVE
BEEN TENDERED UNLESS OTHERWISE INDICATED.
3. SIGNATURES ON THIS LETTER, ASSIGNMENTS AND ENDORSEMENT; GUARANTEE OF
SIGNATURES.
If this Letter of Transmittal is signed by the registered holder of the Old
Notes tendered hereby, the signature must correspond exactly with the name as
written on the face of the Old Notes without any change whatsoever.
8
<PAGE> 9
If any tendered Old Notes are owned of record by two or more joint owners,
all such owners must sign this Letter of Transmittal.
If any tendered Old Notes are registered in different names on several Old
Notes, it will be necessary to complete, sign and submit as many separate copies
of this Letter of Transmittal as there are different registrations of Old Notes.
When this Letter of Transmittal is signed by the registered holder(s) of
the Old Notes specified herein and tendered hereby, no endorsements of the
submitted Old Notes or separate instruments of assignment are required. If,
however, the New Notes are to be issued, or any untendered Old Notes are to be
reissued, to a person other than the registered holder(s), then endorsements of
any Old Notes transmitted hereby or separate instruments of assignment are
required. Signatures on such Old Notes must be guaranteed by an Eligible
Institution.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of any Old Notes specified herein, such Old Notes must be
endorsed or accompanied by appropriate instruments of assignment, in either case
signed exactly as the name of the registered holder appears on the Old Notes and
the signatures on such Old Notes must be guaranteed by an Eligible Institution.
If this Letter of Transmittal or any Old Notes or instruments of assignment
are signed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in a fiduciary or representative
capacity, such persons should so indicate when signing, and, unless waived by
the Company, proper evidence satisfactory to the Company of their authority to
so act must be submitted.
Endorsements on Old Notes or signatures on instruments of assignment
required by this Instruction 3 must be guaranteed by a firm which is a member of
a registered national securities exchange or a member of the National
Association of Securities Dealers, Inc., by a commercial bank or trust company
having an office or correspondent in the United States or by an "eligible
guarantor" institution within the meaning of Rule 17Ad-15 under the Securities
Exchange Act of 1934 (an "Eligible Institution").
Signatures on this Letter of Transmittal need not be guaranteed by an
Eligible Institution, provided the Old Notes are tendered: (i) by a registered
holder of Old Notes (which term, for purposes of the Exchange Offer, includes
any participant in the book-entry transfer facility system whose name appears on
a security position listing as the holder of such Old Notes) who has not
completed the box entitled "Special Issuance Instructions" or "Special Delivery
Instructions" on this Letter of Transmittal, or (ii) for the account of an
Eligible Institution.
4. SPECIAL ISSUANCE AND DELIVERY INSTRUCTIONS.
Tendering holders of Old Notes should indicate in the applicable box the
name and address to which New Notes issued pursuant to the Exchange Offer and/or
substitute certificates evidencing Old Notes not exchanged are to be issued or
sent, if different from the name or address of the person signing this Letter of
Transmittal. In the case of issuance in a different name, the Employer
Identification or Social Security Number of the person named must also be
indicated. A holder of Old Notes tendering Old Notes by book-entry transfer may
request that New Notes and Old Notes not exchanged be credited to such account
maintained at the Book-Entry Transfer Facility as such holder of Old Notes may
designate hereon. If no such instructions are given, such New Notes and Old
Notes not exchanged will be returned to the name or address of the person
signing this Letter of Transmittal or credited to the account listed beneath the
box entitled "Description of Old Notes," as the case may be.
5. TAX IDENTIFICATION NUMBER.
Federal income tax law generally requires that a tendering holder whose Old
Notes are accepted for exchange must provide the Company (as payor) with such
Holder's correct Taxpayer Identification Number ("TIN") on Substitute Form W-9
above, which, in the case of a tendering holder who is an individual, is his or
her Social Security Number. If the Company is not provided with the current TIN
or an adequate basis for an exemption, such tendering holder may be subject to a
$50 penalty imposed by the Internal Revenue Service. In addition, delivery of
New Notes to such tendering holder may be subject to backup withholding in an
amount equal to 31% of all reportable payments made after the exchange. If
withholding results in an overpayment of taxes, a refund may be obtained.
Exempt holders of Old Notes (including, among others, all corporations and
certain foreign individuals) are not subject to these backup withholding and
reporting requirements. See the enclosed Guidelines of Certification of Taxpayer
Identification Number on Substitute Form W-9 (the "W-9 Guidelines") for
additional instructions.
