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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-A
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(b) OR (g) OF THE
SECURITIES EXCHANGE ACT OF 1934
BUFFETS, INC.
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(Exact name of registrant as specified in its charter)
MINNESOTA 41-1462294
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(State of incorporation or organization) (I.R.S. Employer Identification No.)
10260 VIKING DRIVE, EDEN PRAIRIE, MN 55344
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(Address of principal executive offices) (Zip Code)
If this Form relates to the registration of a class of debt securities and
is effective upon filing pursuant to General Instruction A.(c)(1), please check
the following box. / /
If this Form relates to the registration of a class of debt securities and
is to become effective simultaneously with the effectiveness of a concurrent
registration statement under the Securities Act of 1933 pursuant to General
Instruction A.(c)(2), please check the following box. / /
Securities to be registered pursuant to Section 12(b) of the Act:
NONE
Securities to be registered pursuant to Section 12(g) of the Act:
Title of each class
to be so registered
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HOMETOWN BUFFET, INC.
7% CONVERTIBLE SUBORDINATED NOTES DUE 2002
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Item 1. DESCRIPTION OF SECURITIES TO BE REGISTERED.
On September 20, 1996, pursuant to the terms of an Agreement and Plan of
Merger dated June 3, 1996 (the "Merger Agreement"), among Buffets, Inc., a
Minnesota corporation ("Buffets" or the "Registrant"), HomeTown Buffet, Inc., a
Delaware corporation ("HomeTown"), and Country Delaware, Inc., a Delaware
corporation and wholly-owned subsidiary of Buffets ("Sub"), Sub was merged (the
"Merger") into HomeTown. In the Merger, each share of common stock, par value
$.01 per share, of HomeTown outstanding immediately prior to the Merger was
converted into the right to receive 1.17 shares of common stock, par value $.01
per share ("Buffets Common Stock"), of Buffets and HomeTown became a wholly-
owned subsidiary of Buffets. As provided in the Merger Agreement, Buffets
assumed and/or guaranteed the obligations of HomeTown under HomeTown's 7%
Convertible Subordinated Notes due 2002 (the "Notes"). The obligations of
Buffets with respect to the Notes are set forth in the First Supplemental
Indenture, dated as of September 20, 1996 (the "Supplemental Indenture"), by and
among Buffets, HomeTown and Wells Fargo Bank, National Association, as trustee,
(the "Trustee"). The Indenture, dated as of November 27, 1995 by and between
HomeTown and First Interstate Bank of California (as predecessor trustee)
relating to the Notes, as amended and modified by the Supplemental Indenture, is
herein referred to as the "Indenture."
The following summaries of certain provisions of the Indenture do not
purport to be complete and are subject to, and are qualified in their entirety
by reference to, all the provisions of the Indenture. Capitalized terms used
but not defined herein have the same meanings as defined in the Indenture.
The Notes are unsecured subordinated obligations of HomeTown and Buffets,
were issued in an aggregate principal amount of $41,500,000 and will mature on
December 1, 2002. The Notes bear interest at the rate of 7% per annum from the
date of initial issuance, or from the most recent Interest Payment Date to which
interest has been paid or provided for, payable semi-annually on June 1 and
December 1 of each year, commencing June 1, 1996, to the Person in whose name
the Note (or any predecessor Note) is registered at the close of business on the
Regular Record Date for such interest, which shall be May 15 or November 15
(whether or not a Business Day), as the case may be, next preceding such
Interest Payment Date. Interest on the Notes is paid on the basis of a 360-day
year of twelve 30-day months, based on actual days elapsed.
Buffets has guaranteed the prompt and complete payment and performance of
HomeTown's obligations under the Indenture and the Notes, including, without
limitation, HomeTown's liability for the payment of principal of, premium, if
any, and interest on the Notes; provided, however, Buffets' obligations under
the Notes are expressly made subordinate and subject in right of payment of
Senior Indebtedness to substantially the same extent as HomeTown's obligations
thereunder.
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Principal of and premium, if any, and interest on the Notes is payable, and
the transfer of Notes is registrable, at the office or agency of the Registrant
maintained for such purposes in the Borough of Manhattan, The City of New York,
and the Corporate Trust Office of the Trustee located in Los Angeles,
California. In addition, payment of interest may, at the option of the
Registrant, be made by check mailed to the address of the Person entitled
thereto as it appears in the Note Register.
The Notes are issued only in fully registered form, without coupons, in
denominations of $1,000 and any integral multiples thereof. No service charge
is made for any registration of transfer or exchange of Notes, but HomeTown may
require payment of a sum sufficient to cover any tax or other governmental
charge payable in connection therewith. HomeTown is not required (i) to issue,
register the transfer of or exchange any Note during a period beginning at the
opening of business 15 days before the day fixed for any redemption and ending
at the close of business on such Redemption Date or (ii) to register the
transfer of or exchange any Note selected for redemption in whole or in part,
except the unredeemed portion of the Notes being redeemed in part.
All monies paid to the Trustee or any Paying Agent for the payment of
principal of and premium, if any, and interest on any Note which remain
unclaimed for two years after such principal, premium or interest becomes due
and payable may be repaid to HomeTown or the Registrant. Thereafter, the Holder
of such Note may, as an unsecured general creditor, look only to HomeTown or the
Registrant for payment thereof.
Neither the Indenture nor the Supplemental Indenture contain any provision
that would provide protection to Holders of the Notes against a sudden and
dramatic decline in credit quality of the Registrant or HomeTown resulting from
any takeover, recapitalization or similar restructuring, except as described
below.
The Notes are convertible into Common Stock of the Registrant at any time
up to and including the maturity date (subject to prior redemption by the
Registrant on not less than 15 nor more than 60 days' notice) at the principal
amount thereof, at the conversion price of $11 2/3 (subject to adjustment as
described below). The right to convert Notes called for redemption or delivered
for repurchase will terminate at the close of business on the last Trading Day
prior to the Redemption Date or the Repurchase Date, unless HomeTown and the
Registrant default in making the payment due upon redemption or repurchase. For
information as to notices of redemption, see below.
The conversion price will be subject to adjustment in certain events,
including: (i) dividends (and other distributions) payable in Common Stock on
any class of capital stock of the Registrant, (ii) the issuance to all holders
of Common Stock of rights, warrants or options entitling them to subscribe for
or purchase Common Stock at less than the Current Market Price, (iii)
subdivisions and combinations of Common Stock, (iv) distributions to all holders
of Common Stock of evidences of indebtedness of the Registrant, cash or other
assets (including securities, but excluding those dividends, rights, warrants,
options and distributions
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referred to above and excluding dividends and distributions paid exclusively in
cash), (v) distributions consisting exclusively of cash (excluding any cash
portion of distributions referred to in (iv) above or cash distributed upon a
merger or consolidation to which the third succeeding paragraph applies) to all
holders of Common Stock in an aggregate amount that, combined together with (a)
all other such all-cash distributions made within the preceding 12 months in
respect to which no adjustment has been made and (b) any cash and the fair
market value of other consideration paid or payable in respect of any tender
offers by the Registrant or any of its subsidiaries for Common Stock concluded
within the preceding 12 months in respect of which no adjustment has been made,
exceeds 12.5% of the Registrant's market capitalization (defined as being the
product of the Current Market Price of the Common Stock times the number of
shares of Common Stock then outstanding) on the record date for such
distribution, and (vi) the purchase of Common Stock pursuant to a tender offer
made by the Registrant or any of its subsidiaries which involves an aggregate
consideration that, together with (a) any cash and the fair market value of any
other consideration paid or payable in any other tender offer by the Registrant
or any of its subsidiaries for Common Stock expiring within the 12 months
preceding the expiration of such tender offer in respect of which no adjustment
has been made and (b) the aggregate amount of any such all-cash distributions
referred to in (v) above to all holders of Common Stock within the 12 months
preceding the expiration of such tender offer in respect of which no adjustments
have been made, exceeds 12.5% of the Registrant's market capitalization on the
expiration of such tender offer. There will be no upward adjustment in the
conversion price except in the event of a reverse stock split. No adjustment in
the conversion price shall be required unless such adjustment (plus any
adjustments not previously made) would require an increase or decrease of at
least 1% in such price; provided, however, than any adjustments which by reason
of this sentence are not required to be made shall be carried forward and then
taken into account in any subsequent adjustment.
The Registrant from time to time may, to the extent permitted by law,
reduce the conversion price of the Notes by any amount for a period of at least
20 days, in which case the Registrant shall give at least 15 days' notice of
such decrease, if the Board of Directors has made a determination that such
decrease would be in the best interests of the Registrant, which determination
shall be conclusive.
In addition to the foregoing adjustments, the Registrant will be permitted
to make such reduction in the conversion price as it considers to be advisable
in order that any event treated for federal income tax purposes as a dividend or
distribution of stock or stock rights will not be taxable to the holders of the
Common Stock.
Subject to the rights of Holders of Notes described below, in case of
certain consolidations or mergers to which the Registrant is a party or the
transfer of substantially all of the assets of the Registrant, each Note then
outstanding would, without the consent of any Holders of Notes, become
convertible only into the kind and amount of securities, cash and other property
receivable upon the consolidation, merger or transfer by a holder of the number
of shares of Common Stock into which such Note might have been converted
immediately
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prior to such consolidation, merger or transfer (assuming such holder of Common
Stock failed to exercise any rights of election and received per share the kind
and amount received per share by a plurality of non-electing shares).
Fractional shares of Common Stock will not be issued upon conversion, but,
in lieu thereof, the Registrant will pay a cash adjustment based upon market
price. Notes surrendered for conversion during the period from the close of
business on any Regular Record Date next preceding any Interest Payment Date to
the opening of business on such Interest Payment Date (except Notes called for
redemption on a Redemption Date within such period) must be accompanied by
payment of an amount equal to the interest thereon which the registered Holder
is to receive. In the case of any Note that has been converted after any
Regular Record Date but on or before the next Interest Payment Date, interest
whose Stated Maturity is on such Interest Payment Date will be payable on such
Interest Payment Date notwithstanding such conversion, and such interest will be
paid to the Holder of such Note on such Regular Record Date. Except as
described above, no interest on converted Notes will be payable by the
Registrant on any Interest Payment Date subsequent to the date of conversion.
No other payment or adjustment for interest or dividends will be made upon
conversion.
If at any time the Registrant makes a distribution of property to its
stockholders that would be taxable to such stockholders as a dividend for
Federal income tax purposes (E.G., distributions of evidence of indebtedness or
assets of the Registrant, but generally not stock dividends or rights to
subscribe for Common Stock) and, pursuant to the antidilution provisions of the
Indenture, the conversion price of the Notes is reduced, such reduction may be
deemed to be the payment of a taxable dividend to Holders of Notes. If the
Registrant voluntarily reduces the conversion price for a period of time,
Holders of the Notes may, in certain circumstances, have taxable income equal to
the value of the reduction in the conversion price. Holders of Notes could,
therefore, have taxable income as a result of an event pursuant to which they
receive no cash or property that could be used to pay the related income tax.
The payment of the principal of and premium, if any, and interest on, the
Notes will, to the extent set forth in the Indenture, be subordinated in right
of payment to the prior payment in full of all Senior Indebtedness. Upon any
payment or distribution of assets to creditors upon any liquidation,
dissolution, winding up, reorganization, assignment for the benefit of
creditors, marshaling of assets or any bankruptcy, insolvency or similar
proceedings of the Registrant or HomeTown, the holders of all Senior
Indebtedness will be first entitled to receive payment in full of all amounts
due or to become due thereon before the Holders of the Notes will be entitled to
receive any payment in respect of the principal of or premium, if any, or
interest on, the Notes. In the event of the acceleration of the maturity of any
Notes, the holders of all Senior Indebtedness will first be entitled to receive
payment in full of all amounts due or to become due thereon before the Holders
of the Notes will be entitled to receive any payment upon the principal of or
premium, if any, or interest on, the Notes. In the event and during the
continuation of (i) any default in the payment of principal of or premium, if
any, or interest on any Senior Indebtedness beyond any applicable grace period
with respect
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thereto or (ii) any other event of default with respect to any Senior
Indebtedness permitting the holders of such Senior Indebtedness (or a trustee or
other representative on behalf of the holders thereof) to declare such Senior
Indebtedness due and payable prior to the date on which it would otherwise have
become due and payable, upon written notice thereof to the Registrant and the
Trustee by any holders of Senior Indebtedness (or a trustee or other
representative on behalf of the holders thereof) (the "Default Notice"), unless
and until such event of default shall have been cured or waived and such
acceleration shall have been rescinded or annulled, or (iii) any judicial
proceeding shall be pending with respect to any such default in payment or event
of default, then no payment may be made in respect of principal or premium, if
any, or interest on the Notes or to acquire or repurchase the Notes for cash or
property on account of the repurchase provisions of the Indenture provided such
payments may not be prevented under clause (ii) above for more than 179 days
after an applicable Default Notice has been received by the Trustee unless the
Senior Indebtedness in respect of which such event of default exists has been
declared due and payable in its entirety, in which case no such payment may be
made until such acceleration has been rescinded or annulled or such Senior
Indebtedness has been paid in full. No event of default which existed or was
continuing on the date of any Default Notice may be made the basis for the
giving of a second Default Notice and only one such Default Notice may be given
in any 365-day period.
By reason of such subordination, in the event of insolvency, creditors of
the Registrant who are not holders of Senior Indebtedness or of the Notes may
recover less, ratably, than holders of Senior Indebtedness and may recover more,
ratably, than the Holders of the Notes.
"Senior Indebtedness" is defined in the Indenture as (i) the principal of
and premium, if any, and interest on all indebtedness of the Registrant and
HomeTown for money borrowed, other than the Notes, whether outstanding on the
date of execution of the Indenture or thereafter created, incurred or assumed,
except any such other indebtedness that by the terms of the instrument or
instruments by which such indebtedness was created or incurred expressly
provides that it (a) is junior in right of payment to the Notes or (b) ranks
PARI PASSU in right of payment with the Notes, and (ii) any amendments,
renewals, extensions, deferrals, modifications, refinancings and refundings of
any of the foregoing. The term "indebtedness for money borrowed" when used with
respect to the Registrant or HomeTown is defined to mean (a) any obligation of
the Registrant or HomeTown for the repayment of borrowed money (including,
without limitation, fees, penalties, expenses, collection expenses, interest
yield amounts and other obligations in respect thereof, and, to the extent
permitted by applicable law, interest accruing after the filing of a petition
initiating any proceeding under the Bankruptcy Code whether or not allowed as a
claim in such proceeding), whether or not evidenced by bonds, debentures, notes
or other written instruments, and any other obligation evidenced by notes,
bonds, debentures or similar instruments, (b) any deferred payment obligation of
the Registrant or HomeTown for the payment of the purchase price of property or
assets evidenced by a note or similar instrument (excluding any obligations for
trade payables or constituting the deferred purchase price of assets incurred in
the ordinary course of business), (c) any obligation of the Registrant or
HomeTown for the payment of rent or
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other amounts under a lease of property or assets which obligation is required
to be classified and accounted for as a capitalized lease on the balance sheet
of the Registrant or HomeTown under generally accepted accounting principles,
(d) all obligations of the Registrant or HomeTown due and payable under interest
rate and currency swaps, floors, caps or similar arrangements intended to fix
interest rate obligations or currency fluctuation risks, (e) all obligations of
the Registrant or HomeTown evidenced by a letter of credit or any reimbursement
obligation of the Registrant or HomeTown in respect of a letter of credit and
(f) all obligations of others of the kinds described in the preceding clauses
(a), (b), (c), (d) or (e) assumed by or guaranteed by the Registrant or HomeTown
and the obligations of the Registrant or HomeTown under guarantees of any such
obligations.
The Notes will be effectively subordinated to all indebtedness and other
liabilities and commitments (including trade payables and lease obligations) of
the Registrant's subsidiaries. Any right of the Registrant to receive assets of
any such subsidiary upon the liquidation or reorganization of any such
subsidiary (and the consequent right of the Holders of the Notes to participate
in those assets) will be effectively subordinated to the claims of that
subsidiary's creditors, except to the extent that the Registrant is itself
recognized as a creditor of such subsidiary, in which case the claims of the
Registrant would still be subordinate to any security in the assets of such
subsidiary and any indebtedness of such subsidiary senior to that held by the
Registrant.
The Indenture does not prohibit or limit the incurrence of additional
Senior Indebtedness. The Registrant and its subsidiaries expect from time to
time to incur additional indebtedness, including Senior Indebtedness.
The Notes will be redeemable at the Registrant's or HomeTown's option, in
whole or from time to time in part, upon not less than 15 nor more than 60 days'
notice mailed to each Holder of Notes to be redeemed at such Holder's address
appearing in the Note Register, on any date on or after December 2, 1998 and
prior to maturity.
The Redemption Prices (expressed as percentage of principal amount) are as
follows for the 12-month period beginning December 1 (or December 2 in the case
of 1998) of the years indicated:
1998. . . . . . . . . . . . . . . . .104.0%
1999. . . . . . . . . . . . . . . . .103.0
2000. . . . . . . . . . . . . . . . .102.0
2001. . . . . . . . . . . . . . . . .101.0
thereafter and at maturity at 100% of principal, together in the case of any
such redemption with accrued interest to the Redemption Date (subject to the
right of Holders of record on the relevant Regular Record Date to receive
interest due on an Interest Payment Date that is on or prior to the Redemption
Date).
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No sinking fund is provided for the Notes.
The following will be Events of Default under the Indenture:
(i) failure to pay principal of or premium, if any, on any Note
when due, whether or not such payment is prohibited by the subordination
provisions of the Indenture;
(ii) failure to pay any interest on any Note when due, continued for
30 days, whether or not such payment is prohibited by the subordination
provisions of the Indenture;
(iii) default in the payment of the Repurchase Price in respect of
any Note on the Repurchase Date therefor, whether or not such payment is
prohibited by the subordination provisions of the Indenture;
(iv) failure to perform any other covenant of HomeTown in the
Indenture, continued for 60 days after written notice as provided in the
Indenture;
(v) a default under any indebtedness for money borrowed by HomeTown
or any Significant Subsidiary in an amount, together with all other such
indebtedness, exceeding $1,000,000, which default (a) shall constitute a
failure to pay any principal or interest with respect to any such
indebtedness when due and payable after the expiration of any applicable
grace period with respect thereto or (b) shall have resulted in such
indebtedness in an amount exceeding $1,000,000 becoming or being declared
due and payable prior to the date on which it would otherwise have become
due and payable, if such indebtedness is not discharged, or such
acceleration is not annulled, within 10 days after written notice as
provided in the Indenture;
(vi) a final judgment or final judgments for payment of money
against HomeTown or any Significant Subsidiary which remains undischarged
for a period ending on the later of (a) 60 days after the entry of such
judgment, as extended by any effective stay of its execution, or (b) the
date on which any payment is or becomes due and payable pursuant to such
judgment in accordance with its terms, provided that the aggregate of all
such outstanding judgments exceeds $1,000,000 (excluding any amounts
covered by insurance as to which the insurer has not denied liability);
(vii) certain events of bankruptcy, insolvency or reorganization of
HomeTown or any Significant Subsidiary; and
(viii) default in the performance, or breach, of any covenant or
warranty of the Registrant in this Indenture, and continuance of such
default or breach for a period of sixty (60) days after there has been
given, by registered or certified mail, to the Registrant by the Trustee,
or to the Registrant and the Trustee by the Holders of at least 10% in
principal amount of Outstanding Notes, a written notice specifying such
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default or breach and requiring it to be remedied and stating that such
notice is a Notice of Default hereunder.
Subject to the provisions of the Indenture relating to the duties of the
Trustee, in case an Event of Default shall occur and be continuing, the Trustee
will be under no obligation to exercise any of its rights or powers under the
Indenture at the request or direction of any of the Holders, unless such Holders
shall have offered to the Trustee reasonable indemnity. Subject to the Trustee
being offered reasonable security or indemnity against the costs, expenses and
liabilities which might be incurred by the Trustee, the Holders of 66 2/3% in
aggregate principal amount of the Outstanding Notes will have the right by
written instruction to the Trustee, to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or exercising
any trust or power conferred on the Trustee.
If any Event of Default shall occur and be continuing, either the Trustee
or the Holders of not less than 25% in aggregate principal amount of the
Outstanding Notes may accelerate the maturity of all Notes; provided, however,
that after such acceleration, but before a judgment or decree based on
acceleration, the Holders of 66 2/3% in aggregate principal amount of the
Outstanding Notes may, under certain circumstances, rescind and annul such
acceleration if all Events of Default, other than the non-payment of accelerated
principal, have been cured or waived as provided in the Indenture. For
information as to waiver of defaults, see below.
No Holder of any Note will have any right to institute any proceeding with
respect to the Indenture or for any remedy thereunder, unless (i) such Holder
shall have previously given to the Trustee written notice of a continuing Event
of Default and unless also the Holders of at least 25% in aggregate principal
amount of the Outstanding Notes shall have made written request to the Trustee
to institute proceedings, (ii) such Holder has offered to the Trustee reasonable
indemnity, (iii) the Trustee for 60 days after receipt of such notice has failed
to institute any such proceeding and (iv) no direction inconsistent with such
request shall have been given to the Trustee during such 60-day period by the
Holders of 66 2/3% in principal amount of the Outstanding Notes. However, such
limitations do not apply to a suit instituted by a Holder of a Note for
enforcement of (a) payment of the principal of and premium, if any, or interest
on such Note on or after the respective due dates expressed in such Note, (b)
the right to require repurchase of such Note or (c) the right to convert such
Note in accordance with the Indenture.
The Indenture provides that HomeTown will deliver to the Trustee, within 60
days after the end of each fiscal year, an officers' certificate, stating as to
each signer thereof that he or she is familiar with the affairs of HomeTown and
whether or not to his or her knowledge HomeTown is in default in the performance
and observance of any of HomeTown's obligations under the Indenture and if
HomeTown shall be in default, specifying all such defaults of which he or she
has knowledge and the nature and status thereof.
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HomeTown, without the consent of the Holders of any of the Notes under the
Indenture, may consolidate with or merge into any other Person or convey,
transfer or lease its assets substantially as an entirety to any Person,
provided that (i) the successor is a Person organized under the laws of any
domestic jurisdiction; (ii) the successor Person, if other than the Registrant
or HomeTown, assumes the Registrant or HomeTown's obligations on the Notes and
under the Indenture; (iii) after giving effect to the transaction no Event of
Default, and no event which, after notice or lapse of time, would become an
Event of Default, shall have occurred and be continuing; and (iv) HomeTown has
delivered to the Trustee an Officers' Certificate and an Opinion of Counsel,
stating that such consolidation, merger, conveyance, transfer or lease and, if a
supplemental indenture is required in connection with such transaction, such
supplemental indenture complies with this covenant and that all conditions
precedent herein provided for relating to such transaction have been complied
with.
Modifications and amendments of the Indenture may be made with the consent
of the Holders of 66 2/3% in aggregate principal amount of the Outstanding
Notes; provided, however, that no such modification or amendment may, without
consent of the Holder of each Outstanding Note affected thereby, (i) change the
Stated Maturity of the principal of, or any installment of interest on, any
Note; (ii) reduce the principal amount of, or the premium or interest on, any
Note; (iii) change the place of payment where, or currency in which, any Note or
any premium or interest thereof is payable; (iv) impair the right to institute
suit for the enforcement of any payment on or with respect to any Note; (v)
adversely affect the right to convert the Notes; (vi) adversely affect the right
to cause the repurchase of the Notes; (vii) modify the subordination provisions
in a manner adverse to the Holders of the Notes; (viii) reduce the above-stated
percentage of Outstanding Notes necessary to modify or amend the Indenture; or
(ix) reduce the percentage of aggregate principal amount of Outstanding Notes
necessary for waiver of compliance with certain provisions of the Indenture or
for waiver of certain defaults.
The Holders of 66 2/3% in aggregate principal amount of Outstanding Notes
may waive compliance with certain restrictive provisions of the Indenture. The
Holders of 66 2/3% in aggregate principal amount of the Outstanding Notes may
waive any past default or right under the Indenture, except (i) a default in
payment of principal, premium or interest, (ii) the right of a Holder to redeem
or convert the Note or (iii) with respect to any covenant or provision of the
Indenture that requires the consent of the Holder of each Outstanding Note
affected.
The Indenture provides that if a Risk Event (as defined below) occurs, each
Holder of Notes shall have the right (which right may not be waived by the Board
of Directors or the Trustee) at the Holder's option, to require the repurchase
of all of such Holder's Notes, or any portion thereof that is an integral
multiple of $1,000, on the date (the "Repurchase Date") that is 45 calendar days
after the date of the HomeTown Notice (as defined below), for cash at a price
equal to 100% of the principal amount of such Notes to be repurchased (the
"Repurchase Price"), together with accrued interest to the Repurchase Date.
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Within 15 calendar days after the occurrence of a Risk Event, HomeTown is
obligated to mail all Holders of record of the Notes a notice (the "HomeTown
Notice") of the occurrence of such Risk Event and of the repurchase right
arising thereof. HomeTown must deliver a copy of the HomeTown Notice to the
Trustee and cause a copy or a summary of such notice to be published in a
newspaper of general circulation in The City of New York. To exercise the
repurchase right, a Holder of such Notes must deliver on or before the fifth day
preceding the Repurchase Date irrevocable written notice to the Trustee of the
Holder's exercise of such right (except that the right of the Holders to convert
such Notes shall continue until the close of business on the last Trading Day
preceding the Repurchase Date), together with the Notes with respect to which
the right is being exercised, duly endorsed for transfer to the Registrant or
HomeTown.
A Risk Event will be deemed to have occurred at such times as:
(i) any Person (including any syndicate or group deemed to be a
"Person" under Section 13(d)(3) of the Exchange Act), other than the
Registrant or HomeTown, any subsidiary of HomeTown or any current or future
employee or director benefit plan of HomeTown or any subsidiary of HomeTown
or any entity holding capital stock of HomeTown for or pursuant to the
terms of such plan, or an underwriter engaged in a firm commitment
underwriting in connection with a public offering of capital stock of
HomeTown, is or becomes the beneficial owner, directly or indirectly,
through a purchase, merger or other acquisition transaction or series of
transactions, of shares of capital stock of HomeTown entitling such Person
to exercise 50% or more of the total voting power of all shares of capital
stock of HomeTown entitled to vote generally in the election of directors;
(ii) HomeTown adopts a plan relating to the liquidation or
dissolution of HomeTown;
(iii) there occurs any consolidation of HomeTown with, or merger of
HomeTown into, any other Person, any merger of another Person into
HomeTown, or any sales or transfers of all or substantially all of the
assets of HomeTown to another Person (other than a merger (a) which does
not result in any reclassification, conversion, exchange or cancellation of
outstanding shares of Common Stock or (b) which is effected solely to
change the jurisdiction of incorporation of HomeTown and results in a
reclassification, conversion or exchange of outstanding shares of Common
Stock solely into shares of Common Stock); or
(iv) a change in the Board of Directors of HomeTown in which the
individuals who constituted the Board of Directors of HomeTown at the
beginning of the 24-month period immediately preceding such change
(together with any other director whose election by the Board of Directors
of HomeTown or whose nomination for election by the stockholders of
HomeTown was approved by a vote of at least a majority of the directors
then in office either who were directors at the beginning of
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such period or whose election or nomination for election was previously so
approved) cease for any reason to constitute a majority of the directors
then in office;
provided, however, that a Risk Event shall not be deemed to have occurred if the
closing price per share of the Common Stock for any five Trading Days within the
period of ten consecutive Trading Days ending immediately before the Risk Event
shall equal or exceed 105% of the conversion price of such Notes in effect on
each such Trading Day. A "beneficial owner" shall be determined in accordance
with Rule 13d-3 promulgated by the Commission under the Exchange Act, as in
effect on the date of execution of the Indenture.
The right to require the repurchase of the Notes as a result of the
occurrence of a Risk Event could create an event of default under Senior
Indebtedness as a result of which any repurchase could, absent a waiver, be
blocked by the subordination provisions of the Notes. Failure of HomeTown to
repurchase the Notes when required would result in an Event of Default with
respect to the Notes whether or not such repurchase is permitted by the
subordination provisions. The ability of the Registrant or HomeTown to pay cash
to the Holders of Notes upon a repurchase may be limited by certain financial
covenants contained in the Registrant's or HomeTown's credit agreements.
Rule 13e-4 under the Exchange Act requires, among other things, the
dissemination of certain information to security holders in the event of any
issuer tender offer and may apply in the event that the repurchase option
becomes available to Holders of the Notes. HomeTown will comply with this rule
to the extent applicable at that time.
The repurchase feature of the Notes may in certain circumstances make more
difficult or discourage a takeover of HomeTown and the removal of incumbent
management. The foregoing provisions would not necessarily afford Holders of
the Notes protection in the event of highly leveraged or other transactions
involving HomeTown that may adversely affect Holders.
Except as described above with respect to a Risk Event, the Indenture does
not contain provisions permitting the Holders of the Notes to require the
repurchase or redemption of the Notes in the event of a takeover,
recapitalization or similar transaction. Subject to the limitation on mergers
and consolidations described above, the Registrant or HomeTown, their management
or their subsidiaries could, in the future, enter into certain transactions,
including refinancings, certain recapitalizations, acquisitions, the sale of all
or substantially all of its assets, the liquidation of the Registrant or
HomeTown or similar transactions, that would not constitute a Risk Event under
the Indenture, but that would increase the amount of Senior Indebtedness (or any
other indebtedness) outstanding at such time or substantially reduce or
eliminate the Registrant's or HomeTown's assets. There are no restrictions in
the Indenture on the creation of Senior Indebtedness (or any other indebtedness)
and, under certain circumstances, the incurrence of significant amounts of
additional indebtedness could have an adverse effect on the Registrant's or
HomeTown's ability to service their indebtedness, including the Notes.
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If a Risk Event were to occur, there is no assurance that the Registrant or
HomeTown would have sufficient funds to repurchase all Notes tendered by the
Holders thereof or to make any principal, premium, if any, or interest payment
otherwise required by the Notes.
As noted above, one of the events that constitutes a Risk Event under the
Indenture is a sale or other transfer of all or substantially all of the assets
of HomeTown. The Indenture will be governed by New York law, and the definition
under New York law of "substantially all" of the assets of a corporation varies
according to the facts and circumstances of the transaction. Accordingly, if
HomeTown were to engage in a transaction in which it disposed of less than all
of its assets, a question of interpretation could arise as to whether such
disposition was of "substantially all" of its assets and whether the transaction
was a Risk Event.
HomeTown may discharge its obligations under the Indenture while Notes
remain Outstanding if (i) all Outstanding Notes will become due and payable at
their scheduled maturity within one year or (ii) all Outstanding Notes are
scheduled for redemption within one year, and, in either case, HomeTown has
deposited with the Trustee an amount sufficient to pay and discharge all
Outstanding Notes on the date of their scheduled maturity or the scheduled date
of redemption.
In addition to complying with any applicable legal requirements, the
Registrant or HomeTown will deliver to Holders of record, and to any beneficial
owners so requesting, annual reports containing audited consolidated financial
statements with a report thereon by the Registrant's independent public
accountants.
The Indenture and Notes will be governed by and construed in accordance
with the laws of the State of New York.
The Trustee's duties are set forth in the Trust Indenture Act, as amended
(the "Trust Indenture Act"), and in the Indenture. The Trust Indenture Act
imposes certain limitations on the right of the Trustee, in the event it becomes
a creditor of the Registrant or HomeTown, to obtain payment of claims in certain
cases, or to realize on certain property received in respect to any such claim
as security or otherwise. The Trustee will be permitted to engage in other
transactions; provided, however, if it acquires any conflicting interest within
the meaning of Section 310 of the Trust Indenture Act, it must generally either
eliminate such conflict or resign.
Prior to an Event of Default, the Trustee is responsible to perform only
such duties as are specifically set out in the Indenture. In case an Event of
Default shall occur (and shall not be cured), the Trust Indenture Act requires
that the Trustee use the degree of care of a prudent person in the conduct of
its own affairs in the exercise of its powers. Subject to such provisions, the
Trustee will be under no obligation to exercise any of its rights or powers
under the Indenture at the request of any of the Holders of Notes, unless they
shall have offered to the Trustees reasonable security or indemnity.
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The Holders of 66 2/3% in principal amount of all outstanding Notes will
have the right to direct the time, method and place of conducting any proceeding
for exercising any remedy or power available to the Trustee, provided that such
direction does not conflict with any rule of law or with the Indenture, is not
prejudicial to the rights of another Holder or the Trustee, and does not involve
the Trustee in personal liability.
Item 2. EXHIBITS.
3.1 Amended and Restated Certificate of Incorporation of HomeTown
(incorporated by reference to Exhibit 3.1 of HomeTown's
Registration Statement on Form S-1, as amended, filed
September 22, 1993, registration No. 33-67326).
3.2 Amended Bylaws of HomeTown (incorporated by reference to
Exhibit 3.2 of HomeTown's Annual Report on Form 10-K for the year
ended December 28, 1994).
4.1 Composite Amended and Restated Articles of Incorporation of the
Registrant (incorporated by reference to Exhibit 4.1 to the
Registrant's Registration Statement on Form S-3, File No. 33-
63694).
4.2 By-Laws of the Registrant (incorporated by reference to Exhibit
3(b) to the Registrant's Annual Report on Form 10-K for the
fiscal year ended December 29, 1993).
4.3 Form of Rights Agreement, dated as of October 24, 1995, by and
between the Registrant and American Stock Transfer and Trust
Registrant (incorporated by reference to Exhibit 1 to the
Registrant's Current Report on Form 8-K dated October 24, 1995).
4.4 Second Amended and Restated Credit Agreement by and between the
Registrant and First Bank National Association dated as of April
30, 1996 (incorporated by reference to Exhibit 10.1 to the
Registrant's Quarterly Report on Form 10-Q for the quarter ended
April 24, 1996).
4.5 Amendment No. 1 dated as of September 20, 1996 to Second Amended
and Restated Credit Agreement by and between the Registrant and
First Bank National Association. The following Schedules to
Amendment No. 1 have been omitted: Schedule 6.12, containing a
list of outstanding loans by HomeTown to its officers, employees
and directors; Schedule 6.13, containing a list of certain
outstanding indebtedness of HomeTown; Schedule 6.14, identifying
certain liens and encumbrances of HomeTown. The Registrant
agrees to furnish supplementally a copy of any omitted schedule
to the Securities and Exchange Commission upon request.
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4.6 Indenture dated as of November 27, 1995 related to 7% Convertible
Subordinated Notes of HomeTown due 2002.
4.7 First Supplemental Indenture dated as of September 20, 1996 among
the Registrant, HomeTown and Wells Fargo Bank, N.A.
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SIGNATURE
Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, the registrant has duly caused this registration statement to be
signed on its behalf by the undersigned, thereunto duly authorized.
BUFFETS, INC.
Date: November 6, 1996 By: /s/ Clark C. Grant
-------------------------------
Clark C. Grant, Executive Vice
President of Finance, Treasurer
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EXHIBIT INDEX
EXHIBIT NO.
3.1 Amended and Restated Certificate of
Incorporation of HomeTown (incorporated by
reference to Exhibit 3.1 of HomeTown's
Registration Statement on Form S-1, as
amended, filed September 22, 1993,
registration No. 33-67326) . . . . . . . . . . . .Incorporated by Reference
3.2 Amended Bylaws of HomeTown (incorporated by
reference to Exhibit 3.2 of HomeTown's Annual
Report on Form 10-K for the year ended
December 28, 1994) . . . . . . . . . . . . . . . .Incorporated by Reference
4.1 Composite Amended and Restated Articles of
Incorporation of the Registrant (incorporated
by reference to Exhibit 4.1 to the
Registrant's Registration Statement on
Form S-3, File No. 33-63694) . . . . . . . . . . .Incorporated by Reference
4.2 By-Laws of the Registrant (incorporated
by reference to Exhibit 3(b) to the
Registrant's Annual Report on Form 10-K
for the fiscal year ended
December 29, 1993) . . . . . . . . . . . . . . . .Incorporated by Reference
4.3 Form of Rights Agreement, dated as of
October 24, 1995, by and between the
Registrant and American Stock Transfer
and Trust Registrant (incorporated by
reference to Exhibit 1 to the Registrant's
Current Report on Form 8-K dated
October 24, 1995). . . . . . . . . . . . . . . . .Incorporated by Reference
4.4 Second Amended and Restated Credit
Agreement by and between the Registrant
and First Bank National Association
dated as of April 30, 1996 (incorporated
by reference to Exhibit 10.1 to the
Registrant's Quarterly Report on
Form 10-Q for the quarter ended
April 24, 1996). . . . . . . . . . . . . . . . . .Incorporated by Reference
4.5 Amendment No. 1 dated as of
September 20, 1996 to Second Amended
and Restated Credit Agreement by and
between the Registrant and First Bank
National Association . . . . . . . . . . . . . . . . . Filed Electronically
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4.6 Indenture dated as of November 27, 1995
related to 7% Convertible Subordinated
Notes of HomeTown due 2002 . . . . . . . . . . . . . . Filed Electronically
4.7 First Supplemental Indenture dated as of
September 20, 1996 among the Registrant,
HomeTown and Wells Fargo Bank, N.A.. . . . . . . . . . Filed Electronically
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EXHIBIT 4.5
FIRST AMENDMENT TO
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
THIS FIRST AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT
(the "Amendment") is made and entered into as of September 20, 1996 by and
between BUFFETS, INC., a Minnesota corporation (the "Borrower"), the Banks as
defined in the Credit Agreement (as hereinafter defined) and FIRST BANK NATIONAL
ASSOCIATION, a national banking association, one of the Banks, as agent for the
Banks (in such capacity, the "Agent").
RECITALS
1. The Borrower, the Banks and the Agent are parties to that
certain Second Amended and Restated Credit Agreement, dated as of April 30, 1996
(as the same may be amended, supplemented, restated, or otherwise modified the
"Credit Agreement").
2. The Borrower, Country Delaware, Inc., a newly-formed,
wholly-owned subsidiary of the Borrower ("Sub") and HomeTown Buffet, Inc., a
Delaware corporation ("HomeTown"), have entered into an Agreement and Plan of
Merger dated June 3, 1996 (the "Merger Agreement").
3. The Borrower, Sub and HomeTown have agreed that pursuant to the
terms and subject to the conditions of the Merger Agreement, Sub will merge with
and into HomeTown (the "Merger"). Upon consummation of the Merger, the separate
corporate existence of Sub will cease and HomeTown will be a wholly-owned
subsidiary of Buffets.
4. Pursuant to an Indenture dated as of November 27, 1995 (as
supplemented by the First Supplemental Indenture referred to below, the
"HomeTown Indenture") between HomeTown and First Interstate Bank of California,
as Trustee, HomeTown issued $41,500,000 of 7% Convertible Subordinated Notes due
2002 (the "HomeTown Notes").
5. Upon consummation of the Merger, and pursuant to the terms and
subject to the conditions set out in the HomeTown Indenture, HomeTown may be
required to offer to repurchase all or part of the HomeTown Notes from the
holders of the HomeTown Notes (the "Repurchase").
6. Pursuant to a First Supplemental Indenture dated as of
September 20, 1996 among the Borrower, HomeTown and Wells Fargo Bank National
Association (successor by merger to First Interstate Bank of California), as
Trustee (the "Trustee"),
<PAGE>
Borrower has, among other things, agreed to guarantee the payment and
performance of the obligations of HomeTown under the HomeTown Notes.
7. The Borrower has requested that the Banks amend certain
provisions contained in the Credit Agreement to provide for the Merger and the
Repurchase, and the Banks have agreed to do so, subject to the terms and
conditions set forth in this Amendment.
AGREEMENT
NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereto hereby covenant
and agree to be bound as follows:
SECTION 1. CAPITALIZED TERMS. Capitalized terms used herein and not
otherwise defined herein shall have the meanings assigned to them in the Credit
Agreement, unless the context shall otherwise require.
