SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): SEPTEMBER 23, 1999
SBARRO, INC.
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(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
NEW YORK
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(STATE OR OTHER JURISDICTION OF INCORPORATION)
1-8881 11-2501939
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(COMMISSION FILE NUMBER) (IRS EMPLOYER IDENTIFICATION NO.)
401 BROADHOLLOW ROAD, MELVILLE, NEW YORK 11747
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (516) 864-0200
NOT APPLICABLE
----------------------------------------------------
(FORMER NAME OR FORMER ADDRESS, IF CHANGED SINCE LAST REPORT)
<PAGE>
ITEM 1. CHANGES IN CONTROL OF REGISTRANT.
On September 28, 1999, Mario Sbarro, Joseph Sbarro, Joseph Sbarro
(1994) Family Limited Partnership, Anthony Sbarro, and Mario Sbarro and Franklin
Montgomery, not individually but as trustees under that certain Trust Agreement
dated April 28, 1984 for the benefit of Carmela Sbarro and her descendants
(collectively, the "Continuing Shareholders") became the holders of 100% of the
issued and outstanding Common Stock of Sbarro, Inc. (the "Company") pursuant to
an Amended and Restated Agreement and Plan of Merger dated as of January 19,
1999 among the Company, Sbarro Merger LLC ("Mergeco") and the Continuing
Shareholders (the "Merger Agreement"). The following brief description of the
consideration payable under the Merger Agreement is qualified in its entirety by
reference to the Merger Agreement, which is Exhibit 2.1 to this Report.
Pursuant to the terms of the Merger Agreement, Mergeco merged (the
"Merger") with and into the Company and the Company's shareholders other than
the Continuing Shareholders or Mergeco (the "Public Shareholders") received the
right to receive $28.85 per share in cash in exchange for the approximately 13.5
million shares of the Company's Common Stock not owned by the Continuing
Shareholders, and all outstanding stock options, including stock options held by
Continuing Shareholders, have been terminated in exchange for a cash payment
equal to the number of shares subject thereto multiplied by the excess, if any,
of $28.85 over the applicable option exercise price. The Company estimates that
approximately $411.0 million is required to consummate the Merger and pay
related fees and expenses of the transactions.
The consideration for shares of the Public Shareholders and for the
stock options pursuant to the Merger Agreement was funded through the placement
of $255.0 million of 11.0% Senior Notes (the "Senior Notes") due 2009, sold at a
price of 98.514% of par to yield 11.25% per annum, and substantially all of the
Company's cash on hand. The Notes were issued under an Indenture dated September
28, 1999 among the Company, each of the Company's current and future Restricted
Subsidiaries (as defined), as guarantors, and Firstar Bank, N.A., as trustee
(the "Indenture"). The Company also entered into a Credit Agreement dated as of
September 23, 1999 with European American Bank (the "Bank") to provide an
unsecured $30.0 million senior revolving credit facility (the "Credit
Agreement"). The following is a brief description of certain terms of the
Indenture and the Credit Agreement and is qualified in its entirety by reference
to the Indenture and the Credit Agreement which are filed as Exhibits 4.1 and
4.2 to this Report.
Interest on the Notes is payable semi-annually on March 15 and
September 15 of each year commencing on March 15, 2000 at the rate of 11.0% per
annum.
The Company's payment obligations under the Notes are jointly and
severally unconditionally and irrevocably guaranteed by all of the Company's
current Restricted Subsidiaries and is to be similarly guaranteed by the
Company's future Restricted Subsidiaries. The Notes and the subsidiary
guarantees are senior unsecured obligations of the Company and the guarantor
subsidiaries, ranking PARI PASSU in right of payment to all of the Company's and
the guarantor subsidiaries' respective present and future senior debt, including
under the Credit Agreement.
The Indenture permits redemption of the Notes at the Company's option
at varying redemption prices and requires the Company to offer to purchase Notes
in the event of a Change of Control and in connection with certain Asset Sales
(each as defined).
The Indenture contains various covenants on the part of the Company and
its Restricted Subsidiaries, including, but not limited to, restrictions on
making of dividends, stock repurchases, certain investments and other restricted
payments, the incurrence of indebtedness and liens on its assets, affiliate
transactions, asset sales and mergers.
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<PAGE>
The Credit Agreement provides an unsecured revolving credit facility
(the "Credit Facility") to the Company enabling the Company to borrow, on a
revolving basis from time to time during its five-year term, up to $30.0
million, including a $10.0 million sublimit for standby letters of credit.
At the Company's option, the interest rates applicable to loans under
the Credit Agreement will be at either (a) the Bank's prime rate plus a margin
ranging from zero to 0.75% (the initial margin will be 0.50%) or (b) reserve
adjusted LIBOR plus a margin ranging from 1.5% to 2.5% (the initial margin will
be 2.25%). In each case, the margin depends upon the ratio of the Company's
senior debt (as defined) to its EBITDA (as defined).
Each of the Company's current Corporate Guarantors (as defined in the
Credit Agreement, being the Restricted Subsidiaries under the Indenture) have
agreed to, and the future Corporate Guarantors are to, unconditionally and
irrevocably guarantee the Company's obligations under the Credit Agreement on a
joint and several basis.
The Company has agreed to pay certain fees in connection with the
Credit Agreement, including an unused commitment fee at a rate per year that
will vary from 0.25% of the undrawn amount of the facility to 0.45% of the
undrawn amount of the facility per year, depending upon the ratio of the
Company's senior debt to EBITDA. Initially, the unused commitment fee will be
0.40% per year.
The Company's borrowings under the Credit Agreement are repayable on
September 28, 2004. In addition, the Company will be required to repay the
Company's loans and reduce the lenders commitments under the Credit Agreement
using the proceeds of certain asset sales and certain issuances of certain
equity interests of, and sales of equity interests in, Corporate Guarantors.
The Credit Agreement contains various covenants, including, but not
limited to, restrictions on making of dividends and stock repurchases, certain
investments and other restricted payments, the incurrence of indebtedness,
guarantees and other contingent obligations, and liens on its assets, affiliate
transactions, asset sales and mergers, consolidations and acquisitions of stock
or assets by the Company and the Corporate Guarantors. In addition, the Credit
Facility contains provisions that under certain circumstances prohibit
redemptions or repurchases of the Notes, including repurchases that might
otherwise be required pursuant to the terms of the Indenture, and imposes
certain conditions on the Company's amending or supplementing the Indenture.
Additionally, the Company will have to maintain a minimum ratio of the Company's
consolidated EBITDA (with the Corporate Guarantors) to the Company's
consolidated interest expense (with the Corporate Guarantors) of at least 2.0 to
1.0 and a ratio of the Company's consolidated senior debt (with the Corporate
Guarantors) to the Company's consolidated EBITDA (with the Corporate Guarantors)
ranging from 4.5 to 1.0 in 1999 to 3.9 to 1.0 beginning December 29, 2002.
A copy of the Company's press releases dated September 24, 1999 and
September 29, 1999 are attached as Exhibit 99.1 and Exhibit 99.2, respectively,
to this Report.
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
Reference is made to Item 1 above.
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<PAGE>
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED:
Not applicable.
(b) PRO FORMA FINANCIAL INFORMATION:
Pro Forma financial information is provided herein on pages F-1 through
F-7.
(c) EXHIBITS:
Exhibit Description
- ------- -----------
2.1 Amended and Restated Agreement and Plan of Merger dated as of
January 19, 1999 among the Company, Sbarro Merger LLC, a New York
limited liability company, Mario Sbarro, Joseph Sbarro, Joseph
Sbarro (1994) Family Limited Partnership, Anthony Sbarro, and
Mario Sbarro and Franklin Montgomery, not individually but as
trustees under that certain Trust Agreement dated April 28, 1984
for the benefit of Carmela Sbarro and her descendants.
(Incorporated by reference to Exhibit 2 to the Company's Current
Report on Form 8-K dated (date of earliest event reported) June
17, 1999, File No. 1-8881.)
4.1 Indenture dated as of September 28, 1999 among the Company, the
Restricted Subsidiaries of the Company named therein, as
guarantors, and Firstar Bank, as trustee.
4.2 Credit Agreement dated as of September 23, 1999 by and among the
Company and European American Bank, as Agent, and the Lenders
Party thereto (initially European American Bank).
10.1 Registration Rights Agreement dated as of September 28, 1999
` among the Company, the Guarantors named therein and Bear, Stearns
& Co. Inc.
99.1 Press release of the Company dated September 24, 1999
99.2 Press release of the Company dated September 29, 1999
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<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SBARRO, INC.
Date: October 7, 1999 By:/s/ Robert G. Rooney
--------------------------------------
Robert G. Rooney,
Vice President - Finance and
Chief Financial Officer
<PAGE>
UNAUDITED CONSOLIDATED PRO FORMA FINANCIAL DATA
The following unaudited consolidated pro forma financial data have been
derived from the Company's historical financial statements. The unaudited
consolidated pro forma balance sheet gives effect to the Transaction as if it
had occurred on July 18, 1999. The unaudited consolidated pro forma income
statements for the year ended January 3, 1999, twenty-eight weeks ended July 18,
1999 and the twelve months ended July 18, 1999 give effect to the Transaction as
if it had occurred at the beginning of each period presented. The unaudited
consolidated pro forma financial data should be read in conjunction with the
Company's "Selected Consolidated Historical Financial Data," "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
audited Consolidated Financial Statements and notes thereto for the year ended
January 3, 1999 included in its Annual Report on Form 10-K for the year ended
January 3, 1999 and the Company's unaudited Consolidated Financial Statements
and notes thereto for the twenty-eight weeks ended July 18, 1999 included in its
Quarterly Report on Form 10-Q for the twenty-eight weeks ended July 18, 1999.
The pro forma adjustments are based upon available information and
certain assumptions that the Company's management believes are reasonable and
are described in the notes accompanying the unaudited consolidated pro forma
financial statements. The unaudited consolidated pro forma financial data do not
purport to represent what the Company's results of operations or financial
position would have been had the transactions occurred on the dates indicated,
or to project the Company's results of operations or financial position for any
future period or date, nor does it give effect to any matters other than those
described in the notes thereto. The Merger will be accounted for as a purchase
for financial accounting purposes.
The unaudited consolidated pro forma financial data presented herein do
not reflect the Company's current intention to elect to be taxed under the
provisions of Subchapter S of the Internal Revenue Code of 1986, as amended,
and, where applicable and permitted, under similar state and local income tax
provisions, beginning as early as fiscal 2000. At the time of the S corporation
election, the Company's deferred income taxes will be eliminated or reduced.
F-1
<PAGE>
SBARRO, INC.
UNAUDITED CONSOLIDATED PRO FORMA BALANCE SHEET
JULY 18, 1999
<TABLE>
<CAPTION>
TRANSACTION
HISTORICAL ADJUSTMENTS PRO FORMA
---------- ----------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents.................... $152,907 $(146,000)(a) $ 6,907
Receivables.................................. 3,542 -- 3,542
Inventories.................................. 2,882 -- 2,882
Prepaid expenses............................. 5,114 -- 5,114
------- -------- -------
Total current assets................. 164,445 (146,000) 18,445
Property and equipment, net.................... 138,397 -- 138,397
Excess purchase price over cost basis.......... -- 224,835(b) 224,835
Deferred financing fees and transaction costs.. -- 14,900(c) 14,900
Other assets, net.............................. 8,902 -- 8,902
-------- --------- --------
$311,744 $ 93,735 $405,479
======== ========== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable............................. $ 7,512 $ -- $ 7,512
Accrued expenses............................. 24,786 -- 24,786
Income taxes................................. 75 -- 75
-- - --
Total current liabilities............ 32,373 -- 32,373
Long-term debt................................. -- 265,000(d) 265,000
Deferred income taxes.......................... 8,882 -- 8,882
Commitments and contingencies
Shareholders' equity........................... 270,489 (171,265)(e) 99,224
-------- --------- ---------
$311,744 $ 93,735 $ 405,479
======== ========= =========
</TABLE>
See notes to unaudited consolidated pro forma financial data
F-2
<PAGE>
SBARRO, INC.
UNAUDITED CONSOLIDATED PRO FORMA STATEMENT OF OPERATIONS
YEAR ENDED JANUARY 3, 1999
<TABLE>
<CAPTION>
TRANSACTION
HISTORICAL ADJUSTMENTS PRO FORMA
---------- ----------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Revenues:
Restaurant sales............................... $361,534 $ -- $361,534
Franchise related income....................... 8,578 -- 8,578
Interest income................................ 5,120 (5,120)(a) --
------- --------- -------
Total revenues......................... 375,232 (5,120) 370,112
------- --------- -------
Costs and expenses:
Cost of food and paper products................ 76,572 -- 76,572
Restaurant operating expenses:
Payroll and other employee benefits......... 93,367 -- 93,367
Occupancy and other......................... 101,013 -- 101,013
Depreciation and amortization.................... 22,429 7,495(b) 29,924
General and administrative....................... 19,708 -- 19,708
Interest expense................................. -- 28,650(c) 30,519
1,490(d)
379(e)
Provision for unit closings...................... 2,515 -- 2,515
Non-recurring charges............................ 5,605 -- 5,605
Other income..................................... (2,680) -- (2,680)
------- ------ -------
Total costs and expenses............... 318,529 38,014 356,543
------- ------ -------
Income before income taxes and cumulative effect of
change in method of accounting................. 56,703 (43,134) 13,569
Income taxes..................................... 21,547 (13,121)(f) 8,426
------ -------- -------
Income before cumulative change in method of
accounting..................................... 35,156 (30,013) 5,143
Cumulative effect of change in method of accounting for
start-up costs................................. (822) 27(f) (795)
-------- --------- --------
Net income....................................... $ 34,334 $ (29,986) $ 4,348
======== ========= ========
EBITDA........................................... $ 82,132 $ 82,132
</TABLE>
See notes to unaudited consolidated pro forma financial data
F-3
<PAGE>
SBARRO, INC.
UNAUDITED CONSOLIDATED PRO FORMA STATEMENT OF OPERATIONS
TWENTY-EIGHT WEEKS ENDED JULY 18, 1999
TRANSACTION
HISTORICAL ADJUSTMENTS PRO FORMA
---------- ----------- ---------
(DOLLARS IN THOUSANDS)
Revenues:
Restaurant sales................. $179,051 $ -- $179,051
Franchise related income......... 4,332 -- 4,332
Interest income.................. 2,624 (2,624)(a) --
------- ------- -------
Total revenues........... 186,007 (2,624) 183,383
------- ------ -------
Costs and expenses:
Cost of food and paper products.. 36,981 -- 36,981
Restaurant operating expenses:
Payroll and other employee benefits 49,575 -- 49,575
Occupancy and other........... 56,205 -- 56,205
Depreciation and amortization...... 12,278 4,036(b) 16,314
General and administrative......... 12,339 -- 12,339
Interest expense................... -- 15,427(c) 16,433
802(d)
204(e)
Other income....................... (2,574) -- (2,574)
------- -------- -------
Total costs and expenses. 164,804 20,469 185,273
------- -------- -------
Income (loss) before income taxes.. 21,203 (23,093) (1,890)
Income taxes....................... 8,057 (7,199)(f) 858
-------- --------- --------
Net income (loss).................. $ 13,146 $ (15,894) $ (2,748)
======== ========= ========
EBITDA............................. $ 30,857 $ 30,857
See notes to unaudited consolidated pro forma financial data
F-4
<PAGE>
SBARRO, INC.
UNAUDITED CONSOLIDATED PRO FORMA STATEMENT OF OPERATIONS
TWELVE MONTHS ENDED JULY 18, 1999
<TABLE>
<CAPTION>
LESS PLUS
TWENTY-EIGHT TWENTY-EIGHT TWELVE PRO FORMA
WEEKS WEEKS MONTHS TWELVE MONTHS
YEAR ENDED ENDED ENDED ENDED TRANSACTION ENDED
JANUARY 3, 1999 JULY 12, 1998 JULY 18, 1999 JULY 18, 1999 ADJUSTMENTS JULY 18, 1999
--------------- ------------- ------------- ------------- ----------- -------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Revenues:
Restaurant sales........ $361,534 $174,028 $179,051 $366,557 $ -- $ 366,557
Franchise related
income............... 8,578 4,154 4,332 8,756 -- 8,756
Interest income......... 5,120 2,545 2,624 5,199 (5,199)(a) --
------- ------- ------- ------- ------- --------
Total revenues.. 375,232 180,727 186,007 380,512 (5,199) 375,313
------- ------- ------- ------- ------ -------
Costs and expenses:
Cost of food and paper
products............. 76,572 36,423 36,981 77,130 -- 77,130
Restaurant operating
expenses:
Payroll and other
employee benefits.. 93,367 46,899 49,575 96,043 -- 96,043
Occupancy and other.. 101,013 52,985 56,205 104,233 -- 104,233
Depreciation and
amortization............ 22,429 11,725 12,278 22,982 7,495(b) 30,477
General and
administrative.......... 19,708 10,367 12,339 21,680 -- 21,680
Interest expense.......... -- -- -- -- 28,650(c) 30,519
1,490(d)
379(e)
Provision for unit
closings................ 2,515 1,525 -- 990 -- 990
Non-recurring charges..... 5,605 986 -- 4,619 -- 4,619
Other income.............. (2,680) (1,259) (2,574) (3,995) -- (3,995)
------- ------- ------- ------- ------ -------
Total costs and
expenses...... 318,529 159,651 164,804 323,682 38,014 361,696
------- ------- ------- ------- ------ -------
Income before income taxes
and cumulative effect of
change in method of
accounting.............. 56,703 21,076 21,203 56,830 (43,213) 13,617
Income taxes.............. 21,547 8,009 8,057 21,595 (13,150)(f) 8,445
------- ------- ------- ------- ------- -------
Income before cumulative
effect of change in method
of accounting........... 35,156 13,067 13,146 35,235 (30,063) 5,172
Cumulative effect of change
in method of accounting
for start-up costs, less
income tax benefit of
$504.................... (822) (822) -- -- -- --
-------- -------- -------- -------- -------- ---------
Net income................ $ 34,334 $ 12,245 $ 13,146 $ 35,235 $(30,063) $ 5,172
======== ======== ======== ======== ======== =========
EBITDA.................... $ 82,132 $ 32,767 $ 30,857 $ 80,222 $ 80,222
</TABLE>
See notes to unaudited consolidated pro forma financial data
F-5
<PAGE>
SBARRO, INC.
NOTES TO UNAUDITED CONSOLIDATED PRO FORMA FINANCIAL DATA
1. UNAUDITED PRO FORMA BALANCE SHEET ADJUSTMENTS:
The Company made the following pro forma adjustments to arrive at its pro
forma consolidated balance sheet as of July 18, 1999:
(a) Represents cash on hand used as consideration in the Merger.
(b) Represents the excess of the purchase price over the fair value of net
assets acquired arising as a result of the Merger. The adjustments are
based on presently available information and on certain assumptions
that the Company believes is reasonable; however, actual recording of
the Merger will be based upon appraisals, evaluations and estimates of
fair values.
(c) Represents deferred financing and other costs associated with the
Merger.
(d) Represents initial borrowings under the Credit Facility and issuance
of the Senior Notes. The Senior Notes are recorded at a discount of
approximately $3.8 million to the face amount to reflect the original
issue discount on the Senior Notes.
(e) Represents the elimination of the Public Shareholders' proportionate
share of shareholders' equity.