9
<PAGE> 10
To prevent backup withholding, each tendering holder of Old Notes must
provide its correct TIN by completing the "Substitute Form W-9" set forth above,
certifying that the TIN provided is correct (or that such holder is awaiting a
TIN) and that (i) the holder is exempt from backup withholding, (ii) the holder
has not been notified by the Internal Revenue Service that such holder is
subject to a backup withholding as a result of a failure to report all interest
or dividends or (iii) the Internal Revenue Service has notified the holder that
such holder is no longer subject to backup withholding. If the tendering holder
of Old Notes is a nonresident alien or foreign entity not subject to backup
withholding, such holder must give the Company a completed Form W-8, Notice of
Foreign Status. These forms may be obtained from the Exchange Agent. If the Old
Notes are in more than one name or are not in the name of the actual owner, such
holder should consult the W-9 Guidelines for information on which TIN to report.
If such holder does not have a TIN, such holder should consult the W-9
Guidelines for instructions on applying for a TIN, check the box in Part 2 of
the Substitute Form W-9 and write "applied for" in lieu of its TIN. Note:
checking this box and writing "applied for" on the form means that such holder
has already applied for a TIN or that such holder intends to apply for one in
the near future. If such holder does not provide its TIN to the Company within
60 days, backup withholding will begin and continue until such holder furnishes
its TIN to the Company.
6. TRANSFER TAXES.
The Company will pay all transfer taxes, if any, applicable to the transfer
of Old Notes to it or its order pursuant to the Exchange Offer. If, however, New
Notes and/or substitute Old Notes not exchanged are to be delivered to, or are
to be registered or issued in the name of, any person other than the registered
holder of the Old Notes tendered hereby, or if tendered Old Notes are registered
in the name of any person other than the person signing this Letter of
Transmittal, or if a transfer tax is imposed for any reason other than the
transfer of Old Notes to the Company or its order pursuant to the Exchange
Offer, the amount of any such transfer taxes (whether imposed on the registered
holder or any other persons) will be payable by the tendering holder. If
satisfactory evidence of payment of such taxes or exemption therefrom is not
submitted herewith, the amount of such transfer taxes will be billed directly to
such tendering holder.
EXCEPT AS PROVIDED IN THIS INSTRUCTION 6, IT IS NOT NECESSARY FOR TRANSFER
TAX STAMPS TO BE AFFIXED TO THE OLD NOTES SPECIFIED IN THIS LETTER OF
TRANSMITTAL.
7. DETERMINATION OF VALIDITY/WAIVER OF CONDITIONS.
The Company will determine, in its sole discretion, all questions as to the
form of documents, validity, eligibility (including time of receipt) and
acceptance for exchange of any tender of Old Notes, which determination shall be
final and binding on all parties. The Company reserves the absolute right to
reject any and all tenders determined by it not to be in proper form or the
acceptance of which, or exchange for which, may, in the view of counsel to the
Company, be unlawful. The Company also reserves the absolute right, subject to
applicable law, to waive any of the conditions of the Exchange Offer set forth
in the Prospectus under the caption "The Exchange Offer" or any conditions or
irregularity in any tender of Old Notes of any particular holder whether or not
similar conditions or irregularities are waived in the case of other holders.
The Company's interpretation of the terms and conditions of the Exchange
Offer (including this Letter of Transmittal and the instructions hereto) will be
final and binding. No tender of Old Notes will be deemed to have been validly
made until all irregularities with respect to such tender have been cured or
waived. Although the Company intends to notify holders of defects or
irregularities with respect to tenders of Old Notes, neither the Company, any
employees, agents, affiliates or assigns of the Company, the Exchange Agent, nor
any other person shall be under any duty to give notification of any
irregularities in tenders or incur any liability for failure to give such
notification.
8. NO CONDITIONAL TENDERS.
No alternative, conditional, irregular or contingent tenders will be
accepted. All tendering holders of Old Notes, by execution of this Letter of
Transmittal, shall waive any right to receive notice of the acceptance of their
Old Notes for exchange.
Neither the Company, the Exchange Agent nor any other person is obligated
to give notice of any defect or irregularity with respect to any tender of Old
Notes nor shall any of them incur any liability for failure to give any such
notice.
10
<PAGE> 11
9. MUTILATED, LOST, STOLEN OR DESTROYED OLD NOTES.
Any holder whose Old Notes have been mutilated, lost, stolen or destroyed
should contact the Exchange Agent at the address indicated above for further
instructions.
10. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES.
