UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Quarter Ended December 27, 1994
Commission File Number 0-13007
NPC INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
Kansas 48-0817298
(State of Incorporation) (I.R.S. Employer Identification Number)
720 W. 20th Street, Pittsburg, KS 66762
(Address of principal executive offices)
Registrant's telephone number, including area code
(316) 231-3390
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No ____
The number of shares outstanding of each of the registrant's
classes of common stock as of February 9, 1995:
Class A Common Stock, $0.01 par value - 12,355,505
Class B Common Stock, $0.01 par value - 12,126,319
NPC INTERNATIONAL, INC.
INDEX
PAGE
PART I. FINANCIAL INFORMATION
Condensed Consolidated Balance Sheets --
December 27, 1994 and March 29, 1994 3
Condensed Consolidated Statements of Income --
For the Thirteen Weeks and Thirty-nine Weeks
Ended December 27, 1994 and December 28, 1993 4
Condensed Consolidated Statements of Cash Flows --
For the Thirty-nine Weeks Ended
December 27, 1994 and December 28, 1993 5
Notes to Condensed
Consolidated Financial Statements 6
Management's Discussion and Analysis of
Financial Condition and Results of Operations 7
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 14
PART I - FINANCIAL INFORMATION
NPC International, Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
<TABLE>
<CAPTION>
Dec. 27, 1994 March 29,1994
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 4,735,000 $ 8,119,000
Accounts receivable, net 3,634,000 3,105,000
Notes receivable, net 901,000 641,000
Inventories of food and supplies 3,251,000 3,297,000
Prepaid expenses and
other current assets 2,924,000 2,048,000
Total current assets 15,445,000 17,210,000
Facilities and equipment, net 137,056,000 148,760,000
Franchise rights 34,326,000 21,047,000
Goodwill, less accumulated amortization 32,283,000 33,327,000
Other assets 8,532,000 8,768,000
$ 227,642,000 $ 229,112,000
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 14,585,000 $ 16,200,000
Payroll taxes 1,196,000 1,283,000
Accrued interest 1,015,000 1,788,000
Accrued payroll 3,990,000 3,303,000
Other accrued liabilities 12,255,000 12,866,000
Current portion of long-term debt 1,328,000 1,390,000
Total current liabilities 34,369,000 36,830,000
Long-term debt and
obligations under capital leases 81,730,000 86,734,000
Deferred income taxes and other 6,547,000 6,561,000
Stockholders' equity:
Class A Common Stock 139,000 139,000
Class B Common Stock 137,000 137,000
Paid-in capital 22,028,000 22,322,000
Retained earnings 104,568,000 95,700,000
126,872,000 118,298,000
Less treasury stock (21,876,000) (19,311,000)
Total stockholders' equity 104,996,000 98,987,000
$ 227,642,000 $ 229,112,000
</TABLE>
[FN]
See notes to condensed consolidated financial statements.
NPC International, Inc.
Condensed Consolidated Statements of Income
(Unaudited)
<TABLE>
<CAPTION>
For the Thirteen For the Thirty-nine
Weeks Ended Weeks Ended
Dec. 27, Dec. 28, Dec. 27, Dec. 28,
1994 1993 1994 1993
<S> <C> <C> <C> <C>
Net sales $75,610,000 $81,922,000 $235,839,000 $246,521,000
Franchise revenues 1,549,000 1,365,000 4,249,000 2,967,000
Total revenues 77,159,000 83,287,000 240,088,000 249,488,000
Cost of sales 22,894,000 24,174,000 69,815,000 73,466,000
54,265,000 59,113,000 170,273,000 176,022,000
Direct labor costs 22,287,000 23,945,000 68,721,000 72,257,000
Operating expenses 20,862,000 22,236,000 64,224,000 65,590,000
General and
administrative
expenses 6,118,000 6,848,000 18,375,000 20,082,000
49,267,000 53,029,000 151,320,000 157,929,000
Operating income 4,998,000 6,084,000 18,953,000 18,093,000
Interest expense (1,545,000) (1,729,000) (4,589,000) (5,014,000)
Other income (expense) 71,000 136,000 104,000 (79,000)
Income before
income taxes 3,524,000 4,491,000 14,468,000 13,000,000
Provision for
income taxes 1,366,000 1,751,000 5,600,000 5,064,000
Net income $2,158,000 $2,740,000 $8,868,000 $7,936,000
Earnings per share $ 0.09 $ 0.11 $ 0.36 $ 0.32
Weighted average
shares outstanding 24,545,988 25,083,088 24,847,608 25,186,218
</TABLE>
[FN]
See notes to condensed consolidated financial statements.
NPC International, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
For the Thirty-nine Weeks Ended
Dec. 27, 1994 Dec. 28, 1993
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 8,868,000 $ 7,936,000
Non-cash items included in net income:
Depreciation and amortization 16,217,000 17,982,000
Deferred income taxes and other (14,000) 160,000
Change in assets and liabilities,
net of acquisitions:
Accounts receivable (529,000) 894,000
Notes receivable (260,000) (1,334,000)
Inventories of food and supplies 56,000 182,000
Prepaid expenses and
other current assets (1,027,000) (894,000)
Accounts payable (1,615,000) 89,000
Payroll taxes (87,000) 682,000
Accrued interest (773,000) 122,000
Accrued payroll 687,000 1,073,000
Other accrued liabilities (618,000) (950,000)
Net cash flows from
operating activities 20,905,000 25,942,000
CASH FLOWS USED BY INVESTING ACTIVITIES:
Acquisition of NRH Corporation, net of cash --- (19,370,000)
Acquisition of business assets (7,761,000) ---
Capital expenditures, net (10,382,000) (9,190,000)
Changes in other assets, net 559,000 2,087,000
Proceeds from sale of capital assets 1,219,000 552,000
Net cash flows used by
investing activities (16,365,000) (25,921,000)
CASH FLOWS (USED BY)
FROM FINANCING ACTIVITIES:
Purchase of treasury stock (3,029,000) (1,761,000)
Net change in revolving credit agreements (8,910,000) 16,200,000
Payment of long-term debt (6,155,000) (13,770,000)
Issuance of long-term debt 10,000,000 ---
Exercise of stock options 170,000 6,000
Net cash flows (used by)
from financing activities (7,924,000) 675,000
NET CHANGE IN CASH AND CASH EQUIVALENTS (3,384,000) 696,000
CASH AND CASH EQUIVALENTS
AT BEGINNING OF PERIOD 8,119,000 6,195,000
CASH AND CASH EQUIVALENTS
AT END OF PERIOD $ 4,735,000 $ 6,891,000
</TABLE>
[FN]
See notes to condensed consolidated financial statements.
NPC International, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note 1
On July 12, 1994, the stockholders of National Pizza Company
approved and adopted an amendment to the Company's Amended and
Restated Articles of Incorporation to change the Company's
name to NPC International, Inc. The Company's Class A voting
and Class B non-voting common stock continues to trade on the
NASDAQ under the new ticker symbols "NPCIA" and "NPCIB,"
respectively.
Note 2
In the opinion of management of the Company, the accompanying
unaudited condensed consolidated financial statements contain
all normal recurring adjustments necessary to present fairly
the financial position of the Company as of December 27, 1994
and March 29, 1994, the results of operations for the fiscal
quarters and cumulative periods ended December 27, 1994 and
December 28, 1993 and the statements of cash flows for the
three fiscal quarters ended December 27, 1994 and December 28, 1993.
Romacorp, Inc. (formerly NRH Corporation), a wholly owned
subsidiary of the Company, was acquired on June 8, 1993 and is
included in the data for the three fiscal quarters ended
December 28, 1993 for only twenty-nine weeks.
On June 7, 1994, the Company executed a new franchise
agreement and a definitive agreement to exchange certain
assets. Under the agreement, NPC exchanged a total of 84
Pizza Hut restaurants for 50 Pizza Hut restaurants operated by
the franchisor Pizza Hut Inc. (PHI) and certain additional
rights under the 1990 Franchise Agreement. The transaction
was completed on August 4, 1994.
On January 27, 1995, the Company announced that it would close
approximately 95 Skipper's stores which are unprofitable or
located in unprofitable regions. Accordingly, the Company
will take a charge to its earnings of up to $35 million
(before taxes) in the quarter ended March 28, 1995 for the
loss on disposing of these underperforming assets.
These statements should be read in conjunction with the
financial statements and notes contained in the Company's
annual report on Form 10-K for the fiscal year ended March 29,
1994. Certain reclasses were made to prior year balances to
conform with the current year presentation.
Note 3
There were cash payments for income taxes of $7.2 million in
the thirty-nine weeks ended December 27, 1994 and $4.4 million
in the thirty-nine weeks ended December 28, 1993. Cash paid
for interest for the thirty-nine weeks ended December 27, 1994
and December 28, 1993 was $5.4 million and $4.9 million,
respectively.
As part of the asset exchange agreement with Pizza Hut, Inc.,
the Company exchanged 84 of its operating entities with 50
Pizza Hut restaurants operated by PHI and certain additional
rights. No gain or loss was recognized as a result of this
exchange in properties. Approximately $9.8 million of book
basis in the exchanged assets has been re-capitalized as
franchise rights in connection with the transaction, which
will be amortized beginning in July, 1996 over the remaining
life of the franchise agreement.
NPC International, Inc.
Management's Discussion and Analysis
of Financial Condition and Results of Operations
At December 27, 1994, NPC International, Inc. (formerly
National Pizza Company) owned and operated 257 Pizza Hut
restaurants and 87 delivery kitchens in nine states. The
Company's pizza restaurants are generally free standing, full
table service restaurants which offer high quality and
moderately priced pizza, pasta, sandwiches and a salad bar.
Beverage service includes soft drinks and, in most
restaurants, beer. Delivery kitchens provide home delivery
and carry out of pizza products, but they do not have dining
facilities, salad bars or beer.
On the same date, the Company owned and operated 184 and
franchised 14 quick service seafood Skipper's restaurants in
ten western states and British Columbia. By March, 1995,
however, the Company anticipates paring the number of Company
units to approximately 100 restaurants. Skipper's offers a
limited menu including fish, shrimp and clams. Each
restaurant features a casual atmosphere and beer is served in
most locations.
The Company is also the owner and operator of 26 Tony Roma's
restaurants in five states, and franchisor of 105 restaurants
in 18 states and 39 foreign locations at December 27, 1994.
Tony Roma's is a casual theme restaurant chain known as "A
Place for Ribs", but also offers a variety of menu choices
including chicken, steaks and salads. All Tony Roma's serve
alcohol.
Pizza Hut Operations
<TABLE>
<CAPTION>
For the Thirteen Weeks Ended
December 27, 1994 December 28, 1993
Restaurants Delivery Restaurants Delivery
<S> <C> <C> <C> <C>
Net sales $ 36,611,000 $11,866,000 $39,590,000 $13,585,000
Percentage of net sales:
Cost of sales 26.9% 24.8% 26.2% 25.2%
Direct labor costs 25.5% 31.6% 25.7% 32.2%
Operating expenses 23.7% 24.6% 25.2% 23.6%
76.1% 81.0% 77.1% 81.0%
Operating profit 23.9% 19.0% 22.9% 19.0%
</TABLE>
<TABLE>
<CAPTION>
For the Thirty-nine Weeks Ended
December 27, 1994 December 28, 1993
Restaurants Delivery Restaurants Delivery
<S> <C> <C> <C> <C>
Net sales $113,136,000 $37,062,000 $120,997,000 $40,988,000
Percentage of net sales:
Cost of sales 26.1% 24.5% 26.6% 25.7%
Direct labor costs 25.6% 31.9% 26.6% 33.0%
Operating expenses 24.5% 24.8% 24.9% 24.0%
76.2% 81.2% 78.1% 82.7%
Operating profit 23.8% 18.8% 21.9% 17.3%
Number of units 257 87 260 99
</TABLE>
Comparison of Operating Results for the Thirteen Weeks Ended
December 27, 1994 with the Thirteen Weeks Ended December 28, 1993
Net sales from Pizza Hut operations for the thirteen weeks
ended December 27, 1994, were $48.5 million, down $4.6 million
or 8.8% from the same period in the prior fiscal year.
BIGFOOT sales are $4.8 million higher in the quarter ended
December, 1993 than the quarter just ended. In addition, the
Company is operating with 16 fewer restaurants than a year
ago, due in part to the asset exchange agreement consummated
this summer with the Company's franchisor. The Company
expects to replace these units in the next six months through
construction or acquisition. Sales in comparable restaurants
and delivery kitchens open in excess of twelve months
decreased approximately 5.1% on a real basis over the same
quarter a year earlier, reflecting continued impact from
unusually high sales of the value-priced BIGFOOT pizza and the
luncheon buffet in the prior year. Sales from the Company's
concession and catering division, which was sold in November,
1993, were $253,000 for the thirteen weeks ended December 28, 1993.
Management anticipates, based on the economic environment and
strong sales gains recorded a year ago, comparable unit sales
in real dollars will remain flat to slightly negative for the
remainder of the fiscal year. The Company is in the process
of introducing buffalo wings and a major marketing campaign is
planned beginning in January, 1995.
Cost of sales in the Pizza Hut operations--as a percentage of
net sales--for the thirteen weeks ended December 27, 1994
(26.4%) increased slightly when compared with the cost of
sales percentage for the thirteen weeks ended December 28,
1993 (26.0%). Cheese prices, which accounts for approximately
40% of a pizza's cost, are about 4.0% lower in the recent
fiscal quarter compared with the prior fiscal quarter. Part
of this increase is due to the implementation of a new pizza
production system which is designed to provide products with
better consistency. In addition, a meal promotion which ran
during the fiscal quarter ending December, 1994 contained
higher-than-normal food costs. Cost of sales includes food
and beverage costs and the expense of paper takeout supplies.
Direct labor in the Pizza Hut operations decreased to
27.0% of net sales for the most recent quarter, compared with
27.3% for the comparable quarter a year ago. Direct labor
includes taxes and benefits, such as vacation and insurance,
as well as restaurant worker's compensation expense.
Overall operating expenses deceased as a percentage of sales,
to 23.9% for the quarter ended December 27, 1994 from 24.8%
for the quarter ended December 28, 1993. Major operating
expenses in the Pizza Hut division include advertising,
depreciation and amortization, and rent.
Comparison of Operating Results for the Thirty-nine Weeks Ended
December 27, 1994 with the Thirty-nine Weeks Ended December 28, 1993
Fiscal year-to-date net sales for the Pizza Hut operations
have declined by $11.8 million, partially due to the
introduction of BIGFOOT and the luncheon buffet in the prior
year. The Company generally experienced higher labor and food
costs associated with these two introductions due to the
nature of the products. Accordingly, the cost of goods sold
and direct labor costs (when expressed as a percentage of net
sales) are down moderately while operating expenses remained
about the same, despite lower sales levels.
Overall operating income for the Pizza Hut operations
increased to 22.6% of net sales for the thirty-nine weeks
ended December 27, 1994 from 20.7% for the comparable period
in the prior year, obtained through the reduction of these
inefficiencies associated with the product introductions in
the prior year.
Skipper's Operations
<TABLE>
<CAPTION>
For the Thirteen Weeks Ended
December 27, 1994 December 28, 1993
<S> <C> <C>
Net restaurant sales $17,331,000 $18,627,000
Net franchise revenues 55,000 90,000
Total revenues $17,386,000 $18,717,000
Percentage of revenue:
Cost of sales 38.9% 36.6%
Direct labor costs 34.7% 31.4%
Operating expenses 36.0% 31.8%
109.6% 99.8%
Operating profit (9.6)% 0.2%
</TABLE>
<TABLE>
<CAPTION>
For the Thirty-nine Weeks Ended
December 27, 1994 December 28, 1993
<S> <C> <C>
Net restaurant sales $55,732,000 $61,142,000
Net franchise revenues 194,000 253,000
Total revenues $55,926,000 $61,395,000
Percentage of revenue:
Cost of sales 37.6% 37.1%
Direct labor costs 32.7% 30.3%
Operating expenses 33.0% 30.2%
103.3% 97.6%
Operating profit (3.3)% 2.4%
Number of Company units 183 188
Number of franchised units 14 18
</TABLE>
Comparison of Operating Results for the Thirteen Weeks Ended
December 27, 1994 with the Thirteen Weeks Ended December 28, 1993
On January 27, 1995, the Company announced that it would close
approximately 95 Skipper's stores which are unprofitable or
located in unprofitable regions. Accordingly, the Company
will take a charge to its earnings of up to $35 million
(before taxes) in the quarter ended March 28, 1995 for
the loss on disposing of these underperforming assets.
Management believes downsizing the organization will
allow it to concentrate on those units and regions
which are profitable while it further refines operations.
As part of the restructuring, Mr. Frank Brown resigned as
President of Skipper's and Mr. Jerry Brunotts was appointed to
fill the position to assist in the turnaround. Mr. Brunotts
helped the Company integrate the Tony Roma acquisition in 1993
and, prior to that, was a consultant to the restaurant
industry.
Skipper's has continued with its value-pricing marketing
strategy in an attempt to increase customer traffic. However,
guest counts for the quarter ended December 27, 1994 fell
approximately 6.0% this quarter and same store sales declined
6.8% when compared with the thirteen weeks ended December 28, 1993.
Cost of sales, direct labor and operating expenses--when
expressed as a percentage of net revenues--all rose in the
current quarter ended December 27, 1994 when compared with the
quarter ended December 28, 1993. In an attempt to regain
customer satisfaction with Skipper's core product, the Company
introduced a better, whiter fish product. This new product
costs more than the items it replaced. Although the Company's
implementation of this product is in its early stages, the
Company has not generated sufficient incremental traffic to
offset the higher costs. Another reason for the percentage
increases are due to the lower sales base in the most recent
period.
Comparison of Operating Results for the Thirty-nine Weeks Ended
December 27, 1994 with the Thirty-nine Weeks Ended December 28, 1993
Sales were 8.8% lower for the two fiscal quarters ended
December 27, 1994, when compared with the two fiscal quarters
a year ago. Franchising revenues from the franchised stores
have declined some 23%, although franchise fees are not
material to the overall operations of the concept; Skipper's
had 18 franchised restaurants in December, 1993, compared with
14 units operating in the most recent quarter.
Cost of sales rose to 37.6% of total revenues for the thirty-
nine weeks ended December 27, 1994 when compared with 37.1% of
revenues for the same period a year earlier. Prior year
figures include costs associated with the introduction of
Skipper's new beer-battered fish.
Management anticipates, based on the economic environment and
competitive conditions, comparable unit sales in real dollars
will remain flat to lower throughout the remainder of the
fiscal year.
Tony Roma's Operations
<TABLE>
<CAPTION>
For the Thirteen Weeks Ended
December 27, 1994 December 28, 1993
<S> <C> <C>
Net restaurant sales $ 9,802,000 $9,867,000
Net franchise revenues 1,494,000 1,275,000
Total revenues $11,296,000 $11,142,000
Percentage of revenue:
Cost of sales 29.7% 30.5%
Direct labor costs 28.1% 31.0%
Operating expenses 26.5% 26.5%
84.3% 88.0%
Operating profit 15.7% 12.0%
</TABLE>
<TABLE>
<CAPTION>
For the Thirty-nine For the Twenty-nine
Weeks Ended Weeks Ended
December 27, 1994 December 28, 1993
<S> <C> <C>
Net restaurant sales $ 29,909,000 $22,361,000
Net franchise revenues 4,055,000 2,714,000
Total revenues $33,964,000 $25,075,000
Percentage of revenue:
Cost of sales 29.7% 30.3%
Direct labor costs 28.5% 30.4%
Operating expenses 26.3% 26.6%
84.5% 87.3%
Operating profit 15.5% 12.7%
Number of Company units 26 27
Number of franchised units 144 130
</TABLE>
[FN]
Note: Prior year information has been reclassified to be
consistent with current year presentation.
Comparison of Operating Results for the Thirteen Weeks Ended
December 27, 1994 with the Thirteen Weeks Ended December 28, 1993
Comparable sales for the thirteen weeks ended December 27,
1994 were up 2.2% when compared with the similar period in the
prior year. Comparable sales were up in Florida and Texas,
and down in California, the Company's three primary markets.
Gross franchising revenue increased 35.4% to $2.3 million for
the quarter ended December 27, 1994 from $1.7 million for the
same quarter a year ago. Tony Roma's is the Company's fastest
growing restaurant concept, with plans to open four to six
Company restaurants and add 15 to 20 franchised units in the
fiscal year ended March 28, 1995.
Cost of sales and direct labor decreased as a percent of sales
as operating efficiencies were established subsequent to the
June 8, 1993 acquisition. In addition, these percentages
declined because royalties now constitute a higher proportion
of revenues (13.2% of total revenue in the current quarter vs.
11.4% in the quarter ended December, 1993); royalty income
does not have significant cost of sales and direct labor
costs. Operating expenses as a percent of revenue for the
most recent quarter remained about the same as the same
quarter in the prior year.
Comparison of Operating Results for the Thirty-nine Weeks Ended
December 27, 1994 with the Twenty-nine Weeks Ended December 28, 1993
Romacorp, Inc. (formerly NRH Corporation), a wholly-owned
subsidiary of the Company, was acquired on June 8, 1993 and is
included in the data for the three fiscal quarters ended
December 28, 1993 for only twenty-nine weeks.
Tony Roma's averaged approximately $871,000 revenue per week
for the thirty-nine weeks ended December 27, 1994, compared
with an average of $874,000 revenue per week for the twenty-
nine weeks ended December 28, 1993. On a proforma basis
(including the ten weeks prior to NPC acquiring the business),
sales are down 1.2% nominally and gross franchising revenue is
up 23.0%.
Cost of sales and direct labor as a percent of total revenue
are down moderately when comparing the recent thirty-nine week
period with the twenty-nine week period last year. Operating
expenses for the comparable periods have remained the same
after the prior year information was reclassed to be
consistent with the current year presentation.
Consolidated Results
Comparison of Operating Results for the Thirteen Weeks Ended
December 27, 1994 with the Thirteen Weeks Ended December 28, 1993
Overall revenues for the thirteen weeks ended December 27,
1994 were $77.2 million, a decrease of $6.1 million, or 7.4%
when compared with $83.3 million for the thirteen weeks ended
December 28, 1993. Revenues for the pizza operations and
Skipper's are down, and Tony Roma's revenues are slightly up
due to a substantial increase in franchise fee income.
General and administrative expenses decreased in the thirteen
weeks ended December 27, 1994 (to 7.9% of total revenue) when
compared with the thirteen weeks ended December 28, 1993
(8.2%). The thirteen weeks ended December 28, 1993 includes
the absorption of some redundant administrative costs
associated with the Tony Roma's acquisition; those functions
were consolidated at the Company's headquarters in October,
1993. In addition, Pizza Hut operations amortized $473,000 in
BIGFOOT start-up costs in the quarter ended December, 1993,
which became fully amortized in March, 1994. Major expenses
in these costs principally include corporate salaries,
amortization of intangible assets, and bank service charges.
Interest expense decreased slightly when comparing the two
quarterly periods, resulting from higher debt levels related
to the Tony Roma's acquisition in June, 1993.
Net income for the thirteen weeks ended December 27, 1994, was
$2.2 million, a 21.2% decrease from the $2.7 million reported
for the thirteen weeks ended December 28, 1993. The Company
experienced improvement in its Pizza Hut and Tony Roma's
operations, increases that were more than offset by higher
losses in the Skipper's division. The effective tax rate for
the quarter ended December 27, 1994 was 38.7% compared with a
39.0% rate used for the comparable quarter a year earlier.
Comparison of Operating Results for the Thirty-nine Weeks Ended
December 27, 1994 with the Thirty-nine Weeks Ended December 28, 1993
Sales for the thirty-nine weeks ended December 27, 1994 were
$235.8 million, down $10.7 million from the same thirty-nine
week period ended December 28, 1993. This decline was
mitigated by an increase in franchise revenue, to $4.2 million
for the thirty-nine weeks ended December, 1994 compared with
$3.0 million in the prior year (which includes only 29 weeks
of Tony Roma franchise revenue). Despite a net 3.8% overall
decline in revenues, however, net income rose by $932,000, to
$8,868,000 for the quarter ended December, 1994 when compared
with the $7,936,000 net income reported for the comparable
quarter a year earlier, an 11.7% increase. Profit gains in
the Pizza Hut and Tony Roma operations were mitigated by
increased losses at Skipper's.
General and administrative costs declined as a percent of
sales for the three fiscal quarters ended December 27, 1994
(7.6%) when compared with the two fiscal quarters ended
December 28, 1993 (8.0%).
Due to the Skipper's restructuring charge expected in the
Company's fourth quarter, management anticipates a net loss
for the quarter and fiscal year ended March 28, 1995. Due to
the resignation of Mr. Mitch Boyd, President and Chief
Executive Officer, the Company promoted Mr. James Schwartz to
President and Chief Operating Officer. Mr. Bicknell
reassumed the position of Chief Executive Officer. The
Company anticipates announcing a new Vice President Finance
and Chief Financial Officer in the near future.
Liquidity, Capital Resources and Cash Flows
On December 27, 1994, the Company had a working capital
deficit of $18.9 million ($18.1 million deficit at December
28, 1993). Like most restaurant businesses, the Company is
able to operate with a working capital deficit because
substantially all of its sales are for cash, while it
generally receives credit from trade suppliers. Further,
receivables are not a significant asset in the restaurant
business and inventory turnover is rapid. Therefore, the
Company uses all available liquid assets to reduce borrowings
under its line of credit.
On December 20, 1994, the Company executed a new revolving
credit agreement, increasing the limit to $50.0 million at a
fluctuating interest rate which depends upon the type of loan
obtained. At December 27, 1994, the Company had borrowed
approximately $15.2 million under this facility.
On the same day, the Company funded $10.0 million of a $20.0
million Senior Notes Master Shelf Agreement it had signed June
9, 1994. The fixed-rate note, in which principal payments
begin in October, 1997 and matures in the year 2001, bears a
coupon rate of 9.09%.
Net cash flows from operating activities decreased $5.0
million when comparing the thirty-nine weeks ended December
27, 1994 with the comparable period a year earlier. This
19.4% decrease is attributable to normal fluctuations in
working capital components. Working capital uses for the
three quarters ended December 27, 1994 were $4.2 million
compared with $0.1 million a year ago.
The Company completed the acquisition of Romacorp, Inc.
(formerly NRH Corporation) on June 8, 1993, for an aggregate
cash consideration of $20.4 million plus operating cash flow
subsequent to the date of the preliminary agreement. The
Company increased its line of credit to $45.0 million on June
11, 1993 and funded the transaction through borrowings
available under the line. The Company also acquired 17 Pizza
Hut units from another franchisee in June, 1994.
NPC International, Inc. has an ongoing share repurchase
program, initiated in November, 1991. This plan originally
authorized 2.5 million shares to be repurchased and was
expanded on June 16, 1994 to allow the repurchase of an
additional 500,000 Class A or Class B shares. Since
inception, 3,069,686 shares have been reacquired.
The Company anticipates cash flow from operations will provide
sufficient capital to fund continuing expansion and
improvements, to service debt obligations and to develop new
restaurants in existing territories. Future acquisitions may
require additional debt or capital resources.
Seasonality and Effects of Inflation
As a result of continued concept diversification, the Company
has not experienced significant seasonality in its sales.
Skipper's sales are typically higher in the fourth quarter of
the fiscal year, during the Lenten period.
Inflationary factors such as increases in food and labor costs
directly affect the Company's operations. Because most of the
Company's employees are paid hourly rates related to federal
and state minimum wage and tip credit laws, changes in these
laws will result in increases in the Company's labor costs.
Legislation mandating health coverage for employees, if
passed, will increase benefit costs since most hourly
restaurant employees are not currently covered under Company
plans. The Company cannot always effect immediate price
increases to offset higher costs, and no assurance can be
given that the Company will be able to do so in the future.
Increases in interest rates could directly affect the
Company's operations.
PART II. OTHER INFORMATION
Item 6. Exhibits filed as part of this Report and Reports on
Form 8-K
(a) Exhibits
The following Exhibit is filed as part of this Report:
Exhibit 10.A Credit Agreement among NPC International,
Inc., the banks named therein, and Bank of
America Illinois, as Agent dated as of
December 13, 1994
Exhibit 10.B Master Shelf Agreement between NPC
International, Inc. and Prudential Capital
Group for up to $20,000,000 Senior Notes
dated as of June 9, 1994
Exhibit 10.C Third Amendment to the 1990 Agreement
between NPC International, Inc. and Prudential
Insurance Company; Second Amendment to the
1991 Agreement between NPC International, Inc.
and Prudential Insurance Company, dated
June 9, 1994
Exhibit 10.D Fourth Amendment to the 1990 Agreement
between NPC International, Inc. and the
Prudential Insurance Company; Third Amendment
to the 1991 Agreement between NPC International,
Inc. and the Prudential Life Insurance Company;
First Amendment to Master Shelf Agreement between
NPC International, Inc. and Prudential Capital
Group, dated December 23, 1994.
Exhibit 11 - Statement Regarding Computation of Per Share
Earnings - Page 16
(b) Reports on Forms 8-K
No reports were filed on Form 8-K for the quarter ended
December 27, 1994
Signature
Pursuant to the requirements of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned thereunto duly
authorized.
NPC INTERNATIONAL, INC.
(Registrant)
DATE: February 9, 1995 James K. Schwartz
President and Chief Operating Officer
Designated Principal Financial Officer
DATE: February 9, 1995 Douglas K. Stuckey
Corporate Controller,
Chief Accounting Officer
Principal Accounting Officer
REVOLVING CREDIT AGREEMENT
DATED AS OF DECEMBER 13, 1994
AMONG
NPC INTERNATIONAL, INC.,
VARIOUS BANKS
AND
BANK OF AMERICA ILLINOIS,
as Agent
TABLE OF CONTENTS
Page
1. DEFINITIONS, INTERPRETATION OF AGREEMENT AND
COMPLIANCE WITH FINANCIAL RESTRICTIONS. 1
1.1 Definitions 1
1.2 Other Definitional Provisions 11
1.3 Interpretation of Agreement 11
1.4 Compliance with Financial Restrictions 11
2. COMMITMENT OF THE BANKS 11
2.1 Commitments 11
2.2 Loan Options 11
2.3 Borrowing Procedure. 11
2.4 Continuation and/or Conversion of Loans 12
2.5 Extension of Termination Date 14
3. NOTES EVIDENCING LOANS. 14
3.1 Reference Rate Loans; Eurodollar Loans 14
3.2 Money Market Loans 14
3.3 Evidence of Loans 14
4. INTEREST AND FEES. 14
4.1 Interest 14
4.2 Commitment Fee 15
4.3 Method of Calculating Interest and Fees 15
4.4 Agent's Fee 15
5. PAYMENTS, PREPAYMENTS, REDUCTION OR TERMINATION
OF THE CREDIT 15
5.1 Place of Payment 15
5.2 Prepayments 16
5.3 Reduction of Credit 16
5.4 Offset 16
5.5 Proration of Payments 16
6. INDEMNIFICATION: EURODOLLAR LOANS 17
6.1 Indemnity for Funding Losses 17
6.2 Capital Adequacy 17
6.3 Additional Provisions Relating to Eurodollar Loans 18
7. CONDITIONS PRECEDENT TO ALL LOANS 20
7.1 Notice 20
7.2 Default 20
7.3 Insurance 20
7.4 Warranties 21
7.5 Certification 21
8. CONDITIONS PRECEDENT TO EFFECTIVE DATE AND
INITIAL LOAN THEREON OR THEREAFTER 21
8.1 Notes 21
8.2 Resolutions; Consents and Approvals 21
8.3 Incumbency 21
8.4 Opinion 22
8.5 General 22
9. WARRANTIES. 22
9.1 Existence 22
9.2 Authorization 22
9.3 No Conflicts 22
9.4 Validity and Binding Effect 22
9.5 Financial Statements 23
9.6 Litigation 23
9.7 Taxes 23
9.8 Liens 23
9.9 No Default 24
9.10 Insurance 24
9.11 Subsidiaries 24
9.12 Partnerships 24
9.13 Regulation U 24
9.14 Compliance 24
9.15 Pension Plans 24
10. COMPANY'S COVENANTS. 25
10.1 Financial Statements and Other Information 25
10.2 Books, Records and Inspection 26
10.3 Conduct of Business 26
10.4 Taxes 26
10.5 Notices 27
10.6 Pension Plans 27
10.7 Expenses 27
10.8 Indebtedness 28
10.9 Liens 28
10.10 Merger, Purchase and Sale 28
10.11 Nature of Business 29
10.12 Franchise Rights. 29
10.13 Net Worth 29
10.14 Indebtedness to Net Worth Ratio 29
10.15 Fixed Charge Coverage 30
10.16 Insurance 30
10.17 Restricted Payments 30
10.18 Leases 30
10.19 Company's and Subsidiaries' Stock 31
10.20 Guaranties 31
10.21 Investments 31
10.22 Subsidiaries 32
10.23 Unconditional Purchase Obligation 32
10.24 Other Agreements 32
10.25 Use of Proceeds 32
11. EVENTS OF DEFAULT AND REMEDIES. 32
11.1 Events of Default 32
11.2 Remedies 35
12. RELATIONSHIP AMONG BANKS. 35
12.1 Appointment and Grant of Authority 35
12.2 Non-Reliance on Agent 35
12.3 Responsibility of Agent and Other Matters 36
12.4 Action on Instructions 37
12.5 Indemnification 37
12.6 Bank of America Illinois and Affiliates 37
12.7 Notice to Holders of Loan 37
12.8 Successor Agent 38
13. GENERAL. 38
13.1 Waiver and Amendments 38
13.2 Notices 39
13.3 Severability; Participations. 39
13.4 Indemnification. 40
13.5 LAW 40
13.6 Successors 40
13.7 Subsidiary Reference 40
13.8 ENTIRE AGREEMENT 41
13.9 NON-STANDARD TERMS; NO UNWRITTEN ORAL AGREEMENTS 41
13.10 Counterparts 41
EXHIBITS
EXHIBIT A-I - SERIES A NOTE
EXHIBIT A-2 - SERIES B NOTE
EXHIBIT B - FORM OF REQUEST FOR EXTENSION OF TERMINATION DATE
EXHIBIT C - SCHEDULE OF LITIGATION
EXHIBIT D - SCHEDULE OF LIENS
EXHIBIT E - CERTIFICATE AS TO INSURANCE
EXHIBIT F - SCHEDULE OF SUBSIDIARIES
EXHIBIT G - SCHEDULE OF PARTNERSHIPS AND JOINT VENTURES
EXHIBIT H - SCHEDULE OF INDEBTEDNESS
EXHIBIT I - SCHEDULE OF INVESTMENTS
EXHIBIT J - OPINION OF COUNSEL
EXHIBIT K - FORM OF CONFIRMATION
||
REVOLVING CREDIT AGREEMENT
THIS AGREEMENT, dated as of December 13, 1994 (this
"Agreement"), is entered into among NPC INTERNATIONAL, INC., a
Kansas corporation (the "Company"), the banks listed on the
signature pages hereof (together with such other financial
institutions that from time to time become parties hereto,
individually a "Bank" and collectively the "Banks") and BANK
OF AMERICA ILLINOIS ("BAI"), as agent for the Banks.