2. UNAUDITED PRO FORMA STATEMENT OF OPERATIONS ADJUSTMENTS:
The Company has made the following pro forma adjustments to arrive at
its pro forma consolidated statements of operations:
(a) (Represents elimination of interest income due to $146.0 million of
cash on hand used as consideration in the Merger.
(b) Represents amortization of the excess of the purchase price over the
fair value of net assets acquired arising as a result of the Merger.
The adjustments are based on presently available information and on
certain assumptions that the Company believes are reasonable; however,
actual recording of the Merger will be based upon appraisals,
evaluations and estimates of fair values.
(c) Represents cash interest expense as a result of the issuance of the
Senior Notes and initial borrowings of $13.8 million under the Credit
Facility.
(d) Represents amortization of deferred financing and transaction costs
over the life of the Senior Notes.
(e) Represents amortization of original issue discount over the life of
the Senior Notes.
(f) Reflects adjustments to the Company's income tax provision and
effective tax rate as a result of the transactions. The Company's
effective tax rate after the Merger will be higher than its
F-6
<PAGE>
historical effective tax rate primarily due to the non-deductible
amortization of the excess of the purchase price over the fair value
of net assets acquired arising as a result of the Merger. The
adjustments are based on presently available information and on
certain assumptions that the Company believes are reasonable; however,
actual recording of the Merger will be based upon appraisals,
evaluations and estimates of fair values.
F-7
<PAGE>
EXHIBIT INDEX
Exhibit Description
- ------- -----------
2.1 Amended and Restated Agreement and Plan of Merger dated as of January 19,
1999 among the Company, Sbarro Merger LLC, a New York limited liability
company, Mario Sbarro, Joseph Sbarro, Joseph Sbarro (1994) Family Limited
Partnership, Anthony Sbarro, and Mario Sbarro and Franklin Montgomery, not
individually but as trustees under that certain Trust Agreement dated April
28, 1984 for the benefit of Carmela Sbarro and her descendants.
(Incorporated by reference to Exhibit 2 to the Company's Current Report on
Form 8-K dated (date of earliest event reported) June 17, 1999, File No.
1-8881.)
4.1 Indenture dated as of September 28, 1999 among the Company, the Restricted
Subsidiaries of the Company named therein, as guarantors, and Firstar Bank,
as trustee.
4.2 Credit Agreement dated as of September 23, 1999 by and among the Company
and European American Bank, as Agent, and the Lenders Party thereto
(initially European American Bank).
10.1 Registration Rights Agreement dated as of September 28, 1999 among the
Company, the Guarantors named therein and Bear, Stearns & Co. Inc.
99.1 Press release of the Company dated September 24, 1999
99.2 Press release of the Company dated September 29, 1999
9/27/90
KL
SBARRO, INC.,
as Issuer
THE GUARANTORS NAMED HEREIN,
as Guarantors
FIRSTAR BANK, N.A.
as Trustee
11% SENIOR NOTES DUE 2009
---------------------------
INDENTURE
---------------------------
Dated as of September 28, 1999
<PAGE>
TABLE OF CONTENTS
ARTICLE 1. DEFINITIONS AND INCORPORATION BY REFERENCE............... 1
SECTION 1.01 Definitions.............................................. 1
SECTION 1.02 Other Definitions........................................ 22
SECTION 1.03 Incorporation by Reference of Trust Indenture Act........ 22
SECTION 1.04 Rules of Construction.................................... 23
SECTION 1.05 Compliance Certificates and Opinions..................... 23
SECTION 1.06 Form of Documents Delivered to Trustee................... 24
SECTION 1.07 Acts of Holders.......................................... 25
ARTICLE 2. THE NOTES ............................................... 26
SECTION 2.01. Form and Dating.......................................... 26
SECTION 2.02. Execution and Authentication............................. 26
SECTION 2.03. Registrar and Paying Agent............................... 27
SECTION 2.04. Paying Agent to Hold Assets in Trust..................... 28
SECTION 2.05. Holder Lists............................................. 28
SECTION 2.06. Transfer and Exchange.................................... 28
SECTION 2.07. Replacement Notes........................................ 41
SECTION 2.08. Outstanding Notes........................................ 42
SECTION 2.09. Treasury Notes........................................... 42
SECTION 2.10. Temporary Notes.......................................... 43
SECTION 2.11. Cancellation............................................. 43
SECTION 2.12. Defaulted Interest....................................... 43
SECTION 2.13 CUSIP Number............................................. 44
SECTION 2.14. Deposit of Moneys........................................ 44
SECTION 2.15. Issuance of Additional Notes............................. 45
ARTICLE 3. REDEMPTION AND OFFERS TO PURCHASE........................ 45
SECTION 3.01 Applicability of Article................................. 45
SECTION 3.02 Election to Redeem; Notice to Trustee.................... 45
SECTION 3.03 Selection of Notes to Be Redeemed........................ 46
SECTION 3.04 Notice of Redemption..................................... 46
SECTION 3.05 Deposit of Redemption Price.............................. 47
SECTION 3.06 Notes Payable on Redemption Date......................... 47
SECTION 3.07 Notes Redeemed in Part................................... 48
SECTION 3.08 Optional Redemption...................................... 48
SECTION 3.09 Mandatory Redemption..................................... 49
SECTION 3.10 Offer to Purchase by Application of Excess Proceeds...... 49
ARTICLE 4. COVENANTS................................................ 51
SECTION 4.01 Payment of Notes......................................... 51
SECTION 4.02 Maintenance of Office or Agency.......................... 51
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<PAGE>
SECTION 4.03 Money for Security Payments to be Held in Trust.......... 52
SECTION 4.04 Reports.................................................. 53
SECTION 4.05 Compliance Certificate................................... 54
SECTION 4.06 Taxes.................................................... 55
SECTION 4.07 Stay, Extension and Usury Laws........................... 55
SECTION 4.08 Corporate Existence; Maintenance of Properties and
Insurance.............................................. 55
SECTION 4.09 Limitation on the Incurrence of Indebtedness and
Issuance of Preferred Stock.............................. 56
SECTION 4.10 Limitation on Restricted Payments........................ 58
SECTION 4.11 Limitation on Liens...................................... 62
SECTION 4.12 Limitation on Transactions with Affiliates............... 62
SECTION 4.13 Limitation on Dividend and Other Payment Restrictions
Affecting Subsidiaries................................... 63
SECTION 4.14 Covenants Relating to Tax Payment Agreement.............. 64
SECTION 4.15 Payments for Consent..................................... 65
SECTION 4.16 Asset Sales.............................................. 65
SECTION 4.17 Offer to Repurchase Upon Change of Control............... 66
SECTION 4.18 Additional Subsidiary Guarantees......................... 68
SECTION 4.19 Limitation on Issuances and Sales of Capital
Stock of Wholly-Owned Restricted Subsidiaries............ 68
ARTICLE 5. SUCCESSORS............................................... 69
SECTION 5.01 Limitation on Merger, Consolidation or Sale of Assets.... 69
SECTION 5.02 Successor Person Substituted............................. 70
ARTICLE 6. DEFAULTS AND REMEDIES.................................... 70
SECTION 6.01 Events of Default........................................ 70
SECTION 6.02 Acceleration of Maturity................................. 72
SECTION 6.03 Other Remedies........................................... 72
SECTION 6.04 Waiver of Past Defaults.................................. 73
SECTION 6.05 Control by Majority...................................... 73
SECTION 6.06 Limitation on Suits...................................... 73
SECTION 6.07 Rights of Holders to Receive Payment..................... 74
SECTION 6.08 Collection Suit by Trustee............................... 74
SECTION 6.09 Trustee May File Proofs of Claim......................... 74
SECTION 6.10 Priorities............................................... 75
SECTION 6.11 Undertaking for Costs.................................... 75
ARTICLE 7. TRUSTEE.................................................. 76
SECTION 7.01 Duties of Trustee........................................ 76
SECTION 7.02 Rights of Trustee........................................ 77
SECTION 7.03 Individual Rights of Trustee............................. 78
SECTION 7.04 Trustee's Disclaimer..................................... 78
SECTION 7.05 Notice of Defaults....................................... 79
-ii-
<PAGE>
SECTION 7.06 Reports by Trustee to Holders of Notes................... 79
SECTION 7.07 Compensation and Indemnity............................... 79
SECTION 7.08 Replacement of Trustee................................... 81
SECTION 7.09 Successor Trustee by Merger, etc......................... 82
SECTION 7.10 Eligibility; Disqualification............................ 82
SECTION 7.11 Preferential Collection of Claims Against Company........ 82
ARTICLE 8. LEGAL DEFEASANCE AND COVENANT DEFEASANCE................. 83
SECTION 8.01 Option to Effect Legal Defeasance or Covenant Defeasance. 83
SECTION 8.02 Legal Defeasance and Discharge........................... 83
SECTION 8.03 Covenant Defeasance...................................... 83
SECTION 8.04 Conditions to Legal Defeasance or Covenant Defeasance.... 84
SECTION 8.05 Deposited Money and Government Securities to be Held in
Trust; Other Miscellaneous Provisions.................... 85
SECTION 8.06 Repayment to Company..................................... 86
SECTION 8.07 Reinstatement............................................ 86
ARTICLE 9. AMENDMENTS............................................... 87
SECTION 9.01 Without Consent of Holders............................... 87
SECTION 9.02 With Consent of Holders.................................. 87
SECTION 9.03 Compliance with Trust Indenture Act...................... 89
SECTION 9.04 Revocation and Effect of Consents........................ 89
SECTION 9.05 Notation on or Exchange of Notes......................... 89
SECTION 9.06 Trustee to Sign Amendments, etc.......................... 89
ARTICLE 10. SATISFACTION AND DISCHARGE............................... 90
Section 10.01 Satisfaction and Discharge of Indenture.................. 90
SECTION 10.02 Application of Trust Money............................... 91
ARTICLE 11. SUBSIDIARY GUARANTEES..................................... 92
SECTION 11.01 Subsidiary Guarantee...................................... 92
SECTION 11.02 Obligation of the Guarantors Unconditional................ 92
SECTION 11.03 Waiver Relating to Subsidiary Guarantees.................. 93
SECTION 11.04 Guarantors May Consolidate, etc., on Certain Terms........ 93
SECTION 11.05 Release of Subsidiary Guarantee........................... 94
SECTION 11.06 Contribution of Guarantors................................ 94
SECTION 11.07. Reinstatement of Subsidiary Guarantees.................... 95
MISCELLANEOUS................................................................ 95
SECTION 12.01 Trust Indenture Act Controls.............................. 95
SECTION 12.02 Notices................................................... 95
SECTION 12.03 Communication by Holders with Other Holders............... 97
SECTION 12.04 Certificate and Opinion as to Conditions Precedent........ 97
SECTION 12.05 Rules by Trustee and Agents............................... 97
-iii-
<PAGE>
SECTION 12.06 Legal Holidays............................................ 97
SECTION 12.07 No Personal Liability of Directors, Officers, Employees,
Incorporators and Stockholders............................ 98
SECTION 12.08 Governing Law; Submission to Jurisdiction................. 98
SECTION 12.09 No Adverse Interpretation of Other Agreements............. 98
SECTION 12.10 Successors and Assigns.................................... 98
SECTION 12.11 Severability...............................................98
SECTION 12.12 Counterpart Originals......................................99
SECTION 12.13 Table of Contents, Headings, etc...........................99
SCHEDULES
Schedule 1 Commited Restricted Investments
Schedule 2 Existing Indebtedness
Schedule 3 Unrestricted Subsidiaries
EXHIBITS
Exhibit A Form of Note
Exhibit B Form of Certificate of Transfer
Exhibit C Form of Certificate of Exchange
Exhibit D Form of Certificate from Acquiring Institutional
Accredited Investor
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<PAGE>
CROSS-REFERENCE TABLE*
TRUST INDENTURE ACT SECTION INDENTURE SECTION
310(a)(1)............................................................7.10
(a)(2)..........................................................7.10
(a)(3)...........................................................N.A.
(a)(4)...........................................................N.A.
(a)(5)...........................................................7.10
(b)............................................................ 7.08,7.10
(c)..............................................................N.A.
311(a)................................................................7.11
(b)..............................................................7.11
(c)..............................................................N.A.
312(a)................................................................2.05
(b)..............................................................12.03
(c)..............................................................12.03
313(a)................................................................7.06
(b)(1)...........................................................N.A.
(b)(2)......................................................... 7.06;7.07
(c)..............................................................7.06
(d)..............................................................7.06
314(a)................................................................4.04,4.05
(b)..............................................................N.A.
(c)(1)...........................................................12.04
(c)(2)...........................................................12.04
(c)(3)...........................................................N.A.
(d)..............................................................N.A.
(e)..............................................................1.05
(f)..............................................................N.A.
315(a)................................................................7.01
(b)..............................................................7.05;12.02
(c)..............................................................7.01
(d)..............................................................7.01
(e)..............................................................6.11
316(a)(last sentence).................................................2.09
(a)(1)(A)........................................................6.05
(a)(1)(B)........................................................6.04
(a)(2)...........................................................N.A.
(b)..............................................................6.07
(c)..............................................................1.07
317(a)(1).............................................................6.08
(a)(2)...........................................................6.09
(b)..............................................................2.04
318(a)................................................................12.01
(b)..............................................................N.A.
(c)..............................................................12.01
N.A. means not applicable.
*This Cross-Reference Table is not part of the Indenture.
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<PAGE>
INDENTURE, dated as of September 28, 1999, among SBARRO, INC., a New
York corporation (the "Company"), as Issuer, the Guarantors named on the
signature pages hereto, as Guarantors, and FIRSTAR BANK, N.A., a national
banking association, as trustee (the "Trustee").
The Company, the Guarantors and the Trustee agree as follows for the
benefit of each other and for the equal and ratable benefit of the Holders of
the 11% Senior Notes due 2009 of the Company (the "Notes").
ARTICLE 1.
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01 Definitions
"144A Global Note" means a global note substantially in the form of
Exhibit A hereto bearing the Global Note Legend and the Private Placement Legend
and deposited with or on behalf of, and registered in the name of, the
Depositary or its nominee that will be issued in a denomination equal to the
initial outstanding principal amount of the Notes sold in reliance on Rule 144A.
"Acquired Debt" means, with respect to any specified Person, (i)
Indebtedness or Preferred Stock of any other Person existing at the time such
other Person is merged with or into or became a Subsidiary of such specified
Person, including, without limitation, Indebtedness or Preferred Stock incurred
by such other Person in connection with, or in contemplation of, such other
Person merging with or into or becoming a Subsidiary of such specified Person,
and (ii) Indebtedness secured by a Lien encumbering any asset acquired by such
specified Person.
"Additional Notes" means, subject to the Company's compliance with
Section 4.09 hereof, 11% Senior Notes due 2009 issued from time to time after
September 28, 1999 under the terms of this Indenture (other than those issued
pursuant to Sections 2.06, 2.07, 2.10, 3.07, 3.10, 4.17 or 9.05 of this
Indenture and other than Exchange Notes issued pursuant to an Exchange Offer for
other Notes outstanding under this Indenture).
"Adjusted Consolidated Net Income" means, with respect to any Person
for any period, the sum of (i) the Consolidated Net Income of such Person for
such period plus (ii) the aggregate amount of intangible amortization charges
resulting from the Merger to the extent that such intangible amortization
charges were deducted in computing such Consolidated Net Income.
"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 purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect
<PAGE>
to any Person, shall mean the possession, directly or indirectly, of the power
to direct or cause the direction of the management or policies of such Person,
whether through the ownership of voting securities, by agreement or otherwise;
provided that beneficial ownership of 10% or more of the voting securities of a
Person shall be deemed to be control.
"Agent" means any Registrar or Paying Agent.
"Agent Members" means members of, or participants in, the Depositary.
"Applicable Procedures" means, with respect to any transfer or exchange
of or for beneficial interest in any Global Note, the rule and regulations and
procedures of the Depositary that apply to such transfer or exchange.
"Asset Sale" means (i) the sale, lease, conveyance or other disposition
(collectively, "dispositions") of any assets or rights (including, without
limitation, by way of a sale and leaseback), other than dispositions of
inventory in the ordinary course of business consistent with past practices
(provided that the disposition of all or substantially all of the assets of the
Company and its Restricted Subsidiaries taken as a whole will be governed by the
provisions of Section 4.17 hereof and/or the provisions of Section 5.01 hereof
and not by the provisions of Section 4.16 hereof), and (ii) the issuance of
Equity Interests by any Restricted Subsidiary or the disposition by the Company
or a Restricted Subsidiary of Equity Interests in any of the Company's
Restricted Subsidiaries (other than directors' qualifying shares or shares
required by applicable law to be held by a Person other than the Company or a
Restricted Subsidiary of the Company); provided, however, that the term Asset
Sale shall not include any disposition of any assets or rights or any issuance
or disposition of Equity Interests if such transaction would have been an Asset
Sale in the absence of this proviso to the extent that the gross proceeds
thereof do not exceed, in aggregate amount together with all other such
dispositions or issuances, $3.0 million in any fiscal year of the Company (such
proceeds, to the extent non-cash, to be determined in good faith by the Board of
Directors of the Company). Notwithstanding the foregoing, the following will be
deemed not to be Asset Sales: (i) a transfer of assets or rights or Equity
Interests by the Company to a Wholly Owned Restricted Subsidiary or by a Wholly
Owned Restricted Subsidiary to the Company or to another Wholly Owned Restricted
Subsidiary; (ii) an issuance of Equity Interests by a Wholly Owned Restricted
Subsidiary to the Company or to another Wholly Owned Restricted Subsidiary;
(iii) a Permitted Investment or Restricted Payment that is permitted by Section
4.10 hereof; (iv) a disposition of Cash Equivalents solely for cash or other
Cash Equivalents; and (v) a disposition of assets in a single transaction or
group of related transactions, the gross proceeds of which do not exceed $10,000
(such proceeds, to the extent non-cash, to be determined in good faith by the
Board of Directors of the Company).
"Bankruptcy Law" means Title 11, U.S. Code or any similar foreign,
federal or state law for the relief of debtors, as amended.
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<PAGE>
"Board of Directors" means, with respect to any Person, the board of
directors of such Person, or any duly authorized committee of such board of
directors.
"Board Resolution" means a duly adopted resolution of the Board of
Directors of the Company in full force and effect at the time of determination
and certified as such by the Secretary or an Assistant Secretary of the Company
and delivered to the Trustee.
"Broker-Dealer" has the meaning set forth in the Registration Rights
Agreement.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and
Friday that is not a day on which banking institutions in The City of New York
are authorized or obligated by law, regulation or executive order to close.
"Capital Lease Obligation" means, at the time any determination thereof
is to be made, the amount of the liability in respect of a capital lease that
would at such time be required to be capitalized on a balance sheet in
accordance with GAAP.
"Capital Stock" means (i) in the case of a corporation, corporate
stock, (ii) in the case of an association or business entity, any and all
shares, interests, participations, rights or other equivalents (however
designated) of corporate stock, (iii) in the case of a partnership or limited
liability company, partnership or membership interests (whether general or
limited) and (iv) any other interest or participation that confers on a Person
the right to receive a share of the profits (other than incentive compensation
arrangements based upon profits) and losses of, or distributions of assets of,
the issuing Person.