Questions relating to the procedure for tendering, as well as requests for
additional copies of the Prospectus and this Letter of Transmittal, may be
directed to the Exchange Agent, at the address and telephone number indicated
above.
11
<PAGE> 1
NOTICE OF GUARANTEED DELIVERY
CKE RESTAURANTS, INC.
9 1/8% SENIOR SUBORDINATED NOTES DUE 2009
- --------------------------------------------------------------------------------
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON
, 1999,
UNLESS THE EXCHANGE OFFER IS EXTENDED (THE "EXPIRATION DATE").
- --------------------------------------------------------------------------------
This form, or one substantially equivalent hereto, must be used by a holder
of the 9 1/8% Senior Subordinated Notes Due 2009 (the "Old Notes") of CKE
Restaurants, Inc., a Delaware corporation (the "Company") to accept the
Company's Exchange Offer made pursuant to the Prospectus, dated
, 1999 (the "Prospectus"), and the related Letter of
Transmittal (the "Letter of Transmittal") if certificates for the Old Notes are
not immediately available, or if the procedure for book-entry transfer cannot be
completed on a timely basis or time will not permit all documents required to be
delivered to Chase Manhattan Bank and Trust Company, National Association, as
exchange agent (the "Exchange Agent"), on or prior to 5:00 p.m., New York City
time, on the Expiration Date. This Notice of Guaranteed Delivery may be
delivered by hand or sent by facsimile transmission or mail to the Exchange
Agent as set forth below. In order to utilize the guaranteed delivery procedure
to tender Old Notes pursuant to the Exchange Offer, a completed, signed and
dated Letter of Transmittal (or facsimile thereof) must also be received by the
Exchange Agent prior to 5:00 p.m., New York City time, on the Expiration Date.
Capitalized terms not defined herein have the respective meanings given to them
in the Prospectus or the Letter of Transmittal.
The Exchange Agent for the Exchange Offer is:
CHASE MANHATTAN BANK AND TRUST COMPANY, NATIONAL ASSOCIATION
By Mail, Hand or Overnight Delivery:
CHASE MANHATTAN BANK AND TRUST COMPANY, NATIONAL ASSOCIATION
c/o Chase Bank of Texas, National Association
Corporate Trust Services
1201 Main Street, 18th Floor
Dallas, TX 75202
Attention: Frank Ivins (CONFIDENTIAL)
By Facsimile Transmission:
(For Eligible Institutions Only)
(214) 672-5746
Confirm by Telephone:
Frank Ivins (214) 672-5678
Delivery of this Notice of Guaranteed Delivery to an address other than as
set forth above or transmission of this Notice of Guaranteed Delivery via
facsimile to a number other than as set forth above will not constitute a valid
delivery.
<PAGE> 2
THIS NOTICE OF GUARANTEED DELIVERY IS NOT TO BE USED TO GUARANTEE
SIGNATURES. IF A SIGNATURE ON A LETTER OF TRANSMITTAL IS REQUIRED TO BE
GUARANTEED BY AN ELIGIBLE INSTITUTION UNDER THE INSTRUCTIONS THERETO, SUCH
SIGNATURE GUARANTEE MUST APPEAR IN THE APPLICABLE SPACE PROVIDED IN THE
SIGNATURE BOX ON THE LETTER OF TRANSMITTAL.
LADIES AND GENTLEMEN:
The undersigned hereby tender(s) to the Company, upon the terms and
conditions set forth in the Prospectus and the related Letter of Transmittal,
receipt of which is hereby acknowledged, the aggregate principal amount of Old
Notes indicated below, pursuant to the guaranteed delivery procedures set forth
in the Prospectus and the Letter of Transmittal.
<TABLE>
<S> <C> <C>
- --------------------------------------------------------------------------------------------------------------------
DESCRIPTION OF OLD NOTES
- --------------------------------------------------------------------------------------------------------------------
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S) CERTIFICATE AGGREGATE PRINCIPAL AMOUNT OF OLD NOTES
(PLEASE FILL IN IF BLANK) NUMBER(S) TENDERED (IF LESS THAN ALL)
- --------------------------------------------------------------------------------------------------------------------
$
------------------------------------------------------------
------------------------------------------------------------
------------------------------------------------------------
------------------------------------------------------------
------------------------------------------------------------
------------------------------------------------------------
------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
TOTAL PRINCIPAL AMOUNT OF OLD NOTES TENDERED:
$
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
PLEASE SIGN HERE
X Date:
------------------------------------- --------------------------------
X Date:
------------------------------------- --------------------------------
Signature(s) of Owner or Authorized Signatory
This Notice of Guaranteed Delivery must be signed by the holder(s) of
Old Notes exactly as the name(s) of the holder(s) appear(s) on the
certificate(s) for the Old Notes or by any person(s) authorized to become
(a) holder(s) by endorsements and documents transmitted herewith. If
signature is by a trustee, executor, administrator, guardian, officer or
other person acting in a fiduciary or representative capacity, such person
must provide the following information.