In consideration of the mutual covenants contained herein
and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties
hereto agree as follows:
1. DEFINITIONS, INTERPRETATION OF AGREEMENT AND
COMPLIANCE WITH FINANCIAL RESTRICTIONS.
1 Definitions. In addition to the terms defined
elsewhere in this Agreement, the following terms shall have
the meanings indicated for purposes of this Agreement (such
meanings to be equally applicable to both the singular and
plural forms of the terms defined):
Affiliate of any Person means any other Person that,
directly or indirectly, controls, is controlled by or is under
common control with such Person (excluding any trustee under,
or any committee with responsibility for administering, any
Plan (hereinafter defined)). A Person shall be deemed to be
"controlled by" any other Person if such other Person
possesses, directly or indirectly, power
(a) to vote 10% or more of the securities (on a
fully diluted basis) having ordinary voting power for the
election of directors or managing general partners; or
(b) to direct or cause the direction of the
management and policies of such Person whether by
contract or otherwise.
Agent means BAI as Agent for the Banks hereunder and each
successor, as provided in Section 12.8, who shall act as
Agent.
BAI -- see the Preamble.
Bank -- see the Preamble.
Banking Day means any day on which banks are open for
business in Chicago, Illinois and San Francisco, California
and, with respect to Eurodollar Loans, on which dealings in
foreign currencies and exchange may be carried on by the Agent
in the interbank eurodollar market.
Capitalized Lease means any lease which is or should be
capitalized on the balance sheet of the lessee in accordance
with GAAP.
Code means the Internal Revenue Code of 1986 and any
successor statute of similar import, together with the
regulations thereunder, in each case as in effect from time to
time. References to sections of the Code shall be construed
to also refer to any successor sections.
Commitment -- see Section 2.1.
Company -- see the Preamble.
Consolidated Net Earnings means the consolidated gross
revenues of the Company and its Subsidiaries less all
operating and non-operating expenses of the Company and its
Subsidiaries including taxes on income, all determined in
accordance with GAAP consistent with those followed in the
preparation of the financial statements referred to in Section
9.5, provided that (i) there shall not be included in revenues
(a) any income representing the excess of equity in any
Subsidiary at the date of acquisition over the investment in
such Subsidiary, (b) any equity in the undistributed earnings
of any corporation which is not a Subsidiary, (c) any earnings
of any Subsidiary for any period prior to the fiscal year of
the Company in which such Subsidiary was acquired, or (d) any
gains resulting from the write-up of assets, and (ii) capital
gains may be included in revenues only to offset capital
losses.
Consolidated Net Worth means, at any time, the total of
stockholders' equity (including capital stock, additional paid-
in capital and retained earnings after deducting treasury
stock, ESOP obligations and similar contra accounts) of the
Company and its consolidated Subsidiaries calculated in
accordance with GAAP.
Credit means the aggregate Commitments of the Banks to
make Loans under the terms of this Agreement.
Dollars and the sign "$" mean lawful money of the United
States of America.
EBITDA means the Company's Consolidated Net Earnings
before interest expense, provision for taxes (to the extent
not excluded from Consolidated Net Earnings), depreciation,
amortization and the noncash portion of nonrecurring charges
(as defined by GAAP).
Effective Date means the date on which all the conditions
precedent set forth in Section 8 are met or waived in writing
by the Agent and the Majority Banks.
ERISA means the Employee Retirement Income Security Act
of 1974, as amended, and any successor statute of similar
import, together with the regulations thereunder, in each case
as in effect from time to time. References to sections of
ERISA shall be construed to also refer to any successor
sections.
ERISA Affiliate means any corporation, trade or business
that is, along with the Company, a member of a controlled
group of corporations or a controlled group of trades or
businesses, as described in sections 414(b) and 414(c),
respectively, of the Code.
Eurocurrency Reserve Percentage means, with respect to
any Interest Period, a percentage (expressed as a decimal)
equal to the daily average during such Interest Period of the
percentages in effect on each day of such Interest Period, as
prescribed by the Board of Governors of the Federal Reserve
System (or any successor), for determining reserve
requirements applicable to "Eurocurrency liabilities" pursuant
to Regulation D or any other then applicable regulation of the
Board of Governors which prescribes reserve requirements
applicable to "Eurocurrency liabilities," as presently defined
in Regulation D. For purposes of this definition, any
Eurodollar Loans hereunder shall be deemed to be "Eurocurrency
liabilities" as defined in Regulation D.
Eurodollar Loan means any Loan which bears interest at a
rate determined with reference to the Interbank Rate (Reserve
Adjusted).
Event of Default means any of the events described in
Section 11.1.
Existing Credit Agreement means the Amended and Restated
Revolving Credit Agreement dated as of November 17, 1989 among
the Company (then known as National Pizza Company), various
banks and BAI (then known as Continental Bank N.A.), as
amended prior to the date hereof.
Federal Funds Rate means for any date the weighted
average of the rates on overnight Federal Funds transactions,
with members of the Federal Reserve System only, arranged by
Federal Funds brokers applicable to Federal Funds transactions
on that date. The Federal Funds Rate shall be determined by
the Agent on the basis of reports by Federal Funds brokers to,
and published daily by, the Federal Reserve Bank of New York
in the Composite Closing Quotations for U.S. Government
Securities. If such publication is unavailable or the Federal
Funds Rate is not set forth therein, the Federal Funds Rate
shall be determined on the basis of any other source
reasonably selected by the Agent. In the case of a day which
is not a Banking Day, the Federal Funds Rate shall be the
Federal Funds Rate for the immediately preceding Banking Day.
Franchise Agreement means any franchise agreement between
the Company or any Subsidiary and Pizza Hut, Inc., as such may
be amended or modified from time to time.
GAAP means generally accepted accounting principles as
applied in the preparation of the audited financial statements
of the Company referred to in Section 9.5.
Indebtedness means, without duplication,
(i) any obligation, including, without limitation, any
obligation for borrowed money (and any notes payable and
drafts accepted representing extensions of credit whether or
not representing obligations for borrowed money), which under
GAAP is shown on the balance sheet as a liability (including
any obligation under a Capitalized Lease but excluding
reserves for deferred income taxes and other reserves to the
extent that such reserves do not constitute an obligation),
(ii) indebtedness which is secured by a Lien on, or payable
out of the proceeds of production from, property owned by the
Company or any Subsidiary, whether or not the indebtedness
secured thereby shall have been assumed by the Company or such
Subsidiary,
(iii) guarantees, endorsements (other than endorsements
of negotiable instruments for collection in the ordinary
course of business) and other contingent liabilities (whether
direct or indirect) in connection with the obligations, stock
or dividends of any Person,
(iv) obligations under any contract providing for the making
of loans, advances or capital contributions to any Person, or
for the purchase of any property from any Person, in each case
in order to enable the Company or any Subsidiary primarily to
maintain working capital, net worth or any other balance sheet
condition or to pay debts, dividends or expenses,
(v) obligations under any contract for the purchase of
materials, supplies or other property or services if such
contract (or any related document) requires that payment for
such materials, supplies or other property or services shall
be made regardless of whether or not delivery of such
materials, supplies or other property or services is ever made
or tendered,
(vi) obligations under any contract to rent or lease (as
lessee) any real or personal property if such contract (or
related document) provides that the obligation to make
payments thereunder is absolute and unconditional under
conditions not customarily found in commercial leases then in
general use and requires that the lessee purchase or otherwise
acquire material amounts of securities, assets or obligations
of the lessor,
(vii) obligations under any other contract which, in
economic effect, is substantially equivalent to a guarantee;
all as determined in accordance with GAAP; provided that
Indebtedness shall not include trade accounts payable, accrued
expenses or income taxes payable.
Indebtedness to EBITDA Ratio means, as of the last day of
any fiscal quarter, the ratio of (a) all Indebtedness of the
Company and its Subsidiaries on such day to (b) EBITDA for the
period of four consecutive fiscal quarters ending on such day.
Interbank Rate means, for any Interest Period, the rate
per annum at which Dollar deposits in immediately available
funds are offered to the Agent two Banking Days prior to the
beginning of such Interest Period by major banks in the
interbank eurodollar market as at or about 10:00 a.m., Chicago
time, for delivery on the first day of such Interest Period,
for the number of days comprised therein and in an amount
equal to the amount of BAI's Eurodollar Loan for such Interest
Period.
Interbank Rate (Reserve Adjusted) means a rate per annum
(rounded upwards, if necessary, to the nearest 1/100 of 1%)
determined pursuant to the following formula:
Interbank Rate = Interbank Rate
(Reserve Adjusted) 1.0-Eurocurrency Reserve
Percentage
Interest Period means, with respect to any Eurodollar
Loan, the one month, two month, three month or six month
period commencing on the applicable borrowing date or
conversion date of such Loan or the last day of the prior
Interest Period for such Loan, as the case may be; provided,
however, that no Interest Period shall extend beyond the
Termination Date. Each Interest Period which would otherwise
end on a day which is not a Banking Day shall end on the next
succeeding Banking Day unless such next succeeding Banking Day
is the first Banking Day of a calendar month, in which case it
shall end on the next preceding Banking Day.
Investment means any investment, made in cash or by
delivery of any kind of property or asset, in any Person,
whether by acquisition of shares of stock or similar interest,
Indebtedness or other obligation or security, or by loan,
advance or capital contribution, or otherwise.
Lien means any mortgage, pledge, hypothecation, judgment
lien or similar legal process, title retention lien, or other
lien or security interest, including, without limitation, the
interest of a vendor under any conditional sale or other title
retention agreement and the interest of a lessor under any
Capitalized Lease.
Loan -- see Section 2.1.
Majority Banks means the Agent and those Banks whose
share in the aggregate principal amount of the Loans
outstanding constitutes (or, if no Loans are outstanding,
those whose Percentage constitutes) more than fifty percent
(50%).
Margin means (a) initially, .625% and (b) on and after
any date specified below on which the Margin is to be
adjusted, the rate per annum set forth in the table below
opposite the applicable Indebtedness to EBITDA Ratio:
Indebtedness
to
EBITDA Margin
Greater than 2.75 to 1 1.0%
Greater than 2.25 to 1
but equal to or less
than 2.75 to 1 .75%
Greater than 1.50 to 1
but equal to or less
than 2.25 to 1 .625%
Equal to or less than
1.50 to 1 .50%.
The Margin shall be adjusted, to the extent applicable, 45
days (or, in the case of the last fiscal quarter of any fiscal
year, 90 days) after the end of each fiscal quarter based on
the Indebtedness to EBITDA Ratio as of the last day of such
fiscal quarter; it being understood that if the Company fails
to deliver the financial statements required by Section
10.1(a) or 10.1(b), as applicable, by the 45th day (or, if
applicable, the 90th day) after any fiscal quarter, the Margin
shall be 1.0% until such financial statements are delivered.
Maturity Date means, for any Money Market Loan, the date
that is from one (1) to thirty (30) days from the date of such
Loan as selected by the Company in the notice of borrowing,
but not later than the Termination Date.
Money Market Loan means any Loan designated as such which
is made pursuant to Section 2.3(c).
Money Market Rate means for any Money Market Loan the per
annum interest rate which is quoted by the Agent for such
Money Market Loan at the making thereof.
Notes means the Notes referred to in Section 3.
Payment Date means (a) as to any Eurodollar Loan, the
last day of each Interest Period with respect thereto and, if
such Interest Period is in excess of three months, the date
that is three months after the commencement of such Interest
Period, and (b) as to any Reference Rate Loan and any Money
Market Loan, the last day of each March, June, September and
December.
PBGC means the Pension Benefit Guaranty Corporation and
any entity succeeding to any or all of its functions under
ERISA.
Percentage means, for any Bank, the percentage which the
amount of such Bank's Commitment is of the amount of the
Credit.
Permitted Liens means the following, provided that none
of the following materially adversely affect the financial
condition or business operations of the Company and its
Subsidiaries taken as a whole:
(1) Liens of taxes, assessments, and governmental
charges not yet payable, or not delinquent and payable without
interest or penalty so long as so payable;
(2) Liens of taxes, assessments, governmental charges and
other Indebtedness, the validity of which are being contested
in good faith by appropriate action diligently pursued,
provided that such proceeding shall suspend the collection of
such taxes, assessments, governmental charges, or other
Indebtedness and no property of the Company or any Subsidiary
would be in any danger of being forfeited during the period of
such contest;
(3) Liens of employees and laborers for current wages, not
yet due, incidental to current operations or current
construction, and Liens of others for current indebtedness,
not yet due, incidental to current construction, including
maintenance, repair, and alteration; mechanics', material-
men's, workmen's, repairmen's or carriers' liens, or other
similar Liens arising in the ordinary course of business, or
deposits, Liens, or pledges of personal property to obtain the
release of any such Liens;
(4) oil and gas leases, licenses, privileges, other leases,
releases of damages, easements, restrictions on the use of
real property, zoning laws and ordinances, rights-of-way,
minor irregularities in title and other similar encumbrances
(including the right of vendors to occupy and use real
property previously sold to the Company or any Subsidiary not
immediately required by the Company or any Subsidiary for use
in its business), not in any case impairing the use by the
Company or any Subsidiary in its business of the property
affected thereby;
(5) in the case of easements and right-of-way grants from
governmental bodies, the rights of the public;
(6) Liens existing prior to the time of acquisition upon
any real or personal property acquired by the Company or any
Subsidiary through purchase, merger, consolidation, or
otherwise, whether or not assumed by the Company or any
Subsidiary;
(7) Liens in connection with the acquisition of property
after the date hereof by way of purchase money mortgage,
conditional sale or other title retention agreement,
Capitalized Lease or other deferred payment contract, and
attaching only to the property being acquired, if the
Indebtedness secured thereby does not exceed 75% (100% in the
case of a Capitalized Lease) of the lesser of cost or fair
market value of such property at the time of acquisition
thereof;
(8) deposits, Liens, or pledges of personal property
or of securities to secure payments of workers' compensation,
unemployment insurance, old age pensions or other Social
Security, or to secure the performance of bids, tenders,
contracts (other than contracts for the payment of
money), or leases to which the Company or any Subsidiary
is a party, or to secure public or statutory obligations
of the Company or any Subsidiary, or deposits of cash or
United States government obligations to secure or in lieu
of surety, stay or appeal bonds to which the Company or
any Subsidiary is a party, or pledges, Liens, or deposits
for similar purposes in the ordinary course of business;
(9) Liens based on workers' compensation claims which are
not due and payable, or the validity of which is being
contested in good faith; and
(10) minor discrepancies and encroachments that might be
disclosed by an accurate survey.
Should any of the preceding Permitted Liens occur, the Banks
may reasonably request, as to all the preceding matters
referred to in paragraphs (1), (2), (3), (7), (8) and (9)
above, that adequate reserves be set aside and maintained by
Company or any Subsidiary with respect thereto.
Person means an individual, partnership, corporation,
trust, joint venture, joint stock company, association,
unincorporated organization, government or agency or political
subdivision thereof, or other entity.
Pizza Hut, Inc. means Pizza Hut, Inc., a Delaware
corporation.
Plan means a "pension plan," as such term is defined in
ERISA, established or maintained by the Company or any ERISA
Affiliate or as to which the Company or any ERISA Affiliate
contributes or is a member or otherwise may have any
liability.
Reference Rate means a per annum interest rate which is
the greater at any time of (i) the rate of interest then most
recently announced by BAI at Chicago, Illinois as its
reference rate, or (ii) 0.5% plus the Federal Funds Rate.
Such reference rate of BAI is not necessarily intended to be
the lowest rate of interest determined by BAI in connection
with extensions of credit. Changes in the rate of interest on
that portion of any Loans maintained as Reference Rate Loans
shall take effect simultaneously with each change in the
Reference Rate. The Agent shall give notice promptly to the
Company and the Banks of changes in the Reference Rate.
Reference Rate Loan means any Loan which bears interest
at or by reference to the Reference Rate.
Reportable Event has the meaning given to such term in
ERISA.
Romacorp, Inc. means Romacorp, Inc., a Delaware
corporation.
Significant Subsidiary means, at any time of
determination, a Subsidiary (a) which has assets with a Value
equal to three percent (3%) or more of the value of the
consolidated total assets of the Company and its Subsidiaries,
determined as of the last day of the immediately preceding
fiscal year, or (b) which had Cash Flow (hereinafter defined)
during the immediately preceding fiscal year equal to three
percent (3%) or more of the consolidated Cash Flow of the
Company and its Subsidiaries during such fiscal year. "Cash
Flow" for any period means earnings before interest expense,
provision for taxes, depreciation, amortization and other
noncash charges for such period. "Value" as used in the first
sentence of this definition means, with respect to any asset
at any date of determination, the book value of such asset as
would appear immediately prior to such determination on the
balance sheet of the owner of such asset prepared in
accordance with GAAP.
Subsidiary means any Person of which or in which the
Company and its other Subsidiaries at any time own directly or
indirectly 50% or more of (i) the combined voting power of all
classes of stock having general voting power under ordinary
circumstances to elect a majority of the board of directors of
such Person, if it is a corporation, (ii) the capital interest
or profits interest of such Person, if it is a partnership,
joint venture or similar entity, or (iii) the beneficial
interest of such Person, if it is a trust, association or
other unincorporated organization.
Supermajority Banks means the Agent and those Banks whose
share in the aggregate principal amount of the Loans
outstanding constitutes (or, if no Loans are outstanding,
those whose Percentages constitute) at least sixty-seven
percent (67%).
Termination Date means August 10, 1997, as such date may
from time to time be extended in accordance with Section 2.5,
or such earlier date as may be fixed by the Company on at
least thirty (30) Banking Days' written notice to the Agent
and the Banks.
Termination Event with respect to any Plan means (i) the
institution by the Company, the PBGC or any other Person of
steps to terminate such Plan, (ii) the occurrence of a
Reportable Event with respect to such Plan which the Agent
reasonably believes may be a basis for the PBGC to institute
steps to terminate such Plan, or (iii) the withdrawal from
such Plan (or deemed withdrawal under section 4062(f) of
ERISA) by the Company or any ERISA Affiliate if the Company or
such ERISA Affiliate is a "substantial employer" within the
meaning of section 4063 of ERISA.
Unmatured Event of Default means any event or condition
which, with the lapse of time or giving of notice to the
Company or both, would constitute an Event of Default.
2 Other Definitional Provisions. Unless otherwise
defined or the context otherwise requires, all financial and
accounting terms used herein or in any certificate or other
document made or delivered pursuant hereto shall be defined in
accordance with GAAP. Unless otherwise defined therein, all
terms defined in this Agreement shall have the defined
meanings when used in any Note or in any certificate or other
document made or delivered pursuant hereto.
3 Interpretation of Agreement. A Section, an Exhibit or
a Schedule is, unless otherwise stated, a reference to a
section hereof, an exhibit hereto or a schedule hereto, as the
case may be. Section captions used in this Agreement are for
convenience only, and shall not affect the construction of
this Agreement. The words "hereof," "herein," "hereto" and
"hereunder" and words of similar purport when used in this
Agreement shall refer to this Agreement as a whole and not to
any particular provision of this Agreement.
1.4 Compliance with Financial Restrictions. Compliance
with each of the financial ratios and restrictions contained
in Section 10 shall, except as otherwise provided herein, be
determined in accordance with GAAP consistently followed.
2. COMMITMENTS OF THE BANKS; BORROWING PROCEDURES.
1 Commitments. Subject to the terms and conditions of
this Agreement, each Bank, severally but not jointly, agrees
to make loans (collectively the "Loans" and individually each
a "Loan") to the Company, which Loans the Company may prepay
and reborrow during the period from the date hereof to, but
not including, the Termination Date, in such amounts as the
Company may from time to time request, but not exceeding in
the aggregate at any one time outstanding the amount set forth
opposite said Bank's name on the signature page hereof (or
such reduced amount as may be fixed by the Company pursuant to
Section 5.3) (herein, the commitment of any Bank to make Loans
to the Company up to an amount not exceeding at any one time
outstanding the amount set forth opposite such Bank's name on
the signature page hereof shall be referred to as such Bank's
"Commitment"). All Loans made hereunder shall be made by the
Banks on a pro-rata basis according to each Bank's Percentage.
2 Loan Options. Each Loan shall be either a Reference
Rate Loan, a Eurodollar Loan or a Money Market Loan, except as
otherwise provided herein. Any combination of types of Loans
may be outstanding at the same time; provided, however, that
the Company may not have more than ten borrowings of
Eurodollar Loans outstanding at the same time.
3 Borrowing Procedure.
(a) Subject to the terms of this Agreement, the Company
shall give the Agent (x) at least three Banking Days' prior
notice of each proposed borrowing of Eurodollar Loans not
later than 10:00 a.m. Chicago time on the date of such notice,
(y) notice not later than 12:00 noon Chicago time on the day
of each proposed borrowing of Reference Rate Loans and (z)
notice not later than 10:00 a.m. Chicago time on the day of
each proposed borrowing of Money Market Loans. Each notice
shall be in writing or by telephone and shall specify (i) the
type of Loans requested, (ii) in the case of Eurodollar Loans,
the initial Interest Period therefor, (iii) the borrowing
date, which shall be a Banking Day, (iv) the amount of Loans
requested and (v) in the case of Money Market Loans, the
Maturity Date therefor. The Agent shall promptly advise each
Bank thereof. Not later than 12:30 p.m., Chicago time, on the
date of a proposed borrowing, each Bank shall provide the
Agent at its principal office in Chicago with immediately
available funds covering such Bank's ratable share (if any) of
such borrowing.
(b) Each borrowing of Reference Rate Loans and Money Market
Loans shall be in a minimum amount of $30,000 or an integral
multiple thereof. Each borrowing of Eurodollar Loans shall be
in a minimum amount of $500,000 or an integral multiple
thereof.
(c) If the Company requests a borrowing of Money Market
Loans, the Agent shall promptly provide to the Company a
quotation of the interest rate that would be applicable to a
borrowing of Money Market Loans in the amount requested and
with a Maturity Date specified in the notice of borrowing;
provided, however, that in no event shall such quoted rate be
less than the lesser at any time of (i) the rate of interest
then most recently announced by BAI at Chicago, Illinois as
its reference rate, or (ii) the sum of 0.5% plus the Federal
Funds Rate. If such interest rate is satisfactory to the
Company, the Company shall, not later than the time specified
by the Agent when providing the interest rate quotation,
request that such Money Market Loan be made. The principal
amount of each Money Market Loan shall mature and, shall be
payable in full, on its respective Maturity Date. The Company
shall not prepay the principal of any Money Market Loan
without the consent of all Banks.
(d) The Agent, on behalf of the Banks, will pay to the
Company, by crediting its commercial demand deposit account
number 76-03568 maintained at BAI, the amount of each Loan on
the date designated in the notice of borrowing upon receipt of
the documents required in Section 7 and, if applicable,
Section 8, with respect to such Loan.
4 Continuation and/or Conversion of Loans. The Company
may elect (i) to continue any outstanding Eurodollar Loan from
the current Interest Period of such Loan into a subsequent
Interest Period to begin on the last day of such current
Interest Period, or (ii) to convert any outstanding Reference
Rate Loan into a Eurodollar Loan or, on the last day of the
current Interest Period, to convert one type of Loan into
another, in each case by giving at least three (3) Banking
Days' prior telephonic notice not later than 10:00 a.m.
Chicago time on the date of such notice (promptly confirmed
in writing) to the Agent (which shall promptly advise each
Bank thereof) of such continuation or conversion, specifying
the date, amount and the Interest Period, if applicable.
Absent notice of continuation or conversion, each Eurodollar
Loan shall automatically convert into a Reference Rate Loan on
the last day of the current Interest Period for such Loan,
unless paid in full on such last day. No Loan shall be
converted into a Eurodollar Loan and no Eurodollar Loan shall
be continued less than thirty days before the Termination Date
or at any time that an Event of Default or an Unmatured Event
of Default exists.
5 Extension of the Termination Date.
(a) At least 60 but not more than 90 days before any
anniversary of the Effective Date, the Company may, by
delivery of a written request to the Agent in the form of
Exhibit B, request that each Bank agree to extend the
then-scheduled Termination Date by one (1) year.
(b) The Agent shall, upon receipt of any such
extension request, promptly notify each Bank thereof, and
request that each Bank promptly advise the Agent of its
approval or rejection of such request.
(c) Upon receipt of such notification from the Agent,
each Bank may, in its sole discretion, agree to extend
for one (1) year, or decline to extend, the Termination
Date, and each Bank shall, within 30 days of receipt of
the notice described in clause (b), notify the Agent of
its approval or denial of such request. If any Bank does
not so notify the Agent, such Bank shall be deemed to
have denied such extension request. The Agent shall, no
later than 30 days following its receipt of any extension
request from the Company, notify the Company as to the
Banks which have approved or denied such request.
(d) If all of the Banks approve any such request, the
Termination Date shall be extended to the date which is
one (1) year after the Termination Date in effect
immediately prior to such extension. If fewer than all
of the Banks approve any such request, the Termination
Date shall not be extended.
3. NOTES EVIDENCING LOANS.
1 Reference Rate Loans; Eurodollar Loans. The Reference
Rate Loans and Eurodollar Loans shall be evidenced by the
Company's promissory note (the "Series A Note") in the form of
Exhibit A-1, with appropriate insertions, which Note shall (i)
be dated the Effective Date (or such other date satisfactory
to the Agent), (ii) be made payable to the order of the Agent
for the account of the Banks ratably in accordance with their
Percentages, and (iii) mature on the Termination Date.
2 Money Market Loans. The Money Market Loans shall be
evidenced by the Company's promissory note (the "Series B
Note") in the form of Exhibit A-2, with appropriate
insertions, which Note shall (i) be dated the Effective Date
(or such other date satisfactory to the Agent), (ii) be made
payable to the order of the Agent for the account of the Banks
ratably in accordance with their Percentages, and (iii) mature
on the Termination Date.
3 Evidence of Loans. All Loans made by the Banks to the
Company pursuant to this Agreement and all payments of
principal shall be evidenced by the Agent in its records or,
at its option, on the schedule attached to the applicable
Note, which records or schedule(s) shall be rebuttable
presumptive evidence of the subject matter thereof.
4. INTEREST AND FEES.
1 Interest.
(a) Reference Rate Loan. The unpaid principal of the
Reference Rate Loans shall bear interest prior to maturity at
a rate per annum equal to the Reference Rate in effect from
time to time. Prior to maturity interest on each Reference
Rate Loan shall be payable on each Payment Date therefor and
at maturity.
(b) Eurodollar Loans. The unpaid principal of each
Eurodollar Loan shall bear interest prior to maturity at a
rate per annum equal to the Interbank Rate (Reserve Adjusted)
in effect for each Interest Period therefor plus the Margin
from time to time in effect. Prior to maturity interest on
each Eurodollar Loan shall be payable on each Payment Date
therefor and at maturity.
(c) Money Market Loans. The unpaid principal of each Money
Market Loan shall bear interest prior to maturity at the Money
Market Rate applicable to such Loan. Prior to maturity
interest on each Money Market Loan shall be payable on the
Payment Date therefor and at maturity.
(d) Interest After Maturity. The Company shall pay to the
Banks interest on any amount of principal of any Loan which is
not paid when due, whether at stated maturity, by acceleration
or otherwise, accruing from and including the date such amount
shall have become due to (but not including) the date of
payment thereof in full, at the rate per annum which is equal
to the greater of (i) 2% in excess of the rate applicable to
the unpaid amount immediately before it became due or (ii) 2%
in excess of the Reference Rate from time to time in effect.
Interest after maturity shall be payable on demand.
2 Commitment Fee. The Company agrees to pay to the Banks
ratably in accordance with their Percentages, a commitment
fee, for the period commencing on the Effective Date and
ending on the earlier of (x) the Termination Date and (y) the
date of termination of the Credit, equal to 0.25% per annum on
the daily average of the unused amount of the Credit. The
commitment fee paid to the Banks pursuant to this Section 4.2
shall be payable on the last day of each March, June,
September and December and on the Termination Date or the date
of termination of the Credit, in each case for any period then
ending for which such commitment fee shall not have been
theretofore paid.
3 Method of Calculating Interest and Fees. Interest on
each Eurodollar Loan and Money Market Loan (and on any
Reference Rate Loan bearing interest by reference to the
Federal Funds Rate) shall be computed on the basis of a year
consisting of 360 days and paid for actual days elapsed,
calculated as to each Interest Period from and including the
first day thereof to but excluding the last day thereof.
Interest on each Reference Rate Loan (other than any Reference
Rate Loan described in the preceding sentence) shall be
calculated on the basis of a 365 day or 366 day year, as
applicable, and paid for actual days elapsed. The fee payable
pursuant to Section 4.2 shall be computed on the basis of a
year consisting of 360 days and paid for actual days elapsed.
4 Agent's Fee. The Company shall pay the Agent the fees
separately agreed to between the Company and the Agent.
5. PAYMENTS, PREPAYMENTS, REDUCTION OR TERMINATION
OF THE CREDIT.
1 Place of Payment. All payments hereunder (including
payments with respect to the Notes) shall be made without set-
off or counterclaim and shall be made to the Agent, for the
account of the Banks ratably in accordance with their share of
the Credit, in immediately available funds prior to 12:30
p.m., Chicago time, on the date due at the Agent's office at
231 South LaSalle Street, Chicago, Illinois 60697, or at such
other place as may be designated by the Agent to the Company
in writing. Any payments received after such time shall be
deemed received on the next Banking Day. The Agent shall
promptly remit in immediately available funds to each Bank its
share of all such payments received by the Agent for the
account of such Bank. Whenever any payment to be made
hereunder or under any Note shall be stated to be due on a
date other than a Banking Day, such payment may be made on the
next succeeding Banking Day (unless, in the case of a payment
with respect to a Eurodollar Loan, such next succeeding
Banking Day is the first Banking Day of a calendar month, in
which case such payment shall be due on the next preceding
Banking Day), and such extension of time shall be included in
the computation of interest or any fees.