SECTION 2. AMENDMENTS. The Credit Agreement is hereby amended as follows:
2.1 DEFINITIONS. Section 1.1 of the Credit Agreement is amended by
amending the definitions of "GUARANTORS" and "SUBORDINATED DEBT" in their
entirety to read as follows:
"GUARANTORS": OCB Purchasing Co., OCB Restaurant Co., OCB Property
Co., OCB Realty Co., Evergreen Buffets, Inc., Country Delaware, Inc., and,
from and after the HomeTown Merger, HomeTown, and any other Subsidiary of
the Borrower that hereafter executes and delivers a guaranty to the Banks.
"SUBORDINATED DEBT": (a) the HomeTown Notes, and (b) any Indebtedness
of the Borrower, now existing or hereafter created, incurred or arising
(including without limitation, a guaranty of the HomeTown Notes), which is
subordinated in right of payment to the payment of the Obligations in a
manner and to an extent (i) that Majority Banks have approved in writing
prior to the creation of such Indebtedness, or (ii) as to any Indebtedness
of the Borrower existing on the date of this Agreement, that Majority Banks
have approved as Subordinated Debt in a writing delivered by Majority Banks
to the Borrower on or prior to the Closing Date.
Section 1.1 of the Credit Agreement is further amended by adding thereto
the following definitions, in proper alphabetical order:
"HOMETOWN": HomeTown Buffet, Inc., a Delaware corporation.
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"HOMETOWN INDENTURE": Indenture dated as of November 27, 1995 between
HomeTown and First Interstate Bank of California, as Trustee, as
supplemented by that First Supplemental Indenture dated as of September 20,
1996 among the Borrower, HomeTown and Wells Fargo Bank National Association
(as successor by merger to First Interstate Bank of California), as
Trustee, or as further amended, supplemented, restated or otherwise
modified.
"HOMETOWN MERGER": The merger of Country Delaware, Inc., a Delaware
corporation and wholly-owned subsidiary of the Borrower, with and into
HomeTown pursuant to an Agreement and Plan of Merger dated June 3, 1996 by
and between the Borrower, Country Delaware, Inc. and HomeTown.
"HOMETOWN NOTES": 7% Convertible Subordinated Notes due 2002 issued
pursuant to the HomeTown Indenture.
"HOMETOWN REPURCHASE": Any required repurchase of any or all
outstanding HomeTown Notes by HomeTown, pursuant to the terms and subject
to the conditions of the HomeTown Indenture.
2.2 USE OF LOAN PROCEEDS. Section 2.20 of the Credit Agreement is
amended to read in its entirety as follows:
Section 2.20 USE OF LOAN PROCEEDS. The proceeds of the
Revolving Loans shall be used (i) to extend loans to HomeTown to finance
the HomeTown Repurchase; and (ii) for the Borrower's general business
purposes in a manner not in conflict with any of the Borrower's covenants
in this Agreement.
2.3 RESTRICTED PAYMENTS. Section 6.7 of the Credit Agreement is
amended to read in its entirety as follows:
Section 6.7 RESTRICTED PAYMENTS. The Borrower will not make
any Restricted Payments, except that (a) the Borrower may issue Series A
Junior Participation Preferred Shares in accordance with the terms of its
Rights Agreement dated as of October 24, 1995, as now in effect or as
amended from time to time, (b) the Borrower shall be permitted to make
Restricted Payments in an aggregate amount per fiscal year of the Borrower
not to exceed $2,000,000 for the sole purpose of redeeming common stock of
the Borrower, and (c) the Borrower shall be permitted to make Restricted
Payments in connection with any HomeTown Repurchase, provided in each case
that no Default or Event of Default then exists.
2.4 CAPITAL EXPENDITURES. Section 6.10 of the Credit Agreement is
amended to read in its entirety as follows:
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Section 6.10 CAPITAL EXPENDITURES. The Borrower will not, and will
not permit any Subsidiary to (a) make Capital Expenditures (other than
Capitalized Restaurant Lease Obligations), net of any landlord
contribution, (i) in an amount greater than $138,000,000 in its fiscal year
ending January 1, 1997, (ii) in an amount greater than $90,000,000 in its
fiscal year ending January 1, 1998, and (iii) for each subsequent fiscal
year, an amount greater than the permitted Capital Expenditures for the
immediately preceding fiscal year plus $5,000,000; or (b) enter into
Capitalized Restaurant Lease Obligations, except Capitalized Restaurant
Lease Obligations of the Borrower, any Real Estate Subsidiary and, to the
extent permitted pursuant to Section 6.18, other Subsidiaries, in any
fiscal year which exceed $15,000,000.
2.5 SUBSIDIARY INDEBTEDNESS. Section 6.11 of the Credit Agreement
is amended to read in its entirety as follows:
Section 6.11 SUBORDINATED DEBT. The Borrower will not, and will not
permit any Subsidiary to (a) make any scheduled payment of the principal of
or interest on any Subordinated Debt which would be prohibited by the terms
of such Subordinated Debt and any related subordination agreement;
(b) directly or indirectly make any prepayment on or purchase, redeem or
defease any Subordinated Debt or offer to do so (whether such prepayment,
purchase or redemption, or offer with respect thereto, is voluntary or
mandatory) other than the HomeTown Repurchase (provided that no Default or
Event of Default has occurred and is continuing at the time of any HomeTown
Repurchase); (c) amend or cancel the subordination provisions applicable to
any Subordinated Debt; (d) take or omit to take any action if as a result
of such action or omission the subordination of such Subordinated Debt, or
any part thereof, to the Obligations might be terminated, impaired or
adversely affected; or (e) omit to give the Agent prompt notice of any
notice received from any holder of Subordinated Debt, or any trustee
therefor, or of any default under any agreement or instrument relating to
any Subordinated Debt by reason whereof such Subordinated Debt might become
or be declared to be due or payable.
2.6 LOANS TO OFFICERS. Section 6.12(b) of the Credit Agreement is
amended to read in its entirety as follows:
(b) loans to (i) officers, employees or directors of HomeTown
listed in the attached Schedule 6.12, but not any refinancing, renewal or
extensions thereof; and (ii) officers, employees or directors of the
Borrower or its Subsidiaries not otherwise permitted pursuant to this
Section 6.12, in an aggregate amount at any time outstanding not exceeding
$250,000.
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2.7 PERMITTED INVESTMENTS. Section 6.12(d) of the Credit Agreement
is amended to read in its entirety as follows:
(d) the loans to and investments in the Subsidiaries existing on
the date hereof; PROVIDED FURTHER that nothing in this Section 6.12 shall
be deemed a restriction on loans, investments and transfers in the ordinary
course of business between or among the Borrower and any wholly-owned
Subsidiary that has guaranteed the obligations of the Borrower under this
Agreement and the Notes; PROVIDED, HOWEVER, that all investments in or
transfers to HomeTown by the Borrower or any other Subsidiary shall be in
the form of loans and shall be evidenced by a promissory note in form and
substance satisfactory to The Agent made by HomeTown and payable to the
Borrower or such Subsidiary;
2.8 INDEBTEDNESS. Section 6.13 of the Credit Agreement is amended
to read in its entirety as follows:
Section 6.13 INDEBTEDNESS. The Borrower will not, and will not
permit any Subsidiary to, incur, create, issue, assume or suffer to exist
any Indebtedness, except (a) the Indebtedness evidenced by the Note,
(b) Subordinated Debt of the Borrower, (c) Indebtedness created in the
ordinary course of business other than for money borrowed or property
leased, (d) the Indebtedness listed in the attached Schedule 6.13, but not
any refinancing, renewals or extensions of the Indebtedness of HomeTown
listed therein, (e) Indebtedness secured by liens permitted under Section
6.14(e) hereof, PROVIDED THAT (i) the aggregate principal amount of all
Indebtedness of all Real Estate Subsidiaries secured by all mortgages,
liens or security interests described in Section 6.14(e) shall not exceed
$30,000,000 at any one time, and (ii) the aggregate principal amount of all
Indebtedness of the Borrower secured by all mortgages, liens or security
interests described in Section 6.14(e) shall not exceed $3,000,000 at any
one time outstanding, (f) Indebtedness owed to the Borrower by its
Subsidiaries to the extent permitted by Section 6.12, and (g) Capitalized
Restaurant Lease Obligations permitted by Section 6.10(b).
2.9 LIENS. Sections 6.14(d) and 6.14(e) of the Credit Agreement
are amended to read in their entirety as follows:
(d) Liens and encumbrances reflected in the attached Schedule 6.14,
provided that any such Liens on the assets of HomeTown secure only
Indebtedness of HomeTown listed in Schedule 6.13, but not any refinancing,
renewals or extensions of such Indebtedness,
(e) Purchase money mortgages, liens, or security interests (which
term for purposes of this subsection shall include conditional sale
agreements or other title retention agreements and leases in the nature of
title retention agreement) upon or in
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property acquired by the Borrower or a Real Estate Subsidiary after the
date hereof, PROVIDED THAT no such mortgage, lien or security interest
extends or shall extend to or cover any property of the Borrower or such
Real Estate Subsidiary, other than the property then being acquired, and
2.10 SUBSIDIARY INDEBTEDNESS. Section 6.19 of the Credit Agreement
is amended to read in its entirety as follows:
Section 6.19 SUBSIDIARY INDEBTEDNESS, LIENS AND OPERATING LEASES.
The Borrower will not permit any Subsidiary other than a Real Estate
Subsidiary to:
(a) incur any Indebtedness (including, without limitation,
Capitalized Restaurant Lease Obligations) other than (i) the HomeTown
Notes, (ii) Indebtedness listed in Schedule 6.13, but not any renewal,
extension or refinancing of such Indebtedness, (iii) liabilities not
consisting of Indebtedness for borrowed money or the deferred purchase
price of property incurred in the ordinary course of business, (iv)
obligations (including, to the extent permitted, Capitalized Lease
Obligations) permitted pursuant to clause (b) of this Section 6.19,
and (v) obligations permitted pursuant to Section 6.12(d); or
(b) enter into any lease of real or personal property with
any Person other than the Borrower or a Guarantor if the aggregate
amount of lease payments required to be made under all such leases by
all Subsidiaries other than Real Estate Subsidiaries in any fiscal
year of the Borrower would exceed $1,000,000, PROVIDED THAT lease
payments made by HomeTown on leases listed in Schedule 6.13 shall not
be included in the determination of such aggregate amount.
2.11 CROSS REFERENCES. Sections 6.1, 6.5 and 6.10 of the Credit
Agreement are amended to delete the reference to Section 6.18 and insert a
reference to Section 6.19 in lieu thereof.
2.12 AMENDED SCHEDULES. Schedules 4.6, 4.18, 6.13 and 6.14 to the
Credit Agreement are amended in their entirety to be in the forms of Schedules
4.6, 4.18, 6.13 and 6.14 to this Amendment, respectively.
2.13 NEW SCHEDULE. A new schedule in the form of Schedule 6.12 to
this Amendment is hereby made a part of the Credit Agreement as Schedule 6.12
thereto.
SECTION 3. DEFAULTS, WAIVERS AND MAJORITY BANK APPROVALS.
3.1 EVENTS OF DEFAULT. Under Section 6.5 of the Credit Agreement,
the Borrower covenanted that no Subsidiary would be formed by the Borrower
unless such
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Subsidiary shall have executed and delivered to the Banks a Guaranty on or prior
to the date of its formation. A Guaranty was not executed and delivered on or
prior to the formation of Sub.
3.2 WAIVER. Upon the date on which this Amendment becomes
effective, the Banks hereby waive the Event of Default described in the
preceding Section 3.1. The waiver set forth herein shall not constitute a
waiver by the Banks of any other Default or Event of Default, if any, under the
Credit Agreement, and shall not be, and shall not be deemed to be, a course of
action with respect thereto upon which the Borrower may rely in the future and
the Borrower hereby expressly waives any claim to such effect.
3.3 CONSENT TO THE MERGER. Upon the date on which this Amendment
becomes effective, the Majority Banks hereby consent to the HomeTown Merger and
the execution and delivery of the Merger Agreement by the Borrower, Sub and
HomeTown.
3.4 APPROVAL OF SUBORDINATED DEBT. Upon the date on which this
Amendment becomes effective, the Majority Banks hereby approve of the guaranty
of the HomeTown Notes described in Section 4.5 hereof as Subordinated Debt.
SECTION 4. EFFECTIVENESS OF AMENDMENTS, WAIVERS AND CONSENTS. The
amendments contained in this Amendment shall become effective upon delivery to
the Agent with sufficient counterparts for the Banks of, and compliance by the
Borrower with, the following:
4.1 This Amendment executed by the Borrower.
4.2 A guaranty (the "Guaranty"), in the form of Exhibit A to this
Amendment, executed by Sub prior to the occurrence of the HomeTown Merger.
4.3 An assumption agreement (the "Assumption Agreement"), in the
form of Exhibit B to this Amendment, executed by Sub and HomeTown on the
effective date of the Merger.
4.4 Evidence that a Supplement to the HomeTown Indenture has been
executed by HomeTown and the Trustee, affirming that (A) (i) the Obligations and
any obligations of HomeTown under the Guaranty and (ii) any obligations of
HomeTown to the Borrower or any Subsidiary of the Borrower in respect of
Investments made pursuant to the second proviso of Section 6.12(d) are Senior
Indebtedness, as defined in the Indenture, and (B) Borrower guarantees the
payment and performance of HomeTown's obligations under the HomeTown Notes, and
otherwise containing terms acceptable to the Majority Banks.
4.5 A certificate of the Secretary or Assistant Secretary of
Borrower (i) certifying as to a true and correct copy of the resolutions of the
Board of Directors of the
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Borrower authorizing the execution, delivery and performance of this Amendment,
(ii) certifying that the has been no change to the Articles of Incorporation or
bylaws of the Borrower since true and correct copies of the same were delivered
to the Agent with a certificate of the Secretary of the Borrower dated May 10,
1996, and (iii) identifying each officer of the Borrower authorized to execute
this Amendment and any other documents it is party to and certifying as to the
specimens of such officer's signature and such officer's incumbency in such
offices as such officer holds.
4.6 A certificate of the Secretary or Assistant Secretary of Sub
(i) certifying as to a true and correct copy of the resolutions of the Board of
Directors of Sub authorizing the execution, delivery and performance of the
Guaranty and the Assumption Agreement, and (ii) identifying each officer of Sub
authorized to execute the documents to which it is a party to and certifying as
to the specimens of such officer's signature and such officer's incumbency in
such offices as such officer holds.
4.7 A certificate of the Secretary or Assistant Secretary of
HomeTown (i) certifying as to a true and correct copy of the resolutions of the
Board of Directors of HomeTown authorizing the execution, delivery and
performance of the Assumption Agreement, and (ii) identifying each officer of
HomeTown authorized to execute the documents to which it is a party to and
certifying as to the specimens of such officer's signature and such officer's
incumbency in such offices as such officer holds.
4.8 Long-form certificates of good standing for Sub and HomeTown in
the respective jurisdictions of their incorporation.
4.9 Written opinions of Faegre & Benson LLP, counsel to the
Borrower, and Stoel, Rives, counsel to HomeTown addressed to the Agent, dated
the effective date hereof and covering the matters set forth in Exhibit C
hereto.
4.10 Letters from Deloitte & Touche LLP and KPMG Peat Marwick LLP,
addressed to the Borrower and HomeTown, respectively, regarding the
appropriateness of the pooling-of-interests accounting treatment of the Merger.
4.11 The Borrower shall have satisfied such other conditions as
reasonably specified by the Agent or counsel to the Agent.
SECTION 5. REPRESENTATIONS; NO DEFAULT. The Borrower hereby represents
that on and as of the date hereof and after giving effect to this Amendment and
the other documents described in Section 4.1 through 4.3 (together with this
Amendment, the "Amendment Documents") (a) all of the representations and
warranties contained in the Credit Agreement are true, correct and complete in
all material respects as of the date hereof as though made on and as of such
date, except to the extent such representations and warranties specifically
relate to an earlier date, in which case they are true and correct as of such
earlier date, and (b) there
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will exist no Default or Event of Default on such date which has not been waived
by the Banks. The Borrower represents and warrants that the Borrower, each of
its Subsidiaries and HomeTown has the power and legal right and authority to
enter into the Amendment Documents to which it is party and has duly authorized
as appropriate the execution and delivery of the Amendment Documents by proper
corporate action, and neither this Amendment, the other Amendment Documents nor
the agreements contained herein or therein contravene or constitute a default
under any agreement, instrument or indenture to which the Borrower, each of its
Subsidiaries and HomeTown is a party or a signatory or a provision of the
Borrower's, such Subsidiary's or HomeTown's certificate of incorporation, bylaws
or, to the best of the Borrower's knowledge, any other agreement or requirement
of law. The Borrower represents and warrants that no consent, approval or
authorization of or registration or declaration with any Person, including but
not limited to any governmental authority, is required in connection with the
execution and delivery by the Borrower, each of its Subsidiaries and HomeTown of
the Amendment Documents to which it is party or the performance of obligations
of the Borrower, each of its Subsidiaries and HomeTown herein or therein
described. The Borrower represents and warrants that the Amendment Documents to
which it, any of its Subsidiaries or HomeTown is a party are the legal, valid
and binding obligations of the Borrower, such Subsidiary or HomeTown,
enforceable in accordance with their terms. The Borrower warrants that no
events have taken place and no circumstance exists at the date hereof which
would give the Borrower, any of its Subsidiaries or HomeTown a basis to assert a
defense, offset or counterclaim to any claim of the Agent or any Bank as to any
obligations of the Borrower, any of its Subsidiaries or HomeTown to the Agent or
any Bank.
SECTION 6. AFFIRMATION, FURTHER REFERENCES. The Banks, the Agent and the
Borrower each acknowledge and affirm that the Credit Agreement, as hereby
amended, is hereby ratified and confirmed in all respects and all terms,
conditions and provisions of the Credit Agreement, except as amended by this
Amendment, shall remain unmodified and in full force and effect. All references
in any document or instrument to the Credit Agreement are hereby amended and
shall refer to the Credit Agreement as amended by this Amendment.
SECTION 7. MERGER AND INTEGRATION, SUPERSEDING EFFECT. This Amendment,
from and after the date hereof, embodies the entire agreement and understanding
between the parties hereto with respect to the subject matter hereof, and
supersedes and has merged into it all prior oral and written agreements on the
same subjects by and between the parties hereto with the effect that this
Amendment shall control with respect to the specific subjects hereof.
SECTION 8. LEGAL EXPENSES. As provided in Section 9.2 of the Credit
Agreement, the Borrower agrees to reimburse the Agent upon demand for all
reasonable out-of-pocket expenses (including attorneys' fees and legal expenses
of Dorsey & Whitney LLP, counsel for the Agent) incurred in connection with the
negotiation or preparation of this Amendment and all other documents negotiated
and prepared in connection with this Amendment, and the Borrower agrees to
reimburse the Agent upon demand for all other reasonable expenses,
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including attorneys' fees incurred as a result of or in connection with the
enforcement of the Credit Agreement as amended hereby, and including, without
limitation, all expenses of collection of any loans made or to be made under the
Credit Agreement as amended hereby.
SECTION 9. SEVERABILITY. Each provision of this Amendment and any other
statement, instrument or transactions contemplated hereby or relating hereto
shall be interpreted in such manner as to be effective, valid and enforceable
under the applicable law of any jurisdiction, but, if any provision of this
Amendment or relating hereto or thereto shall be held to be prohibited, invalid
or unenforceable under the applicable law, such provision shall be ineffective
in such jurisdiction only to the extent of such prohibition, invalidity or
unenforceability, without invalidating or rendering unenforceable the remainder
of such provision or the remaining provisions of this Amendment or any other
statement, instrument or transaction contemplated hereby or thereby or relating
hereto or thereto in such jurisdiction, or affecting the effectiveness, validity
or enforceability of such provision in any such jurisdiction.
SECTION 10. SUCCESSORS. This Amendment shall be binding upon the
Borrower, the Banks and the Agent and their respective successors and assigns,
and shall inure to the benefit of the Borrower, the Banks and the Agent and the
successors and assigns of the Borrower, the Banks and the Agent.
SECTION 11. HEADINGS. The headings of various sections of this Amendment
have been inserted for reference only and shall not be deemed to be a part of
this Amendment.
SECTION 12. COUNTERPARTS. This Amendment may be executed in several
counterparts, all or any of which shall be regarded as one and the same document
and either party to such agreements may execute any such agreement by executing
a counterpart of such agreement.
SECTION 13. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY THE
INTERNAL LAWS OF THE STATE OF MINNESOTA, WITHOUT GIVING EFFECT TO CONFLICT OF
LAW PRINCIPLES THEREOF, BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL
BANKS.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be executed as of the date and year first above written.
BUFFETS, INC.
By /s/ Clark C. Grant
-------------------------------------------
Its Chief Financial Officer
--------------------------------------
Address for Borrower:
10260 Viking Drive
Suite 100
Eden Prairie, Minnesota 55344
Attention: CHIEF FINANCIAL OFFICER
----------------------------------
FIRST BANK NATIONAL ASSOCIATION
In its individual corporate capacity and as
Agent
By /s/ Megan G. Mourning
---------------------------------------------
Its Vice President
--------------------------------------
Address:
First Bank Place
601 Second Avenue South
Minneapolis, MN 55402-4302
Attention: Megan G. Mourning MPFP0601
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EXHIBIT A TO
FIRST AMENDMENT
TO CREDIT AGREEMENT
GUARANTY
THIS GUARANTY, dated as of September 20, 1996 is made and given by
COUNTRY DELAWARE, INC., a Delaware corporation (the "Guarantor"), in favor of
the Banks from time to time party to the Second Amended and Restated Credit
Agreement dated as of April 30, 1996 (as the same may be amended, supplemented,
restated, or otherwise modified from time to time, the "Credit Agreement"), by
and among Buffets, Inc., a Minnesota corporation (the "Borrower"), such Banks
and First Bank National Association, as agent for such Banks (in such capacity,
the "Agent").
RECITALS
A. The Borrower, the Banks and the Agent have entered into the Credit
Agreement pursuant to which the Banks have agreed to extend to the Borrower a
revolving credit facility in a maximum amount, as of the date hereof, of
$50,000,000.
B. It is a condition precedent to the obligation of the Bank to
extend credit accommodations pursuant to the terms of the Credit Agreement that
this Guaranty be executed and delivered by the Guarantor.
C. The Borrower owns, directly or indirectly, all of the issued and
outstanding capital stock of the Guarantor, and intends to use a portion of the
credit accommodations extended by the Banks under the Credit Agreement to
finance the Guarantor's business.
D. The Guarantor expects to derive benefits from the extension of
credit accommodations to the Borrower by the Bank and finds it advantageous,
desirable and in its best interests to execute and deliver this Guaranty to the
Bank.
NOW, THEREFORE, In consideration of the credit accommodations to be
extended to the Borrower and for other good and valuable consideration, the
Guarantor hereby covenants and agrees with the Bank as follows:
Section 1. DEFINED TERMS. As used in this Guaranty, the following
terms shall have the meaning indicated:
"OBLIGATIONS" shall mean (a) all indebtedness, liabilities and
obligations of the Borrower to the Banks of every kind, nature or description
under the Credit Agreement,
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including the Borrower's obligation on any promissory note or notes under the
Credit Agreement and any note or notes hereafter issued in substitution or
replacement thereof, in all cases whether due or to become due, and whether now
existing or hereafter arising or incurred.
"PERSON" shall mean any individual, corporation, partnership, limited
partnership, limited liability company, joint venture, firm, association, trust,
unincorporated organization, government or governmental agency or political
subdivision or any other entity, whether acting in an individual, fiduciary or
other capacity.
Section 2. THE GUARANTY. Subject to the following Section, the
Guarantor hereby absolutely and unconditionally guarantees to the Banks the
payment when due (whether at a stated maturity or earlier by reason of
acceleration or otherwise) and performance of the Obligations.
Section 3. LIMITATION; INSOLVENCY LAWS. As used in this Section: (a)
the term "Applicable Insolvency Laws" means the laws of the United States of
America or of any State, province, nation or other governmental unit relating to
bankruptcy, reorganization, arrangement, adjustment of debts, relief of debtors,
dissolution, insolvency, fraudulent transfers or conveyances or other similar
laws (including, without limitation, 11 U. S. C. Section 547, Section 548,
Section 550 and other "avoidance" provisions of Title 11 of the United Stated
Code) as applicable in any proceeding in which the validity and/or
enforceability of this Guaranty or any Specified Lien is in issue; and (b)
"Specified Lien" means any security interest, mortgage, lien or encumbrance
securing this Guaranty, in whole or in part. Notwithstanding any other
provision of this Guaranty, if, in any proceeding, a court of competent
jurisdiction determines that this Guaranty or any Specified Lien would, but for
the operation of this Section, be subject to avoidance and/or recovery or be
unenforceable by reason of Applicable Insolvency Laws, this Guaranty and each
such Specified Lien shall be valid and enforceable only to the maximum extent
that would not cause this Guaranty or such Specified Lien to be subject to
avoidance, recovery or unenforceability. To the extent that any payment to, or
realization by, the Agent or the Banks on the guaranteed Obligations exceeds the
limitations of this Section and is otherwise subject to avoidance and recovery
in any such proceeding, the amount subject to avoidance shall in all events be
limited to the amount by which such actual payment or realization exceeds such
limitation, and this Guaranty as limited shall in all events remain in full
force and effect and be fully enforceable against the Guarantor. This Section
is intended solely to reserve the rights of the Agent and the Banks hereunder
against the Guarantor in such proceeding to the maximum extent permitted by
Applicable Insolvency Laws and neither the Guarantor, the Borrower, any other
guarantor of the Obligations nor any Person shall have any right, claim or
defense under this Section that would not otherwise be available under
Applicable Insolvency Laws in such proceeding.
Section 4. CONTINUING GUARANTY. This Guaranty is an absolute,
unconditional and continuing guaranty of payment and performance of the
Obligations, and the obligations
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of the Guarantor hereunder shall not be released, in whole or in part, by any
action or thing which might, but for this provision of this Guaranty, be deemed
a legal or equitable discharge of a surety or guarantor, other than irrevocable
payment and performance in full of the Obligations. No notice of the
Obligations to which this Guaranty may apply, or of any renewal or extension
thereof need be given to the Guarantor and none of the foregoing acts shall
release the Guarantor from liability hereunder. The Guarantor hereby expressly
waives (a) demand of payment, presentment, protest, notice of dishonor,
nonpayment or nonperformance on any and all forms of the Obligations; (b) notice
of acceptance of this Guaranty and notice of any liability to which it may
apply; (c) all other notices and demands of any kind and description relating to
the Obligations now or hereafter provided for by any agreement, statute, law,
rule or regulation; and (d) any and all defenses of the Borrower pertaining to
the Obligations except for the defense of discharge by payment. The Guarantor
shall not be exonerated with respect to the Guarantor's liabilities under this
Guaranty by any act or thing except irrevocable payment and performance of the
Obligations, it being the purpose and intent of this Guaranty that the
Obligations constitute the direct and primary obligations of the Guarantor and
that the covenants, agreements and all obligations of the Guarantor hereunder be
absolute, unconditional and irrevocable. The Guarantor shall be and remain
liable for any deficiency remaining after foreclosure of any mortgage, deed of
trust or security agreement securing all or any part of the Obligations, whether
or not the liability of the Borrower or any other Person for such deficiency is
discharged pursuant to statute, judicial decision or otherwise. The acceptance
of this Guaranty by the Agent and the Banks is not intended and does not release
any liability previously existing of any guarantor or surety of any indebtedness
of the Borrower to the Agent and the Banks.
Section 5. OTHER TRANSACTIONS. The Agent and the Banks are expressly
authorized (a) to exchange, surrender or release with or without consideration
any or all collateral and security which may at any time be placed with it by
the Borrower or by any other Person, or to forward or deliver any or all such
collateral and security directly to the Borrower for collection and remittance
or for credit, or to collect the same in any other manner without notice to the
Guarantor; and (b) to amend, modify, extend or supplement the Credit Agreement,
any note or other instrument evidencing the Obligations or any part thereof and
any other agreement with respect to the Obligations, waive compliance by the
Borrower or any other Person with the respective terms thereof and settle or
compromise any of the Obligations without notice to the Guarantor and without in
any manner affecting the absolute liabilities of the Guarantor hereunder. No
invalidity, irregularity or unenforceability of all or any part of the
Obligations or of any security therefor or other recourse with respect thereto
shall affect, impair or be a defense to this Guaranty. The liabilities of the
Guarantor hereunder shall not be affected or impaired by any failure, delay,
neglect or omission on the part of the Agent or any Bank to realize upon any of
the Obligations of the Borrower to the Agent or such Bank, or upon any
collateral or security for any or all of the Obligations, nor by the taking by
the Agent or any Bank of (or the failure to take) any other guaranty or
guaranties to secure the Obligations, nor by the taking by the Agent or any Bank
of (or the failure to take or the failure to perfect its security interest in or
other lien on) collateral or security of any kind.
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No act or omission of the Agent or any Bank, whether or not such action or
failure to act varies or increases the risk of, or affects the rights or
remedies of the Guarantor, shall affect or impair the obligations of the
Guarantor hereunder. The Guarantor acknowledges that this Guaranty is in effect
and binding without reference to whether this Guaranty is signed by any other
Person or Persons, that possession of this Guaranty by the Agent shall be
conclusive evidence of due delivery hereof by the Guarantor and that this
Guaranty shall continue in full force and effect, both as to the Obligations
then existing and/or thereafter created, notwithstanding the release of or
extension of time to any other guarantor of the Obligations or any part thereof.
Section 6. ACTIONS NOT REQUIRED. The Guarantor hereby waives any and
all right to cause a marshalling of the assets of the Borrower or any other
action by any court or other governmental body with respect thereto or to cause
the Agent or any Bank to proceed against any security for the Obligations or any
other recourse which the Agent or any Bank may have with respect thereto and
further waives any and all requirements that the Agent or any Bank institute any
action or proceeding at law or in equity, or obtain any judgment, against the
Borrower or any other Person, or with respect to any collateral security for the
Obligations, as a condition precedent to making demand on or bringing an action
or obtaining and/or enforcing a judgment against, the Guarantor upon this
Guaranty. The Guarantor further acknowledges that time is of the essence with
respect to the Guarantor's obligations under this Guaranty. Any remedy or right
hereby granted which shall be found to be unenforceable as to any Person or
under any circumstance, for any reason, shall in no way limit or prevent the
enforcement of such remedy or right as to any other Person or circumstance, nor
shall such unenforceability limit or prevent enforcement of any other remedy or
right hereby granted.
Section 7. NO SUBROGATION. Notwithstanding any payment or payments
made by the Guarantor hereunder, the Guarantor waives all rights of subrogation
to any of the rights of the Agent or any Bank against the Borrower or any other
Person liable for payment of any of the Obligations or any collateral security
or guaranty or right of offset held by the Agent or any Bank for the payment of
the Obligations, and the Guarantor waives all rights to seek any recourse to or
contribution or reimbursement from the Borrower or any other Person liable for
payment of any of the Obligations in respect of payments made by the Guarantor
hereunder.
Section 8. APPLICATION OF PAYMENTS. Any and all payments upon the
Obligations made by the Guarantor or by any other Person, and/or the proceeds of
any or all collateral or security for any of the Obligations, may be applied by
the Agent and the Banks on such items of the Obligations as they may elect.
Section 9. RECOVERY OF PAYMENT. If any payment received by the Agent
or any Bank and applied to the Obligations is subsequently set aside, recovered,
rescinded or required to be returned for any reason (including, without
limitation, the bankruptcy, insolvency or reorganization of the Borrower or any
other obligor), the Obligations to which
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such payment was applied shall for the purposes of this Guaranty be deemed to
have continued in existence, notwithstanding such application, and this Guaranty
shall be enforceable as to such Obligations as fully as if such application had
never been made. References in this Guaranty to amounts "irrevocably paid" or
to "irrevocable payment" refer to payments that cannot be set aside, recovered,
rescinded or required to be returned for any reason.
Section 10. BORROWER'S FINANCIAL CONDITION. The Guarantor is
familiar with the financial condition of the Borrower, and the Guarantor has
executed and delivered this Guaranty based on the Guarantor's own judgment and
not in reliance upon any statement or representation of the Agent or any Bank.
Neither the Agent nor any Bank shall have any obligation to provide the
Guarantor with any advice whatsoever or to inform the Guarantor at any time of
the actions, evaluations or conclusions of the Agent or any Bank on the
financial condition or any other matter concerning the Borrower.
Section 11. REMEDIES. All remedies afforded to the Agent or any Bank
by reason of this Guaranty are separate and cumulative remedies and it is agreed
that no one of such remedies, whether or not exercised by the Agent or any Bank,
shall be deemed to be in exclusion of any of the other remedies available to the
Agent or any Bank and no one of such remedies shall in any way limit or
prejudice any other legal or equitable remedy which the Agent or any Bank may
have hereunder and with respect to the Obligations. Mere delay or failure to
act shall not preclude the exercise or enforcement of any rights and remedies
available to the Agent or any Bank.
Section 12. BANKRUPTCY OF THE BORROWER. The Guarantor expressly
agrees that the liabilities and obligations of the Guarantor under this Guaranty
shall not in any way be impaired or otherwise affected by the institution by or
against the Borrower or any other Person of any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings, or any other similar
proceedings for relief under any bankruptcy law or similar law for the relief of
debtors and that any discharge of any of the Obligations pursuant to any such
bankruptcy or similar law or other law shall not diminish, discharge or
otherwise affect in any way the obligations of the Guarantor under this
Guaranty, and that upon the institution of any of the above actions, such
obligations shall be enforceable against the Guarantor.
Section 13. COSTS AND EXPENSES. The Guarantor will pay or reimburse
the Agent and each Bank on demand for all out-of-pocket expenses (including in
each case all reasonable fees and expenses of counsel) incurred by the Agent or
such Bank arising out of or in connection with the enforcement of this Guaranty
against the Guarantor or arising out of or in connection with any failure of the
Guarantor to fully and timely perform the obligations of the Guarantor
hereunder.
Section 14. WAIVERS AND AMENDMENTS. This Guaranty can be waived,
modified, amended, terminated or discharged only explicitly in a writing signed
by the Agent,
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on behalf of the Banks. A waiver so signed shall be effective only in the
specific instance and for the specific purpose given.
Section 15. NOTICES. Any notice or other communication to any party
in connection with this Guaranty shall be in writing and shall be sent by manual
delivery, telegram, telex, facsimile transmission, overnight courier or United
States mail (postage prepaid) addressed to such party at (i) in the case of the
Guarantor, the address specified on the signature page hereof, and (ii) in the
case of the Agent or any Bank, the address specified on the signature pages of
the Credit Agreement, or at such other address as such party shall have
specified in writing. All periods of notice shall be measured from the date of
delivery thereof if manually delivered, from the date of sending thereof if sent
by telegram, telex or facsimile transmission, from the first business day after
the date of sending if sent by overnight courier, or from four days after the
date of mailing if mailed.
Section 16. GUARANTOR ACKNOWLEDGEMENTS. The Guarantor hereby
acknowledges that (a) counsel has advised the Guarantor in the negotiation,
execution and delivery of this Guaranty, (b) neither the Agent nor any Bank has
any fiduciary relationship to the Guarantor, the relationship being solely that
of debtor and creditor, and (c) no joint venture exists between the Guarantor
and the Agent and the Banks.
Section 17. REPRESENTATIONS AND WARRANTIES. The Guarantor hereby
represents and warrants to the Agent and the Banks that:
17(a) It is a corporation duly organized, validly existing and
in good standing under the laws of the jurisdiction of its organization and
has the power and authority and the legal right to own and operate its
properties and to conduct the business in which it is currently engaged.
17(b) It has the power and authority and the legal right to
execute and deliver, and to perform its obligations under, this Guaranty
and has taken all necessary corporate action to authorize such execution,
delivery and performance.
17(c) This Guaranty constitutes its legal, valid and binding
obligation enforceable in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and by general equitable principles (whether
enforcement is sought by proceedings in equity or at law).
17(d) The execution, delivery and performance of this Guaranty
will not (i) violate any provision of any law, statute, rule or regulation
or any order, writ, judgment, injunction, decree, determination or award of
any court, governmental agency or arbitrator presently in effect having
applicability to it, (ii) violate or contravene any provision of its
organizational documents, or (iii) result in a breach of
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or constitute a default under any indenture, loan or credit agreement or
any other agreement, lease or instrument to which it is a party or by which
it or any of its properties may be bound or result in the creation of any
lien thereunder. It is not in default under or in violation of any such
law, statute, rule or regulation, order, writ, judgment, injunction,
decree, determination or award or any such indenture, loan or credit
agreement or other agreement, lease or instrument in any case in which the
consequences of such default or violation could have a material adverse
effect on its business, operations, properties, assets or condition
(financial or otherwise).
17(e) No order, consent, approval, license, authorization or
validation of, or filing, recording or registration with, or exemption by,
any governmental or public body or authority is required on its part to
authorize, or is required in connection with the execution, delivery and
performance of, or the legality, validity, binding effect or enforceability
of, this Guaranty.
17(f) There are no actions, suits or proceedings pending or, to
its knowledge, threatened against or affecting it or any of its properties
before any court or arbitrator, or any governmental department, board,
agency or other instrumentality which, if determined adversely to it, would
have a material adverse effect on its business, operations, property or
condition (financial or otherwise) or on its ability to perform its
obligations hereunder.
17(g) It expects to derive benefits from the transactions
resulting in the creation of the Obligations. The Agent and the Banks may
rely conclusively on the continuing warranty, hereby made, that the
Guarantor continues to be benefitted by the Banks' extension of credit
accommodations to the Borrower and neither the Agent nor any Bank shall
have no duty to inquire into or confirm the receipt of any such benefits,
and this Guaranty shall be effective and enforceable by the Agent and the
Banks without regard to the receipt, nature or value of any such benefits.
Section 18. CONTINUING GUARANTY; ASSIGNMENTS UNDER CREDIT AGREEMENT.
This Guaranty shall (a) remain in full force and effect until irrevocable
payment in full of the Obligations and the expiration of the obligations, if
any, of the Agent or any Bank to extend credit accommodations to the Borrower,
(b) be binding upon the Guarantor, its successors and assigns and (c) inure to
the benefit of, and be enforceable by, the Agent, the Banks and their respective
successors, transferees, and assigns. Without limiting the generality of the
foregoing clause (c), the Agent and any Bank may assign or otherwise transfer
all or any portion of its rights and obligations under the Credit Agreement to
any other Persons to the extent and in the manner provided in the Credit
Agreement and may similarly transfer all or any portion of its rights under this
Guaranty to such Persons.
Section 19. GOVERNING LAW AND CONSTRUCTION. THE VALIDITY,
CONSTRUCTION AND ENFORCEABILITY OF THIS GUARANTY SHALL BE
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GOVERNED BY THE LAWS OF THE STATE OF MINNESOTA, WITHOUT GIVING EFFECT TO
CONFLICT OF LAWS PRINCIPLES THEREOF, BUT GIVING EFFECT TO FEDERAL LAWS OF THE
UNITED STATES APPLICABLE TO NATIONAL BANKS. Whenever possible, each provision
of this Guaranty and any other statement, instrument or transaction contemplated
hereby or relating hereto shall be interpreted in such manner as to be effective
and valid under such applicable law, but, if any provision of this Guaranty or
any other statement, instrument or transaction contemplated hereby or relating
hereto shall be held to be prohibited or invalid under such applicable law, such
provision shall be ineffective only to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Guaranty or any other statement, instrument or
transaction contemplated hereby or relating hereto.