"Cash Equivalents" means (i) United States dollars, (ii) securities
issued or directly and fully guaranteed or insured by the United States
government or any agency or instrumentality thereof having maturities of not
more than six months from the date of acquisition, (iii) certificates of deposit
and Eurodollar time deposits with maturities of six months or less from the date
of acquisition, bankers' acceptances with maturities not exceeding six months
and overnight bank deposits, in each case with any domestic commercial bank
having capital and surplus in excess of $500 million and a Keefe Bank Watch
Rating of AB or better, (iv) repurchase obligations with a term of not more than
seven days for underlying securities of the types described in clauses (ii) and
(iii) above entered into with any financial institution meeting the
qualifications specified in clause (iii) above, (v) commercial paper having the
highest rating obtainable from Moody's Investors Service, Inc. or Standard &
Poor's, a division of The McGraw Hill Companies, and in each case maturing
within six months after the date of acquisition and (vi) Investments in money
market funds substantially all the assets of which are comprised of securities
and other obligations of the types described in clauses (i) through (v) above.
"Cedel" means Cedel Bank, societe anonyme.
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<PAGE>
"Change of Control" means the occurrence of any of the following: (i) the
sale, lease, transfer, conveyance or other disposition, in one or a series of
related transactions, directly or indirectly, of all or substantially all of the
assets of the Company and its Restricted Subsidiaries taken as a whole to any
Person or "group" (as such term is used in Section 13(d)(3) of the Exchange
Act), other than to one or more Permitted Holders, (ii) the adoption of a plan
relating to the liquidation or dissolution of the Company, (iii) the
consummation of any transaction (including, without limitation, any merger or
consolidation) the result of which is that any Person or group, other than one
or more Permitted Holders, becomes the "beneficial owner" (as such term is
defined in Rule 13d- 3 and Rule 13d-5 under the Exchange Act, except that a
Person shall be deemed to have "beneficial ownership" of all securities that
such Person has the right to acquire, whether such right is currently
exercisable or is exercisable only upon the occurrence of a subsequent
condition), directly or indirectly, of more than 35% of the Voting Stock of the
Company (measured by voting power rather than number of shares) or (iv) the
first day on which a majority of the members of the Board of Directors of the
Company are not Continuing Directors.
"Closing Date" means September 28, 1999.
"Code" means the Internal Revenue Code of 1986, as amended, or any
successor thereto.
"Committed Restricted Investments" means up to $13.9 million of
Investments that were, as of August 30, 1999, committed to be made by the
Company and its Restricted Subsidiaries and are set forth in Schedule l to the
Indenture.
"Company" means Sbarro, Inc., a New York corporation, and any successor
thereto pursuant to Section 5.01 hereof.
"Company Request" or "Company Order" means a written request or order
signed in the name of the Company (i) by its Chairman, a Vice Chairman, its
President, Senior Vice President or a Vice President and (ii) by its Treasurer,
an Assistant Treasurer, its Secretary or an Assistant Secretary and delivered to
the Trustee; provided, however, that such written request or order may be signed
by any two of the officers or directors listed in clause (i) above in lieu of
being signed by one of such officers or directors listed in such clause (i) and
one of the officers listed in clause (ii) above.
"Consolidated Cash Flow" means, with respect to any Person for any
period, the Consolidated Net Income of such Person for such period plus, to the
extent deducted in computing such Consolidated Net Income, (i) an amount equal
to any net loss realized in connection with an Asset Sale, (ii) provision for
taxes based on income or profits of such Person and its Restricted Subsidiaries
for such period and Tax Distributions, if any, (iii) Consolidated Interest
Expense, and (iv) depreciation and amortization (including amortization of
goodwill and other intangibles but excluding amortization of prepaid cash
expenses that were paid in a prior period) and other non-cash expenses
(excluding any such non-cash
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<PAGE>
expense to the extent that it represents an accrual of or reserve for cash
expenses in any future period or amortization of a prepaid cash expense that was
paid in a prior period) of such Person and its Restricted Subsidiaries for such
period to the extent that such depreciation, amortization and other non-cash
expenses were deducted in computing such Consolidated Net Income, minus (v)
non-cash items increasing such Consolidated Net Income for such period, in each
case, for such period without duplication on a consolidated basis and determined
in accordance with GAAP. Notwithstanding the foregoing, (i) the provision for
taxes based on the income or profits of, and the depreciation and amortization
and other non-cash charges of, a Person shall be added to Consolidated Net
Income to compute Consolidated Cash Flow only to the extent (and in the same
proportion) that the Net Income of such Person was included in calculating
Consolidated Net Income and (ii) the Net Income of any Unrestricted Subsidiary
shall be excluded, whether or not such Unrestricted Subsidiary has paid any
dividends or distributions to the Company or any of its Restricted Subsidiaries.
"Consolidated Interest Coverage Ratio" means, with respect to any
Person for any period, the ratio of the Consolidated Cash Flow of such Person
for such period to the Consolidated Interest Expense of such Person for such
period. In the event that the Company or any of its Restricted Subsidiaries
incurs, assumes, Guarantees, redeems or repays any Indebtedness (other than
revolving credit borrowings) subsequent to the commencement of the period for
which the Consolidated Interest Coverage Ratio is being calculated but prior to
the date on which the event for which the calculation of the Consolidated
Interest Coverage Ratio is made (the "Calculation Date"), then the Consolidated
Interest Coverage Ratio shall be calculated giving pro forma effect to such
incurrence, assumption, Guarantee, redemption or repayment of Indebtedness as if
the same had occurred at the beginning of the applicable four-quarter reference
period. In addition, for purposes of making the computation referred to above,
(i) acquisitions that have been made by the Company or any of its Restricted
Subsidiaries, including through mergers or consolidations and including any
related financing transactions, and other transactions consummated by the
Company or any of its Restricted Subsidiaries with respect to which pro forma
effect may be given pursuant to Article 11 of Regulation S-X under the
Securities Act, in each case during the four-quarter reference period or
subsequent to such reference period and on or prior to the Calculation Date
shall be deemed to have occurred on the first day of the four-quarter reference
period and Consolidated Cash Flow for such reference period shall be calculated
without giving effect to clause (iii) of the proviso set forth in the definition
of Consolidated Net Income, (ii) the Consolidated Cash Flow attributable to
discontinued operations, as determined in accordance with GAAP, and operations
or businesses disposed of prior to the Calculation Date, shall be excluded and
(iii) the Consolidated Interest Expense attributable to discontinued operations,
as determined in accordance with GAAP, and operations or businesses disposed of
prior to the Calculation Date, shall be excluded, but only to the extent that
the obligations giving rise to such Consolidated Interest Expense will not be
obligations of the referent Person or any of its Restricted Subsidiaries
following the Calculation Date.
"Consolidated Interest Expense" means, with respect to any Person for
any period, the sum, without duplication, of (i) the consolidated interest
expense of such Person and its
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<PAGE>
Restricted Subsidiaries for such period, whether paid or accrued (including,
without limitation, amortization of debt issuance costs and original issue
discount, non-cash interest payments, the interest component of any deferred
payment obligations, the interest component of all payments associated with
Capital Lease Obligations, commissions, discounts and other fees and charges
incurred in respect of letter of credit or bankers' acceptance financings, and
net payments (if any) pursuant to Hedging Obligations), (ii) the consolidated
interest expense of such Person and its Restricted Subsidiaries that was
capitalized during such period, (iii) any interest expense for such period on
Indebtedness of another Person that is Guaranteed by such Person or one of its
Restricted Subsidiaries or secured by a Lien on assets of such Person or one of
its Restricted Subsidiaries (whether or not such Guarantee or Lien is called
upon), in each case, on a consolidated basis and in accordance with GAAP, and
(iv) the product of (x) any Preferred Stock dividends declared or paid or
payable in cash, and (y) a fraction, the numerator of which is one and the
denominator of which is one minus the then current combined federal, state and
local statutory tax rate of such Person, expressed as a decimal, determined, in
each case, on a consolidated basis and in accordance with GAAP.
"Consolidated Net Income" means, with respect to any Person for any
period, the aggregate of the Net Income of such Person and its Restricted
Subsidiaries for such period, on a consolidated basis, determined in accordance
with GAAP, less the amount of all Tax Distributions, if any, made by such Person
from the beginning of such period through the date that is 30 days after the end
of such period; provided that (i) the Net Income of any Person that is not a
Restricted Subsidiary of such Person or that is accounted for by the equity
method of accounting shall be excluded, except that the Net Income of such
Person shall be included to the extent of the amount of dividends or
distributions paid in cash by such Person during such period to the referent
Person or a Wholly Owned Restricted Subsidiary thereof (other than any such
dividends or distributions (x) which the Company elects not to include in the
computation of Consolidated Net Income at the time of the computation thereof or
(y) which consist of payments to the Company referred to in subclause (3) of
clause (c) of the first paragraph of Section 4.10 hereof), (ii) the net income
(but not loss) of any Restricted Subsidiary shall be excluded to the extent that
the declaration or payment of dividends or similar distributions by that
Restricted Subsidiary of that net income is not at the date of determination
permitted without any prior governmental approval (that has not been obtained)
or, directly or indirectly, by operation of the terms of its charter or any
agreement, instrument, judgment, decree, order, statute, rule or governmental
regulation applicable to that Restricted Subsidiary or its stockholders, (iii)
the Net Income of any Person acquired in a pooling of interests transaction for
any period prior to the date of such acquisition shall be excluded, (iv) the
cumulative effect of a change in accounting principles shall be excluded and (v)
any non-cash write-off or charge (excluding any such non-cash write-off or
charge to the extent it represents an accrual of or reserve of cash expenses in
any future period) in respect of the disposition or write-down of fixed assets
other than in the ordinary course of business shall be excluded.
"Consolidated Net Worth" means, with respect to any Person as of any
date, the sum of (a) the consolidated equity of the common stockholders of such
Person and its consolidated Restricted Subsidiaries as of such date, plus (b)
the respective amounts reported on such
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<PAGE>
Person's balance sheet as of such date with respect to any series of Preferred
Stock (other than Disqualified Stock) that by its terms is not entitled to the
payment of dividends unless such dividends may be declared and paid only out of
net earnings in respect of the year of such declaration and payment, but only to
the extent of any cash received by such Person upon issuance of such Preferred
Stock, less (i) all write-ups (other than write-ups resulting from foreign
currency translations and write-ups of tangible assets of a going concern
business made within 12 months after the acquisition of such business)
subsequent to the Closing Date in the book value of any asset owned by such
Person or a consolidated Restricted Subsidiary of such Person, (ii) all
investments as of such date in unconsolidated Subsidiaries and in Persons that
are not Restricted Subsidiaries and (iii) all unamortized debt discount and
expense and unamortized deferred charges as of such date, in each case
determined in accordance with GAAP.
"Continuing Director" means, as of any date of determination, any
member of the Board of Directors of the Company who (i) was a member of such
Board of Directors on the Closing Date or ii) was nominated for election or
elected to the Board of Directors of the Company with the approval of a majority
of the Continuing Directors who were members of such Board at the time of such
nomination or election.
"Corporate Trust Office of the Trustee" means the principal corporate
trust office of the Trustee at which at any particular time its corporate trust
business shall be administered, which office at the date of execution of this
Indenture is located at 101 East 5th Street, 12th Floor, St. Paul, Minnesota,
55101.
"Credit Facility" means that certain Credit Agreement, dated as of
September 23, 1999, by and among the Company, certain lenders and other
financial institutions, and European American Bank, as administrative agent for
such lenders and other financial institutions, including any related notes,
guarantees, collateral documents, instruments and agreements executed in
connection therewith, in each case as any of the same may be amended, extended,
refinanced, renewed, increased, restated, replaced or refunded from time to
time.
"Custodian" means any receiver, trustee, assignee, liquidator or
similar official under any Bankruptcy Law.
"Default" means any event that is or with the passage of time or the
giving of notice or both would be an Event of Default
"Definitive Notes" means a certificated Note registered in the name of
the Holder thereof and issued in accordance with Section 2.06 hereof,
substantially in the form of Exhibit A hereto except that such Note shall not
bear the Global Note Legend and shall not have the "Schedule of Exchanges of
Interests in the Global Note" attached thereto.
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<PAGE>
"Depositary" means, with respect to any Global Note, the Person
specified in Section 2.03 hereof as the Depositary with respect to such Note,
until a successor shall have been appointed and become such pursuant to the
applicable provision of this Indenture, and, thereafter, "Depositary" shall mean
or include such successor.
"Disqualified Stock" means any Capital Stock that, by its terms (or by
the terms of any security into which it is convertible or for which it is
exchangeable), or upon the happening of any event, matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at
the option of the holder thereof, in whole or in part, on or prior to the date
that is 91 days after the date on which the Notes mature.
"Equity Interests" means Capital Stock and all warrants, options or
other rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"Euroclear" means Morgan Guaranty Trust Company of New York, Brussels
office, as operator of the Euroclear system.
"Event of Default" has the meaning set forth in Section 6.01 hereof.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations of the SEC promulgated thereunder.
"Exchange Notes" means the Notes issued in the Exchange Offer pursuant
to Section 2.06(f) hereof.
"Exchange Offer" means the offer that may be made by the Company
pursuant to any Registration Rights Agreement to exchange Notes for Exchange
Notes and any similar exchange of Additional Notes.
"Exchange Offer Registration Statement" has the meaning set forth in
the Registration Rights Agreement.
"Existing Indebtedness" means up to $8.8 million in aggregate principal
amount of Indebtedness of the Company and its Restricted Subsidiaries (other
than Indebtedness under the Credit Facility) in existence on the Closing Date
and set forth in Schedule 2 to the Indenture, until such Indebtedness is repaid.
Existing Indebtedness includes (a) certain Guarantees of obligations for
borrowed money (the "Borrowed Money Obligations"), including the Company's
Guarantee of 40% of up to $11.0 million of Indebtedness from time to time
outstanding of Boulder Creek Holding LLC and Boulder Creek Venture LLC under
loan agreements with HSBC Bank U.S.A., as they may be amended and in effect from
time to time, (b) certain Guarantees of reimbursement obligations in respect of
letters of credit, (c) any Guarantee by the Company or any of its Restricted
Subsidiaries of Indebtedness issued in exchange for, or the net proceeds of
which are used to refund, refinance or replace,
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<PAGE>
Borrowed Money Obligations at the time guaranteed pursuant to a Guarantee
referred to in clause (a) above ("Guaranteed Refinancing Indebtedness"), to the
extent that (x) the principal amount of such Guaranteed Refinancing Indebtedness
does not exceed the principal amount of the guaranteed Borrowed Money
Obligations so refunded, refinanced or replaced and (y) the obligor(s) of such
Guaranteed Refinancing Indebtedness are the same as the obligors on the
guaranteed Borrowed Money Obligations being refunded, refinanced or replaced,
and (d) any Guarantee of reimbursement obligations in respect of a letter of
credit issued in replacement for a letter of credit in respect of which the
reimbursement obligations are guaranteed pursuant to a Guarantee referred to in
clause (b) above (a "Replacement Letter of Credit") to the extent that (x) the
amount of Indebtedness represented by the Guarantee of reimbursement obligations
in respect of the Replacement Letter of Credit does not exceed the amount of
Indebtedness represented by the Guarantee of reimbursement obligations in
respect of the letter of credit so replaced and (y) the obligor(s) of the
reimbursement obligations in respect of the Replacement Letter of Credit are the
same as the obligor(s) of the reimbursement obligations in respect of the letter
of credit so replaced. For purposes of the Indenture, (a) any Guarantee by the
Company or any of its Restricted Subsidiaries of Guaranteed Refinancing
Indebtedness shall not be deemed to be an additional Investment to the extent
that (x) the provisions of subclauses (x) and (y) of clause (c) of the preceding
sentence are satisfied in respect of such Guaranteed Refinancing Indebtedness
and (y) the Guarantee of the Borrowed Money Obligations refunded, refinanced or
replaced by such Guaranteed Refinancing Indebtedness was entered into prior to
August 30, 1999 or constitutes a Committed Restricted Investment and (b) any
Guarantee by the Company or any of its Restricted Subsidiaries of reimbursement
obligations in respect of a Replacement Letter of Credit shall not be deemed to
be an additional Investment to the extent that (x) the provisions of subclauses
(x) and (y) of clause (d) of the preceding sentence are satisfied in respect of
such Guarantee and such Replacement Letter of Credit and (y) the Guarantee of
the reimbursement obligations in respect of the letter of credit replaced by
such Replacement Letter of Credit was entered into prior to August 30, 1999 or
constitutes a Committed Restricted Investment.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as have been approved by a significant segment of the accounting
profession, which are in effect in the United States from time to time.
"Global Note" means, individually and collectively, each of the
Restricted Global Notes and the Unrestricted Global Notes, substantially in the
form of Exhibit A hereto that bears the Global Note Legend and that has the
"Schedule of Exchange of Interests in the Global Note" attached thereto.
"Global Note Legend" means the legend set forth in Section 2.06(g)(ii),
which is required to be placed on all Global Notes issued under this Indenture.
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"Government Securities" means securities that are (a) direct
obligations of the United States of America for the timely payment of which its
full faith and credit is pledged or (b) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of the United States of
America the timely payment of which is unconditionally guaranteed as a full
faith and credit obligation by the United States of America, which, in either
case, are not callable or redeemable at the option of the issuer thereof, and
shall also include a depository receipt issued by a bank (as defined in Section
3(a)(2) of the Securities Act), as custodian with respect to any such Government
Securities or a specific payment of principal of or interest on any such
Government Securities held by such custodian for the account of the holder of
such depository receipt; provided that (except as required by law) such
custodian is not authorized to make any deduction from the amount payable to the
holder of such depository receipt from any amount received by the custodian in
respect of the Government Securities or the specific payment of principal of or
interest on the Government Securities evidenced by such depository receipt.
"Guarantee" means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, letters of credit and
reimbursement agreements in respect thereof), of all or any part of any
Indebtedness.
"Guarantor" means (i) each of the Company's Restricted Subsidiaries
that is a party to this Indenture on the date of execution and delivery of this
Indenture and (ii) each other Person that becomes a guarantor of the obligations
of the Company under the Notes and this Indenture from time to time in
accordance with the provisions of Section 4.18 hereof, and their respective
successors and assigns; provided, however, that "Guarantor" shall not include
any Person that is released from its Guarantee of the obligations of the Company
under the Notes and this Indenture as provided in Article 11 hereof.
"Hedging Obligations" means, with respect to any Person, the
obligations of such Person under (i) currency exchange or interest rate swap,
cap or collar agreements and (ii) other agreements or arrangements designed to
protect such Person against fluctuations in currency exchange or interest rates.
"Holder" means a Person in whose name a Note is registered.
"IAI Global Note" means a global note substantially in the form of
Exhibit A hereto bearing the Global Note Legend and the Private Placement Legend
(with such changes therein as may be necessary or appropriate to reflect the
interest of an Institutional Accredited Investor) and deposited with or on
behalf of, and registered in the name of, the Depositary or its nominee that
will be issued in a denomination equal to the outstanding principal amount of
the Notes sold or otherwise transferred to Institutional Accredited Investors.
"Indebtedness" means with respect to any Person, without duplication,
(i) any indebtedness of such Person, whether or not contingent, in respect of
borrowed money or
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evidenced by bonds, notes, debentures or similar instruments or letters of
credit (or reimbursement agreements in respect thereof) or bankers acceptances
or representing Capital Lease Obligations or the balance deferred and unpaid of
the purchase price of any property or services or representing any Hedging
Obligations, except any such balance that constitutes an accrued expense or
trade payable, if and to the extent any of the foregoing indebtedness (other
than letters of credit or reimbursement agreements in respect thereof) and
Hedging Obligations) would appear as a liability upon a balance sheet of such
Person prepared in accordance with GAAP, (ii) all indebtedness of others secured
by a Lien on any asset of such Person (whether or not such indebtedness is
assumed by such Person) and (iii) to the extent not otherwise included, the
Guarantee by such Person of any Indebtedness of any other Person.