2 Prepayments. The Company may from time to time, upon
prior written or telephonic notice received by the Agent
(which shall promptly advise each Bank thereof), prepay the
principal of any Loan (other than a Money Market Loan) in
whole or in part without premium, as contemplated by Section
2.1; provided, however, that (a) any partial prepayment of
principal shall be in a minimum amount of $30,000 or an
integral multiple thereof and (b) any prepayment of a
Eurodollar Loan on a day other than the last day of an
Interest Period therefor shall be subject to Section 6.1.
3 Reduction of Credit. The Company may from time to
time, upon at least thirty (30) days' prior written or
telephonic notice received by the Agent (which shall promptly
advise each Bank thereof), permanently reduce the amount of
the Credit (such reduction to be made among the Banks
according to their Percentages) to an amount not less than the
principal amount of all outstanding Loans. Any such reduction
shall be in a minimum amount of $1,000,000 or an integral
multiple thereof. The Company may at any time on like notice
terminate the Credit upon payment in full of the Loans and
other liabilities of the Company hereunder. The Company shall
promptly confirm any telephonic notice of reduction or
termination of the Credit in writing.
4 Offset. In addition to and not in limitation of all
rights of offset that any Bank or other holder of any Loan may
have under applicable law, each Bank or other holder of any
Loan shall, upon the occurrence of any Event of Default
described in Section 11.1 or any Unmatured Event of Default
described in Section 11.1(e), have the right to appropriate
and apply to the payment of each Loan any and all balances,
credits, deposits, accounts or moneys of the Company then or
thereafter with such Bank or other holder.
5 Proration of Payments. If any Bank or other holder of
a Loan shall obtain any payment or other recovery (whether
voluntary, involuntary, by application of offset or otherwise)
on account of principal of or interest on any Loan in excess
of its pro rata share of payments and other recoveries
obtained by all Banks or other holders on account of principal
of and interest on Loans then held by them, such Bank or other
holder shall purchase from the other Banks or holders such
participation in the Loans held by them as shall be necessary
to cause such purchasing Bank or other holder to share the
excess payment or other recovery ratably with each of them;
provided, however, that if all or any portion of the excess
payment or other recovery is thereafter recovered from such
purchasing holder, the purchase shall be rescinded and the
purchase price restored to the extent of such recovery, but
without interest. The Company agrees that the Bank so
purchasing a participation from the other Banks under this
Section 5.5 may exercise all its rights of payment, including
the right of set-off, with respect to such participation as
fully as if such Bank were the direct creditor of the Company
in the amount of such participation.
6. INDEMNIFICATION: EURODOLLAR LOANS.
1 Indemnity for Funding Losses. The Company will
indemnify each Bank upon demand against any loss or expense
which such Bank may sustain or incur, including, without
limitation, any loss or expense sustained or incurred in
obtaining, liquidating or employing deposits or other funds
acquired to effect funding or maintain a Loan, as a
consequence of (i) any failure of the Company to borrow any
Loan on the date specified therefor in the notice of borrowing
with respect to such Loan, (ii) any failure of the Company to
make any payment when due of any amount due hereunder or under
any Note in connection with any Loan, (iii) any payment or
prepayment of any Eurodollar Loan on a date other than the
last day of the Interest Period for such Loan, or (iv) any
prepayment of any Money Market Loan. The Company's foregoing
obligations shall survive termination of this Agreement.
2 Capital Adequacy. If any Bank shall determine at any
time after the date hereof that the adoption of any law, rule
or regulation regarding capital adequacy, or any change
therein or in the interpretation or administration thereof by
any governmental authority, central bank or comparable agency
charged with the interpretation or administration thereof, or
compliance by such Bank with any request or directive
regarding capital adequacy (whether or not having the force of
law) from any such authority, central bank or comparable
agency, has or would have the effect of reducing the rate of
return on such Bank's capital as a consequence of its
obligations hereunder to a level below that which such Bank
could have achieved but for such adoption, change or
compliance (taking into consideration such Bank's policies
with respect to capital adequacy), by an amount deemed by such
Bank to be material, then the Company shall pay to such Bank
upon demand such amount or amounts, in addition to the amounts
payable under the other provisions of this Agreement or under
any Note, as will compensate such Bank for such reduction.
Determination by such Bank for purposes of this Section 6.2 of
the additional amount or amounts required to compensate such
Bank in respect of the foregoing shall be conclusive in the
absence of demonstrable error. In determining such amount or
amounts, such Bank may use any reasonable averaging and
attribution methods.
3 Additional Provisions Relating to Eurodollar
Loans.
(a) Increased Cost. If, as a result of any law,
regulation, treaty or directive, or any change therein, or in
the interpretation or application thereof, or compliance by
any Bank with any request or directive (whether or not having
the force of law) from any court or governmental authority,
agency or instrumentality:
(ii) the basis of taxation of payments to any Bank of the
principal of or interest on any Eurodollar Loan (other than
taxes imposed on the overall net income of such Bank by the
jurisdiction in which such Bank has its principal office) is
changed; or
(iii) any reserve, special deposit, special assessment,
or similar requirement against assets of, deposits with or for
the account of, or credit extended by any Bank is imposed,
modified or deemed applicable; or
(iv) any other condition affecting this Agreement or the
Eurodollar Loans is imposed on any Bank or the interbank
eurodollar market;
and such Bank determines that, by reason thereof, the cost to
such Bank of making or maintaining any Eurodollar Loan is
increased, or the amount of any sum receivable by such Bank
hereunder in respect of any Eurodollar Loan is reduced;
then, the Company shall pay to such Bank upon demand (which
demand shall be accompanied by a statement setting forth the
basis for the calculation thereof but only to the extent not
theretofore provided to the Company) such additional amount or
amounts as will compensate such Bank for such additional cost
or reduction (provided such amount has not been compensated
for in the calculation of the Eurocurrency Reserve
Percentage). Determinations by such Bank for purposes of this
section of the additional amounts required to compensate such
Bank in respect of the foregoing shall be conclusive, absent
demonstrable error. The provisions of this Section 6.3(a)
shall only be applicable to Eurodollar Loans which are
outstanding on or after the date such Bank has notified the
Company that an event has occurred which will result in the
imposition of a liability on the Company under this Section
6.3(a), it being understood that the Company may prepay any
such Loan without any prepayment fee or penalty (except as
provided in Section 6.1).
(b) Eurodollar Deposits Unavailable or Interest Rate
Unascertainable. If the Company has any Eurodollar Loan
outstanding, or has notified the Agent of its intention to
incur a Eurodollar Loan as provided herein, then in the event
that prior to any Interest Period any Bank shall have
determined (which determination shall be conclusive and
binding on the parties hereto) that deposits of the necessary
amount for the relevant Interest Period are not available to
such Bank in the interbank eurodollar market or that, by
reason of circumstances affecting such market, adequate and
reasonable means do not exist for ascertaining the Interbank
Rate applicable to such Interest Period, such Bank shall
promptly give notice of such determination to the Company, the
Agent and the other Banks, and (i) any notice of new
Eurodollar Loans previously given by the Company and not yet
borrowed shall be deemed a notice to make Reference Rate Loans
and (ii) the Company shall be obligated either to prepay or to
convert any outstanding Eurodollar Loans to Reference Rate
Loans or, if available, Money Market Loans on the last day of
the then current Interest Period with respect thereto.
(c) Changes in Law Rendering Eurodollar Loans
Unlawful. If at any time due to any new law, treaty or
regulation, or any interpretation thereof by any governmental
or other regulatory authority charged with the administration
thereof, or for any other reason arising subsequent to the
date hereof, it shall become unlawful for any Bank to fund any
Eurodollar Loan which it is committed to make hereunder, the
obligation of such Bank to provide such Loan shall, upon the
happening of such event, forthwith be suspended for the
duration of such illegality. If any such change shall make it
unlawful for such Bank to continue any Eurodollar Loan
previously made by it hereunder, such Bank shall, upon the
happening of such event, notify the Company, the Agent and the
other Banks thereof in writing stating the reasons therefor,
and the Company shall on the earlier of (i) the last day of
the then current Interest Period for such Eurodollar Loan or
(ii) if required by such law, regulation or interpretation, on
such date as shall be specified in such notice, either convert
such unlawful Loans to Reference Rate Loans, or, if available,
Money Market Loans, or prepay all such Eurodollar Loans
without any penalty (except as provided in Section 6.1), to
such Bank in full.
(d) Discretion of any Bank as to Manner of Funding.
Subject to the provisions of Section 6.3(e), any Bank shall be
entitled to fund and maintain its funding of all or any part
of its Eurodollar Loans in any manner it elects, it being
understood, however, that for the purposes of this Agreement
all determinations hereunder shall be made as if such Bank had
actually funded and maintained each Eurodollar Loan through
the purchase of deposits having a maturity corresponding to
the maturity of such Eurodollar Loan and being an interest
rate equal to the Interbank Rate. Any Bank may, if it so
elects, fulfill any commitment to make Eurodollar Loans by
causing a foreign branch or affiliate to make or continue such
Eurodollar Loans, provided, however, that in such event such
Loans shall be deemed for the purposes of this Agreement to
have been made by such Bank, and the obligation of the Company
to repay such Loans shall nevertheless be to such Bank and
shall be deemed held by such Bank, to the extent of such
Loans, for the account of such branch or affiliate.
(e) Mitigation of Circumstances. Each Bank shall
promptly notify the Company and the Agent of any event of
which it has knowledge which will result in, and will use
reasonable commercial efforts available to it (and not, in
such Bank's good faith judgment, otherwise disadvantageous to
such Bank) to mitigate or avoid, (i) any obligation by the
Company to pay any amount pursuant to Section 6.3(a) or (ii)
the occurrence of any circumstances of the nature described in
Section 6.3(b) or 6.3(c) (and, if any Bank has given notice of
any such event described in clause (i) or (ii) above and
thereafter such event ceases to exist, such Bank shall
promptly so notify the Company and the Agent). Without
limiting the foregoing, each Bank will designate a different
funding office if such designation will avoid (or reduce the
cost to the Company of) any event described in clause (i) or
(ii) of the preceding sentence and such designation will not,
in such Bank's sole judgment, be otherwise disadvantageous to
such Bank.
7. CONDITIONS PRECEDENT TO ALL LOANS.
The obligation of any Bank to make any Loan is subject to
the satisfaction of each of the following conditions
precedent:
1 Notice. The Agent shall have received timely notice of
such Loan in accordance with Section 2.3.
2 Default. Before and after giving effect to such Loan,
no Event of Default or Unmatured Event of Default shall have
occurred and be continuing.
3 Insurance. There shall have been no material change,
or notice of prospective material change (whether such notice
is
formal or informal) in the nature, extent, scope or
cost of the insurance policies of the Company or any
Subsidiary listed on Exhibit E which change would have a
material adverse effect on the financial condition of the
Company and its Subsidiaries taken as a whole or would
significantly adversely affect the Company's ability to
perform its obligations under this Agreement or under any
Note.
4 Warranties. Before and after giving effect to such
Loan, the warranties in Section 9 (other than the warranty in
the last sentence of Section 9.5 and in Section 9.10) shall be
true and correct as though made on the date of such Loan,
except for such changes as are specifically permitted
hereunder.
5 Certification. Each request for a Loan shall be deemed
to be a certification that the conditions precedent set out in
Sections 7.2, 7.3 and 7.4 have been satisfied.
8. CONDITIONS PRECEDENT TO EFFECTIVE DATE AND
INITIAL LOAN THEREON OR THEREAFTER.
The occurrence of the Effective Date and the obligation of
the Banks to make the initial Loan hereunder on or after the
Effective Date is subject to the satisfaction of the
conditions precedent, in addition to the applicable conditions
precedent set forth in Section 7 above, that (a) all Loans
under the Existing Credit Agreement shall have been (or shall
be with the proceeds of the initial Loans) paid in full, and
the "Credit" under and as defined in the Existing Credit
Agreement shall have terminated, and (b) the Company shall
have delivered to the Agent all of the following, each (i)
duly executed and dated the Effective Date or such earlier
date as is satisfactory to the Agent, (ii) in form and
substance satisfactory to the Agent, and (iii) in sufficient
number of signed counterparts to provide one for each Bank
(except for the Notes, of which only the originals shall be
signed).
1 Notes. Its Series A Note and Series B Note payable to
the order of the Agent for the account of the Banks ratably in
accordance with their respective Commitments.
2 Resolutions; Consents and Approvals. A copy, duly
certified by the secretary or an assistant secretary of the
Company, of (i) the resolutions of the Company's Board of
Directors authorizing or ratifying the execution and delivery
of this Agreement and the Notes and authorizing the borrowings
hereunder, (ii) all documents evidencing other necessary
corporate action with respect to this Agreement and the Notes,
and (iii) all approvals or consents, if any, with respect to
this Agreement and the Notes.
3 Incumbency. A certificate of the secretary or an
assistant secretary of the Company certifying the names of the
Company's officers authorized to sign this Agreement, the
Notes and all other documents or certificates to be delivered
hereunder, together with the true signatures of such officers.
4 Opinion. An opinion of Shook, Hardy & Bacon P.C,
counsel to the Company, addressed to the Agent and the Banks
in substantially the form of Exhibit J.
5 General. All other documents which are provided for
hereunder or which the Banks may reasonably request.
9. WARRANTIES.
To induce the Banks to grant the Credit and to make the
Loans, the Company warrants that:
1 Existence. The Company and all of its corporate
Subsidiaries are corporations duly organized, validly existing
and in good standing under the laws of the states of their
respective incorporation. All of the Company's other
Subsidiaries, if any, are entities duly organized, validly
existing and in good standing under the laws of the
jurisdictions of their respective organization. The Company
and all of its Subsidiaries are in good standing and are duly
qualified to do business in each state where, because of the
nature of their respective activities or properties, such
qualification is necessary.
2 Authorization. The Company is duly authorized to
execute and deliver this Agreement and the Notes and is and
will continue to be duly authorized to borrow monies hereunder
and to perform its obligations under this Agreement and under
the Notes. The execution, delivery and performance by the
Company of this Agreement and the Notes and the borrowings
hereunder do not and will not require any consent or approval
of any governmental agency or authority.
3 No Conflicts. The execution, delivery and performance
by the Company of this Agreement and the Notes (a) do not and
will not conflict with (i) any provision of law applicable to
the Company, (ii) the charter or by-laws of the Company, (iii)
any agreement binding upon the Company, or (iv) any court or
administrative order or decree applicable to the Company and
(b) do not and will not require, or result in, the creation or
imposition of any Lien on any asset of the Company or any of
its Subsidiaries.
4 Validity and Binding Effect. This Agreement is, and
the Notes when duly executed and delivered will be, legal,
valid and binding obligations of the Company, enforceable
against the Company in accordance with their respective terms,
except as enforceability may be limited by bankruptcy,
insolvency or other similar laws of general application
affecting the enforcement of creditors' rights and by general
principles of equity limiting the availability of equitable
remedies.
5 Financial Statements. The Company's audited
consolidated financial statement as at March 29, 1994 and the
Company's Quarterly Report on Form 10-Q dated June 28, 1994
and filed with the Securities and Exchange Commission, copies
of which have been furnished to each Bank, have been prepared
in conformity with generally accepted accounting principles
applied on a basis consistent with that of the preceding
fiscal year and period and present fairly the financial
condition of the Company and its Subsidiaries as at such dates
and the results of their operations for the periods then
ended, subject (in the case of the interim financial
statement) to year-end audit adjustments. Since March 29, 1994
there has been no material adverse change in the financial
condition, assets, liabilities, business operations,
management or prospects of the Company and its Subsidiaries
taken as a whole.
6 Litigation. No claims, litigation, arbitration
proceedings or governmental proceedings are pending or
threatened against or are affecting the Company or any of its
Subsidiaries, the results of which might materially and
adversely affect the financial condition, assets, liabilities,
business operations, management or prospects of the Company
and its Subsidiaries taken as a whole, except those referred
to in a schedule furnished to each Bank contemporaneously
herewith and attached hereto as Exhibit C. Other than any
liability incident to such claims, litigation or proceedings
or provided for or disclosed in the financial statements
referred to in Section 9.5, neither the Company nor any of its
Subsidiaries has any contingent liabilities which are material
to the Company and its Subsidiaries taken as a whole.
7 Taxes. Each of the Company and its Subsidiaries has
filed all tax returns, to the best of its knowledge, which are
required to have been filed and has paid, or made adequate
provisions for the payment of all material taxes, assessments
and other governmental charges or levies imposed upon it, its
income or any of its properties, franchises or assets which
are due and payable, except such taxes, assessments and other
governmental charges or levies, if any, as are being contested
in good faith and by appropriate proceedings and as to which
such reserves or other appropriate provisions as may be
required by GAAP have been maintained.
8 Liens. None of the assets of the Company or any of its
Subsidiaries is subject to any Lien, except for (a) Permitted
Liens, (b) Liens disclosed in the financial statements
referred to in Section 9.5; and (c) Liens listed on Exhibit D.
9 No Default. Neither the Company nor any of its
Subsidiaries is in default under any agreement or instrument
to which the Company or any Subsidiary is a party or by which
any of their respective properties or assets is bound or
affected, which default might materially and adversely affect
the financial condition, assets, liabilities, business
operations, management or prospects of the Company and its
Subsidiaries taken as a whole. No Event of Default or
Unmatured Event of Default has occurred and is continuing.
10 Insurance. The schedule that summarizes the property
and casualty insurance program carried by the Company and its
Subsidiaries (Exhibit E attached hereto) is complete and
accurate in all material aspects. This summary includes the
insurer's(s') name(s), policy numbers(s), expiration date(s),
amount(s) of coverage, type(s) of coverage, the annual
premium(s), exclusions, deductibles and self-insured
retention, and describes any other self-insurance or risk
assumption agreed to by the Company or any Subsidiary or
imposed upon the Company or any Subsidiary by any such
insurer.
11 Subsidiaries. The Company has no Subsidiaries except
as listed on Exhibit F (as updated from time to time pursuant
to Section 10.1(f)). The Company and its Subsidiaries own the
percentage of its Subsidiaries as set forth on Exhibit F.
12 Partnerships. Neither the Company nor any of its
Subsidiaries is a partner or joint venturer in any
partnership or joint venture other than the partnerships and
joint ventures listed on Exhibit G (as updated from time to
time pursuant to Section 10.1(f)).
13 Regulation U. (i) The Company is not engaged in the
business of purchasing or selling margin stock (as defined in
Regulation U of the Board of Governors of the Federal Reserve
System) or extending credit to others for the purpose of
purchasing or carrying margin stock, (ii) no part of the
proceeds of any Loan will be used to purchase or carry any
margin stock, and (iii) no Loan will be used for any purpose
which would violate any of the margin regulations of said
Board of Governors.
14 Compliance. The Company and its Subsidiaries are in
material compliance with all statutes and governmental rules
and regulations applicable to them.
15 Pension Plans. Each Plan complies in all material
respects with all material applicable statutes and
governmental rules and regulations, and (i) no Reportable
Event has occurred and is continuing with respect to any Plan,
(ii) neither the Company nor any ERISA Affiliate has withdrawn
from any Plan or instituted steps to do so, and (iii) no steps
have been instituted to terminate any Plan. No condition
exists or event or transaction has occurred in connection with
any Plan which could result in the incurrence by the Company
or any ERISA Affiliate of any material liability, fine or
penalty.
COMPANY'S COVENANTS.
From the date of this Agreement and thereafter until the
expiration or termination of the Credit and until the Notes
and other liabilities of the Company hereunder are paid in
full, the Company agrees that it will:
1 Financial Statements and Other Information. Furnish to
each Bank:
(a) within ninety-five (95) days after each fiscal year of
the Company, a copy of the annual audit and Form 10-K report
of the Company and its Subsidiaries prepared on a consolidated
basis in conformity with GAAP and bearing the unqualified
opinion of an independent certified public accountant of
recognized national standing selected by the Company whose
opinion shall be in scope and substance satisfactory to the
Banks;
(b) within fifty (50) days after each quarter (except the
last quarter) of each fiscal year of the Company, a copy of
the Company's Quarterly Report on Form 10-Q filed with the
Securities and Exchange Commission and of the unaudited
financial statement of the Company and its Subsidiaries
prepared in the same manner as the audit report referred to in
preceding clause (a) signed by the Company's chairman,
president or chief financial officer and consisting of at
least a balance sheet as at the close of such quarter, and
statements of income and cash flows for such quarter and for
the period from the beginning of such fiscal year to the close
of such quarter;
(c) together with the financial statements furnished by the
Company under preceding clauses (a) and (b), a certificate of
the Company's chairman, president or chief financial officer,
dated the date of such annual audit report or such quarterly
financial statement, as the case may be, to the effect that no
Event of Default or Unmatured Event of Default has occurred
and is continuing or, if there is any such event, describing
it and the steps, if any, being taken to cure it, and
containing a computation of, and showing compliance with, each
of the financial ratios and restrictions contained in this
Section 10;
(d) within fifty (50) days after each fiscal month, a copy
of the letter to directors describing the Company's
consolidated financial performance during such month together
with an unaudited consolidated balance sheet and income
statement for the Company and its consolidated Subsidiaries
for such month;
(e) copies of each filing and report made by the Company or
any Subsidiary with or to any securities exchange or the
Securities and Exchange Commission and of each communication
from the Company or any Subsidiary to stockholders generally,
promptly upon the filing or making thereof;
(f) promptly from time to time, a written report of any
change in the list of the Company's Subsidiaries set forth on
Exhibit F or in the list of partnerships and joint ventures
set forth on Exhibit G;
(g) promptly upon receipt thereof, a copy of any annual,
interim or special audit made by independent accountants, any
management control letter issued by them or any other report
submitted to the Company's Board of Directors by the
independent accountants; and
(h) promptly from time to time, such other information as
the Banks may reasonably request.
2 Books, Records and Inspection. Maintain, and cause
each Subsidiary to maintain, complete and accurate books and
records in which full and correct entries in conformity with
GAAP shall be made of all dealings and transactions in
relation to its respective business and activities; permit,
and cause each Subsidiary to permit, any authorized
representative of any of the Banks to visit and inspect any of
the properties of the Company or any of its Subsidiaries, upon
reasonable prior notice and during regular business hours,
including any books and records (and to make extracts
therefrom), and to discuss its affairs and finances as often
as the Banks may reasonably request.
3 Conduct of Business. Maintain and cause each
Significant Subsidiary to maintain its respective
existence and use its best efforts to maintain in full force
and effect all franchises (including but not limited to all
Pizza Hut, Inc. franchise agreements and licenses), licenses,
leases, contracts and other authority and rights necessary or
desirable to the profitable conduct of its business.
4 Taxes. Pay, and cause each Subsidiary to pay, when
due, all taxes, assessments and other governmental charges or
levies imposed upon it, its income or any of its properties,
franchises or assets, unless and only to the extent that the
Company or such Subsidiary, as the case may be, is contesting
such taxes, assessments and other governmental charges or
levies in good faith and by appropriate proceedings and the
Company or such Subsidiary has set aside on its books such
reserves or other appropriate provisions therefor as may be
required by GAAP.
5 Notices.
(a) Event of Default; Pension Plans. Immediately upon
learning of the occurrence of any of the following, provide to
each Bank written notice thereof, describing the same and the
steps being taken by the Company or the Subsidiary or the
ERISA Affiliate affected with respect thereto: (i) the
occurrence of an Event of Default or an Unmatured Event of
Default or (ii) the occurrence of a Reportable Event with
respect to any Plan, the institution of any steps by the
Company, any ERISA Affiliate, the PBGC or any other Person to
terminate any Plan, or the institution of any steps by the
Company or any ERISA Affiliate to withdraw from any Plan with
respect to which it is a "substantial employer" within the
meaning of section 4063 of ERISA.
(b) Litigation. Notify each Bank (i) promptly upon
learning thereof, of the institution or existence of any
litigation, arbitration or governmental proceedings which is
material to the Company and its Subsidiaries taken as a whole
and (ii) of any judgment or decree entered against the Company
or any Subsidiary within five business days after such entry
if the aggregate amount of all judgments and decrees then
outstanding against the Company and all Subsidiaries exceeds
$1,500,000 after deducting (A) the amount with respect to
which the Company or any Subsidiary is insured and with
respect to which the insurer has not disclaimed liability, and
(B) the amount for which the Company or any Subsidiary is
otherwise indemnified if the terms of such indemnification are
satisfactory to the Banks.
(c) Indebtedness. Notify each Bank of any Indebtedness
incurred in connection with Liens permitted under Section
10.8(c) if the amount thereof exceeds $1,500,000.
6 Pension Plans. Not permit, and not permit any
Subsidiary to permit, any condition to exist in
connection with any Plan which might constitute grounds for
the PBGC to institute proceedings to have such Plan terminated
or a trustee appointed to administer such Plan, and not engage
in, or permit to exist or occur, or permit any of its
Subsidiaries to engage in, or permit to exist or occur, any
other condition, event or transaction with respect to any Plan
which could result in the incurrence by the Company or any of
its Subsidiaries of any material liability, fine or penalty.
7 Expenses. Whether or not any Loan is made hereunder,
pay the Banks upon demand for all reasonable expenses,
including reasonable fees of attorneys for the Agent and the
Banks (who may be employees of the Agent and the Banks) and
other legal expenses and costs of collection, incurred by (i)
the Agent in connection with the preparation, negotiation and
execution of this Agreement, the Notes and any document
required to be furnished herewith, and (ii) the Agent and the
Banks in connection with the enforcement of the Company's
obligations hereunder or under any Note. The Company also
agrees to (x) indemnify and hold the Agent harmless from any
loss or expense which may arise or be created by the
acceptance of telephonic or other instructions for making
Loans or disbursing the proceeds thereof, and (y) pay, and
save the Agent and the Banks harmless from all liability for,
any stamp or other taxes which may be payable with respect to
the execution or delivery of this Agreement or the issuance of
any Note or any other instrument or document provided for
herein or delivered or to be delivered hereunder or in
connection herewith. The Company's foregoing obligations
shall survive any termination of this Agreement.
8 Indebtedness. Not, and not permit any Subsidiary to,
incur or permit to exist any Indebtedness, except: (a)
Indebtedness under the terms of this Agreement; (b)
Indebtedness of the Company having maturities and terms, and
which is subordinated to payment of the Notes in a manner,
approved in writing by the Banks; (c) Indebtedness hereafter
incurred in connection with the Liens permitted by paragraph
(7) of the definition of Permitted Liens; (d) Indebtedness
outstanding on the date hereof and listed on Exhibit H; and
(e) other unsecured Indebtedness, provided that such
Indebtedness is incurred when no Event of Default or Unmatured
Event of Default exists or would result therefrom and such
Indebtedness exists under agreements that contain
representations, warranties, covenants and defaults no more
burdensome to the Company than those set forth herein;
provided that the aggregate of all Indebtedness of
Subsidiaries shall not exceed $15,000,000 at any one time
outstanding. Liens. Not, and not permit any Subsidiary to,
create
or permit to exist any Lien with respect to any assets
now owned or hereafter acquired, except for Permitted Liens
and Liens referred to in Section 9.8.
10 Merger, Purchase and Sale. Not, and not permit any
Significant Subsidiary to, be a party to any merger or
consolidation; not, and not permit any Subsidiary to in any
one fiscal year, sell, transfer, convey, lease or otherwise
dispose of assets of the Company and its Subsidiaries which
exceed in the aggregate, for the Company and its Subsidiaries
taken as a whole, five percent (5%) of the value of the
Company's consolidated total assets determined as of the end
of the immediately preceding fiscal year, or purchase or
otherwise acquire all or substantially all the assets of any
Person. Notwithstanding the foregoing:
(a) the Company or any Subsidiary may acquire any other
franchisee of Pizza Hut, Inc. or Romacorp, Inc.;
(b) any wholly-owned Subsidiary may merge into the Company
(provided that the Company is the surviving corporation) or
into or with any other wholly-owned Subsidiary;
(c) any wholly-owned Subsidiary may be consolidated with
any other wholly-owned Subsidiary so long as immediately
thereafter 100% of the voting stock or other ownership
interest of the resulting Person is owned by the Company or
another wholly-owned Subsidiary; and
(d) any wholly-owned Subsidiary may sell, transfer, convey,
lease or assign all or a substantial part of its assets to the
Company or another wholly-owned Subsidiary;
provided, in each of the cases described in the preceding
clauses, that immediately thereafter and after giving
effect thereto, no Event of Default or Unmatured Event of
Default shall have occurred and be continuing.
The term "value" as used herein shall mean, with respect to
any asset at any date of determination, the greater of such
asset's book or fair market value as of the date of
determination, with "book value" being the value of such asset
as would appear immediately prior to such determination on a
balance sheet of the owner of such asset prepared in
accordance with GAAP.
11 Nature of Business. Engage, and cause each Significant
Subsidiary to engage, in substantially the same fields of
business as it is engaged in on the date hereof.
12 Franchise Rights. Not permit any change, termination,
or loss of its or any Significant Subsidiary's rights to
operate as a franchisee of Pizza Hut, Inc., which would have a
material adverse affect on the Company and its Subsidiaries
taken as a whole.
13 Net Worth. Not permit the Company's Consolidated Net
Worth during any fiscal quarter ending after June 28, 1994 to
be less than the sum of (a) $78,443,000 plus (b) fifty percent
(50%) of the Company's Consolidated Net Earnings for each
fiscal quarter ending after June 28, 1994 (excluding any
fiscal quarter in which there is a loss).
14 Indebtedness to Net Worth Ratio. Not at any time
permit the ratio of the Company's and its Subsidiaries'
Indebtedness to exceed fifty-five percent (55%) of the sum of
(a) Indebtedness of the Company and its Subsidiaries plus (b)
Consolidated Net Worth.
15 Fixed Charge Coverage. Not permit the ratio of (a) the
sum of the Company's (i) Consolidated Net Earnings before
interest expense and provision for taxes, plus (ii)
amortization, plus (iii) consolidated operating lease rental
expense, and plus (or minus, as applicable) (iv) any changes
in deferred taxes, in each case, for the four fiscal quarters
immediately preceding the date of determination to (b) the sum
of (i) the Company's consolidated interest expense for such
four quarter period, plus (ii) the Company's consolidated
operating lease rental expense for such four quarter period to
be less than 1.5 to 1.0 on the last day of such fiscal
quarter.
For purposes of this Section 10.15, interest expense shall
include, without limitation, implicit interest expenses on
Capitalized Leases.
16 Insurance. Maintain, and cause each Subsidiary to
maintain, insurance to such extent and against such hazards
and liabilities as is commonly maintained by companies
similarly situated, and in any event such types and in such
amounts and with financially sound and reputable insurers of
at least the quality as is described in the certificate
furnished pursuant to Section 9.10. The Company agrees to
notify each Bank prior to any material change in or
cancellation of any such insurance.
17 Restricted Payments. Not purchase or redeem any shares
of its stock, declare or pay any dividends thereon (other than
stock dividends), make any distribution to stockholders as
such or set aside any funds for any such purpose, and not
prepay, purchase or redeem, and not permit any Subsidiary to
purchase, any subordinated Indebtedness of the Company or any
Subsidiary if, before or after giving effect to such
transaction, an Event of Default or Unmatured Event of Default
has occurred and is continuing.
18 Leases. Not enter into or permit to exist, or permit
any Subsidiary to enter into or permit to exist, any
arrangements for the leasing by it or any of its Subsidiaries,
as lessee, of any real or personal property under leases
(other than Capitalized Leases) if, immediately before and
after giving effect thereto, an Event of Default or Unmatured
Event of Default shall exist or be continuing. For purposes
of determining whether the entering into any lease results in
a breach of Section 10.15, the Company shall make the
calculation required under such Section as of the date such
lease is entered into (a) on assumption that the rental
expense that is expected to be incurred during the twelve-
month period following the entering into the lease was
incurred during the twelve-month period ending on the date of
such calculation and (b) by including in the Company's
Consolidated Net Earnings for the twelve-month period ending
on the date the lease is entered into, the net earnings
properly attributable to the property covered by the lease
during the twelve-month period ending on the date the lease is
entered into.