Section 20. CONSENT TO JURISDICTION. AT THE OPTION OF THE AGENT,
THIS GUARANTY MAY BE ENFORCED IN ANY FEDERAL COURT OR MINNESOTA STATE COURT
SITTING IN MINNEAPOLIS OR ST. PAUL, MINNESOTA; AND THE GUARANTOR CONSENTS TO THE
JURISDICTION AND VENUE OF ANY SUCH COURT AND WAIVES ANY ARGUMENT THAT VENUE IN
SUCH FORUMS IS NOT CONVENIENT. IN THE EVENT THE GUARANTOR COMMENCES ANY ACTION
IN ANOTHER JURISDICTION OR VENUE UNDER ANY TORT OR CONTRACT THEORY ARISING
DIRECTLY OR INDIRECTLY FROM THE RELATIONSHIP CREATED BY THIS GUARANTY, THE AGENT
AT ITS OPTION SHALL BE ENTITLED TO HAVE THE CASE TRANSFERRED TO ONE OF THE
JURISDICTIONS AND VENUES ABOVE- DESCRIBED, OR IF SUCH TRANSFER CANNOT BE
ACCOMPLISHED UNDER APPLICABLE LAW, TO HAVE SUCH CASE DISMISSED WITHOUT
PREJUDICE.
Section 21. WAIVER OF JURY TRIAL. THE GUARANTOR, BY ITS EXECUTION
AND DELIVERY HEREOF, AND THE AGENT AND EACH BANK, BY ITS ACCEPTANCE HEREOF,
IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATING TO THIS GUARANTY OR THE TRANSACTIONS CONTEMPLATED
HEREBY.
Section 22. COUNTERPARTS. This Guaranty may be executed in any
number of counterparts, each of which when so executed and delivered shall be
deemed an original, but all such counterparts together shall constitute but one
and the same instrument.
Section 23. GENERAL. All representations and warranties contained in
this Guaranty or in any other agreement between the Guarantor and the Agent or
any Bank shall survive the execution, delivery and performance of this Guaranty
and the creation and
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payment of the Obligations. Captions in this Guaranty are for reference and
convenience only and shall not affect the interpretation or meaning of any
provision of this Guaranty.
IN WITNESS WHEREOF, the Guarantor has executed this Guaranty as of the
date first above written.
COUNTRY DELAWARE, INC.:
By __________________________________________
Title _______________________________________
Address:
c/o Buffets, Inc.
10260 Viking Drive
Eden Prairie, Minnesota 55344
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EXHIBIT B TO
FIRST AMENDMENT
TO CREDIT AGREEMENT
ASSUMPTION AGREEMENT
ASSUMPTION AGREEMENT dated as of September 20, 1996 by and between
COUNTRY DELAWARE, INC. ("Sub"), a Delaware corporation, and HOMETOWN BUFFET,
INC. ("HomeTown"), a Delaware corporation.
RECITALS
A. BUFFETS, INC., a Minnesota corporation ("Buffets"), the Banks
party thereto and FIRST BANK NATIONAL ASSOCIATION, a national banking
association, one of the Banks and as agent for the Banks (in such capacity, the
Agent"), are parties to that certain Second Amended and Restated Credit
Agreement dated as of April 30, 1996 (as the same may be amended, supplemented,
restated, or otherwise modified from time to time, the "Credit Agreement").
B. Pursuant to Section 6.5 of the Credit Agreement, Buffets has
covenanted that all subsidiaries of Buffets shall execute and deliver to the
Agent a Guaranty. Sub has executed a Guaranty dated as of September 20, 1996
(the "Sub Guaranty"), and delivered the Sub Guaranty to the Agent.
C. Pursuant to the terms and subject to the conditions of an
Agreement and Plan of Merger dated June 3, 1996 (the "Merger Agreement") by and
between Buffets, Sub and HomeTown (i) Sub will merge with and into HomeTown (the
"Merger") and (ii) upon consummation of the Merger, the separate corporate
existence of Sub will cease and HomeTown will be a wholly-owned subsidiary of
Buffets.
D. As a consequence of the Merger, HomeTown will succeed to all the
rights and privileges, and will become subject to all of the duties and
obligations, of Sub under the Sub Guaranty.
E. To provide for the consummation of the Merger, Buffets and the
Banks have agreed to amend certain terms and covenants of the Credit Agreement
pursuant to a First Amendment to Second Amended and Restated Credit Agreement
dated as of September 20, 1996 (the "Amendment"). It is a condition, among
others, to the effectiveness of the Amendment, that Sub and HomeTown execute and
deliver this Assumption Agreement to
B-1
<PAGE>
evidence HomeTown's agreement to assume Sub's duties and obligations under the
Sub Guaranty.
F. The Merger is expected to become effective as of the date hereof
(the "Merger Date").
G. Sub and HomeTown have each determined that it is advantageous,
desirable, and in its best interests to comply with the condition that it
execute and deliver this Assumption Agreement.
NOW, THEREFORE, in consideration of the premises, the parties hereto
hereby agree as follows:
1. CERTAIN DEFINED TERMS. Capitalized terms used herein and not
otherwise defined herein shall have the meanings assigned to them in the Credit
Agreement or in the Sub Guaranty, as the context may require.
2. ASSUMPTION. Without limiting the legal effect of the Merger, Sub
hereby agrees to delegate to HomeTown upon the effectiveness of the Merger, and
HomeTown hereby agrees to assume and perform and discharge any and all
unperformed obligations of Sub under the Sub Guaranty and HomeTown hereby agrees
generally, upon the effectiveness of the Merger, to subject itself to all of the
terms, provisions, and conditions of the Sub Guaranty, all with the same effect
as if HomeTown were an original party thereto, as the "Guarantor." Without
limiting the generality of the foregoing, and without limiting the legal effect
of the Merger, HomeTown hereby agrees, upon the effectiveness of the Merger, (a)
to assume all Obligations, as defined in the Sub Guaranty, and (b) to perform
for the Agent and the Banks' benefit the covenants of the Guarantor set forth in
the Sub Guaranty, and (c) acknowledges that, as of and upon effectiveness of the
Merger, all representations and warranties made in the Sub Guaranty will be true
and correct with respect to HomeTown as Guarantor.
3. FURTHER ASSURANCES. From and after the Merger Date, HomeTown,
promptly upon receipt of the written request of the Agent, will do such further
things and execute such further documents as may be necessary to assure that the
Agent and any Bank may enjoy, to the fullest extent, the benefit of this
Assumption Agreement, including, without limitation, appropriate amendments to
or restatements of and assumptions of the Sub Guaranty.
4. NOTICES. All notices and communications hereunder shall be given
in accordance with the provisions of Section 15 of the Guaranty, and, in the
case of HomeTown, given to the "Address for Notices" specified below its name on
the signature page hereof.
B-2
<PAGE>
5. ACKNOWLEDGEMENT. Sub and HomeTown each acknowledge that the Bank
is entering into the Amendment in reliance on this Agreement. Each of the
parties hereto acknowledges and agrees that, except as herein provided, the Sub
Guaranty is and remains in full force and effect in accordance with its terms.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
B-3
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Assumption
Agreement to be duly executed as of the day and year first above written.
COUNTRY DELAWARE, INC.
By __________________________________________
Its _______________________________________
HOMETOWN BUFFET, INC.
By _________________________________________
Its _______________________________________
Address for Notices:
_______________________________________
_______________________________________
Attention: _________________________________
Telecopier Number: _________________________
Acknowledged and agreed to
this _______ day of ________________ , 1996.
BUFFETS, INC.
By ________________________________
Its ___________________________
FIRST BANK NATIONAL ASSOCIATION,
As Agent
By ________________________________
Its __________________________
B-4
<PAGE>
EXHIBIT C TO
FIRST AMENDMENT
TO CREDIT AGREEMENT
MATTERS TO BE COVERED BY
OPINION OF COUNSEL
TO THE BORROWER,
SUB AND HOMETOWN
The opinion of Faegre & Benson LLP, counsel to the Borrower, Sub and
HomeTown which is called for by Section 3.8 of the First Amendment to Second
Amended and Restated Credit Agreement shall be addressed to the Banks and dated
the date thereof. It shall be satisfactory in form and substance to the Banks
and shall cover the matters set forth below, subject to such assumptions,
exceptions and qualifications as may be acceptable to the Banks and counsel to
the Banks. Capitalized terms used herein have the respective meanings given
such terms in the Credit Agreement or the Amendment as the context may require.
(i) The Borrower, Sub and HomeTown are each a corporation duly
incorporated and validly existing and in good standing under the laws of its
jurisdiction of incorporation and has all requisite corporate power and
authority to carry on its business as now conducted, to enter into those
Amendment Documents to which it is a party and to perform all of its obligations
under each and all of the foregoing.
(ii) The execution, delivery and performance by each of the
Borrower, Sub and HomeTown of the Amendment Documents to which it is a party
have been duly authorized by all necessary corporate action by it.
(iii) Each Amendment Document executed by each of the Borrower, Sub
and HomeTown constitutes the legal, valid and binding obligation of against the
Borrower, Sub or HomeTown, as the case may be, enforceable against each in
accordance with its terms.
(iv) The execution, delivery and performance by each of the
Borrower, Sub and HomeTown of the Amendment Documents to which it is a party
will not (a) violate any provision of any law, statute, rule or regulation or,
to the best knowledge of such counsel, any order, writ, judgment, injunction,
decree, determination or award of any court, governmental agency or arbitrator
presently in effect having applicability to the Borrower, Sub or HomeTown, (b)
violate or contravene any provision of the Articles of Incorporation or bylaws
of the Borrower, Sub or HomeTown, or (c) result in a breach of or constitute a
default under any indenture, loan or credit agreement or any other agreement,
lease or instrument known to such counsel to which the Borrower, Sub or HomeTown
is a party or by which it or any of its properties may be bound or result in the
creation of any Lien thereunder.
C-1
<PAGE>
(v) After the execution, delivery and performance of the
Assumption Agreement by HomeTown, the Guaranty shall constitute the legal, valid
and binding obligations of HomeTown enforceable against HomeTown in accordance
with its terms.
(vi) No order, consent, approval, license, authorization or
validation of, or filing, recording or registration with, or exemption by, any
governmental or public body or authority is required on the part of the
Borrower, Sub or HomeTown to authorize, or is required in connection with the
execution, delivery and performance of, or the legality, validity, binding
effect or enforceability of, the Amendment Documents.
(vii) To the best knowledge of such counsel, there are no actions,
suits or proceedings pending or threatened against or affecting any of the
Borrower, Sub or HomeTown or any of their properties before any court or
arbitrator, or any governmental department, board, agency or other
instrumentality which (i) challenge the legality, validity or enforceability of
the Amendment Documents, or (ii) if determined adversely to the Borrower, Sub or
HomeTown, would have a material adverse effect on the business, operations,
property or condition (financial or otherwise) of the Borrower and Sub, or after
giving effect to the Merger, the Borrower and HomeTown, as a consolidated
enterprise or on the ability of Sub or HomeTown to perform its obligations under
the Amendment Documents.
(viii) After giving effect to the execution and delivery of the
Guaranty and the Assumption Agreement, and to the Merger, the Obligations and
all of HomeTown's obligations in respect of all loans made by the Borrower or
any other Subsidiary to HomeTown will be "Senior Indebtedness" (as defined in
the Indenture).
C-2
<PAGE>
SCHEDULE 4.6
TO CREDIT AGREEMENT
PENDING LITIGATION
IN RE BUFFETS, INC. SECURITIES LITIGATION, United States District
Court for the District of Minnesota, Master No. 3-94-1447, is a consolidation of
four separate lawsuits involving Buffets, Inc. ("Buffets"). The first lawsuit
was commenced by ZSA Asset Allocation Fund and ZSA Equity Fund on or about
November 7, 1994. Three other substantially similar actions were filed shortly
thereafter by alleged shareholders Marc Kushner, Trustee for Service Lamp Corp.
Profit Sharing Plan, Jerrine Fernandes, and John J. Nuttall. By Pretrial Order
No. 1, entered in early January 1995, the District Court ordered that the four
lawsuits be consolidated into the single pending action and that plaintiffs
serve and file a Consolidated Amended Class Action Complaint (the "Complaint"),
which was served on or about January 31, 1995. The Court ordered the dismissal
of the Complaint upon motion by the defendants, but granted plaintiffs leave to
replead. Plaintiffs filed their Second Amended, Consolidated Class Action
Complaint (the "Second Complaint") on December 11, 1995. Defendants moved to
dismiss the Second Complaint. On May 3, 1996, Magistrate Judge John Mason
issued his Report and Recommendation, recommending to the district judge that
the Second Complaint be dismissed with leave to plaintiffs to replead within 60
days only upon payment of all defendants' attorneys' fees to date. Plaintiffs
filed objections to this Report and Recommendation. On September 11, 1996,
Judge Michael J. Davis, of the District Court, dismissed the Second Complaint
without prejudice, with leave to plaintiffs to replead within 60 days. The
Judge did not condition such repleading upon the payment by plaintiffs' of
defendants' attorneys' fees, as recommended by the Magistrate.
The Second Complaint is against Buffets and several of its officers
and directors. In the Second Complaint, plaintiffs seek to represent a putative
class consisting of all person and entities (excluding defendants and certain
others) who purchased shares of the Buffets Common Stock during the period
commencing October 26, 1993 and ending October 25, 1994 (the "Class Period").
The Second Complaint alleges that the defendants made misrepresentations and
omissions of material fact during the Class Period with respect to Buffets
operations and restaurant development activities, as a result of which the price
of the Buffets stock allegedly was artificially inflated during the Class
Period. The Second Complaint further alleges that certain defendants made sales
of Buffets Common Stock during the Class Period while in possession of material
undisclosed information about the Company's operations and restaurant
development activities. The Second Complaint alleges that the defendants'
conduct violated the Securities Exchange Act of 1934 and seeks compensatory
damages in an unspecified amount, prejudgement interest, and an award of
attorneys' fees, costs and expenses. Management of Buffets believes that the
action is without merit and intends to defend it vigorously. Although the
outcome of this proceeding
<PAGE>
cannot be predicted with certainty, the Buffets' management believes that while
the outcome may have a material effect on earnings in a particular period, the
outcome should not have a material effect on the financial condition of Buffets.
On August 9, 1996, HTB Restaurants, Inc. ("HTB Restaurants"), a
franchisee of HomeTown, along with its parent entities, Summit Family
Restaurants, Inc. and CKE Restaurants, Inc. (the "Plaintiffs"), filed suit
against Buffets and HomeTown Buffet, Inc. ("HomeTown") in Federal District Court
for the District of Utah, Central Division. The suit alleges, among other
things, that Buffets and HomeTown have illegally conspired to restrict
competition and to prevent the Plaintiffs from developing additional HomeTown
Buffet restaurants under the multiple unit agreement between HomeTown and HTB
Restaurants. The continued viability of the multiple unit agreement, which
provides HTB Restaurants with exclusive HomeTown Buffet restaurant development
rights in the states of Arizona, Colorado, Idaho, Montana, Nevada, New Mexico,
Utah and Wyoming, is the subject of pending arbitration between HomeTown and HTB
Restaurants. The suit includes claims against Buffets and HomeTown for
violations of both federal and state antitrust laws, claims for unfair business
practices, and claims for tortious interference with contract and economic
relations. The suit also alleges claims against HomeTown for breach of contract
and breach of the covenant of good faith and fair dealing. Plaintiffs seek up
to $160 million in damages and to enjoin the merger between Buffets and
HomeTown. Buffets is not aware of any facts that support the claims made
against Buffets in the lawsuit and Buffets intends to vigorously defend the
lawsuit.
2
<PAGE>
SCHEDULE 4.18
TO CREDIT AGREEMENT
EXISTING SUBSIDIARIES
<TABLE>
<CAPTION>
Number of Holder of Shares and Jurisdiction
Subsidiary Shares Outstanding Percentage Held of Incorporation
---------- ----------------- ----------------------- ----------------
<S> <C> <C> <C>
Evergreen Buffets, Inc. 50,000 Buffets, Inc. (100%) Oregon
OCB Restaurant Co. 100 Buffets, Inc. (100%) MN
OCB Purchasing Co. 100 Buffets, Inc. (100%) MN
OCB Property Co. 100 OCB Restaurant Co. (100%) MN
OCB Realty Co. 100 OCB Property Co. (100%) MN
Country Delaware, Inc. 100 Buffets, Inc. (100%) MN
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
HOMETOWN BUFFET, INC.
$40,000,000
7% CONVERTIBLE SUBORDINATED NOTES DUE 2002
--------------------
--------------------
INDENTURE
Dated as of November 27, 1995
--------------------
FIRST INTERSTATE BANK OF CALIFORNIA
as Trustee
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION . . . . . . . . . . . 1
1.1 Definitions.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Compliance Certificates and Opinions. . . . . . . . . . . . . . . . . 7
1.3 Form of Documents Delivered to Trustee. . . . . . . . . . . . . . . . 7
1.4 Act of Holders; Record Dates. . . . . . . . . . . . . . . . . . . . . 8
1.5 Notices to Trustee and Company. . . . . . . . . . . . . . . . . . . . 9
1.6 Notice to Holders; Waiver.. . . . . . . . . . . . . . . . . . . . . . 9
1.7 Conflict with Trust Indenture Act.. . . . . . . . . . . . . . . . . .10
1.8 Effect of Headings and Table of Contents. . . . . . . . . . . . . . .10
1.9 Successors and Assigns. . . . . . . . . . . . . . . . . . . . . . . .10
1.10 Separability Clause. . . . . . . . . . . . . . . . . . . . . . . . .10
1.11 Benefits of Indenture. . . . . . . . . . . . . . . . . . . . . . . .10
1.12 Governing Law; Consent to Jurisdiction.. . . . . . . . . . . . . . .11
1.13 Legal Holidays.. . . . . . . . . . . . . . . . . . . . . . . . . . .11
1.14 No Security Interest Created.. . . . . . . . . . . . . . . . . . . .11
1.15 Immunity of Incorporators, Stockholders, Officers and
Directors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
1.16 Acceptance by Trustee. . . . . . . . . . . . . . . . . . . . . . . .12
ARTICLE 2
NOTE FORMS
2.1 Forms Generally.. . . . . . . . . . . . . . . . . . . . . . . . . . .12
2.2 Form of Face of Note. . . . . . . . . . . . . . . . . . . . . . . . .12
2.3 Form of Reverse Side of Note. . . . . . . . . . . . . . . . . . . . .14
2.4 Form of Trustee's Certificate of Authentication.. . . . . . . . . . .22
ARTICLE 3
THE NOTES
3.1 Title and Terms.. . . . . . . . . . . . . . . . . . . . . . . . . . .23
3.2 Denominations.. . . . . . . . . . . . . . . . . . . . . . . . . . . .23
3.3 Execution, Authentication, Delivery and Dating. . . . . . . . . . . .24
3.4 Temporary Notes.. . . . . . . . . . . . . . . . . . . . . . . . . . .24
3.5 Registration, Registration of Transfer and Exchange.. . . . . . . . .25
3.6 Mutilated, Destroyed, Lost and Stolen Notes.. . . . . . . . . . . . .26
3.7 Payment of Interest; Interest Rights Preserved. . . . . . . . . . . .26
3.8 Persons Deemed Owners.. . . . . . . . . . . . . . . . . . . . . . . .28
3.9 Cancellation. . . . . . . . . . . . . . . . . . . . . . . . . . . . .28
3.10 Computation of Interest. . . . . . . . . . . . . . . . . . . . . . .28
ARTICLE 4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .28
SATISFACTION AND DISCHARGE . . . . . . . . . . . . . . . . . . . . . . . . . .28
<PAGE>
Page
----
4.1 Satisfaction and Discharge of Indenture.. . . . . . . . . . . . . . .28
4.2 Application of Trust Money. . . . . . . . . . . . . . . . . . . . . .29
4.3 Reinstatement.. . . . . . . . . . . . . . . . . . . . . . . . . . . .30
ARTICLE 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .30
REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .30
5.1 Events of Default.. . . . . . . . . . . . . . . . . . . . . . . . . .30
5.2 Acceleration of Maturity; Rescission and Annulment. . . . . . . . . .32
5.3 Collection of Indebtedness and Suits for Enforcement by
Trustee.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .33
5.4 Trustee May File Proofs of Claim. . . . . . . . . . . . . . . . . . .33
5.5 Trustee May Enforce Claims Without Possession of Notes. . . . . . . .34
5.6 Application of Money Collected. . . . . . . . . . . . . . . . . . . .34
5.7 Limitation on Suits.. . . . . . . . . . . . . . . . . . . . . . . . .34
5.8 Unconditional Right of Holders to Receive Principal, Premium and
Interest and to Convert.. . . . . . . . . . . . . . . . . . . . . . .35
5.9 Restoration of Rights and Remedies. . . . . . . . . . . . . . . . . .35
5.10 Rights and Remedies Cumulative.. . . . . . . . . . . . . . . . . . .36
5.11 Delay or Omission Not Waiver.. . . . . . . . . . . . . . . . . . . .36
5.12 Control by Holders.. . . . . . . . . . . . . . . . . . . . . . . . .36
5.13 Waiver of Past Defaults. . . . . . . . . . . . . . . . . . . . . . .36
5.14 Undertaking for Costs. . . . . . . . . . . . . . . . . . . . . . . .37
5.15 Waivers of Stay or Extension Laws. . . . . . . . . . . . . . . . . .37
ARTICLE 6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .38
THE TRUSTEE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .38
6.1 Certain Duties and Responsibilities.. . . . . . . . . . . . . . . . .38
6.2 Notice of Defaults. . . . . . . . . . . . . . . . . . . . . . . . . .38
6.3 Certain Rights of Trustee.. . . . . . . . . . . . . . . . . . . . . .38
6.4 Not Responsible for Recitals or Issuance of Notes.. . . . . . . . . .39
6.5 May Hold Notes. . . . . . . . . . . . . . . . . . . . . . . . . . . .39
6.6 Money Held in Trust.. . . . . . . . . . . . . . . . . . . . . . . . .40
6.7 Compensation and Reimbursement. . . . . . . . . . . . . . . . . . . .40
6.8 Disqualifications; Conflicting Interests. . . . . . . . . . . . . . .40
6.9 Corporate Trustee Required; Eligibility.. . . . . . . . . . . . . . .40
6.10 Registration and Removal; Appointment of Successor.. . . . . . . . .41
6.11 Acceptance of Appointment by Successor.. . . . . . . . . . . . . . .42
6.12 Merger, Conversion, Consolidation or Succession to
Business.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .42
6.13 Preferential Collection of Claims Against Company. . . . . . . . . .43
6.14 Appointment of Authenticating Agent. . . . . . . . . . . . . . . . .43
ARTICLE 7 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .44
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY. . . . . . . . . . . . . . .44
7.1 Company to Furnish Trustee Names and Addresses of Holders.. . . . . .44
7.2 Preservation of Information Communications to Holders.. . . . . . . .45
(ii)
<PAGE>
Page
----
7.3 Reports by Trustee. . . . . . . . . . . . . . . . . . . . . . . . . .45
7.4 Reports by Company. . . . . . . . . . . . . . . . . . . . . . . . . .45
ARTICLE 8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .46
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE. . . . . . . . . . . . .46
8.1 Company May Consolidate, Etc., Only on Certain Terms. . . . . . . . .46
8.2 Successor Substitute. . . . . . . . . . . . . . . . . . . . . . . . .46
ARTICLE 9 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .47
SUPPLEMENTAL INDENTURES. . . . . . . . . . . . . . . . . . . . . . . . . . . .47
9.1 Supplemental Indentures Without Consent of Holders. . . . . . . . . .47
9.2 Supplemental Indentures with Consent of Holders.. . . . . . . . . . .48
9.3 Execution of Supplemental Indentures. . . . . . . . . . . . . . . . .48
9.4 Effect of Supplemental Indentures.. . . . . . . . . . . . . . . . . .49
9.5 Conformity with Trust Indenture Act.. . . . . . . . . . . . . . . . .49
9.6 Reference in Notes to Supplemental Indentures.. . . . . . . . . . . .49
9.7 Notice of Supplemental Indenture. . . . . . . . . . . . . . . . . . .49
ARTICLE 10 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .49
COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .49
10.1 Payment of Principal, Premium and Interest.. . . . . . . . . . . . .49
10.2 Maintenance of Office or Agency. . . . . . . . . . . . . . . . . . .50
10.3 Money for Note Payments to Be Held in Trust. . . . . . . . . . . . .50
10.4 Statement by Officers as to Default. . . . . . . . . . . . . . . . .51
10.5 Existence. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .51
10.6 Maintenance of Properties. . . . . . . . . . . . . . . . . . . . . .52
10.7 Payment of Taxes and Other Claims. . . . . . . . . . . . . . . . . .52
10.8 Waiver of Certain Covenants. . . . . . . . . . . . . . . . . . . . .52
ARTICLE 11 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .53
REDEMPTION OF NOTES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .53
11.1 Right of Redemption. . . . . . . . . . . . . . . . . . . . . . . . .53
11.2 Applicability of Article.. . . . . . . . . . . . . . . . . . . . . .53
11.3 Election to Redeem; Notice to Trustee. . . . . . . . . . . . . . . .53
11.4 Selection by Trustee of Notes to Be Redeemed.. . . . . . . . . . . .53
11.5 Notice of Redemption.. . . . . . . . . . . . . . . . . . . . . . . .54
11.6 Deposit of Redemption Price. . . . . . . . . . . . . . . . . . . . .54
11.7 Notes Payable on Redemption Date.. . . . . . . . . . . . . . . . . .55
11.8 Notes Redeemed in Part.. . . . . . . . . . . . . . . . . . . . . . .55
ARTICLE 12 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .56
SUBORDINATION OF NOTES . . . . . . . . . . . . . . . . . . . . . . . . . . . .56
12.1 Notes Subordinate to Senior Indebtedness.. . . . . . . . . . . . . .56
12.2 Payment Over of Proceeds Upon Dissolution, Etc.. . . . . . . . . . .56
(iii)
<PAGE>
Page
----
12.3 No Payment on Notes in Certain Circumstances.. . . . . . . . . . . .57
12.4 Payment Permitted if No Default. . . . . . . . . . . . . . . . . . .58
12.5 Subrogation to Rights of Holders of Senior Indebtedness. . . . . . .58
12.6 Provisions Solely to Define Relative Rights, . . . . . . . . . . . .59
12.7 Trustee to Effectuate Subordination. . . . . . . . . . . . . . . . .59
12.8 No Waiver of Subordination Provisions. . . . . . . . . . . . . . . .59
12.9 Notice to Trustee. . . . . . . . . . . . . . . . . . . . . . . . . .60
12.10 Reliance on Judicial Order or Certificate of Liquidating
Agent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .61
12.11 Trustee Not Fiduciary for Holders of Senior Indebtedness. . . . . .61
12.12 Rights of Trustee as Holder of Senior Indebtedness;
Preservation of Trustee's Rights.. . . . . . . . . . . . . . . . .61
12.13 Article Applicable to Paying Agents.. . . . . . . . . . . . . . . .62
12.14 Certain Conversions Deemed Payment. . . . . . . . . . . . . . . . .62
ARTICLE 13 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .62
CONVERSION OF NOTES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .62
13.1 Conversion Privilege and Conversion Price. . . . . . . . . . . . . .62
13.2 Exercise of Conversion Privilege.. . . . . . . . . . . . . . . . . .63
13.3 Fraction of Shares.. . . . . . . . . . . . . . . . . . . . . . . . .64
13.4 Adjustment of Conversion Price.. . . . . . . . . . . . . . . . . . .64
13.5 Notice of Adjustments of Conversion Price. . . . . . . . . . . . . .71
13.6 Notice of Certain Corporate Action.. . . . . . . . . . . . . . . . .71
13.7 Company to Reserve Common Stock. . . . . . . . . . . . . . . . . . .72
13.8 Taxes on Conversions.. . . . . . . . . . . . . . . . . . . . . . . .72
13.9 Covenant as to Shares of Common Stock. . . . . . . . . . . . . . . .73
13.10 Cancellation of Converted Notes.. . . . . . . . . . . . . . . . . .73
13.11 Provisions in Case of Consolidation, Merger or Sale of
Assets.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .73
ARTICLE 14 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .74
REPURCHASE OF NOTES AT THE OPTION OF THE HOLDER UPON A RISK EVENT. . . . . . .74
14.1 Right to Require Repurchase. . . . . . . . . . . . . . . . . . . . .74
14.2 Notices; Method of Exercising Repurchase Right, Etc. . . . . . . . .74
14.3 Certain Definitions. . . . . . . . . . . . . . . . . . . . . . . . .76
(iv)
<PAGE>
CROSS REFERENCE TABLE(*)
TRUST INDENTURE
ACT SECTION INDENTURE SECTION
- --------------- -----------------
310 (a)(1). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.9
(a)(2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.9
(a)(3). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .N.A.
(a)(4). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .N.A.
(a)(5). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.9
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.8; 6.10
311 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6.13
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6.13
312 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.1; 7.2(a)
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7.2(b)
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7.2(c)
313 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7.3(a)
(a)(4). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7.3(a)
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7.3(a)
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7.3(b)
314 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.4
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .N.A.
(c)(1). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2
(c)(2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2
(c)(3). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .N.A.
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .N.A.
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2
315 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.1
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.2
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.1
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.1
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5.14
316 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1
(a)(1)(A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.2; 5.12
(a)(1)(B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5.13
(a)(2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .N.A.
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.8
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1.4(c)
317 (a)(1). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.3
(a)(2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.4
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10.3
318 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.7
- --------------------
*THIS CROSS-REFERENCE TABLE IS NOT PART OF THE INDENTURE.
v
<PAGE>
N.A. means not applicable.
vi
<PAGE>
INDENTURE, dated as of November 27, 1995, between HomeTown Buffet, Inc., a
corporation duly organized and existing under the laws of the State of Delaware
(herein called the "Company"), having its principal office at 9171 Towne Center
Drive, Suite 575, San Diego, California 92122, and First Interstate Bank of
California, a state banking corporation, as Trustee (herein called the
"Trustee," which term includes any successor trustee under the Indenture).
RECITALS
The Company has duly authorized the creation of an issue of its 7%
Convertible Subordinated Notes due 2002 (herein called the "Notes") of
substantially the tenor and amount hereinafter set forth, and to provide
therefor the Company has duly authorized the execution and delivery of this
Indenture.
All things necessary to make the Notes, when executed by the Company and
authenticated and delivered hereunder and duly issued by the Company, the valid
obligations of the Company, and to make this Indenture a valid agreement of the
Company, in accordance with their and its terms, have been done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the promises and the purchase of the Notes by
the Holders thereof, it is mutually agreed, for the equal and proportionate
benefit of all Holders of the Notes, as follows:
ARTICLE 1
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
1.1 DEFINITIONS.
For all purposes of this Indenture, except as otherwise expressly
provided or unless the context otherwise requires:
(1) the terms defined in this Article have the meanings assigned to
them in this Article and include the plural as well as the singular;
(2) all other terms used herein which are defined in the Trust
Indenture Act, either directly or by reference therein, have the meanings
assigned to them therein;
(3) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted accounting
principles, and, except as otherwise herein expressly provided, the term
"generally accepted accounting principles" with respect to any computation
required or permitted hereunder shall mean such accounting principles as are
generally accepted at the date of such computation;
<PAGE>
(4) the words "herein," "hereof" and "hereunder" and other words of
similar import refer to this Indenture as a whole and not to any particular
Article, Section or other subdivision; and
(5) "or" is not exclusive.
"Act" when used with respect to any Holder, has the meaning specified
in Section 1.4.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Authenticating Agent" means any Person authorized by the Trustee
pursuant to Section 6.14 to act on behalf of the Trustee to authenticate Notes.
"Beneficial Owner" shall have the meaning specified in Section
14.3(a).
"Board of Directors" means either the board of directors of the
Company or any duly authorized committee of that board.
"Board Resolution" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Company to have been duly adopted by
the Board of Directors and to be in full force and effect on the date of such
certification, and delivered to the Trustee.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and
Friday which is not a day on which banking institutions in The City of New York
or the city in which the Corporate Trust Office is located are authorized or
obligated by law or executive order to close or to be closed.
"Closing Price" has the meaning specified in Section 13.4(h).
"Commission" means the Securities and Exchange Commission, as from
time to time constituted, created under the Exchange Act, or, if at any time
after the execution of this instrument such Commission is not existing and
performing the duties now assigned to it under the Trust Indenture Act, then the
body performing such duties at such time.
"Common Stock" includes any stock of any class of the Company which
has no preference in respect of dividends or of amounts payable in the event of
any voluntary or involuntary liquidation, dissolution or winding-up of the
Company and which is not subject to redemption by the Company. However, subject
to the provisions of Section 13.11, shares issuable on conversion of Notes shall
include only shares of the class designated as Common
2
<PAGE>
Stock of the Company at the date of this instrument or shares of any class or
classes resulting from any reclassification or reclassifications thereof and
which have no preference in respect of dividends or of amounts payable in the
event of any voluntary or involuntary liquidation, dissolution or winding-up of
the Company and which are not subject to redemption by the Company; provided
that, if at any time there shall be more than one such resulting class, the
shares of each such class then so issuable shall be substantially in the
proportion which the total number of shares of such class resulting from all
such reclassifications bears to the total number of shares of all such classes
resulting from all such reclassifications.
"Company" means the Person named as the "Company" in the first
paragraph of this instrument until a successor Person shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Company" shall mean such successor Person.
"Company Request" or "Company Order" means a written request or order
signed in the name of the Company by its Chairman of the Board, its President or
a Vice President, and by its Chief Financial Officer, its Treasurer, an
Assistant Treasurer, its Secretary or an Assistant Secretary, and delivered to
the Trustee.
"Corporate Trust Office" means the principal office of the Trustee at
which at any particular time its corporate trust business shall be administered.
As of the date hereof, the Corporate Trust Office of the Trustee is located at
707 Wilshire Boulevard, W11-1, Los Angeles, California 90017.
"Corporation" means a corporation, association, company, limited
liability company, joint-stock company or business trust.
"Defaulted Interest" has the meaning specified in Section 3.7.
"Event of Default" has the meaning specified in Section 5.1.
"Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time.
"Holder" means a Person in whose name a Note is registered in the Note
Register.
"Indenture" means this instrument as originally executed or as it may
from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions hereof,
including, for all purposes of this instrument and any such supplemental
indenture, the provisions of the Trust Indenture Act that are deemed to be a
part of and to govern this instrument and any such supplemental indenture,
respectively.
"Interest Payment Date" means the Stated Maturity of an installment of
interest on the Notes.
3
<PAGE>
"Maturity," when used with respect to any Note, means the date on
which the principal of such Note becomes due and payable as therein or herein
provided, whether at the Stated Maturity or by declaration of acceleration, call
for redemption or otherwise.
"Note" has the meaning specified in the Recitals to this Indenture.
"Note Register" and "Note Registrar" have the respective meanings
specified in Section 3.5.
"Officers' Certificate" means a certificate signed by the Chairman of
the Board, the President or a Vice President, and by the Chief Financial
Officer, the Treasurer, an Assistant Treasurer, the Secretary or an Assistant
Secretary, of the Company, and delivered to the Trustee. One of the officers
signing an Officers' Certificate given pursuant to Section 10.4 shall be the
principal executive, financial or accounting officer of the Company.
"Opinion of Counsel" means a written opinion of counsel, who may be
counsel for the Company, and who shall be acceptable to the Trustee.
"Outstanding," when used with respect to Notes, refers, as of the date
of determination, to all Notes theretofore authenticated and delivered under
this Indenture, except:
(i) Notes theretofore canceled by the Trustee or delivered to
the Trustee for cancellation;
(ii) Notes, or portions thereof, for whose payment or
redemption money in the necessary amount has been theretofore deposited with the
Trustee or any Paying Agent (other than the Company) in trust or set aside and
segregated in trust by the Company (if the Company shall act as its own Paying
Agent) for the Holders of such Notes; provided that, if such Notes are to be
redeemed, notice of such redemption has been duly given pursuant to this
Indenture or provision therefor satisfactory to the Trustee has been made; and
(iii) Notes which have been paid pursuant to Section 3.6 or in
exchange for or in lieu of which other Notes have been authenticated and
delivered pursuant to this Indenture, other than any such Notes in respect of
which there shall have been presented to the Trustee proof satisfactory to it
that such Notes are held by a bona fide purchaser in whose hands such Notes are
valid obligations of the Company;
provided, however, that in determining whether the Holders of the requisite
principal amount of the Outstanding Notes have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, Notes owned by
the Company or any other obligor upon the Notes or any Affiliate of the Company
or of such other obligor shall be disregarded and deemed not to be Outstanding,
except that, in determining whether the Trustee shall be protected in relying
upon any such request, demand, authorization, direction, notice, consent or
waiver, only Notes which the Trustee knows to be so owned shall be so
disregarded. Notes so owned which have been pledged in good faith may be
regarded as Outstanding if the pledgee establishes to the
4
<PAGE>
satisfaction of the Trustee the pledgee's right so to act with respect to such
Notes and that the pledgee is not the Company or any other obligor upon the
Notes or any Affiliate of the Company or of such other obligor.
"Paying Agent" means any Person authorized by the Company to pay the
principal of (and premium, if any) or interest on any Notes on behalf of the
Company.
"Person" means any individual, corporation, partnership, joint
venture, trust, unincorporated organization or government or any agency or
political subdivision thereof.
"Predecessor Note" of any particular Note means every previous Note
evidencing all or a portion of the same debt as that evidenced by such
particular Note; and, for the purposes of this definition, any Note
authenticated and delivered under Section 3.6 in exchange for or in lieu of a
mutilated, destroyed, lost, or stolen Note shall be deemed to evidence the same
debt as the mutilated, destroyed, lost or stolen Note.
"Redemption Date," when used with respect to any Note to be redeemed,
means the date fixed for such redemption by or pursuant to this Indenture.
"Redemption Price," when used with respect to any Note to be redeemed,
means the price at which it is to be redeemed pursuant to this Indenture.
"Regular Record Date" for the interest payable on any Interest Payment
Date means May 15 or November 15 (whether or not a Business Day), as the case
may be, next preceding such Interest Payment Date.
"Repurchase Date" has the meaning specified in Section 14.1.
"Repurchase Price" has the meaning specified in Section 14.1.
"Risk Event" has the meaning specified in Section 14.3(c).
"Senior Indebtedness" means the principal of (and premium, if any) and
interest on (a) all indebtedness of the Company for money borrowed, other than
the Notes, whether outstanding on the date of execution of this Indenture or
thereafter created, incurred or assumed, except any such indebtedness that, by
the terms of the instrument or instruments by which such indebtedness was
created or incurred, expressly provides that it (i) is junior in right of
payment to the Notes or (ii) ranks pari passu in right of payment with the
Notes, and (b) any amendments, renewals, extensions, deferrals, modifications,
refinancings and refundings of any such indebtedness. For the purposes of this
definition, "indebtedness for money borrowed," when used with respect to the
Company, means (u) any obligation of the Company for the repayment of borrowed
money (including, without limitation, fees, penalties, expenses, collection
expenses, interest yield amounts and other obligations in respect thereof, and,
to the extent permitted by applicable law, interest accruing after the filing of
a petition initiating any proceeding under the Bankruptcy Code, whether or not
allowed as a claim in such proceeding), whether or not
5
<PAGE>
evidenced by bonds, debentures, notes or other written instruments, and any
other obligations evidenced by notes, bonds, debentures or similar instruments,
(v) any deferred payment obligations of the Company for the payment of the
purchase price of property or assets evidenced by a note or similar instrument
(excluding any obligations for trade payables or constituting the deferred
purchase price of assets incurred in ordinary course of business), (w) any
obligation for the payment of rent or other amounts under a lease of property or
assets which obligation in required to be classified and accounted for as a
capitalized lease on the balance sheet of the Company under generally accepted
accounting principles, (x) any obligations of the Company due and payable under
interest rate and currency swaps, floors, caps or similar arrangements intended
to fix interest rate obligations or currency fluctuations risks, (y) all
obligations of the Company evidenced by a letter of credit or any reimbursement
obligation of the Company in respect of a letter of credit, and (z) any
obligations of others of the kinds described in the preceding clauses (u), (v),
(w), (x) or (y) assumed by or guaranteed by the Company and the obligations of
the Company under guarantees of such obligations.