"Indenture" means this Indenture, as amended or supplemented from time
to time.
"Initial Purchaser" means Bear, Stearns & Co. Inc.
"Institutional Accredited Investor" means an institution that is an
"accredited investor" as defined in Rule 501(a)(1), (2), (3) or (7) under the
Securities Act.
"Interest Payment Date" means each March 15 and September 15.
"Investments" means, with respect to any Person, all investments by
such Person in other Persons (including Affiliates) in the forms of (a) direct
or indirect loans (including guarantees of (or the furnishing of letters of
credit as security for) Indebtedness or other obligations but excluding Remote
Guarantees), (b) advances or capital contributions (excluding (i) salary and
bonus advances, and commission, travel and similar advances, to officers and
employees made in the ordinary course of business consistent with past practice
and (ii) amounts payable by shareholders of the Company pursuant to the
provisions of the Tax Payment Agreement), (c) purchases or other acquisitions
for consideration of Indebtedness, Equity Interests or other securities, and (d)
payments pursuant to guarantees of Indebtedness or other obligations (including
payments pursuant to Remote Guarantees), together with all items that are or
would be classified as investments on a balance sheet prepared in accordance
with GAAP, excluding, however, trade accounts receivable and bank deposits made
in the ordinary course of business consistent with past practice. The amount of
any Investment by any Person that constitutes a guarantee of (or the furnishing
of a letter of credit as security for) Indebtedness or other obligations shall
be deemed to be (a) if such Investment is a guarantee of Indebtedness, the
maximum principal amount of Indebtedness that may be guaranteed under such
guarantee, (b) if such Investment is the furnishing of a letter of credit, the
maximum reimbursement obligation in respect of such letter of credit, (c) if
such Investment is a guarantee of a lease, the lesser of (A) the sum of (i) the
total amount of fixed rent (excluding escalations resulting from a rise in the
consumer price index or similar index and excluding amounts required to be paid
for insurance, taxes, gas, electricity, common area charges and other similar
charges) provided for in such lease during the term thereof, and (ii) the
product of (x) the Company's estimate (as determined in good faith by the Board
of Directors whose resolution with respect thereto shall be delivered to the
Trustee) of the amounts (exclusive of
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fixed rent) that will be payable under such lease in respect of the first year
of the term thereof and (y) the number of years of the term of such lease and
(B) the maximum liability of such Person under such guarantee (as determined in
good faith by the Board of Directors of the Company whose resolution with
respect thereto shall be delivered to the Trustee) and (d) if such Investment is
a guarantee of obligations other than Indebtedness or a lease, the maximum
liability of such Person under such guarantee. If an Investment by a Person
consists of the guarantee of a lease and the amount of such Investment is
determined under subclause (A) of clause (c) of the preceding sentence, such
Investment shall be deemed to be amortized on a straight line basis over the
term of the lease (or the remaining term of the lease if the Investment is made
or deemed to have been made after the commencement of the term of the lease). If
an Investment by a Person consists of the guarantee of a lease and the amount of
such Investment is determined under subclause (B) of clause (c) of the second
preceding sentence, such Investment shall be deemed to be amortized as and to
the extent that the maximum liability of such Person under such guarantee (as
determined in good faith by the Board of Directors of the Company, whose
resolution with respect thereto shall be delivered to the Trustee) is reduced.
Any unamortized portion of an Investment by a Person that consists of a
guarantee of a lease shall be deemed to be amortized on such date, if any, as
such Person has no further liability under such guarantee. If an Investment by a
Person consists of the guarantee of a lease and the fixed rent under such lease
is increased or the term of such lease is extended, (a) such Person shall be
deemed to have made a new Investment on the date (and computed as if the term of
the lease commenced as of the date) on which the action which increased the
fixed rent or extended the term occurred and (b) the unamortized portion
immediately prior to such date of such Person's original Investment by reason of
such guarantee shall be deemed to be amortized on such date. If the Company or
any Restricted Subsidiary of the Company sells or otherwise disposes of any
Equity Interests of any direct or indirect Wholly Owned Restricted Subsidiary of
the Company such that, after giving effect to any such sale or disposition, such
Person is no longer a Wholly Owned Restricted Subsidiary of the Company, the
Company shall be deemed to have made an Investment on the date of any such sale
or disposition equal to sum of (a) the fair market value of the Equity Interests
of such Restricted Subsidiary not sold or disposed of in an amount determined as
provided in the penultimate paragraph of Section 4.10 hereof and (b) the amount
of the Investments by the Company and its Restricted Subsidiaries constituting a
guarantee of (or the furnishing of a letter of credit as security for)
Indebtedness or other obligations of such Restricted Subsidiary.
"Letter of Transmittal" means the letter of transmittal to be prepared
by the Company and sent to all Holders of the Notes for use by such Holders in
connection with the Exchange Offer.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law
(including any conditional, sale or other title retention agreement, any lease
in the nature thereof, and any option or other agreement to sell or give a
Lien).
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"Liquidated Damages" has the meaning set forth in the Registration
Rights Agreement.
"Make-Whole Amount" means, with respect to any Note, an amount equal to
the excess, if any, of (a) the present value of the remaining principal, premium
and interest payments that would be payable with respect to such Note if such
Note were redeemed on September 15, 2004, computed using a discount rate equal
to the Treasury Rate plus 50 basis points, over (b) the outstanding principal
amount of such Note.
"Make-Whole Average Life" means, with respect to any date of redemption
of Notes, the number of years (calculated to the nearest one-twelfth) from such
redemption date to September 15, 2004.
"Make-Whole Price" means, with respect to any Note, the greater of (a)
the sum of the principal amount of and Make-Whole Amount with respect to such
Note, and (b) the redemption price of such Note on September 15, 2004.
"Maturity" when used in respect to any Note means the date on which the
principal of (and premium, if any) and interest and Liquidated Damages, if any,
on such Note becomes due and payable as therein or herein provided, whether at
Stated Maturity or the applicable Redemption Date and whether by declaration of
acceleration, call for redemption or otherwise.
"Merger" means the merger of Sbarro Merger LLC with and into the
Company pursuant to that certain Amended and Restated Agreement and Plan of
Merger, dated as of January 19, 1999, among the Company, Sbarro Merger LLC and
Mario Sbarro, Joseph Sbarro, Joseph Sbarro (1994) Family Limited Partnership,
Anthony Sbarro, and Mario Sbarro and Franklin Montgomery, not individually but
as trustees under that certain Trust Agreement dated April 28, 1984 for the
benefit of Carmela Sbarro and her descendants.
"Net Income" means, with respect to any Person, the net income (loss)
of such Person, determined in accordance with GAAP and before any reduction in
respect of Preferred Stock dividends, excluding, however, (i) any gain (but not
loss), together with any related provision for taxes on such gain (but not
loss), realized in connection with (a) any Asset Sale (including, without
limitation, dispositions pursuant to sale and leaseback transactions) or (b) the
disposition of any securities by such Person or any of its Subsidiaries or the
extinguishment of any Indebtedness of such Person or any of its Subsidiaries,
(ii) any extraordinary gain or loss and any nonrecurring gain (but not loss),
together with any related provision for taxes on such extraordinary gain or loss
or nonrecurring gain (but not loss).
"Net Proceeds" means the aggregate cash proceeds received by the
Company or any of its Restricted Subsidiaries in respect of any Asset Sale
(including, without limitation, any cash received upon the sale or other
disposition of any non-cash consideration received in any Asset Sale, but only
as and when received), net of (i) the direct costs relating to such Asset Sale
(including, without limitation, legal, accounting and investment banking fees,
and sales commissions) and any relocation expenses incurred as a result thereof,
(ii) taxes paid or
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payable as a result thereof (after taking into account any available tax credits
or deductions and any tax sharing arrangements), (iii) amounts required to be
applied to the repayment of Indebtedness secured by a Lien on the asset or
assets that were the subject of such Asset Sale and (iv) any reserve for
adjustment in respect of the sale price of such asset or assets established in
accordance with GAAP.
"Non-U.S. Person" means a Person who is not a U.S. Person.
"Note Custodian" means the custodian for the Depositary of the Global
Note or any successor entity thereto.
"Notes" means $255,000,000 aggregate principal amount of the Company's
11% Senior Notes due 2009 issued pursuant to this Indenture on the Closing Date
and any other 11% Senior Notes due 2009 hereafter issued in compliance with the
provisions of this Indenture.
"Obligations" means any principal, interest (including post-petition
interest), penalties, fees, indemnifications, reimbursements, damages and other
liabilities payable under the documentation governing any Indebtedness.
"Officer" means, with respect to any Person, the Chairman of the Board,
the Chief Executive Officer, the President, any Senior Vice President, any Vice
President, the Chief Financial Officer, the Secretary or any Assistant Secretary
of such Person.
"Officers' Certificate" means, with respect to any Person, a
certificate signed on behalf of such Person by the Chief Executive Officer or
President and by the Chief Financial Officer or chief accounting officer of such
Person.
"Opinion of Counsel" means a written opinion from legal counsel who is
acceptable to the Trustee, that meets the requirements of Section 1.05 hereof
and, to the extent required by the TIA, complies with TIA ss. 314.
"Participant" means, with respect to DTC, Euroclear or Cedel, a Person
who has an account with DTC, Euroclear or Cedel, respectively (and, with respect
to DTC, shall include Euroclear and Cedel).
"Permitted Holder" means Mario Sbarro, Anthony Sbarro, Joseph Sbarro,
their respective spouses and lineal descendants, any spouse of any such lineal
descendant who is a full time employee of the Company or any of its
Subsidiaries, any trust for the benefit of one or more of the foregoing, any
Person in which one or more of the foregoing holds 80% or more of the Voting
Stock (measured by voting power rather than number of shares) and the trust
created under that certain Trust Agreement dated April 28, 1984 for the benefit
of Carmela Sbarro and her descendants.
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"Permitted Investments" means (i) any Investment in the Company or in a
Wholly Owned Restricted Subsidiary of the Company; (ii) any Investment in Cash
Equivalents; (iii) any Investment by the Company or any Restricted Subsidiary of
the Company in a Person, if as a result of such Investment (a) such Person
becomes a Wholly Owned Restricted Subsidiary of the Company and a Guarantor or
(b) such Person is merged, consolidated or amalgamated with or into, or
transfers or conveys substantially all of its assets to, or is liquidated into,
the Company or a Wholly Owned Restricted Subsidiary of the Company; (iv) any
Investment made as a result of the receipt of non-cash consideration from an
Asset Sale that was made pursuant to and in compliance with Section 4.16 hereof;
(v) any acquisition of assets received solely in exchange for the issuance of
Equity Interests (other than Disqualified Stock) of the Company; (vi)
Investments received in connection with the settlement of any ordinary course
obligations owed to the Company or any of its Restricted Subsidiaries; and (vii)
other Investments (including Investments in the form of guarantees of (or
providing letters of credit as security for) Indebtedness or other obligations
but excluding Committed Restricted Investments) in businesses reasonably similar
to the business engaged in by the Company and its Restricted Subsidiaries on the
date of this Indenture or in businesses reasonably complemen tary, related or
incidental thereto (as determined in good faith by the Board of Directors of the
Company) if, after giving effect to such Investment, the aggregate amount of
Unrestricted Investments Outstanding does not exceed $20.0 million.
"Permitted Liens" means (i) Liens in favor of the Company or any of its
Restricted Subsidiaries; (ii) Liens securing Obligations incurred pursuant to
clause (i) of the second paragraph of Section 4.09 hereof; provided, that the
outstanding principal amount of Indebtedness secured by Liens (other than Liens
on the real property and related personal property owned by the Company and/or
its Restricted Subsidiaries located at 401 Broadhollow Road, Melville, New York)
permitted by this clause (ii) shall not at any time exceed $50.0 million; (iii)
Liens on property or Equity Interests of a Person existing at the time such
Person is merged into or consolidated with the Company or any Restricted
Subsidiary of the Company; provided that such Liens were in existence prior to
the contemplation of such merger or consolidation and do not extend to any
assets or Equity Interests other than those of the Person merged into or
consolidated with the Company; (iv) Liens on property existing at the time of
acquisition thereof by the Company or any Restricted Subsidiary of the Company;
provided that such Liens were in existence prior to the contemplation of such
acquisition; (v) Liens to secure the performance of statutory obligations,
surety or appeal bonds, performance bonds or other obligations of a like nature
incurred in the ordinary course of business; (vi) Liens existing on the Closing
Date; (vii) Liens for taxes, assessments or governmental charges or claims that
are not yet delinquent or that are being contested in good faith by appropriate
proceedings promptly instituted and diligently concluded; provided that any
reserve or other appropriate provision as shall be required in conformity with
GAAP shall have been made therefore; (viii) Liens securing the Notes or any
Guarantee thereof; (ix) Liens securing Permitted Refinancing Indebtedness to the
extent that the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded was permitted to be secured by a Lien provided that such
Liens do not extend to any assets other than those that secured the Indebtedness
being extended, refinanced, renewed, replaced, defeased or refunded; (x) Liens
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securing Indebtedness (including Capital Lease Obligations) incurred pursuant to
clause (iv) of the second paragraph of Section 4.09 hereof; provided that such
Liens cover only assets acquired with the proceeds of such Indebtedness; and
(xi) Liens incurred in the ordinary course of business of the Company or any
Restricted Subsidiary of the Company with respect to obligations that do not
exceed $2.0 million at any one time outstanding and that (a) are not incurred in
connection with the borrowing of money or the obtaining of advances or credit
(other than trade credit in the ordinary course of business) and (b) do not in
the aggregate materially detract from the value of the property or materially
impair the use thereof in the operation of business by the Company or such
Restricted Subsidiary.
"Permitted Refinancing Indebtedness" means any Indebtedness of the
Company or any of its Restricted Subsidiaries issued in exchange for, or the net
proceeds of which are used to extend, refinance, renew, replace, defease or
refund other Indebtedness (other than Hedging Obligations and other than
Indebtedness permitted to be incurred pursuant to clause (iv), clause (vii) or
clause (ix) of the second paragraph of Section 4.09 hereof) of the Company or
any of its Restricted Subsidiaries; provided that: (i) the principal amount (or
accreted value, if applicable) of such Permitted Refinancing Indebtedness does
not exceed the principal amount of (or accreted value, if applicable), plus
premium and accrued interest on, the Indebtedness so extended, refinanced,
renewed, replaced, defeased or refunded (plus the amount of reasonable expenses
incurred in connection therewith); (ii) such Permitted Refinancing Indebtedness
has a final maturity date later than the final maturity date of, and has a
Weighted Average Life to Maturity equal to or greater than the Weighted Average
Life to Maturity of, the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded; (iii) if the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded is subordinated in right of
payment to the Notes or any Guarantee thereof, such Permitted Refinancing
Indebtedness is subordinated in right of payment to the Notes or such Guarantee
on terms at least as favorable to the Holders of Notes as those contained in the
documentation governing the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded; and (iv) such Indebtedness is incurred either by
the Company or by the Restricted Subsidiary that is an obligor on the
Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded.
"Person" means an individual, limited or general partnership,
corporation, limited liability company, association, unincorporated
organization, trust, joint stock company, joint venture or other entity, or a
government or any agency or political subdivision thereof.
"Preferred Stock" of any Person means Capital Stock of such Person of
any class or classes (however designated) that ranks prior, as to the payment of
dividends or as to the distribution of assets upon any voluntary or involuntary
liquidation, dissolution or winding up of such Person, to shares of Capital
Stock of any other class of such Person.
"Private Placement Legend" means the legend set forth in Section
2.06(g)(i)(A) to be placed on all Notes issued under this Indenture except as
permitted pursuant to Section 2.06(g)(i)(B).
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"Public Equity Offering" means a bona fide underwritten sale to the
public of common stock of the Company pursuant to a registration statement
(other than on Form S-8 or any other form relating to securities issuable under
any benefit plan of the Company) that is declared effective by the SEC.
"Redemption Date," when used with respect to any Note to be redeemed,
means the date fixed for such redemption pursuant to this Indenture.
"Redemption Price," when used with respect to any Note to be redeemed,
means the price (exclusive of any accrued and unpaid interest or Liquidated
Damages thereon) at which it is to be redeemed pursuant to this Indenture.
"Registration Rights Agreement" means that certain Registration Rights
Agreement, dated as of the date of this Indenture, among the Company, the
Guarantors and the Initial Purchaser, as amended or supplemented from time to
time, or similar agreement relating to Additional Notes.
"Regular Record Date" for the interest payable on any Interest Payment
Date means the March 1 or September 1 (whether or not a Business Day), as the
case may be, next preceding such Interest Payment Date.
"Regulation S" means Regulation S promulgated under the Securities Act.
"Regulation S Global Note" means a global note substantially in the
form of Exhibit A hereto bearing the Global Note Legend and the Private
Placement Legend and deposited with or on behalf of, and registered in the name
of, the Depositary or its nominee that will be issued in a denomination equal to
the outstanding principal amount of the Notes resold in reliance on Rule 904 of
Regulation S.
"Remote Guarantee" means a guarantee of a tenant's obligations under a
lease of real property which does not apply to obligations accruing in respect
of periods subsequent to the date on which the tenant surrenders possession of
the leased premises to the landlord (whether or not such surrender is authorized
by the terms of the lease), does not apply to any breach arising from any such
surrender and does not apply to any obligations that may have been accelerated
under the provisions of the lease.
"Responsible Officer" when used with respect to the Trustee, shall mean
any officer assigned to the Corporate Trust Office, including any managing
director, vice president, assistant vice president, assistant treasurer,
assistant secretary or any other officer of the Trustee customarily performing
functions similar to those performed by any of the above designated officers and
having direct responsibility for the administration of this Indenture, and also,
with respect to a particular matter, any other officer, to whom such matter is
referred because of such officer's knowledge of and familiarity with the
particular subject.
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"Restricted Definitive Note" means a Definitive Note bearing the
Private Placement Legend.
"Restricted Global Note" means a Global Note bearing the Private
Placement Legend.
"Restricted Investment" means an Investment other than a Permitted
Investment.
"Restricted Period" means the 40 day distribution compliance period as
defined in Regulation S.
"Restricted Subsidiary" of a Person means any Subsidiary of the
referent Person that is not an Unrestricted Subsidiary.
"Rule 144" means Rule 144 promulgated under the Securities Act.
"Rule 144A" means Rule 144A promulgated under the Securities Act.
"Rule 903" means Rule 903 promulgated under the Securities Act.
"Rule 904" means Rule 904 promulgated under the Securities Act.
"S Corporation" means a corporation that is treated as an "S
corporation" for federal income tax purposes.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations of the SEC promulgated thereunder.
"Senior Debt" means Indebtedness of the Company or any of its
Restricted Subsidiaries that is not subordinated in right of payment to any
other Indebtedness of the Company or such Restricted Subsidiary.
"Shelf Registration Statement" has the meaning set forth in the
Registration Rights Agreement.
"Significant Subsidiary" means any Restricted Subsidiary that would be
a "significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X,
promulgated pursuant to the Securities Act, as such Regulation is in effect on
the date hereof.