19 Company's and Subsidiaries' Stock. Not permit any
Subsidiary to purchase or otherwise acquire any shares of the
stock of the Company, and not take any action, or permit any
Subsidiary to take any action, which will result in a decrease
in the Company's or any Subsidiary's ownership interest in any
Significant Subsidiary.
20 Guaranties. Not, and not permit any Subsidiary to,
become a guarantor or surety of, or otherwise become or be
responsible in any manner (whether by agreement to purchase
any obligations, stock, assets, goods or services, or to
supply or advance any funds, assets, goods or services, or
otherwise) with respect to, any undertaking of any other
Person, except for the endorsement, in the ordinary course of
collection, of instruments payable to it or its order and
except for guarantees of obligations which do not exceed
$5,000,000.00 in the aggregate at any one time.
21 Investments. Not, and not permit any Subsidiary to,
make or permit to exist any Investment in any Person, except
for:
(a) Investments in securities with maturities of one year
or less from the date of acquisition issued or fully
guaranteed or insured by the United States of America or any
agency thereof;
(b) Investments in commercial paper maturing in 270 days or
less from the date of issuance rated in the highest grade by a
nationally recognized credit rating agency;
(c) Investments in certificates of deposit maturing within
one year from the date of acquisition issued by a bank or
trust company organized under the laws of the United States or
any state thereof having capital, surplus and undivided
profits aggregating at least $100,000,000;
(d) Investments in other Pizza Hut, Inc. or Romacorp, Inc.
franchisees as long as, before or after giving effect to such
Investment, no Event of Default or Unmatured Event of Default
has occurred which is continuing;
(e) Investments outstanding on the date hereof and listed
on Exhibit I; and
(f) other liquid Investments (except Investments prohibited
under Sections 10.10 or 10.20), as selected by the Company or
a Subsidiary, not to exceed $5,000,000 in the aggregate at any
one time for the Company and all Subsidiaries.
22 Subsidiaries. Except as permitted under Section
10.21(d), not, without the Banks' prior consent, create or
acquire any Significant Subsidiaries in addition to those
existing on the date of this Agreement.
23 Unconditional Purchase Obligation. Not, and not permit
any Subsidiary to, enter into or be a party to any contract
for the purchase or lease of materials, supplies or other
property or services if (a) such contract requires that
payment be made by it regardless of whether or not delivery is
ever made of such materials, supplies or other property or
services and (b) the aggregate amount payable over the full
remaining terms of all such contracts exceeds $1,500,000 in
the aggregate for the Company and its Subsidiaries.
24 Other Agreements. Not, and not permit any Subsidiary
to, enter into any agreement containing any provision which
would be violated or breached by the Company's performance of
its obligations hereunder or under any instrument or document
delivered or to be delivered by the Company hereunder or in
connection herewith.
25 Use of Proceeds. Not permit any proceeds of the Loans
to be used, either directly or indirectly, for the purpose,
whether immediate, incidental or ultimate, of "purchasing or
carrying any margin stock" within the meaning of Regulation U
of the Board of Governors of the Federal Reserve System, as
amended from time to time, and furnish to each Bank, upon its
request, a statement in conformity with the requirements of
Federal Reserve Form U-1 (or such other form or forms as may
be required by Regulation U) referred to in Regulation U.
11. EVENTS OF DEFAULT AND REMEDIES.
1 Events of Default. Each of the following shall
constitute an Event of Default under this Agreement:
(a) Non-Payment. Default in the payment, when due, of
any.principal of any Note or any fee hereunder or default, and
the continuance thereof for 10 days, in the payment, when due,
of any interest on any Note.
(b) Non-Payment of Other Indebtedness. Default in the
payment when due, whether by acceleration or otherwise
(subject to any applicable grace period), of any Indebtedness
of, or guaranteed by, the Company or any Subsidiary (other
than the Indebtedness evidenced by the Notes) in excess of
$1,000,000 in the aggregate for the Company and its
Subsidiaries.
(c) Acceleration of Other Indebtedness. Any event or
condition shall occur which (i) results in the acceleration of
the maturity of any Indebtedness in excess (in the aggregate
for the Company and its Subsidiaries) of $1,000,000 of, or
guaranteed by, the Company or any Subsidiary (other than the
Indebtedness evidenced by the Notes) or (ii) enables the
holder or holders of such other Indebtedness or any trustee or
agent for such holders (any required notice of default having
been given and any applicable grace period having expired) to
accelerate the maturity of such other Indebtedness.
(d) Other Obligations. Default in the payment when due,
whether by acceleration or otherwise, or in the performance or
observance (subject to any applicable grace period) of (i) any
material obligation or agreement in excess in the aggregate of
$1,000,000 of the Company or any Subsidiary to or with any
Bank (other than any obligation or agreement of the Company
hereunder or under any Note), or (ii) any material obligation
or agreement in excess in the aggregate of $1,000,000 of the
Company or any Subsidiary to or with any other Person (other
than (x) any such material obligation or agreement
constituting or related to Indebtedness, (y) accounts payable
arising in the ordinary course of business, and (z) any
material obligation or agreement of any Subsidiary to the
Company or to any other Subsidiary), except only to the extent
that the existence of any such default is being contested by
the Company or such Subsidiary, as the case may be, in good
faith and by appropriate proceedings and the Company or such
Subsidiary shall have set aside on its books such reserves or
other appropriate provisions therefor as may be required by
GAAP.
(e) Insolvency. The Company or any of its Subsidiaries
becomes insolvent, or generally fails to pay, or admits in
writing its inability to pay, its debts as they mature, or
applies for, consents to, or acquiesces in the appointment of
a trustee, receiver or other custodian for the Company or such
Subsidiary or a substantial part of the property of the
Company or such Subsidiary, or makes a general assignment for
the benefit of creditors; or, in the absence of such
application, consent or acquiescence, a trustee, receiver or
other custodian is appointed for the Company or any of its
Subsidiaries or for a substantial part of the property of the
Company or any of its Subsidiaries and is not discharged
within 30 days; or any bankruptcy, reorganization, debt
arrangement or other proceeding under any bankruptcy or
insolvency law, or any dissolution or liquidation proceeding,
is instituted by or against the Company or any of its
Subsidiaries and, if instituted against the Company or any of
its Subsidiaries, is consented to or acquiesced in by the
Company or such Subsidiary or remains for 30 days undismissed;
or any warrant of attachment is issued against any substantial
part of the property of the Company or any of its Subsidiaries
which is not released within 30 days of service.
(f) Pension Plans. A Termination Event occurs with respect
to any Plan if, at the time such Termination Event occurs,
such Plan's then "vested liabilities" (as defined in section
3(25) of ERISA) would exceed the then value of such Plan's
assets.
(g) Financial Covenants; Agreements. The Company fails to
perform or observe any agreement contained in Section 10.8,
10.9, 10.10, 10.13, 10.14, 10.15, 10.16, 10.19, 10.20, 10.21
or 10.22 and such failure shall not be remedied within five
(5) days after the chairman, president or chief financial
officer of the Company obtains actual knowledge thereof; or
the Company fails to perform or observe any other agreement
set forth in this Agreement (and not constituting an Event of
Default under any of the other subsections of this Section
11.1) and continuance of such failure for thirty (30) days
after the chairman, president or chief financial officer of
the Company obtains actual knowledge thereof.
(h) Warranty. Any warranty made by the Company herein is
untrue in any material respect, or any schedule, statement,
report, notice, certificate or other writing furnished by the
Company to any Bank is untrue in any material respect on the
date as of which the facts set forth therein are stated or
certified, or any certification made or deemed made by the
Company to any Bank is untrue in any material respect on or as
of the date made or deemed made.
(i) Litigation. There shall be entered against the Company
or any Subsidiary one or more judgments or decrees in excess
of $1,500,000 in the aggregate at any one time outstanding for
the Company and all Subsidiaries, excluding those judgments or
decrees (i) that shall have been outstanding less than 30
calendar days from the entry thereof or (ii) for and to the
extent which the Company or any Subsidiary is insured and with
respect to which the insurer has assumed responsibility in
writing or for and to the extent which the Company or any
Subsidiary is otherwise indemnified if the terms of such
indemnification are satisfactory to the Banks.
(j) Franchise Agreement. The Company or any Subsidiary
takes any action or fails to take action which results in the
loss of any Franchise Agreement, license or other permit which
would preclude the Company or any Significant Subsidiary from
operating such franchise under the name "Pizza Hut", and such
loss materially adversely affects the business operations or
profitability of the Company or such Significant Subsidiary.
(k) Pizza Hut. Inc. If (a) Pizza Hut, Inc. applies for,
consents to, or acquiesces in the appointment of a trustee,
receiver or other custodian for itself or a substantial part
of its property, or makes a general assignment for the benefit
of creditors; or, in the absence of such application, consent
or acquiescence, a trustee, receiver or other custodian is
appointed for Pizza Hut, Inc. or for a substantial part of its
property and is not discharged within 30 days; or any
bankruptcy, reorganization, debt arrangement or other
proceeding under any bankruptcy or insolvency law, or any
dissolution or liquidation proceeding, is instituted by or
against Pizza Hut, Inc. and, if instituted against Pizza Hut,
Inc., is consented to or acquiesced in by Pizza Hut, Inc. or
remains for 30 days undismissed; or any warrant of attachment
is issued against any substantial part of the property of
Pizza Hut, Inc. which is not released within 30 days of
service; and (b) for the 12-month period ending on the last
day of the fiscal quarter end which coincides with or
immediately precedes the occurrence of the event described in
clause (a), the ratio described in Section 10.15 is less than
2.5 to 1.0.
2 Remedies. If any Event of Default described in Section
11.1 shall have occurred and be continuing, the Agent shall
upon request of the Supermajority Banks by written notice to
the Company declare the Credit to be terminated and all Notes
to be due and payable, whereupon the Credit shall immediately
terminate and all outstanding Notes shall become immediately
due and payable (except that if an event described in Section
11.1(e) occurs, the Credit shall immediately terminate and all
outstanding Notes shall become immediately due and payable
without declaration or notice of any kind).
12. RELATIONSHIP AMONG BANKS.
1 Appointment and Grant of Authority. Each Bank hereby
appoints the Agent, and the Agent hereby agrees to act, as
agent under this Agreement. The Agent shall have and may
exercise such powers under this Agreement as are specifically
delegated to the Agent by the terms hereof, together with such
other powers as are reasonably incidental thereto. Each Bank
hereby authorizes, consents to, and directs the Company to
deal with the Agent as the true and lawful agent of such Bank
to the extent set forth herein.
2 Non-Reliance on Agent. Each Bank agrees that it has,
independently and without reliance on the Agent or any other
Bank, and based on such documents and information as it has
deemed appropriate, made its own credit analysis of the
Company and its Subsidiaries and decision to enter into this
Agreement and that it will, independently and without reliance
upon the Agent, and based on such documents and information as
it shall deem appropriate at the time, continue to make its
own analysis and decisions in taking or not taking action
under this Agreement. The Agent shall not be required to keep
informed as to the performance or observance by the Company of
this Agreement or any other document referred to or provided
for herein or to inspect the properties or books of the
Company or its Subsidiaries. Except for notices, reports and
other documents and information expressly required to be
furnished to the Banks by the Agent hereunder, the Agent shall
not have any duty or responsibility to provide any Bank with
any credit or other information concerning the affairs,
financial condition or business of the Company, its
Subsidiaries (or any of its related companies) which may come
into the Agent's possession.
3 Responsibility of the Agent and Other Matters.
(a) The Agent shall have no duties or responsibilities
except those expressly set forth in this Agreement and those
duties and liabilities shall be subject to the limitations and
qualifications set forth in this Section 12. The duties of
the Agent shall be mechanical and administrative in nature.
(b) Neither the Agent nor any of its directors, officers or
employees shall be liable for any action taken or omitted
(whether or not such action taken or omitted is within or
without the Agent's responsibilities and duties expressly set
forth in this Agreement) under or in connection with this
Agreement or any other instrument or document in connection
herewith, except for gross negligence or willful misconduct.
Without limiting the foregoing, neither the Agent nor any of
its directors, officers or employees shall be responsible for,
or have any duty to examine into (i) the genuineness,
execution, validity, effectiveness, enforceability, value or
sufficiency of (a) this Agreement or the Notes, or (b) any
document or instrument furnished pursuant to or in connection
with this Agreement or the Notes, (ii) the collectibility of
any amounts owed by the Company, (iii) any recitals or
statements or representations or warranties in connection with
this Agreement or the Notes, (iv) any failure of any party to
this Agreement to receive any communication sent, or (v) the
assets, liabilities, financial condition, results of
operations, business or creditworthiness of the Company.
(c) The Agent shall be entitled to act, and shall be fully
protected in acting upon, any communication in whatever form
believed by the Agent in good faith to be genuine and correct
and to have been signed or sent or made by a proper person or
persons or entity. The Agent may consult counsel and shall be
entitled to act, and shall be fully protected in any action
taken in good faith, in accordance with advice given by
counsel. The Agent may employ agents and attorneys-in-fact
and shall not be liable for the default or misconduct of any
such agents or attorneys-in-fact selected by the Agent with
reasonable care. The Agent shall not be bound to ascertain or
inquire as to the performance or observance of any of the
terms, provisions or conditions of this Agreement or the Notes
on the Company's part.
4 Action on Instructions. The Agent shall be entitled to
act or refrain from acting, and in all cases shall be fully
protected in acting or refraining from acting, under this
Agreement or the Notes or any other instrument or document in
connection herewith or therewith in accordance with
instructions in writing from the Majority Banks (or, if
required, all Banks).
5 Indemnification. To the extent the Company does not
reimburse and save the Agent harmless according to the terms
hereof for and from all costs, expenses and disbursements in
connection herewith, such costs, expenses and disbursements
shall be borne by the Banks ratably in accordance with their
Percentages and the Banks hereby agree on such basis (i) to
reimburse the Agent for all such costs, expenses and
disbursements on request and (ii) to indemnify and save
harmless the Agent against and from any and all losses,
obligations, penalties, actions, judgments and suits and other
costs, expenses and disbursements of any kind or nature
whatsoever which may be imposed on, incurred by or asserted
against the Agent, other than as a consequence of actual gross
negligence or willful misconduct on the part of the Agent,
arising out of or in connection with this Agreement, or the
Notes or any instrument or document in connection herewith or
therewith, or any request of the Banks, including without
limitation the costs, expenses and disbursements in connection
with defending itself against any claim or liability, or
answering any subpoena, related to the exercise or performance
of any of its powers or duties under this Agreement or the
taking of any action under or in connection with this
Agreement or the Notes.
6 Bank of America Illinois and Affiliates. With respect
to BAI's Commitment and any Loans by BAI under this Agreement
and any Note and any interest of BAI in any Note, BAI shall
have the same rights and powers under this Agreement and such
Note as any other Bank and may exercise the same as though it
were not the Agent. BAI and its affiliates may accept
deposits from, lend money to, and generally engage, and
continue to engage, in any kind of business with the Company
as if BAI were not the Agent.
7 Notice to Holder of Loans. The Agent may deem and
treat the payees of the Notes as the owners thereof for all
purposes unless a written notice of assignment, negotiation or
transfer thereof has been filed with the Agent. Any request,
authority or consent of any holder of any Loan shall be
conclusive and binding on any subsequent holder, transferee or
assignee of such Loan.
8 Successor Agent. The Agent may resign at any time by
giving 30 days' written notice thereof to the Banks. Upon any
such resignation, the Banks shall have the right to appoint a
successor Agent. If no successor Agent shall have been
appointed by the Banks and accepted such appointment in
connection herewith or therewith within 30 days after the
retiring Agent's giving notice of resignation, then the
retiring Agent may, but shall not be required to, on behalf of
the Banks, appoint a successor Agent who has accepted such
appointment. Notwithstanding the foregoing provisions of this
Section 12.8, BAI may at any time resign as Agent if
concurrently therewith an affiliate of BAI agrees to assume
the role of Agent hereunder. After any resigning Agent's
resignation hereunder, the provisions of this Section 12 shall
continue to be effective as to any action taken or omitted
hereunder or in connection herewith prior to such resignation.
13. GENERAL.
1 Waiver and Amendments. No delay on the part of any
Bank or the holder of any Loan in the exercise of any power or
right shall operate as a waiver thereof, nor shall any single
or partial exercise of any power or right preclude other or
further exercise thereof or the exercise of any other power or
right. The remedies provided for herein are cumulative and not
exclusive of any remedies which may be available to any Bank
at law or in equity. No amendment, modification or waiver of,
or consent with respect to, any provision of this Agreement or
any Note shall in any event be effective unless the same shall
be in writing and signed by the Company and the Majority
Banks; provided, however, that in no event shall any
amendment, modification or waiver, or consent with respect to,
Sections 10.13 through 10.15 be effective unless the same
shall be in writing and signed by the Supermajority Banks.
Any waiver of any provision of this Agreement or any Note, and
any consent to any departure by the Company from the terms of
any provision of this Agreement or any Note, shall be
effective only in the specific instance and for the specific
purpose for which given; provided, however, that no amendment,
waiver or consent shall, unless in writing and signed by all
the Banks, do any of the following: (a) waive any of the
conditions specified in Sections 7 or 8, (b) increase the
amounts or extend the terms of the Banks' Commitments or
subject the Banks to any additional obligations, (c) reduce
the principal of, or interest on, the Notes or any fees
hereunder, (d) postpone any date fixed for any payment of
principal of, or interest on, the Notes or any fees hereunder,
(e) change the percentage of the Commitments or of the
aggregate unpaid principal amount of the Notes, or the number
of Banks, which shall be required to take action hereunder, or
(f) change any provisions of this Section 13.1; provided,
further, that no amendment, waiver or consent to Section 12
shall be effective unless signed by the Agent.
2 Notices. Except as otherwise expressly provided
herein, any notice hereunder between the parties shall be in
writing (including telegraphic, telex or telecopy
communication) and shall be given to the Company, the Agent or
any Bank at its address, telex number or telecopier number set
forth on the signature pages hereof or at such other address,
telex number or telecopier number as the Company, the Agent or
such Bank may, by written notice, designate as its address,
telex number or telecopier number for purposes of notice
hereunder. All such notices shall be deemed to be given when
transmitted by telex and the appropriate answerback is
received, transmitted by telecopier, delivered to the
telegraph office, personally delivered or, in the case of a
mailed notice, three Banking Days after the date sent by
registered or certified mail, postage prepaid, in each case
addressed as specified in this Section 13.2; provided,
however, that notices to the Agent shall not be effective
until actually received by the Agent.
3 Severability; Participations.
(a) Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition
or unenforceability without invalidating the remaining
provisions hereof or affecting the validity or enforceability
of such provision in any other jurisdiction.
(b) Any Bank may assign or transfer its rights and
obligations hereunder to any Affiliate of such Bank pursuant
to an assignment agreement satisfactory to the Agent. In
addition, any Bank may grant one or more participations in any
Loan, and participant shall have the rights (and be subject to
the obligations) of a Bank set forth in Sections 5.4, 5.5, 6
and 10.7 hereof as if such participant were a Bank hereunder;
provided, however, that
(ii) no participation contemplated in this Section 13.3
shall relieve the participating Bank from its Commitment or
its other obligations hereunder,
(iii) such Bank shall remain solely responsible for
the performance of its Commitment and such other obligations,
(iv) the Company and the Agent shall continue to deal solely
and directly with such Bank in connection with such Bank's
rights and obligations under this Agreement, and
(v) no participant, unless such participant is an Affiliate
of such Bank, or is itself a Bank, shall be entitled to
require such Bank to take or refrain from taking any action
hereunder, except that such Bank may agree with any
participant that such Bank will not, without such
participant's consent, take any actions of the type described
in clauses (a) through (f) of Section 13.1.
4 Indemnification. The Company hereby indemnifies and
holds harmless the Agent and each Bank and each of the Agent's
and the Banks' directors, officers, employees, persons
controlling or controlled by any of them and their assigns
(collectively the "Indemnified Parties") from and against any
and all losses, claims, damages, costs, liabilities and
expenses (including, without limitation, reasonable attorneys'
fees, disbursements and any out-of-pocket expenses) to which
any of the Indemnified Parties may become subject, whether
directly or indirectly, that result or arise from, or relate
to, any claim, action, lawsuit, or proceeding related to (i)
any tender offer, merger, purchase of stock, purchase of
assets or other similar transaction financed or proposed to be
financed in whole or in part, directly or indirectly, with the
proceeds of any of the Loans or (ii) the execution, delivery,
performance or enforcement of this Agreement or any other Loan
Document by any of the Indemnified Parties; provided, however,
that an Indemnified Party shall refund to the Company any
amount received from the Company for losses, damages, costs
and expenses incurred by such Person but which a court of
competent jurisdiction has found resulted solely from such
Person's own gross negligence or willful misconduct
(individually and not as a co-conspirator with the Company or
any affiliate thereof). The foregoing obligations of the
Company shall survive termination of this Agreement.
5 LAW. THIS AGREEMENT AND THE NOTES SHALL BE CONTRACTS
MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF
ILLINOIS.
6 Successors. This Agreement shall be binding upon the
Company, the Agent and the Banks and their respective
successors and assigns, and shall inure to the benefit of the
Company, the Agent and the Banks and the successors and
assigns of the Agent and the Banks. The Company shall not
assign its rights or duties hereunder without the consent of
all Banks.
7 Subsidiary Reference. Any reference herein to a
Subsidiary or Subsidiaries of the Company, and any financial
ratio or restriction or other provision of this Agreement
which is stated to be applicable to the "Company and its
Subsidiaries" or which is to be determined on a "consolidated"
basis, shall apply only to the extent the Company has any
Subsidiaries and, where applicable, to the extent any such
Subsidiaries are consolidated with the Company for financial
reporting purposes.
8 ENTIRE AGREEMENT. THIS AGREEMENT, TOGETHER WITH ALL
OTHER WRITTEN AGREEMENTS BETWEEN THE PARTIES HERETO, IS THE
FINAL EXPRESS OF THE CREDIT AGREEMENT BETWEEN THE PARTIES
HERETO, AND SUCH WRITTEN CREDIT AGREEMENT MAY NOT BE
CONTRADICTED BY EVIDENCE OF ANY PRIOR ORAL CREDIT AGREEMENT OR
OF A CONTEMPORANEOUS ORAL CREDIT AGREEMENT BETWEEN THE PARTIES
HERETO.
9 NON-STANDARD TERMS; NO UNWRITTEN ORAL AGREEMENTS. ANY
ADDITIONAL NON-STANDARD TERMS OF THE CREDIT AGREEMENT BETWEEN
THE PARTIES HERETO, INCLUDING THE REDUCTION TO WRITING OF A
PREVIOUS ORAL CREDIT AGREEMENT BETWEEN THE PARTIES HERETO ARE
SET FORTH IN THE SPACE BELOW (IF NONE, WRITE "NONE"):
NONE.
NO UNWRITTEN ORAL CREDIT AGREEMENT BETWEEN THE PARTIES HERETO
EXISTS.
10 Counterparts. This Agreement may be executed in any
number of counterparts and by the different parties on
separate counterparts and each such counterpart shall be
deemed an original, but all such counterparts shall together
constitute but one and the same Agreement.
11
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed at Chicago, Illinois by their
respective officers thereunto duly authorized as of the date
first written above.
NPC INTERNATIONAL, INC.
By:______________________________
Title:____________________________
Address: 720 W. 20th Street
P. O. Box 643
Pittsburg, KS 66762
Attention: James Schwartz
Fax: (316) 231-1199
Amount of BANK OF AMERICA ILLINOIS
Commitment Share
$25,000,000 50%
By:_________________________________
Title:_____________________________
Address: 231 South LaSalle Street
Chicago, Illinois 60697
Attn: R. Guy Stapleton
Midwestern States
Fax: (312) 987-1276
NATIONSBANK OF TEXAS, N.A.
$12,500,000 25% By:_________________________________
Title:____________________________
Address: 901 Main Street
67th Floor
Dallas, Texas 75202-3748
Attn: Perry B. Stephenson
Fax: (214) 508-0980
UNITED STATES NATIONAL BANK OF OREGON
$12,500,000 25% By:_________________________________
Title:____________________________
Address: National Corporate banking -
Western Region 309
S.W. Sixth Avenue
10th Floor
Portland, Oregon 97204
Attn: Blake Howells
Total: Fax: (503) 275-3475
$50,000,000 100%
BANK OF AMERICA ILLINOIS, as Agent
By:_________________________________
Title:_____________________________
Address: 231 South LaSalle Street
Chicago, Illinois 60697
Attn: R. Guy Stapleton
Midwestern States
Fax: (312) 987-1276
EXHIBIT A-1
SERIES A NOTE
$50,000,000 Chicago, Illinois
December 13, 1994
ON OR BEFORE the Termination Date (as defined in the
Credit Agreement hereinafter referred to), the undersigned,
for value received, hereby promises to pay to the order of
Bank of America Illinois, at 231 South LaSalle Street,
Chicago, Illinois 60697, as Agent under the Credit Agreement
(the "Agent"), for the account of the financial institutions
which now or hereafter become Banks under the Credit
Agreement, ratably in accordance with their respective
Percentages, the principal sum of FIFTY MILLION DOLLARS
($50,000,000) or, if less, the aggregate unpaid principal
amount of all Reference Rate Loans and Eurodollar Loans made
by the Banks to the undersigned hereunder.
The undersigned further promises to pay to the order of
the Agent for the account of the Banks ratably in accordance
with their respective Percentages, interest on the principal
sum from time to time outstanding at the rates and at the
times set forth in the Credit Agreement.
This Note evidences indebtedness incurred under, and is
subject to the terms and provisions of, the Revolving Credit
Agreement dated as of December 13, 1994 (herein, as amended,
modified, restated, supplemented, extended, refinanced,
refunded or renewed, from time to time, called the "Credit
Agreement"), among the undersigned, various banks from time to
time party thereto, and the Agent, to which Credit Agreement
reference is hereby made for a statement of said terms and
provisions, including those under which this Note may be paid
prior to its due date or its due date accelerated. Terms used
but not otherwise defined herein shall have the same meaning
as such terms have in the Credit Agreement.
This Series A Note is issued in substitution for, but not
in payment of, the Series A Notes existing prior to the
Effective Date. Nothing contained herein shall be considered
to deem paid any amounts of principal of or interest on the
Loans existing on the Effective Date.
In addition to and not in limitation of the foregoing,
but subject to the provisions of the Credit Agreement, the
undersigned further agrees to pay on demand all reasonable
attorneys' fees and legal expenses incurred by the Agent and
the Banks in connection with the collection and enforcement of
this Note, and any and all amendments, modifications,
restatements, supplements, extensions, refinancings, refunds
and renewals relating to this Note.
THIS NOTE IS MADE UNDER AND GOVERNED BY THE INTERNAL LAWS
OF THE STATE OF ILLINOIS WITHOUT REGARD TO PRINCIPLES OF
CONFLICTS OF LAW.
Address: NPC INTERNATIONAL, INC.
720 West 20th Street By:
Pittsburgh, Kansas 66762 Title:
Schedule attached to Series A Note dated as of December 13,
1994, of NPC INTERNATIONAL, INC., payable to the order of Bank
of America Illinois, as Agent for the account of various
Banks.
LOANS AND PRINCIPAL PAYMENTS
Date of
Loan, Type of Loan
Continu- & Applicable
ation or Amount Interest Rate Amount of Unpaid
Con- of Loan & Interest Principal Principal Notation
version Made Period Repaid Balance Made By
The aggregate unpaid principal amount shown on this schedule
shall be rebuttable presumptive evidence of the principal
amount owing and unpaid on this Note. The failure to record
the date and amount of any loan on this schedule shall not,
however, limit or otherwise affect the obligations of NPC
INTERNATIONAL, INC. under this Note to repay the principal
amount of the Loans together with all interest accruing
thereon.
EXHIBIT A-2
SERIES B NOTE
$50,000,000 Chicago, Illinois
December 13, 1994
UPON THE MATURITY OF ANY MONEY MARKET LOAN MADE HEREUNDER
(but in any event not later than the Termination Date as
defined in the Credit Agreement hereinafter referred to), the
undersigned, for value received, hereby promises to pay to the
order of Bank of America Illinois at 231 South LaSalle Street
Chicago, Illinois 60697, as Agent under the Credit Agreement
(the "Agent"), for the account of the financial institutions
which now or hereafter become Banks under the Credit
Agreement, ratably in accordance with their respective
Percentages, the principal sum of such Money Market Loan, all
such Loans not to exceed in the aggregate FIFTY MILLION
DOLLARS ($50,000,000) or, if less, the aggregate unpaid
principal amount of all Money Market Loans made by the Banks
to the undersigned hereunder.
The undersigned further promises to pay to the order of
the Agent, for the account of the Banks ratably in accordance
with their respective Percentages, upon the maturity of any
Money Market Loan made hereunder, interest on the principal
sum of such Loan at the Money Market Rate applicable to such
Money Market Loan and accruing for the period from the date of
the making of such Loan until its Maturity Date (subject to
the terms of the Credit Agreement). The Money Market Rate
applicable to each Money Market Loan and the Maturity Date of
each such Loan shall be recorded by the holder in its records,
or, at its option, on the schedule attached to this Note.
Interest accruing after the maturity of any Loan hereunder
shall be at a rate per annum as provided in the Revolving
Credit Agreement, dated as of December 13, 1994, among the
undersigned, various banks from time to time party thereto,
and the Agent (herein, as amended, modified, restated,
supplemented, extended, refinanced, refunded or renewed from
time to time, called the "credit Agreement") and shall be
payable on demand. Interest shall be computed on the basis of
a year consisting of 360 days and paid for actual days
elapsed. The undersigned shall not prepay any Loan made
hereunder without the prior written consent of all Banks.
This Note evidences indebtedness incurred under and
pursuant to the terms of the Credit Agreement hereinabove
referred to, to which Credit Agreement reference is hereby
made for a statement of its terms and provisions, including
those under which this Note may be paid prior to its due date
or its due date accelerated. Terms used but not otherwise
defined herein shall have the same meaning as such terms have
in the credit Agreement.
This Series B Note is issued in substitution for, but not
in payment of, the Series C Notes (as defined in the Amended
and Restated Revolving Credit Agreement, dated as of November
17, 1989, among the undersigned, various banks from time to
time party thereto, and the Agent) existing prior to the
Effective Date. Nothing contained herein shall be considered
to deem paid any amounts of principal of or interest on the
Money Market Loans existing on the Effective Date. In
addition to and not in limitation of the foregoing, but
subject to the provisions of the Credit Agreement, the
undersigned further agrees to pay on demand all reasonable
attorneys' fees and legal expenses incurred by the Agent and
the Banks in connection with the collection and enforcement of
this Note, and any and all amendments, modifications,
restatements, supplements, extensions, refinancings, refunds
and renewals relating to this Note.
THIS NOTE IS MADE UNDER AND GOVERNED BY THE INTERNAL LAWS
OF THE STATE OF ILLINOIS WITHOUT REGARD TO PRINCIPLES OF
CONFLICTS OF LAW.
NPC INTERNATIONAL, INC.
Address: By:
720 West 20th Street Title:
Pittsburgh, Kansas 66720
Schedule attached to Series B Note dated as of December 13,
1994, of NPC INTERNATIONAL, INC., payable to the order of Bank
of America Illinois as Agent for the account of various Banks.
MONEY MARKET LOANS AND PRINCIPAL PAYMENTS
Unpaid
Amount of Maturity Interest Principal Notation
Date Loan Made Date Rate Balance Made By
The unpaid principal amount shown on this schedule
shall be rebuttable presumptive evidence of the principal
amount owing and unpaid on this Note. The failure to record
the date and amount of any loan on this schedule shall not,
however, limit or otherwise affect the obligations of NPC
INTERNATIONAL, INC. under this Note to repay the principal
amount of the loans together with all interest accruing
thereon.
EXHIBIT B
FORM OF REQUEST FOR EXTENSION OF
TERMINATION DATE
[Date]
Banks party to the Credit Agreement
referred to below
Pursuant to the Credit Agreement dated as of December 13,
1994 (the "Credit Agreement") among NPC International, Inc.
(the "Company"), various banks and Bank of America Illinois,
as Agent, this represents the Company's request to extend the
Termination Date (as defined in the Credit Agreement) to
December 13, ____.