"Significant Subsidiary" means, with respect to any person, a
Subsidiary of such Person that would constitute a "significant subsidiary" as
such term in defined under Rule 1.02(v) of Regulation S-X of the Securities and
Exchange Commission.
"Special Record Date" for the payment of any Defaulted Interest means
a date fixed by the Trustee pursuant to Section 3.7.
"Stated Maturity," when used with respect to any Note or any
installment of interest thereon, means the date specified in such Note as the
fixed date on which the principal of such Note or such installment of interest,
as applicable, is due and payable.
"Subsidiary" means a corporation more than 50% of the outstanding
voting stock of which is owned, directly or indirectly, by the Company or by one
or more other Subsidiaries, or by the Company and one or more other
Subsidiaries. For the purposes of this definition, "voting stock" means stock
which ordinarily has voting power for the election of directors, whether at all
times or only so long as no senior class of stock has such voting power by
reason of any contingency.
"Trading Day" means each Monday, Tuesday, Wednesday, Thursday and
Friday, other than any day on which securities are not traded on the applicable
securities exchange or in the applicable securities market.
"Trustee" means the Person named as the "Trustee" in the first
paragraph of this instrument until a successor Trustee shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Trustee" shall mean such successor Trustee.
"Trust Indenture Act" means the Trust Indenture Act of 1939 as in
force at the date as of which this instrument was executed; provided, however,
that in the event the Trust
6
<PAGE>
Indenture Act of 1939 is amended after such date, "Trust Indenture Act" means,
to the extent required by any such amendment, the Trust Indenture Act of 1939 as
so amended.
"Vice President," when used with respect to the Company or the
Trustee, means any vice president, whether or not designated by a number or a
word or words added before or after the title "vice president."
1.2 COMPLIANCE CERTIFICATES AND OPINIONS.
Upon any application or request by the Company to the Trustee to take
any action under any provision of this Indenture, the Company shall furnish to
the Trustee such certificates and opinions as may be required under the Trust
Indenture Act. Each such certificate or opinion shall be given in the form of
an Officers' Certificate, if to be given by an officer of the Company, or an
Opinion of Counsel, if to be given by counsel, and shall comply with the
requirements of the Trust Indenture Act and any other requirement set forth in
this Indenture.
Every certificate (other than certificates provided pursuant to
Section 10.4) or opinion with respect to compliance with a condition or covenant
provided for in this Indenture shall include:
(1) a statement that each individual signing such certificate
or opinion has read such covenant or condition and the definitions herein
relating thereto;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions contained in
such certificate or opinion are based;
(3) a statement that, in the opinion of each such individual,
he has made such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such covenant or condition has
been complied with; and
(4) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
1.3 FORM OF DOCUMENTS DELIVERED TO TRUSTEE.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
7
<PAGE>
Any certificate or opinion of an officer of the Company may be based,
insofar as it relates to legal matters, upon a certificate or opinion of, or
representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which his certificate or opinion is based are
erroneous. Any such certificate or opinion of counsel may be based, insofar as
it relates to factual matters, upon a certificate or opinion of, or
representations by, an officer or officers of the Company stating that the
information with respect to such factual matters is in the possession of the
Company, unless such counsel knows, or in the exercise of reasonable care should
know, that the certificate or opinion or representations with respect to such
matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
1.4 Act of Holders; Record Dates.
(a) Any request, demand, authorization, director, notice,
consent, waiver or other action provided by this Indenture to be given or taken
by Holders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders in person or by agent duly
appointed in writing; and, except as herein otherwise expressly provided, such
action shall become effective when such instrument or instruments are delivered
to the Trustee and, where it is hereby expressly required, to the Company. Such
instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "Act" of the Holders signing
such instrument or instruments. Proof of execution of any such instrument or of
a writing appointing any such agent shall be sufficient for any purpose of this
Indenture and (subject to Section 6.1) conclusive in favor of the Trustee and
the Company, if made in the manner provided in this Section.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Where
such execution is by a signer acting in a capacity other than his individual
capacity, such certificate or affidavit shall also constitute sufficient proof
of his authority. The fact and date of the execution of any such instrument or
writing, or the authority of the Person executing the same, may also be proved
in any other manner which the Trustee deems sufficient.
(c) The Company may, in the circumstances permitted by the Trust
Indenture Act, fix any day as the record date for the purpose of determining the
Holders entitled to give or take any request, demand, authorization, direction,
notice, consent, waiver or other action, or to vote on any action, authorized or
permitted to be given or taken by Holders. If not
8
<PAGE>
set by the Company prior to the first solicitation of a Holder made by any
Person in respect of any such action, or, in the case of any such vote, prior to
such vote, the record date for any such action or vote shall be the 30th day
(or, if later, the date of the most recent list of Holders required to be
provided pursuant to Section 7.1) prior to such first solicitation or vote, as
the case may be. With regard to any record date, only the Holders on such date
(or their duly designated proxies) shall be entitled to give or take, or vote
on, the relevant action.
(d) The ownership of Notes shall be proved by the Note Register.
(e) Any request, demand, authorization, direction, notice,
consent, waiver or other Act of the Holder of any Note shall bind every future
Holder of the same Note and the Holder of ever Note issued upon the registration
of transfer thereof or in exchange therefor or in lieu thereof in respect of
anything done, omitted or suffered to be done by the Trustee or the Company in
reliance thereon, whether or not notation of such action is made upon such Note.
1.5 NOTICES TO TRUSTEE AND COMPANY.
Any request, demand, authorization, direction, notice, consent, waiver
or other Act of Holders or other document provided or permitted by this
Indenture to be made upon, given or furnished to, or filed with,
(1) the Trustee by any Holder or by the Company shall be
sufficient for every purpose hereunder if made, given, furnished or filed in
writing to or with the Trustee at its Corporate Trust Office, or
(2) the Company by the Trustee or by any Holder shall be
sufficient for every purpose hereunder (unless otherwise herein expressly
provided) if in writing and mailed by United States mail, first-class postage
prepaid, to the Company addressed to it at the address of its principal office
specified in the first paragraph of this Indenture, or at any other address
previously furnished in writing to the Trustee by the Company, Attention: Chief
Financial Officer; PROVIDED, that such notice shall not be deemed effective
until the third Business Day after the official postmark date appearing on the
outer envelope containing such notice.
1.6 NOTICE TO HOLDERS; WAIVER.
Where this Indenture provides for notice to Holders of any event, such
notice shall be sufficiently given (unless otherwise herein expressly provided)
if in writing and mailed, first-class postage prepaid, to each Holder affected
by such event, at his address as it appears in the Note Register, not later than
the latest date (if any), and not earlier than the earliest date (if any),
prescribed for the giving of such notice. In any case where notice to Holders
is given by mail, neither the failure to mail such notice, nor any defect in any
notice so mailed, to any particular Holder shall affect the sufficiency of such
notice with respect to other Holders. Where this
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Indenture provides for notice in any manner, such notice may be waived in
writing by the Person entitled to receive such notice, either before or after
the event, and such waiver shall be the equivalent of such notice. Waivers of
notice by Holders shall be filed with the Trustee, but such filing shall not be
a condition precedent to the validity of any action taken in reliance upon such
waiver.
In case by reason of the suspension of regular mail service or by
reason of any other cause it shall be impracticable to give such notice by mail,
then such notification as shall be made with the approval of the Trustee shall
constitute a sufficient notification to every purpose hereunder.
1.7 CONFLICT WITH TRUST INDENTURE ACT.
If any provision hereof limits, qualifies or conflicts with a
provision of the Trust Indenture Act that is required under such Act to be a
part of and govern this Indenture, the latter provision shall control. If any
provision of this Indenture modifies or excludes any provision of the Trust
Indenture Act that may be so modified or excluded, the latter provision shall be
deemed to apply to this Indenture as so modified or to be excluded, as the case
may be.
1.8 EFFECT OF HEADINGS AND TABLE OF CONTENTS.
The Article and Section headings herein and the Table of Contents are
for convenience only and shall not affect the construction hereof.
1.9 SUCCESSORS AND ASSIGNS.
All covenants and agreements in this Indenture by the Company shall
bind its successors and assigns, whether so expressed or not.
1.10 SEPARABILITY CLAUSE.
In case any provision in this Indenture or in the Notes shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
1.11 BENEFITS OF INDENTURE.
Nothing in this Indenture or in the Notes, express or implied, shall
give to any Person, other than the parties hereto and their successors
hereunder, the holders of Senior Indebtedness and the Holders of Notes, any
benefit or any legal or equitable right, remedy or claim under this Indenture.
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1.12 GOVERNING LAW; CONSENT TO JURISDICTION.
This Indenture and the Notes shall be governed by and construed in
accordance with the laws of the State of New York. The parties hereby agree to
submit to the jurisdiction of any court of the State of New York or the United
States District Court for the Southern District of New York for the purpose of
any suit, action, or other proceeding arising out of this Indenture or the
Notes.
1.13 LEGAL HOLIDAYS.
In any case where any Interest Payment Date, Redemption Date or Stated
Maturity of any Note or the last date on which a Holder has the right to convert
his Notes shall not be a Business Day, then (notwithstanding any other provision
of this Indenture or of the Notes) payment of interest or principal (and
premium, if any) or conversion of the Notes need not be made on such date, but
may be made on the next succeeding Business Day with the same force and effect
as if made on the Interest Payment Date or Redemption Date, or at the Stated
Maturity, or on such last day for conversion, provided that no additional
interest shall accrue as a result of such delayed payment for the period from
and after such Interest Payment Date, Redemption Date or Stated Maturity, as the
case may be.
1.14 NO SECURITY INTEREST CREATED.
Nothing in this Indenture or in the Notes, expressed or implied, shall
be construed to constitute a security interest under the Uniform Commercial Code
or similar legislation, as now or hereafter enacted and in effect, in any
jurisdiction where property of the Company or its Subsidiaries is located.
1.15 IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS AND DIRECTORS.
No recourse shall be had for the payment of the principal of (and
premium, if any), or the interest, if any, on any Note, or for any claim based
thereon, or upon any obligation, covenant or agreement of this Indenture,
against any incorporator, stockholder, officer or director, as such, past,
present or future, of the Company or of any successor corporation, either
directly or indirectly through the Company or of any successor corporation,
whether by virtue of any constitution, statute or rule of law or by the
enforcement of any assessment of penalty or otherwise; it being expressly agreed
and understood that this Indenture and all of the Notes are solely corporate
obligations, and that no personal liability whatever shall attach to, or is
incurred by, any incorporator, stockholder, officer or director, past, present
or future, of the Company or of any successor corporation, either directly or
indirectly through the Company or any successor corporation, because of the
incurring of the indebtedness hereby authorized or under or by reason of any of
the obligations, covenants or agreements contained in this Indenture or in the
Notes, or
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to be implied herefrom or therefrom; and that all such personal liability is
hereby expressly released and waived as a condition of, and as part of the
consideration for, the execution of this Indenture and the issuance of the
Notes.
1.16 ACCEPTANCE BY TRUSTEE.
The Trustee hereby accepts the trusts in this Indenture declared and
provided, upon the terms and conditions set forth herein.
ARTICLE 2
NOTE FORMS
2.1 FORMS GENERALLY.
The Notes and the Trustee's certificates of authentication shall be in
substantially the forms set forth in this Article, with such appropriate
insertions, omissions, substitutions and other variations as are required or
permitted by this Indenture, and may have such letters, numbers or other marks
of identification and such legends or endorsements placed thereon as may be
required to comply with the rules of any securities exchange on which the Notes
may be listed or as may, consistently herewith, be determined by the officers
executing such Notes, as evidenced by their execution of the Notes.
The definitive Notes shall be printed, lithographed or engraved or
produced by any combination of these methods on steel engraved borders or may be
produced in any other manner permitted by the rules of any securities exchange
on which the Notes may be listed, all as determined by the officers executing
such Notes, as evidenced by their execution of such Notes.
2.2 FORM OF FACE OF NOTE.
No. 1 $40,000,000
HomeTown Buffet, Inc.
7% Convertible Subordinated Note due 2002
CUSIP No. 437862AA3
HomeTown Buffet, Inc., a corporation duly organized and existing under
the laws of Delaware (herein called the "Company," which term includes any
successor Person under the Indenture hereinafter referred to), for value
received, hereby promises to pay to Cede & Co. or registered assigns, the
principal sum of Forty Million Dollars on December 1, 2002, and to pay interest
thereon from November 27, 1995 or from and including the most recent Interest
Payment Date to which interest has been paid or duly provided for, semi-annually
on June 1 and
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December 1 in each year, commencing June 1, 1996, at the rate of 7% per annum,
until the principal hereof is paid or made available for payment. The interest
so payable, and punctually paid or duly provided for, on any Interest Payment
Date will, as provided in such Indenture, be paid to the Person in whose name
this Note (or one or more Predecessor Notes) is registered at the close of
business on the Regular Record Date for such interest, which shall be May 15 or
November 15 (whether or not a Business Day), as the case may be, next preceding
such Interest Payment Date. Any such interest not so punctually paid or duly
provided for will forthwith cease to be payable to the Holder on such Regular
Record Date and may either be paid to the Person in whose name this Note (or one
or more Predecessor Notes) is registered at the close of business on a Special
Record Date for the payment of such Defaulted Interest to be fixed by the
Trustee, notice of which shall be given to Holders of Notes not less than ten
(10) days prior to such Special Record Date, or be paid at any time in any other
lawful manner not inconsistent with the requirements of any securities exchange
on which the Notes may be listed, and upon such notice as may be required by
such exchange, all as more fully provided in said Indenture. Payment of the
principal of (and premium, if any) and interest on this Note will be made at the
office or agency of the Company maintained for that purpose in the Borough of
Manhattan, The City of New York, in such coin or currency of the United States
of America as at the time of payment is legal tender for payment of public and
private debts; provided, however, that at the option of the Company payment of
interest may be made by check mailed to the address of the Person entitled
thereto as such address shall appear in the Note Register.
Reference is hereby made to the further provisions of this Note set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by
the Trustee referred to on the reverse hereof by manual signature, this Note
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.
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IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
Dated: November 27, 1995 HOMETOWN BUFFET, INC.
TRUSTEE'S CERTIFICATE OF BY:
AUTHENTICATION -------------------------------------
President
This is one of the Notes
referred to in the within- ATTEST:
mentioned Indenture. --------------------------------
Secretary
FIRST INTERSTATE BANK OF CALIFORNIA,
as Trustee
BY:
--------------------------
Authorized Signatory
2.3 FORM OF REVERSE SIDE OF NOTE.
HOMETOWN BUFFET, INC.
7% CONVERTIBLE SUBORDINATED NOTE DUE 2002
This Note is one of a duly authorized issue of Notes of the Company
designated as its 7% Convertible Subordinated Notes due 2002 (herein called the
"Notes"), limited in aggregate principal amount to $40,000,000 (subject to
increase as provided in the Indenture up to $46,000,000 aggregate principal
amount), issued and to be issued under an Indenture, dated as of November 27,
1995 (herein called the "Indenture"), between the Company and First Interstate
Bank of California as Trustee (herein called the "Trustee," which term includes
any successor trustee under the Indenture), to which Indenture and all
indentures supplemental thereto reference is hereby made for a statement of the
respective rights, limitations or rights, duties and immunities thereunder of
the Company, the Trustee, the holders of Senior Indebtedness and the Holders of
the Notes and of the terms upon which the Notes are, and are to be,
authenticated and delivered.
Subject to and upon compliance with the provisions of the Indenture,
the Holder of this Note is entitled, at his option, at any time after 60 days
following the latest date of the initial issuance thereof and on or before the
close of business on December 1, 2002, or in case this Note or a portion hereof
is called for redemption or submitted for repurchase upon the
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occurrence of a Risk Event, then in respect of this Note or such portion hereof
until and including, but (unless the Company defaults in making the payment due
upon redemption or repurchase, as the case may be) not after, the close of
business on the last Trading Day prior to the Redemption Date or Repurchase
Date, respectively, to convert this Note (or any portion of the principal amount
hereof which is $1,000 or an integral multiple thereof), at the principal amount
hereof, or of such portion, into fully paid and nonassessable shares (calculated
as to each conversion to the nearest 1/100 of a share) of Common Stock of the
Company at a conversion price equal to $ 13.65 aggregate principal amount of
Notes for each share of Common Stock (or at the current adjusted conversion
price if an adjustment has been made as provided in the Indenture) by surrender
of this Note, duly endorsed or assigned to the Company or in blank, to the
Company at its office or agency maintained for that purpose in the Borough of
Manhattan, The City of New York, accompanied by written notice to the Company in
the form provided in this Note (or such other notice as is acceptable to the
Company) that the Holder hereof elects to convert this Note, or if less than the
entire principal amount hereof is to be converted, the portion hereof to be
converted, and, in case such surrender shall be made during the period from the
close of business on any Regular Record Date next preceding any Interest Payment
Date to the opening of business on such Interest Payment Date (unless this Note
or the portion thereof being converted has been called for redemption on a
Redemption Date within such period), also accompanied by payment in New York
Clearing House or other funds acceptable to the Company of an amount equal to
the interest payable on such Interest Payment Date on the principal amount of
this Note then being converted. Subject to the aforesaid requirement for
payment and, in the case of a conversion after the Regular Record Date next
preceding any Interest Payment Date and on or before such Interest Payment Date,
to the right of the Holder of this Note (or any Predecessor Note) of record at
such Regular Record Date to receive an installment of interest (with certain
exceptions provided in the Indenture), no payment or adjustment is to be made on
conversion for interest accrued hereon or for dividends on the Common Stock
issued on conversion. No fractional shares or scrip representing fractional
shares will be issued on conversion, but instead of any fractional share the
Company shall pay a cash adjustment as provided in the Indenture. The
conversion price is subject to adjustment as provided in the Indenture. In
addition, the Indenture provides that in case of certain reclassifications,
consolidations or mergers to which the Company is a party or the sale or
transfer of substantially all of the assets of the Company, the Indenture shall
be amended, without the consent of any Holders of Notes, so that this Note, if
then outstanding, will be convertible thereafter, during the period this Note
shall be convertible as specified above, only into the kind and amount of
securities, cash and other property receivable upon the reclassification,
consolidation, merger, sale or transfer by a holder of the number of shares of
Common Stock into which this Note might have been converted immediately prior to
such consolidation, merger or transfer (assuming such holder of Common Stock
failed to exercise any rights of election and received per share the kind and
amount received per share by a plurality of non-electing shares).
The Notes are subject to redemption upon not less than fifteen (15)
nor more than sixty (60) days' notice by mail, at any time on or after December
2, 1998, as a whole or in part, at
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the election of the Company, at the following Redemption Prices (expressed as
percentages of the principal amount):
If redeemed during the twelve (12) month period beginning December 1 (or
December 2, in the case of 1998) of the years indicated,
Year . . . . . . . . . . . . . . . . . Redemption Price
1998 . . . . . . . . . . . . . . . . . 104.0%
1999 . . . . . . . . . . . . . . . . . 103.0%
2000 . . . . . . . . . . . . . . . . . 102.0%
2001 . . . . . . . . . . . . . . . . . 101.0%
thereafter and at maturity at 100% of principal, together in the case of any
such redemption with accrued interest to the Redemption Date, but interest
installments whose Stated Maturity is on or prior to such Redemption Date will
be payable to the Holders of such Notes, or one or more Predecessor Notes, of
record at the close of business on the relevant Record Dates referred to on the
face hereof, all as provided in the Indenture.
The Indenture provides that if a Risk Event (as defined therein)
occurs, each Holder of Notes shall have the right, in accordance with the
provisions of the Indenture, to require the Company to repurchase all of such
Holder's Notes, or any portion thereof that is an integral multiple of $1,000,
for cash at a price equal to 100% of the principal amount of such Notes to be
repurchased together with accrued interest to the Repurchase Date.
In the event of redemption, conversion or repurchase of this Note in
part only, a new Note or Notes for the portion hereof not redeemed, converted or
repurchased will be issued in the name of the Holder hereof upon the
cancellation hereof.
The indebtedness evidenced by this Note is, to the extent provided in
the Indenture, subordinate and subject in right of payment to the prior payment
in full of all Senior Indebtedness, and this Note is issued subject to the
provisions of the Indenture with respect thereto. Each Holder of this Note, by
accepting the same, (a) agrees to and shall be bound by such provisions, (b)
authorizes and directs the Trustee on his behalf to take such action as may be
necessary or appropriate to effectuate the subordination so provided and (c)
appoints the Trustee his attorney-in-fact for any and all such purposes.
If an Event of Default shall occur and be continuing, the principal of
all the Notes may be declared due and payable in the manner and with the effect
provided in the Indenture.
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Notes under the Indenture at any
time by the Company and the Trustee with the consent of the Holder of not less
than 66-2/3% in aggregate principal amount of the Notes at the time Outstanding.
The Indenture also contains provisions permitting the
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<PAGE>
Holders of specified percentages in aggregate principal amount of the Notes at
the time Outstanding, on behalf of the Holders of all the Notes, to waive
compliance by the Company with certain provisions of the Indenture and certain
past defaults under the Indenture and their consequences. Any such consent or
waiver by the Holder of this Note shall be conclusive and binding upon such
Holder and upon all future Holders of this Note and of any Note issued upon the
registration of transfer hereof or in exchange therefor or in lieu hereof,
whether or not notation of such consent or waiver is made up this Note.
No reference herein to the Indenture and no provision of this Note or
of the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of (and premium, if any) and
interest on this Note at the times, place and rate, and in the coin or currency,
herein prescribed or to convert this Note as provided in the Indenture.
Interest on the Notes shall be computed on the basis of a 360-day year
of twelve 30-day months, based on actual days elapsed.
As provided in the Indenture and subject to certain limitations
therein set forth, the transfer of this Note is registrable in the Note
Register, upon surrender of this Note for registration of transfer at the office
or agency of the Company maintained for such purpose in the Borough of
Manhattan, The City of New York, duly endorsed by or accompanied by a written
instrument of transfer in form satisfactory to the Company and the Note
Registrar duly executed by the Holder hereof or his attorney duly authorized in
writing, in each case, with an appropriate signature guarantee, and thereupon
one or more new Notes, of authorized denominations and for the same aggregate
principal amount, will be issued to the designated transferee or transferees.
The Notes are issuable only in registered form without coupons in
denominations of $1,000 and any integral multiple thereof. As provided in the
Indenture and subject to certain limitations therein set forth, Notes are
exchangeable for a like aggregate principal amount of Notes of a different
authorized denomination, as requested by the Holder surrendering the same.
No service charge shall be made for any such registration of transfer
or exchange, but the Company may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith (except as
provided in the Indenture).
Prior to due presentment of this Note for registration of transfer,
the Company, the Trustee and any agent of the Company or the Trustee may treat
the Person in whose name this Note is registered as the owner hereof for all
purposes, whether or not this Note be overdue, and neither the Company, the
Trustee nor any such agent shall be affected by notice to the contrary.
No recourse shall be had for the payment of the principal, premium, if
any, or the interest on this Note, or for any claim based hereon, or otherwise
in respect hereof, or based on or in respect of the Indenture or any indenture
supplemental thereto, against any incorporator, stockholder, officer or
director, as such, past, present or future, of the Company or any successor
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<PAGE>
corporation, whether by virtue of any constitution, statute or rule of law, or
by the enforcement of any assessment or penalty or otherwise, all such liability
being, by the acceptance hereof and as part of the considerations for the issue
hereof, expressly waived and released.
All terms used in this Note which are defined in the Indenture shall
have the meanings assigned to them in the Indenture.
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face
of this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT -
TEN ENT - as tenants by the entireties __________ Custodian _________
JT TEN - as joint tenants with right (Cust) (Minor)
of survivorship and not as Under Uniform Gifts to
tenants in common Minors Act _____________
(State)
Additional abbreviations may also be used though not in above list.
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(FORM OF CONVERSION NOTICE)
CONVERSION NOTICE
TO HOMETOWN BUFFET, INC.
The undersigned registered owner of this Note hereby irrevocably
exercises the option to convert this Note, or the portion hereof (which is
$1,000 or an integral multiple thereof) below designated, into shares of Common
Stock of the Company in accordance with the terms of the Indenture referred to
in this Note, and directs that the shares issuable and deliverable upon the
conversion, together with any check in payment for fractional shares and any
Notes representing any unconverted principal amount hereof, be issued and
delivered to the registered holder hereof unless a different name has been
indicated below. If shares or any portion of this Note not converted are to be
issued in the name of a Person other than the undersigned, the undersigned will
pay all transfer taxes payable with respect thereto. Any amount required to be
paid by the undersigned on account of interest accompanies this Note.
Dated:
------------------------
Signature(s)
Signatures(s) must be guaranteed by a
commercial bank or trust company or a member
firm of a major stock exchange if shares of
Common Stock are to be delivered, or Notes to
be issued, other than to and in the name of
the registered owner.
- ------------------------------
Signature Guarantee
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Fill in for registration of shares
of Common Stock if they are to be
delivered, or Notes if they are to
be issued, other than to and
in the name of the registered owner:
- ------------------------------ Register: ____ Common Stock
(Name) ____ Notes
- ------------------------------
(Street Address) (Check appropriate line(s))
- ------------------------------
(City, State and Zip Code) Principal amount to be converted
(if less than all): $_______,000
(Please print name and address)
Social Security or Other Taxpayer
Identification Number: ________
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<PAGE>
(FORM OF OPTION TO ELECT REPAYMENT
UPON A RISK EVENT)
OPTION TO ELECT REPAYMENT UPON A RISK EVENT
TO HOMETOWN BUFFET, INC.
The undersigned registered owner of this Note hereby irrevocably
acknowledges receipt of a notice from the Company as to the occurrence of a Risk
Event with respect to the Company and requests and instructs the Company to
repay the entire principal amount of this Note, or the portion thereof (which is
$1,000 or an integral multiple thereof) below designated, in accordance with the
terms of the Indenture, together with accrued interest to such date, to the
registered holder hereof.
Date:
------------------------- -----------------------------------
-----------------------------------
Signature(s)
-----------------------------------
Social Security or Other
Taxpayer Identification Number
Principal amount to be repaid
(if less than all):
$_____________,000
NOTICE: The above signatures of the
holder(s) hereof must correspond with
the name as written upon the face of the
Note in every particular without
alteration or enlargement or any change
whatever.
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ASSIGNMENT
Date:
------------------------- -----------------------------------
-----------------------------------
Signature(s)
-----------------------------------
Social Security or Other
Taxpayer Identification Number
Principal amount to be repaid
(if less than all):
$_____________,000
NOTICE: The above signatures of the
holder(s) hereof must correspond with
the name as written upon the face of the
Note in every particular without
alteration or enlargement or any change
whatever.
2.4 FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION.
This is one of the Notes referred to in the within-mentioned
Indenture.
FIRST INTERSTATE BANK OF
CALIFORNIA, as Trustee
By
-------------------------------------
Authorized Signatory
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<PAGE>
ARTICLE 3
THE NOTES
3.1 TITLE AND TERMS.
The aggregate principal amount of Notes which may be authenticated and
delivered under this Indenture is limited to (a) $40,000,000 plus (b) such
additional aggregate principal amount (which may not exceed $6,000,000 principal
amount) of Notes as may be purchased by the Underwriters pursuant to the
Underwriting Agreement, dated November 20, 1995, between the Company, Montgomery
Securities and Alex. Brown & Sons Incorporated, as underwriters, solely to cover
over-allotments, except for Notes authenticated and delivered upon registration
of transfer of, or in exchange for, or in lieu of, other Notes pursuant to
Sections 3.4, 3.5, 3.6, 9.6, 11.8 or 13.2.
The Notes shall be known and designated as the "7% Convertible
Subordinated Notes due 2002" of the Company. The Stated Maturity shall be
December 1, 2002, and they shall bear interest at the rate of 7% per annum, from
the date of initial issuance or from the most recent Interest Payment Date to
which interest has been paid or duly provided for, as the case may be, payable
semi-annually on June 1 and December 1, commencing June 1, 1996, until the
principal thereof is paid or made available for payment.
The principal of (and premium, if any) and interest on the Notes shall
be payable at the office or agency of the Company in the Borough of Manhattan,
The City of New York, maintained for such purpose and at any other office or
agency maintained by the Company for such purpose; provided, however, that at
the option of the Company payment of interest may be made by check mailed to the
address of the Person entitled thereto as such address shall appear in the Note
Register.
The Notes shall be redeemable as provided in Article II.
The Notes shall be subordinated in right of payment to Senior
Indebtedness as provided in Article 12.
The Notes shall be convertible as provided in Article 13.
The Notes shall be subject to repurchase by the Company, at the
election of Holders, as provided in Article 14.
3.2 DENOMINATIONS.
The Notes shall be issuable only in registered form without coupons
and only in denominations of $1,000 and any integral multiple thereof.
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3.3 EXECUTION, AUTHENTICATION, DELIVERY AND DATING.
The Notes shall be executed on behalf of the Company by its Chairman
of the Board, its President or one of its Vice Presidents, attested by its
Secretary or one of its Assistant Secretaries. The signature of any of these
officers on the Notes may be manual or facsimile.
Notes bearing the manual or facsimile signatures of individuals who
were at any time the proper officers of the Company shall bind the Company,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Notes or did not hold
such offices at the date of such Notes.
At any time and from time to time after the execution and delivery of
this Indenture, the Company may deliver Notes executed by the Company to the
Trustee for authentication, together with a Company Order for the authentication
and delivery of such Notes; and the Trustee in accordance with such Company
Order shall authenticate and deliver such Notes as in this Indenture provided
and not otherwise.
Each Note shall be dated the date of its authentication.
No Note shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose unless there appears on such Note a
certificate of authentication substantially in the form provided for herein
executed by the Trustee by manual signature, and such certificate upon any Note
shall be conclusive evidence, and the only evidence, that such Note has been
duly authenticated and delivered hereunder.
3.4 TEMPORARY NOTES.
Pending the preparation of definitive Notes, the Company may execute,
and upon Company Order the Trustee shall authenticate and deliver, temporary
Notes which are printed, lithographed, typewritten, mimeographed or otherwise
produced, in any authorized denomination, substantially of the tenor of the
definitive Notes in lieu of which they are issued and with such appropriate
insertions, omissions, substitutions and other variations as the officers
executing such Notes may determine, as evidenced by their execution of such
Notes.
If temporary Notes are issued, the Company will cause definitive Notes
to be prepared without unreasonable delay. After the preparation of definitive
Notes, the temporary Notes shall be exchangeable for definitive Notes upon
surrender of the temporary Notes at any office or agency of the Company
designated pursuant to Section 10.2, without charge to the Holder. Upon
surrender for cancellation of any one or more temporary Notes the Company shall
execute and the Trustee shall authenticate and deliver in exchange therefor a
like principal amount of definitive Notes of authorized denominations. Until so
exchanged the temporary Notes shall in all respects be entitled to the same
benefits under this Indenture as definitive Notes.
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3.5 REGISTRATION, REGISTRATION OF TRANSFER AND EXCHANGE.
The Company shall cause to be kept at the Corporate Trust Office of
the Trustee a register (the register maintained in such office and in any other
office or agency designated pursuant to Section 10.2 being herein sometimes
collectively referred to as the "Note Register") in which, subject to such
reasonable regulations as it may prescribe, the Company shall provide for the
registration of Notes and of transfers of Notes. The Trustee is hereby
appointed "Note Registrar" for the purpose of registering Notes and transfers of
Notes as herein provided.
Upon surrender for registration of transfer of any Note at an office
or agency of the Company designated pursuant to Section 10.2 for such purpose,
the Company shall execute, and the Trustee shall authenticate and deliver, in
the name of the designated transferee or transferees, one or more new Notes of
any authorized denominations and of a like aggregate principal amount.
At the option of the Holder, Notes may be exchanged for other Notes of
any authorized denominations and of a like aggregate principal amount, upon
surrender of the Notes to be exchanged at such office or agency. Whenever any
Notes are so surrendered for exchange, the Company shall execute, and the
Trustee shall authenticate and deliver, the Notes which the Holder making the
exchange is entitled to receive.
All Notes issued upon any registration of transfer or exchange of
Notes shall be the valid obligations of the Company, evidencing the same debt,
and entitled to the same benefits under this Indenture, as the Notes surrendered
upon such registration of transfer or exchange.
Every Note presented or surrendered for registration of transfer or
for exchange shall (if so required by the Company or the Trustee) be duly
endorsed, or be accompanied by a written instrument of transfer in form
satisfactory to the Company and the Note Registrar duly executed, by the Holder
thereof or his attorney duly authorized in writing.
No service charge shall be made to a Holder for any registration of
transfer or exchange of Notes, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any registration of transfer or exchange of Notes, other than
exchanges pursuant to Sections 3.4, 9.6, 11.8 or 13.2 not involving any
transfer.
The Company shall not be required (i) to issue, register the transfer
of or exchange any Note during a period beginning at the opening of business
fifteen (15) days before the Redemption Date fixed under Section 11.4 and ending
at the close of business on the Redemption Date, or (ii) to register the
transfer of or exchange any Note so selected for redemption in whole or in part,
except the unredeemed portion of any Note being redeemed in part.
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3.6 MUTILATED, DESTROYED, LOST AND STOLEN NOTES.
If any mutilated Note is surrendered to the Trustee, the Company shall
execute and the Trustee shall authenticate and deliver in exchange therefor a
new Note of like tenor and principal amount and bearing a number not
contemporaneously outstanding.
If there shall be delivered to the Company and the Trustee (i)
evidence to their satisfaction of the destruction, or theft of any Note and (ii)
such security or indemnity as may be required by them to save each of them and
any agent of either of them harmless, then, in the absence of notice to the
Company or the Trustee that such Note has been acquired by a bona fide
purchaser, the Company shall execute, and the Trustee shall authenticate and
deliver, in lieu of any such destroyed, lost or stolen Note, a new Note of like
tenor and principal amount and bearing a number not contemporaneously
outstanding.
In case any such mutilated, destroyed, lost or stolen Note has become
or is about to become due and payable, the Company in its discretion may,
instead of issuing a new Note, pay such Note.
Upon the issuance of any New Note under this Section, the Company may
require the payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto and any other expenses (including
the fees and expenses of the Trustee) connected therewith.
Every Note issued pursuant to this Section in lieu of any destroyed,
lost or stolen Note shall constitute an original additional contractual
obligation of the Company, whether or not the destroyed, lost or stolen Note
shall be at any time enforceable by anyone, and shall be entitled to all the
benefits of this Indenture equally and proportionately with any and all other
Notes duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Notes.
3.7 PAYMENT OF INTEREST; INTEREST RIGHTS PRESERVED.
Interest on any Note which is payable, and is punctually paid or duly
provided for, on any Interest Payment Date shall be paid to the Person in whose
name that Note (or one or more Predecessor Notes) is registered at the close of
business on the Regular Record Date for such interest.
Any interest on any Note which is payable, but is not punctually paid
or duly provided for, on any Interest Payment Date (herein called "Defaulted
Interest") shall forthwith cease to be payable to the Holder on the relevant
Regular Record Date by virtue of having been
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such Holder, and such Defaulted Interest may be paid by the Company, at its
election in each case, as provided in Clause (1) or (2) below:
(1) The Company may elect to make payment of any Defaulted
Interest to the Persons in whose names the Notes (or their respective
Predecessor Notes) are registered at the close of business on a Special Record
Date for the payment of such Defaulted Interest, which shall be fixed in the
following manner. The Company shall notify the Trustee in writing of the amount
of Defaulted Interest proposed to be paid on each Note and the date of the
proposed payment, and at the same time the Company shall deposit with the
Trustee an amount of money equal to the aggregate amount proposed to be paid in
respect of such Defaulted Interest or shall make arrangements satisfactory to
the Trustee for such deposit prior to the date of the proposed payment, such
money when deposited to be held in trust for the benefit of the Persons entitled
to such Defaulted Interest as in this Clause provided. Thereupon the Trustee
shall fix a Special Record Date for the payment of such Defaulted Interest which
shall be not more than fifteen (15) days and not less than ten (10) days prior
to the date of the proposed payment and not less than ten (10) days after the
receipt by the Trustee of the notice of the proposed payment. The Trustee shall
promptly notify the Company of such Special Record Date and, in the name and at
the expense of the Company, shall cause notice of the proposed payment of such
Defaulted Interest and the Special Record Date therefor to be mailed, first-
class postage prepaid, to each Holder at his address as it appears in the Note
Register, not less than ten (10) days prior to such Special Record Date. Notice
of the proposed payment of such Defaulted Interest and the Special Record Date
therefor having been so mailed, such Defaulted Interest shall be paid to the
Persons in whose names the Notes (or their respective Predecessor Notes) are
registered at the close of business on such Special Record Date and shall no
longer be payable pursuant to the following Clause (2).
(2) The Company may make payment of any Defaulted Interest in
any other lawful manner not inconsistent with the requirements of any securities
exchange on which the Notes may be listed, and upon such notice as may be
required by such exchange, if, after notice given by the Company to the Trustee
of the proposed payment, pursuant to this Clause, such manner of payment shall
be deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section, each Note
delivered under this Indenture upon registration of transfer of or in exchange
for or in lieu of any other Note shall carry the rights to interest accrued and
unpaid, and to accrue, which were carried by such other Note.
In the case of any Note which is converted after any Regular Record
Date and on or prior to the next succeeding Interest Payment Date (other than
any Note whose Maturity is prior to such Interest Payment Date), interest whose
Stated Maturity is on such Interest Payment Date shall be payable on such
Interest Payment Date notwithstanding such conversion, and such interest
(whether or not punctually paid or duly provided for) shall be paid to the
Person in whose name that Note (or one or more Predecessor Notes) is registered
at the close of business on such Regular Record Date. Except as otherwise
expressly provided in the immediately
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preceding sentence, in the case of any Note which is converted, interest whose
Stated Maturity is after the date of conversion of such Note shall not be
payable.
3.8 PERSONS DEEMED OWNERS.
Prior to due presentment of a Note for registration of transfer, the
Company, the Trustee and any agent of the Company or the Trustee may treat the
Person in whose name such Note is registered as the owner of such Note for the
purpose of receiving payment of principal of (and premium, if any) and (subject
to Section 3.7) interest on such Note, and for all other purposes whatsoever,
whether or not such Note be overdue, and neither the Company, the Trustee nor
any agent of the Company or the Trustee shall be affected by notice to the
contrary.
3.9 CANCELLATION.
All Notes surrendered for payment, redemption, registration of
transfer or exchange or conversion shall, if surrendered to any Person other
than the Trustee, be delivered to the Trustee and shall be promptly canceled by
it. The Company may at any time deliver to the Trustee for cancellation any
Notes previously authenticated and delivered hereunder which the Company may
have acquired in any manner whatsoever, and all Notes so delivered shall be
promptly canceled by the Trustee. No Notes shall be authenticated in lieu of or
in exchange for any Notes canceled as provided in this Section, except as
expressly permitted by this Indenture. All canceled Notes held by the Trustee
shall be disposed of as directed by a Company Order.
3.10 COMPUTATION OF INTEREST.
Interest on the Notes shall be computed on the basis of a 360-day year
of twelve 30-day months, based on actual days elapsed.