"Special Record Date" means a date fixed by the Trustee for the payment
of any Defaulted Interest pursuant to Section 2.12 thereof.
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"Stated Maturity" means, with respect to any installment of interest or
principal on any series of Indebtedness, the date on which such payment of
interest or principal was scheduled to be paid in the original documentation
governing such Indebtedness, and shall not include any contingent obligations to
repay, redeem or repurchase any such interest or principal prior to the date
originally scheduled for the payment thereof.
"Subsidiary" means, with respect to any Person, (i) any corporation,
association or other business entity of which more than 50% of the total voting
power of shares of Capital Stock entitled (without regard to the occurrence of
any contingency) to vote in the election of at least a majority of the
directors, managers or trustees thereof is at the time owned or controlled,
directly or indirectly, by such Person or one or more of the other Subsidiaries
of that Person (or a combination thereof) and (ii) any partnership (a) the sole
general partner or the managing general partner of which is such Person or a
Subsidiary of such Person or (b) the only general partners of which are such
Person or one or more Subsidiaries of such Person (or any combination thereof).
"Subsidiary Guarantee" means any guarantee of the obligations of the
Company pursuant to this Indenture and the Notes by any Person in accordance
with the provisions of this Indenture.
"Tax Distributions" means amounts paid or distributed to or for the
benefit of shareholders of the Company (net of amounts repaid by such
shareholders) pursuant to and in accordance with the Tax Payment Agreement as in
effect on the Closing Date.
"Tax Payment Agreement" means the Tax Payment Agreement, dated as of
the Closing Date, among the Company, Mario Sbarro, Joseph Sbarro,Joseph Sbarro
(1994) Family Limited Partnership, Anthony Sbarro, and Mario Sbarro and Franklin
Montgomery, not individually but as trustees under that certain Trust Agreement
dated April 28, 1984 for the benefit of Carmela Sbarro and her descendants, and
any future shareholders of the Company that may become parties thereto.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. ss.ss.
77a-77bbbb) as in effect on the date on which this Indenture is qualified under
the TIA; provided, however, that in the event the Trust Indenture Act of 1939 is
amended after such date, then "TIA" means, to the extent required by such
amendment, the Trust Indenture Act of 1939 as so amended.
"Treasury Rate" means, at any time of computation, the yield to
maturity at such time (as compiled by and published in the most recent Federal
Reserve Statistical Release H.15(519), which has become publicly available at
least two business days prior to the date of the redemption notice or, if such
Statistical Release is no longer published, any publicly available source of
similar market data) of United States Treasury securities with a constant
maturity most nearly equal to the Make-Whole Average Life; provided, however,
that if the Make-Whole Average Life is not equal to the constant maturity of the
United States Treasury security for which a weekly average yield is given, the
Treasury Rate shall be obtained by
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linear interpolation (calculated to the nearest one-twelfth of a year) from the
weekly average yields of United States Treasury securities for which such yields
are given, except that if the Make-Whole Average Life is less than one year, the
weekly average yield on actually traded United States Treasury securities
adjusted to a constant maturity of one year shall be used.
"Trustee" means the party named as such above until a successor
replaces it in accordance with applicable provisions of this Indenture and
thereafter means such successor.
"Unrestricted Definitive Note" means one or more Definitive Notes that
do not bear and are not required to bear the Private Placement Legend.
"Unrestricted Global Note" means a permanent global Note substantially
in the form of Exhibit A attached hereto that bears the Global Note Legend and
that has the "Schedule of Exchanges of Interests in the Global Note" attached
thereto, and that is deposited with or on behalf of and registered in the name
of the Depositary, representing Notes that do not bear the Private Placement
Legend.
"Unrestricted Investments Outstanding" means, at any time of
determination, in respect of any Permitted Investments made in any Person
pursuant to clause (vii) of the definition of the term Permitted Investments
(and any Investments (other than Committed Restricted Investments) made in such
Person by the Company or any of its Restricted Subsidiaries during the period
from August 30, 1999 to the Closing Date), the difference between (i) the sum of
all Permitted Investments theretofore made by the Company or any Restricted
Subsidiary in such Person on or after the date of the Indenture pursuant to
clause (vii) of the definition of Permitted Investments plus the sum of all
Investments (other than Committed Restricted Investments) made by the Company or
any Restricted Subsidiary in such Person during the period from August 30, 1999
to the Closing Date minus (ii) the sum of, without duplication, (a) the amount
of all dividends and distributions paid in cash by such Person after August 30,
1999 to the Company or a Restricted Subsidiary of the Company (to the extent
that the Company does not elect to include the amount of such dividends and
distributions in the computation of Consolidated Net Income pursuant to the
parenthetical of clause (i) of the definition thereof at the time of
determination), (b) all repayments after August 30, 1999 by such Person of the
principal amount of loans or advances that constitute Permitted Investments
theretofore made by the Company or any of its Restricted Subsidiaries in such
Person pursuant to clause (vii) of the definition of Permitted Investments or
that constitute loans or advances (other than Committed Restricted Investments)
made by the Company or any of its Restricted Subsidiaries in such Person during
the period from August 30, 1999 to the Closing Date, (c) any other reduction
made in cash of such Investments by the Company or any of its Restricted
Subsidiaries in such Person, (d) if any Permitted Investment made in such Person
by the Company or any of its Restricted Subsidiaries pursuant to clause (vii) of
the definition of the term Permitted Investments (or if any Investment (other
than Committed Restricted Investments) made in such Person by the Company or any
of its Restricted Subsidiaries during the period from August 30, 1999 to the
Closing Date) was in the form of a guarantee of Indebtedness, the amount of any
reduction in the maximum principal amount of Indebtedness
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that may be guaranteed under such guarantee, (e) if any Permitted Investment
made in such Person by the Company or any of its Restricted Subsidiaries
pursuant to clause (vii) of the definition of the term Permitted Investments (or
if any Investment (other than Committed Restricted Investments) made in such
Person by the Company or any of its Restricted Subsidiaries during the period
from August 30, 1999 to the Closing Date) was in the form of the furnishing of a
letter of credit as security for Indebtedness or other obligations, the amount
of any reduction in the maximum reimbursement obligations in respect of such
letter or credit, (f) if any Permitted Investment made in such Person by the
Company or any of its Restricted Subsidiaries pursuant to clause (vii) of the
definition of the term Permitted Investments (or if any Investment (other than
Committed Restricted Investments) made in such Person by the Company or any of
its Restricted Subsidiaries during the period from August 30, 1999 to the
Closing Date) was in the form of the guarantee of a lease, the amount of
amortization (as provided in the definition of "Investments") of such Investment
and (g) if any Permitted Investment made in such Person by the Company or any of
its Restricted Subsidiaries pursuant to clause (vii) of the definition of the
term Permitted Investments (or if any Investment (other than Committed
Restricted Investments) made in such Person by the Company or any of its
Restricted Subsidiaries during the period from August 30, 1999 to the Closing
Date) was in the form of a guarantee of obligations other than Indebtedness or a
lease, the amount of any reduction in the maximum liability under such
guarantee; provided that (x) the amount of Unrestricted Investments Outstanding
in respect of any Person in respect of such Investments shall at no time be a
negative amount and (y) the amount of Unrestricted Investments Outstanding in
respect of any Permitted Investments theretofore made in any Person pursuant to
clause (vii) of the definition of the term Permitted Investments (and any
Investments (other than Committed Restricted Investments) made in such Person by
the Company or any of its Restricted Subsidiaries during the period from August
30, 1999 to the Closing Date) shall be zero if, at the time of determination,
such Person is a Wholly-Owned Restricted Subsidiary of the Company.
"Unrestricted Subsidiary" means each of the Subsidiaries of the Company
listed on Schedule 3 to the Indenture and any other Subsidiary that, subject to
the provisions described in the penultimate paragraph of Section 4.10 hereof, is
designated by the Board of Directors as an Unrestricted Subsidiary pursuant to a
Board Resolution, but only to the extent that such Subsidiary (a) is not party
to any agreement, contract, arrangement or understanding with the Company or any
Restricted Subsidiary of the Company unless the terms of any such agreement,
contract, arrangement or understanding comply with Section 4.12 hereof, (b) is a
Person with respect to which neither the Company nor any of its Restricted
Subsidiaries has any direct or indirect obligation (i) to subscribe for
additional Equity Interests or (ii) to maintain or preserve such Person's
financial condition or to cause such Person to achieve any specified levels of
operating results and (c) is not a guarantor of, and is not otherwise directly
or indirectly providing credit support for, any Indebtedness of the Company or
any of its Restricted Subsidiaries. Any such designation by the Board of
Directors shall be evidenced to the Trustee by filing with the Trustee a
certified copy of the Board Resolution giving effect to such designation and an
Officers' Certificate certifying that such designation complied with the
foregoing conditions and was permitted by Section 4.10 hereof. If, at any
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time, any Unrestricted Subsidiary would fail to meet the foregoing requirements
as an Unrestricted Subsidiary, it shall thereafter cease to be an Unrestricted
Subsidiary for purposes of this Indenture and any Indebtedness of such
Subsidiary shall be deemed to be incurred by a Restricted Subsidiary of the
Company as of such date (and, if such Indebtedness is not permitted to be
incurred as of such date under Section 4.09 hereof, the Company shall be in
default of such Section). The Board of Directors of the Company may at any time
designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided
that such designation shall be deemed to be an incurrence of Indebtedness by a
Restricted Subsidiary of the Company of any outstanding Indebtedness of such
Unrestricted Subsidiary and such designation shall only be permitted if (i) such
Indebtedness is permitted under Section 4.09 hereof, calculated on a pro forma
basis as if such designation had occurred at the beginning of the four-quarter
reference period, and (ii) no Default or Event of Default would be in existence
following such designation.
"U.S. Person" means a U.S. person as defined in Rule 902(k) under the
Securities Act.
"Voting Stock" of any Person as of any date means the Capital Stock of
such Person that is at the time entitled to vote in the election of at least a
majority of the directors, managers, trustees or other governing body of such
Person.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (i) the sum
of the products obtained by multiplying (a) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (b) the
number of years (calculated to the nearest one-twelfth) that will elapse between
such date and the making of such payment, by (ii) the then outstanding principal
amount of such Indebtedness.
"Wholly Owned Restricted Subsidiary" of any Person means a Restricted
Subsidiary of such Person all of the outstanding Capital Stock and other Equity
Interests or other ownership interests (including convertible debt securities)
of which (other than directors' qualifying shares) shall at the time be owned by
such Person and/or by one or more Wholly Owned Restricted Subsidiaries of such
Person.
SECTION 1.02 Other Definitions
Defined
Term in Section
---- ----------
"Act" 1.07
"Affiliate Transaction" 4.12
"Asset Sale Offer" 3.10
"Change of Control Offer" 4.17
"Change of Control Payment" 4.17
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"Change of Control Payment Date" 4.17
"Contributor" 11.06
"Covenant Defeasance" 8.03
"DTC" 2.03
"Defaulted Interest" 2.12
"Excess Proceeds" 4.16
"Expiration Date" 4.17
"Funding Party" 11.06
"Guaranteed Obligations" 11.01
"incur" 4.09
"Legal Defeasance" 8.02
"Offer Amount" 3.10
"Offer Period" 3.10
"Paying Agent" 2.03
"Payment Default" 6.01
"Permitted Debt" 4.09
"Purchase Date" 3.10
"Registrar" 2.03
"Restricted Payments" 4.10
SECTION 1.03 Incorporation by Reference of Trust Indenture Act
Whenever this Indenture refers to a provision of the TIA, the provision
is incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the following
meanings:
"indenture securities" means the Notes and the Subsidiary Guarantees;
"indenture security Holder" means a Holder of a Note;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the Trustee;
"obligor" on the Notes means the Company, each Guarantor and any
successor obligors upon the Notes.
All other terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by SEC rule under the TIA
have the meanings so assigned to them.
SECTION 1.04 Rules of Construction
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Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and words in the
plural include the singular;
(5) provisions apply to successive events and transactions; and
(6) references to sections of or rules under the Securities Act
or the Exchange Act shall be deemed to include substitute, replacement
or successor sections or rules adopted by the SEC from time to time.
SECTION 1.05 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 an Officers' Certificate stating that all conditions precedent, if
any, provided for in this Indenture (including any covenant compliance with
which constitutes a condition precedent) relating to the proposed action have
been complied with and an Opinion of Counsel stating that in the opinion of such
counsel all such conditions precedent, if any, have been complied with, except
that, in the case of any such application or request as to which the furnishing
of such documents is specifically required by any provision of this Indenture
relating to such particular application or request, no additional certificate or
opinion need be furnished.
Every certificate or opinion (other than the certificates required by
Section 4.05(a) hereof) with respect to compliance with a condition or covenant
provided for in this Indenture shall comply with the provisions of TIA ss.
314(e) and shall include:
(a) a statement that each individual signing such certificate or
opinion has read such covenant or condition and the definitions herein
relating thereto;
(b) 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;
(c) a statement that, in the opinion of each such individual, he
or she has made such examination or investigation as is necessary to
enable him or her to express
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an informed opinion as to whether or not such covenant or condition
has been complied with; and
(d) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
SECTION 1.06 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.
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 representation
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.
SECTION 1.07 Acts of Holders
(a) Any request, demand, authorization, direction, 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 an 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 TIA ss. 315) conclusive in favor of the Trustee and
the Company, if made in the manner provided in this Section 1.07.
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(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved in any reasonable manner that the Trustee
deems sufficient.
(c) The ownership of Notes shall be proved by a register kept by the
Registrar.
(d) If the Company shall solicit from the Holders any request, demand,
authorization, direction, notice, consent, waiver or other Act, the Company may,
at its option, by or pursuant to Board Resolution, fix in advance a record date
for the determination of such Holders entitled to give such request, demand,
authorization, direction, notice, consent, waiver or other Act or to revoke any
consent previously given, but the Company shall have no obligation to do so.
Notwithstanding TIA ss. 316(c), any such record date shall be the record date
specified in or pursuant to such Board Resolution, which shall be a date not
more than 30 days prior to the first solicitation of Holders generally in
connection therewith and no later than the date such solicitation is completed.
If such a record date is fixed, such request, demand, authorization,
direction, notice, consent, waiver or other Act or revocation of any consent
previously given may be given before or after such record date, but only the
Holders of record at the close of business on such record date shall be deemed
to be Holders for the purposes of determining whether Holders of the requisite
proportion of Notes then outstanding have authorized or agreed or consented to
such request, demand, authorization, direction, notice, consent, waiver or other
Act, and for this purpose the Notes then outstanding shall be computed as of
such record date; provided that no such request, demand, authorization,
direction, notice, consent, waiver or other Act by the Holders on such record
date shall be deemed effective unless it shall become effective pursuant to the
provisions of this Indenture not later than nine months after the record date.
(e) Any request, demand, authorization, direction, notice, consent,
waiver or other Act by the Holder of any Note shall bind every future Holder of
the same Note or the Holder of every Note issued upon the registration of
transfer thereof or in exchange therefor or in lieu thereof, in respect of
anything done, suffered or omitted to be done by the Trustee, any Paying Agent
or the Company in reliance thereon, whether or not notation of such action is
made upon such Note.
(f) All Notes issued pursuant to this Indenture shall vote as one class
on all matters.
ARTICLE 2.
THE NOTES
SECTION 2.01. Form and Dating.
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(a) General. The Notes and the Trustee's certificate of authentication
relating thereto shall be substantially in the form of Exhibit A attached hereto
with such appropriate insertions, substitutions and other variations as are
required or permitted by this Indenture. The Notes may have notations, legends
or endorsements required by law, stock exchange rule or usage, as designated by
the Company or its counsel. Each Note shall be dated the date of its
authentication. The Notes shall be in denominations of $1,000 and integral
multiples thereof.
(b) Global Notes. Notes issued in global form shall be substantially in
the form of Exhibit A attached hereto (including the Global Note Legend and the
"Schedule of Exchanges in the Global Note" attached thereto). Notes issued in
definitive form shall be substantially in the form of Exhibit A attached hereto
(but without the Global Note Legend and without the "Schedule of Exchanges of
Interests in the Global Note" attached thereto). Each Global Note shall
represent such of the outstanding Notes as shall be specified therein and the
aggregate principal amount of outstanding Notes represented thereby from time to
time shall be reflected on the records maintained by the Trustee. The aggregate
principal amount of outstanding Notes represented by a Global Note may from time
to time be reduced or increased, as appropriate, to reflect transfers,
exchanges, repurchases and redemptions. Any increase or decrease in the
aggregate principal amount outstanding of a Global Note shall be reflected on
the records maintained by the Trustee or the Note Custodian, at the direction of
the Trustee, in accordance with instructions given by the Holder thereof as
required by Section 2.06 hereof.
The provisions of the "Operating Procedures of Euroclear System" and
"Terms and Conditions Governing Use of Euroclear" and the "General Terms and
Conditions of Cedel Bank" and "Customer Handbook" of Cedel Bank shall be
applicable to transfers of beneficial interests in the Regulation S Global Note
that is held by the Agent Members through Euroclear and Cedel.
SECTION 2.02. Execution and Authentication.
Two Officers of the Company shall sign the Notes for the Company by
manual or facsimile signature.
If an Officer of the Company whose signature is on a Note no longer
holds that office at the time the Note is authenticated, the Note shall
nevertheless be valid.
A Note shall not be valid until authenticated by the manual signature
of the Trustee. The signature of the Trustee shall be conclusive evidence that
the Note so authenticated has been duly authenticated and delivered hereunder.
The Trustee shall, upon a written order of the Company signed by two
Officers (an "Authentication Order"), authenticate Notes for original issue in
such principal amounts as may be specified in such Authentication Order(s),
provided that the issuance of Additional Notes shall be subject to satisfaction
of the conditions set forth in Section 2.15 hereof.
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The Trustee may appoint an authenticating agent acceptable to the
Company to authenticate Notes. Unless limited by the terms of such appointment,
an authenticating agent may authenticate Notes whenever the Trustee may do so.
Each reference in this Indenture to authentication by the Trustee includes
authentication by such agent. An authenticating agent has the same rights as an
Agent to deal with any Holder, the Company or an Affiliate of the Company. The
Trustee shall not be liable for any act or failure to act of the authenticating
agent to perform any duty either required herein or authorized herein to be
performed by such person in accordance with this Indenture. Each authenticating
agent shall be acceptable to the Company and otherwise comply in all respects
with the eligibility requirements of the Trustee contained in this Indenture.
SECTION 2.03. Registrar and Paying Agent.
The Company shall maintain an office or agency where Notes may be
presented for registration of transfer or for exchange ("Registrar") and an
office or agency where Notes may be presented or surrendered for payment
("Paying Agent"). The Registrar shall keep a register of the Notes and of their
transfer and exchange. The Company may appoint one or more co-registrars and one
or more additional paying agents. The term "Paying Agent" includes any
additional paying agents. The Company may change any Paying Agent or Registrar
without notice to any Holder. The Company shall notify the Trustee in writing of
the name and address of any Agent not a party to this Indenture. If the Company
fails to appoint or maintain another entity as Registrar or Paying Agent, the
Trustee shall act as such and shall be entitled to appropriate compensation in
accordance with Section 7.07 hereof. The Company or any of its Subsidiaries may
not act as Paying Agent or Registrar.