Please indicate whether you consent to such extension of
the Termination Date by signing the attached copy of this
Extension Request in the space provided below and returning
the same to the Agent by _____________.
Very truly yours,
NPC INTERNATIONAL, INC.
By:___________________________
Title: ______________________
[Name of Bank]
Date:_______________
ACCEPTS ____
REJECTS ____
By:___________________________
Title: ____________________
EXHIBIT C
SCHEDULE OF LITIGATION
EXHIBIT D
SCHEDULE OF LIENS
EXHIBIT E
CERTIFICATE AS TO INSURANCE
EXHIBIT F
SUBSIDIARIES
EXHIBIT G
SCHEDULE OF PARTNERSHIPS AND JOINT VENTURES
EXHIBIT H
SCHEDULE OF INDEBTEDNESS
EXHIBIT I
SCHEDULE OF INVESTMENTS
EXHIBIT J
FORM OF OPINION OF COUNSEL
Each of the Banks listed on
Schedule 1 attached hereto
and
Bank of America Illinois,
as Agent on behalf of the Banks
231 South LaSalle Street
Chicago, Illinois 60697
Attention:
Ladies and Gentlemen:
We are delivering to you this opinion of counsel pursuant
to Section 8.4 of the Revolving Credit Agreement dated as of
December 13, 1994 (the "Credit Agreement") and entered into
between NPC International, Inc. (the "Company"), Nationsbank
of Texas, N.A., U.S. Bank of Washington, National Association
and Bank of America Illinois (formerly Continental Bank N.A.)
(together with their respective successors and assigns, the
"Banks") and Bank of America Illinois, as Agent for the Banks.
We have acted as counsel for the Company for several years
when specifically requested to do so in relation to particular
matters, and we are not generally familiar with matters with
respect to which we have not been consulted. Unless otherwise
defined herein, capitalized terms used herein shall have the
same respective meanings assigned to such terms in the Credit
Agreement.
As to factual matters, we have relied upon statements
made to us by representatives of the Company, on the
representations and warranties of the Company contained in the
Credit Agreement, and other documents being executed and/or
delivered as part of this transaction. We have assumed the
genuineness and authority of signatures on all original
documents and we have also assumed the conformity to the
original of all copies submitted to us as photocopies or
conformed copies.
In connection with this opinion, we have examined, among
other documents, a copy of the Credit Agreement and copies of
[the Notes] [Exhibits A-I and A-2 thereto] (the "Notes").
[However, we have not witnessed the execution or delivery of
the Credit Agreement or the Notes by the Company.]
In addition, we have reviewed originals, or copies
certified or otherwise identified to our satisfaction, of the
following:
14. the Articles of Incorporation of the Company,
together with all amendments thereto;
15. the Bylaws of the company, together with all
amendments thereto;
16. certificates issued by the secretaries of various
states respecting the good standing of the Company in such
states; and
17. resolutions of the Board of Directors of the
Company, approving the execution, delivery and performance of
the Credit Agreement, the Notes and all other documents and
instruments pertaining thereto or necessary to carry out the
objectives thereof.
We have also examined the originals, or copies certified
or identified to our satisfaction, of such other records of'
the Company, and such other certificates of public officials
and statements and certificates of officers of the Company,
and such other agreements, instruments and documents and have
made such investigation of questions of law as we have deemed
necessary under the circumstances as a basis for the opinions
hereinafter expressed.
Based upon the foregoing, and having regard for legal
considerations which we deem relevant, subject to the
qualifications and reservations stated herein, we are of the
opinion that:
18. The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of
Kansas, and is duly qualified and in good standing as a
foreign corporation in all other jurisdictions in which its
respective present operations or properties require such
qualification.
19.
19. The Company has full corporate power and authority
to own and operate its properties and assets, carry on its
business as presently conducted, and enter into and perform
its obligations under the Credit Agreement and the Notes.
20. The execution and delivery of the Credit Agreement
and the Notes, and the performance by the Company of its
obligations thereunder, have been duly authorized by all
necessary corporate action, and all of said documents and
instruments, assuming due execution and delivery on behalf of
the Company, constitute valid and binding obligations of the
Company, enforceable in accordance with their respective
terms.
21. There is no provision in the Articles of
Incorporation or Bylaws of the Company, nor to the best of our
knowledge any provision in any indenture, mortgage, contract
or agreement to which the Company is a party or by which it or
its properties may be bound, or any law, statute, rule or
regulation, or any writ, order or decision of any court or
governmental instrumentality binding on the Company which
would be contravened by the execution and delivery of the
Credit Agreement and the Notes, nor to the best of our
knowledge do any of the foregoing prohibit the Company's
performance of any term, provision, condition, covenant or any
other obligation of the Company contained therein.
22. To the best of our knowledge there are no actions,
suits or proceedings pending or threatened against or
affecting the company before any court or arbitrator or by or
before any administrative agency or governmental authority,
which, if adversely determined, would have a materially
adverse effect on the Company's consolidated financial
condition or business or the Company's ability to perform or
otherwise comply with its obligations set forth in the Credit
Agreement or the Notes.
23. Neither the making nor performance of the Credit
Agreement or the Notes, nor the borrowing(s) under the Credit
Agreement and the Notes, require the consent or approval of
any governmental instrumentality.
24. Neither the execution or delivery by the Company of
the Credit Agreement and the Notes, nor its performance of its
obligations thereunder, will violate Regulation G, T, U or X
of the Board of Governors of the Federal Reserve system.
Notwithstanding anything to the contrary set forth in
this opinion, this opinion is subject to the following
reservations and comments:
1 The enforcement of specific provisions of the Credit
Agreement and the Notes is subject to the provisions of, and
limitations imposed by, bankruptcy, insolvency,
reorganization, and other similar laws and judicial decisions
relating to or affecting the enforcement of the rights of
Creditors generally, and subject to the discretion of any
court of competent jurisdiction in granting specific
performance or other equitable relief.
2 We express no opinion whatsoever as to the federal
or state tax treatment to be accorded to the Banks in
connection with the making of loans under the Credit
Agreement.
In rendering this opinion, we have assumed the power and
authority of the Banks to enter into the Credit Agreement, and
the due execution by the Banks of the Credit Agreement.
We are members of the bars of the States of Missouri and
Kansas and we express no opinions with respect to the law of
any jurisdiction other than the United States of America and
the State of Kansas. We express no opinions with respect to
federal or state banking, truth in lending, or other similar
law which may be applicable to the Credit Agreement or the
transactions contemplated thereby. The opinions set forth in
this letter are effective as of the date hereof. No expansion
of our opinions may be made by implication or otherwise, and
we express no opinions other than as herein and expressly set
forth. We do not undertake to advise you of any matter within
the scope of this letter that comes to our attention after the
date of this letter, and we disclaim any responsibility to
advise you of future changes in law or fact that may affect
the above opinions. This letter is solely for your use in the
transaction indicated above, is considered by the Company to
be confidential, and is not to be quoted from in whole or in
part without the express written consent of this firm. No
party other than you, your assignees and your participants may
rely on this letter or utilize the opinions set forth herein
for any purpose.
Very truly yours,
SHOOK, HARDY & BACON P.C.
Schedule 1
Nationsbank of Texas, N.A.
901 Main Street
67th Floor
Dallas, Texas 75202-3748
United States National Bank of Oregon
Western Region
309 S.W. Sixth Avenue
10th Floor
Portland, Oregon 97204
EXHIBIT K
FORM OF CONFIRMATION
[Company's Letterhead]
_____________________________ 19___
Bank of America Illinois,
as Agent
231 South LaSalle Street
Chicago, Illinois 60697
Attention: ___________________
Ladies/Gentlemen:
Reference is made to the Revolving Credit Agreement dated as
of December 13, 1994 (as the same may be amended, supplemented
or otherwise modified, the "Agreement") between you, the Banks
and us. All terms used herein which are defined in the
Agreement shall have the same meaning herein as therein.
Pursuant to the terms of the Agreement, we hereby confirm the
following:
25. A [Reference Rate] [Eurodollar] [Money Market] Loan
in the amount of $ was requested on ________________, 19__.
[The Money Market Loan requested shall bear interest at a rate
of ____ per annum, and shall have a maturity of days.] [The
Eurodollar Loan shall have an initial Interest Period of ____
(days) (months)].
26.
26. A prepayment of principal of the [Reference Rate]
[Eurodollar] [Money Market] Loan in the amount of
$_______________ was authorized on _________, 19____.
[Complete number 1 or 2 above, whichever is applicable.]
27. As of the date hereof, the unpaid principal balance
of the [Reference Rate] [Eurodollar] [Money Market] Loan is
$_____________________.
Very truly yours,
NPC INTERNATIONAL, INC.
By:
Title:
National Pizza Company
up to $20,000,000 Senior Notes
__________________________
Master Shelf Agreement
__________________________
Dated as of June 9, 1994
______________________________________________________________
Table of Contents
(not part of Agreement)
Page
1. AUTHORIZATION OF ISSUE OF NOTES - 1 -
2. PURCHASE AND SALE OF NOTES - 2 -
2A. Facility - 2 -
2B. Issuance Period - 2 -
2C. Periodic Spread Information - 2 -
2D. Request for Purchase - 3 -
2E. Rate Quotes - 3 -
2F. Acceptance - 3 -
2G. Market Disruption - 4 -
2H. Closing - 4 -
2I. Fees - 5 -
3. CONDITIONS OF CLOSING - 7 -
3A. Certain Documents - 7 -
3B. Opinion of Purchaser's Special Counsel - 8 -
3C. Representations and Warranties; No Default - 8 -
3D. Purchase Permitted by Applicable Laws - 8 -
3E. New Franchise Agreement - 9 -
3F. Amendments to Existing Agreements - 9 -
4. PREPAYMENTS - 9 -
4A. Required Prepayments - 9 -
4B. Optional Prepayment With Yield-Maintenance Amount - 9 -
4C. Notice of Optional Prepayment - 9 -
4D. Application of Prepayments. - 9 -
4E. Retirement of Notes. - 10 -
5. AFFIRMATIVE COVENANTS - 10 -
5A. Financial Statements - 10 -
5B. Inspection of Property - 12 -
5C. Covenant to Secure Notes Equally - 13 -
5D. Agreement Assuming Liability on Notes - 13 -
5E. Compliance with Laws, Etc. - 13 -
5F. Maintenance of Insurance - 13 -
5G. Maintenance of Properties, Etc. - 14 -
5H. Corporate Existence - 14 -
5I. Claims for Labor and Materials - 14 -
6. NEGATIVE COVENANTS - 14 -
6A. Consolidated Net Worth Requirement - 14 -
6B. Consolidated Fixed Charge Requirement - 14 -
6C. Lien, Debt, and Other Restrictions - 15 -
6C(1) Liens - 15 -
6C(2) Debt - 16 -
6C(3) Loans, Advances, Investments and Contingent Liab. - 16 -
6C(4) Subsidiary Debt - 18 -
6C(5) Sale of Stock and Debt of Subsidiaries - 18 -
6C(6) Merger and Sale of Assets - 18 -
6C(7) Sale or Discount of Receivables - 19 -
6C(8) Transactions with Affiliates - 19 -
6C(9) Intangible Assets - 19 -
7. EVENTS OF DEFAULT - 20 -
7A. Acceleration - 20 -
7B. Rescission of Acceleration - 24 -
7C. Notice of Acceleration or Rescission - 24 -
7D. Other Remedies. - 24 -
8. REPRESENTATIONS, COVENANTS AND WARRANTIES. - 24 -
8A. Organization; Qualification; Corporate Authority. - 25 -
8B. Financial Statements. - 25 -
8C. Conflicting Agreements and Other Matters. - 25 -
8D. Governmental Consent. - 26 -
8E. Enforceability - 26 -
8F. Actions Pending - 26 -
8G. Outstanding Debt. - 27 -
8H. Title to Properties - 27 -
8I. Taxes. - 27 -
8J. Offering of Notes - 27 -
8K. Use of Proceeds. - 28 -
8L. ERISA - 28 -
8M. Disclosure. - 28 -
8N. Investment Company Act. - 29 -
8O. Public Utility Holding Company Act. - 29 -
8P. Environmental Compliance - 29 -
8Q. Funded Debt Agreements - 29 -
8R. Hostile Tender Offers - 29 -
9. REPRESENTATIONS OF THE PURCHASER. - 29 -
9A. Nature of Purchase - 29 -
9B. Source of Funds - 30 -
10. DEFINITIONS AND ACCOUNTING TERMS. - 30 -
10A. Certain Defined Terms. - 30 -
10B. Accounting Principles, Terms and Determinations - 39 -
11. MISCELLANEOUS. - 39 -
11A. Note Payments. - 39 -
11B. Expenses. - 39 -
11C. Consent to Amendments. - 40 -
11D.Form, Registration, Transfer and Exchange of Notes;
Lost Notes. - 40-
11E. Persons Deemed Owners; Participations. - 41-
11F. Survival of Representations and Warranties;
Entire Agreement. - 41-
11G. Successors and Assigns. - 41 -
11H. Disclosure to Other Persons; Confidentiality. - 42 -
11I. Notices. - 42 -
11J. Descriptive Headings. - 43 -
11K. Satisfaction Requirement. - 43 -
11L. Governing Law. - 43 -
11M. Integration. - 43 -
11N. Maximum Interest Payable. - 44 -
11O. Counterparts. - 44 -
11P. Payments Due on Non-Business Days - 44 -
NATIONAL PIZZA COMPANY
720 West 20th Street
Pittsburg, Kansas 66762
As of June 9, 1994
To: The Prudential Insurance Company
of America (herein called "Prudential")
Each Prudential Affiliate (as hereinafter
defined) which becomes bound by certain
provisions of this Agreement as hereinafter
provided (together with Prudential, the
"Purchasers")
c/o Prudential Capital Group
Gateway Center Four
100 Mulberry Street
Newark, New Jersey 07102-4069
Ladies and Gentlemen:
The undersigned, National Pizza Company (the "Company"),
hereby agrees with Prudential as follows:
1. AUTHORIZATION OF ISSUE OF NOTES. The Company
will authorize the issue of its senior promissory notes
(herein called the "Notes") in the aggregate principal amount
of $20,000,000; to be dated the date of issue thereof; to
mature, in the case of each Note so issued, no more than 8
years after the date of original issuance thereof; to have an
average life, in the case of each Note so issued, of no more
than 6 years after the date of original issuance thereof; to
bear interest on the unpaid balance thereof from the date
thereof at the rate per annum, and to have such other
particular terms, as shall be set forth, in the case of each
Note so issued, in the Confirmation of Acceptance with respect
to such Note delivered pursuant to paragraph 2F; and to be
substantially in the form of Exhibit A attached hereto. The
term "Notes" as used herein shall include each Note delivered
pursuant to any provision of this Agreement and each Note
delivered in substitution or exchange for any such Note
pursuant to any such provision. Notes which have (a) the same
final maturity, (b) the same installment payment dates, (c)
the same installment payment amounts (as a percentage of the
original principal amount of each Note), (d) the same interest
rate, (e) the same interest payment periods, and (vi) the same
original date of issuance are herein called a "Series" of
Notes.
2. PURCHASE AND SALE OF NOTES.
2A. Facility. Prudential is willing to consider,
in its sole discretion and within limits which may be
authorized for purchase by Prudential and Prudential
Affiliates from time to time, the purchase of Notes pursuant
to this Agreement. The willingness of Prudential to consider
such purchase of Notes is herein called the "Facility". At
any time, the aggregate principal amount of Notes stated in
paragraph 1, minus the aggregate principal amount of Notes
purchased and sold pursuant to this Agreement prior to such
time, minus the aggregate principal amount of Accepted Notes
(as hereinafter defined) which have not yet been purchased and
sold hereunder prior to such time, is herein called the
"Available Facility Amount" at such time. Notwithstanding the
willingness of Prudential to consider purchases of Notes, this
Agreement is entered into on the express understanding that
neither Prudential nor any Prudential Affiliate shall be
obligated to make offers to purchase or accept offers to sell
Notes, or to quote rates, spreads or other terms with respect
to specific purchases of Notes, and the Facility shall in no
way be construed as a commitment by Prudential or any
Prudential Affiliate.
2B. Issuance Period. Notes may be issued and sold
pursuant to this Agreement until the earlier of (i) (a) if no
Notes have been previously issued hereunder, the first
anniversary of the date of this Agreement or (b) upon receipt
of the Renewal Fee provided for in paragraph 2I(v) or the
issuance of Notes prior to the first anniversary date of this
Agreement, the second anniversary of the date of this
Agreement (or if any such anniversary is not a Business Day,
the Business Day next preceding such anniversary) and (ii) the
thirtieth day after Prudential shall have given to the
Company, or the Company shall have given to Prudential, a
notice stating that it elects to terminate the issuance and
sale of Notes pursuant to this Agreement (or if such thirtieth
day is not a Business Day, the Business Day next preceding
such thirtieth day). The period during which Notes may be
issued and sold pursuant to this Agreement is herein called
the "Issuance Period".
2C. Periodic Spread Information. Not later than
9:30 A.M. (New York City local time) on a Business Day during
the Issuance Period if there is an Available Facility Amount
on such Business Day, the Company may request by telecopier or
telephone, and Prudential will, to the extent reasonably
practicable, provide to the Company on such Business Day (or,
if such request is received after 9:30 A.M. (New York City
local time) on such Business Day, on the following Business
Day), information (by telecopier or telephone) with respect to
various spreads at which Prudential or Prudential Affiliates
might be interested in purchasing Notes of different average
lives; provided, however, that the Company may not make such
requests more frequently than once in every five Business Days
or such other period as shall be mutually agreed to by the
Company and Prudential. The amount and content of information
so provided shall be in the sole discretion of Prudential but
it is the intent of Prudential to provide information which
will be of use to the Company in determining whether to
initiate procedures for use of the Facility. Information so
provided shall not constitute an offer to purchase Notes, and
neither Prudential nor any Prudential Affiliate shall be
obligated to purchase Notes at the spreads specified.
Information so provided shall be representative of potential
interest only for the period commencing on the day such
information is provided and ending on the earlier of the fifth
Business Day after such day and the first day after such day
on which further spread information is provided. Prudential
may suspend or terminate providing information pursuant to
this paragraph 2C if, in its sole discretion, it determines
that there has been an adverse change in the credit quality of
the Company after the date of this Agreement.
2D. Request for Purchase. The Company may from
time to time during the Issuance Period make requests for
purchases of Notes (each such request being herein called a
"Request for Purchase"). Each Request for Purchase shall be
made to Prudential by telecopier and confirmed by nationwide
overnight delivery service, and shall (i) specify the
aggregate principal amount of Notes covered thereby, which
shall not be less than $5,000,000 and not be greater than the
Available Facility Amount at the time such Request for
Purchase is made, (ii) specify the principal amounts, final
maturities, installment payment dates and amounts and interest
payment periods (quarterly or semi-annual in arrears) of the
Notes covered thereby, (iii) specify the use of proceeds of
such Notes, (iv) specify the proposed Closing Day of the
purchase and sale of such Notes, which shall be a Business Day
during the Issuance Period not less than 5 Business Days and
not more than 20 Business Days after the making of such
Request for Purchase, (v) specify the number of the account
and the name and address of the depository institution to
which the purchase prices of such Notes are to be transferred
on the Closing Day for such purchase and sale, (vi) certify
that the representations and warranties contained in paragraph
8 are true on and as of the date of such Request for Purchase
except to the extent of changes caused by the transactions
herein contemplated and that there exists on the date of such
Request for Purchase no Event of Default or Default, and (vii)
be substantially in the form of Exhibit B attached hereto.
Each Request for Purchase shall be in writing and shall be
deemed made when received by Prudential.
2E. Rate Quotes. Not later than five Business Days
after the Company shall have given Prudential a Request for
Purchase pursuant to paragraph 2D, Prudential may provide (by
telephone promptly thereafter confirmed by telecopier, in each
case no earlier than 9:30 A.M. and no later than 1:30 P.M. New
York City local time) interest rate quotes for the several
principal amounts, maturities, installment payment schedules,
and interest payment periods of Notes specified in such
Request for Purchase. Each quote shall represent the interest
rate per annum payable on the outstanding principal balance of
such Notes until such balance shall have become due and
payable, at which Prudential or a Prudential Affiliate would
be willing to purchase such Notes at 100% of the principal
amount thereof.
2F. Acceptance. Within 30 minutes after Prudential
shall have provided any interest rate quotes pursuant to
paragraph 2E or in the event that due to conditions in the
market place it shall not be feasible to hold such interest
rate quotes open 30 minutes, such shorter period as Prudential
may specify to the Company at the time such interest rate
quotes are provided to the Company (such period herein called
the "Acceptance Window"), the Company may, subject to
paragraph 2G, elect to accept such interest rate quotes as to
not less than $5,000,000 aggregate principal amount of the
Notes specified in the related Request for Purchase. Such
election shall be made by an Authorized Officer of the Company
notifying Prudential by telephone or telecopier within the
Acceptance Window (but not earlier than 9:30 A.M. or later
than 2:00 P.M., New York City local time) that the Company
elects to accept such interest rate quotes, specifying the
Notes (each such Note being herein called an "Accepted Note")
as to which such acceptance (herein called an "Acceptance")
relates. The day the Company notifies an Acceptance with
respect to any Accepted Notes is herein called the "Acceptance
Day" for such Accepted Notes. Any interest rate quotes as to
which Prudential does not receive an Acceptance within the
Acceptance Window shall expire, and no purchase or sale of
Notes hereunder shall be made based on such expired interest
rate quotes. Subject to paragraph 2G and the other terms and
conditions hereof, the Company agrees to sell to Prudential or
a Prudential Affiliate, and Prudential agrees to purchase, or
to cause the purchase by a Prudential Affiliate of, the
Accepted Notes at 100% of the principal amount of such Notes.
As soon as practicable following the Acceptance Day, the
Company, Prudential and each Prudential Affiliate which is to
purchase any such Accepted Notes will execute a confirmation
of such Acceptance substantially in the form of Exhibit C
attached hereto (herein called a "Confirmation of
Acceptance").
2G. Market Disruption. Notwithstanding the
provisions of paragraph 2F, if Prudential shall have provided
interest rate quotes pursuant to paragraph 2E and thereafter
prior to the time an Acceptance with respect to such quotes
shall have been notified to Prudential in accordance with
paragraph 2F there shall occur a general suspension, material
limitation, or significant disruption of trading in securities
generally on the New York Stock Exchange or in the domestic
public market for U.S. Treasury securities or derivatives
thereof, then such interest rate quotes shall expire, and no
purchase or sale of Notes hereunder shall be made based on
such expired interest rate quotes. If the Company thereafter
notifies Prudential of the Acceptance of any such interest
rate quotes, such Acceptance shall be ineffective for all
purposes of this Agreement, and Prudential shall promptly
notify the Company that the provisions of this paragraph 2G
are applicable with respect to such Acceptance.
2H. Closing.
2H(i) Closings -- Not later than 11:30 A.M. (New
York City local time) on the Closing Day for any Accepted
Notes, the Company will deliver to each Purchaser listed
in the Confirmation of Acceptance relating thereto at the
offices of the Prudential Capital Group, 1201 Elm St,
Suite 4900, Dallas, Texas 75270, the Accepted Notes to be
purchased by such Purchaser in the form of a one or more
Notes in authorized denominations as such Purchaser may
request for each Series of Accepted Notes to be purchased
on the Closing Day, dated the Closing Day and registered
in such Purchaser's name (or in the name of its nominee),
against payment of the purchase price thereof by transfer
of immediately available funds for credit to the
Company's account specified in the Request for Purchase
of such Notes.
2H(ii) Rescheduled Closings -- If the Company fails
to tender to any Purchaser the Accepted Notes to be
purchased by such Purchaser on the scheduled Closing Day
for such Accepted Notes as provided above in this
paragraph 2H, or any of the conditions specified in
paragraph 3 shall not have been fulfilled by the time
required on such scheduled Closing Day, the Company
shall, prior to 1:00 P.M., New York City local time, on
such scheduled Closing Day notify such Purchaser in
writing whether (i) such closing is to be rescheduled
(such rescheduled date to be a Business Day during the
Issuance Period not less than one Business Day and not
more than 10 Business Days after such scheduled Closing
Day (the "Rescheduled Closing Day") and certify to such
Purchaser that the Company reasonably believes that it
will be able to comply with the conditions set forth in
paragraph 3 on such Rescheduled Closing Day and that the
Company will pay the Delayed Delivery Fee in accordance
with paragraph 2I(iii) or (ii) such closing is to be
canceled as provided in paragraph 2I(iv). In the event
that the Company shall fail to give such notice referred
to in the preceding sentence, such Purchaser may at its
election, at any time after 1:00 P.M., New York City
local time, on such scheduled Closing Day, notify the
Company in writing that such closing is to be canceled as
provided in paragraph 2I(iv).
2I. Fees.
2I(i) Facility Fee -- In consideration for the
time, effort and expense involved in the preparation,
negotiation and execution of this Agreement, at the time of
the execution of the term sheet concerning this Agreement, the
Company paid to Prudential in immediately available funds fee
(herein called the "Facility Fee") in an amount equal to
$25,000. In the event that the Company has been unable to
obtain a new or amended franchise agreement with Pizza Hut,
Inc. satisfactory to Prudential as required by in paragraph 3E
on or before the first anniversary of the date of this
Agreement, Prudential will return the Facility Fee (without
interest) to the Company.
2I(ii) Issuance Fee -- The Company will pay to
Prudential in immediately available funds a fee (herein called
the "Issuance Fee") on each Closing Day in an amount equal to
0.25% (25/100ths of 1%) of the aggregate principal amount of
Notes sold on such Closing Day.
2I(iii) Delayed Delivery Fee -- If the closing of
the purchase and sale of any Accepted Note is delayed for any
reason beyond the original Closing Day for such Accepted Note,
the Company will pay to Prudential (a) on the Cancellation
Date or actual closing date of such purchase and sale and (b)
if earlier, the next Business Day following 90 days after the
Acceptance Day for such Accepted Notes and on each Business
Day following 90 days after the prior payment hereunder, a fee
(herein called the "Delayed Delivery Fee") calculated as
follows:
(BEY - MMY) X DTS/360 X PA
where "BEY" means Bond Equivalent Yield, i.e., the bond
equivalent yield per annum of such Accepted Note, "MMY" means
Money Market Yield, i.e., the yield per annum on a commercial
paper investment of the highest quality selected by Prudential
on the date Prudential receives notice of the delay in the
closing for such Accepted Notes having a maturity date or
dates the same as, or closest to, the Rescheduled Closing Day
or Rescheduled Closing Days (a new alternative investment
being selected by Prudential each time such closing is
delayed); "DTS" means Days to Settlement, i.e., the number of
actual days elapsed from and including the originally
scheduled Closing Day with respect to such Accepted Note (in
the case of the first such Delayed Delivery Fee payment with
respect to such Accepted Note) or from and including the date
of the next preceding Delayed Delivery Fee payment (in the
case of any subsequent Delayed Delivery Fee payment with
respect to such Accepted Note) to but excluding the date of
such Delayed Delivery Fee payment; and "PA" means Principal
Amount, i.e., the principal amount of the Accepted Note for
which such calculation is being made. In no case shall the
Delayed Delivery Fee be less than zero. Nothing contained
herein shall obligate any Purchaser to purchase any Accepted
Note on any day other than the Closing Day for such Accepted
Note, as the same may be rescheduled from time to time in
compliance with paragraph 2H.
2I(iv) Cancellation Fee -- If the Company at any
time notifies the Purchasers in writing that the Company is
canceling the closing of the purchase and sale of any Accepted
Note, or if the Purchasers notify the Company in writing under
the circumstances set forth in the last sentence of paragraph
2H that the closing of the purchase and sale of such Accepted
Note is to be canceled, or if the closing of the purchase and
sale of such Accepted Note is not consummated on or prior to
the last day of the Issuance Period (the date of any such
notification, or the last day of the Issuance Period, as the
case may be, being herein called the "Cancellation Date"), the
Company will pay the Purchasers in immediately available funds
an amount (the "Cancellation Fee") calculated as follows:
PI X PA
where "PI" means Price Increase, i.e., the quotient (expressed
in decimals) obtained by dividing (a) the excess of the ask
price (as reasonably determined by Prudential) of the Hedge
Treasury Note(s) on the Cancellation Date over the bid price
(as reasonably determined by Prudential) of the Hedge Treasury
Notes(s) on the Acceptance Day for such Accepted Note by (b)
such bid price; and "PA" has the meaning ascribed to it in
paragraph 2I(iii). The foregoing bid and ask prices shall be
as reported by Telerate Systems, Inc. (or, if such data for
any reason ceases to be available through Telerate Systems,
Inc., any publicly available source of similar market data).
Each price shall be based on a U.S. Treasury security having a
par value of $100.00 and shall be rounded to the second
decimal place. In no case shall the Cancellation Fee be less
than zero.
2I(v) Renewal Fee -- If no Notes are issued from
the date hereof until the first anniversary of the date of
this Agreement, the Facility shall be terminated and the
Issuance Period shall end on such anniversary date unless on
or before such first anniversary the Company shall pay to
Prudential a renewal fee (the "Renewal Fee") in the aggregate
amount of $25,000. In the event the Company pays the Renewal
Fee, the Facility shall remain in place and the Issuance
Period shall extend until the second anniversary of the date
of this Agreement (unless terminated earlier by the Company
pursuant to paragraph 2B).
3. CONDITIONS OF CLOSING. The obligation of any
Purchaser to purchase and pay for any Accepted Notes is
subject to the satisfaction, on or before the Closing Day for
such Accepted Notes, of the following conditions:
3A. Certain Documents. Such Purchaser shall have
received the following, each dated the date of the applicable
Closing Day:
(i) The Accepted Note(s) to be purchased by such
Purchaser.
(ii) Certified copies of the resolutions of the
Board of Directors of the Company approving this
Agreement and the Accepted Notes, and of all documents
evidencing other necessary corporate action and
governmental approvals, if any, with respect to this
Agreement and the Accepted Notes.
(iii) A certificate of the Secretary or an
Assistant Secretary of the Company certifying the names
and true signatures of the officers of the Company
authorized to sign this Agreement and the Accepted Notes
and the other documents to be delivered hereunder.
(iv) Certified copies of the Certificate of
Incorporation and By-laws of the Company.
(v) A favorable opinion of Shook, Hardy & Bacon,
special counsel to the Company satisfactory to such
Purchaser and substantially in the form of Exhibit D
attached hereto and as to such other matters as such
Purchaser may reasonably request. The Company hereby
directs each such counsel to deliver such opinion, agrees
that the issuance and sale of any Accepted Notes will
constitute a reconfirmation of such direction, and
understands and agrees that each Purchaser receiving such
an opinion will and is hereby authorized to rely on such
opinion.
(vi) A good standing certificate for the Company
from the Secretary of State of Kansas dated of a recent
date and such other evidence of the status of the Company
as such Purchaser may reasonably request.
(vii) Certified copies of Requests for
Information or Copies (Form UCC-11) or equivalent reports
of a recent date listing all effective financing
statements which name the Company or any Subsidiary
(under its present name and previous names) as debtor and
which are filed in the offices of the Secretaries of
State of Kansas, Texas, Washington and such other states
in which a "chief executive office" (as such term is used
in the Uniform Commercial Code) is located as may be
reasonably requested, with copies of such financing
statements.
(viii) Additional documents or certificates with
respect to legal matters or corporate or other
proceedings related to the transactions contemplated
hereby as may be reasonably requested by such Purchaser.
3B. Opinion of Purchaser's Special Counsel. Such
Purchaser shall have received from Jay D. Squiers, Assistant
General Counsel of Prudential or such other counsel, who is
acting as special counsel for it in connection with this
transaction, a favorable opinion satisfactory to such
Purchaser as to such matters incident to the matters herein
contemplated as it may reasonably request.
3C. Representations and Warranties; No Default.
The representations and warranties contained in paragraph 8
shall be true on and as of such Closing Day, except to the
extent of changes caused by the transactions herein
contemplated; there shall exist on such Closing Day no Event
of Default or Default; and the Company shall have delivered to
such Purchaser an Officer's Certificate, dated such Closing
Day, to both such effects.