ARTICLE 4
SATISFACTION AND DISCHARGE
4.1 SATISFACTION AND DISCHARGE OF INDENTURE.
This Indenture shall cease to be of further effect (except as to any
surviving rights of conversion, registration of transfer or exchange of Notes
herein expressly provided for), and the Trustee, on demand of and at the expense
of the Company, shall execute proper instruments acknowledging satisfaction and
discharge of this Indenture, when
(1) either
(A) all Notes theretofore authenticated and delivered
(other than (i) Notes which have been destroyed, lost or stolen and which have
been replaced or paid as
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provided in Section 3.6 and (ii) Notes for whose payment money has theretofore
been deposited in trust or segregated and held in trust by the Company and
thereafter repaid to the Company or discharged from such trust, as provided in
Section 10.3) have been delivered to the Trustee for cancellation; or
(B) all such Notes not theretofore delivered to the Trustee
for cancellation
(i) have become due and payable; or
(ii) will become due and payable at their Stated
Maturity within one (1) year, or
(iii) are to be called for redemption within one (1)
year under arrangements satisfactory to the Trustee for the giving of notice of
redemption by the Trustee in the name, and at the expense, of the Company.
and the Company, in the case of (i), (ii) or (iii) above, has deposited or
caused to be deposited with the Trustee as trust funds in trust for the purpose
an amount sufficient to pay and discharge the entire indebtedness on such Notes
not theretofore delivered to the Trustee for cancellation, for principal (and
premium, if any) and interest to the date of such deposit (in the case of Notes
which have become due and payable) or to the Stated Maturity or Redemption Date,
as the case may be;
(2) the Company has paid or caused to be paid all other sums
payable hereunder by the Company; and
(3) the Company has delivered to the Trustee an Officers'
Certificate and an opinion of Counsel, each stating that all conditions
precedent herein provided for relating to the satisfaction and discharge of this
Indenture have been complied with.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Section 6.7 and, if money shall
have been deposited with the Trustee pursuant to subclause (B) of Clause (1) of
this Section, the obligations of the Trustee under Section 4.2 and the last
paragraph of Section 10.3 shall survive.
4.2 APPLICATION OF TRUST MONEY.
Subject to the provisions of the last paragraph of Section 10.3, all
money deposited with the Trustee pursuant to Section 4.1 shall be held in trust
and applied by it, in accordance with the provisions of the Notes and this
Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent) as the Trustee may
determine, to the Persons entitled thereto, of the principal (and premium, if
any) and interest for whose payment such money has been deposited with the
Trustee. All moneys
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deposited with the Trustee pursuant to Section 4.1 (and held by it, or any
Paying Agent) for the payment of Notes subsequently converted shall be returned
to the Company upon Company Request.
4.3 REINSTATEMENT.
If the Trustee or the Paying Agent is unable to apply any money in
accordance with this Article 4 by reason of any order or judgment of any court
or governmental authority enjoining, restraining or otherwise prohibiting such
application, then the Company's obligations under this Indenture and the Notes
shall be revived and reinstated as though no deposit had occurred pursuant to
this Article 4 until such time as the Trustee or Paying Agent is permitted to
apply all money held in trust with respect to the Notes; provided, however, that
if the Company makes any payment of principal of or any premium or interest on
any Note following the reinstatement of its obligations, the Company shall be
subrogated to the rights of the Holders to receive such payment from the money
so held in trust.
ARTICLE 5
REMEDIES
5.1 EVENTS OF DEFAULT.
"Event of Default," wherever used herein, means any one of the
following events (whatever the reason for such Event of Default and whether it
shall be voluntary or involuntary or be effected by operation of law or pursuant
to any judgment, decree or order of any court or any order, rule or regulation
of any administrative or governmental body):
(1) default in the payment of the principal of (or premium, if
any, on) any Note at its Maturity, whether or not such payment is prohibited by
the provisions of Article 12; or
(2) default in the payment of any interest upon any Note when it
becomes due and payable, and continuance of such default for a period of thirty
(30) days, whether or not such payment is prohibited by the provisions of
Article 12; or
(3) a default in the payment of the Repurchase Price in respect
of any Note on the Repurchase Date therefore in accordance with the provisions
of Article 14, whether or not such payment is prohibited by the provisions of
Article 12; or
(4) default in the performance, or breach, of any covenant or
warranty of the Company in this Indenture (other than a covenant or warranty in
default in whose performance or whose breach is elsewhere in this Section
specifically dealt with), and continuance of such default or breach for a period
of sixty (60) days after there has been given, by registered or certified mail,
to the Company by the Trustee, or to the Company and the Trustee
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by the Holders of at least 10% in principal amount of the Outstanding Notes, a
written notice specifying such default or breach and requiring it to be remedied
and stating that such notice is a "Notice of Default" hereunder; or
(5) a default under any bond, debenture, note or other evidence
of indebtedness for money borrowed by the Company or any of its Significant
Subsidiaries or under any mortgage, indenture or instrument under which there
may be issued or by which there may be secured or evidenced any indebtedness for
money borrowed by the Company or any Significant Subsidiary in an amount,
together with all other such indebtedness, exceeding $1,000,000, whether such
indebtedness now exists or shall hereafter be created, which default shall
constitute a failure to pay any portion of principal or interest on such
indebtedness when due and payable after the expiration of any applicable grace
period with respect thereto or shall have resulted in such indebtedness in an
amount exceeding $1,000,000 becoming or being declared due and payable prior to
the date on which it would otherwise have become due and payable, without such
indebtedness having been discharged, or such acceleration having been rescinded
or annulled, within a period of ten (10) days after there shall have been given,
by registered or certified mail, to the Company by the Trustee or to the Company
and the Trustee by the Holders of at least 10% in principal amount of the
Outstanding Notes a written notice specifying such default and requiring the
Company to cause such indebtedness to be discharged or cause such acceleration
to be rescinded or annulled and stating that such notice is a "Notice of
Default" hereunder; or
(6) a final judgment or final judgments for the payment of money
are entered by a court or courts of competent jurisdiction against the Company
or any Significant Subsidiary which remains undischarged for a period (during
which execution shall not be effectively stayed) ending on the later of (i)
sixty (60) days after the entry of such judgment, as extended by any such
effective stay of its execution or (ii) the date on which any payment is or
becomes due and payable pursuant to such judgment in accordance with the terms
of such judgment, provided that the aggregate of all such outstanding judgments
exceeds $1,000,000 (excluding any amounts covered by insurance as to which the
insurer has not denied liability); or
(7) the entry by a court having jurisdiction in the premises of
(A) a decree or order for relief in respect of the Company or a Significant
Subsidiary in an involuntary case or proceeding under any applicable Federal or
State bankruptcy, insolvency, reorganization or other similar law or (B) a
decree or order adjudging the Company or a Subsidiary bankrupt or insolvent, or
approving as properly filed a petition seeking reorganization, arrangement,
adjustment or composition of or in respect of the Company or any Significant
Subsidiary under any applicable Federal or State law, or appointing a custodian,
receiver, liquidator, assignee, trustee, sequestrator or other similar official
of the Company or of any substantial part of its property, or ordering the
winding up or liquidation of its affairs, and the continuance of any such decree
or order for relief or any such other decree or order unstayed and in effect for
a period of sixty (60) consecutive days; or
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(8) the commencement by the Company or any Significant
Subsidiary of a voluntary case or proceeding under any applicable Federal or
State bankruptcy, insolvency, reorganization or other similar law or of any
other case or proceeding to be adjudicated as bankrupt or insolvent, or the
consent by it to the entry of a decree or order for relief in respect of the
Company or any Significant Subsidiary in an involuntary case or proceeding under
any applicable Federal or State bankruptcy, insolvency, reorganization or other
similar law or to the commencement or any bankruptcy or insolvency case or
proceeding against it, or the filing by it of a petition or answer or consent
seeking reorganization or relief under any applicable Federal or State law, or
the consent by it to the filing of such petition or to the appointment of or
taking possession by a custodian, receiver, liquidator, assignee, trustee,
sequestrator or other similar official of the Company or any Significant
Subsidiary or of any substantial part of its property, or the making by it of
any assignment for the benefit of creditors, or the admission by it in writing
of its inability to pay its debts generally as they become due, or the taking of
corporate action by the Company or any Significant Subsidiary in furtherance of
any such action.
5.2 ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT.
If an Event of Default occurs and is continuing, then and in every
such case the Trustee or the Holders of not less than 25% in principal amount of
the Outstanding Notes may declare the principal of all the Notes to be due and
payable immediately, by a notice in writing to the Company (and to the Trustee
if given by Holders), and upon any such declaration such principal shall become
immediately due and payable.
At any time after such declaration of acceleration has been made and
before a judgment or decree for payment of the money due has been obtained by
the Trustee as hereinafter in this Article provided, the Holders of 66-2/3% in
principal amount of the outstanding Notes, by written notice to the Company and
the Trustee, may rescind and annul such declaration and its consequences if
(1) the Company has paid or deposited with the Trustee a sum
sufficient to pay
(A) all overdue interest on all Notes,
(B) the principal of (and premium, if any, on) any Notes
which have become due otherwise than by such declaration of acceleration and
interest thereon at the rate borne by the Notes,
(C) to the extent that payment of such interest is lawful,
interest upon overdue interest at the rate borne by the Notes, and
(D) all sums paid or advanced by the Trustee hereunder and
the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel;
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and
(2) all Events of Default, other than nonpayment of the
principal of Notes which have become due solely by such declaration of
acceleration, have been cured or waived as provided in Section 5.13.
No such rescission shall affect any subsequent default or impair any
right consequent thereon.
5.3 COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY TRUSTEE.
The Company covenants that if:
(1) default is made in the payment of any interest on any Note
when such interest becomes due and payable and such default continues for a
period of thirty (30) days, or
(2) default is made in the payment of the principal of (or
premium, if any, on) any Note at the maturity thereof, the Company will, upon
demand of the Trustee, pay to it, for the benefit of the Holders of such Notes,
the whole amount then due and payable on such Notes for principal (and premium,
if any) and interest, and, to the extent that payment of such interest shall be
legally enforceable, interest on any overdue principal (and premium, if any) and
on any overdue interest, at the rate borne by the Notes, and in addition
thereto, such further amount as shall be sufficient to cover the costs and
expenses of collection, including the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel.
If an Event of Default occurs and is continuing, the Trustee may in
its discretion proceed to protect and enforce its rights and the rights of the
Holders by such appropriate judicial proceedings as the Trustee shall deem most
effectual to protect and enforce any such rights, whether for the specific
enforcement of any covenant or agreement in this Indenture or in aid of the
exercise of any power granted herein, or to enforce any other proper remedy.
5.4 TRUSTEE MAY FILE PROOFS OF CLAIM.
In case of any judicial proceeding relative to the Company (or any
other obligor upon the Notes), its property or its creditors, the Trustee shall
be entitled and empowered, by intervention in such proceeding or otherwise, to
take any and all actions authorized under the Trust Indenture Act in order to
have claims of the Holders and the Trustee allowed in any such proceeding. In
particular, the Trustee shall be authorized to collect and receive any moneys or
other property payable or deliverable on any such claims and to distribute the
same; and any custodian, receiver, assignee, trustee, liquidator, sequestrator
or other similar official in any such
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judicial proceeding is hereby authorized by each Holder to make such payments to
the Trustee and, in the event that the Trustee shall consent to the making of
such payments directly to the Holders, to pay to the Trustee any amount due it
for the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 6.7.
No provision of this Indenture shall be deemed to authorize the
Trustee to authorize or consent to or accept or adopt on behalf of any Holder
any plan of reorganization, arrangement, adjustment or composition affecting the
Notes or the rights of any Holder thereof or to authorize the Trustee to vote in
respect of the claim of any Holder in any such proceeding.
5.5 TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF NOTES.
All rights of action and claims under this Indenture or the Notes may
be prosecuted and enforced by the Trustee without the possession of any of the
Notes or the production thereof in any proceeding relating thereto, and any such
proceeding instituted by the Trustee shall be brought in its own name as trustee
of an express trust, and any recovery of judgment shall, after provision for the
payment of the reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel, be for the ratable benefit of the Holders
of the Notes in respect of which such judgment has been recovered.
5.6 APPLICATION OF MONEY COLLECTED.
Subject to Article 12, any money collected by the Trustee pursuant to
this Article shall be applied in the following order, at the date or dates fixed
by the Trustee and, in case of the distribution of such money on account of
principal (or premium, if any) or interest, upon presentation of the Notes and
the notation thereon of the payment if only partially paid and upon surrender
thereof if fully paid:
FIRST: To the payment of all amounts due the Trustee under Section
6.7; and
SECOND: To the payment of the amounts then due and unpaid for
principal of (and premium, if any) and interest on the Notes in respect of which
or for the benefit of which such money has been collected, ratably, without
preference or priority of any kind, according to the amounts due and payable on
such Notes for principal (and premium, if any) and interest, respectively.
5.7 LIMITATION ON SUITS.
No Holder of any Note shall have any right to institute any
proceeding, judicial or otherwise, with respect to this Indenture, or for the
appointment of a receiver or trustee, or for any other remedy hereunder, unless
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(1) such Holder has previously given written notice to the
Trustee of a continuing Event of Default;
(2) the Holders of not less than 25% in principal amount of the
outstanding Notes shall have made written request to the Trustee to institute
proceedings in respect of such Event of Default in its own name as Trustee
hereunder;
(3) such Holder or Holders have offered to the Trustee
reasonable indemnity against the costs, expenses and liability to be incurred in
compliance with such request;
(4) the Trustee for sixty (60) days after its receipt of such
notice, request and offer of indemnity has failed to institute any such
proceeding; and
(5) no direction inconsistent with such written request has been
given to the Trustee during such sixty (60) day period by the Holders of 66-2/3%
in principal amount of the Outstanding Notes.
It being understood and intended that no one or more Holders shall have any
right in any manner whatever by virtue of, or by availing itself of, any
provision of this Indenture to affect, disturb or prejudice the rights of any
other Holders, or to obtain or to seek to obtain priority or preference over any
other Holders or to enforce any right under this Indenture, except in the manner
herein provided and for the equal and ratable benefit of all the Holders.
5.8 UNCONDITIONAL RIGHT OF HOLDERS TO RECEIVE PRINCIPAL, PREMIUM AND
INTEREST AND TO CONVERT.
Notwithstanding any other provision in this Indenture, the Holder of
any Note shall have the right, which is absolute and unconditional, to receive
payment of the principal of (and premium, if any) and (subject to Section 3.7)
interest on such Note on the respective Stated Maturities expressed in such Note
(or, in the case of redemption, on the Redemption Date), to have such Note
repurchased in accordance with Article 14 and to convert such Note in accordance
with Article 13 and to institute suit for the enforcement of any such payment,
right to require repurchase and right to convert, and such rights shall not be
impaired without the consent of such Holder.
5.9 RESTORATION OF RIGHTS AND REMEDIES.
If the Trustee or any Holder has instituted any proceeding to enforce
any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Trustee or to such Holder, then and in every such case, subject to any
determination in such proceeding, the Company, the Trustee and the Holders shall
be restored severally and respectively to their former positions hereunder and
thereafter all
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rights and remedies of the Trustee and the Holders shall continue as though no
such proceeding had been instituted.
5.10 RIGHTS AND REMEDIES CUMULATIVE.
Except as otherwise provided with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Notes in the last paragraph of
Section 3.6, no right or remedy herein conferred upon or reserved to the Trustee
or to the Holders is intended to be exclusive of any other right or remedy, and
every right and remedy shall, to the extent permitted by law, be cumulative and
in addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
5.11 DELAY OR OMISSION NOT WAIVER.
No delay or omission of the Trustee or of any Holder or any Note to
exercise any right or remedy accruing upon any Event of Default shall impair any
such right or remedy or constitute a waiver of any such Event of Default or any
acquiescence therein. Every right and remedy given by this Article or by law to
the Trustee or to the Holders may be exercised from time to time, and as often
as may be deemed expedient, by the Trustee or by the Holders, as the case may
be.
5.12 CONTROL BY HOLDERS.
Notwithstanding the provisions of Section 316(a) of the Trust
Indenture Act, which is expressly excluded herein, the Holders of 66-2/3% in
principal amount of the Outstanding Notes shall have the right to direct the
time, method and place of conducting any proceeding for any remedy available to
the Trustee or exercising any trust or power conferred on the Trustee, provided
that:
(1) such direction shall not be in conflict with any rule of law
or with this Indenture, and
(2) the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction.
5.13 WAIVER OF PAST DEFAULTS.
Notwithstanding the provisions of Section 316(a) of the Trust
Indenture Act, which is expressly excluded herein, the Holders of not less than
66-2/3% in principal amount of
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the Outstanding Notes may on behalf of the Holders of all the Notes waive any
past default hereunder and its consequences, except a default
(1) in the payment of the principal of (or premium, if any) or
interest on any Note,
(2) in the right of a Holder to redeem or convert the Note, or
(3) in respect of a covenant or provision hereof which under
Article 9 cannot be modified or amended without the consent of the Holder of
each Outstanding Note affected.
Upon any such waiver, such default shall cease to exist, and any Event
of Default arising therefrom shall be deemed to have been cured, for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other default or impair any right consequent thereof.
5.14 UNDERTAKING FOR COSTS.
In any suit for the enforcement of any right or remedy under this
Indenture, or in any suit against the Trustee for any action taken, suffered or
omitted by it as Trustee, a court may require any party litigant in such suit to
file an undertaking to pay the costs of such suit, and may assess costs against
any such party litigant, in the manner and to the extent provided in the Trust
Indenture Act; provided that neither this Section nor the Trust Indenture Act
shall be deemed to authorize any court to require such an undertaking or to make
such an assessment in any suit instituted by the Company or in any suit for the
enforcement of the right to convert any Note in accordance with Article 13.
5.15 WAIVERS OF STAY OR EXTENSION LAWS.
The Company covenants (to the extent that it may lawfully do so) that
it will not at any time insist upon, or plead, or in any manner whatsoever claim
or take the benefit or advantage of, any stay or extension law wherever enacted,
now or at any time hereafter in force, which may affect the covenants or the
performance of this Indenture; and the Company (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such law
and covenants that it will not hinder, delay or impede the execution of any
power herein granted to the Trustee, but will suffer and permit the execution of
every such power as though no such law had been enacted.
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ARTICLE 6
THE TRUSTEE
6.1 CERTAIN DUTIES AND RESPONSIBILITIES.
The duties and responsibilities of the Trustee shall be as provided by
the Trust Indenture Act. Notwithstanding the foregoing, no provision of this
Indenture shall require the Trustee to expend or risk its own funds or otherwise
incur any financial liability in the performance of any of its duties hereunder,
or in the exercise of any of its rights or powers, if it shall have reasonable
grounds for believing that repayment of such funds or adequate indemnity against
such risk or liability is not reasonably assured to it. Whether or not therein
expressly so provided, every provision of this Indenture relating to the conduct
or affecting the liability of or affording protection to the Trustee shall be
subject to the provisions of this Section.
All indemnification and releases from liability granted herein to the
Trustee shall extend to the directors, officers, employees and agents of the
Trustee.
6.2 NOTICE OF DEFAULTS.
The Trustee shall give the Holders notice of any default hereunder, of
which a responsible officer in the Corporate Trust Office of the Trustee has
actual knowledge, as and to the extent provided by the Trust Indenture Act;
provided, however, that in the case of any default of the character specified in
Section 5.1(4), no such notice to Holders shall be given until at least thirty
(30) days after the occurrence thereof. For the purpose of this Section, the
term "default" means any event which is, or after notice or lapse of time or
both would become, an Event of Default.
6.3 CERTAIN RIGHTS OF TRUSTEE.
Subject to the provisions of Section 6.1:
(a) the Trustee may rely and shall be protected in acting
or refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order, bond,
debenture, note, other evidence of indebtedness or other paper or document
believed by it to be genuine and to have been signed or presented by the proper
party or parties;
(b) any request or direction of the Company mentioned
herein shall be sufficiently evidenced by a Company Request or Company Order and
any resolution of the Board of Directors may be sufficiently evidenced by a
Board Resolution;
(c) whenever in the administration of this Indenture the
Trustee shall deem it desirable that a matter be proved or established prior to
taking, suffering or omitting any
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action hereunder, the Trustee (unless other evidence be herein practically
prescribed) may, in the absence of bad faith on its part, rely upon an Officers'
Certificate;
(d) the Trustee may consult with counsel and the written
advice of such counsel of any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or omitted
by it hereunder in good faith and in reliance thereon;
(e) the Trustee shall be under no obligation to exercise
any of the rights or powers vested in it by this Indenture at the request or
direction of any of the Holders pursuant to this Indenture, unless such Holders
shall have offered to the Trustee reasonable security or indemnity against the
costs, expenses and liabilities which might be incurred by it in compliance with
such request or direction;
(f) the Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction, consent,
order, bond, debenture, note, other evidence of indebtedness or other paper or
document, but the Trustee, in its discretion, may make such further inquiry or
investigation into such facts or matters as it may see fit, and, if the Trustee
shall determine to make such further inquiry or investigation, it shall be
entitled to examine the books, records and premises of the Company, personally
or by agent or attorney; and
(g) the Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
agents or attorneys and the Trustee shall not be responsible for any misconduct
or negligence on the part of any agent or attorney appointed with due care by it
hereunder.
6.4 NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF NOTES.
The recitals contained herein and in the Notes, except the Trustee's
certificates of authentication, shall be taken as the statements of the Company,
and the Trustee assumes no responsibility for their correctness. The Trustee
makes no representations as to the validity or sufficiency of this Indenture or
of the Notes. The Trustee shall not be accountable for the use or application
by the Company of Notes or the proceeds thereof.
6.5 MAY HOLD NOTES.
The Trustee, any Paying Agent, any Note Registrar or any other agent
of the Company, in its individual or any other capacity, may become the owner or
pledgee of Notes and, subject to Sections 6.8 and 6.13, may otherwise deal with
the Company with the same rights it would have if it were not Trustee, Paying
Agent, Note Registrar or such other agent.
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6.6 MONEY HELD IN TRUST.
Money held by the Trustee in trust hereunder need not be segregated
from other funds except to the extent required by law. The Trustee shall be
under no liability for interest on any money received by it hereunder except as
otherwise agreed with the Company.
6.7 COMPENSATION AND REIMBURSEMENT.
The Company agrees
(1) to pay to the Trustee from time to time reasonable
compensation for all services rendered by it hereunder (which compensation shall
not be limited by any provision of law in regard to the compensation of a
trustee of an express trust);
(2) except as otherwise expressly provided herein, to
reimburse the Trustee upon its request for all reasonable expenses,
disbursements and advances incurred or made by the Trustee in accordance with
any provision of this Indenture (including the reasonable compensation and the
expenses and disbursements of its agents and counsel), except any such expense,
disbursement or advance as may be attributable to its negligence or bad faith;
and
(3) to indemnify the Trustee for, and to hold it harmless
against, any loss, liability or expense incurred without negligence or bad faith
on its part, arising out of or in connection with the acceptance or
administration of this trust, including the costs and expenses of defending
itself against any claim or liability in connection with the exercise or
performance of any of its powers or duties hereunder.
As necessary for the performance of the obligations of the Company
under this Section, the Trustee shall have a lien prior to the Notes upon all
property and funds held or collected by the Trustee, except funds held in trust
for the payment of principal of (and premium, if any) or interest on the Notes.
6.8 DISQUALIFICATIONS; CONFLICTING INTERESTS.
If the Trustee has or shall acquire a conflicting interest within the
meaning of the Trust Indenture Act, the Trustee shall either eliminate such
interest or resign, to the extent and in the manner provided by, and subject to
the provisions of, the Trust Indenture Act and this Indenture.
6.9 CORPORATE TRUSTEE REQUIRED; ELIGIBILITY.
There shall at all times be a Trustee hereunder which shall be a
Person that is eligible pursuant to the Trustee Indenture Act to act as such and
has a combined capital and
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surplus of at least $40,000,000. If such Person publishes reports of condition
at least annually, pursuant to law or to the requirements of any supervising or
examining authority, then for the purposes of this Section, the combined capital
and surplus of such Person shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. If at
any time the Trustee shall cease to be eligible in accordance with the
provisions of this Section, it shall resign immediately in the manner and with
the effect hereinafter specified in this Article.
6.10 REGISTRATION AND REMOVAL; APPOINTMENT OF SUCCESSOR.
(a) No resignation or removal of the Trustee and no appointment of
a successor Trustee pursuant to this Article shall be effective until the
acceptance of appointment by the successor Trustee under Section 6.11.
(b) The Trustee may resign at any time by giving written notice
thereof to the Company. If an instrument of acceptance by a successor Trustee
shall not have been delivered to the Trustee within thirty (30) days after the
giving of such notice of resignation, the resigning Trustee may petition any
court of competent jurisdiction for the appointment of a successor Trustee.
(c) The Trustee may be removed at any time by Act of the Holders of
66 2/3% in principal amount of the Outstanding Notes, delivered to the Trustee
and to the Company.
(d) If at any time:
(1) the Trustee shall fail to comply with Section 6.8 after
written request therefor by the Company or by any Holder who has been a bona
fide Holder of a Note for at least six (6) months, or
(2) the Trustee shall cease to be eligible under Section
6.9 and shall fail to resign after written request therefor by the Company or by
any such Holder, or
(3) the Trustee shall become incapable of acting or shall
be adjudged a bankrupt or insolvent or a receiver of the Trustee or of its
property shall be appointed or any public officer shall take charge or control
of the Trustee or of its property or affairs for the purpose of rehabilitation,
conservation or liquidation,
then, in any such case, (I) the Company by a Board Resolution may remove
the Trustee, or (II) subject to Section 5.14, any Holder who has been a bona
fide Holder of a Note for at least six (6) months may, on behalf of himself and
all others similarly situated, petition any court of competent jurisdiction for
the removal of the Trustee and the appointment of a successor Trustee.
(e) If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of Trustee for any cause, the
Company, by a Board
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Resolution, shall promptly appoint a successor Trustee. If, within ninety (90)
days after such resignation, removal or incapability, or the occurrence of such
vacancy, a successor Trustee shall be appointed by Act of the Holders of 66-2/3%
in principal amount of the Outstanding Notes delivered to the Company and the
retiring Trustee, the successor Trustee so appointed shall, forthwith upon its
acceptance of such appointment, become the successor Trustee and supersede the
successor Trustee appointed by the Company. If no successor Trustee shall have
been so appointed by the Company or the Holders and accepted appointment in the
manner hereinafter provided, any Holder who has been a bona fide Holder of a
Note for at least six (6) months may, on behalf of himself and all others
similarly situated, petition any court of competent jurisdiction for the
appointment of a successor Trustee.
(f) The Company shall give notice of each resignation and each
removal of the Trustee and each appointment of a successor Trustee to all
Holders in the manner provided in Section 1.6. Each notice shall include the
name of the successor Trustee and the address of its Corporate Trust Office.
6.11 ACCEPTANCE OF APPOINTMENT BY SUCCESSOR.
Every successor Trustee appointed hereunder shall execute,
acknowledge and deliver to the Company and to the retiring Trustee an instrument
accepting such appointment, and thereupon the resignation or removal of the
retiring Trustee shall become effective and such successor Trustee, without any
further act, deed or conveyance, shall become vested with all the rights,
powers, trusts and duties of the retiring Trustee; but, on request of the
Company or the successor Trustee, such retiring Trustee shall, upon payment of
its charges, execute and deliver an instrument transferring to such successor
Trustee all the rights, powers and trusts of the retiring Trustee and shall duly
assign, transfer and deliver to such successor Trustee all property and money
held by such retiring Trustee hereunder. Upon request of any such successor
Trustee, the Company shall execute any and all instruments for more fully and
certainly vesting in and confirming to such successor Trustee all such rights,
powers and trusts.
No successor Trustee shall accept its appointment unless at the time
of such acceptance such successor Trustee shall be qualified and eligible under
this Article.
6.12 MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO BUSINESS.
Any corporation into which the Trustee may be merged or converted or
with which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all the corporate trust business
of the Trustee, shall be the successor of the Trustee hereunder, provided such
corporation shall be otherwise qualified and eligible under this Article,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto. In case any Notes shall have been authenticated, but
not delivered, by the Trustee then in office, any successor by merger,
conversion or consolidation to such authenticating Trustee may
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adopt such authentication and deliver the Notes so authenticated with the
same effect as if such successor Trustee had itself authenticated such Notes.
6.13 PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.
If and when the Trustee shall be or become a creditor of the Company
(or any other obligor upon the Notes), the Trustee shall be subject to the
provisions of the Trust Indenture Act regarding the collection of claims against
the Company (or any such other obligor).
6.14 APPOINTMENT OF AUTHENTICATING AGENT.
The Trustee may appoint an Authenticating Agent or Agents which shall
be authorized to act on behalf of the Trustee to authenticate Notes issued upon
original issue and upon exchange, registration of transfer, partial conversion
or partial redemption or pursuant to Section 3.6, and Notes so authenticated
shall be entitled to the benefits of this Indenture and shall be valid and
obligatory for all purposes as if authenticated by the Trustee hereunder.
Whenever reference is made in this Indenture to the authentication and delivery
of Notes by the Trustee or the Trustees certificate of authentication, such
references shall be deemed to include authentication and delivery on behalf of
the Trustee by an Authenticating Agent and a certificate of authentication
executed on behalf of the Trustee by an Authenticating Agent. Each
Authenticating Agent shall be acceptable to the Company and shall at all times
be a corporation organized and doing business under the laws of the United
States of America, any State thereof or the District of Columbia, authorized
under such laws to act as Authenticating Agent, having a combined capital and
surplus of not less than $40,000,000 and subject to supervision or examination
by Federal or State authority. If such Authenticating Agent publishes reports
of condition at least annually, pursuant to law or to the requirements of said
supervising or examining authority, then for the purposes of this Section, the
combined capital and surplus of such Authenticating Agent shall be deemed to be
its combined capital and surplus as set forth in its most recent report of
condition so published. If at any time an Authenticating Agent shall cease to
be eligible in accordance with the provisions of this Section, such
Authenticating Agent shall resign immediately in the manner and with the effect
specified in this Section.
Any corporation into which an Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which such Authenticating Agent
shall be a party, or any corporation succeeding to the corporate agency or
corporate trust business of an Authenticating Agent, shall continue to be an
Authenticating Agent, provided such corporation shall be otherwise eligible
under this section, without the execution or filing of any paper or any further
act on the part of the Trustee or the Authenticating Agent.
An Authenticating Agent may resign at any time by giving written
notice thereof to the Trustee and to the Company. The Trustee may at any time
terminate the agency of an
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Authenticating Agent by giving written notice thereof to such Authenticating
Agent and to the Company. Upon receiving such a notice of resignation or upon
such a termination, or in case at any time such Authenticating Agent shall cease
to be eligible in accordance with the provisions of this Section, the Trustee
may appoint a successor Authenticating Agent which shall be acceptable to the
Company and shall mail written notice of such appointment by first-class mail,
postage prepaid, to all Holders as their names and addresses appear in the Note
Register. Any successor Authenticating Agent upon acceptance of its appointment
hereunder shall become vested with all the rights, powers, and duties of its
predecessor hereunder, with like effect as if originally named as an
Authenticating Agent. No successor Authenticating Agent shall be appointed
unless eligible under the provisions of this Section.
The Trustee agrees to pay to each Authenticating Agent from time to
time reasonable compensation for its services under this Section, and the
Trustee shall entitled to be reimbursed for such payments, subject to the
provisions of Section 6.7.
If an appointment is made pursuant to this Section, the Notes may
have endorsed thereon, in addition to the Trustees certificate of
authentication, an alternative certificate of authentication in the following
form.
This in one of the Notes described in the within mentioned Indenture.
FIRST INTERSTATE BANK OF
CALIFORNIA, as Trustee
By ________________________________
as authorized agent
By ________________________________
as Authenticating Agent
By ________________________________
Authorized Signatory
ARTICLE 7
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
7.1 COMPANY TO FURNISH TRUSTEE NAMES AND ADDRESSES OF HOLDERS.
The Company will furnish or cause to be furnished to the Trustee:
(a) semi-annually, not more than fifteen (15) days after each
Regular Record Date, a list, in such form as the Trustee may reasonably require,
of the names and addresses of the Holders as of such Regular Record Date, and
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(b) at such other times as the Trustee may request in writing,
within thirty (30) days after the receipt by the Company of any such request, a
list of similar form and content as of a date not more than fifteen (15) days
prior to the time such list is furnished;
excluding from any such list names and addresses received by the Trustee in
its capacity as Note Registrar.
7.2 PRESERVATION OF INFORMATION COMMUNICATIONS TO HOLDERS.
(a) The Trustee shall preserve, in as current a form as is
reasonably practicable, the names and addresses of Holders contained in the most
recent list furnished to the Trustee as provided in Section 7.1 and the names
and addresses of Holders received by the Trustee in its capacity as Note
Registrar. The Trustee may destroy any list furnished to it as provided in
Section 7.1 upon receipt of a new list so furnished.
(b) The rights of Holders to communicate with other Holders with
respect to their rights under this Indenture or under the Notes, and the
corresponding rights and duties of the Trustee, shall be as provided by the
Trust Indenture Act.
(c) Every Holder of Notes, by receiving and holding the same,
agrees with the Company and the Trustee that neither the Company nor the Trustee
nor any agent of either of them shall be held accountable by reason of any
disclosure of information as to names and addresses of Holders made pursuant to
the Trust Indenture Act.
7.3 REPORTS BY TRUSTEE.
(a) The Trustee shall transmit to Holders such reports concerning
the Trustee and its actions under this Indenture as may be required pursuant to
the Trust Indenture Act at the times and in the manner provided pursuant
thereto.
(b) A copy of each such report shall, at the time of such
transmission to Holders, be filed by the Trustee with each stock exchange upon
which the Notes are listed, with the Commission and with the Company. The
Company will notify the Trustee when the Notes are listed on any stock exchange.
7.4 REPORTS BY COMPANY.
The Company shall file with the Trustee and the Commission, and
transmit to Holders, such information, documents and other reports, and such
summaries thereof, as may be required pursuant to the Trust Indenture Act at the
times and in the manner provided pursuant to such Act; provided that any such
information, documents or reports required to be filed with the Commission
pursuant to section 13 or 15(d) of the Exchange Act shall be filed with the
Trustee within fifteen (15) days after the same is so required to be filed with
the Commission.
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ARTICLE 8
CONSOLIDATION, MERGER,
CONVEYANCE, TRANSFER OR LEASE
8.1 COMPANY MAY CONSOLIDATE, ETC., ONLY ON CERTAIN TERMS.
The Company shall not consolidate with or merge into any other Person
or convey, transfer or lease its properties and assets substantially as an
entirety to any Person, and the Company shall not permit any Person to
consolidate with or merge into the Company or convey, transfer or lease its
properties and assets substantially as an entirety to the Company, unless:
(1) in case the Company shall consolidate with or merge into
another Person or convey, transfer or lease its properties and assets
substantially as an entirety to any Person, the Person formed by such
consolidation or into which the Company is merged or the Person which acquires
by conveyance or transfer, or which leases, the properties and assets of the
Company substantially as an entirety shall be a corporation, partnership,
limited liability company or trust, shall be organized and validly existing
under the laws of the United States of America, any State thereof or the
District of Columbia and shall expressly assume, by an indenture supplemental
hereto, executed and delivered to the Trustee, in form satisfactory to the
Trustee, the due and punctual payment of the principal of (and premium, if any)
and interest on all the Notes and the performance or observance of every
covenant of this Indenture on the part of the Company to be performed or
observed and shall have provided for conversion rights in accordance with
Section 13.11;
(2) immediately after giving effect to such transaction and
treating any indebtedness which becomes an obligation of the Company or a
Subsidiary as a result of such transaction as having been incurred by the
Company or such Subsidiary at the time of such transaction, no Event of Default,
and no event which, after notice or lapse of time or both, would become an Event
of Default, shall have happened and be continuing; and
(3) the Company has delivered to the Trustee an Officer's
Certificate and an Opinion of Counsel, each stating that such consolidation,
merger, conveyance, transfer or lease and, if a supplemental indenture is
required in connection with such transaction, such supplemental indenture comply
with this Article and that all conditions precedent herein provided for relating
to such transaction have been complied with.
8.2 SUCCESSOR SUBSTITUTE.
Upon any consolidation of the Company with, or merger of the Company
into, any other Person or any conveyance, transfer or lease of the properties
and assets of the Company substantially as an entirety in accordance with
Section 8.1, the successor person formed by such
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consolidation or into which the Company is merged or to which such conveyance,
transfer or lease of the properties and assets of the Company substantially as
an entirety in accordance with Section 8.1 is made shall succeed to, and be
substituted for, and may exercise every right and power of, the Company under
this Indenture with the same effect as if such successor Person had been named
as the Company herein, and thereafter, except in the case of a lease, the
predecessor Person shall be relieved of all obligations and covenants under this
Indenture and the Notes.
ARTICLE 9
SUPPLEMENTAL INDENTURES
9.1 SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF HOLDERS.
Without the consent of any Holders, the Company, when authorized by a
Board Resolution, and the Trustee, at any time and from time to time, may enter
into one or more indentures supplemental hereto, in form satisfactory to the
Trustee, for any of the following purposes:
(1) to evidence the succession of another Person to the Company and
the assumption by any such successor of the covenants of the Company herein and
in the Notes; or
(2) to add to the covenants of the Company for the benefit of the
Holders, or to surrender any right or power herein conferred upon the Company;
provided, however, that in respect of any such additional covenant such
supplemental indenture may provide for a particular period of grace after
default (which period may be shorter or longer than that allowed in the case of
other defaults) or may provide for immediate enforcement upon such default or
may limit the remedies available to the Trustee upon such default; or
(3) to secure the Notes; or
(4) to make provisions with respect to the conversion rights of
Holders pursuant to the requirements of Section 13.11; or
(5) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee with respect to the Notes and to add to or
change any of the provisions of this Indenture as shall be necessary to provide
for or facilitate the administration of the trusts hereunder by more than one
Trustee; or
(6) to add any additional Events of Default; or
(7) to cure any ambiguity, to correct or supplement any provision
herein or any supplemental indenture which may be inconsistent with any other
provision herein, or to make any other provisions with respect to matters or
questions arising under this Indenture which shall not be inconsistent with the
provisions of this Indenture, provided that such action pursuant to this Clause
(7) shall not adversely affect the interests of the Holders in any material
respect.
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9.2 SUPPLEMENTAL INDENTURES WITH CONSENT OF HOLDERS.
With the consent of the Holders of not less than 66-2/3% in principal
amount of the Outstanding Notes, by Act of said Holders delivered to the Company
and the Trustee, the Company, when authorized by a Board Resolution, and the
Trustee may enter into an indenture or indentures supplemental hereto for the
purpose of adding any provisions to or changing in any manner or eliminating any
of the provisions of this Indenture or of modifying in any manner the rights of
the Holders under this Indenture; provided, however, that no such supplemental
indenture shall, without the consent of the Holder of each Outstanding Note
affected thereby:
(1) change the Stated Maturity of, the principal of, or any
installment of interest on, any Note, or reduce the principal amount thereof or
the rate of interest thereon or any premium payable upon the redemption thereof,
or change the place of payment where, or the coin or currency in which, any Note
or any premium or interest thereon is payable, or impair the right to institute
suit for the enforcement of any such payment on or after the Stated Maturity
thereof (or, in the case of redemption, on or after the Redemption Date), or
adversely affect the right to convert any Note as provided in Article 13 (except
as permitted by Section 9.1(4)), or adversely affect the right to cause the
Company to repurchase any Note pursuant to Article 14, or modify the provisions
of this Indenture with respect to the subordination of the Notes in a manner
adverse to the Holders, or
(2) reduce the percentage in principal amount of the outstanding
Notes, the consent of whose Holders is required for any such supplemental
indenture, or the consent of whose Holders is required for any waiver (of
compliance with certain provisions of this Indenture or certain defaults
hereunder and their consequences) provided for in this Indenture, or
(3) modify any of the provisions of this Section or Section 5.13 or
Section 10.3, except to increase any such percentage or to provide that certain
other provisions of this Indenture cannot be modified or waived without the
consent of the Holder of each outstanding Note affected thereby.
It shall not be necessary for any Act of Holders under this Section
to approve the particular form of any proposed supplemental indenture, but it
shall be sufficient if such Act shall approve the substance thereof.