The Company shall enter into an appropriate agency agreement with any
Agent not a party to this Indenture, which shall incorporate the provisions of
the TIA. The agreement shall implement the provisions of this Indenture that
relate to such Agent. The Company initially appoints The Depository Trust
Company ("DTC") to act as Depositary with respect to the Global Notes.
The Company initially appoints the Trustee to act as the Registrar and
Paying Agent and to act as Note Custodian with respect to the Global Notes.
SECTION 2.04. Paying Agent to Hold Assets in Trust.
The Company shall require each Paying Agent other than the Trustee to
agree in writing that the Paying Agent will hold in trust for the benefit of
Holders or the Trustee all assets held by the Paying Agent for the payment of
principal of, premium or Liquidated Damages, if any, or interest on the Notes
(whether such assets have been distributed to it by the Company or any other
obligor on the Notes), and will notify the Trustee of any default by the Company
or any Guarantor in making any such payment. While any such default continues,
the Trustee may require a Paying Agent to pay all money held by it to the
Trustee. The Company at any time may require a Paying Agent to distribute all
assets held by it to the
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Trustee and account for any assets disbursed. Upon payment over and accounting
to the Trustee, the Paying Agent shall have no further liability for the assets.
Upon any bankruptcy or reorganization proceedings relating to the Company or any
Guarantor, the Trustee shall serve as Paying Agent for the Notes.
SECTION 2.05. Holder Lists.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
all Holders and shall otherwise comply with TIA ss.312(a). If the Trustee is not
the Registrar, the Company and/or the Guarantors shall furnish to the Trustee at
least seven Business Days before each Interest Payment Date and at such other
times as the Trustee may request in writing, a list in such form and as of such
date as the Trustee may reasonably require of the names and addresses of the
Holders of Notes, including the aggregate principal amount of Notes held by each
Holder, and the Company and/or the Guarantors shall otherwise comply with TIA
ss.312(a).
SECTION 2.06. Transfer and Exchange.
(a) Transfer and Exchange of Global Notes. A Global Note may not be
transferred as a whole except by the Depositary to a nominee of the Depositary,
by a nominee of the Depositary to the Depositary or to another nominee of the
Depositary, or by the Depositary or any such nominee to a successor Depositary
or a nominee of such successor Depositary. All Global Notes will be exchanged by
the Company for Definitive Notes if, and only if, either (i) the Company
delivers to the Trustee notice from the Depositary that it is unwilling or
unable to continue as depositary and a successor depositary is not appointed by
the Company within 90 days after the date of such notice from the Depositary,
(ii) the Company in its sole discretion determines that the Global Notes (in
whole but not in part) should be exchanged for Definitive Notes and delivers a
written notice to such effect to the Trustee or (iii) there shall have occurred
a Default or an Event of Default and any owner of a beneficial interest in a
Global Note so requests, then, upon surrender by the Global Note Holder of a
Global Note, Notes in the form of Definitive Notes will be issued to each person
that the Global Note Holder and the Depositary identify as being the beneficial
owner of the related Notes. Upon the occurrence of any of the preceding events
in (i), (ii) or (iii) above, Definitive Notes shall be issued in such names as
the Depositary shall instruct the Trustee. Global Notes also may be exchanged or
replaced, in whole or in part, as provided in Sections 2.07 and 2.10 hereof.
Every Note authenticated and delivered in exchange for, or in lieu of, a Global
Note or any portion thereof, pursuant to Section 2.07 or 2.10 hereof, shall be
authenticated and delivered in the form of, and shall be, a Global Note. A
Global Note may not be exchanged for another Note other than as provided in this
Section 2.06(a), however, beneficial interests in a Global Note may be
transferred and exchanged as provided in Section 2.06(b), (c) or (f) hereof.
(b) Transfer and Exchange of Beneficial Interests in the Global Notes.
The transfer and exchange of beneficial interests in the Global Notes shall be
effected through the Depositary, in accordance with the provisions of this
Indenture and the Applicable Procedures.
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Beneficial interests in the Restricted Global Notes shall be subject to
restrictions on transfer comparable to those set forth herein to the extent
required by the Securities Act. Transfers of beneficial interests in the Global
Notes also shall require compliance with either subparagraph (i) or (ii) below,
as applicable, as well as one or more of the other following subparagraphs as
applicable:
(i) Transfer of Beneficial Interests in the Same Global Note.
Beneficial interests in any Restricted Global Note may be transferred
to Persons who take delivery thereof in the form of a beneficial
interest in the same Restricted Global Note in accordance with the
transfer restrictions set forth in the Private Placement Legend.
Beneficial interests in any Unrestricted Global Note may be
transferred only to Persons who take delivery thereof in the form of a
beneficial interest in an Unrestricted Global Note. No written orders
or instructions shall be required to be delivered to the Registrar to
effect the transfers described in this Section 2.06(b)(i).
(ii) All Other Transfers and Exchanges of Beneficial Interests in
Global Notes. In connection with all transfers and exchanges of
beneficial interests (other than a transfer of a beneficial interest
in a Global Note to a Person who takes delivery thereof in the form of
a beneficial interest in the same Global Note), the transferor of such
beneficial interest must deliver to the Registrar either (A) (1) a
written order from a Participant or an Indirect Participant given to
the Depositary in accordance with the Applicable Procedures directing
the Depositary to credit or cause to be credited a beneficial interest
in another Global Note in an amount equal to the beneficial interest
to be transferred or exchanged and (2) instructions given in
accordance with the Applicable Procedures containing information
regarding the Participant account to be credited with such increase or
(B) (1) a written order from a Participant or an Indirect Participant
given to the Depositary in accordance with the Applicable Procedures
directing the Depositary to cause to be issued a Definitive Note in an
amount equal to the beneficial interest to be transferred or exchanged
and (2) instructions given by the Depositary to the Registrar
containing information regarding the Person in whose name such
Definitive Note shall be registered to effect the transfer or exchange
referred to in (1) above. Upon consummation of an Exchange Offer by
the Company in accordance with Section 2.06(f) hereof, the
requirements of this Section 2.06(b)(ii) shall be deemed to have been
satisfied upon receipt by the Registrar of the instructions contained
in the Letter of Transmittal delivered by the Holder of such
beneficial interests in the Restricted Global Notes. Upon satisfaction
of all of the requirements for transfer or exchange of beneficial
interests in Global Notes contained in this Indenture and the Notes
and otherwise applicable under the Securities Act, the Trustee shall
adjust the principal amount of the relevant Global Note(s) pursuant to
Section 2.06(h) hereof.
(iii) Transfer of Beneficial Interests to Another Restricted
Global Note. A beneficial interest in any Restricted Global Note may
be transferred to a Person who takes delivery thereof in the form of a
beneficial interest in another Restricted Global
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Note if the transfer complies with the requirements of clause (ii)
above and the Registrar receives the following:
(A) if the transferee will take delivery in the form of a
beneficial interest in the 144A Global Note, then the transferor
must deliver a certificate in the form of Exhibit B hereto,
including the certifications in item (1) thereof;
(B) if the transferee will take delivery in the form of a
beneficial interest in the Regulation S Global Note, then the
transferor must deliver a certificate in the form of Exhibit B
hereto, including the certifications in item (2) thereof; and
(C) if the transferee will take delivery in the form of a
beneficial interest in the IAI Global Note, then the transferee
must deliver a certificate in the form of Exhibit B hereto,
including the certifications, certificates and Opinion of Counsel
required by item (3)(d) thereof, if applicable.
(iv) Transfer and Exchange of Beneficial Interests in a
Restricted Global Note for Beneficial Interests in the Unrestricted
Global Note. A beneficial interest in any Restricted Global Note may
be exchanged by any holder thereof for a beneficial interest in an
Unrestricted Global Note or transferred to a Person who takes delivery
thereof in the form of a beneficial interest in an Unrestricted Global
Note if the exchange or transfer complies with the requirements of
clause (ii) above and:
(A) such exchange or transfer is effected pursuant to the
Exchange Offer in accordance with the Registration Rights
Agreement and the holder of the beneficial interest to be
transferred, in the case of an exchange, or the transferee, in
the case of a transfer, certifies in the applicable Letter of
Transmittal that it is not (1) a Broker-Dealer, (2) a Person
participating in the distribution of the Exchange Notes or (3) a
Person who is an affiliate (as defined in Rule 144) of the
Company;
(B) such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration Rights
Agreement;
(C) such transfer is effected by a Broker-Dealer pursuant to
the Exchange Offer Registration Statement in accordance with the
Registration Rights Agreement; or
(D) the Registrar receives the following:
(1) if the holder of such beneficial interest in a
Restricted Global Note proposes to exchange such beneficial
interest for a beneficial interest in an Unrestricted Global
Note, a certificate from such
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holder in the form of Exhibit C hereto, including the
certifications in item (1)(a) thereof; or
(2) if the holder of such beneficial interest in a
Restricted Global Note proposes to transfer such beneficial
interest to a Person who shall take delivery thereof in the
form of a beneficial interest in an Unrestricted Global
Note, a certificate from such holder in the form of Exhibit
B hereto, including the certifications in item (4) thereof;
and, in each such case set forth in this subparagraph (D), if the
Registrar so requests or if the Applicable Procedures so require,
an Opinion of Counsel in form reasonably acceptable to the
Registrar to the effect that such exchange or transfer is in
compliance with the Securities Act and that the restrictions on
transfer contained herein and in the Private Placement Legend are
no longer required in order to maintain compliance with the
Securities Act.
If any such transfer is effected pursuant to subparagraph (B) or
(D) above at a time when an Unrestricted Global Note has not yet been
issued, the Company shall issue and, upon receipt of an authentication
order in accordance with Section 2.02 hereof, the Trustee shall
authenticate one or more Unrestricted Global Notes in an aggregate
principal amount equal to the principal amount of beneficial interests
transferred pursuant to subparagraph (B) or (D) above.
Beneficial interests in an Unrestricted Global Note cannot be
exchanged for, or transferred to Persons who take delivery thereof in
the form of, a beneficial interest in a Restricted Global Note.
(c) Transfer or Exchange of Beneficial Interests for Definitive Notes.
(i) Beneficial Interest in Restricted Global Notes to Restricted
Definitive Notes. If any holder of a beneficial interest in a
Restricted Global Note proposes to exchange such beneficial interest
for a Restricted Definitive Note or to transfer such beneficial
interest to a Person who takes delivery thereof in the form of a
Restricted Definitive Note, then, upon receipt by the Registrar of the
following documentation:
(A) if the holder of such beneficial interest in a
Restricted Global Note proposes to exchange such beneficial
interest for a Restricted Definitive Note, a certificate from
such holder in the form of Exhibit C hereto, including the
certifica tions in item (2)(a) thereof;
(B) if such beneficial interest is being transferred to a
QIB in accordance with Rule 144A under the Securities Act, a
certificate to the effect set forth in Exhibit B hereto,
including the certifications in item (1) thereof;
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(C) if such beneficial interest is being transferred to a
Non-U.S. Person in an offshore transaction in accordance with
Rule 903 or Rule 904 under the Securities Act, a certificate to
the effect set forth in Exhibit B hereto, including the
certifications in item (2) thereof;
(D) if such beneficial interest is being transferred
pursuant to an exemption from the registration requirements of
the Securities Act in accordance with Rule 144 under the
Securities Act, a certificate to the effect set forth in Exhibit
B hereto, including the certifications in item (3)(a) thereof;
(E) if such beneficial interest is being transferred to an
Institutional Accredited Investor in reliance on an exemption
from the registration requirements of the Securities Act other
than those listed in subparagraphs (B) through (D) above, a
certificate to the effect set forth in Exhibit B hereto,
including the certifications, certificates and Opinion of Counsel
required by item (3) thereof, if applicable;
(F) if such beneficial interest is being transferred to the
Company or any of its Subsidiaries, a certificate to the effect
set forth in Exhibit B hereto, including the certifications in
item (3)(b) thereof; or
(G) if such beneficial interest is being transferred
pursuant to an effective registration statement under the
Securities Act, a certificate to the effect set forth in Exhibit
B hereto, including the certifications in item (3)(c) thereof,
<PAGE>
the Trustee shall cause the aggregate principal amount of the
applicable Global Note to be reduced accordingly pursuant to Section
2.06(h) hereof, and the Company shall execute and the Trustee shall
authenticate and deliver to the Person designated in the instructions
a Definitive Note in the appropriate principal amount. Any Definitive
Note issued in exchange for a beneficial interest in a Restricted
Global Note pursuant to this Section 2.06(c) shall be registered in
such name or names and in such authorized denomination or
denominations as the holder of such beneficial interest shall instruct
the Registrar through instructions from the Depositary and the
Participant or Indirect Participant. The Trustee shall deliver such
Definitive Notes to the Persons in whose names such Notes are so
registered. Any Definitive Note issued in exchange for a beneficial
interest in a Restricted Global Note pursuant to this Section
2.06(c)(i) shall bear the Private Placement Legend and shall be
subject to all restrictions on transfer contained therein.
(ii) Beneficial Interests in Restricted Global Notes to
Unrestricted Definitive Notes. A holder of a beneficial interest in a
Restricted Global Note may exchange such beneficial
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interest for an Unrestricted Definitive Note or may transfer such
beneficial interest to a Person who takes delivery thereof in the form
of an Unrestricted Definitive Note only if:
(A) such exchange or transfer is effected pursuant to the
Exchange Offer in accordance with the Registration Rights
Agreement and the holder of such beneficial interest, in the case
of an exchange, or the transferee, in the case of a transfer,
certifies in the applicable Letter of Transmittal that it is not
(1) a Bro ker-Dealer, (2) a Person participating in the
distribution of the Exchange Notes or (3) a Person who is an
affiliate (as defined in Rule 144) of the Company;
(B) any such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration Rights
Agreement;
(C) any such transfer is effected by a Broker-Dealer
pursuant to the Exchange Offer Registration Statement in
accordance with the Registration Rights Agreement; or
(D) the Registrar receives the following:
(1) if the holder of such beneficial interest in a
Restricted Global Note proposes to exchange such beneficial
interest for a Definitive Note that does not bear the
Private Placement Legend, a certificate from such holder in
the form of Exhibit C hereto, including the certifications
in item (1)(b) thereof; or
(2) if the holder of such beneficial interest in a
Restricted Global Note proposes to transfer such beneficial
interest to a Person who shall take delivery thereof in the
form of a Definitive Note that does not bear the Private
Placement Legend, a certificate from such holder in the form
of Exhibit B hereto, including the certifications in item
(4) thereof;
and, in each such case set forth in this subparagraph (D), if the
Registrar so requests or if the Applicable Procedures so require,
an Opinion of Counsel in form reasonably acceptable to the
Company, to the effect that such exchange or transfer is in
compliance with the Securities Act and that the restrictions on
transfer contained herein and in the Private Placement Legend are
no longer required in order to maintain compliance with the
Securities Act.
(iii) Beneficial Interests in Unrestricted Global Notes to
Unrestricted Definitive Notes. If any holder of a beneficial interest
in an Unrestricted Global Note proposes to exchange such beneficial
interest for a Definitive Note or to transfer such beneficial interest
to a Person who takes delivery thereof in the form of a Definitive
Note, then, upon satisfaction of the conditions set forth in Section
2.06(b)(ii) hereof,
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the Trustee shall cause the aggregate principal amount of the
applicable Global Note to be reduced accordingly pursuant to Section
2.06(h) hereof, and the Company shall execute and the Trustee shall
authenticate and deliver to the Person designated in the instructions
a Definitive Note in the appropriate principal amount. Any Definitive
Note issued in exchange for a beneficial interest pursuant to this
Section 2.06(c)(iii) shall be registered in such name or names and in
such authorized denomination or denominations as the holder of such
beneficial interest shall instruct the Registrar through instructions
from the Depositary and the Participant or Indirect Participant. The
Trustee shall deliver such Definitive Notes to the Persons in whose
names such Notes are so registered. Any Definitive Note issued in
exchange for a beneficial interest pursuant to this Section
2.06(c)(iii) shall not bear the Private Placement Legend. A beneficial
interest in an Unrestricted Global Note cannot be exchanged for a
Definitive Note bearing the Private Placement Legend or transferred to
a Person who takes delivery thereof in the form of a Definitive Note
bearing the Private Placement Legend.
(d) Transfer and Exchange of Definitive Notes for Beneficial Interests.
(i) Restricted Definitive Notes to Beneficial Interests in
Restricted Global Notes. If any Holder of a Restricted Definitive Note
proposes to exchange such Note for a beneficial interest in a
Restricted Global Note or to transfer such Restricted Definitive Notes
to a Person who takes delivery thereof in the form of a beneficial
interest in a Restricted Global Note, then, upon receipt by the
Registrar of the following documentation:
(A) if the Holder of such Restricted Definitive Note
proposes to exchange such Note for a beneficial interest in a
Restricted Global Note, a certificate from such Holder in the
form of Exhibit C hereto, including the certifications in item
(2)(b) thereof;
(B) if such Restricted Definitive Note is being transferred
to a QIB in accordance with Rule 144A under the Securities Act, a
certificate to the effect set forth in Exhibit B hereto,
including the certifications in item (1) thereof;
(C) if such Restricted Definitive Note is being transferred
to a Non-U.S. Person in an offshore transaction in accordance
with Rule 903 or Rule 904 under the Securities Act, a certificate
to the effect set forth in Exhibit B hereto, including the
certifications in item (2) thereof;
(D) if such Restricted Definitive Note is being transferred
pursuant to an exemption from the registration requirements of
the Securities Act in accordance with Rule 144 under the
Securities Act, a certificate to the effect set forth in Exhibit
B hereto, including the certifications in item (3)(a) thereof;
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(E) if such Restricted Definitive Note is being transferred
to an Institutional Accredited Investor in reliance on an
exemption from the registration requirements of the Securities
Act other than those listed in subparagraphs (B) through (D)
above, a certificate to the effect set forth in Exhibit B hereto,
including the certifications, certificates and Opinion of Counsel
required by item (3) thereof, if applicable;
(F) if such Restricted Definitive Note is being transferred
to the Company or any of its Subsidiaries, a certificate to the
effect set forth in Exhibit B hereto, including the
certifications in item (3)(b) thereof; or
(G) if such Restricted Definitive Note is being transferred
pursuant to an effective registration statement under the
Securities Act, a certificate to the effect set forth in Exhibit
B hereto, including the certifications in item (3)(c) thereof,
the Trustee shall cancel the Restricted Definitive Note, increase or
cause to be increased the aggregate principal amount of, in the case
of clause (A) above, the appropriate Restricted Global Note, in the
case of clause (B) above, the 144A Global Note, in the case of clause
(C) above, the Regulation S Global Note, and in the case of clause (E)
above, the IAI Global Note.