3D. Purchase Permitted by Applicable Laws. The
purchase of and payment for the Accepted Notes to be purchased
by such Purchaser on the terms and conditions herein provided
(including the use of the proceeds of such Notes by the
Company) shall not violate any applicable law or governmental
regulation (including, without limitation, Section 5 of the
Securities Act or Regulation G, T or X of the Board of
Governors of the Federal Reserve System) and shall not subject
such Purchaser to any tax, penalty, liability or other onerous
condition under or pursuant to any applicable law or
governmental regulation, and such Purchaser shall have
received such certificates or other evidence as it may request
to establish compliance with this condition.
3E. New Franchise Agreement. The Company and Pizza
Hut, Inc. shall have executed and delivered a new or amended
franchise agreement relating to the operation of the Company's
Pizza Hut restaurants that is satisfactory in form and
substance to Prudential.
3F. Amendments to Existing Agreements. The Company
shall have duly executed and delivered an amendment to (i) the
Note Agreement dated as of March 13, 1991 between the Company
and Prudential and (ii) the Note Agreement dated as of January
25, 1990 between the Company and Prudential in substantially
the form of Exhibit E attached hereto.
4. PREPAYMENTS. Any Accepted Notes shall be
subject to prepayment with respect to any required prepayments
set forth in such Accepted Notes as provided in paragraph 4A
and with respect to the optional prepayments permitted by
paragraph 4B.
4A. Required Prepayments. The Notes of each Series
shall be subject to required prepayments, if any, set forth in
the Notes of such Series.
4B. Optional Prepayment With Yield-Maintenance
Amount. The Notes of each Series shall be subject to
prepayment, in whole at any time or from time to time in part
(in integral multiples of $1,000,000), at the option of the
Company, at 100% of the principal amount so prepaid plus
interest thereon to the prepayment date and the Yield-
Maintenance Amount, if any, with respect to each such Note.
Any partial prepayment of a Series of Notes pursuant to this
paragraph 4B shall be applied in satisfaction of required
payments of principal in inverse order of their scheduled due
dates.
4C. Notice of Optional Prepayment. The Company
shall give the holder of each Note to be prepaid pursuant to
paragraph 4B irrevocable written notice of such prepayment not
less than 10 Business Days prior to the prepayment date,
specifying such prepayment date, specifying the aggregate
principal amount of the Notes of the same Series as such Note
to be prepaid on such date, identifying each Note held by such
holder, and the principal amount of each such Note, to be
prepaid on such date and stating that such prepayment is to be
made pursuant to paragraph 4B. Notice of prepayment having
been given as aforesaid, the principal amount of the Notes
specified in such notice, together with interest thereon to
the prepayment date and together with the Yield-Maintenance
Amount, if any, herein provided, shall become due and payable
on such prepayment date. The Company shall, on or before the
day on which it gives written notice of any prepayment
pursuant to paragraph 4B, give telephonic notice of the
principal amount of the Notes to be prepaid and the prepayment
date to each Significant Holder which shall have designated a
recipient for such notices in the Information Schedule
attached hereto or by notice in writing to the Company.
4D. Application of Prepayments. In the case of
each prepayment of less than the entire unpaid principal
amount of all outstanding Notes, the amount to be prepaid
shall be applied pro rata to all outstanding Notes of all
Series (including, for the purpose of this paragraph 4D only,
all Notes prepaid or otherwise retired or purchased or
otherwise acquired by the Company or any of its Subsidiaries
or Affiliates other than by prepayment pursuant to paragraph
4A or 4B) according to the respective unpaid principal amounts
thereof. The amounts so prepaid on each outstanding Note
shall be credited against the last maturing installment or
installments of principal then remaining unpaid on such Note.
4E. Retirement of Notes. The Company shall not,
and shall not permit any of its Subsidiaries or Affiliates to,
prepay or otherwise retire in whole or in part prior to their
stated final maturity (other than by prepayment pursuant to
paragraph 4A or 4B or upon acceleration of such final maturity
pursuant to paragraph 7A), or purchase or otherwise acquire,
directly or indirectly, Notes of any Series held by any holder
unless the Company or such Subsidiary or Affiliate shall have
offered to prepay or otherwise retire or purchase or otherwise
acquire, as the case may be, the same proportion of the
aggregate principal amount of Notes of such Series held by
each other holder of Notes of such Series at the time
outstanding upon the same terms and conditions. Any Notes so
prepaid or otherwise retired or purchased or otherwise
acquired by the Company or any of its Subsidiaries or
Affiliates shall not be deemed to be outstanding for any
purpose under this Agreement, except as provided in paragraph
4D.
5. AFFIRMATIVE COVENANTS. During the Issuance
Period and thereafter so long as any Note shall remain unpaid,
the Company covenants as follows:
5A. Financial Statements. The Company will deliver
to each Significant Holder in triplicate:
(i) as soon as practicable and in any event within
50 days after the end of each quarterly period (other
than the last quarterly period) in each fiscal year,
consolidated statements of income, consolidated
statements of shareholder's equity and consolidated
statements of cash flows of the Company and its
Subsidiaries for the period from the beginning of the
current fiscal year to the end of such quarterly period,
and consolidated balance sheets of the Company and its
Subsidiaries as at the end of such quarterly period,
setting forth in each case in comparative form figures
for the corresponding period or as of the end of such
corresponding period, as applicable, in the preceding
fiscal year, all in reasonable detail and certified by an
authorized financial officer of the Company, subject to
changes resulting from year-end adjustments; provided,
however, that, so long as such delivery is made within
the time requirement set forth above in this clause (i),
delivery pursuant to clause (iv) below of copies of the
Quarterly Report on Form 10-Q of the Company for such
quarterly period filed with the Securities and Exchange
Commission shall be deemed to satisfy the requirements of
this clause (i);
(ii) as soon as practicable and in any event within
50 days after the end of each quarterly period in each
fiscal year (or, at the Company's option, more
frequently), balance sheets at the end of each fiscal
quarter and income statements for the period from the
beginning of the current fiscal year to the end of such
fiscal quarter for each material operating division of
the Company (whether incorporated or not), setting forth
in each case in comparative form figures as of the end of
the corresponding period or for the corresponding period,
as applicable, in the preceding fiscal year, all in
reasonable detail and certified by an authorized
financial officer of the Company as fairly presenting the
financial condition and operations of such divisions in
accordance with prior practices of the Company
consistently applied; provided, however, that, so long as
such delivery is made within the time requirement set
forth above in this clause (ii), it is agreed and
acknowledged that the continued delivery of the financial
statements currently provided by the Company in its
director packages shall be deemed to satisfy the
requirements of this clause (ii);
(iii) as soon as practicable and in any event
within 95 days after the end of each fiscal year,
consolidated statements of income, shareholder's equity
and cash flows of the Company and its Subsidiaries for
such year, and a consolidated balance sheet of the
Company and its Subsidiaries as at the end of such year,
setting forth in each case in comparative form
corresponding consolidated figures from the preceding
annual audit, all in reasonable detail and satisfactory
in scope to the Required Holders and certified to the
Company by independent public accountants of recognized
national standing selected by the Company whose
certificate shall be in scope and substance satisfactory
to the Required Holders; provided, however, that, so long
as such delivery is made within the time requirement set
forth above in the clause (iii), delivery pursuant to
clause (iv) below of copies of the Annual Report on Form
10-K of the Company for such fiscal year filed with the
Securities and Exchange Commission shall be deemed to
satisfy the requirements of this clause (iii);
(iv) promptly upon transmission thereof, copies of
all such financial statements, proxy statements, notices
and reports as it shall send to its stockholders and
copies of all registration statements (without exhibits)
and all reports which it files with the Securities and
Exchange Commission (or any governmental body or agency
succeeding to the functions of the Securities and
Exchange Commission);
(v) promptly upon receipt thereof, a copy of each
other report submitted to board of directors of the
Company (or the executive committee thereof) or any
Subsidiary by independent accountants in connection with
any annual, interim or special audit made by them of the
books of the Company or any Subsidiary;
(vi) promptly after the filing or receiving thereof,
copies of all reports and notices which the Company or
any Subsidiary files under ERISA with the Internal
Revenue Service or the Pension Benefit Guaranty
Corporation or the U.S. Department of Labor or which the
Company or any Subsidiary receives from such corporation;
and
(vii) promptly after receipt of notice thereof
by the Company or after the Company obtains knowledge
thereof, notice of any default under any Franchise
Agreement and any notice received by the Company pursuant
to Article XXI. C. of the existing Franchise Agreement
(or any similar provision of any Franchise Agreement
hereafter entered into by the Company or any Subsidiary)
of any Franchise Agreement in effect on the Date of
Closing; and
(viii) with reasonable promptness, such other
information respecting the condition or operations,
financial or otherwise, of the Company or any of its
Subsidiaries as such Significant Holder may reasonably
request.
Together with each delivery of financial statements required
by clauses (i) and (iii) above, the Company will deliver to
each Significant Holder an Officer's Certificate demonstrating
(with computations in reasonable detail) compliance by the
Company and its Subsidiaries with the provisions of paragraph
6 and stating that there exists no Event of Default or
Default, or, if any Event of Default or Default exists,
specifying the nature and period of existence thereof and what
action the Company proposes to take with respect thereto.
Together with each delivery of financial statements required
by clause (iii) above, the Company will deliver to each
Significant Holder a certificate of such accountants stating
that, in making the audit necessary to the certification of
such consolidated financial statements, they have obtained no
knowledge of any Event of Default or Default, or, if they have
obtained knowledge of any Event of Default or Default,
specifying the nature and period of existence thereof. Such
accountants, however, shall not be liable to anyone by reason
of their failure to obtain knowledge of any Event of Default
or Default which would not be disclosed in the course of an
audit conducted in accordance with generally accepted auditing
standards.
The Company also covenants that forthwith upon the
President or Chief Financial Officer or principal accounting
officer of the Company obtaining knowledge of an Event of
Default or Default, it will deliver to each Significant Holder
an Officer's Certificate specifying the nature and period of
existence thereof and what action the Company proposes to take
with respect thereto.
5B. Inspection of Property. The Company will
permit any Person designated by any Significant Holder in
writing, at such Significant Holder's expense, to visit and
inspect any of the properties of the Company and its
Subsidiaries, to examine the corporate books and financial
records of the Company and its Subsidiaries and make copies
thereof or extracts therefrom and to discuss the affairs,
finances and accounts of any of such corporations with the
principal officers of the Company and its independent public
accountants (and by this provision the Company authorizes its
accountants to discuss with such Person the finances and
affairs of the Company and its Subsidiaries), all at such
reasonable times with reasonable notice and as often as such
Significant Holder may reasonably request.
5C. Covenant to Secure Notes Equally. If the
Company or any Subsidiary shall create or assume any Lien upon
any of its property or assets, whether now owned or hereafter
acquired, other than Liens permitted by the provisions of
paragraph 6C(1) (unless prior written consent to the creation
or assumption thereof shall have been obtained pursuant to
paragraph 11C), it will make or cause to be made effective
provision whereby the Notes will be secured by such Lien
equally and ratably with any and all other Debt thereby
secured so long as any such other Debt shall be so secured.
In the event the Company shall propose to secure the Notes
pursuant to this paragraph, the mortgage or other instrument
creating such Lien shall be satisfactory in form and substance
(including without limitation the portion thereof pertaining
to the release of the collateral secured thereby and the
application of the proceeds from the sale or other disposition
of such collateral) to the Required Holders.
5D. Agreement Assuming Liability on Notes. If at
any time any Person should become liable (as co-obligor,
endorser, guarantor or surety) on any other unsecured
obligation of the Company in excess of $500,000 or on any
obligation of any Subsidiary, the Company will, at the same
time, cause such Person to deliver to each holder of any Note
an agreement pursuant to which such Person becomes similarly
liable on each Note.
5E. Compliance with Laws, Etc. The Company will
comply, and cause each of its Subsidiaries to comply, in all
material respects with all applicable laws, rules, regulations
and orders the noncompliance with which could result in a
material adverse effect on the Company or any of its
Subsidiaries, such compliance to include, without limitation,
paying before the same become delinquent all taxes,
assessments and governmental charges imposed upon it or upon
its property; provided the Company or such Subsidiary shall
not be required to pay any such taxes, assessments or
governmental charges if (i) the validity, applicability or
amount thereof is being contested in good faith by appropriate
actions or proceedings which will prevent the forfeiture or
sale of any property of the Company or such Subsidiary or any
material interference with the use thereof by the Company or
such Subsidiary, and (ii) the Company or such Subsidiary shall
set aside on its books, reserves deemed by it to be adequate
with respect thereto.
5F. Maintenance of Insurance. The Company and each
Subsidiary will maintain insurance in such amounts and against
such liabilities and hazards as customarily is maintained by
other companies of similar size operating similar businesses,
and upon the written request of any Significant Holder, and
together with each delivery of financial statements under
clause (iii) of paragraph 5A, it will deliver an Officer's
Certificate specifying the details of such insurance in
effect.
5G. Maintenance of Properties, Etc. The Company
will maintain and preserve, and cause each Subsidiary to
maintain and preserve, to the extent that a failure to so
maintain or preserve would have a material adverse effect on
the Company's or any Subsidiary's business, property or assets
(i) all of its properties which are used or useful in the
conduct of its business in good working order and condition,
ordinary wear and tear excepted and (ii) all of its rights,
title, licenses, trademarks and other permits used or useful
in the conduct of its business.
5H. Corporate Existence. The Company and its
Subsidiaries shall maintain their corporate existence.
5I. Claims for Labor and Materials. The Company
will promptly pay and discharge, and will cause each
Subsidiary promptly to pay and discharge, all trade accounts
payable in accordance with usual and customary business terms,
and all claims for work, labor or materials, which if unpaid
might become a Lien upon any property of the Company or such
Subsidiary; provided the Company or such Subsidiary shall not
be required to pay any such account payable or claim if either
(i)(a) the validity, applicability or amount thereof is being
contested in good faith by appropriate actions or proceedings
which will prevent the forfeiture or sale of any property of
the Company or such Subsidiary or any material interference
with the use thereof by the Company or such Subsidiary, and
(b) the Company or such Subsidiary shall set aside on its
books, reserves deemed by it to be adequate with respect
thereto or (ii) the failure to pay any such account payable or
claim would not have a material adverse effect on the
business, prospects, profits, properties or condition
(financial or otherwise) of the Company and its Subsidiaries
taken as a whole.
6. NEGATIVE COVENANTS. During the Issuance Period
and thereafter so long as any Note shall remain unpaid, the
Company covenants as follows:
6A. Consolidated Net Worth Requirement. The
Company will not permit Consolidated Net Worth at any time to
be less than the sum of (i) $65,423,000 plus (ii) an amount
equal to 50% of Consolidated Net Earnings (without reduction
for any deficit in Consolidated Net Earnings for any quarterly
fiscal period) for the period from and after March 31, 1992 to
and including the date of determination thereof, computed on a
cumulative basis for such period.
6B. Consolidated Fixed Charge Requirement. The
Company will not permit Consolidated Net Income Available for
Fixed Charges for the four fiscal quarters most recently ended
as of the date of determination, at any time to be less than
200% of Fixed Charges as of the last day of the fiscal quarter
most recently ended as of the date of determination.
6C. Lien, Debt, and Other Restrictions. The
Company will not and will not permit any Subsidiary to:
6C(1) Liens -- Create, assume or suffer to exist
any Lien upon any of its properties or assets, whether
now owned or hereafter acquired (whether or not provision
is made for the equal and ratable securing of the Notes
in accordance with the provisions of paragraph 5C),
except
(i) Liens for taxes or governmental
charges and liens securing claims or demands of
mechanics and materialmen provided that the payment
is not at the time required by paragraph 5E or 5I;
(ii) other Liens incidental to the
conduct of its business or the ownership of its
property and assets which are not incurred in
connection with the borrowing of money or the
obtaining of advances or credit, and which do not in
the aggregate materially detract from the value of
its property or assets or materially impair the use
thereof in the operation of its business;
(iii) survey exceptions which, when taken
as a whole, would not have a material adverse effect
on the Company;
(iv) Liens on property or assets of a
Subsidiary to secure obligations of such Subsidiary
to the Company or another Subsidiary;
(v) Liens existing on property acquired
by the Company or any Subsidiary at the time such
property is acquired or Liens existing on property
of a Person immediately prior to such Person being
consolidated with or merged into the Company or a
Subsidiary or such Person becoming a Subsidiary
provided that (x) no such Lien shall have been
created or assumed in contemplation of such
acquisition, consolidation or merger or such
Person's becoming a Subsidiary, (y) each such Lien
shall at all times be confined solely to the
property so acquired, and (z) any Debt secured by
such Liens shall be within the applicable
limitations of paragraph 6C(2)(a); and
(vi) other Liens on the property of the
Company and all Subsidiaries, provided that (a) the
aggregate amount of (I) Debt secured by such Liens
plus (II) Debt of Subsidiaries (collectively,
"Priority Debt") does not exceed at any time an
amount equal to 20% of Consolidated Net Worth and
(b) all such Debt shall be within the applicable
limitations of paragraph 6C(2)(a).
6C(2) Debt -- (a) Create, incur, assume or in
any manner be or become liable in respect of any Debt,
except
(i) Funded Debt of the Company
represented by the Notes;
(ii) Funded Debt of the Company existing
on the date hereof and described on Schedule 6C(2)
attached hereto;
(iii) Funded Debt or Current Debt of any
Subsidiary to the Company or any other Subsidiary;
(iv) additional Debt of the Company and
its Subsidiaries; provided that (x) the aggregate
amount of all Debt of the Company and its
Subsidiaries (determined on a consolidated basis)
shall not exceed at any time an amount equal to
fifty-five percent (55%) of the sum of (I) all Debt
of the Company and its Subsidiaries (determined on a
consolidated basis) plus (II) Consolidated Net Worth
and (y) in the case of Priority Debt, such Debt is
within the applicable limitations of paragraphs
6C(1) and 6C(4).
(b) Any entity which becomes a Subsidiary after the date
hereof shall for all purposes of this Agreement be deemed to
have created, assumed or incurred at the time it becomes a
Subsidiary all Debt of such entity existing immediately after
it becomes a Subsidiary.
6C(3) Loans, Advances, Investments and Contingent
Liabilities -- Make or permit to remain outstanding any loan
or advance to, or guarantee, endorse or otherwise be or become
contingently liable, directly or indirectly, in connection
with the obligations, stock or dividends of, or own, purchase
or acquire any stock, obligations or securities of, or any
other interest in, or make any capital contribution to, any
Person, except that the Company or any Subsidiary may
(i) make or permit to remain outstanding
loans or advances to any Subsidiary,
(ii) own, purchase or acquire stock,
obligations or securities of a Subsidiary or of a
corporation which immediately after such purchase or
acquisition will be a Subsidiary,
(iii) acquire and own stock, obligations
or securities received in settlement of debts
(created in the ordinary course of business) owing
to the Company or any Subsidiary,
(iv) own, purchase or acquire prime
commercial paper and certificates of deposit of
United States commercial banks (having capital
surplus in excess of $250,000,000), in each case due
within one year from the date of purchase and
payable in the United States in United States
dollars, and obligations of the United States
Government or any agency thereof, and obligations
guaranteed by the United States Government, and
repurchase agreements of such banks for terms of
less than one year in respect of the foregoing
certificates and obligations,
(v) own, purchase or acquire securities
issued by state and local governments (or
subdivisions thereof) maturing in twelve months or
less from the date of acquisition by the Company or
any Subsidiary which securities at the time of
acquisition thereof by the Company or such
Subsidiary are rated AA or better by Standard &
Poor's Corporation or Aa or better by Moody's
Investors Service, Inc.,
(vi) make or permit to remain outstanding
travel and other like advances to officers and
employees in the ordinary course of business,
(vii) make or permit to remain
outstanding loans to officers and employees of the
Company pursuant to the Executive Loan Program in an
aggregate amount not to exceed $1,500,000
outstanding at any time that are approved by the
Audit Committee of the Board of Directors of the
Company,
(viii) promissory notes and other
receivables arising from the sale of goods and
services or other assets; provided that the
aggregate outstanding amounts of such notes and
receivables shall not at any time exceed $7,500,000,
and
(ix) make or permit to remain outstanding
loans or advances to, or guarantee, endorse or
otherwise be or become contingently liable in
connection with the obligations, stock or dividends
of, or own, purchase or acquire stock, obligations
or securities of, any other Person, provided that
the aggregate principal amount of such loans and
advances, plus the aggregate amount of such
contingent liabilities, at any time outstanding for
the Company and all Subsidiaries shall not exceed an
amount equal to 10% of Consolidated Net Worth.
6C(4) Subsidiary Debt. The Company will not
permit its Subsidiaries to create, incur or assume or in
any manner be or become liable in any respect of any
Debt, if the aggregate amount of Priority Debt of the
Company and its Subsidiaries would exceed an amount equal
to twenty percent (20%) of Consolidated Net Worth.
6C(5) Sale of Stock and Debt of Subsidiaries --
Sell or otherwise dispose of, or part with control of,
any shares of stock or Debt of any Subsidiary, except to
the Company or another Subsidiary, and except that all
shares of stock and Debt of any Subsidiary at the time
owned by or owed to the Company and all Subsidiaries may
be sold as an entirety for a cash consideration which
represents the fair value (as determined in good faith by
the Board of Directors of the Company) at the time of
sale of the shares of stock and Debt so sold, provided
that the assets of such Subsidiary could be sold within
the limitations of paragraph 6C(6) and that the earnings
of such Subsidiary shall not have constituted more than
5% of Consolidated Net Earnings for any of the three
fiscal years then most recently ended, and provided
further that, at the time of such sale, such Subsidiary
shall not own, directly or indirectly, any shares of
stock or Debt of any other Subsidiary (unless all of the
shares of stock and Debt of such other Subsidiary owned,
directly or indirectly, by the Company and all
Subsidiaries are simultaneously being sold as permitted
by this paragraph 6C(5)) or any Debt of the Company.
6C(6) Merger and Sale of Assets -- Merge or
consolidate with or into any other Person or during any
12 month period, sell, lease, transfer or otherwise
dispose of any assets which in the aggregate have a book
value in excess of 5% of the consolidated assets of the
Company and all Subsidiaries to any Person (determined as
of the end of the fiscal year immediately preceding the
date of such sale or disposition), except that
(i) the Company may consolidate or merge
with any other corporation if (x) the Company shall
be the surviving or continuing corporation, and (y)
at the time of such consolidation or merger and
after giving effect thereto no Default or Event of
Default shall have occurred or be continuing.
(ii) any Subsidiary may merge with the
Company (provided that the Company shall be the
continuing or surviving corporation) or with any one
or more other Subsidiaries,
(iii) any Subsidiary may sell, lease,
transfer or otherwise dispose of any of its assets
to the Company or another Subsidiary, and
(iv) any Subsidiary may sell, or otherwise
dispose of all or substantially all of its assets
subject to the conditions specified in paragraph
6C(5) with respect to a sale of the stock of such
Subsidiary.
6C(7) Sale or Discount of Receivables -- Sell
with recourse, or discount or otherwise sell for less
than face value thereof, any of its notes or accounts
receivable.
6C(8) Transactions with Affiliates -- Directly
or indirectly, purchase, acquire or lease any property
from, or sell, transfer or lease property (other than
shares of stock of the Company) to, or otherwise deal
with, in the ordinary course of business or otherwise (i)
any Substantial Stockholder, or (ii) any corporation
(except a Subsidiary) in which a Substantial Stockholder
or the Company (either directly or through Subsidiaries)
owns 5% or more of the outstanding voting stock of such
corporation except that (a) any Substantial Stockholder
may be a director, officer or employee of the Company or
any Subsidiary and may be paid reasonable compensation in
connection therewith and (b) such acts and transactions
prohibited by this paragraph 6C(8) may be performed or
engaged in if upon terms not less favorable to Company or
any Subsidiary than if no relationship described in
clause (i) and (ii) above existed. The provisions of
this paragraph 6C(8) shall not apply to transactions with
stockholders initiated prior to September 26, 1989 and
which have been reported to the Securities and Exchange
Commission or loans to stockholders permitted by
paragraph 6C(3)(vi).
6C(9) Intangible Assets -- (a) Permit at any
time the aggregate amount of all intangible assets of the
Company and its Subsidiaries on a consolidated basis,
including without limitation unamortized debt discount
and expense, unamortized deferred charges and goodwill,
but not including franchise and leasehold rights, to
exceed an amount equal to (i) 35% of Consolidated Net
Worth as of any date of determination before March 30,
1995 and (ii) 30% of Consolidated Net Worth as of any
date of determination on March 30, 1995 and any time
thereafter;
(b) In the event that none of the Company nor any
Subsidiaries is a party to, nor bound by or obligated
under, any agreement creating or evidencing any Debt of
the Company or any Subsidiary or any agreement executed
and delivered in connection with Debt of the Company or
my Subsidiary which contains an Intangible Asset Covenant
(as defined below), then, upon delivery by the Company to
each of the holders of the Notes of an Officer's
Certificate certifying that the foregoing condition has
been met, this Agreement shall be deemed to be amended
automatically to delete clause (a) of this paragraph
6C(9). For the convenience of the parties hereto, the
Company and the Required Holders shall execute an
amendment to this Agreement to evidence such automatic
deletion of clause (a) of this paragraph 6C(9) as soon as
practicable thereafter.
(c) The Company will not and will not permit any
Subsidiary to enter into, assume or otherwise be bound or
obligated under any agreement creating or evidencing Debt
or any agreement executed and delivered in connection
with any Debt containing one or more Intangible Asset
Covenants unless prior written consent to such agreement
shall have been obtained pursuant to paragraph 11C;
provided, however, in the event the Company or any
Subsidiary shall enter into, assume or otherwise become
bound by or obligated under any such agreement without
the prior written consent of the Required Holders, the
terms of this Agreement shall without any further action
on the part of the Company or any of the holders of the
Notes, be deemed to be amended automatically to include
each Intangible Asset Covenant contained in such
agreement. The Company further covenants to promptly
execute and deliver at its expense an amendment to this
Agreement in form and substance satisfactory to the
Required Holders evidencing the amendment of this
Agreement to include such Intangible Asset Covenants
provided that the execution and delivery of such
amendment shall not be a precondition to the
effectiveness of such amendment as provided for in this
paragraph 6C(9), but shall merely be for the convenience
of the parities hereto.
(d) For the purposes of this Agreement, the term
"Intangible Asset Covenant" shall mean (i) any
affirmative or negative covenant or similar restriction
applicable to the Company or any Subsidiary (regardless
of whether such provision is labeled or otherwise
characterized as a covenant) or (ii) any provision which
permits the holder of Debt of the Company or any
Subsidiary to accelerate (with the passage of time or
giving of notice or both) the maturity thereof or
otherwise require the Company or any Subsidiary to
purchase such Debt prior to its stated maturity and
either (I) such provision is similar to the terms of
clause (a) of paragraph 6C(9) as in effect on the date
hereof but contains one or more percentages, amounts or
formulas that is more restrictive than the covenant then
in effect hereunder or more beneficial to the holder or
holders of such other Debt (and such provision shall be
deemed an "Intangible Asset Covenant" only the extent
that it is more restrictive or beneficial) or (II) such
provision is different from the terms of clause (a) of
paragraph 6C(9) then in effect and such provision
provides for a financial covenant or default the
calculation of which involves as a specific component
thereof the level of intangible assets of the Company or
any Subsidiary.
7. EVENTS OF DEFAULT.
7A. Acceleration. If any of the following events
shall occur and be continuing for any reason whatsoever (and
whether such occurrence shall be voluntary or involuntary or
come about or be effected by operation of law or otherwise):
(i) the Company defaults in the payment of any
principal of or premium on any Note when the same shall
become due, either by the terms thereof or otherwise as
herein provided; or
(ii) the Company defaults in the payment of any
interest on any Note for more than five (5) Business Days
after the date due; or
(iii) the Company or any Subsidiary defaults in
any payment of principal of or interest on any other
obligation for money borrowed (or any Capitalized Lease
Obligation, any obligation under a conditional sale or
other title retention agreement, any obligation issued or
assumed as full or partial payment for property whether
or not secured by a purchase money mortgage or any obliga
tion under notes payable or drafts accepted representing
extensions of credit) beyond any period of grace provided
with respect thereto, or the Company or any Subsidiary
fails to perform or observe any other agreement, term or
condition contained in any agreement under which any such
obligation is created (or if any other event of default
thereunder or under any such agreement shall occur and be
continuing) and the effect of such failure or other event
of default is to cause, or to permit the holder or
holders of such obligation (or a trustee on behalf of
such holder or holders) to cause, such obligation to
become due (or to be repurchased by the Company or any
Subsidiary) prior to any stated maturity or the Company
fails to pay any guaranty in accordance with its terms,
provided that the aggregate amount of all obligations as
to which such a payment default shall occur and be contin
uing or such a failure or other event causing or
permitting acceleration (or resale to the Company or any
Subsidiary) shall occur and be continuing exceeds
$2,500,000; or
(iv) any representation or warranty made by the
Company herein or by the Company or any of its officers
in any writing furnished in connection with or pursuant
to this Agreement shall be false in any material respect
on the date as of which made; or
(v) the Company fails to perform or observe any
term, covenant or agreement contained in paragraphs 5C,
5D or 6 (other than paragraph 6C(8)) and such failure
shall not be remedied within 5 Business Days after any
officer of the Company obtains actual knowledge thereof;
or
(vi) the Company fails to perform or observe any
other agreement, covenant, term or condition contained
herein including paragraph 6C(8) and such failure shall
not be remedied within 30 days after any officer of the
Company obtains actual knowledge thereof; or
(vii) the Company or any Subsidiary takes any
action or fails to take action which results in the loss
of any franchise agreement, license or other permit which
would preclude the Company from operating such franchise
under the name "Pizza Hut", and such loss materially
adversely affects the business operations or
profitability of the Company; or
(viii) the Company or any Subsidiary makes an
assignment for the benefit of creditors or is generally
not paying its debts as such debts become due; or
(ix) any decree or order for relief in respect of
the Company or any Subsidiary is entered under any
bankruptcy, reorganization, compromise, arrangement,
insolvency, readjustment of debt (with respect to the
bankruptcy or insolvency of the Company or any
Subsidiary), dissolution or liquidation or similar law,
whether now or hereafter in effect (herein called the
"Bankruptcy Law"), of any jurisdiction; or
(x) the Company or any Subsidiary petitions or
applies to any tribunal for, or consents to, the
appointment of, or taking possession by, a trustee,
receiver, custodian, liquidator or similar official of
the Company or any Subsidiary, or of any substantial part
of the assets of the Company or any Subsidiary, or
commences a voluntary case under the Bankruptcy Law of
the United States or any proceedings (other than
proceedings for the voluntary liquidation and dissolution
of a Subsidiary) relating to the Company or any
Subsidiary under the Bankruptcy Law of any other
jurisdiction; or
(xi) any such petition or application is filed, or
any such proceedings are commenced, against the Company
or any Subsidiary and the Company or such Subsidiary by
any act indicates its approval thereof, consent thereto
or acquiescence therein, or an order, judgment or decree
is entered appointing any such trustee, receiver,
custodian, liquidator or similar official, or approving
the petition in any such proceedings, and such order,
judgment or decree remains unstayed and in effect for
more than 30 days; or
(xii) any order, judgment or decree is entered
in any proceedings against the Company decreeing the
dissolution of the Company and such order, judgment or
decree remains unstayed and in effect for more than 60
days; or
(xiii) any order, judgment or decree is entered
in any proceedings against the Company or any Subsidiary
decreeing a split-up of the Company or such Subsidiary
which requires the divestiture of assets representing a
substantial part, or the divestiture of the stock of a
Subsidiary whose assets represent a substantial part, of
the consolidated assets of the Company and its
Subsidiaries (determined in accordance with generally
accepted accounting principles) or which requires the
divestiture of assets, or stock of a Subsidiary, which
shall have contributed a substantial part of the Consol
idated Net Earnings for any of the three fiscal years
then most recently ended, and such order, judgment or
decree remains unstayed and in effect for more than 60
days; or
(xiv) any judgment or order, or series of
judgments or orders, for the payment of money in an
amount in excess of $2,500,000 (exclusive of any amount
covered by insurance and with respect to which the
insurer has assumed responsibility in writing) is
rendered against the Company or any Subsidiary and either
(i) enforcement proceedings have been commenced by any
creditor upon such judgment or order or (ii) within 30
days after entry thereof, such judgment is not discharged
or execution thereof stayed pending appeal, or within 30
days after the expiration of any such stay, such judgment
is not discharged; or
(xv) any Termination Event with respect to a Plan
shall have occurred, and, within 30 days after the
occurrence thereof, (i) such Termination Event (if
correctable) shall not have been corrected and (ii) the
then present value of such Plan's vested benefits exceeds
the then current value of assets accumulated in such Plan
by more than the amount of $2,500,000 (or in the case of
a Termination Event involving the withdrawal of a
"substantial employer" (as defined in Section 4001(a)(2)
of ERISA), the withdrawing employer's proportionate share
of such excess shall exceed such amount); or
(xvi) the Company or any of its ERISA Affiliates
as employer under a Multiemployer Plan shall have made a
complete or partial withdrawal from such Multiemployer
Plan and the plan sponsor of such Multiemployer Plan
shall have notified such withdrawing employer that such
employer has incurred a withdrawal liability in an annual
amount exceeding $2,500,000;
then (a) if such event is an Event of Default specified in
clause (i) or (ii) of this paragraph 7A, any holder of any
Note subject to such a payment default may at its option
during the continuance of such Event of Default, by notice in
writing to the Company, declare all of such Notes held by such
holder to be, and all of such Notes held by such holder shall
thereupon be and become, immediately due and payable together
with interest accrued thereon, without presentment, demand,
protest or notice of any kind, all of which are hereby waived
by the Company, (b) if such event is an Event of Default
specified in clause (viii), (ix), (x), (xi) or (xii) of this
paragraph 7A with respect to the Company, all of the Notes at
the time outstanding shall automatically become immediately
due and payable at par together with interest accrued thereon,
without presentment, demand, protest or notice of any kind,
all of which are hereby waived by the Company, and (c) if such
event is any other Event of Default, the Required Holder(s) of
the Notes of any Series may at its or their option during the
continuance of such Event of Default, by notice in writing to
the Company, declare all of the Notes of such Series to be,
and all of the Notes of such Series shall thereupon be and
become, immediately due and payable together with interest
accrued thereon and together with the Yield-Maintenance
Amount, if any, with respect to each Note of such Series,
without presentment, demand, protest or notice of any kind,
all of which are hereby waived by the Company, provided that
the Yield Maintenance Amount, if any, with respect to each
Note shall be due and payable upon any declaration pursuant to
this paragraph 7A only if (I) the event whose occurrence
permits such declaration is an Event of Default specified in
any of clauses (i) to (vi), inclusive, of this paragraph 7A,
(II) the Required Holders of the Notes of any Series which
shall have been accelerated shall have given to the Company,
at least 10 Business Days before such declaration, written
notice stating its or their intention to declare the Notes
held by such Required Holders (or all of the Notes of such
Series) to be immediately due and payable and identifying one
or more such Events of Default whose occurrence on or before
the date of such notice permits such declaration, and
(III) one or more of the Events of Default so identified shall
be continuing at the time of such declaration.