9.3 EXECUTION OF SUPPLEMENTAL INDENTURES.
In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article or the modifications thereby of
the trusts created by this Indenture, the Trustee shall be entitled to receive,
and (subject to Section 6.1) shall be fully protected in relying upon, an
Opinion of Counsel stating that the execution of such supplemental indenture is
authorized or permitted by this Indenture. The Trustee may, but shall not be
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obligated to, enter into any such supplemental indenture which affects the
Trustee's own rights, duties or immunities under this Indenture or otherwise.
9.4 EFFECT OF SUPPLEMENTAL INDENTURES.
Upon the execution of any supplemental indenture under this Article,
this Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every Holder
of Notes theretofore or thereafter authenticated and delivered hereunder shall
be bound thereby.
9.5 CONFORMITY WITH TRUST INDENTURE ACT.
Every supplemental indenture executed pursuant to this Article shall
conform to the requirements of the Trust Indenture Act.
9.6 REFERENCE IN NOTES TO SUPPLEMENTAL INDENTURES.
Notes authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article may, and shall if required by
the Trustee, bear a notation in form approved by the Trustee as to any matter
provided for in such supplemental indenture. If the Company shall so determine,
Notes so modified as to conform, in the opinion of Trustee and the Company, to
any such supplemental indenture may be prepared and executed by the Company and
authenticated and delivered by the Trustee in exchange for outstanding Notes.
9.7 NOTICE OF SUPPLEMENTAL INDENTURE.
Promptly after execution by the Company and the Trustee of any
supplemental indenture pursuant to Section 9.2, the Company shall transmit to
the Holders a notice setting forth the substance of such supplemental indenture.
ARTICLE 10
COVENANTS
10.1 PAYMENT OF PRINCIPAL, PREMIUM AND INTEREST.
The Company will duly and punctually pay the principal of (and
premium, if any) and interest on the Notes (including the Repurchase Price) in
accordance with the terms of the Notes and this Indenture.
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10.2 MAINTENANCE OF OFFICE OR AGENCY.
The Company will maintain in the Borough of Manhattan, The City of
New York an office or agency where Notes may be presented or surrendered for
payment, where Notes may be surrendered for registration of transfer or
exchange, where Notes may be surrendered for conversion and where notices and
demands to or upon the Company in respect of the Notes and this Indenture may be
served. The Company will give prompt written notice to the Trustee of the
location, and any change in the location, of such office or agency. If at any
time the Company shall fail to maintain any such required office or agency or
shall fail to furnish the Trustee with the address thereof, such presentations,
surrenders, notices and demands may be made or served at the Corporate Trust
Office of the Trustee, and the Company hereby appoints the Trustee as its agent
to receive all such presentations, surrenders, notices and demands.
The Company may also from time to time designate one or more other
offices or agencies (in or outside the Borough of Manhattan, The City of New
York) where the Notes may be presented or surrendered for any or all such
purposes and may from time to time rescind such designations; provided, however,
that no such designation or rescission shall in any manner relieve the Company
of its obligations to maintain an office or agency in the Borough of Manhattan,
The City of New York for such purposes. The Company will give prompt written
notice to the Trustee of any such designation or rescission of any change in the
location of any such other office or agency.
10.3 MONEY FOR NOTE PAYMENTS TO BE HELD IN TRUST.
If the Company shall at any time act as its own Paying Agent, it
will, on or before each due date of the principal of (and premium, if any) or
interest on any of the Notes, aggregate and hold in trust for the benefit of the
Persons entitled thereto a sum sufficient to pay the principal (and premium, if
any) or interest so becoming due until such sums shall be paid to such Persons
or otherwise disposed of as herein provided and will promptly notify the Trustee
of its action or failure so to act.
Whenever the Company shall have one or more Paying Agents, it will,
prior to each due date of the principal of (and premium, if any) or interest on
any Notes, deposit with a Paying Agent a sum sufficient to pay such amount, such
sum to be held as provided by the Trust Indenture Act, and (unless such Paying
Agent is the Trustee) the Company will promptly notify the Trustee of its action
or failure so to act.
The Company will cause each Paying Agent other than the Trustee to
execute and deliver to the Trustee an instrument in which such Paying Agent
shall agree with the Trustee, subject to the provisions of this Section, that
such Paying Agent will (i) comply with the provisions of the Trust Indenture Act
applicable to it as a Paying Agent and (ii) during the continuance of any
default by the Company (or any other obligor upon the Notes) in the making
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of any payment in respect of the Notes, upon the written request of the Trustee,
forthwith pay to the Trustee all sums held in trust by such Paying Agent as
such.
The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by Company Order direct any Paying Agent to pay, to the Trustee all sums held in
trust by the Company or such Paying Agent, such sums to be held by the Trustee
upon the same trusts as those upon which such sums were held by the Company or
such Paying Agent; and, upon such payment by any Paying Agent to the Trustee,
such Paying Agent shall be released from all further liability with respect to
such money.
Any money deposited with the Trustee or any Paying Agent, then held
by the Company, in trust for the payment of the principal of (and premium, if
any) or interest on any Note and remaining unclaimed for two (2) years after
such principal (and premium, if any) or interest has become due and payable
shall be paid to the Company on Company Request, or (if then held by the
Company) shall be discharged from such trust; and the Holder of such Note shall
thereafter, as unsecured general creditor, look only to the Company for payment
thereof, and all liability of the Trustee or such Paying Agent with respect to
such trust money, and all liability of the Company as trustee thereof, shall
thereupon cease; provided, however, that the Trustee or such Paying Agent,
before being required to make any such repayment, shall at the expense of the
Company cause to be published once, in a paper published in the English
language, customarily published on each Business Day and of general circulation
in the City of New York, notice that such money remains unclaimed that, after a
date specified therein, which shall not be less than thirty (30) days from the
date of such publication, any unclaimed balance of such money then remaining
will be paid to the Company.
10.4 STATEMENT BY OFFICERS AS TO DEFAULT.
The Company will deliver to the Trustee, within sixty (60) days after
the end of each fiscal year of the Company ending after the date hereof, an
Officers' Certificate, stating as to each signer thereof that he or she is
familiar with the affairs of the Company and whether or not to his or her
knowledge the Company is in default in the performance and observance of the
terms, provisions or conditions of this Indenture (without regard to any period
of grace or requirement of notice provided hereunder) and, if the Company shall
be in default, specifying all such defaults and the nature and status thereof of
which he or she may have knowledge.
10.5 EXISTENCE.
Subject to Article 8, the Company will cause to be done all things
necessary to preserve and keep in full force and effect its existence, rights
(charter and statutory) and franchises and the existence, rights (charter and
statutory) and franchises of each Significant Subsidiary; provided, however,
that the Company shall not be required to preserve any such right or franchise
if the Board of Directors shall determine that the preservation thereof is no
longer
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desirable in the conduct of the business of the Company and its Subsidiaries and
that the loss thereof is not disadvantageous in any material respect to the
Holders.
10.6 MAINTENANCE OF PROPERTIES.
The Company will cause properties used or useful in the conduct of
its business or the business of any Significant Subsidiary to be maintained and
kept in good condition, repair and working order and supplied with all necessary
equipment and will cause to be made all necessary repairs, renewals,
replacements, betterments and improvements thereof, all as in the judgment of
the Company may be necessary so that the business carried on in connection
therewith may be properly and advantageously conducted at all times; provided,
however, that nothing in this Section shall prevent the Company from
discontinuing the operation or maintenance of any of such properties if such
discontinuance is, in the judgment of the Company, desirable in the conduct of
its business and the business of its Subsidiaries and not disadvantageous in any
material respect to the Holders.
10.7 PAYMENT OF TAXES AND OTHER CLAIMS.
The Company will pay or discharge or cause to be paid or discharged,
before the same shall become delinquent, (1) all taxes, assessments and
governmental charges levied or imposed upon the Company or any Significant
Subsidiary or upon the income, profits or property of the Company or any
Significant Subsidiary, and (2) all lawful claims for labor, materials and
supplies which, if unpaid, might by law become a lien upon the property of the
Company or any Significant Subsidiary; provided, however, that the Company shall
not be required to pay or discharge or cause to be paid or discharged any such
tax, assessment, charge or claim whose amount, applicability or validity is
being contested in good faith by appropriate proceedings.
10.8 WAIVER OF CERTAIN COVENANTS.
The Company need not in any particular instance comply with any
covenant or condition set forth in Section 10.5, 10.6 or 10.7, if before the
time for such compliance the Holders of at least 66-2/3% in principal amount of
the Outstanding Notes shall, by Act of such Holders, either waive such
compliance in such instance or generally waive compliance with such covenant or
condition, but no such waiver shall extend to or affect such covenant or
condition except to the extent so expressly waived, and, until such waiver shall
become effective, the obligations of the Company and the duties of the Trustee
in respect of any such covenant or condition shall remain in full force and
effect.
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ARTICLE 11
REDEMPTION OF NOTES
11.1 RIGHT OF REDEMPTION.
The Notes may be redeemed at the election of the Company, as a whole
or from time to time in part, at any time on or after December 2, 1998, at the
Redemption Prices specified in the form of Note hereinbefore set forth, together
with accrued interest to the Redemption Date.
11.2 APPLICABILITY OF ARTICLE.
Redemption of Notes at the election of the Company, as permitted by
any provision of this Indenture, shall be made in accordance with such provision
and this Article.
11.3 ELECTION TO REDEEM; NOTICE TO TRUSTEE.
The election of the Company to redeem any Notes pursuant to Section
11.1 shall be evidenced by a Board Resolution. The election of the Company to
redeem any Notes hereunder shall become irrevocable on the earlier of (i) the
date of delivery of the notice of such redemption to the Trustee pursuant to
this Section 11.3 or (ii) the date of mailing of the notice to Holders of Notes
provided for in Section 11.5 hereof. In case of any redemption at the election
of the Company of less than all the Notes, the Company shall, at least thirty
(30) days prior to the Redemption Date fixed by the Company (unless a shorter
notice shall be satisfactory to the Trustee), notify the Trustee of such
Redemption Date and of the principal amount of Notes to be redeemed.
11.4 SELECTION BY TRUSTEE OF NOTES TO BE REDEEMED.
If less than all the Notes are to be redeemed, the particular Notes
to be redeemed shall be selected not more than sixty (60) days prior to the
Redemption Date by the Trustee, from the Outstanding Notes not previously called
for redemption, by such method as the Trustee shall deem fair and appropriate
and which may provide for the selection for redemption of portions (equal to
$1,000 or any integral multiple thereof) of the principal amount of Notes of a
denomination larger than $1,000.
If any Note selected for partial redemption is converted in part
before termination of the conversion right with respect to the portion of the
Note so selected, the converted portion of such Note shall be deemed (so far as
may be) to be the portion selected for redemption. Notes which have been
converted during a selection of Notes to be redeemed shall be treated by the
Trustee as Outstanding for the purpose of such selection.
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The Trustee shall promptly notify the Company and each Note Registrar
in writing of the Notes selected for redemption and, in the case of any Notes
selected for partial redemption, the principal amount thereof to be redeemed.
For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to the redemption of Notes shall relate, in
the case of any Notes redeemed or to be redeemed only in part, to the portion of
the principal amount of such Notes which has been or is to be redeemed.
11.5 NOTICE OF REDEMPTION.
Notice of redemption shall be given by first-class mail, postage
prepaid, mailed not less than fifteen (15) nor more than sixty (60) days prior
to the Redemption Date, to each Holder of Notes to be redeemed, at his address
appearing in the Note Register.
All notices of redemption shall state:
(1) the Redemption Date,
(2) the Redemption Price,
(3) if less than all the Outstanding Notes are to be redeemed, the
identification (and, in the case of partial redemption of any Notes, the
principal amounts) of the particular Notes to be redeemed,
(4) that on the Redemption Date the Redemption Price will become
due and payable upon each such Note to be redeemed and that interest thereon
will cease to accrue on and after said date,
(5) the conversion price, the date on which the right to convert
the Notes to be redeemed will terminate and the place or places where such Notes
may be surrendered for conversion, and
(6) the place or places where such Notes are to be surrendered for
payment of the Redemption Price.
Notice of redemption of Notes to be redeemed at the election of the
Company shall be given by the Company or, at Company's request, by the Trustee
in the name and at the expense of the Company.
11.6 DEPOSIT OF REDEMPTION PRICE.
On or prior to any Redemption Date, the Company shall deposit with
the Trustee or a Paying Agent (or, if the Company is acting as its own Paying
Agent, segregate and hold in
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trust as provided in Section 10.3) an amount of money sufficient to pay the
Redemption Price of, and (except if the Redemption Date shall be an Interest
Payment Date) accrued interest on, all the Notes which are to be redeemed on
that date other than Notes called for redemption on that date which have been
converted prior to the date of such deposit.
If any Note called for redemption is converted, any money deposited
with the Trustee or with any Paying Agent or segregated and held in trust for
the redemption of such Note shall (subject to any right of the Holder of such
Note or any Predecessor Note to receive interest as provided in the last
paragraph of Section 3.7) be paid to the Company upon Company Request or, if
then held by the Company, shall be discharged from such trust.
11.7 NOTES PAYABLE ON REDEMPTION DATE.
Notice of redemption having been given as aforesaid, the Notes so
redeemed shall, on the Redemption Date, become due and payable at the Redemption
Price therein specified, and from and after such date (unless the Company shall
default in the payment of the Redemption Price and accrued interest) such Notes
shall cease to bear interest. Upon surrender of such Note for redemption in
accordance with said notice, such Note shall be paid by the Company at the
Redemption Price, together with accrued interest to the Redemption Date;
provided, however, that installments of interest whose Stated Maturity is on or
prior to the Redemption Date shall be payable to the Holders of such Notes, or
one or more Predecessor Notes, registered as such at the close of business on
the relevant record dates according to their terms and the provisions of Section
3.7.
If any Note called for redemption shall not be so paid upon surrender
thereof for redemption, the principal (and premium, if any) shall, until paid,
bear interest from the Redemption Date at the rate borne by the Note.
11.8 NOTES REDEEMED IN PART.
Any Note which is to be redeemed only in part shall be surrendered at
an office or agency of the Company designated for that purpose pursuant to
Section 10.2 (with, if the Company or the Trustee so requires, due endorsement
by, or a written instrument of transfer in form satisfactory to the Company or
the Trustee duly executed by, the Holder thereof or his attorney duly authorized
in writing), and the Company shall execute, and the Trustee shall authenticate
and deliver to the Holder of such Note without service charge, a new Note or
Notes, of any authorized denomination as requested by such Holder, in aggregate
principal amount equal to and in exchange for the unredeemed portion of the
principal of the Note so surrendered.
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ARTICLE 12
SUBORDINATION OF NOTES
12.1 NOTES SUBORDINATE TO SENIOR INDEBTEDNESS.
The Company covenants and agrees, and each Holder of a Note, by his
acceptance thereof, likewise covenants and agrees, that, to the extent and in
the manner hereinafter set forth in this Article (subject to the provisions of
Article 4), the payment of the principal of (and premium, if any) and interest
on each and all of the Notes (including any repurchases or payments pursuant to
Article 14) are hereby expressly made subordinate and subject in right of
payment to the prior payment in full of all Senior Indebtedness.
12.2 PAYMENT OVER OF PROCEEDS UPON DISSOLUTION, ETC.
In the event of (a) any insolvency or bankruptcy case or proceeding,
or any receivership, liquidation, reorganization or other similar case or
proceeding in connection therewith, relative to the Company or to its creditors,
as such, or to its assets, or (b) any liquidation, dissolution or other winding
up of the Company, whether voluntary or involuntary whether or not involving
insolvency or bankruptcy, or any assignment for the benefit of creditors or any
other marshalling of assets and liabilities of the Company, then and in any such
event specified in (a) or (b) above (each such event, if any, herein sometimes
referred to as a "Proceeding") the holders of Senior Indebtedness shall be
entitled to receive payment in full of all amounts due or to become due on or in
respect of all Senior Indebtedness, or provision shall be made for such payment
in cash or cash equivalents or otherwise in a manner satisfactory to the holders
of Senior Indebtedness, before the Holders of the Notes are entitled to receive
any payment or distribution of any kind or character, whether in cash, property
or securities, on account of principal of (or premium, if any) or interest on
the Notes or on account of any purchase (including any repurchase pursuant to
Article 14) or other acquisition of Notes by the Company or any Subsidiary of
the Company (all such payments, distributions, purchases and acquisitions herein
referred to, individually and collectively, as a "Notes Payment"), and to that
end the holders of all Senior Indebtedness shall be entitled to receive, for
application to the payment thereof, any Notes Payment which may be payable or
deliverable in respect of the Notes in any such Proceeding.
In the event that, notwithstanding the foregoing provisions of this
Section, the Trustee or the Holder of any Note shall have received any Notes
Payment before all Senior Indebtedness is paid in full or payment thereof
provided for in cash or cash equivalents or otherwise in a manner satisfactory
to the holders of Senior Indebtedness, and if such fact shall, at or prior to
the time of such Notes Payment, have been made actually known to a responsible
officer in the Corporate Trust Office of the Trustee or, as the case may be,
such Holder, then and in such event such Notes Payment shall be paid over or
delivered forthwith to the trustee in
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bankruptcy, receiver, liquidating trustee, custodian, assignee, agent or other
Person making payment or distribution of assets of the Company for application
to the payment of all Senior Indebtedness remaining unpaid, to the extent
necessary to pay all Senior Indebtedness in full, after giving effect to any
concurrent payment or distribution to or for the holders of Senior Indebtedness.
For purposes of this Article only, the words "any payment or
distribution of any kind or character, whether in cash, property or securities"
shall not be deemed to include a payment or distribution of stock or securities
of the Company provided for by a plan of reorganization or readjustment
authorized by an order or decree of a court of competent jurisdiction in a
reorganization proceeding under any applicable bankruptcy law or of any other
corporation provided for by such plan of reorganization or readjustment which
stock or securities are subordinated in right of payment to all then outstanding
Senior Indebtedness to substantially the same extent as the Notes are so
subordinated as provided in this Article. The consolidation of the Company
with, or the merger of the Company into, another Person or the liquidation or
dissolution or the Company following the conveyance or transfer of all or
substantially all of its properties and assets as an entirety to another Person
upon the terms and conditions set forth in Article 8 shall not be deemed a
Proceeding for the purposes of this Section if the Person formed by such
consolidation or into which the Company is merged or the Person which acquires
by conveyance or transfer such properties and assets as an entirety, as the case
may be, all, as a part of such consolidation, merger, conveyance or transfer,
comply with the conditions set forth in Article 8.
12.3 NO PAYMENT ON NOTES IN CERTAIN CIRCUMSTANCES.
In the event that any Notes are declared due and payable before their
Stated Maturity, then and in such event the holders of the Senior Indebtedness
outstanding at the time such Notes so become due and payable shall be entitled
to receive payment in full of all amounts due or to become due on or in respect
of all Senior Indebtedness, or provision shall be made for such payment in cash
or cash equivalents or otherwise in a manner satisfactory to the holders of such
Senior Indebtedness, before the Holders of the Notes are entitled to receive any
Notes Payment (including any payment which may be payable by reason of the
payment of any other indebtedness of the Company being subordinated to the
payment of the Notes).
In the event and during the continuation of (i) any default in the
payment of principal of (or premium, if any) or interest on any Senior
Indebtedness beyond any applicable grace period with respect thereto, or
(ii) any other event of default with respect to any Senior Indebtedness shall
have occurred and be continuing permitting the holders of such Senior
Indebtedness (or a trustee or other representative on behalf of the holders
thereof) to declare such Senior Indebtedness due and payable prior to the date
on which it would otherwise have become due and payable, upon written notice
thereof to the Company and the Trustee by any holders of Senior Indebtedness (or
a trustee or other representative on behalf of the holders thereof) (the
"Default Notice"), unless and until such event of default shall have been cured
or waived or shall
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have ceased to exist and such acceleration shall have been rescinded or
annulled, or (iii) any judicial proceeding shall be pending with respect to any
such default payment or event of default, then no Notes Payment shall be made;
provided, however, that clause (ii) of this paragraph shall not prevent the
making of any Notes Payment for more than 179 days after a Default Notice shall
have been received by the Trustee unless the Senior Indebtedness in respect of
which such event of default exists has been declared due and payable in its
entirety in which case no such payment may be made until such acceleration has
been rescinded or annulled or such Senior Indebtedness has been paid in full.
Notwithstanding the foregoing, no event of default which existed or was
continuing on the date of any Default Notice shall be made the basis for the
giving of a second Default Notice; provided, further, however, that only one
such Default Notice may be given in any 365 day period.
In the event that, notwithstanding the foregoing, the Company shall
make any Notes Payment to the Trustee or any Holder prohibited by the foregoing
provisions of this Section, and if such fact shall, at or prior to the time of
such Notes Payment, have been made actually known to a responsible officer in
the Corporate Trust Office of the Trustee or, as the case may be, such Holder,
then and in such event such Notes Payment shall be paid over and delivered
forthwith to the Company.
The provisions of this Section shall not apply to any Notes Payment
with respect to which Section 12.2 would be applicable.
12.4 PAYMENT PERMITTED IF NO DEFAULT.
Nothing contained in this Article or elsewhere in this Indenture or
in any of the Notes shall prevent (a) the Company, at any time except during the
pendency of any Proceeding referred to in Section 12.2 or under the conditions
described in Section 12.3, from making any Notes Payment, or (b) the application
by the Trustee of any money deposited with it hereunder to Notes Payments or the
retention of such Notes Payment by the Holders, if, at the time of such
application by the Trustee, a responsible officer in the Corporate Trust Office
of the Trustee did not have actual knowledge that such Notes Payment would have
been prohibited by the provisions of this Article.
12.5 SUBROGATION TO RIGHTS OF HOLDERS OF SENIOR INDEBTEDNESS.
Subject to the payment in full of all amounts due or to become due on
or in respect of Senior Indebtedness, or the provision for such payment in cash
or cash equivalents or otherwise in a manner satisfactory to the holders of
Senior Indebtedness, the Holders of the Notes shall be subrogated to the extent
of the payments or distributions made to the holders of such Senior Indebtedness
pursuant to the provisions of this Article (equally and ratably with the holders
of all indebtedness of the Company which by its express terms is subordinated to
indebtedness of the Company to substantially the same extent as the Notes are
subordinated and is entitled to like rights of subrogation) to the rights of the
holders of such Senior Indebtedness to
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receive payments and distributions of cash, property and securities applicable
to the Senior Indebtedness until the principal of (and premium, if any) and
interest on the Notes shall be paid in full. For purposes of such subrogation,
no payments or distributions to the holders of the Senior Indebtedness of any
cash, property or securities to which the Holders of the Notes or the Trustee
would be entitled except for the provisions of this Article, and no payments
over pursuant to the provisions of this Article to the holders of Senior
Indebtedness by Holders of the Notes or the Trustee, shall, as among the
Company, its creditors other than holders of Senior Indebtedness and the Holders
of the Notes, be deemed to be a payment or distribution by the Company to or on
account of the Senior Indebtedness.
12.6 PROVISIONS SOLELY TO DEFINE RELATIVE RIGHTS,
The provisions of this Article are and are intended solely for the
purpose of defining the relative rights of the Holders on the one hand and the
holders of Senior Indebtedness on the other hand. Nothing contained in this
Article or elsewhere in this Indenture or in the Notes is intended to or shall
(a) impair, as among the Company, its creditors other than holders of Senior
Indebtedness, and the Holders of the Notes, the obligation of the Company, which
is absolute and unconditional (and which, subject to the rights under this
Article of the holders of Senior Indebtedness, is intended to rank equally with
all other general obligations of the Company), to pay to the Holders of the
Notes the principal of (and premium, if any) and interest on, and to make any
repurchases required by Article 14 of, the Notes as and when the same shall
become due and payable in accordance with their terms; or (b) affect the
relative rights against the Company of the Holders of the Notes and creditors of
the Company other than the holders of Senior Indebtedness; or (c) prevent the
Trustee or the Holder of any Note from exercising all remedies otherwise
permitted by applicable law upon default under this Indenture, subject to the
rights, if any, under this Article of the holders of Senior Indebtedness to
receive cash, property and securities otherwise payable or deliverable to the
Trustee or such Holder.
12.7 TRUSTEE TO EFFECTUATE SUBORDINATION.
Each Holder of a Note by his acceptance thereof authorizes and
directs the Trustee on his behalf to take such action as may be necessary or
appropriate to effectuate the subordination provided in this Article and
appoints the Trustee his attorney-in-fact for any and all such purposes.
12.8 NO WAIVER OF SUBORDINATION PROVISIONS.
No right of any present or future holder of any Senior Indebtedness
to enforce subordination as herein provided shall at any time in any way be
prejudiced or impaired by any act or failure to act on the part of the Company
or by any act or failure to act, in good faith, by any such holder, or by any
noncompliance by the Company with the terms, provisions and
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covenants of this Indenture, regardless of any knowledge thereof any such holder
may have or be otherwise charged with.
Without in any way limiting the generality of the foregoing
paragraph, the holders of Senior Indebtedness may, at any time and from time to
time, without the consent of or notice to the Trustee or the Holders of the
Notes, without incurring responsibility to the Holders of the Notes and without
impairing or releasing the subordination provided in this Article or the
obligations hereunder of the Holders of the Notes to the holders of Senior
Indebtedness, do any one or more of the following: (i) change the manner, place
or terms of payment or extend the time of payment of, or renew or alter, Senior
Indebtedness, or otherwise amend or supplement in any manner Senior
Indebtedness, any instrument evidencing the same or any agreement under which
Senior Indebtedness is outstanding; (ii) sell, exchange, release or otherwise
deal with any property pledged, mortgaged or otherwise securing Senior
Indebtedness; (iii) release any Person liable in any manner for the collection
of Senior Indebtedness; and (iv) exercise or refrain from exercising any rights
against the Company and any other Person.
12.9 NOTICE TO TRUSTEE.
The Company shall give prompt written notice to the Trustee of any
fact known to the Company which would prohibit the making of any payment to or
by the Trustee in respect of the Notes. Notwithstanding the provisions of this
Article or any other provision of this Indenture, the Trustee shall not be
charged with knowledge of the existence of any facts which would prohibit the
making of any payment to or by the Trustee in respect of the Notes, unless and
until the Trustee shall have received at its Corporate Trust Office written
notice thereof from the Company or a holder of Senior Indebtedness or from any
trustee therefor; and, prior to the receipt of any such written notice, the
Trustee, subject to the provisions of Section 6.1, shall be entitled in all
respects to assume that no such facts exist; provided, however, that if the
Trustee shall not have received the notice provided for in this Section at least
three (3) Business Days prior to the date upon which by the terms hereof any
money may become payable for any purpose (including, without limitation, the
payment of the principal of (and premium, if any) or interest on, or amounts
payable upon repurchase of, any Note), then, anything herein contained to the
contrary notwithstanding, the Trustee shall have full power and authority to
receive such money and to apply the same to the purpose for which such money was
received and shall not be affected by any notice to the contrary which may be
received by it within three (3) Business Days prior to such date.
Subject to the provisions of Section 6.1, the Trustee shall be
entitled to rely on the delivery to it of a written notice by a person
representing himself to be a holder of Senior Indebtedness (or a trustee
therefor) to establish that such notice has been given by a holder of Senior
Indebtedness (or a trustee therefor). In the event that the Trustee determines
in good faith that further evidence is required with respect to the right of any
Person as a holder of Senior
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Indebtedness to participate in any payment or distribution pursuant to this
Article, the Trustee may request such Person to furnish evidence to the
reasonable satisfaction of the Trustee as to the amount of Senior Indebtedness
held by such Person, the extent to which such person is entitled to participate
in such payment or distribution and any other facts pertinent to the rights of
such Person under this Article, and if such evidence is not furnished, the
Trustee may defer any payment to such Person pending judicial determination as
to the right of such Person to receive such payment.
12.10 RELIANCE ON JUDICIAL ORDER OR CERTIFICATE OF LIQUIDATING AGENT.
Upon any payment or distribution of assets of the Company referred to
in this Article, the Trustee, subject to the provisions of Section 6.1, and the
Holders of the Notes shall be entitled to rely upon any order or decree entered
by any court of competent jurisdiction in which such Proceeding is pending, or a
certificate of the trustee in bankruptcy, receiver, liquidating trustee,
custodian, assignee for the benefit of creditors, agent or other Person making
such payment or distribution, delivered to the Trustee or to the Holders of
Notes, for the purpose of ascertaining the Persons entitled to participate in
such payment or distribution, the holders of the Senior Indebtedness and other
indebtedness of the Company, the amount thereof or payable thereon, the amount
or amounts paid or distributed thereon and all other facts pertinent thereto or
to this Article.
12.11 TRUSTEE NOT FIDUCIARY FOR HOLDERS OF SENIOR INDEBTEDNESS.
The Trustee shall not be deemed to owe any fiduciary duty to the
holders of Senior Indebtedness and shall not be liable to any such holders if it
shall in good faith mistakenly pay over or distribute to Holders of Notes or to
the Company or to any other Person cash, property or securities to which any
holders of Senior Indebtedness shall be entitled by virtue of this Article or
otherwise.
12.12 RIGHTS OF TRUSTEE AS HOLDER OF SENIOR INDEBTEDNESS; PRESERVATION OF
TRUSTEE'S RIGHTS.
The Trustee in its individual capacity shall be entitled to all the
rights set forth in this Article with respect to any Senior Indebtedness which
may at any time be held by it, to the same extent as any other holder of Senior
Indebtedness, and nothing in this Indenture shall deprive the Trustee of any of
its rights as such holder.
Nothing in this Article shall apply to claims of, or payments to, the
Trustee under or pursuant to Section 6.7.
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12.13 ARTICLE APPLICABLE TO PAYING AGENTS.
In case at any time any Paying Agent other than the Trustee shall
have been appointed by the Company and be then acting hereunder, the term
"Trustee" as used in this Article shall in such case (unless the context
otherwise requires) be construed as extending to and including such Paying Agent
within its meaning as fully for all intents and purposes as if such Paying Agent
were named in this Article in addition to or in place of the Trustee; provided,
however, that Section 12.12 shall not apply to the Company or any Affiliate of
the Company if it or such Affiliate acts as Paying Agent.
12.14 CERTAIN CONVERSIONS DEEMED PAYMENT.
For the purposes of this Article only, (1) the issuance and delivery
of junior securities upon conversion of Notes in accordance with Article 13
shall not be deemed to constitute a payment or distribution on account of the
principal of (or premium, if any) or interest on Notes or on account of the
purchase or other acquisition of Notes, and (2) the payment, issuance or
delivery of cash, property or securities (other than junior securities) upon
conversion of a Note shall be deemed to constitute payment on account of the
principal of such Note. For the purposes of this Section, the term "junior
securities" means (a) shares of any stock of any class of the Company,
(b) securities of the Company which are subordinated in right of payment to all
Senior Indebtedness which may be outstanding at the time of issuance or delivery
of such securities to substantially the same extent as, or to a greater extent
than, the Notes are so subordinated as provided in this Article and
(c) securities into which the Notes become convertible pursuant to Section
13.11. Nothing contained in this Article or elsewhere in this Indenture or in
the Notes is intended to or shall impair, as among the Company, its creditors
other than holders of Senior Indebtedness and the Holders of the Notes, the
right, which is absolute and unconditional, of the Holder of any Note to convert
such Note in accordance with Article 13.
ARTICLE 13
CONVERSION OF NOTES
13.1 CONVERSION PRIVILEGE AND CONVERSION PRICE.
Subject to and upon compliance with the provisions of this Article,
at the option of the Holder thereof, any Note or any portion of the principal
amount thereof which is $1,000 or an integral multiple of $1,000 may be
converted at the principal amount thereof, or of such portion thereof, into
fully paid and nonassessable shares (calculated as to each conversion to the
nearest 1/100 of a share) of Common Stock of the Company at the conversion
price, determined as hereinafter provided, in effect at the time of conversion.
Such conversion right shall commence on the sixtieth day following the latest
date of initial issuance of the Notes to be converted and shall expire at the
close of business on December 1, 2002. In case a Note or portion thereof is
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called for redemption at the election of the Company or delivered for repurchase
pursuant to Article 14, such conversion right in respect of the Note or portion
so called shall expire at the close of business on the last Trading Day prior to
the Redemption Date or the Repurchase Date, as the case may be, unless the
Company defaults in making the payment due upon redemption or repurchase.
The price at which shares of Common Stock shall be delivered upon
conversion (herein called the "conversion price") shall be initially $ 13.65 per
share of Common Stock. The conversion price shall be adjusted in certain
instances as provided in this Article 13.
13.2 EXERCISE OF CONVERSION PRIVILEGE.
In order to exercise the conversion privilege, the Holder of any Note
to be converted shall surrender such Note, duly endorsed or assigned to the
Company or in blank, at any office or agency of the Company maintained for that
purpose pursuant to Section 10.2, accompanied by written notice to the Company
(in form and substance satisfactory to the Company) at such office agency that
the Holder elects to convert such Note or, if less than the entire principal
amount thereof is to be converted, the portion thereof to be converted. Notes
surrendered for conversion during the period from the close of business on any
Regular Record Date next preceding any Interest Payment Date to the opening of
business on such Interest Payment Date shall (except in the case of Notes or
portions thereof which have been called for redemption on a Redemption Date
within such period) be accompanied by payment in New York Clearing House funds
or other funds acceptable to the Company of an amount equal to the interest
payable on such Interest Payment Date on the principal amount of Notes being
surrendered for conversion. Subject to the provisions of Section 3.7 relating
to the payment of Defaulted Interest by the Company, the interest payment with
respect to a Note called for redemption on a Redemption Date during the period
from the close of business on any Regular Record Date next preceding any
Interest Payment Date to the opening of business on such Interest Payment Date
shall be payable on such Interest Payment Date to the Holder of such Note at the
close of business on such Regular Record Date notwithstanding the conversion of
such Note after such Regular Record Date and prior to such Interest Payment
Date, and the Holder converting such Note need not include a payment of such
interest payment amount upon surrender of such Note for conversion. Except as
provided in the preceding sentence and subject to the final paragraph of Section
3.7, no payment or adjustment shall be made upon any conversion on account of
any interest accrued on the Notes surrendered for conversion or on account of
any dividends on the Common Stock issued upon conversion.
Notes shall be deemed to have been converted immediately prior to the
close of business on the day of surrender of such Notes for conversion in
accordance with the foregoing provisions, and at such time the rights of the
Holders of such Notes as Holders shall cease, and the Person or Persons entitled
to receive the Common Stock issuable upon conversion shall be treated for all
purposes as the record holder or holders of such Common Stock at such time. As
promptly as practicable on or after the Conversion Date, the Company shall issue
and shall
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deliver at such office or agency a certificate or certificates for the number of
full shares of Common Stock issuable upon conversion, together with payment in
lieu of any fraction of a share, as provided in Section 13.3.
In the case of any Note which is converted in part only, upon such
conversion the Company shall execute and the Trustee shall authenticate and
deliver to the Holder thereof, at the expense of the Company, a new Note or
Notes of authorized denominations in aggregate principal amount equal to the
unconverted portion of the principal amount of such Note.
13.3 FRACTION OF SHARES.
No fractional shares of Common Stock shall be issued upon conversion
of Notes. If more than one Note shall be surrendered for conversion at one time
by the same Holder, the number of full shares which shall be issuable upon
conversion thereof shall be computed on the basis of the aggregate principal
amount of the Notes (or specified portions thereof) so surrendered. Instead of
any fractional share of Common Stock which would otherwise be issuable upon
conversion of any Note or Notes (or specified portions thereof), the Company
shall pay a cash adjustment in respect of such fraction in an amount equal to
the fraction of the daily Closing Price per share of Common Stock (consistent
with Section 13.4(h) below) at the close of business on the day of conversion.
13.4 ADJUSTMENT OF CONVERSION PRICE.
(a) In case the Company shall pay or make a dividend or other
distribution on any class of capital stock of the Company in Common Stock, the
conversion price in effect at the opening of business on the day following the
date fixed for the determination of stockholders entitled to receive such
dividend or other distribution shall be reduced by multiplying such conversion
price by a fraction of which the numerator shall be the number of shares of
Common Stock outstanding at the close of business on the date fixed for such
determination and the denominator shall be the sum of such number of shares and
the total number of shares constituting such dividend or other distribution,
such reduction to become effective immediately after the opening of business on
the day following the date fixed for such determination. For the purposes of
this paragraph (a), the number of shares of Common Stock at any time outstanding
shall not include shares held in the treasury of the Company but shall include
shares issuable in respect of scrip certificates issued in lieu of fractions of
shares of Common Stock. The Company will not pay any dividend or make any
distribution on shares of Common Stock held in the treasury of the Company.
(b) Subject to the provisions of paragraph (g) of this Section, in case
the Company shall issue rights, options or warrants to all holders of its Common
Stock entitling them to subscribe for or purchase shares of Common Stock at a
price per share less than the
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Current Market Price (determined as provided in paragraph (h) of this Section)
on the date fixed for the determination of stockholders entitled to receive such
rights, options or warrants (other than pursuant to a dividend reinvestment
plan), the conversion price in effect at the opening of business on the day
following the date fixed for such determination shall be reduced by multiplying
such conversion price by a fraction of which the numerator shall be the number
of shares of Common Stock outstanding at the close of business on the date fixed
for such determination plus the number of shares of Common Stock which the
aggregate of the offering price of the total number of shares of Common Stock
offered for subscription or purchase would purchase at such Current Market Price
and the denominator shall be the number of shares of Common Stock outstanding at
the close of business on the date fixed for such determination plus the number
of shares of Common Stock so offered for subscription or repurchase, such
reduction to become effective immediately after the opening of business on the
date fixed for such determination. For the purposes of this paragraph (b), the
number of shares of Common Stock at any time outstanding shall not include
shares held in the treasury of the Company but shall include shares issuable in
respect of scrip certificates issued in lieu of fractions of shares of Common
Stock. The Company will not issue any rights, options or warrants in respect of
shares of Common Stock held in the treasury of the Company.
(c) In case outstanding shares of Common Stock shall be subdivided into a
greater number of shares of Common Stock, the conversion price in effect at the
opening of business on the day following the day upon which such subdivision
becomes effective shall be proportionately reduced, and, conversely, in case
outstanding shares of Common Stock shall each be combined into a smaller number
of shares of Common Stock, the conversion price in effect at the opening of
business on the day following the day upon which such combination becomes
effective shall be proportionately increased, such reduction or increase, as the
case may be, to become effective immediately after the opening of business on
the day following the day upon which such subdivision or combination becomes
effective.
(d) Subject to the last sentence of this paragraph (d) and the provisions
of paragraph (g) of this Section, in case the Company shall, by dividend or
otherwise, distribute to all holders of the Common Stock evidences of its
indebtedness, shares of any class of its capital stock, cash or other assets
(including securities, but excluding any rights, options or warrants referred to
in paragraph (b) of this Section, excluding any dividend or distribution paid
exclusively in cash and excluding any dividend or distribution referred to in
paragraph (a) of this Section), the conversion price shall be reduced by
multiplying the conversion price in effect immediately prior to the close of
business on the date fixed for the determination of stockholders entitled to
such distribution by a fraction of which the numerator shall be the Current
Market Price (determined as provided in paragraph (h) of this Section) on such
date less the fair market value (as determined by the Board of Directors, whose
determination shall be conclusive and described in a Board Resolution) on such
date of the portion of the evidences of indebtedness, shares of capital stock,
cash and other assets to be distributed applicable to one share of Common Stock
and the denominator shall be such Current Market Price, such reduction to become
effective immediately prior to the opening of business on the day following such
date. If
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the Board of Directors determines the fair market value of any distribution for
purposes of this paragraph (d) by reference to the actual or when-issued trading
market for any securities comprising part or all of such distribution, it must
in doing so consider the prices in such market over the same period used in
computing the Current Market Price pursuant to paragraph (h) of this Section, to
the extent possible. For purposes of this paragraph (d), any dividend or
distribution that includes shares of Common Stock, rights, options or warrants
to subscribe for or purchase shares of Common Stock or securities convertible
into or exchangeable for shares of Common Stock shall be deemed to be (x) a
dividend or distribution of the evidences of indebtedness, cash, assets or
shares of capital stock other than such shares of Common Stock, such rights,
options or warrants or such convertible or exchangeable securities (making any
conversion price reduction required by paragraph (d)) immediately followed by
(y) in the case of such shares of Common Stock or such rights, options or
warrants, dividend or distribution thereof (making any further conversion price
reduction required by (a) and (b) of this Section, except any shares of Common
Stock included in such dividend or distribution shall not be deemed "outstanding
at close of business on the date fixed for such determination" within the
meaning of paragraph (a) of this Section), or (z) in the case of such
convertible or exchangeable securities, a dividend or distribution of the number
of shares of Common Stock as would then be issuable upon the conversion or
exchange thereof, whether or not the conversion or exchange of such securities
is subject to any conditions (making any further conversion price reduction
required by paragraph (a) of this Section, except the shares deemed to
constitute such dividend or distribution shall not be deemed "outstanding at the
close of business on the date fixed for such determination" within the meaning
of paragraph (a) of this Section).