(ii) Restricted Definitive Notes to Beneficial Interests in
Unrestricted Global Notes. A Holder of a Restricted Definitive Note
may exchange such Note for a beneficial interest in an Unrestricted
Global Note or transfer such Restricted Definitive Note to a Person
who takes delivery thereof in the form of a beneficial interest in an
Unrestricted Global Note only if:
(A) such exchange or transfer is effected pursuant to the
Exchange Offer in accordance with the Registration Rights
Agreement and the Holder, in the case of an exchange, or the
transferee, in the case of a transfer, certifies in the
applicable Letter of Transmittal that it is not (1) a
Broker-Dealer, (2) a Person participating in the distribution of
the Exchange Notes or (3) a Person who is an affiliate (as
defined in Rule 144) of the Company;
(B) any such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration Rights
Agreement;
(C) any such transfer is effected by a Broker-Dealer
pursuant to the Exchange Offer Registration Statement in
accordance with the Registration Rights Agreement; or
(D) the Registrar receives the following:
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(1) if the Holder of such Definitive Notes proposes to
exchange such Notes for a beneficial interest in the
Unrestricted Global Note, a certificate from such Holder in
the form of Exhibit C hereto, including the certifications
in item (1)(c) thereof; or
(2) if the Holder of such Definitive Notes proposes to
transfer such Notes to a Person who shall take delivery
thereof in the form of a beneficial interest in the
Unrestricted Global Note, a certificate from such Holder in
the form of Exhibit B hereto, including the certifications
in item (4) thereof;
and, in each such case set forth in this subparagraph (D), if the
Registrar so requests or if the Applicable Procedures so require,
an Opinion of Counsel in form reasonably acceptable to the
Company to the effect that such exchange or transfer is in
compliance with the Securities Act, that the restrictions on
transfer contained herein and in the Private Placement Legend are
not required in order to maintain compliance with the Securities
Act, and such Definitive Notes are being exchanged or transferred
in compliance with any applicable blue sky securities laws of any
State of the United States.
Upon satisfaction of the conditions of any of the subparagraphs
in this Section 2.06(d)(ii), the Trustee shall cancel the Definitive
Notes and increase or cause to be increased the aggregate principal
amount of the Unrestricted Global Note.
(iii) Unrestricted Definitive Notes to Beneficial Interests in
Unrestricted Global Notes. A Holder of an Unrestricted Definitive Note
may exchange such Note for a beneficial interest in an Unrestricted
Global Note or transfer such Definitive Notes to a Person who takes
delivery thereof in the form of a beneficial interest in an
Unrestricted Global Note at any time. Upon receipt of a request for
such an exchange or transfer, the Trustee shall cancel the applicable
Unrestricted Definitive Note and increase or cause to be increased the
aggregate principal amount of one of the Unrestricted Global Notes.
If any such exchange or transfer from a Definitive Note to a
beneficial interest is effected pursuant to subparagraphs (ii)(B),
(ii)(D) or (iii) above at a time when an Unrestricted Global Note has
not yet been issued, the Company shall issue and, upon receipt of an
Authentication Order in accordance with Section 2.02 hereof, the
Trustee shall authenticate one or more Unrestricted Global Notes in an
aggregate principal amount equal to the principal amount of Definitive
Notes so transferred.
(e) Transfer and Exchange of Definitive Notes for Definitive Notes.
Upon request by a Holder of Definitive Notes and such Holder's compliance with
the provisions of this Section 2.06(e), the Registrar shall register the
transfer or exchange of Definitive Notes. Prior to such registration of transfer
or exchange, the requesting Holder shall present or surrender to
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the Registrar the Definitive Notes duly endorsed or accompanied by a written
instruction of transfer in form satisfactory to the Registrar duly executed by
such Holder or by his attorney, duly authorized in writing. In addition, the
requesting Holder shall provide any additional certifications, documents and
information, as applicable, pursuant to the provisions of this Section 2.06(e).
(i) Restricted Definitive Notes to Restricted Definitive Notes.
Any Restricted Definitive Note may be transferred to and registered in
the name of Persons who take delivery thereof in the form of a
Restricted Definitive Note if the Registrar receives the following:
(A) if the transfer will be made pursuant to Rule 144A under
the Securities Act, then the transferor must deliver a
certificate in the form of Exhibit B hereto, including the
certifications in item (1) thereof;
(B) if the transfer will be made pursuant to Rule 903 or
Rule 904, then the transferor must deliver a certificate in the
form of Exhibit B hereto, including the certifications in item
(2) thereof; and
(C) if the transfer will be made pursuant to any other
exemption from the registration requirements of the Securities
Act, then the transferor must deliver a certificate in the form
of Exhibit B hereto, including the certifications, certificates
and Opinion of Counsel required by item (3) thereof, if
applicable.
(ii) Restricted Definitive Notes to Unrestricted Definitive
Notes. Any Restricted Definitive Note may be exchanged by the Holder
thereof for an Unrestricted Definitive Note or transferred to a Person
or Persons who take delivery thereof in the form of an Unrestricted
Definitive Note if:
(A) such exchange or transfer is effected pursuant to the
Exchange Offer in accordance with the Registration Rights
Agreement and the Holder, in the case of an exchange, or the
transferee, in the case of a transfer, certifies in the
applicable Letter of Transmittal that it is not (1) a
Broker-Dealer, (2) a Person participating in the distribution of
the Exchange Notes or (3) a Person who is an affiliate (as
defined in Rule 144) of the Company;
(B) any such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration Rights
Agreement;
(C) any such transfer is effected by a Broker-Dealer
pursuant to the Exchange Offer Registration Statement in
accordance with the Registration Rights Agreement; or
(D) the Registrar receives the following:
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(1) if the Holder of such Restricted Definitive Notes
proposes to exchange such Notes for an Unrestricted
Definitive Note, a certificate from such Holder in the form
of Exhibit C hereto, including the certifications in item
(1)(a) thereof; or
(2) if the Holder of such Restricted Definitive Notes
proposes to transfer such Notes to a Person who shall take
delivery thereof in the form of an Unrestricted Definitive
Note, a certificate from such Holder in the form of Exhibit
B hereto, including the certifications in item (4) thereof;
and, in each such case set forth in this subparagraph (D), if the
Registrar so requests or the Applicable Procedures so require, an
Opinion of Counsel in form reasonably acceptable to the Company
to the effect that such exchange or transfer is in compliance
with the Securities Act, that the restrictions on transfer
contained herein and in the Private Placement Legend are not
required in order to maintain compliance with the Securities Act,
and such Restricted Definitive Note is being exchanged or
transferred in compliance with any applicable blue sky securities
laws of any State of the United States.
(iii) Unrestricted Definitive Notes to Unrestricted Definitive
Notes. A Holder of Unrestricted Definitive Notes may transfer such
Notes to a Person who takes delivery thereof in the form of an
Unrestricted Definitive Note. Upon receipt of a request for such a
transfer, the Registrar shall register the Unrestricted Definitive
Notes pursuant to the instructions from the Holder thereof.
Unrestricted Definitive Notes cannot be exchanged for or transferred
to Persons who take delivery thereof in the form of a Restricted
Definitive Note.
(f) Exchange Offer. Upon the consummation of an Exchange Offer, the
Company shall issue and, upon receipt of an Authentication Order in accordance
with Section 2.02, the Trustee shall authenticate (i) one or more Unrestricted
Global Notes in an aggregate principal amount equal to the principal amount of
the beneficial interests in the Restricted Global Notes tendered for acceptance
by Persons that certify in the applicable Letter of Transmittal that (x) they
are not Broker-Dealers, (y) they are not participating in the distribution of
the Exchange Notes and (z) they are not affiliates (as defined in Rule 144) of
the Company, and accepted for exchange in the Exchange Offer and (ii) Definitive
Notes in an aggregate principal amount equal to the principal amount of the
Restricted Definitive Notes accepted for exchange in the Exchange Offer.
Concurrently with the issuance of such Notes, the Trustee shall cause the
aggregate principal amount of the applicable Restricted Global Notes to be
reduced accordingly, and the Company shall execute and the Trustee shall
authenticate and deliver to the Persons designated by the Holders of Definitive
Notes so accepted Definitive Notes in the appropriate principal amount.
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(g) Legends. The following legends shall appear on the face of all
Global Notes and Definitive Notes issued under this Indenture unless
specifically stated otherwise in the applicable provisions of this Indenture.
(i) Private Placement Legend.
(A) Except as permitted by subparagraph (B) below, each Global
Note and each Definitive Note (and all Notes issued in exchange
therefor or substitution thereof) shall bear the legend in
substantially the following form:
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURI TIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT
BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT
OR BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH BELOW. BY ITS
ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT IT IS A "QUALIFIED
INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES
ACT), (2) AGREES THAT IT WILL NOT WITHIN TWO YEARS AFTER THE ORIGINAL
ISSUANCE OF THIS SECURITY RESELL OR OTHERWISE TRANSFER THIS SECURITY
EXCEPT (A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF, (B) INSIDE THE
UNITED STATES TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH
RULE 144A UNDER THE SECURITIES ACT, (C) INSIDE THE UNITED STATES TO AN
ACCREDITED INVESTOR (AS DEFINED IN RULE 501(a)(1), (2), (3) OR (7)
UNDER THE SECURITIES ACT) THAT, PRIOR TO SUCH TRANSFER, FURNISHES (OR
HAS FURNISHED ON ITS BEHALF BY A U.S. BROKER-DEALER) TO THE TRUSTEE A
SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS
RELATING TO THE RESTRICTIONS ON TRANSFER OF THIS SECURITY (THE FORM OF
WHICH LETTER CAN BE OBTAINED FROM THE TRUSTEE FOR THIS SECURITY), (D)
OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE
WITH RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, (E) PURSUANT
TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE
SECURITIES ACT (IF AVAILABLE), OR (F) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND (3) AGREES THAT IT
WILL GIVE TO EACH PERSON TO WHOM THIS SECURITY IS TRANSFERRED A NOTICE
SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY
TRANSFER OF THIS SECURITY WITHIN ONE YEAR AFTER THE ORIGINAL ISSUANCE
OF THIS SECURITY, IF THE PROPOSED TRANSFEREE IS AN ACCREDITED
INVESTOR, THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE
TRUSTEE AND THE COMPANY SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER
INFORMATION AS EITHER OF THEM MAY
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REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE
PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. AS USED HEREIN, THE
TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE
THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT."
(B) Notwithstanding the foregoing, any Global Note or Definitive
Note issued pursuant to subparagraphs (b)(iv), (c)(ii), (c)(iii),
(d)(ii), (d)(iii), (e)(ii), (e)(iii) or (f) to this Section 2.06 (and
all Notes issued in exchange therefor or substitution thereof) shall
not bear the Private Placement Legend.
(ii) Global Note Legend. Each Global Note shall bear a legend in
substantially the following form:
"THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE
INDENTURE GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE
BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE
TO ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE
MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO
SECTION 2.06 OF THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE
EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF
THE INDENTURE, (III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE
TRUSTEE FOR CANCELLATION PURSUANT TO SECTION 2.11 OF THE
INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE TRANSFERRED TO A
SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE
COMPANY."
(h) Cancellation and/or Adjustment of Global Notes. At such time as all
beneficial interests in a particular Global Note have been exchanged for
Definitive Notes or a particular Global Note has been redeemed, repurchased or
cancelled in whole and not in part, each such Global Note shall be returned to
or retained and cancelled by the Trustee in accordance with Section 2.11 hereof.
At any time prior to such cancellation, if any beneficial interest in a Global
Note is exchanged for or transferred to a Person who will take delivery thereof
in the form of a beneficial interest in another Global Note or for Definitive
Notes, the principal amount of Notes represented by such Global Note shall be
reduced accordingly and an endorsement shall be made on such Global Note, by the
Trustee or by the Depositary at the direction of the Trustee, to reflect such
reduction; and if the beneficial interest is being exchanged for or transferred
to a Person who will take delivery thereof in the form of a beneficial interest
in another Global Note, such other Global Note shall be increased accordingly
and an endorsement shall be made on such Global Note, by the Trustee or by the
Depositary at the direction of the Trustee, to reflect such increase.
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(i) General Provisions Relating to Transfers and Exchanges.
(i) To permit registrations of transfers and exchanges, the
Company shall execute and the Trustee shall authenticate Global Notes
and Definitive Notes upon the Company's order or at the Registrar's
request.
(ii) No service charge shall be made to a holder of a beneficial
interest in a Global Note or to a Holder of a Definitive Note for any
registration of transfer or exchange, but the Company may require
payment of a sum sufficient to cover any transfer tax or similar
governmental charge payable in connection therewith (other than any
such transfer taxes or similar governmental charge payable upon
exchange or transfer pursuant to Sections 2.10, 3.07, 3.10, 4.16, 4.17
and 9.05 hereof).
(iii) The Registrar shall not be required to register the
transfer of or exchange any Note selected for redemption in whole or
in part, except the unredeemed portion of any Note being redeemed in
part.
(iv) All Global Notes and Definitive Notes issued upon any
registration of transfer or exchange of Global Notes or Definitive
Notes shall be the valid obligations of the Company, evidencing the
same debt, and entitled to the same benefits under this Indenture, as
the Global Notes or Definitive Notes surrendered upon such
registration of transfer or exchange.
(v) The Company shall not be required (A) to issue, to register
the transfer of or to exchange Notes during a period beginning at the
opening of business 15 days before the day of any selection of Notes
for redemption under Section 3.02 hereof and ending at the close of
business on the day of selection, (B) to register the transfer of or
to exchange any Note so selected for redemption in whole or in part,
except the unredeemed portion of any Note being redeemed in part or
(C) to register the transfer of or to exchange a Note between a record
date and the next succeeding Interest Payment Date.
(vi) Prior to due presentment for the registration of a transfer
of any Note, the Trustee, any Agent and the Company may deem and treat
the Person in whose name any Note is registered as the absolute owner
of such Note for the purpose of receiving payment of principal of and
interest on such Notes and for all other purposes, and none of the
Trustee, any Agent or the Company shall be affected by notice to the
contrary.
(vii) The Trustee shall authenticate Global Notes and Definitive
Notes in accordance with the provisions of Section 2.02 hereof.
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(viii) All certifications, certificates and Opinions of Counsel
required to be submitted to the Registrar pursuant to this Section
2.06 to effect a transfer or exchange may be submitted by facsimile.
SECTION 2.07. Replacement Notes.
If any mutilated Note is surrendered to the Trustee or the Company or
the Trustee and the Company receive evidence to their satisfaction of the
destruction, loss or theft of any Note, the Company shall issue and the Trustee,
upon the written order of the Company signed by two Officers of the Company,
shall authenticate a replacement Note if the Trustee's and the Company's
requirements are met. If required by the Trustee or the Company, an indemnity
bond must be supplied by the Holder that is sufficient in the judgment of the
Trustee and the Company to protect the Company, the Trustee, any Agent and any
authenticating agent from any loss that any of them may suffer if a Note is
replaced. The Company and the Trustee may charge for their expenses in replacing
a Note. If after the delivery of such new Note, a bona fide purchaser of the
original Note in lieu of which such new Note was issued presents for payment
such original Note, the Company and the Trustee shall be entitled to recover
such new Note from the person to whom it was delivered or any transferee
thereof, except a bona fide purchaser, and shall be entitled to recover upon the
security or indemnity provided therefor to the extent of any loss, damage, cost
or expense incurred by the Company or the Trustee in connection therewith.
Every replacement Note is an additional obligation of the Company and
shall be entitled to all the benefits of this Indenture equally and
proportionately with any and all other Notes duly issued hereunder.
SECTION 2.08. Outstanding Notes.
The Notes outstanding at any time are all the Notes authenticated by
the Trustee except for those cancelled by it, those delivered to it for
cancellation, those reductions in the interest in a Global Note effected by the
Trustee hereunder in accordance with the provisions hereof, and those described
in this Section 2.08 as not outstanding. Except as set forth in Section 2.09
hereof, a Note does not cease to be outstanding because either of the Company or
an Affiliate of the Company holds a Note.
If a Note is replaced pursuant to Section 2.07 hereof, it ceases to be
outstanding unless the Trustee receives proof satisfactory to it that the
replaced Note is held by a bona fide purchaser.
If the principal amount of any Note is considered paid under Section
4.01 hereof, it ceases to be outstanding and interest on it ceases to accrue.
If the Paying Agent segregates and holds in trust, in accordance with
this Indenture, on the Redemption Date or maturity date, money sufficient to pay
all principal, premium, if any,
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interest and Liquidated Damages, if any, payable on that date on the Notes (or
the portion thereof to be redeemed or maturing, as the case may be), then on and
after that date such Notes (or a portion thereof) shall be deemed to be no
longer outstanding and shall cease to accrue interest.
SECTION 2.09. Treasury Notes.
In determining whether the Holders of the required principal amount of
Notes have concurred in any direction, waiver or consent, Notes owned by the
Company or any Affiliate of the Company, shall be considered as though not
outstanding, except that for the purposes of determining whether the Trustee
shall be protected in relying on any such direction, waiver or consent, only
Notes that a Responsible Officer of the Trustee actually knows are so owned
shall be so disregarded. The Company shall notify the Trustee, in writing, when
the Company or any of its Affiliates repurchases or otherwise acquires Notes and
the aggregate principal amount of such Notes so repurchased or otherwise
acquired.
SECTION 2.10. Temporary Notes.
Until certificates representing Notes are ready for delivery, the
Company may prepare and the Trustee upon receipt of an Authentication Order,
shall authenticate and deliver temporary Notes. Temporary Notes shall be
substantially in the form of definitive Notes but may have variations that the
Company and the Trustee consider appropriate for temporary Notes. Without
unreasonable delay, upon receipt of an Authentication Order, the Company shall
prepare and the Trustee shall authenticate and deliver definitive Notes in
exchange for temporary Notes.
Holders of temporary Notes shall be entitled to all of the rights,
benefits and privileges of this Indenture.
SECTION 2.11. Cancellation.
The Company at any time may deliver Notes to the Trustee for
cancellation. The Registrar and Paying Agent shall forward to the Trustee any
Notes surrendered to them for registration of transfer, exchange or payment. The
Trustee and no one else shall cancel all Notes surrendered for registration of
transfer, exchange, payment, replacement or cancellation, except as expressly
permitted by this Indenture. The Company may not issue new Notes to replace
Notes that it has redeemed or paid or that have been delivered to the Trustee
for cancellation. All cancelled Notes held by the Trustee shall be destroyed
(subject to the record retention requirement of the Exchange Act). Certification
of the destruction of all cancelled Notes shall be delivered to the Company. The
Company may not issue new Notes to replace Notes that it has paid or that have
been delivered to the Trustee for cancellation.
SECTION 2.12. Defaulted Interest.
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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 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 and interest on such
defaulted interest at the applicable interest rate borne by the Notes, to the
extent lawful (such defaulted interest (and interest thereon) herein
collectively called "Defaulted Interest") shall forthwith cease to be payable to
the Holder on the relevant Regular Record Date by virtue of having been such
Holder; and such Defaulted Interest shall be paid by the Company to the Persons
in whose names the 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 give the Trustee at least 15 days'
written notice (unless a shorter period is acceptable to the Trustee for its
convenience) 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 by the Trustee in
trust for the benefit of the Persons entitled to such Defaulted Interest as is
provided in this Section 2.12. Thereupon the Trustee shall fix a Special Record
Date for the payment of such Defaulted Interest which shall not be more than 15
days and not less than 10 days prior to the date of the proposed payment and not
less than 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. In the name and at the expense of the Company, the Trustee 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 Registrar, not less than 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 are registered at
the close of business on such Special Record Date.
Subject to the foregoing provisions of this Section 2.12, 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.
SECTION 2.13 CUSIP Number
The Company in issuing the Notes shall use a CUSIP number, and the
Trustee shall use the CUSIP number in notices of redemption or exchange as a
convenience to Holders of Notes; provided, however, that no representation is
hereby deemed to be made by the Trustee as to the correctness or accuracy of the
CUSIP number printed in the notice or on the certificates representing the
Notes, and that reliance may be placed only on the
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other identification numbers printed on the certificates representing the Notes.
The Company will promptly notify the Trustee of any change in a CUSIP number.