<TABLE>
<S> <C>
Name(s): Address:
(Please Print) (Include Zip Code)
Capacity: Telephone Number:
(Include Area Code)
</TABLE>
- --------------------------------------------------------------------------------
THE ACCOMPANYING GUARANTEE MUST BE COMPLETED
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a firm that is a member of a registered national
securities exchange or of the National Association of Securities Dealers, Inc.,
a commercial bank or trust company having an office, branch, agency or
correspondent in the United States, or an "eligible guarantor institution"
within the meaning of Rule 17Ad-15 of the Securities Exchange Act of 1934, as
amended, hereby guarantees to deliver to the Exchange Agent, at its address set
forth above, the Old Notes tendered hereby, in proper form for transfer (or
confirmation of the book-entry transfer of such Old Notes to the Exchange
Agent's account at The Depository Trust Company pursuant to the procedures for
book-entry transfer set forth in the Prospectus), together with a properly
completed and duly executed Letter of Transmittal (or facsimile thereof), with
any required signature guarantees, and any other documents required by the
Letter of Transmittal by 5:00 p.m., New York City time, within three New York
Stock Exchange trading days following the Expiration Date.
2
<PAGE> 3
The undersigned acknowledges that it must deliver the Letter of Transmittal
and Old Notes tendered hereby to the Exchange Agent within the time period set
forth above and that failure to do so could result in financial loss to the
undersigned.
Name of Firm:
By:
(AUTHORIZED SIGNATURE)
Name:
(PLEASE TYPE OR PRINT)
Title:
Address:
Telephone Number:
Date:
DO NOT SEND OLD NOTES WITH THIS NOTICE OF GUARANTEED DELIVERY. ACTUAL
DELIVERY OF OLD NOTES MUST BE MADE PURSUANT TO, AND BE ACCOMPANIED BY, AN
EXECUTED LETTER OF TRANSMITTAL.
3
<PAGE> 4
INSTRUCTIONS
1. DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY.
A properly completed and duly executed copy of this Notice of Guaranteed
Delivery and any other documents required by this Notice of Guaranteed Delivery
must be received by the Exchange Agent at its address set forth herein prior to
the Expiration Date. The method of delivery of this Notice of Guaranteed
Delivery and any other required documents to the Exchange Agent is at the
election and sole risk of the holder, and the delivery will be deemed made only
when actually received by the Exchange Agent. If delivery is by mail, registered
mail with return receipt requested, properly insured, is recommended. As an
alternative to delivery by mail, the holders may wish to consider using an
overnight or hand delivery service. In all cases, sufficient time should be
allowed to assure timely delivery.
2. SIGNATURES ON THIS NOTICE OF GUARANTEED DELIVERY.
If this Notice of Guaranteed Delivery is signed by the registered holder(s)
of the Notes referred to herein, the signature must correspond with the name(s)
written on the face of the Notes without alteration, enlargement, or any change
whatsoever. If this Notice of Guaranteed Delivery is signed by a participant of
the Book-Entry Transfer Facility whose name appears on a security position
listing as the owner of the Notes, the signature must correspond with the name
shown on the security position listing as the owner of the Notes.
If this Notice of Guaranteed Delivery is signed by a person other than the
registered holder(s) of any Notes listed or a participant of the Book-Entry
Transfer Facility, this Notice of Guaranteed Delivery must be accompanied by
appropriate bond powers, signed as the name of the registered holder(s) appears
on the Notes or signed as the name of the participant shown on the Book-Entry
Transfer Facility's security position listing.
If this Notice of Guaranteed Delivery is signed by a trustee, executor,
administrator, guardian, attorney-in-fact, officer of a corporation, or other
person acting in a fiduciary or representative capacity, such person should so
indicate when signing and submit with the Letter of Transmittal evidence
satisfactory to the Company of such person's authority to so act.
3. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES.
Questions and requests for assistance and requests for additional copies of
the Prospectus may be directed to the Exchange Agent at the address specified in
the Prospectus. Holders may also contact their broker, dealer, commercial bank,
trust company, or other nominee for assistance concerning the Exchange Offer.
4