(e) In case the Company shall, by dividend or otherwise, distribute to
all holders of its Common Stock cash (excluding any cash that is distributed
upon a merger or consolidation to which Section 13.11 applies or as part of a
distribution referred to in paragraph (d) of this Section) in an aggregate
amount that, combined together with (1) the aggregate amount of any other
distributions to all holders of its Common Stock exclusively in cash within the
twelve (12) months preceding the date of payment of such distribution, and in
respect of which no adjustment pursuant to this paragraph (e) has been made, and
(2) the aggregate of any cash plus the fair market value (as determined by the
Board of Directors, whose determination shall be conclusive and described in a
Board Resolution) of consideration paid or payable in respect of any tender
offer by the Company or any Subsidiary for all or any portion of the Common
Stock concluded within the twelve (12) months preceding the date of payment of
such distribution, and in respect of which no adjustment pursuant to paragraph
(f) of this Section has been made, exceeds 12.5% of the product of the Current
Market Price (determined as provided in paragraph (h) of this Section) on the
date for the determination of holders of shares of Common Stock entitled to
receive such distribution times the number of shares of Common Stock outstanding
on such date, then, and in each such case, immediately after the close of
business on such date for determination, the conversion price shall be reduced
so that same shall equal the price determined by multiplying the conversion
price in effect immediately prior to the close of business on the date fixed for
determination of the stockholders entitled to receive such distribution by a
fraction (i) the numerator of which shall be equal to the Current Market Price
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(determined as provided in paragraph (h) of this Section) on the date fixed for
such determination less an amount equal to the quotient of (x) the excess of
such combined amount over such 1% and (y) the number of shares of Common Stock
outstanding on such date for determination and (ii) the denominator of which
shall be equal to the Current Market Price (determined as provided in paragraph
(h) of this Section) on such date for determination.
(f) In case a tender offer made by the Company or any Subsidiary for all
or any portion of the Common Stock shall expire and such tender offer (as
amended upon the expiration thereof) shall require the payment to stockholders
(based on the acceptance (up to any maximum specified in the terms of the tender
offer) of Purchased Shares (as defined below)) of an aggregate consideration
having a fair market value (as determined by the Board of Directors, whose
determination shall be conclusive and described in a Board Resolution) that
combined together with (1) the aggregate of the cash plus the fair market value
(as determined by the Board of Directors, whose determination shall be
conclusive and described in a Board Resolution), as of the expiration of such
tender offer, of consideration paid or payable in respect of any other tender
offer, of consideration paid or payable in respect of any other tender offer, by
the Company or any Subsidiary for all or any portion of the Common Stock
expiring within the twelve (12) months preceding the expiration of such tender
offer and in respect of which no adjustment pursuant to this paragraph (f) has
been made and (2) the aggregate amount of any distributions to all holders of
the Company's Common Stock made exclusively in cash within twelve (12) months
preceding the expiration of such tender offer and in respect of which no
adjustment pursuant to paragraph (e) of this Section has been made, exceed 12.5%
of the product of the Current Market Price (determined as provided in paragraph
(h) of this Section) as of the last time (the "Expiration Time") tenders could
have been made pursuant to such tender offer (as it my be amended) times the
number of shares of Common Stock outstanding (including any tendered shares) on
the Expiration Time, then, and in each such case, immediately prior to the
opening of business on the day after the date of the Expiration Time, the
conversion price shall be adjusted so that the same shall equal the price
determined by multiplying the conversion price in effect immediately prior to
close of business on the date of the Expiration Time by a fraction (i) the
numerator of which shall be equal to (A) the product of (I) the Current Market
Price (determined as provided in paragraph (h) of this Section) on the date of
the Expiration Time and (II) the number of shares of Common Stock outstanding
(including any tendered shares) on the Expiration Time less (B) the amount of
cash plus the fair market value (determined as aforesaid) of the aggregate
consideration payable to stockholders based on the acceptance (up to any maximum
specified in the terms of the tender offer) of Purchased Shares, and (ii) the
denominator of which shall be equal to the product of (A) the Current Market
Price (determined as provided in paragraph (h) of this Section) as of the
Expiration Time and (B) the number of shares of Common Stock outstanding
(including any tendered shares) as of the Expiration Time less the number of all
shares validly tendered and not withdrawn as of the Expiration Time (the shares
deemed to be accepted up to any such maximum, being referred to as the
"Purchased Shares").
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(g) The reclassification of Common Stock into securities, including
securities other than Common Stock (other than any reclassification upon a
consolidation or merger to which Section 13.11 applies), shall be deemed to
involve (i) a distribution of such securities other than Common Stock to all
holders of Common Stock (and the effective date of such reclassification shall
be deemed to be "the date fixed for the determination of stockholders entitled
to receive such distribution" and the "date fixed for such determination" within
the meaning of paragraph (d) of this Section), and (ii) a subdivision or
combination, as the case may be, of the number of shares of Common Stock
outstanding immediately prior to such reclassification into the number of shares
of Common Stock outstanding immediately thereafter (and the effective date of
such reclassification shall be deemed to be "the day upon which such subdivision
become effective" or "the day upon which such combination becomes effective," as
the case may be, and "the day upon which such subdivision or combination becomes
effective" within the meaning of paragraph (c) of this Section). Rights,
options or warrants issued by the Company to all holders of the Common Stock
entitling the holders thereof to subscribe for or purchase shares of Common
Stock (either initially or under certain circumstances), which rights, options
or warrants (i) are deemed to be transferred with such shares of Common Stock,
(ii) are not exercisable and (iii) are also issued in respect of future
issuances of Common Stock, in each case in clauses (i) through (iii) until the
occurrence of a specified event or events ("Trigger Event"), shall for purposes
of paragraphs (b) and (d) above not be deemed issued until the occurrence of the
earliest Trigger Event. Notwithstanding any provision of paragraphs (b) and (d)
above to the contrary, no adjustment shall be made pursuant to paragraphs (b) or
(d) above for any dividend, distribution or issuance of rights, options or
warrants to all holders of Common Stock if the Company makes proper provision so
that each Holder of a Note who converts such Note (or any portion thereof) after
the date fixed for the determination of stockholders entitled to such issuance,
dividend or distribution, shall be entitled to receive upon such conversion, in
addition to the shares of Common Stock issuable upon such conversion, that
number of rights, options or warrants as would have been issuable to a holder of
a number of shares of Common Stock equal to the number of shares to which the
Notes were convertible as of the date fixed for such issuance, dividend or
distribution (with adjustments to the rights and privileges under such rights,
options or warrants given effect as if such rights, options or warrants had been
issued as of such date), provided that the foregoing provisions set forth in
this sentence shall only apply to the extent (and so long as) such rights,
options or warrants receivable upon conversion of the Notes would be exercisable
without any loss of rights or privileges for a period of at least 90 days
following conversion of the Notes. In addition, in the event of any issuance or
distribution of rights, options or warrants, or any Trigger Event with respect
thereto, which shall have resulted in an adjustment to the conversion price with
respect to the Notes under paragraph (b) or (d) above, (a) in the case of any
such rights, options or warrants which shall all have been redeemed or
repurchased without exercise by any holders thereof, the conversion price shall
be readjusted upon such final redemption or repurchase to give effect to such
issuance or distribution (or Trigger Event, as the case may be) as though a cash
distribution had been made to all of the holders of Common Stock equal to the
per share redemption or repurchase price received by a holder of Common Stock
with respect to the rights, options or warrants received by such holder
(assuming such holder had retained such rights, options or warrants), and (b) in
the
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case of any such rights, options or warrants all of which shall have expired
without exercise by any holder thereof, the conversion price with respect to the
Notes shall be readjusted as if such issuance had not occurred.
(h) For the purpose of any computation under this paragraph and
paragraphs (b), (d) and (e) of this Section, the current market price per share
of Common Stock (the "Current Market Price") on any date shall be deemed to be
the average of the daily Closing Prices (as hereinafter defined) for the five
consecutive Trading Days selected by the Company commencing not more than 20
Trading Days before, and ending not later than the date in question; provided,
however, that (i) if the "ex" date (as hereinafter defined) for any event (other
than the issuance or distribution requiring such computation) that requires an
adjustment to the conversion price pursuant to paragraph (a), (b), (c), (d), (e)
or (f) above occurs on or after the 20th Trading Day prior to the date in
question and prior to the "ex" date for the issuance or distribution requiring
such computation, the Closing Price for each Trading Day prior to the "ex" date
for such other event shall be adjusted by multiplying such Closing Price by the
same fraction by which the conversion price is so required to be adjusted as a
result of such other event, (ii) if the "ex" date for any event (other than the
issuance or distribution requiring such computation) that requires an adjustment
to the conversion price pursuant to paragraph (a), (b), (c), (d), (e) or (f)
above occurs on or after the "ex" date for the issuance or distribution
requiring such computation and on or prior to the date in question, the Closing
Price for each Trading Day on and after the "ex" date for such other event shall
be adjusted by multiplying such Closing Price by the reciprocal of the fraction
by which the conversion price is so required to be adjusted as a result of such
other event, and (iii) if the "ex" date for the issuance or distribution
requiring such computation is on or prior to the date in question, after taking
into account any adjustment required pursuant to this proviso, the Closing Price
for each Trading Day on or after such "ex" date shall be adjusted by adding
thereto the amount of any cash and the fair market value on the date in question
(as determined by the Board of Directors in a manner consistent with any
determination of such value for purposes of paragraph (d) or (e) of this
Section, whose determination shall be conclusive and described in a Board
Resolution) of the evidences of indebtedness, shares of capital stock or assets
being distributed applicable to one share of Common Stock as of the close of
business on the day before such "ex" date. For the purpose of any computation
under paragraph (f) of this Section, the Current Market Price on any date shall
be deemed to be the average of the daily Closing Prices for the 5 consecutive
Trading Days selected by the Company commencing on or after the latest (the
"Commencement Date") of (i) the date 20 Trading Days before the date in
question, (ii) the date of commencement of the tender offer requiring such
computation, and (iii) the date of the last amendment, if any, of such tender
offer involving a change in the maximum number of shares for which tenders are
sought or a change in the consideration offered, and ending not later than the
Expiration Time of such tender offer; provided, however, that if the "ex" date
for any event (other than the tender offer requiring such computation) that
requires an adjustment to the conversion price pursuant to paragraph (a), (b),
(c), (d), (e) or (f) above occurs on or after the Commencement Date and prior to
the Expiration Time for the tender offer requiring such computation, the Closing
Price for each Trading Day prior to the "ex" date for such other event shall be
adjusted by multiplying
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such Closing Price by the same fraction by which the conversion price is so
required to be adjusted as a result of such other event. The closing price for
any Trading Day (the "Closing Price") shall be the last reported sales price
regular way or, in case no such reported sale takes place on such day, the
average of the reported closing bid and asked prices regular way, in either case
on the New York Stock Exchange or, if the Common Stock is not listed or admitted
to trading or, if not listed or admitted to trading on such exchange, on the
principal national securities exchange on which the Common Stock is listed or
admitted to trading or, if not listed or admitted to trading on any national
securities exchange, on the National Association of Securities Dealers Automated
Quotations National Market System or, if the Common Stock is not listed or
admitted to trading on any national securities exchange or quoted on such
National Market System, the average of the closing bid and asked prices in the
over-the-counter market as furnished by any New York Stock Exchange member firm
selected from time to time by the Company for that purpose. The term " 'ex'
date," (i) when used with respect to any issuance or distribution, means the
first date on which the Common Stock trades regular way on the relevant exchange
or in the relevant market from which the Closing Prices were obtained without
the right to receive such issuance or distribution, (ii) when used with respect
to any subdivision or combination of shares of Common Stock, means the first
date on which the Common Stock trades regular way on such exchange or in such
market after the time at which such subdivision or combination becomes
effective, and (iii) when used with respect to any tender offer means the first
date on which the Common Stock trades regular way on such exchange or in such
market after the last time that tenders may be made pursuant to such tender
offer (as it shall have been amended).
(i) No adjustment in the conversion price shall be required unless such
adjustment (plus any adjustments not previously made by reason of this paragraph
(i)) would require an increase or decrease of at least 1% in such price;
provided, however, that any adjustments which by reason of this paragraph (i)
are not required to be made shall be carried forward and taken into account in
any subsequent adjustment. All calculations under this paragraph (i) shall be
made to the nearest percent.
(j) No upward adjustment in the conversion price will be made other than
in the event of a reverse stock split.
(k) The Company from time to time may, to the extent permitted by law,
reduce the conversion price of the Notes by any amount for a period of at least
20 days, in which case the Company shall give at least 15 days' notice of such
decrease, if the Board of Directors has made a determination that such decrease
would be in the best interests of the Company, which determination shall be
conclusive. The Company may make such reductions in the conversion price, in
addition to those required by the preceding sentence and paragraphs (a), (b),
(c), (d), (e) and (f) of this Section, as it considers to be advisable in order
to avoid or diminish any income tax to any holders of shares of Common Stock
resulting from any dividend or distribution of stock or issuance of rights,
options or warrants to purchase or subscribe for stock or from any event treated
as such for income tax purposes or for any other reasons. The
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Company shall have the power to resolve any ambiguity or correct any error in
this paragraph (j) and its actions in so doing shall be final and conclusive.
(l) Notwithstanding any other provision of this Section 13.4, no
adjustment to the conversion price shall reduce the conversion price below the
then par value per share of the Common Stock, and any such purported adjustment
shall instead reduce the conversion price to such par value. The Company hereby
covenants not to take any action to increase par value per share of the Common
Stock.
13.5 NOTICE OF ADJUSTMENTS OF CONVERSION PRICE.
Whenever the conversion price is adjusted as herein provided,
(a) the Company shall compute the adjusted conversion price in accordance
with Section 13.4 and shall prepare a certificate signed by the Treasurer of the
Company setting forth the adjusted conversion price and showing in reasonable
detail the facts upon which such adjustment is based, and such certificate shall
forthwith be filed at each office or agency maintained for the purpose of
conversion of Notes pursuant to Section 10.2 and with the Trustee at its
Corporate Trust Office; and
(b) a notice stating that the conversion price has been adjusted and
setting forth the adjusted conversion price shall forthwith be required, and as
soon as practicable after it is required, such notice shall be mailed by the
Company to all Holders at their last addresses as they shall appear in the Note
Register.
13.6 NOTICE OF CERTAIN CORPORATE ACTION.
In case:
(a) the Company shall declare a dividend (or any other distribution)
payable (i) otherwise than exclusively in cash or (ii) exclusively in cash in an
amount that would require a conversion price adjustment pursuant to paragraph
(e) of Section 13.4; or
(b) the Company shall authorize the granting to the holders of its Common
Stock of rights, options or warrants to subscribe for or purchase any shares of
capital stock of any class or of any other rights; or
(c) of any reclassification of the Common Stock of the Company (other
than a subdivision or combination of its outstanding shares of Common Stock), or
of any consolidation, or share exchange to which the Company is a party and
which approval of any stockholders of the Company is required, or of the sale or
transfer of all or substantially all of the assets of the Company; or
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(d) of the voluntary or involuntary dissolution, liquidation or winding
up of the Company; or
(e) the Company or any Subsidiary shall commence a tender offer for all
or a portion of the outstanding shares of Common Stock (or shall amend any such
tender offer to change the maximum number of shares being sought or the amount
or type of consideration being offered therefor);
then the Company shall cause to be filed at each office or agency maintained
for the purpose of conversion of Notes pursuant to Section 10.2 and with the
Trustee at its Corporate Trust Office, and shall cause to be mailed to all
Holders at their last addresses as they shall appear in the Note Register, at
least twenty-one (21) days (or eleven days in any case specified in clause
(a), (b) or (c) above) prior to the applicable record or effective date
hereinafter specified, a notice stating (x) the date on which a record is to
be taken for the purpose of such dividend, distribution, rights or warrants,
or, if a record is not to be taken, the date as of which the holders of
Common Stock of record to be entitled to such dividend, distribution, rights
or warrants are to be determined, or (y) the date on which such
reclassification, consolidation, merger, share exchange, transfer,
dissolution, liquidation or winding up is expected to become effective, and
the date as of which it is expected that holders of Common Stock of record
shall be entitled to exchange their shares of Common Stock for securities,
cash or other property deliverable upon such reclassification, consolidation,
merger, share exchange, sale, transfer, dissolution, liquidation or winding
up. Neither the failure to give such notice nor any defect therein shall
affect the legality or validity of the proceedings described in clauses (a)
through (e) of this Section 13.6.
13.7 COMPANY TO RESERVE COMMON STOCK.
The Company shall at all times reserve and keep available out of its
authorized but unissued Common Stock, for the purpose of effecting the
conversion of Notes, the full number of shares of Common Stock then issuable
upon the conversion of all outstanding Notes.
13.8 TAXES ON CONVERSIONS.
The Company will pay any and all taxes levied by the taxing authorities of
the United States of America or any political subdivision thereof that may be
payable in respect of the issue or delivery of shares of Common Stock on
conversion of Notes pursuant hereto. The Company shall not, however, be
required to pay any tax which may be payable in respect of any transfer involved
in the issue and delivery of shares of Common Stock in a name other than that of
the Holder of the Note or Notes to be converted, and no such issue or delivery
shall be made unless and until the Person requesting such issue has paid to the
Company the amount of any such tax, or established to the satisfaction of the
Company that such tax has been paid.
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13.9 COVENANT AS TO SHARES OF COMMON STOCK.
The Company covenants that all shares of Common Stock which may be issued
upon conversion of Notes will upon issue be fully paid and nonassessable and,
except as provided in Section 13.8, the Company will pay all taxes, liens and
charges with respect to the issue thereof.
13.10 CANCELLATION OF CONVERTED NOTES.
All Notes delivered for conversion shall be delivered to the Trustee to be
canceled by or at the direction of the Trustee, which shall dispose of the same
as provided in Section 3.9.
13.11 PROVISIONS IN CASE OF CONSOLIDATION, MERGER OR SALE OF ASSETS.
In case of any consolidation of the Company with, or merger of the Company
into, any other Person, any merger of another Person into the Company (other
than a merger which does not result in any reclassification, conversion, change
or cancellation of outstanding shares of Common Stock of the Company) or any
sale or transfer of all or substantially all of the assets of the Company, the
Person formed by such consolidation or resulting from such merger or which
acquires such assets, as the case may be, shall execute and deliver to the
Trustee a supplemental indenture providing that the Holder of each Note then
outstanding shall have the right thereafter, during the period such Note shall
be convertible as specified in Section 13.1, to convert such Note only into the
kind and amount of securities, cash and other property receivable upon such
consolidation, merger, sale or transfer by a holder of the number of shares of
Common Stock of the Company into which such Note might have been converted
immediately prior to such consolidation, merger, sale or transfer, assuming such
holder of Common Stock of the Company is not a Person with which the Company
consolidated or into which the Company merged or which merged into the Company
or to which such sale or transfer was made, as the case may be ("constituent
Person"), or an Affiliate of a constituent Person, and failed to exercise his
rights of election, if any, to the kind or amount of securities, cash and other
property receivable upon such consolidation, merger, sale or transfer (provided
that if the kind or amount of securities, cash and other property receivable
upon such consolidation, merger, sale or transfer is not the same for each share
of Common Stock of the Company held immediately prior to such consolidation,
merger, sale or transfer by others than a constituent Person or an Affiliate
thereof and in respect of which such rights of election shall not have been
exercised ("nonelecting share"), then for the purpose of this Section the kind
and amount of securities, cash and other property receivable upon such
consolidation, merger, sale or transfer by each nonelecting share shall be
deemed to be the kind and amount so receivable per share by a plurality of the
nonelecting shares). Such supplemental indenture shall provide for adjustments
which, for events subsequent to the effective date of such supplemental
indenture, shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Article. The above
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provisions of this Section shall similarly apply to successive consolidations,
mergers, sales or transfers.
ARTICLE 14
REPURCHASE OF NOTES AT THE OPTION
OF THE HOLDER UPON A RISK EVENT
14.1 RIGHT TO REQUIRE REPURCHASE.
In the event that a Risk Event (as hereinafter defined) shall occur,
then each Holder shall have the right, at the Holder's option, to require the
Company to repurchase, and upon the exercise of such right the Company shall
repurchase, all of such Holder's Notes, or any portion of the principal amount
thereof that is an integral multiple of $1,000, on the date (the "Repurchase
Date") that is forty-five (45) calendar days after the date of the Company
Notice (as defined in Section 14.2) for cash at a purchase price equal to 100%
of the principal amount of the Notes to be repurchased (the "Repurchase Price"),
together in each case with accrued interest to the Repurchase Date. Such right
to require the repurchase of the Notes shall not continue after a discharge of
the Company from its obligations with respect to the Notes in accordance with
Article 4, unless a Risk Event shall have occurred prior to such discharge.
14.2 NOTICES; METHOD OF EXERCISING REPURCHASE RIGHT, ETC.
(a) Unless the Company shall have theretofore called for redemption
of all of the Outstanding Notes, on or before the fifteenth (15th) calendar day
after the occurrence of a Risk Event, the Company or, at the written request of
the Company, the Trustee, shall mail to all Holders a notice (the "Company
Notice") of the occurrence of the Risk Event and of the purchase right set forth
herein arising as a result thereof. The Company shall also deliver a copy of
such notice of a repurchase right to the Trustee and cause a copy of such Notice
of a repurchase right, or a summary of the information contained therein, to be
published in a newspaper of general circulation in The City of New York.
Each notice of a repurchase right shall state:
(1) the Repurchase Date,
(2) the date by which the repurchase right must be exercised,
(3) the Repurchase Price,
(4) a description of the procedure which a Holder must follow to
exercise a repurchase right, and
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(5) the conversion price then in effect, the date which the
right to convert the principal amount of the Notes to be repurchased will
terminate and the place or places where Notes may be surrendered for conversion.
No failure of the Company to give the foregoing notices or defect
therein shall limit any Holders right to exercise a purchase right or affect the
validity of the proceedings for the repurchase of Notes.
If any of the foregoing provisions are inconsistent with applicable
law, such law shall govern.
(b) To exercise a repurchase right, a Holder shall deliver to the
Trustee on or before the close of business on the fifth day preceding the
Repurchase Date (i) written notice of the Holder's exercise of such right, which
notice shall set forth the name of the Holder, the principal amount of the Notes
to be repurchased, a statement that an election to exercise the repurchase right
is being made thereby, and (ii) the Notes with respect to which the repurchase
right is being exercised, duly endorsed for transfer to the Company. Such
written notice shall be irrevocable, except that the right of the Holder to
convert the Notes with respect to which the repurchase right is being exercised
shall continue until the close of business on the last Trading Day preceding the
Repurchase Date.
(c) In the event a repurchase right shall be exercised in
accordance with the terms hereof, the Company shall pay or cause to be paid the
Repurchase Price in cash to the Holder on Repurchase Date, together with accrued
and unpaid interest to the Repurchase Date payable with respect to the Notes to
which the purchase right has been exercised, provided, however, that
installments of interest that mature on or prior to the Repurchase Date shall be
payable in cash to the Holders of such Notes, or one or more predecessor Notes,
registered as such at the close of business on the relevant Regular Record Date
according to the terms and provisions of Article 3.
(d) If any Note surrendered for repurchase shall be so paid on the
Repurchase Date, the principal shall, until paid, bear interest to the extent
permitted by applicable law from the Repurchase Date at the rate borne by the
Note and each Note shall remain convertible into Common Stock until the
principal of such Note shall have been paid or duly provided for.
(e) Any Note which is to be repurchased only in part shall be
surrendered to the Trustee (with, if the Company or the Trustee so requires, due
endorsement by, or a written instrument of transfer in form satisfactory to the
Company and the Trustee duly executed by, the Holder thereof or his attorney
duly authorized in writing), and the Company shall execute, and the Trustee
shall authenticate and deliver to the Holder of such Note without service
charge, a new Note or Notes, containing identical terms and conditions, of any
authorized denomination as requested by such Holder in aggregate principal
amount equal to and in exchange for the unrepurchased portion of the principal
of the Note so surrendered.
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(f) Prior to the Repurchase Date, the Company shall deposit with
the Trustee or with a Paying Agent (or, if the Company is acting as its own
Paying Agent, segregate and hold in trust as provided in Section 10.3) an amount
of money sufficient to pay the Repurchase Price of the Notes that are to be
repaid on the Repurchase Date.
14.3 CERTAIN DEFINITIONS.
For purposes of this Article 14,
(a) the term "beneficial owner" shall be determined in accordance
with Rule 13d-3, as in effect on the date of the final execution of this
Indenture, promulgated by the Securities and Exchange Commission pursuant to the
Exchange Act;
(b) the term "Person" shall include any syndicate or group which
would be deemed to be a "person" under Section 13(d)(3) of the Exchange Act, as
in effect on the date of the original execution of this Indenture; and
(c) a "Risk Event" shall be deemed to have occurred at such time
as:
(i) any Person (other than the Company, any Subsidiary of the
Company or any current or future employee or director benefit plan of the
Company or any subsidiary of the Company or any entity holding capital stock of
the Company for or pursuant to the terms of such plan or any underwriter engaged
in a firm commitment underwriting in connection with a public offering of
capital stock of the Company) is or becomes the beneficial owner, directly or
indirectly, through a purchase, merger or other acquisition transaction or
series of transactions, of shares of capital stock of the Company entitling such
Person to exercise 50% or more of the total voting power of all shares of
capital stock of the Company entitled to vote generally in the elections of
directors (any shares of voting stock of which such person or group is the
beneficial owner that are not then outstanding being deemed outstanding for
purposes of calculating such percentage); or
(ii) the Company adopts a plan relating to the liquidation or
dissolution of the Company;
(iii) any consolidation of the Company with, or merger of the
Company into, any other Person, any merger of another Person into the Company,
or any sale or transfer of all or substantially all of the assets of the Company
to another Person (other than a merger (x) which does not result in any
reclassification, conversion, exchange or cancellation of outstanding shares of
Common Stock or (y) which is affected solely to change the jurisdiction of
incorporation of the Company and results in a reclassification, conversion or
exchange of outstanding shares of Common Stock into solely shares of Common
Stock); or
(iv) a change in the Board of Directors of the Company in
which the individuals who constituted the Board of Directors of the Company at
the beginning of the
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24-month period immediately preceding such change (together with any other
director whose election by the Board of Directors of the Company or whose
nomination for election by the stockholders of the Company was approved by a
vote of at least a majority of the directors then in office either who were
directors at the beginning of such period or whose election or nomination for
election was previously so approved) cease for any reason to constitute a
majority of the directors then in office;
provided, however, that a Risk Event shall not be deemed to have occurred if the
closing price per share of Common Stock for any five (5) Trading Days within the
period of ten (10) consecutive Trading Days ending immediately before the Risk
Event shall equal or exceed 105% of the conversion price of such Notes in effect
on each such Trading Day.
This instrument may be executed in any number of counterparts, each
of which so executed shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed, and their respective corporate seals to be hereunto affixed
and attested, all as of the day and year first above written.
HOMETOWN BUFFET, INC.
By /s/ C. Dennis Scott
--------------------------------
Title: President
Attest: /s/ Neal L. Wichard
---------------------------
FIRST INTERSTATE BANK OF
CALIFORNIA, as Trustee
By /s/ Carl Boyd
--------------------------------
Authorized Signatory
Attest: /s/ Eldia Burgos
---------------------------
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EXHIBIT 4.7
FIRST SUPPLEMENTAL INDENTURE
FIRST SUPPLEMENTAL INDENTURE, dated as of September 20, 1996, among
BUFFETS, INC., a Minnesota corporation ("Buffets"), HOMETOWN BUFFET, INC., a
Delaware corporation ("Hometown"), and WELLS FARGO BANK, N.A. (successor trustee
to First Interstate Bank of California) ("Trustee").
WHEREAS, Hometown has previously issued and sold $41,500,000 principal
amount of its 7% Convertible Subordinated Notes due December 1, 2002 (the
"Notes") under an Indenture dated as of November 27, 1995 (such Indenture, as
supplemented by this First Supplemental Indenture and as may be, from time to
time, further amended, restated, supplemented or otherwise modified, the
"Indenture"), between Hometown and First Interstate Bank of California, said
Notes being convertible into shares of Common Stock of Hometown;
WHEREAS, Buffets, Country Delaware, Inc., a Delaware corporation
("CDI"), and Hometown entered into an Agreement and Plan of Merger dated June 3,
1996 (the "Merger Agreement"), providing for the merger of CDI with and into
Hometown with Hometown being the surviving corporation of the merger (the
"Merger") such that upon the Merger, Hometown shall become a wholly-owned
subsidiary of Buffets;
WHEREAS, the Merger Agreement contemplates that Buffets will guaranty
the obligations of Hometown evidenced by the Notes and further contemplates that
the Notes be amended to reflect that the Notes will be convertible into shares
of Buffets Common Stock rather than Common Stock of Hometown;
WHEREAS, Article 9 of the Indenture provides for the execution of
supplemental indentures for the purpose of making provisions with respect to the
conversion rights of the holders of the Notes under the Indenture pursuant to
the requirements of Section 13.11 of the Indenture;
WHEREAS, Section 6.17 of the Merger Agreement provides that on or
prior to the Effective Time (as defined therein), Buffets and Hometown shall
execute and deliver a supplemental indenture with respect to the Notes to
reflect Buffets' guaranty of Hometown's liability for the principal of, and
interest on the Notes and the obligation of Buffets to deliver Buffets Common
Stock upon conversion of the Notes; and
WHEREAS, the execution of this First Supplemental Indenture has been
duly authorized by Buffets, the Trustee, and Hometown, and all things necessary
to make this First Supplemental Indenture a valid, binding, and legal instrument
according to its terms and the terms of the Indenture have been done and
performed.
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NOW, THEREFORE, in consideration of the premises and of the mutual
covenants herein contained and for other valuable consideration, the receipt of
which is hereby acknowledged, the parties hereby agree as follows:
ARTICLE 1
EFFECTIVENESS
Section 1.1 EFFECTIVE TIME OF MERGER. As provided in the Merger
Agreement, the Merger shall become effective upon the filing by Hometown and CDI
with the Secretary of State of Delaware of a certificate of merger (the
"Certificate of Merger") which Certificate of Merger shall be filed by Hometown
and CDI in accordance with the General Corporation Law of the State of Delaware
as soon as practicable on or after the Closing Date (as defined in Section 1.02
of the Merger Agreement). The date and time when the Merger shall become
effective is herein referred to as the "Effective Time."
Section 1.2 CLOSING DATE. As provided in the Merger Agreement, the
closing for the Merger shall, unless another date, time or place is agreed to in
writing by the parties to the Merger Agreement, take place at the offices of
Faegre & Benson LLP, Minneapolis, Minnesota, at 9:00 a.m. no later than the
second business day after satisfaction of all the conditions set forth in
Article VII of the Merger Agreement, unless a condition shall have been waived
in accordance with Article VII of the Merger Agreement.
Section 1.3 EFFECTIVENESS OF FIRST SUPPLEMENTAL INDENTURE. This
First Supplemental Indenture shall be and become effective upon the Effective
Time. The Effective Time shall be evidenced by the delivery to the Trustee of
an Officer's Certificate of Hometown upon which the Trustee may rely as
conclusive evidence of the consummation of the Merger, the Effective Time
thereof, and the effectiveness of this First Supplemental Indenture.
ARTICLE II
GUARANTY AND SUBSTITUTION
Section 2.1 GUARANTY BY BUFFETS. Buffets hereby guaranties the
prompt and complete payment and performance of Hometown's obligations under the
Indenture and the Notes, including, without limitation, Hometown's liability for
the payment of principal of, premium, if any, and interest on the Notes;
provided, however, Buffets' obligations under the foregoing guaranty are hereby
expressly made subordinate and subject in right of payment to the prior payment
in full of all Senior Indebtedness (as defined in the Indenture) of Buffets as
provided in Article 12 of the Indenture.
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Section 2.2 SUBSTITUTION OF BUFFETS STOCK. Buffets, Hometown and
Trustee each hereby acknowledge and agree that Buffets assumes the obligation to
deliver Buffets Common Stock upon conversion of the Notes in substitution for
Common Stock of Hometown, upon the terms and conditions of Article 13 as revised
by this First Supplemental Indenture.
ARTICLE III
AMENDMENT TO ARTICLE 13 OF THE INDENTURE
Section 3.1 AMENDMENT. Article 13 of the Indenture is hereby
amended in its entirety to read as follows:
"13.1 CONVERSION PRIVILEGE AND CONVERSION PRICE.
Subject to and upon compliance with the provisions of
this Article, at the option of the Holder thereof, any Note or any
portion of the principal amount thereof which is $1,000 or an integral
multiple of $1,000 may be converted at the principal amount thereof,
or of such portion thereof, into fully paid and nonassessable shares
(calculated as to each conversion to the nearest 1/100 of a share) of
Buffets Common Stock at the conversion price, determined as
hereinafter provided, in effect at the time of conversion. Such
conversion right shall commence on the sixtieth day following the
latest date of initial issuance of the Notes to be converted and shall
expire at the close of business on December 1, 2002. In case a Note
or portion thereof is called for redemption at the election of the
Company or delivered for repurchase pursuant to Article 14, such
conversion right in respect of the Note or portion so called shall
expire at the close of business on the last Trading Day prior to the
Redemption Date or the Repurchase Date, as the case may be, unless the
Company defaults in making the payment due upon redemption or
repurchase.
The price at which shares of Buffets Common Stock shall
be delivered upon conversion (herein called the "conversion price")
shall be initially $11 2/3 per share of Buffets Common Stock. The
conversion price shall be adjusted in certain instances as provided in
this Article 13.
13.2 EXERCISE OF CONVERSION PRIVILEGE.
In order to exercise the conversion privilege, the Holder
of any Note to be converted shall surrender such Note, duly endorsed
or assigned to Buffets or in blank, at any office or agency of Buffets
maintained for that purpose pursuant to Section 10.2, accompanied by
written notice to Buffets (in
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form and substance satisfactory to Buffets) at such office agency that the
Holder elects to convert such Note or, if less than the entire principal
amount thereof is to be converted, the portion thereof to be converted.
Notes surrendered for conversion during the period from the close of
business on any Regular Record Date next preceding any Interest Payment
Date to the opening of business on such Interest Payment Date shall (except
in the case of Notes or portions thereof which have been called for
redemption on a Redemption Date within such period) be accompanied by
payment in New York Clearing House funds or other funds acceptable to
Buffets of an amount equal to the interest payable on such Interest Payment
Date on the principal amount of Notes being surrendered for conversion.
Subject to the provisions of Section 3.7 relating to the payment of
Defaulted Interest by Buffets, the interest payment with respect to a Note
called for redemption on a Redemption Date during the period from the close
of business on any Regular Record Date next preceding any Interest Payment
Date to the opening of business on such Interest Payment Date shall be
payable on such Interest Payment Date to the Holder of such Note at the
close of business on such Regular Record Date notwithstanding the
conversion of such Note after such Regular Record Date and prior to such
Interest Payment Date, and the Holder converting such Note need not include
a payment of such interest payment amount upon surrender of such Note for
conversion. Except as provided in the preceding sentence and subject to
the final paragraph of Section 3.7, no payment or adjustment shall be made
upon any conversion on account of any interest accrued on the Notes
surrendered for conversion or on account of any dividends on the Buffets
Common Stock issued upon conversion.
Notes shall be deemed to have been converted immediately
prior to the close of business on the day of surrender of such Notes
for conversion in accordance with the foregoing provisions, and at
such time the rights of the Holders of such Notes as Holders shall
cease, and the Person or Persons entitled to receive the Buffets
Common Stock issuable upon conversion shall be treated for all
purposes as the record holder or holders of such Buffets Common Stock
at such time. As promptly as practicable on or after the Conversion
Date, Buffets shall issue and shall deliver at such office or agency a
certificate or certificates for the number of full shares of Buffets
Common Stock issuable upon conversion, together with payment in lieu
of any fraction of a share, as provided in Section 13.3
In the case of any Note which is converted in part only,
upon such conversion the Company shall execute and the Trustee shall
authenticate and deliver to the Holder thereof, at the expense of the
Company, a new Note or Notes of authorized denominations in aggregate
principal amount equal to the unconverted portion of the principal
amount of such Note.
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13.3 FRACTION OF SHARES.
No fractional shares of Buffets Common Stock shall be
issued upon conversion of Notes. If more than one Note shall be
surrendered for conversion at one time by the same Holder, the number
of full shares which shall be issuable upon conversion thereof shall
be computed on the basis of the aggregate principal amount of the
Notes (or specified portions thereof) so surrendered. Instead of any
fractional share of Buffets Common Stock which would otherwise be
issuable upon conversion of any Note or Notes (or specified portions
thereof), Buffets shall pay a cash adjustment in respect of such
fraction in an amount equal to the fraction of the daily Closing Price
per share of Buffets Common Stock (consistent with Section 13.4(h)
below) at the close of business on the day of conversion.
13.4 ADJUSTMENT OF CONVERSION PRICE.
(a) In case Buffets shall pay or make a dividend or
other distribution on any class of capital stock of Buffets Common
Stock, the conversion price in effect at the opening of business on
the day following the date fixed for the determination of stockholders
entitled to receive such dividend or other distribution shall be
reduced by multiplying such conversion price by a fraction of which
the numerator shall be the number of shares of Buffets Common Stock
outstanding at the close of business on the date fixed for such
determination and the denominator shall be the sum of such number of
shares and the total number of shares constituting such dividend or
other distribution, such reduction to become effective immediately
after the opening of business on the day following the date fixed for
such determination. For the purposes of this paragraph (a), the
number of shares of Buffets Common Stock at any time outstanding shall
not include shares held in the treasury of Buffets but shall include
shares issuable in respect of scrip certificates issued in lieu of
fractions of shares of Buffets Common Stock. Buffets will not pay any
dividend or make any distribution on shares of Buffets Common Stock
held in the treasury of Buffets.
(b) Subject to the provisions of paragraph (g) of this
Section, in case Buffets shall issue rights, options or warrants to
all holders of Buffets Common Stock entitling them to subscribe for or
purchase shares of Buffets Common Stock at a price per share less than
the Current Market Price (determined as provided in paragraph (h) of
this Section) on the date fixed for the determination of stockholders
entitled to receive such rights, options or warrants (other than
pursuant to a dividend reinvestment plan), the conversion price in
effect at the opening of business on the day following the date fixed
for such determination shall be reduced by multiplying such conversion
price by a fraction of which the numerator shall be the number of
shares of Buffets Common Stock outstanding at the close of business on
the date fixed for
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such determination plus the number of shares of Buffets Common Stock which
the aggregate of the offering price of the total number of shares of
Buffets Common Stock offered for subscription or purchase would purchase at
such Current Market Price and the denominator shall be the number of shares
of Buffets Common Stock outstanding at the close of business on the date
fixed for such determination plus the number of shares of Buffets Common
Stock so offered for subscription or repurchase, such reduction to become
effective immediately after the opening of business on the date fixed for
such determination. For the purpose of this paragraph (b), the number of
shares of Buffets Common Stock at any time outstanding shall not include
shares held in the treasury of Buffets but shall include shares issuable in
respect of scrip certificates issued in lieu of fractions of shares of
Buffets Common Stock. Buffets will not issue any rights, options or
warrants in respect of shares of Buffets Common Stock held in the treasury
of Buffets.