7B. Rescission of Acceleration. At any time after
any or all of the Notes shall have been declared immediately
due and payable pursuant to paragraph 7A, the Required
Holder(s) may, by notice in writing to the Company, rescind
and annul such declaration and its consequences if (i) the
Company shall have paid all overdue interest on the Notes, the
principal of and Yield-Maintenance Amount, if any, payable
with respect to any Notes which have become due otherwise than
by reason of such declaration, and interest on such overdue
interest and overdue principal and Yield-Maintenance Amount at
the rate specified in the Notes, (ii) the Company shall not
have paid any amounts which have become due solely by reason
of such declaration, (iii) all Events of Default and Defaults,
other than non-payment of amounts which have become due solely
by reason of such declaration, shall have been cured or waived
pursuant to paragraph 11C, and (iv) no judgment or decree
shall have been entered for the payment of any amounts due
pursuant to the Notes or this Agreement. No such rescission
or annulment shall extend to or affect any subsequent Event of
Default or Default or impair any right arising therefrom.
7C. Notice of Acceleration or Rescission. Whenever
any Note shall be declared immediately due and payable
pursuant to paragraph 7A or any such declaration shall be
rescinded and annulled pursuant to paragraph 7B, the Company
shall forthwith give written notice thereof to the holder of
each Note at the time outstanding.
7D. Other Remedies. If any Event of Default or
Default shall occur and be continuing, the holder of any Note
may proceed to protect and enforce its rights under this
Agreement and such Note by exercising such remedies as are
available to such holder in respect thereof under applicable
law, either by suit in equity or by action at law, or both,
whether for specific performance of any covenant or other
agreement contained in this Agreement or in aid of the
exercise of any power granted in this Agreement. No remedy
conferred in this Agreement upon the holder of any Note is
intended to be exclusive of any other remedy, and each and
every such remedy shall be cumulative and shall be in addition
to every other remedy conferred herein or now or hereafter
existing at law or in equity or by statute or otherwise.
8. REPRESENTATIONS, COVENANTS AND WARRANTIES. The
Company represents, covenants and warrants:
8A. Organization; Qualification; Corporate
Authority. The Company is a corporation duly organized,
validly existing and in good standing under the laws of the
State of Kansas; each Subsidiary is duly organized, validly
existing and in good standing under the laws of the
jurisdiction in which it is incorporated. The Company has and
each Subsidiary has the corporate power to own its respective
property and to carry on its respective business as now being
conducted, and the Company is duly qualified as a foreign
corporation to do business and is in good standing in every
jurisdiction in which the nature of the business conducted by
it makes such qualification necessary. The execution,
delivery and performance by the Company of this Agreement and
the Notes are within the Company's corporate powers and have
been duly authorized by all necessary corporate action.
8B. Financial Statements. The Company has
furnished each Purchaser of any Accepted Notes with the
following financial statements, identified by a principal
financial officer of the Company: (i) a consolidated balance
sheet of the Company and its Subsidiaries as at the last day
of each of the three fiscal years of the Company most recently
completed prior to the date as of which this representation is
made or repeated to such Purchaser (other than fiscal years
completed within 90 days prior to such date for which audited
financial statements have not been released) and consolidated
statements of income, stockholders' equity and cash flows of
the Company and its Subsidiaries for each such year, all
reported on by Ernst & Young; and (ii) a consolidated balance
sheet of the Company and its Subsidiaries as at the end of the
quarterly period (if any) most recently completed prior to
such date and after the end of such fiscal year (other than
quarterly periods completed within 60 days prior to such date
for which financial statements have not been released) and the
comparable quarterly period in the preceding fiscal year and
consolidated statements of income, stockholders' equity and
cash flows for the periods from the beginning of the fiscal
years in which such quarterly periods are included to the end
of such quarterly periods, prepared by the Company. Such
financial statements (including any related schedules and/or
notes) are true and correct in all material respects (subject,
as to interim statements, to changes resulting from audits and
year-end adjustments), have been prepared in accordance with
generally accepted accounting principles consistently followed
throughout the periods involved and show all liabilities,
direct and contingent, of the Company and its Subsidiaries
required to be shown in accordance with such principles. The
balance sheets fairly present the condition of the Company and
its Subsidiaries as at the dates thereof, and the statements
of income, stockholders' equity and cash flows fairly present
the results of the operations of the Company and its
Subsidiaries and their cash flows for the periods indicated.
There has been no material adverse change in the business,
property or assets, condition (financial or otherwise), or
operations of the Company and its Subsidiaries taken as a
whole since the end of the most recent fiscal year for which
such audited financial statements have been furnished.
8C. Conflicting Agreements and Other Matters.
Neither the Company nor any of its Subsidiaries is a party to
any contract or agreement or subject to any charter or other
corporate restriction which materially and adversely affects
its business, property or assets, or financial condition.
Neither the execution nor delivery of this Agreement or the
Notes, nor the offering, issuance and sale of the Notes, nor
fulfillment of nor compliance with the terms and provisions
hereof and of the Notes will conflict with, or result in a
breach of the terms, conditions or provisions of, or
constitute a default under, or result in any violation of, or
result in the creation of any Lien upon any of the properties
or assets of the Company or any of its Subsidiaries pursuant
to, the charter or by-laws of the Company or any of its
Subsidiaries, any award of any arbitrator or any agreement
(including any agreement with stockholders), instrument,
order, judgment, decree, statute, law, rule or regulation to
which the Company or any of its Subsidiaries is subject.
Neither the Company nor any of its Subsidiaries is a party to,
or otherwise subject to any provision contained in, any
instrument evidencing indebtedness of the Company or such
Subsidiary, any agreement relating thereto or any other
contract or agreement (including its charter) which limits the
amount of, or otherwise imposes restrictions on the incurring
of, Debt of the Company of the type to be evidenced by the
Notes except as set forth in the agreements listed in Schedule
8C attached hereto.
The Company has received all consents required in
connection with the issuance of the Notes under the Company's
Amended and Restated Revolving Credit Agreement dated as of
the November 17, 1989, as amended to the date as of which this
representation is being made,or any replacement, renewal or
successor to such agreement.
8D. Governmental Consent. Neither the nature of
the Company or of any Subsidiary, nor any of their respective
businesses or properties, nor any relationship between the
Company or any Subsidiary and any other Person, nor any
circumstance in connection with the offering, issuance, sale
or delivery of the Notes is such as to require any
authorization, consent, approval, exemption or other action by
or notice to or filing with any court or administrative or
governmental or regulatory body (other than routine filings
after the Date of Closing with the Securities and Exchange
Commission and/or state Blue Sky authorities) in connection
with the execution and delivery of this Agreement, the
offering, issuance, sale or delivery of the Notes or
fulfillment of or compliance with the terms and provisions
hereof or of the Notes.
8E. Enforceability. This Agreement is, and the
Notes when delivered hereunder will be, legal, valid and
binding obligations of the Company enforceable against the
Company in accordance with their terms.
8F. Actions Pending. There is no action, suit,
investigation or proceeding pending or, to the knowledge of
the Company, threatened against the Company or any of its
Subsidiaries, or any properties or rights of the Company or
any of its Subsidiaries, by or before any court, arbitrator or
administrative or governmental body which might result in any
material adverse change in the business, condition or
operations of the Company and its Subsidiaries taken as a
whole. There is no action, suit, investigation or proceeding
pending or threatened against the Company or any of its
Subsidiaries which purports to affect the validity or
enforceability of this Agreement or any Note.
8G. Outstanding Debt. Neither the Company nor any
of its Subsidiaries has outstanding any Debt except as
permitted by paragraphs 6C(2) and 6C(4). There exists no
default under the provisions of any instrument evidencing such
Debt or of any agreement relating thereto.
8H. Title to Properties. The Company has and each
of its Subsidiaries has good and marketable title to
substantially all of its respective real properties (other
than properties which it leases) and good title to
substantially all of its other respective properties and
assets, including the properties and assets reflected in the
most recent audited balance sheet referred to in paragraph 8B
(other than properties and assets disposed of in the ordinary
course of business), subject to no Lien of any kind except
Liens permitted by paragraph 6C(1). The Company and each of
its Subsidiaries enjoys peaceful and undisturbed possession
under all leases necessary in any material respect for the
operation of their respective properties and assets, none of
which contains any unusual or burdensome provisions which
might materially affect or impair the operation of such
properties and assets. All leases necessary in any material
respect for the conduct of the respective businesses of the
Company and its Subsidiaries are valid and subsisting and are
in full force and effect.
8I. Taxes. The Company has and each of its
Subsidiaries has filed all Federal, State and other income tax
returns which, to the best knowledge of the officers of the
Company, are required to be filed, and each has paid all taxes
as shown on such returns and on all assessments received by it
to the extent that such taxes have become due, except such
taxes as are being contested in good faith by appropriate
proceedings for which adequate reserves have been established
in accordance with generally accepted accounting principles.
Federal income tax returns of the Company have been examined
and reported on by the taxing authorities or closed by
applicable statutes and satisfied for all fiscal years prior
to and including the fiscal year ended on March 26, 1991.
8J. Offering of Notes. Neither the Company nor any
agent acting on its behalf has, directly or indirectly,
offered the Notes or any similar security of the Company for
sale to, or solicited any offers to buy the Notes or any
similar security of the Company from, or otherwise approached
or negotiated with respect thereto with, any Person other than
institutional investors, and neither the Company nor any agent
acting on its behalf has taken or will take any action which
would subject the issuance or sale of the Notes to the
provisions of section 5 of the Securities Act or to the
provisions of any securities or Blue Sky law of any applicable
jurisdiction.
8K. Use of Proceeds. Neither the Company nor any
Subsidiary owns or has any present intention of acquiring any
"margin stock" as defined in Regulation G (12 CFR Part 207) of
the Board of Governors of the Federal Reserve System (herein
called "margin stock"). None of the proceeds of the sale of
any Notes will be used, directly or indirectly, for the
purpose, whether immediate, incidental or ultimate, of
purchasing or carrying any margin stock or for the purpose of
maintaining, reducing or retiring any Indebtedness which was
originally incurred to purchase or carry any stock that is
currently a margin stock or for any other purpose which might
constitute the purchase of such Notes a "purpose credit"
within the meaning of such Regulation G, unless the Company
shall have delivered to the Purchaser which is purchasing such
Notes, on the Closing Day for such Notes, an opinion of
counsel satisfactory to such Purchaser stating that the
purchase of such Notes does not constitute a violation of such
Regulation G. Neither the Company nor any agent acting on its
behalf has taken or will take any action which might cause
this Agreement or the Notes to violate Regulation G,
Regulation T or any other regulation of the Board of Governors
of the Federal Reserve System or to violate the Exchange Act,
in each case as in effect now or as the same may hereafter be
in effect.
8L. ERISA. No accumulated funding deficiency (as
defined in section 302 of ERISA and section 412 of the Code),
whether or not waived, exists with respect to any Plan (other
than a Multiemployer Plan). No liability to the Pension
Benefit Guaranty Corporation has been, or is expected by the
Company or any Affiliate to be, incurred with respect to any
Plan (other than a Multiemployer Plan) by the Company or any
of its Subsidiaries which is or would be materially adverse to
the Company and its Subsidiaries taken as a whole. Neither
the Company nor any of its Subsidiaries has incurred or
presently expects to incur any withdrawal liability under
Title IV of ERISA with respect to any Multiemployer Plan which
is or would be materially adverse to the Company and its
Subsidiaries taken as a whole. The execution and delivery of
this Agreement and the issuance and sale of the Notes will be
exempt from or will not involve any transaction which is
subject to the prohibitions of section 406 of ERISA and will
not involve any transaction in connection with which a penalty
could be imposed under section 502(i) of ERISA or a tax could
be imposed pursuant to section 4975 of the Code. The
representation by the Company in the next preceding sentence
is made in reliance upon and subject to the accuracy of the
representation of each Purchaser in paragraph 9B as to the
source of funds to be used by it to purchase any Notes.
8M. Disclosure. Neither this Agreement nor any
other document, certificate or statement furnished to any
Purchaser by or on behalf of the Company in connection
herewith contains any untrue statement of a material fact or
omits to state a material fact necessary in order to make the
statements contained herein and therein not misleading. There
is no fact peculiar to the Company or any of its Subsidiaries
which materially adversely affects or in the future may (so
far as the Company can now foresee) materially adversely
affect the business, property or assets, or financial
condition of the Company or any of its Subsidiaries and which
has not been set forth in this Agreement or in the other docu
ments, certificates and statements furnished to any Purchaser
by or on behalf of the Company prior to the date hereof in
connection with the transactions contemplated hereby.
8N. Investment Company Act. The Company is not an
"investment company" or a company "controlled" by an
"investment company", within the meaning of the Investment
Company Act of 1940, as amended.
8O. Public Utility Holding Company Act. The
Company is not a "holding company" or a "subsidiary company"
of a "holding company", or an "affiliate" of a "holding
company" or of a "subsidiary company" of a "holding company",
or a "public utility" within the meaning of the Public Utility
Holding Company Act of 1935, as amended.
8P. Environmental Compliance. The Company and its
Subsidiaries and all of their respective properties and
facilities have complied at all times and in all respects with
all federal, state, local and regional statutes, laws,
ordinances and judicial or administrative orders, judgments,
rulings and regulations relating to protection of the
environment except, in any such case, where failure to comply
would not result in a material adverse effect on the business,
condition (financial or otherwise) or operations of the
Company and its Subsidiaries taken as a whole.
8Q. Funded Debt Agreements. The forms of (i) the
Amended and Restated Revolving Credit Agreement, dated as of
November 17, 1989 among the Company, the banks named therein
and Continental Bank, N.A., as agent, as amended by [list
amendments] (ii) the Note Agreements dated as of March 30,
1993 between the Company and the purchasers named therein and
(iii) the Note Agreements dated as of May 29, 1992 among the
Company, Massachusetts Mutual Life Insurance Company, Pacific
Mutual Life Insurance Company and PM Group Life Insurance
Company are true, correct and complete in all respects and
there exists no amendments, waivers or other modifications to
such agreements except as previously provided to Prudential.
8R. Hostile Tender Offers. None of the proceeds of
the sale of any Notes will be used to finance a Hostile Tender
Offer.
9. REPRESENTATIONS OF THE PURCHASER.
Each Purchaser represents as follows:
9A. Nature of Purchase. Such Purchaser is not
acquiring the Notes purchased by it hereunder with a view to
or for sale in connection with any distribution thereof within
the meaning of the Securities Act, provided that the
disposition of such Purchaser's property shall at all times be
and remain within its control.
9B. Source of Funds. No part of the funds used by
such Purchaser to pay the purchase price of the Notes
purchased by such Purchaser hereunder constitutes assets
allocated to any separate account maintained by such Purchaser
in which any employee benefit plan, other than employee
benefit plans identified on a list which has been furnished by
such Purchaser to the Company, participates to the extent of
10% or more. For the purpose of this paragraph 9B, the terms
"separate account" and "employee benefit plan" shall have the
respective meanings specified in section 3 of ERISA.
10. DEFINITIONS AND ACCOUNTING TERMS.
10A. Certain Defined Terms. As used in this
Agreement the following terms shall have the meanings
specified with respect thereto below (such meanings to be
equally applicable to both the singular and plural forms of
the terms defined):
"Acceptance" shall have the meaning specified in
paragraph 2F.
"Acceptance Day" shall have the meaning specified in
paragraph 2F.
"Acceptance Window" shall have the meaning specified
in paragraph 2F.
"Accepted Note" shall have the meaning specified in
paragraph 2F.
"Affiliate" shall mean any Person directly or
indirectly controlling, controlled by, or under direct or
indirect common control with, the Company, except a
Subsidiary. A Person shall be deemed to control a corporation
if such Person possesses, directly or indirectly, the power to
direct or cause the direction of the management and policies
of such corporation, whether through the ownership of voting
securities, by contract or otherwise.
"Authorized Officer" shall mean (i) in the case of
the Company, its chief executive officer, its chief financial
officer, any vice president of the Company designated as an
"Authorized Officer" of the Company in the Information
Schedule attached hereto or any vice president of the Company
designated as an "Authorized Officer" of the Company for the
purpose of this Agreement in an Officer's Certificate executed
by the Company's chief executive officer or chief financial
officer and delivered to Prudential, and (ii) in the case of
Prudential, any officer of Prudential designated as its
"Authorized Officer" in the Information Schedule or any
officer of Prudential designated as its "Authorized Officer"
for the purpose of this Agreement in a certificate executed by
one of its Authorized Officers. Any action taken under this
Agreement on behalf of the Company by any individual who on or
after the date of this Agreement shall have been an Authorized
Officer of the Company and whom Prudential in good faith
believes to be an Authorized Officer of the Company at the
time of such action shall be binding on the Company even
though such individual shall have ceased to be an Authorized
Officer of the Company, and any action taken under this
Agreement on behalf of Prudential by any individual who on or
after the date of this Agreement shall have been an Authorized
Officer of Prudential and whom the Company in good faith
believes to be an Authorized Officer of Prudential at the time
of such action shall be binding on Prudential even though such
individual shall have ceased to be an Authorized Officer of
Prudential.
"Available Facility Amount" shall have the meaning
specified in paragraph 2A.
"Bankruptcy Law" shall have the meaning specified in
clause (ix) of paragraph 7A.
"Business Day" shall mean any day other than (i) a
Saturday or a Sunday, (ii) a day on which commercial banks in
New York City are required or authorized to be closed and
(iii) for purposes of paragraph 2C hereof only, a day on which
The Prudential Insurance Company of America is not open for
business.
"Cancellation Date" shall have the meaning specified
in paragraph 2I(iv).
"Cancellation Fee" shall have the meaning specified
in paragraph 2I(iv).
"Called Principal" shall mean, with respect to any
Note, the principal of such Note that is to be prepaid
pursuant to paragraph 4B (any partial prepayment being applied
in satisfaction of required payments of principal in inverse
order of their scheduled due dates) or is declared to be
immediately due and payable pursuant to paragraph 7A, as the
context requires.
"Capitalized Lease Obligation" shall mean any rental
obligation which, under generally accepted accounting
principles, is or will be required to be capitalized on the
books of the Company or any Subsidiary, taken at the amount
thereof accounted for as indebtedness (net of interest
expense) in accordance with such principles.
"Closing Day" for any Accepted Note shall mean the
Business Day specified for the closing of the purchase and
sale of such Note in the Request for Purchase of such Note,
provided that (i) if the Acceptance Day for such Accepted Note
is less than five Business Days after the Company shall have
made such Request for Purchase and the Company and the
Purchaser which is obligated to purchase such Note agree on an
earlier Business Day for such closing, the "Closing Day" for
such Accepted Note shall be such earlier Business Day, and
(ii) if the closing of the purchase and sale of such Accepted
Note is rescheduled pursuant to paragraph 2H, the Closing Day
for such Accepted Note, for all purposes of this Agreement
except paragraph 2I(iv), shall mean the Rescheduled Closing
Day with respect to such Closing.
"Code" shall mean the Internal Revenue Code of 1986,
as amended.
"Confirmation of Acceptance" shall have the meaning
specified in paragraph 2F.
"Consolidated Net Earnings" shall mean for any
period the net income or net loss of the Company and its
Subsidiaries on a consolidated basis as determined in
accordance with generally accepted accounting principles
consistent with those followed in the preparation of the
financial statements referred to in paragraph 8B, provided
that (i) there shall not be included in calculating such
amount (a) any income representing the excess of equity in any
Subsidiary at the date of acquisition over the investment in
such Subsidiary, (b) any equity in the undistributed earnings
of any corporation which is not a Subsidiary, (c) any earnings
of any Subsidiary for any period prior to the fiscal year of
the Company in which such Subsidiary was acquired, or (d) any
gains resulting from the write-up of assets, (ii) there shall
not be included in calculating such amount any gain resulting
from the sale of any capital assets other than in the ordinary
course of business or any extraordinary or nonrecurring gains,
except that such gains may be included only to offset the
aggregate amount of losses (net of any tax effect) resulting
from the sale of capital assets other than in the ordinary
course of business and extraordinary or nonrecurring losses
and (iii) there shall not be including in calculating such
amount the losses associated with the sale or disposition by
the Company of the operations of Skipper's, Inc. in an
aggregate amount of up to $30,000,000.
"Consolidated Net Income Available for Fixed
Charges" for any period shall mean the sum of Consolidated Net
Earnings during such period plus (to the extent deducted in
determining Consolidated Net Earnings during such period)
consolidated (i) interest expense, (ii) provision for income
taxes, (iii) depreciation and amortization, (iv) operating
lease expense, and (v) any increase (or less any decrease) in
deferred taxes.
"Consolidated Net Worth" shall mean the sum of (i)
the par value (or value stated on the books of the
corporation) of the capital stock of all classes of the
Company, plus (or minus in the case of a deficit) (ii) the
amount of paid in capital plus retained earnings (netting any
treasury stock, ESOP obligations or similar contra accounts),
whether capital or earned, of the Company.
"Current Debt" shall mean any obligation for
borrowed money (and any notes payable and drafts accepted
representing extensions of credit whether or not representing
obligations for borrowed money) payable on demand or within a
period of one year from the date of the creation thereof;
provided that any obligation shall be treated as Funded Debt,
regardless of its term, if such obligation is renewable
pursuant to the terms thereof or of a revolving credit or
similar agreement effective for more than one year after the
date of the creation of such obligation, or may be payable out
of the proceeds of a similar obligation pursuant to the terms
of such obligation or of any such agreement. Any obligation
secured by a Lien on, or payable out of the proceeds of
production from, property of the Company or any Subsidiary
shall be deemed to be Funded or Current Debt, as the case may
be, of the Company or such Subsidiary even though such
obligation shall not be assumed by the Company or such
Subsidiary. For purposes of this definition, "borrowed money"
shall not include trade accounts payable, accrued expenses or
income taxes payable.
"Current Maturities of Funded Debt" shall mean any
Funded Debt obligation payable on demand or within a period of
one year from the date of determination; provided that an
obligation shall not be included herein if such Funded Debt
obligation (i) is renewable beyond one year from the date of
determination at the sole election of the Company (or a
Subsidiary, if applicable) pursuant to the terms thereof, (ii)
is created pursuant to a revolving credit or similar agreement
which is renewable beyond one year from the date of
determination at the sole election of the Company (or a
Subsidiary, if applicable) pursuant to the terms thereof, or
(iii) may be repaid out of the uncommitted proceeds of a
revolving credit or similar agreement, the maturity of which
is more than one year from the date of determination.
"Debt" shall mean Funded Debt and/or Current Debt,
as the case may be.
"Delayed Delivery Fee" shall have the meaning
specified in paragraph 2I(iii).
"Discounted Value" shall mean, with respect to the
Called Principal of any Note, the amount obtained by
discounting all Remaining Scheduled Payments with respect to
such Called Principal from their respective scheduled due
dates to the Settlement Date with respect to such Called
Principal, in accordance with accepted financial practice and
at a discount factor (applied on a semiannual basis) equal to
the Reinvestment Yield with respect to such Called Principal.
"ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended.
"ERISA Affiliate" shall mean any trade or business
(whether or not incorporated) which is a member of a group of
which the Company is a member and which is under common
control within the meaning of the regulations under Section
414 of the Code.
"Event of Default" shall mean any of the events
specified in paragraph 7A, provided that there has been
satisfied any requirement in connection with such event for
the giving of notice, or the lapse of time, or the happening
of any further condition, event or act, and "Default" shall
mean any of such events, whether or not any such requirement
has been satisfied.
"Exchange Act" shall mean the Securities Exchange
Act of 1934, as amended.
"Facility" shall have the meaning specified in
paragraph 2A.
"Facility Fee" shall have the meaning specified in
paragraph 2I(i).
"Fixed Charges" shall mean the sum of (i) interest
expense and (ii) operating lease expense, each for the four
fiscal quarters most recently ended as of the date of
determination, and (ii) Current Maturities of Funded Debt of
the Company and all Subsidiaries as of the end of the fiscal
quarter most recently ended as of the date of determination.
"Franchise Agreement" shall mean any franchise
agreement, license or other permit necessary to permit the
Company or any Subsidiary to operate under the name "Pizza
Hut".
"Funded Debt" shall mean and include without
duplication,
(i) any obligation payable more than one year from
the date of creation thereof, which under generally
accepted accounting principles is shown on the balance
sheet as a liability (including Capitalized Lease
Obligations but excluding reserves for deferred income
taxes and other reserves to the extent that such reserves
do not constitute an obligation),
(ii) indebtedness payable more than one year from
the date of creation thereof which is secured by any Lien
on property owned by the Company or any Subsidiary,
whether or not the indebtedness secured thereby shall
have been assumed by the Company or such Subsidiary,
(iii) guarantees, endorsements (other than
endorsements of negotiable instruments for collection in
the ordinary course of business) and other contingent
liabilities (whether direct or indirect) in connection
with the obligations, stock or dividends of any Person,
(iv) obligations under any contract providing for
the making of loans, advances or capital contributions to
any Person, or for the purchase of any property from any
Person, in each case in order to enable such Person
primarily to maintain working capital, net worth or any
other balance sheet condition or to pay debts, dividends
or expenses,
(v) obligations under any contract for the purchase
of materials, supplies or other property or services if
such contract (or any related document) requires that
payment for such materials, supplies or other property or
services shall be made regardless of whether or not
delivery of such materials, supplies or other property or
services is ever made or tendered,
(vi) obligations under any contract to rent or lease
(as lessee) any real or personal property if such
contract (or any related document) provides that the
obligation to make payments thereunder is absolute and
unconditional under conditions not customarily found in
commercial leases then in general use or requires that
the lessee purchase or otherwise acquire securities or
obligations of the lessor,
(vii) obligations under any contract for the sale or
use of materials, supplies or other property or services
if such contract (or any related document) requires that
payment for such materials, supplies or other property or
services, or the use thereof, shall be subordinated to
any indebtedness (of the purchaser or user of such
materials, supplies or other property or the Person
entitled to the benefit of such services) owed or to be
owed to any Person,
(viii) obligations under any other contract which,
in economic effect, is substantially equivalent to a
guarantee, and
(ix) liabilities in respect of unfunded vested
benefits under plans covered by Title IV of ERISA,
all as determined in accordance with generally accepted
accounting principles.
"Hedge Treasury Note(s)" shall mean, with respect to
any Accepted Note, the United States Treasury Note or Notes
whose duration (as reasonably determined by Prudential) most
closely matches the duration of such Accepted Note.
"Hostile Tender Offer" shall mean, with respect to
the use of proceeds of any Note, any offer to purchase, or any
purchase of, shares of capital stock of any corporation or
equity interests in any other entity, or securities
convertible into or representing the beneficial ownership of,
or rights to acquire, any such shares or equity interests, if
such shares, equity interests, securities or rights are of a
class which is publicly traded on any securities exchange or
in any over-the-counter market, other than purchases of such
shares, equity interests, securities or rights representing
less than 5% of the equity interests or beneficial ownership
of such corporation or other entity for portfolio investment
purposes, and such offer or purchase has not been duly
approved by the board of directors of such corporation or the
equivalent governing body of such other entity prior to the
date on which the Company makes the Request for Purchase of
such Note.
"Issuance Period" shall have the meaning specified
in paragraph 2B.
"Lien" shall mean any mortgage, pledge, security
interest, encumbrance, lien or charge of any kind (including
any agreement to give any of the foregoing, any conditional
sale or other title retention agreement, any lease in the
nature thereof, and the filing of, or agreement to give, any
financing statement under the Uniform Commercial Code of any
jurisdiction) or any other type of preferential arrangement
encumbering property.
"Multiemployer Plan" shall mean any plan which is a
"multiemployer plan" (as such term is defined in section
4001(a)(3) of ERISA).
"Notes" shall have the meaning specified in
paragraph 1.
"Officer's Certificate" shall mean a certificate
signed in the name of the Company by its President, one of its
Vice Presidents or its Treasurer.
"Person" shall mean and include an individual, a
partnership, a joint venture, a corporation, a trust, an
unincorporated organization and a government or any department
or agency thereof.
"Plan" shall mean an "employee pension benefit plan"
(as defined in section 3 of ERISA) which is or has been
established or maintained, or to which contributions are or
have been made, by the Company or by any trade or business,
whether or not incorporated, which, together with the Company,
is under common control, as described in section 414(b) or (c)
of the Code.
"Priority Debt" shall have the meaning specified in
paragraph 6C(1).
"Prudential" shall mean The Prudential Insurance
Company of America.
"Prudential Affiliate" shall mean any corporation or
other entity all of the Voting Stock (or equivalent voting
securities or interests) of which is owned by Prudential
either directly or through Prudential Affiliates.
"Purchasers" shall mean, with respect to any
Accepted Notes the Persons, either Prudential or a Prudential
Affiliate, who are purchasing such Accepted Notes.
"Reinvestment Yield" shall mean, with respect to the
Called Principal of any Note, the yield to maturity implied by
(i) the yields reported, as of 10:00 A.M. (New York City time)
on the Business Day next preceding the Settlement Date with
respect to such Called Principal, on the display designated as
"Page 678" on the Telerate Service (or such other display as
may replace Page 678 on the Telerate Service) for actively
traded U.S. Treasury securities having a maturity equal to the
Remaining Average Life of such Called Principal as of such
Settlement Date, or if such yields shall not be reported as of
such time or the yields reported as of such time shall not be
ascertainable, (ii) the Treasury Constant Maturity Series
yields reported, for the latest day for which such yields
shall have been so reported as of the Business Day next
preceding the Settlement Date with respect to such Called
Principal, in Federal Reserve Statistical Release H.15 (519)
(or any comparable successor publication) for actively traded
U.S. Treasury securities having a constant maturity equal to
the Remaining Average Life of such Called Principal as of such
Settlement Date. Such implied yield shall be determined, if
necessary, by (a) converting U.S. Treasury bill quotations to
bond-equivalent yields in accordance with accepted financial
practice and (b) interpolating linearly between reported
yields.
"Remaining Average Life" shall mean, with respect to
the Called Principal of any Note, the number of years
(calculated to the nearest one-twelfth year) obtained by
dividing (i) such Called Principal into (ii) the sum of the
products obtained by multiplying (a) each Remaining Scheduled
Payment of such Called Principal (but not of interest thereon)
by (b) the number of years (calculated to the nearest one-
twelfth year) which will elapse between the Settlement Date
with respect to such Called Principal and the scheduled due
date of such Remaining Scheduled Payment.
"Remaining Scheduled Payments" shall mean, with
respect to the Called Principal of any Note, all payments of
such Called Principal and interest thereon that would be due
on or after the Settlement Date with respect to such Called
Principal if no payment of such Called Principal were made
prior to its scheduled due date.
"Renewal Fee" shall have the meaning specified in
paragraph 2I(v).
"Request for Purchase" shall have the meaning
specified in paragraph 2D.
"Required Holder(s)" shall mean, (i) the holder or
holders of at least 66 2/3% of the aggregate principal amount
of all Notes outstanding at the time of determination, or (ii)
with respect to the decision to accelerate a Series of Notes
under paragraph 7A the holder or holders of at least 66 2/3%
of the aggregate principal amount of the Notes of such Series
outstanding at such time.
"Required Prepayment" shall have the meaning
specified in paragraph 4A.
"Rescheduled Closing Day" shall have the meaning
specified in paragraph 2H.
"Responsible Officer" shall mean the chief executive
officer, chief operating officer, chief financial officer or
chief accounting officer of the Company, general counsel of
the Company or any other officer of the Company involved
principally in its financial administration or its
controllership function.
"Securities Act" shall mean the Securities Act of
1933, as amended.
"Series" shall have the meaning specified in
paragraph 7.
"Settlement Date" shall mean, with respect to the
Called Principal of any Note, the date on which such Called
Principal is to be prepaid pursuant to paragraph 4B or is
declared to be immediately due and payable pursuant to
paragraph 7A, as the context requires.
"Significant Holder" shall mean (i) Prudential, so
long as Prudential or any Prudential Affiliate shall hold (or
be committed under this agreement to purchase) any Note, or
(ii) any other holder of at least 10% of the aggregate
principal amount of the Notes from time to time outstanding.
"Subsidiary" shall mean any corporation organized
under the laws of any state of the United States of America,
Canada, or any province of Canada, which conducts the major
portion of its business in and makes the major portion of its
sales to Persons located in the United States of America or
Canada, and all of the stock of every class of which, except
directors' qualifying shares shall, at the time as of which
any determination is being made, be owned by the Company
either directly or through Subsidiaries.
"Substantial Stockholder" shall mean (i) any Person
owning, directly or indirectly, either individually or
together with all other Persons to whom such Person is related
by blood, adoption or marriage, 5% or more of the outstanding
voting stock of the Company, or (ii) any Person related by
blood, adoption or marriage to any Person coming within the
provisions of clause (i) of this definition.
"Termination Event" shall mean (i) a Reportable
Event described in Section 4043 of ERISA and the regulations
issued thereunder (other than a Reportable Event not subject
to the provision for 30-day notice to the Pension Benefit
Guaranty Corporation under such regulations), or (ii) the
withdrawal of the Company or any of its ERISA Affiliates from
a Plan during a plan year in which it was a "substantial
employer" as defined in Section 4001(a)(2) of ERISA, or (iii)
the filing of a notice of intent to terminate a Plan or the
treatment of a Plan amendment as a termination under Section
4041 of ERISA, or (iv) the institution of proceedings to
terminate a Plan by the Pension Benefit Guaranty Corporation,
or (v) any other event or condition which might constitute
grounds under Section 4042 of ERISA for the termination of, or
the appointment of a trustee to administer, any Plan.
"Transferee" shall mean any direct or indirect
transferee of all or any part of any Note purchased by a
Purchaser under this Agreement.
"Yield-Maintenance Amount" shall mean, with respect
to any Note, an amount equal to the excess, if any, of the
Discounted Value of the Called Principal of such Note over the
sum of (i) such Called Principal plus (ii) interest accrued
thereon as of (including interest due on) the Settlement Date
with respect to such Called Principal. The Yield-Maintenance
Amount shall in no event be less than zero.
10B. Accounting Principles, Terms and
Determinations. All unaudited financial statements required
to be furnished hereunder shall be prepared in accordance with
generally accepted accounting principles applied on a basis
consistent with the most recent audited consolidated financial
statements of the Company and its Subsidiaries delivered
pursuant to clause (ii) of paragraph 5A or, if no such
statements have been so delivered, the most recent audited
financial statements referred to in clause (i) of paragraph
8B. Except as provided above, all references in this
Agreement to "generally accepted accounting principles" shall
be deemed to refer to generally accepted accounting principles
in effect in the United States as of the date hereof and
applied on a basis consistent with the Company's audited
financial statements for the fiscal year ended March 27, 1993.
All certificates and reports as to financial matters required
to be furnished hereunder shall be prepared so as to
illustrate in reasonably detail all adjustments between the
generally accepted accounting principles used in the Company's
financial statements provided pursuant to paragraph 5A and the
generally accepted accounting principles used herein.
11. MISCELLANEOUS.
11A. Note Payments. So long as any Purchaser shall
hold any Note, the Company will make payments of principal
thereof and Yield Maintenance Amount, if any, and interest
thereon, which comply with the terms of this Agreement, not
later than 12:00 noon (New York City time) on the day when due
by wire transfer of immediately available funds for credit to
such Purchaser's account or accounts as specified in the
Information Schedule attached hereto, or such other account or
accounts in the United States as such Purchaser may designate
in writing, notwithstanding any contrary provision herein or
in any Note with respect to the place of payment. Each
Purchaser agrees that, before disposing of any Note, it will
make a notation thereon (or on a schedule attached thereto) of
all principal payments previously made thereon and of the date
to which interest thereon has been paid. The Company agrees
to afford the benefits of this paragraph 11A to any Transferee
which shall have made the same agreement as the Purchasers
have made in this paragraph 11A.
11B. Expenses. The Company agrees, whether or not
the transactions contemplated hereby shall be consummated, to
pay, and save Prudential, any Prudential Affiliate and any
Transferee harmless against liability for the payment of, all
out-of-pocket expenses arising in connection with such
transactions (other than such costs and expenses associated
with or resulting from the resale of the Notes), including (i)
all document production and duplication charges and the fees
and expenses of any special counsel engaged by Prudential in
connection with this Agreement and the transactions
contemplated hereby, and all document production and
duplication charges and the fees and expenses of any counsel
or special counsel engaged by Prudential or any Transferee in
connection with any subsequent proposed modification of, or
proposed consent under, this Agreement, whether or not such
proposed modification shall be effected or proposed consent
granted, and (ii) to the extent permitted by applicable law,
the costs and expenses, including reasonable attorneys' fees,
incurred by Prudential or any Transferee in enforcing any
rights against the Company under this Agreement or the Notes
(whether in the contest of civil action, adversary proceeding
workout or otherwise) or in responding to any subpoena or
other legal process issued in connection with this Agreement
or the transactions contemplated hereby or by reason of
Prudential, any Prudential Affiliate or any Transferee's
having acquired any Note, including without limitation costs
and expenses incurred in any bankruptcy case. The obligations
of the Company under this paragraph 11B shall survive the
transfer of any Note or portion thereof or interest therein by
Prudential, any Prudential Affiliate or any Transferee and the
payment of any Note.
11C. Consent to Amendments. This Agreement may be
amended, and the Company may take any action herein
prohibited, or omit to perform any act herein required to be
performed by it, if the Company shall obtain the written
consent to such amendment, action or omission to act, of the
Required Holder(s) except that, without the written consent of
the holder or holders of all Notes at the time outstanding, no
amendment to this Agreement shall change the maturity of any
Note, or change the principal of, or the rate or time of
payment of interest or any premium payable with respect to any
Note, or affect the time, amount or allocation of any required
prepayments, or reduce the proportion of the principal amount
of the Notes required with respect to any consent. Each
holder of any Note at the time or thereafter outstanding shall
be bound by any consent authorized by this paragraph 11C,
whether or not such Note shall have been marked to indicate
such consent, but any Notes issued thereafter may bear a
notation referring to any such consent. No course of dealing
between the Company and the holder of any Note nor any delay
in exercising any rights hereunder or under any Note shall
operate as a waiver of any rights of any holder of such Note.
As used herein and in the Notes, the term "this Agreement" and
references thereto shall mean this Agreement as it may from
time to time be amended or supplemented.
11D. Form, Registration, Transfer and Exchange of
Notes; Lost Notes. The Notes are issuable as registered notes
without coupons in denominations of at least $1,000,000,
except as may be necessary to reflect any principal amount not
evenly divisible by $1,000,000. The Company shall keep at its
principal office a register in which the Company shall provide
for the registration of Notes and of transfers of Notes. Upon
surrender for registration of transfer of any Note at the
principal office of the Company, the Company shall, at its ex
pense, execute and deliver one or more new Notes of like tenor
and of a like aggregate principal amount, registered in the
name of such transferee or transferees. At the option of the
holder of any Note, such Note may be exchanged for other Notes
of like tenor and of any authorized denominations, of a like
aggregate principal amount, upon surrender of the Note to be
exchanged at the principal office of the Company. Whenever
any Notes are so surrendered for exchange, the Company shall,
at its expense, execute and deliver the Notes which the holder
making the exchange is entitled to receive. Every Note
surrendered for registration of transfer or exchange shall be
duly endorsed, or be accompanied by a written instrument of
transfer duly executed, by the holder of such Note or such
holder's attorney duly authorized in writing. Any Note or
Notes issued in exchange for any Note or upon transfer thereof
shall carry the rights to unpaid interest and interest to
accrue which were carried by the Note so exchanged or
transferred, so that neither gain nor loss of interest shall
result from any such transfer or exchange. Upon receipt of
written notice from the holder of any Note of the loss, theft,
destruction or mutilation of such Note and, in the case of any
such loss, theft or destruction, upon receipt of such holder's
unsecured indemnity agreement, or in the case of any such
mutilation upon surrender and cancellation of such Note, the
Company will make and deliver a new Note, of like tenor, in
lieu of the lost, stolen, destroyed or mutilated Note.
11E. Persons Deemed Owners; Participations. Prior
to due presentment for registration of transfer, the Company
may treat the Person in whose name any Note is registered as
the owner and holder of such Note for the purpose of receiving
payment of principal of and premium, if any, and interest on
such Note and for all other purposes whatsoever, whether or
not such Note shall be overdue, and the Company shall not be
affected by notice to the contrary. Subject to the preceding
sentence, the holder of any Note may from time to time grant
participations in all or any part of such Note to any Person
on such terms and conditions as may be determined by such
holder in its sole and absolute discretion.
11F. Survival of Representations and Warranties;
Entire Agreement. All representations and warranties contained
herein or made in writing by or on behalf of the Company in
connection herewith shall survive the execution and delivery
of this Agreement and the Notes, the transfer by any Purchaser
of any Note or portion thereof or interest therein and the
payment of any Note, and may be relied upon by any Transferee,
regardless of any investigation made at any time by or on
behalf of such Purchaser or any Transferee until such time as
all principal of, interest and Yield Maintenance Amount (if
any) on, the Notes have been paid in full. Subject to the
preceding sentence, this Agreement and the Notes embody the
entire agreement and understanding between Prudential and the
Company and supersede all prior agreements and understandings
relating to the subject matter hereof.
11G. Successors and Assigns. All covenants and
other agreements in this Agreement contained by or on behalf
of either of the parties hereto shall bind and inure to the
benefit of the respective successors and assigns of the
parties hereto (including, without limitation, any Transferee)
whether so expressed or not.
11H. Disclosure to Other Persons; Confidentiality.
The Company acknowledges that the holder of any Note may
deliver copies of any financial statements and other documents
delivered to such holder, and disclose any other information
disclosed to such holder, by or on behalf of the Company or
any Subsidiary in connection with or pursuant to this
Agreement to (i) such holder's directors, officers, employees,
agents and professional consultants, (ii) any other holder of
any Note, (iii) any Person to which such holder offers to sell
such Note or any part thereof, (iv) any Person to which such
holder sells or offers to sell a participation in all or any
part of such Note, (v) any federal or state regulatory
authority having jurisdiction over such holder, (vi) the
National Association of Insurance Commissioners or any similar
organization or (vii) any other Person to which such delivery
or disclosure may be necessary or appropriate (a) in
compliance with any law, rule, regulation or order applicable
to such holder, (b) in response to any subpoena or other legal
process, (c) in connection with any litigation to which such
holder is a party, (d) in order to protect such holder's
investment in such Note or (e) to correct any false or
misleading information which may become public concerning the
relationship with such holder to the Company or its
Subsidiaries.
Except as provided in the previous sentence, each holder
agrees that it will use its best efforts to hold in confidence
and not to disclose the Confidential Information. As used
herein "Confidential Information" means copies of any
financial statements and other documents delivered to such
holder, and any other information disclosed to such holder, by
or on behalf of the Company of any Subsidiary of the Company
in connection with or pursuant to this Agreement, but does not
include information (i) which was publicly known or otherwise
known to such holder, at the time of disclosure, (ii) which
subsequently becomes publicly known through no act or omission
of such holder, or (iii) which otherwise becomes known to such
holder, other than through disclosure by the Company or any
Subsidiary of the Company.
11I. Notices. All notices or other communications
provided for hereunder (except for the telephonic notice
required by paragraph 4D) shall be in writing and sent by
first class mail or nationwide overnight delivery service
(with charges prepaid) or telecopy (with receipt confirmed by
the recipient) and, (i) if to Prudential, addressed to it at
the address specified for such communications in the
Information Schedule attached hereto, or at such other address
as it shall have specified to the Company in writing, (ii) if
to any other holder of any Note, addressed to such other
holder at such address as such other holder shall have
specified to the Company in writing or, if any such other
holder shall not have so specified an address to the Company,
then addressed to such other holder in care of the last holder
of such Note which shall have so specified an address to the
Company, and (iii) if to the Company, addressed to it at 720
W. 20th Street, Pittsburg, Kansas 66762, Attention: [Chief
Financial Officer] (telecopy number (316) 231-1188), or at
such other address as the Company shall have specified to the
holder of each Note in writing; provided, however, that any
such communication to the Company may also, at the option of
the holder of any Note, be delivered by any other reasonable
means either to the Company at its address specified above or
to any officer of the Company.
11J. Descriptive Headings. The descriptive headings
of the several paragraphs of this Agreement are inserted for
convenience only and do not constitute a part of this
Agreement.
11K. Satisfaction Requirement. If any agreement,
certificate or other writing, or any action taken or to be
taken, is by the terms of this Agreement required to be
satisfactory to any Purchaser or to the Required Holders, the
determination of such satisfaction shall be made by such
Purchaser or the Required Holders, as the case may be, in the
sole and exclusive judgment (exercised in good faith) of such
Purchaser or the Required Holders, as the case may be, making
such determination.
11L. Governing Law. THIS AGREEMENT SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, AND THE RIGHTS OF
THE PARTIES SHALL BE GOVERNED BY, THE LAW OF THE STATE OF
KANSAS.
11M. Integration. This Agreement may not be changed
orally, but (subject to the provisions of paragraph 11C) only
by an agreement in writing signed by the party against whom
enforcement of any waiver, change, modification or discharge
is sought. THIS WRITTEN LOAN AGREEMENT REPRESENTS THE FINAL
AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES. THIS AGREEMENT, TOGETHER WITH
ALL OTHER WRITTEN AGREEMENTS BETWEEN PRUDENTIAL AND THE
COMPANY, IS THE FINAL EXPRESSION OF THE NOTE AGREEMENT BETWEEN
PRUDENTIAL AND THE COMPANY, AND SUCH WRITTEN NOTE AGREEMENT
MAY NOT BE CONTRADICTED BY EVIDENCE OF ANY PRIOR ORAL
AGREEMENT OR OF A CONTEMPORANEOUS ORAL AGREEMENT BETWEEN
PRUDENTIAL AND THE COMPANY. ANY ADDITIONAL NON-STANDARD TERMS
OF THIS AGREEMENT BETWEEN PRUDENTIAL AND THE COMPANY INCLUDING
THE REDUCTION TO WRITING OF A PREVIOUS ORAL AGREEMENT BETWEEN
PRUDENTIAL AND THE COMPANY ARE SET FORTH IN THE SPACE BELOW:
None
NO UNWRITTEN ORAL AGREEMENT BETWEEN PRUDENTIAL AND
THE COMPANY EXISTS.
11N. Maximum Interest Payable. The Company, any
Purchaser and any other holders of the Notes specifically
intend and agree to limit contractually the amount of interest
payable under this Agreement, the Notes and all other
instruments and agreements related hereto and thereto to the
maximum amount of interest lawfully permitted to be charged
under applicable law. Therefore, none of the terms of this
Agreement, the Notes or any instrument pertaining to or
relating to this Agreement or the Notes shall ever be
construed to create a contract to pay interest at a rate in
excess of the maximum rate permitted to be charged under
applicable law, and neither the Company, any guarantor nor any
other party liable or to become liable hereunder, under the
Notes, any guaranties or under any other instruments and
agreements related hereto and thereto shall ever be liable for
interest in excess of the amount determined at such maximum
rate, and the provisions of this paragraph shall control over
all other provisions of this Agreement, the Notes, any
guaranties or any other instrument pertaining to or relating
to the transactions herein contemplated. If any amount of
interest taken or received by any Purchaser or any holder of a
Note shall be in excess of said maximum amount of interest
which, under applicable law, could lawfully have been
collected by any Purchaser or such holder incident to such
transactions, then such excess shall be deemed to have been
the result of a mathematical error by all parties hereto and
shall be refunded promptly by the Person receiving such amount
to the party paying such amount, or, at the option of the
recipient, credited ratably against the unpaid principal
amount of the Note or Notes held by such Purchaser or such
holder, respectively. All amounts paid or agreed to be paid
in connection with such transactions which would under
applicable law be deemed "interest" shall, to the extent
permitted by such applicable law, be amortized, prorated,
allocated and spread throughout the stated term of this
Agreement. "Applicable law" as used in this paragraph means
that law governing this Agreement in effect from time to time
which permits the charging and collection of the highest
permissible lawful, nonusurious rate of interest on the
transactions herein contemplated and"maximum rate" as used in
this paragraph means, with respect to each of the Notes, the
maximum lawful, nonusurious rates of interest (if any) which
under applicable law may be charged to the Company from time
to time with respect to such Notes.
11O. Counterparts. This Agreement may be executed
simultaneously in two or more counterparts, each of which
shall be deemed an original, and it shall not be necessary in
making proof of this Agreement to produce or account for more
than one such counterpart.
11P. Payments Due on Non-Business Days. Anything in
this Agreement or the Notes to the contrary notwithstanding,
any payment of principal of or interest on, or Yield-
Maintenance Amount payable with respect to, any Note that is
due on a date other than a Business day shall be made on the
next succeeding Business Day. If the date for any payment is
extended to the next succeeding Business Day by reason of the
preceding sentence, the period of such extension shall be
included in the computation of the interest payable on such
Business Day.
If Prudential is in agreement with the foregoing,
please sign the form of acceptance on the enclosed counterpart
of this letter and return the same to the Company, whereupon
this letter shall become a binding agreement between
Prudential and the Company.
Very truly yours,
National Pizza Company
By______________________________
Title:
The foregoing Agreement is
hereby accepted as of the
date first above written.
The Prudential Insurance Company
of America
By______________________________
Vice President
Information Schedule
Exhibit A -- Form of Note
Exhibit B -- Form of Request to Purchase
Exhibit C -- Form of Confirmation of Acceptance
Exhibit D -- Form of Opinion of Company's Counsel
Exhibit E -- Form of Amendment to Existing Note Agreements
Schedule 6C(2) -- Existing Funded Debt
Schedule 8C -- List of Agreements Restricting Debt
Letter Agreement
June 9, 1994
The Prudential Insurance Company
of America
c/o The Prudential Capital Group
1201 Elm Street, Suite 4900
Dallas, Texas 75270
Third Amendment to 1990 Agreement;
Second Amendment to 1991 Agreement
Ladies and Gentlemen:
We refer to (1) the Note Agreement, dated as of January
25, 1990 (as previously amended, the "1990 Agreement"),
between National Pizza Company (the "Company") and The
Prudential Insurance Company of America ("Prudential"),
pursuant to which the Company issued and sold to Prudential,
and Prudential purchased, the Company's 9.03% Notes due
January 25, 1995 (the "1990 Notes") in the aggregate principal
amount of $35,000,000, and (2) the Note Agreement dated as of
March 13, 1991 (as previously amended, the "1991 Agreement")
between the Company and Prudential pursuant to which the
Company issued and sold to Prudential, and Prudential
purchased, the Company's 8.49% Notes due March 13, 1996 (the
"1991 Notes") in the aggregate principal amount of
$20,000,000.. The 1990 Agreement and the 1991 Agreement are
collectively referred to as the "Existing Agreements".
The Company may issue and sell to Prudential, and
Prudential may purchase, additional promissory notes of the
Company (the "New Notes") in the aggregate principal amount of
up to $20,000,000 pursuant to that certain Master Shelf
Agreement, dated as of June 9, 1994 (the "Shelf Agreement").
As a result of the execution of the Shelf Agreement and the
possible issuance and sale of the New Notes, certain
provisions and covenants in the Existing Agreements, as
specified below, are to be modified. You have indicated your
willingness to agree to these modifications. Accordingly, it
is hereby agreed as follows.
The Existing Agreements are, effective as of the date
first above written, hereby amended as follows:
(a) Paragraph 5 of each of the Existing Agreements
is amended in its entirety as set forth on Annex A
attached hereto.
(b) Paragraph 6 of each of the Existing Agreements
is hereby amended in its entirety as set forth on Annex B
attached hereto.
(c) Paragraph 7 of each of the Existing Agreement
is hereby amended in its entirety as set forth on Annex C
attached hereto.
(d) Paragraph 10 of each of the Existing Agreements
is hereby amended by (i) the addition of the new
definitions set forth on Part 1 of Annex D attached
hereto and (ii) by amending in their entirety each of the
definitions set forth on Part 2 of Annex D attached
hereto.
On and after the effective date of this letter amendment,
each reference in each of the Existing Agreements to "this
Agreement", "hereunder", "hereof", or words of like import
referring to such Existing Agreement, and each reference in
the 1990 and 1991 Notes to "the Agreement", "thereunder",
"thereof", or words of like import referring to the respective
Existing Agreement, shall mean the Existing Agreement as
amended by this letter amendment. Each of the Existing
Agreements, as amended by this letter amendment, is and shall
continue to be in full force and effect and is hereby in all
respects ratified and confirmed.
Except as specifically amended above, the Existing
Agreements, the 1990 Notes and the 1991 Notes shall remain in
full force and effect and are hereby ratified and confirmed.
The execution, delivery and effectiveness of this letter
amendment shall not, except as expressly provided herein,
operate as a waiver of any right, power or remedy of
Prudential or any other holder of any 1990 Note or any 1991
Note under the Existing Agreements or such Notes, nor
constitute a waiver of any provision of the Existing
Agreements, the 1990 Notes, or the 1991 Notes.
This letter amendment may be executed in any number of
counterparts and by any combination of the parties hereto in
separate counterparts, each of which counterparts shall be an
original and all of which taken together shall constitute one
and the same letter amendment.
This Amendment may not be changed orally, but only
by an agreement in writing signed by the party against whom
enforcement of any waiver, change, modification or discharge
is sought. THIS WRITTEN AMENDMENT TOGETHER WITH THE EXISTING
AGREEMENTS REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES
AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
THIS AGREEMENT, TOGETHER WITH ALL OTHER WRITTEN AGREEMENTS
BETWEEN YOU AND THE COMPANY, IS THE FINAL EXPRESSION OF THE
AGREEMENT BETWEEN YOU AND THE COMPANY, AND SUCH WRITTEN
AGREEMENT MAY NOT BE CONTRADICTED BY EVIDENCE OF ANY PRIOR
ORAL AGREEMENT OR OF A CONTEMPORANEOUS ORAL AGREEMENT BETWEEN
YOU AND THE COMPANY. ANY ADDITIONAL NON-STANDARD TERMS OF
THIS AMENDMENT BETWEEN YOU AND THE COMPANY INCLUDING THE
REDUCTION TO WRITING OF A PREVIOUS ORAL AGREEMENT BETWEEN YOU
AND THE COMPANY ARE SET FORTH IN THE SPACE BELOW:
The Existing Agreements
NO UNWRITTEN ORAL AGREEMENT BETWEEN YOU AND THE COMPANY
EXISTS.
If you agree to the terms and provisions hereof,
please evidence your agreement by executing and returning one
counterpart of this letter amendment to National Pizza
Company, 720 West 20th Street, Pittsburg, Kansas 66762,
Attention: Chief Financial Officer. This letter amendment
shall become effective as of the date first above written when
and if counterparts of this letter amendment shall have been
executed by each of you.
Very truly yours,
National Pizza Company
By__________________________
Title:
Agreed as of the date
first above written:
The Prudential Insurance Company
of America
By_____________________________
Title: Vice President
NPC International, Inc.
720 West 20th Street
Pittsburg, Kansas 66762
December 23, 1994
The Prudential Insurance Company
of America
c/o Prudential Capital Group
1201 Elm St., Suite 4900
Dallas, Texas 75270
Fourth Amendment to 1990 Agreement;
Third Amendment to 1991 Agreement; and
First Amendment to Master Shelf Agreement herein
Ladies and Gentlemen:
We refer to (1) the Note Agreement, dated as of January
25, 1990 (as previously amended, the "1990 Agreement"),
between NPC International, Inc., formerly known as National
Pizza Company (the "Company"), and The Prudential Insurance
Company of America ("Prudential"), pursuant to which the
Company issued and sold to Prudential, and Prudential
purchased, the Company's 9.03% Notes due January 25, 1995 (the
"1990 Notes") in the aggregate principal amount of
$35,000,000, (2) the Note Agreement dated as of March 13, 1991
(as previously amended, the "1991 Agreement") between the
Company and Prudential pursuant to which the Company issued
and sold to Prudential, and Prudential purchased, the
Company's 8.49% Notes due March 13, 1996 (the "1991 Notes") in
the aggregate principal amount of $20,000,000 and (3) the
Master Shelf Agreement dated as of June 9, 1994 (the "Shelf
Agreement"), between the Company and Prudential pursuant to
which the Company may issue, and Prudential may purchase,
notes (the "Shelf Notes") in the aggregate principal amount of
up to $20,000,000. The 1990 Agreement, 1991 Agreement and
Shelf Agreement are collectively referred to as the "Existing
Agreements" and the 1990 Notes, 1991 Notes and Shelf Notes are
collectively referred to as the "Existing Notes". Unless
otherwise defined herein, the terms defined in the Shelf
Agreement shall be used herein as therein defined.
As provided by clause (b) of paragraph 6C(9) of each of
the Existing Agreements, the Company has advised you that none
of the Company nor any of its Subsidiaries is a party to, nor
bound by or obligated under, any agreement (other than the
Existing Agreements) creating or evidencing any Debt of the
Company or any Subsidiary or any agreement executed and
delivered in connection with Debt of the Company or any
Subsidiary which contains an Intangible Asset Covenant. You
have indicated your willingness to execute a letter amendment
evidencing the automatic amendment deleting clause (a) of
paragraph 6C(9) from each of the Existing Agreements, as
provided by clause (b) of paragraph 6C(9). Accordingly, it is
hereby agreed by you and us as follows:
As provided by paragraph 6C(9)(b), the Existing Agreements
are, effective the date first above written and subject to
paragraph 6C(9)(c), hereby amended by deleting paragraph
6C(9)(a) in full.
On and after the effective date of this letter amendment,
each reference in each of the Existing Agreements to "this
Agreement", "hereunder", "hereof", or words of like import
referring to such Existing Agreement, and each reference in
the Existing Notes to "the Agreement", "thereunder",
"thereof", or words of like import referring to the respective
Existing Agreement, shall mean such Existing Agreement as
amended by this letter amendment. Each Existing Agreement, as
amended by this letter amendment, is and shall continue to be
in full force and effect and is hereby in all respects
ratified and confirmed. The execution, delivery and
effectiveness of this letter amendment shall not, except as
expressly provided herein, operate as a waiver of any right,
power or remedy under any Existing Agreement nor constitute a
waiver of any provision of any Existing Agreement.
This letter amendment may be executed in any number of
counterparts and by any combination of the parties hereto in
separate counterparts, each of which counterparts shall be an
original and all of which taken together shall constitute one
and the same letter amendment.
If you agree to the terms and provisions hereof, please
evidence your agreement by executing and returning at least a
counterpart of this letter amendment to NPC International,
Inc., 720 West 20th Street, Pittsburg, Kansas 66762,
Attention of James K. Schwartz. This letter amendment shall
become effective as of the date first above written when and
if counterparts of this letter amendment shall have been
executed by us and you.
Very truly yours,
NPC International, Inc
By
Title:
Agreed as of the date
first above written:
THE PRUDENTIAL INSURANCE COMPANY
OF AMERICA
By
Vice President
Exhibit 11
NPC International, Inc.
Statement Regarding Computation of Per Share Earnings
<TABLE>
<CAPTION>
Thirteen Thirty-nine
Weeks Ending Weeks Ended
Dec. 27, Dec. 28, Dec. 27, Dec. 28,
1994 1993 1994 1993
<S> <C> <C> <C> <C>
PRIMARY
Shares outstanding
at beginning of period 24,863,892 25,026,493 25,013,373 25,284,622
Weighted average of
shares issued and
(reacquired) during period (327,973) (14,670) (187,539) (164,687)
Assuming exercise of options
and warrants reduced by the
number of shares which could
have been purchased with the
proceeds from exercise 10,069 56,535 21,774 61,077
Shares outstanding
for computation of
per share earnings 24,545,988 25,068,358 24,847,608 25,181,012
Net income $2,185,000 $2,740,000 $8,868,000 $7,936,000
Earnings per share $ 0.09 $ 0.11 $ 0.36 $ 0.32
FULLY DILUTED
Shares outstanding at
beginning of period 24,863,892 25,026,493 25,013,373 25,284,622
Weighted average of
shares issued and
(reacquired) during period (327,973) (14,670) (187,539) (164,687)
Assuming exercise of options
and warrants reduced by the
number of shares which could
have been purchased with the
proceeds from exercise 10,069 71,266 23,195 66,283
Shares outstanding
for computation of
per share earnings 24,545,988 25,083,089 24,849,029 25,186,218
Net income $2,158,000 $2,740,000 $8,868,000 $7,936,000
Earnings per share $ 0.09 $ 0.11 $ 0.36 $ 0.32
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAR-28-1995
<PERIOD-END> DEC-27-1994
<CASH> 4735000
<SECURITIES> 0
<RECEIVABLES> 3634000
<ALLOWANCES> 0<F1>
<INVENTORY> 3251000
<CURRENT-ASSETS> 15445000
<PP&E> 137056000
<DEPRECIATION> 0<F1>
<TOTAL-ASSETS> 227642000
<CURRENT-LIABILITIES> 34369000
<BONDS> 81730000
<COMMON> 276000
0
0
<OTHER-SE> 104720000
<TOTAL-LIABILITY-AND-EQUITY> 227642000
<SALES> 235839000
<TOTAL-REVENUES> 240088000
<CGS> 69815000
<TOTAL-COSTS> 69815000
<OTHER-EXPENSES> 151320000
<LOSS-PROVISION> 0<F1>
<INTEREST-EXPENSE> 4589000
<INCOME-PRETAX> 14468000
<INCOME-TAX> 5600000
<INCOME-CONTINUING> 8868000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 8868000
<EPS-PRIMARY> 0.36
<EPS-DILUTED> 0<F1>
<FN>
<F1>NOT REQUIRED TO BE SEPARATELY PROVIDED FOR INTERIM FINANCIAL
STATEMENT PURPOSES. RECEIVABLES AND PP&E ARE NET BALANCES.
</FN>
</TABLE>