(c) In case outstanding shares of Buffets Common Stock
shall be subdivided into a greater number of shares of Buffets Common
Stock, the conversion price in effect at the opening of business on
the day following the day upon which such subdivision becomes
effective shall be proportionately reduced, and, conversely, in case
outstanding shares of Buffets Common Stock shall each be combined into
a smaller number of shares of Buffets Common Stock, the conversion
price in effect at the opening of business on the day following the
day upon which such combination becomes effective shall be
proportionately increased, such reduction or increase, as the case may
be, to become effective immediately after the opening of business on
the day following the day upon which such subdivision or combination
becomes effective.
(d) Subject to the last sentence of this paragraph (d)
and the provisions of paragraph (g) of this Section, in case Buffets
shall, by dividend or otherwise, distribute to all holders of the
Buffets Common Stock evidences of its indebtedness, shares of any
class of its capital stock, cash or other assets (including
securities, but excluding any rights, options or warrants referred to
in paragraph (b) of this Section, excluding any dividend or
distribution paid exclusively in cash and excluding any dividend or
distribution referred to in paragraph (a) of this Section), the
conversion price shall be reduced by multiplying the conversion price
in effect immediately prior to the close of business on the date fixed
for the determination of stockholders entitled to such distribution by
a fraction of which the numerator shall be the Current Market Price
(determined as provided in paragraph (h) of this Section) on such date
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less the fair market value (as determined by the Board of Directors, whose
determination shall be conclusive and described in a Board Resolution) on
such date of the portion of the evidences of indebtedness, shares of
capital stock, cash and other assets to be distributed applicable to one
share of Buffets Common Stock and the denominator shall be such Current
Market Price, such reduction to become effective immediately prior to the
opening of business on the day following such date. If the Board of
Directors determines the fair market value of any distribution for purposes
of this paragraph (d) by reference to the actual or when-issued trading
market for any securities comprising part or all of such distribution, it
must in doing so consider the prices in such market over the same period
used in computing the Current Market Price pursuant to paragraph (h) of
this Section, to the extent possible. For purposes of this paragraph (d),
any dividend or distribution that includes shares of Buffets Common Stock,
rights, options or warrants to subscribe for or purchase shares of Buffets
Common Stock or securities convertible into or exchangeable for shares of
Buffets Common Stock shall be deemed to be (x) a dividend or distribution
of the evidences of indebtedness, cash, assets or shares of capital stock
other than such shares of Buffets Common Stock, such rights, options or
warrants or such convertible or exchangeable securities (making any
conversion price reduction required by paragraph (d)) immediately followed
by (y) in the case of such shares of Buffets Common Stock or such rights,
options or warrants, dividend or distribution thereof (making any further
conversion price reduction required by (a) and (b) of this Section, except
any shares of Buffets Common Stock included in such dividend or
distribution shall not be deemed "outstanding at close of business on the
date fixed for such determination" within the meaning of paragraph (a) of
this Section), or (z) in the case of such convertible or exchangeable
securities, a dividend or distribution of the number of shares of Buffets
Common Stock as would then be issuable upon the conversion or exchange
thereof, whether or not the conversion or exchange of such securities is
subject to any conditions (making any further conversion price reduction
required by paragraph (a) of this Section, except the shares deemed to
constitute such dividend or distribution shall not be deemed "outstanding
at the close of business on the date fixed for such determination" within
the meaning of paragraph (a) of this Section).
(e) In case Buffets shall, by dividend or otherwise,
distribute to all holders of its Buffets Common Stock cash (excluding
any cash that is distributed upon a merger or consolidation to which
Section 13.11 applies or as part of a distribution referred to in
paragraph (d) of this Section) in an aggregate amount that, combined
together with (1) the aggregate amount of any other distributions to
all holders of its Buffets Common Stock exclusively in cash within the
twelve (12) months preceding the date of payment of such distribution,
and in respect of which no adjustment pursuant to this paragraph
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(e) has been made, and (2) the aggregate of any cash plus the fair market
value (as determined by the Board of Directors, whose determination shall
be conclusive and described in a Board Resolution) of consideration paid or
payable in respect of any tender offer by Buffets or any Subsidiary for all
or any portion of the Buffets Common Stock concluded within the twelve (12)
months preceding the date of payment of such distribution, and in respect
of which no adjustment pursuant to paragraph (f) of this Section has been
made, exceeds 12.5% of the product of the Current Market Price (determined
as provided in paragraph (h) of this Section) on the date for the
determination of holders of shares of Buffets Common Stock entitled to
receive such distribution times the number of shares of Buffets Common
Stock outstanding on such date, then, and in each such case, immediately
after the close of business on such date for determination, the conversion
price shall be reduced so that same shall equal the price determined by
multiplying the conversion price in effect immediately prior to the close
of business on the date fixed for determination of the stockholders
entitled to receive such distribution by a fraction (i) the numerator of
which shall be equal to the Current Market Price (determined as provided in
paragraph (h) of this Section) on the date fixed for such determination
less an amount equal to the quotient of (x) the excess of such combined
amount over such 12.5% and (y) the number of shares of Buffets Common Stock
outstanding on such date for determination and (ii) the denominator of
which shall be equal to the Current Market Price (determined as provided in
paragraph (h) of this Section) on such date for determination.
(f) In case a tender offer made by Buffets or any
Subsidiary for all or any portion of the Buffets Common Stock shall
expire and such tender offer (as amended upon the expiration thereof)
shall require the payment to stockholders (based on the acceptance (up
to any maximum specified in the terms of the tender offer) of
Purchased Shares (as defined below)) of an aggregate consideration
having a fair market value (as determined by the Board of Directors,
whose determination shall be conclusive and described in a Board
Resolution) that combined together with (1) the aggregate of the cash
plus the fair market value (as determined by the Board of Directors,
whose determination shall be conclusive and described in a Board
Resolution), as of the expiration of such tender offer, of
consideration paid or payable in respect of any other tender offer, by
Buffets or any Subsidiary for all or any portion of the Buffets Common
Stock expiring within the twelve (12) months preceding the expiration
of such tender offer and in respect of which no adjustment pursuant to
this paragraph f) has been made and (2) the aggregate amount of any
distributions to all holders of Buffets Common Stock made exclusively
in cash within twelve (12) months preceding the expiration of such
tender offer and in respect of which no adjustment pursuant to
paragraph (e) of this Section has been made, exceed 12.5% of the
product of the Current Market Price
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(determined as provided in paragraph (h) of this Section) as of the last
time (the "Expiration Time") tenders could have been made pursuant to such
tender offer (as it may be amended) times the number of shares of Buffets
Common Stock outstanding (including any tendered shares) on the Expiration
Time, then, and in each such case, immediately prior to the opening of
business on the day after the date of the Expiration Time, the conversion
price shall be adjusted so that the same shall equal the price determined
by multiplying the conversion price in effect immediately prior to close of
business on the date of the Expiration Time by a fraction (i) the numerator
of which shall be equal to (A) the product of (I) the Current Market Price
(determined as provided in paragraph (h) of this Section) on the date of
the Expiration Time and (II) the number of shares of Buffets Common Stock
outstanding (including any tendered shares) on the Expiration Time less (B)
the amount of cash plus the fair market value (determined as aforesaid) of
the aggregate consideration payable to stockholders based on the acceptance
(up to any maximum specified in the terms of the tender offer) of Purchased
Shares, and (ii) the denominator of which shall be equal to the product of
(A) the Current Market Price (determined as provided in paragraph (h) of
this Section) as of the Expiration Time and (B) the number of shares of
Buffets Common Stock outstanding (including any tendered shares) as of the
Expiration Time less the number of all shares validly tendered and not
withdrawn as of the Expiration Time (the shares deemed to be accepted up to
any such maximum, being referred to as the "Purchased Shares").
(g) The reclassification of Buffets Common Stock into
securities, including securities other than Buffets Common Stock
(other than any reclassification upon a consolidation or merger to
which Section 13.11 applies), shall be deemed to involve (i) a
distribution of such securities other than Buffets Common Stock to all
holders of Buffets Common Stock (and the effective date of such
reclassification shall be deemed to be "the date fixed for the
determination of stockholders entitled to receive such distribution"
and the "date fixed for such determination" within the meaning of
paragraph (d) of this Section), and (ii) a subdivision or combination,
as the case may be, of the number of shares of Buffets Common Stock
outstanding immediately prior to such reclassification into the number
of shares of Buffets Common Stock outstanding immediately thereafter
(and the effective date of such reclassification shall be deemed to be
"the day upon which such subdivision become effective" or "the day
upon which such combination becomes effective," as the case may be,
and "the day upon which such subdivision or combination becomes
effective" within the meaning of paragraph (c) of this Section).
Rights, options or warrants issued by Buffets to all holders of the
Buffets Common Stock entitling the holders thereof to subscribe for or
purchase shares of Buffets Common Stock (either initially or under
certain
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circumstances), which rights, options or warrants (i) are deemed to be
transferred with such shares of Buffets Common Stock, (ii) are not
exercisable and (iii) are also issued in respect of future issuances of
Buffets Common Stock, in each case in clauses (i) through (iii) until the
occurrence of a specified event or events ("Trigger Event"), shall for
purposes of paragraphs (b) and (d) above not be deemed issued until the
occurrence of the earliest Trigger Event. Notwithstanding any provision of
paragraphs (b) and (d) above to the contrary, no adjustment shall be made
pursuant to paragraphs (b) or (d) above for any dividend, distribution or
issuance of rights, options or warrants to all holders of Buffets Common
Stock if Buffets makes proper provision so that each holder of a Note who
converts such Note (or any portion thereof) after the date fixed for the
determination of stockholders entitled to such issuance, dividend or
distribution, shall be entitled to receive upon such conversion, in
addition to the shares of Buffets Common Stock issuable upon such
conversion, that number of rights, options or warrants as would have been
issuable to a holder of a number of shares of Buffets Common Stock equal to
the number of shares to which the Notes were convertible as of the date
fixed for such issuance, dividend or distribution (with adjustments to the
rights and privileges under such rights, options or warrants given effect
as if such rights, options or warrants had been issued as of such date),
provided that the foregoing provisions set forth in this sentence shall
only apply to the extent (and so long as) such rights, options or warrants
receivable upon conversion of the Notes would be exercisable without any
loss of rights or privileges for a period of at least 90 days following
conversion of the Notes. In addition, in the event of any issuance or
distribution of rights, options or warrants, or any Trigger Event with
respect thereto, which shall have resulted in an adjustment to the
conversion price with respect to the Notes under paragraph (b) or (d)
above, (a) in the case of any such rights, options or warrants which shall
all have been redeemed or repurchased without exercise by any holders
thereof, the conversion price shall be readjusted upon such final
redemption or repurchase to give effect to such issuance or distribution
(or Trigger Event, as the case may be) as though a cash distribution had
been made to all of the holders of Buffets Common Stock equal to the per
share redemption or repurchase price received by a holder of Buffets Common
Stock with respect to the rights, options or warrants received by such
holder (assuming such holder had retained such rights, options or
warrants), and (b) in the case of any such rights, options or warrants all
of which shall have expired without exercise by any holder thereof, the
conversion price with respect to the Notes shall be readjusted as if such
issuance had not occurred.
(h) For the purpose of any computation under this
paragraph and paragraphs (b), (d) and (e) of this Section, the current
market price per share of Buffets Common Stock (the "Current Market
Price") on any date shall
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be deemed to be the average of the daily Closing Prices (as hereinafter
defined) for the five consecutive Trading Days selected by Buffets
commencing not more than 20 Trading Days before, and ending not later than
the date in question; provided, however, that (i) if the "ex" date (as
hereinafter defined) for any event (other than the issuance or distribution
requiring such computation) that requires an adjustment to the conversion
price pursuant to paragraph (a), (b), (c), (d), (e) or (f) above occurs on
or after the 20th Trading Day prior to the date in question and prior to
the "ex" date for the issuance or distribution requiring such computation,
the Closing Price for each Trading Day prior to the "ex" date for such
other event shall be adjusted by multiplying such Closing Price by the same
fraction by which the conversion price is so required to be adjusted as a
result of such other event, (ii) if the "ex" date for any event (other than
the issuance or distribution requiring such computation) that requires an
adjustment to the conversion price pursuant to paragraph (a), b), (c), (d),
(e) or (f) above occurs on or after the "ex" date for the issuance or
distribution requiring such computation and on or prior to the date in
question, the Closing Price for each Trading Day on and after the "ex" date
for such other event shall be adjusted by multiplying such Closing Price by
the reciprocal of the fraction by which the conversion price is so required
to be adjusted as a result of such other event, and (iii) if the "ex" date
for the issuance or distribution requiring such computation is on or prior
to the date in question, after taking into account any adjustment required
pursuant to this proviso, the Closing Price for each Trading Day on or
after such "ex" date shall be adjusted by adding thereto the amount of any
cash and the fair market value on the date in question (as determined by
the Board of Directors in a manner consistent with any determination of
such value for purposes of paragraph (d) or (e) of this Section, whose
determination shall be conclusive and described in a Board Resolution) of
the evidences of indebtedness, shares of capital stock or assets being
distributed applicable to one share of Buffets Common Stock as of the close
of business on the day before such "ex" date. For the purpose of any
computation under paragraph (f) of this Section, the Current Market Price
on any date shall be deemed to be the average of the daily Closing Prices
for the 5 consecutive Trading Days selected by Buffets commencing on or
after the latest (the "Commencement Date") of (i) the date 20 Trading Days
before the date in question, (ii) the date of commencement of the tender
offer requiring such computation, and (iii) the date of the last amendment,
if any, of such tender offer involving a change in the maximum number of
shares for which tenders are sought or a change in the consideration
offered, and ending not later than the Expiration Time of such tender
offer; provided, however, that if the "ex" date for any event (other than
the tender offer requiring such computation) that requires an adjustment to
the conversion price pursuant to paragraph (a), (b), (c), (d), (e) or (f)
above occurs on or after the Commencement Date and prior to the Expiration
Time for the tender offer requiring such computation, the
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Closing Price for each Trading Day prior to the "ex" date for such other
event shall be adjusted by multiplying such Closing Price by the same
fraction by which the conversion price is so required to be adjusted as a
result of such other event. The closing price for any Trading Day (the
"Closing Price") shall be the last reported sales price regular way or, in
case no such reported sale takes place on such day, the average of the
reported closing bid and asked prices regular way, in either case on the
New York Stock Exchange or, if the Buffets Common Stock is not listed or
admitted to trading or, if not listed or admitted to trading on such
exchange, on the principal national securities exchange on which the
Buffets Common Stock is listed or admitted to trading or, if not listed or
admitted to trading on any national securities exchange, on the National
Association of Securities Dealers Automated Quotations National Market
System or, if the Buffets Common Stock is not listed or admitted to trading
on any national securities exchange or quoted on such National Market
System, the average of the closing bid and asked prices in the over-the-
counter market as furnished by any New York Stock Exchange member firm
selected from time to time by Buffets for that purpose. The term "ex"
date, (i) when used with respect to any issuance or distribution, means
the first date on which the Buffets Common Stock trades regular way on
the relevant exchange or in the relevant market from which the Closing
Prices were obtained without the right to receive such issuance or
distribution, (ii) when used with respect to any subdivision or
combination of shares of Buffets Common Stock, means the first
date on which the Buffets Common Stock trades regular way on such
exchange or in such market after the time at which such subdivision or
combination becomes effective, and (iii) when used with respect to any
tender offer means the first date on which the Buffets Common Stock
trades regular way on such exchange or in such market after the last
time that tenders may be made pursuant to such tender offer (as it shall
have been amended).
(i) No adjustment in the conversion price shall be
required unless such adjustment (plus any adjustments not previously
made by reason of this paragraph (i)) would require an increase or
decrease of at least 1% in such price; provided, however, that any
adjustments which by reason of this paragraph (i) are not required to
be made shall be carried forward and taken into account in any
subsequent adjustment. All calculations under this paragraph (i)
shall be made to the nearest percent.
(j) No upward adjustment in the conversion price will
be made other than in the event of a reverse stock split.
(k) Buffets from time to time may, to the extent
permitted by law, reduce the conversion price of the Notes by any
amount for a period of at least 20 days, in which case Buffets shall
give at least 15 days' notice of such
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decrease, if the Board of Directors has made a determination that such
decrease would be in the best interests of Buffets, which determination
shall be conclusive. Buffets may make such reductions in the conversion
price, in addition to those required by the preceding sentence and
paragraphs (a), (b), (c), (d), (e) and (f) of this Section, as it considers
to be advisable in order to avoid or diminish any income tax to any holders
of shares of Buffets Common Stock resulting from any dividend or
distribution of stock or issuance of rights, options or warrants to
purchase or subscribe for stock or from any event treated as such for
income tax purposes or for any other reasons. Buffets shall have the power
to resolve any ambiguity or correct any error in this paragraph (k) and its
actions in so doing shall be final and conclusive.
(l) Notwithstanding any other provision of this
Section 13.4, no adjustment to the conversion price shall reduce the
conversion price below the then par value per share of Buffets Common
Stock, and any such purported adjustment shall instead reduce the
conversion price to such par value. Buffets hereby covenants not to
take any action to increase par value per share of Buffets Common
Stock.
13.5 NOTICE OF ADJUSTMENTS OF CONVERSION PRICE.
Whenever the conversion price is adjusted as herein
provided,
(a) Buffets shall compute the adjusted conversion
price in accordance with Section 13.4 and shall prepare a certificate
signed by the Treasurer of Buffets setting forth the adjusted
conversion price and showing in reasonable detail the facts upon which
such adjustment is based, and such certificate shall forthwith be
filed at each office or agency maintained for the purpose of
conversion of Notes pursuant to Section 10.2 and with the Trustee at
its Corporate Trust Office; and
(b) a notice stating that the conversion price has
been adjusted and setting forth the adjusted conversion price shall
forthwith be required, and as soon as practicable after it is
required, such notice shall be mailed by Buffets to all Holders at
their last addresses as they shall appear in the Note Register.
13.6 NOTICE OF CERTAIN CORPORATE ACTION.
In case:
(a) Buffets shall declare a dividend (or any other
distribution) payable (i) otherwise than exclusively in cash or (ii)
exclusively in cash in an
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amount that would require a conversion price adjustment pursuant to
paragraph (e) of Section 13.4; or
(b) Buffets shall authorize the granting to the
holders of Buffets Common Stock of rights, options or warrants to
subscribe for or purchase any shares of capital stock of any class or
of any other rights; or
(c) of any reclassification of Buffets Common Stock
(other than a subdivision or combination of its outstanding shares of
Buffets Common Stock), or of any consolidation, or share exchange to
which Buffets is a party and which approval of any stockholders of
Buffets is required, or of the sale or transfer of all or
substantially all of the assets of Buffets; or
(d) of the voluntary or involuntary dissolution,
liquidation or winding up of Buffets; or
(e) Buffets or any Subsidiary shall commence a tender
offer for all or a portion of the outstanding shares of Buffets Common
Stock (or shall amend any such tender offer to change the maximum
number of shares being sought or the amount or type of consideration
being offered therefor);
then Buffets shall cause to be filed at each office or agency
maintained for the purpose of conversion of Notes pursuant to Section
10.2 and with the Trustee at its Corporate Trust Office, and shall
cause to be mailed to all Holders at their last addresses as they
shall appear in the Note Register, at least twenty-one (21) days (or
eleven days in any case specified in clause (a), (b) or (c) above)
prior to the applicable record or effective date hereinafter
specified, a notice stating (x) the date on which a record is to be
taken for the purpose of such dividend, distribution, rights or
warrants, or, if a record is not to be taken, the date as of which the
holders of Buffets Common Stock of record to be entitled to such
dividend, distribution, rights or warrants are to be determined, or
(y) the date on which such reclassification, consolidation, merger,
share exchange, transfer, dissolution, liquidation or winding up is
expected to become effective, and the date as of which it is expected
that holders of Buffets Common Stock of record shall be entitled to
exchange their shares of Buffets Common Stock for securities, cash or
other property deliverable upon such reclassification, consolidation,
merger, share exchange, sale, transfer, dissolution, liquidation or
winding up. Neither the failure to give such notice nor any defect
therein shall affect the legality or validity of the proceedings
described in clauses (a) through (e) of this Section 13.6.
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13.7 BUFFETS TO RESERVE COMMON STOCK.
Buffets shall at all times reserve and keep available out
of its authorized but unissued Buffets Common Stock, for the purpose
of effecting the conversion of Notes, the full number of shares of
Buffets Common Stock then issuable upon the conversion of all
outstanding Notes.
13.8 TAXES ON CONVERSIONS.
Buffets will pay any and all taxes levied by the taxing
authorities of the United States of America or any political
subdivision thereof that may be payable in respect of the issue or
delivery of shares of Buffets Common Stock on conversion of Notes
pursuant hereto. Buffets shall not, however, be required to pay any
tax which may be payable in respect of any transfer involved in the
issue and delivery of shares of Buffets Common Stock in a name other
than that of the Holder of the Note or Notes to be converted, and no
such issue or delivery shall be made unless and until the Person
requesting such issue has paid to Buffets the amount of any such tax,
or established to the satisfaction of Buffets that such tax has been
paid.
13.9 COVENANT AS TO SHARES OF BUFFETS COMMON STOCK.
Buffets covenants that all shares of Buffets Common Stock
which may be issued upon conversion of Notes will upon issue be fully
paid and nonassessable and, except as provided in Section 13.8,
Buffets will pay all taxes, liens and charges with respect to the
issue thereof.
13.10 CANCELLATION OF CONVERTED NOTES.
All Notes delivered for conversion shall be delivered to
the Trustee to be canceled by or at the direction of the Trustee,
which shall dispose of the same as provided in Section 3.9.
13.11 PROVISIONS IN CASE OF CONSOLIDATION, MERGER OR SALE OF
ASSETS.
In case of any consolidation of Buffets with, or merger
of Buffets into, any other Person, any merger of another Person into
Buffets (other than a merger which does not result in any
reclassification, conversion, change or cancellation of outstanding
shares of Buffets Common Stock) or any sale or transfer of all or
substantially all of the assets of Buffets, the Person formed by such
consolidation or resulting from such merger or which acquires such
assets, as the case may be, shall execute and deliver to the Trustee a
supplemental indenture providing that the Holder of each Note then
outstanding shall have
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the right thereafter, during the period such Note shall be convertible as
specified in Section 13.1, to convert such Note only into the kind and
amount of securities, cash and other property receivable upon such
consolidation, merger, sale or transfer by a holder of the number of shares
of Buffets Common Stock into which such Note might have been converted
immediately prior to such consolidation, merger, sale or transfer, assuming
such holder of Buffets Common Stock is not a Person with which Buffets
consolidated or into which Buffets merged or which merged into Buffets or
to which such sale or transfer was made, as the case may be ("Constituent
Person"), or an Affiliate of a Constituent Person, and failed to exercise
his rights of election, if any, to the kind or amount of securities, cash
and other property receivable upon such consolidation, merger, sale or
transfer (provided that if the kind or amount of securities, cash and other
property receivable upon such consolidation, merger, sale or transfer is
not the same for each share of Buffets Common Stock held immediately prior
to such consolidation, merger, sale or transfer by others than a
Constituent Person or an Affiliate thereof and in respect of which such
rights of election shall not have been exercised ("nonelecting share"),
then for the purpose of this Section the kind and amount of securities,
cash and other property receivable upon such consolidation, merger, sale or
transfer by each nonelecting share shall be deemed to be the kind and
amount so receivable per share by a plurality of the nonelecting shares).
Such supplemental indenture shall provide for adjustments which, for events
subsequent to the effective date of such supplemental indenture, shall be
as nearly equivalent as may be practicable to the adjustments provided for
in this Article. The above provisions of this Section shall similarly
apply to successive consolidations, mergers, sales or transfers."
ARTICLE IV
ENDORSEMENT AND CHANGE OF FORM OF NOTES
Section 4.1 ENDORSEMENT TO NOTES. Any Notes authenticated and
delivered after the close of business on the day the merger of CDI into Hometown
is accomplished in substitution for Notes then outstanding and all Notes
presented or delivered to the Trustee on and after that date for such purpose
shall (unless textually revised as hereinafter provided) be stamped by the
Trustee, with a notation as follows:
"The obligations and liabilities of Hometown Buffet, Inc., a Delaware
corporation, contained herein with respect to the payment of the
principal of, and premium, if any, and interest on, this Note and all
other obligations and liabilities of the original obligor under the
Indenture have been guaranteed by Buffets, Inc., a Minnesota
corporation, which is the parent company of Hometown Buffet, Inc.
Buffets, Inc. has also assumed the obligation of
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Hometown Buffet, Inc. to satisfy the conversion rights of the holder of
this Note. This Note is now convertible for Common Stock of Buffets, Inc.
on the basis provided for in the First Supplemental Indenture referred to
below. The Indenture dated as of November 27, 1995, has been amended by a
First Supplemental Indenture dated as of September 20, 1996 to provide
among other things, for such guaranty and assumption of obligations and
liabilities by Buffets, Inc. and the basis for the conversion. Reference
is hereby made to said First Supplemental Indenture, copies of which are on
file with Trustee, for a description of the amendments therein made."
ARTICLE V
MISCELLANEOUS AMENDMENTS TO INDENTURE
Section 5.1 AMENDMENTS TO DEFINITIONS Section 1.1 of the Indenture
is hereby amended as follows:
(a) amending the following definition:
"`Board of Directors' means either the board of directors of the
Company or Buffets or any duly authorized committee of that board, as
the context may indicate."
(b) amending the following definition:
"`Board Resolution' means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Company or Buffets, as the
context may indicate, to have been duly adopted by the Board of
Directors and to be in full force and effect on the date of such
certification, and delivered to Trustee."
(c) amending the following definition:
"`Senior Indebtedness' means the principal of (and premium, if any)
and interest on (a) all indebtedness of the Company or Buffets, as the
context may indicate, for money borrowed, other than the Notes,
whether outstanding on the date of execution of this Indenture or
thereafter created, incurred or assumed, except any such indebtedness
that, by the terms of the instrument or instruments by which such
indebtedness was created or incurred, expressly provides that it (i)
is junior in right of payment to the Notes or (ii) ranks pari passu in
right of payment with the Notes, and (b) any amendments, renewals,
extensions, deferrals, modifications, refinancings and refundings of
any such indebtedness. For the purposes of this definition,
"indebtedness for money borrowed," when used with respect to the
Company or Buffets, as the case may be, means (u) any
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obligation of the Company or Buffets for the repayment of borrowed money
(including, without limitation, fees, penalties, expenses, collection
expenses, interest yield amounts and other obligations in respect thereof
and interest accruing after the filing of a petition initiating any
proceeding under the Bankruptcy Code, whether or not allowed as a claim in
such proceeding), whether or not evidenced by bonds, debentures, notes or
other written instruments, and any other obligations evidenced by notes,
bonds, debentures or similar instruments (including, without limitation,
(i) the Obligations of Buffets under and as defined in that certain Second
Amended and Restated Credit Agreement dated as of April 30, 1996, among
Buffets, the Banks parties thereto, and First Bank National Association in
its separate capacities as a Bank and as agent for the Banks, as amended by
that certain First Amendment to Second Amended and Restated Credit
Agreement dated as of September 20, 1996, and (ii) any obligation of the
Company or Buffets, as the context may indicate, for the repayment of
borrowed money from any Subsidiary or Affiliate), (v) any deferred payment
obligations of the Company or Buffets for the payment of the purchase price
of property or assets evidenced by a note or similar instrument (excluding
any obligations for trade payables or constituting the deferred purchase
price of assets incurred in ordinary course of business), (w) any
obligation for the payment of rent or other amounts under a lease of
property or assets which obligation is required to be classified and
accounted for as a capitalized lease on the balance sheet of the Company or
Buffets under generally accepted accounting principles, (x) any obligations
of the Company or Buffets due and payable under interest rate and currency
swaps, floors, caps or similar arrangements intended to fix interest rate
obligations or currency fluctuations risks, (y) all obligations of the
Company or Buffets evidenced by a letter of credit or any reimbursement
obligation of the Company or Buffets in respect of a letter of credit, and
(z) any obligations of others of the kinds described in the preceding
clauses (u), (v), (w), (x) or (y) assumed by or guaranteed by the Company
or Buffets and the obligations of the Company or Buffets under guarantees
of such obligations, including, without limitation, the obligations of the
Company under that certain Guaranty of Country Delaware, Inc., a Delaware
corporation ("CDI"), dated as of September 20, 1996, as assumed by the
Company pursuant to that certain Assumption Agreement dated as of September
20, 1996 by and between the Company and CDI."
(d) amending the following definition:
"`Subsidiary' means a corporation more than 50% of the outstanding
voting stock of which is owned, directly or indirectly, by the Company
or Buffets, as the context may indicate, or by one or more other
Subsidiaries, or by the Company or Buffets, as the context may
indicate, and by one or more other Subsidiaries. For the purposes of
this definition, "Voting Stock" means stock
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which ordinarily has voting power for the election of directors, whether at
all times or only so long as no senior class of stock has such voting power
by reason of any contingency."
(e) adding the following definition:
"'Buffets' means Buffets, Inc., a Minnesota corporation."
(f) adding the following definition:
"'Buffets Common Stock' includes any stock of any class of Buffets
which has no preference in respect of dividends or of amounts payable
in the event of any voluntary or involuntary liquidation, dissolution
or winding-up of Buffets and which is not subject to redemption by
Buffets. However, subject to the provisions of Section 13.11, shares
issuable on conversion of the Notes shall include only shares of the
class designated as Buffets Common Stock at the date of this
instrument or share of any class or classes resulting from any
reclassification or reclassifications thereof and which have no
preference in respect of dividends or of amounts payable in the event
of any voluntary or involuntary liquidation, dissolution or winding-up
of Buffets and which are not subject to redemption by Buffets;
provided, that, if at any time there shall be more than one such
resulting class, the shares of each such class then so issuable shall
be substantially in the proportion which the total number of shares of
such class resulting from all such reclassifications bears to the
total number of shares of all such classes resulting from all such
reclassifications."
Section 5.2 AMENDMENTS TO SECTIONS 1.2, 1.3 AND 1.5. For purposes
of Sections 1.2, 1.3 and 1.5 of the Indenture, all references to "the Company"
shall be deemed to be a reference to "the Company or Buffets."
Section 5.3 AMENDMENTS TO SECTION 1.4. For purposes of Section
1.4(a) of the Indenture, all references to "the Company" shall be deemed to be a
reference to "the Company and Buffets."
Section 5.4 AMENDMENTS TO SECTION 1.14. Section 1.14 of the
Indenture is hereby amended as follows:
"Nothing in this indenture or in the Notes, expressed or implied,
shall be construed to constitute a security interest under the Uniform
Commercial Code or similar legislation, as now or hereafter enacted
and in effect, in any jurisdiction where property of the Company,
Buffets, or their respective Subsidiaries are located."
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Section 5.5 AMENDMENTS TO SECTION 1.15. For purposes of Section
1.15 of the Indenture, all references to "the Company" shall be deemed to be a
reference to "the Company or Buffets."
Section 5.6 AMENDMENTS TO SECTION 2.3. For purposes of Section 2.3
of the Indenture, all references to "HomeTown Buffet, Inc." in the form of
Conversion Notice and the form of Option to Elect Repayment Upon a Risk Event
shall be deemed to be a reference to "Buffets, Inc."
Section 5.7 AMENDMENTS TO SECTION 3.8. For purposes of Section 3.8
of the Indenture, all references to "the Company, the Trustee and any agent of
the Company or the Trustee" shall be deemed to be a reference to "the Company,
Buffets, the Trustee, and any agent of the Company, Buffets or the Trustee."
Section 5.8 AMENDMENTS TO SECTION 5.1. Section 5.1 of the
Indenture is hereby amended by adding the following as an "Event of Default"
thereunder:
"(9) default in the performance, or breach, of any covenant or
warranty of Buffets in this Indenture, and continuance of such default
or breach for a period of sixty (60) days after there has been given,
by registered or certified mail, to Buffets by the Trustee, or to
Buffets and the Trustee by the Holders of at least 10% in principal
amount of Outstanding Notes, a written notice specifying such default
or breach and requiring it to be remedied and stating that such notice
is a "Notice of Default" hereunder."
Section 5.9 AMENDMENTS TO SECTION 5.2. Section 5.2 of the
Indenture is hereby amended in its entirety to read as follows:
"5.2 ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT.
If an Event of Default occurs and is continuing, then and
in every such case the Trustee or the Holders of not less than 25% in
principal amount of the Outstanding Notes may declare the principal of
all the Notes to be due and payable immediately, by a notice in
writing to the Company and Buffets (and to the Trustee if given by
Holders), and upon any such declaration such principal shall become
immediately due and payable.
At any time after such declaration of acceleration has
been made and before a judgment or decree for payment of the money due
has been obtained by the Trustee as hereinafter in this Article
provided, the Holders of 66-2/3% in principal amount of the
outstanding Notes, by written notice to the Company, Buffets and the
Trustee, may rescind and annul such declaration and its consequences
if
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(1) the Company or Buffets has paid or deposited with
the Trustee a sum sufficient to pay
(A) all overdue interest on all Notes,
(B) the principal of (and premium, if any, on)
any Notes which have become due otherwise than by such declaration of
acceleration and interest thereon at the rate borne by the Notes,
(C) to the extent that payment of such interest
is lawful, interest upon overdue interest at the rate borne by the
Notes, and
(D) all sums paid or advanced by the Trustee
hereunder and the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel;
and
(2) all Events of Default, other than nonpayment of
the principal of Notes which have become due solely by such
declaration of acceleration, have been cured or waived as provided in
Section 5.13.
No such rescission shall affect any subsequent default or
impair any right consequent thereon."
Section 5.10 AMENDMENTS TO SECTION 5.3. Section 5.3 of the
Indenture is hereby amended in its entirety to read as follows:
"5.3 COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY TRUSTEE.
The Company and Buffets each covenants that if:
(1) default is made in the payment of any interest on
any Note when such interest becomes due and payable and such default
continues for a period of thirty (30) days, or
(2) default is made in the payment of the principal of
(or premium, if any, on) any Note at the maturity thereof, the Company
or Buffets will, upon demand of the Trustee, pay to it, for the
benefit of the Holders of such Notes, the whole amount then due and
payable on such Notes for principal (and premium, if any) and
interest, and, to the extent that payment of such interest shall be
legally enforceable, interest on any overdue principal
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(and premium, if any) and on any overdue interest, at the rate borne by the
Notes, and in addition thereto, such further amount as shall be sufficient
to cover the costs and expenses of collection, including the reasonable
compensation, expenses, disbursements and advances of the Trustee, its
agents and counsel.
If an Event of Default occurs and is continuing, the
Trustee may in its discretion proceed to protect and enforce its
rights and the rights of the Holders by such appropriate judicial
proceedings as the Trustee shall deem most effectual to protect and
enforce any such rights, whether for the specific enforcement of any
covenant or agreement in this Indenture or in aid of the exercise of
any power granted herein, or to enforce any other proper remedy."
Section 5.11 AMENDMENTS TO SECTION 7.4. Section 7.4 of the
Indenture is hereby amended in its entirety to read as follows:
"The Company shall file with the Trustee, and transmit to Holders,
such information, documents and other reports, and summaries thereof,
as may be required pursuant to the Trust Indenture Act at the times
and in the manner provided pursuant to such Act. Buffets shall file
with the Trustee and the Commission, and transmit to Holders, such
information, documents or reports required to be filed with the
Commission pursuant to Section 13 or 15(d) of the Exchange Act within
fifteen (15) days after the same is so required to be filed with the
Commission."
Section 5.12 AMENDMENTS TO SECTION 10.2. Section 10.2 of the
Indenture is hereby amended by adding the following to Section 10.2:
"Buffets will maintain in the Borough of Manhattan, The City of
New York an office or agency where Notes may be presented or
surrendered for payment, where Notes may be surrendered for
registration of transfer or exchange, where Notes may be surrendered
for conversion and where notices and demands to or upon Buffets in
respect of the Notes and this Indenture may be served. Buffets will
give prompt written notice to the Trustee of the location, and any
change in the location, of such office or agency. If at any time
Buffets shall fail to maintain any such required office or agency or
shall fail to furnish the Trustee with the address thereof, such
presentations, surrenders, notices and demands may be made or served
at the Corporate Trust Office of the Trustee, and Buffets hereby
appoints the Trustee as its agent to receive all such presentations,
surrenders, notices and demands.
Buffets may also from time to time designate one or more other
offices or agencies (in or outside Hennepin County, Minnesota) where
the Notes may
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be presented or surrendered for any or all such purposes and may from time
to time rescind such designations; provided, however, that no such
designation or rescission shall in any manner relieve Buffets of its
obligations to maintain an office or agency in Hennepin County, Minnesota
for such purposes. Buffets will give prompt written notice to the Trustee
of any such designation or rescission of any change in the location of any
such other office or agency."
Section 5.13 AMENDMENTS TO SECTION 12.2. For Purposes of Section
12.2 of the Indenture, all references to "the Company" shall be deemed to be a
reference to "the Company or Buffets."
ARTICLE VI
MISCELLANEOUS
Section 6.1 DUE AUTHORIZATION AND EXECUTION. This First
Supplemental Indenture is executed by Buffets, Hometown, and the Trustee
pursuant to the provisions of Article 9 of the Indenture, and all the terms and
conditions hereof shall be and be deemed to be part of the terms and conditions
of the Indenture for any and all purposes. Except as expressly altered or
amended as set forth in this First Supplemental Indenture, the Indenture and the
Notes issued thereunder are hereby ratified and confirmed and all the terms,
provisions, and conditions of the Indenture and the Notes issued thereunder
shall be and continue in full force and effect. The Indenture and this First
Supplemental Indenture shall be read, interpreted and construed as one and the
same instrument and shall be binding upon all the holders of the Notes.
Section 6.2 COUNTERPARTS. This First Supplemental Indenture may be
executed in any number of counterparts, each of which shall be an original but
such counterparts shall together constitute but one and the same instrument.
Section 6.3 ACCEPTANCE BY TRUSTEE. The Trustee accepts the
modifications of the trust hereby effected upon the terms and conditions set
forth in the Indenture as amended by this First Supplemental Indenture. The
Trustee shall not be responsible for the validity or sufficiency of this First
Supplemental Indenture or for the validity of the execution by Buffets or
Hometown of this First Supplemental Indenture or for the recitals herein
contained.
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IN WITNESS WHEREOF, each of the parties hereto have caused this First
Supplemental Indenture to be signed in its corporate name by its President or
one of its Vice Presidents and its corporate seal (if applicable) to be affixed
hereto and attested by one of its Secretaries or Assistant Secretaries, all as
of the day and year first above written.
Attest: Buffets, Inc.
/s/ H. Thomas Mitchell By: /s/ Roe H. Hatlan
- -------------------------------------- --------------------------------
Its: Chief Financial Officer
--------------------------------
Attest: Hometown Buffet, Inc.
/s/ Bradley J. Thies By: /s/ C. Dennis Scott
- -------------------------------------- --------------------------------
Its: Chairman
--------------------------------
Attest: Wells Fargo Bank, N.A.
/s/ Carl Boyd By: /s/ Yona Binder
- -------------------------------------- --------------------------------
Its: Vice President
--------------------------------
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