SECTION 2.14 Deposit of Moneys
On each Interest Payment Date and each date on which payments in
respect of the Notes are required to be made pursuant to the terms of this
Indenture, the Company shall, not later than 12:00 noon (New York City time),
deposit with the Paying Agent in immediately available funds money sufficient to
make any cash payments due on such date in a timely manner which permits the
Paying Agent to remit payment to the Holders on such date.
SECTION 2.15 Issuance of Additional Notes
The Company shall be entitled to issue Additional Notes under this
Indenture which shall have identical terms as the Notes issued on September 28,
1999, other than with respect to the date of issuance, issue price and amount of
interest payable on the first payment date applicable thereto (and, if such
Additional Notes shall be issued in the form of Exchange Notes, other than with
respect to transfer restrictions); provided, that such issuance is not
prohibited by Section 4.09 hereof.
With respect to any Additional Notes, the Company shall set forth in a
resolution of the Board of Directors and in an Officers' Certificate, a copy of
each which shall be delivered to the Trustee, the following information:
(A) the aggregate principal amount of such Additional Notes to be
authenticated and delivered pursuant to this Indenture;
(B) the issue price, the issue date and the CUSIP number of such
Additional Notes and the amount of interest payable on the first
payment date applicable thereto; provided, however, that no Additional
Notes may be issued at a price that would cause such Additional Notes
to have "original issue discount" within the meaning of Section 1273
of the Code;
(C) whether such Additional Notes shall be transfer restricted
securities and issued in the form of Notes or shall be registered
securities issued in the form of Exchange Notes as set forth in
Section 2.06 hereof; and
Any Additional Notes shall vote, together with any Notes previously
issued pursuant to this Indenture, as one class for all matters.
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ARTICLE 3.
REDEMPTION AND OFFERS TO PURCHASE
SECTION 3.01 Applicability of Article
Redemption of Notes at the election of the Company shall be made in
accordance with this Article 3.
SECTION 3.02 Election to Redeem; Notice to Trustee
The election of the Company to redeem any Notes pursuant to Section
3.08 hereof shall be evidenced by a Board Resolution. In case of any redemption
at the election of the Company, the Company shall, simultaneously with providing
the notice to Holders specified in Section 3.08 hereof, notify the Trustee of
the Redemption Date and of the principal amount of Notes intended to be
redeemed.
SECTION 3.03 Selection of Notes to Be Redeemed
If less than all of the Notes are to be redeemed at any time, selection
of Notes for redemption shall be made by the Trustee in compliance with the
requirements of the principal national securities exchange, if any, on which the
Notes are listed or, if the Notes are not so listed, on a pro rata basis, by lot
or by such method as the Trustee shall deem fair and appropriate; provided that
no Notes of $1,000 or less shall be redeemed in part.
The Trustee shall promptly notify the Company and the Registrar (if
other than the Trustee) 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 redemption of Notes shall relate, in the
case of any Note redeemed or to be redeemed only in part, to the portion of the
principal amount of such Note which has been or is to be redeemed.
SECTION 3.04 Notice of Redemption
Notices of redemption shall be mailed by first class mail, postage
prepaid, at least 30 but not more than 60 days before the Redemption Date to
each Holder of Notes to be redeemed at such Holder's registered address. If any
Note is to be redeemed in part only, the notice of redemption that relates to
such Note shall state the portion of the principal amount thereof to be
redeemed.
All notices of redemption shall state:
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(1) the Redemption Date;
(2) the Redemption Price, separately stating the amount of any
accrued and unpaid interest and Liquidated Damages, if any, to be paid
in connection with the redemption;
(3) if less than all Notes then outstanding are to be redeemed,
the identification (and, in the case of a Note to be redeemed in part,
principal amount) of such Note to be redeemed;
(4) that on the Redemption Date the Redemption Price, plus
accrued and unpaid interest and Liquidated Damages, if any, thereon to
the Redemption Date, will become due and payable upon each such Note
or portion thereof, and that (unless the Company shall default in
payment of the Redemption Price and accrued interest and Liquidated
Damages, if any, thereon) interest and Liquidated Damages, if any,
thereon shall cease to accrue on or after said date;
(5) the place or places where such Notes are to be surrendered
for payment of the Redemption Price and accrued interest and
Liquidated Damages, if any, thereon;
(6) that Notes called for redemption must be surrendered to the
Paying Agent to collect the Redemption Price, plus accrued and unpaid
interest and Liquidated Damages, if any, thereon to the Redemption
Date;
(7) the CUSIP number, if any, relating to such Notes; and
(8) in the case of a Note to be redeemed in part, the principal
amount of such Note to be redeemed and that after the Redemption Date
upon surrender of such Note, a new Note or Notes in the aggregate
principal amount equal to the unredeemed portion thereof will be
issued.
At the Company's request, the Trustee shall give the notice of
redemption in the name of the Company and at the Company's expense: provided,
however, that the Company shall deliver to the Trustee, at least 5 business days
prior to the date the Company is requesting notice be given to the Holders
(unless a shorter notice period shall be satisfactory to the Trustee for its
convenience), an Officers' Certificate requesting that the Trustee give such
notice and setting forth the information to be stated in such notice as provided
in the preceding paragraph.
SECTION 3.05 Deposit of Redemption Price
On or prior to any Redemption Date, the Company shall deposit with the
Trustee (to the extent not already held by the Trustee) or with the Paying Agent
an amount of money in same day funds (or New York Clearing House funds if such
deposit is made prior to the
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applicable Redemption Date) sufficient to pay the Redemption Price of, and
accrued and unpaid interest and Liquidated Damages, if any, to the Redemption
Date, on all Notes or portions thereof which are to be redeemed on that date.
SECTION 3.06 Notes Payable on Redemption Date
Notice of redemption having been given as aforesaid, the Notes so to be
redeemed shall, on the Redemption Date, become due and payable at the Redemption
Price therein specified, plus accrued and unpaid interest and Liquidated
Damages, if any, thereon to the Redemption Date, and from and after such date
(unless the Company shall default in the payment of the Redemption Price and
accrued interest and Liquidated Damages, if any, thereon) such Notes shall cease
to bear interest and Liquidated Damages, if any. Any such Note surrendered for
redemption in accordance with said notice shall be paid by the Company at the
Redemption Price, plus accrued and unpaid interest and Liquidated Damages, if
any, thereon to the Redemption Date; provided, however, that installments of
interest and Liquidated Damages, if any, whose Stated Maturity is on or prior to
the Redemption Date shall be payable to the Holders of such Notes, registered as
such on the relevant Regular Record Dates according to the terms and provisions
of Section 2.12 hereof.
If any Note called for redemption shall not be so paid in accordance
with the terms hereof, the principal thereof (and premium, if any, thereon)
shall, until paid, bear interest and Liquidated Damages, if any, from the
Redemption Date at the rate borne by such Note.
SECTION 3.07 Notes Redeemed in Part
Any Note which is to be redeemed only in part shall be surrendered at
the office or agency of the Company maintained for such purpose pursuant to
Section 4.02 hereof (with, if the Company, the Registrar or the Trustee so
requires, due endorsement by, or a written instrument of transfer in form
satisfactory to the Company, the Registrar or the Trustee duly executed by, the
Holder thereof or his attorney duly authorized in writing), and a new Note in
principal amount equal to the unredeemed portion will be issued in the name of
the Holder thereof upon cancellation of the original Note. On and after the
Redemption Date, unless the Company defaults in payment of the Redemption Price
and accrued interest and Liquidated Damages, if any, thereon, interest and
Liquidated Damages, if any, shall cease to accrue on Notes or portions thereof
called for redemption.
SECTION 3.08 Optional Redemption
On or after September 15, 2004, the Notes will be subject to redemption
at any time at the option of the Company, in whole or in part, upon not less
than 30 nor more than 60 days' notice, at the redemption prices (expressed as
percentages of principal amount) set forth below, plus accrued and unpaid
interest and Liquidated Damages, if any, thereon to the applicable Redemption
Date, if redeemed during the twelve-month period beginning on September 15 of
the years indicated below:
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Year Percentage
- ---- ----------
2004..................................... 105.500%
2005..................................... 103.667%
2006..................................... 101.833%
2007 and thereafter...................... 100.000%
On or prior to September 15, 2002, the Company may on any one or more
occasions redeem up to 35% of the aggregate principal amount of the Notes
originally issued under this Indenture, including any Additional Notes issued
under this Indenture, at a redemption price equal to 111.000% of the principal
amount thereof, plus accrued and unpaid interest and Liquidated Damages, if any,
thereon, to the Redemption Date, with the net cash proceeds of one or more
Public Equity Offerings; provided that (i) at least 65% of the aggregate
principal amount of the Notes originally issued under this Indenture, including
any Additional Notes issued under this Indenture, remain outstanding immediately
following each such redemption and (ii) such redemption shall occur within 60
days of the closing of each such Public Equity Offering.
At any time prior to September 15, 2004, the Notes will be subject to
redemption at the option of the Company, in whole or in part, upon not less than
30 nor more than 60 days' notice, at the Make-Whole Price, plus accrued and
unpaid interest and Liquidated Damages, if any, thereon to the applicable
Redemption Date.
SECTION 3.09 Mandatory Redemption
Except as set forth under Sections 3.10, 4.16 and 4.17 hereof, the
Company shall not be required to make any mandatory redemption or sinking fund
payments with respect to the Notes.
SECTION 3.10 Offer to Purchase by Application of Excess Proceeds
In the event that, pursuant to Section 4.16 hereof, the Company shall
be required to make an offer to all Holders of Notes to purchase Notes (an
"Asset Sale Offer"), it shall follow the procedures specified below.
The Asset Sale Offer shall remain open for at least 30 and not more
than 40 days, except to the extent that a longer period is required by
applicable law (the "Offer Period"). On a date within five Business Days after
the termination of the Offer Period (the "Purchase Date"), the Company shall
purchase the principal amount of Notes required to be purchased pursuant to
Section 4.16 hereof (the "Offer Amount") or, if less than the Offer Amount has
been tendered, all Notes tendered in response to the Asset Sale Offer.
The Company shall comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws and
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regulations thereunder to the extent such laws and regulations are applicable in
connection with the repurchase of Notes pursuant to an Asset Sale Offer.
If the Purchase Date is on or after a Regular Record Date and on or
before the related Interest Payment Date, any accrued and unpaid interest and
Liquidated Damages, if any, shall be paid to the Person in whose name a Note is
registered at the close of business on such Regular Record Date, and no
additional interest or Liquidated Damages, if any, shall be payable to Holders
who tender Notes pursuant to the Asset Sale Offer.
Upon the commencement of an Asset Sale Offer, the Company shall send,
by first class mail, a notice to each of the Holders, with a copy to the
Trustee. The notice shall contain all instructions and materials necessary to
enable such Holders to tender Notes pursuant to the Asset Sale Offer. The Asset
Sale Offer shall be made to all Holders. The notice, which shall govern the
terms of the Asset Sale Offer, shall state:
(a) that the Asset Sale Offer is being made pursuant to this
Section 3.10 and Section 4.16 hereof and the length of time the Asset
Sale Offer shall remain open;
(b) the Offer Amount, the purchase price, separately stating the
amount of any accrued and unpaid interest and Liquidated Damages, if
any, and the Purchase Date;
(c) that any Note not tendered or accepted for payment shall
remain outstanding and continue to accrue interest and Liquidated
Damages, if any;
(d) that, unless the Company defaults in making such payment, any
Note accepted for payment pursuant to the Asset Sale Offer shall cease
to accrue interest and Liquidated Damages, if any, on the Purchase
Date;
(e) that Holders electing to have a Note purchased pursuant to
any Asset Sale Offer shall be required to surrender the Note, with the
form entitled "Option of Holder to Elect Purchase" on the reverse of
the Note completed, or transfer by book-entry transfer, to the
Company, a depositary, if appointed by the Company, or a Paying Agent
at the address specified in the notice not later than the last
Business Day of the Offer Period;
(f) that Holders shall be entitled to withdraw their tendered
Notes and their election to require the Company to purchase such
Notes, provided that the Company, the depositary or the Paying Agent,
as the case may be, receives, not later than the close of business on
the last Business Day of the Offer Period, a telegram, telex,
facsimile transmission or letter setting forth the name of the Holder,
the principal amount of the Notes the Holder tendered for purchase,
and a statement that such Holder is withdrawing his tendered Notes and
his election to have such Notes purchased;
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(g) that, if the aggregate principal amount of Notes properly
tendered by Holders exceeds the Offer Amount, the Trustee shall select
the Notes to be purchased on a pro rata basis (with such adjustments
as may be deemed appropriate by the Trustee so that only Notes in
denominations of $1,000, or integral multiples thereof, shall be
purchased); and
(h) that Holders whose Notes are being purchased only in part
shall be issued new Notes equal in principal amount to the unpurchased
portion of the Notes surrendered (or transferred by book-entry
transfer).
On or before noon (New York City time) on each Purchase Date, the
Company shall irrevocably deposit with the Trustee or Paying Agent in
immediately available funds the aggregate purchase price with respect to a
principal amount of Notes equal to the Offer Amount (of, if less than the Offer
Amount has been properly tendered, such lesser amount as shall equal the
principal amount of Notes properly tendered), together with accrued and unpaid
interest and Liquidated Damages, if any, thereon to the Purchase Date, to be
held for payment in accordance with the terms of this Section 3.10. On or before
the Purchase Date, the Company shall, to the extent lawful, (i) accept for
payment, on a pro rata basis to the extent necessary, the Offer Amount of Notes
or portions thereof tendered pursuant to the Asset Sale Offer, or if less than
the Offer Amount has been tendered, all Notes tendered, (ii) deliver or cause
the Paying Agent or depositary, as the case may be, to deliver to the Trustee
Notes so accepted and (iii) deliver to the Trustee an Officers' Certificate
stating that such Notes or portions thereof were accepted for payment by the
Company in accordance with the terms of this Section 3.10. The Company, the
depositary or the Paying Agent, as the case may be, shall promptly (but in any
case not later than three Business Days after the Purchase Date) mail or deliver
to each tendering Holder whose Notes are to be purchased an amount equal to the
purchase price of the Notes tendered by such Holder and accepted by the Company
for purchase, plus accrued and unpaid interest and Liquidated Damages, if any,
thereon to the Purchase Date, and the Company shall promptly issue a new Note,
and the Trustee, upon written request from the Company, shall authenticate and
mail or deliver such new Note to such Holder, equal in principal amount to any
unpurchased portion of the Note surrendered. Any Note not so accepted shall be
promptly mailed or delivered by the Company to the Holder thereof.
ARTICLE 4.
COVENANTS
SECTION 4.01 Payment of Notes
The Company shall pay or cause to be paid the principal of, premium, if
any, and interest on, the Notes on the dates and in the manner provided in the
Notes and in this Indenture. Principal, premium, if any, and interest shall be
considered paid on the date due
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if the Paying Agent, if other than the Company or any of its Subsidiaries or
Affiliates, holds as of 12:00 noon (New York City time) on the due date money
deposited by the Company in immediately available funds and designated for and
sufficient to pay all principal, premium and interest then due. The Company
shall pay all Liquidated Damages, if any, in the same manner on the dates and in
the amounts set forth in the Registration Rights Agreement. If any Liquidated
Damages become payable, the Company shall not later than three Business Days
prior to the date that any payment of Liquidated Damages is due (i) deliver an
Officers' Certificate to the Trustee setting forth the amount of Liquidated
Damages payable to Holders and (ii) instruct the Paying Agent to pay such amount
of Liquidated Damages to Holders entitled to receive such Liquidated Damages.
The Company shall pay interest (including post-petition interest under
any Bankruptcy Law) on overdue principal and premium, if any, from time to time
on demand at a rate equal to 1% per annum in excess of the then applicable
interest rate on the Notes to the extent lawful; the Company shall pay interest
(including post-petition interest under any Bankruptcy Law) on overdue
installments of interest and Liquidated Damages (without regard to any
applicable grace period) from time to time on demand at the same rate to the
extent lawful. Interest will be computed on the basis of a 360-day year
comprised of twelve 30-day months.
SECTION 4.02 Maintenance of Office or Agency
The Company will maintain, in The City of New York, an office or agency
(which may be an office of the Trustee or Registrar) where Notes may be
presented or surrendered for payment, where Notes may be surrendered for
registration of transfer or exchange 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 from time to time designate one or more other offices
or agencies (in or outside of 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 obligation to maintain
an office or agency in The City of New York for such purposes. The Company will
give prompt written notice to the Trustee of any such designation or rescission
and of any change in the location of any such other office or agency.
SECTION 4.03 Money for Security Payments to be Held in Trust
Whenever the Company shall have one or more Paying Agents for the
Notes, it will, on or before each due date of the principal of, premium, if any,
or interest or Liquidated
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Damages, if any, on any Notes, deposit with a Paying Agent a sum in same day
funds (or New York Clearing House funds if such deposit is made prior to the
date on which such deposit is required to be made) sufficient to pay the
principal, premium, if any, and interest and Liquidated Damages, if any, so
becoming due (or at the option of the Company, payment of interest and
Liquidated Damages, if any, may be made by check mailed to the Holders of the
Notes at their respective addresses set forth in the register of Holders of
Notes; provided that all payments on the Global Notes and all payments of
principal, premium, interest and Liquidated Damages, if any, on the Definitive
Notes, the holders of which have given wire transfer instructions to the Company
or the Paying Agent at least five Business Days prior to the applicable payment
date, shall be made by wire transfer in same day funds), such sum to be held in
trust for the benefit of the Persons entitled to such principal, premium or
interest or Liquidated Damages, if any, and (unless such Paying Agent is the
Trustee) the Company will promptly notify the Trustee of such action or any
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 4.03,
that such Paying Agent will:
(a) hold all sums held by it for the payment of the principal of,
premium, if any, and interest and Liquidated Damages, if any, on
Notes in trust for the benefit of the Persons entitled thereto
until such sums shall be paid to such Persons or otherwise
disposed of as herein provided;
(b) give the Trustee notice of any default by the Company (or any
other obligor upon the Notes) in the making of any payment of
principal, premium, if any, or interest or Liquidated Damages, if
any;
(c) at any time during the continuance of any such default, upon the
written request of the Trustee, forthwith pay to the Trustee all
sums so held in trust by such Paying Agent; and
(d) acknowledge, accept and agree to comply in all respects with the
provisions of this Indenture relating to the duties, rights and
obligations of such Paying Agent.
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.
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Any money deposited with the Trustee or any Paying Agent, or then held
by the Company, in trust for the payment of the principal of, premium, if any,
or interest or Liquidated Damages, if any, on any Note and remaining unclaimed
for two years after such principal, premium, if any, or interest or Liquidated
Damages, if any, 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 an 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 notice to be promptly sent
to each Holder that such money remains unclaimed and that, after a date
specified therein, which shall not be less than 30 days from the date of such
notification, any unclaimed balance of such money then remaining will be repaid
to the Company.
SECTION 4.04 Reports
(a) Whether or not required by the rules and regulations of the SEC, so
long as any Notes are outstanding, the Company shall furnish to the Holders of
Notes (i) all quarterly and annual financial information that would be required
to
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be contained in a filing with the SEC on Forms 10-Q and 10-K if the Company were
required to file such forms, including a "Management's Discussion and Analysis
of Financial Condition and Results of Operations" that describes the financial
condition and results of operations of the Company and its consolidated
Subsidiaries (showing in reasonable detail, either on the face of the financial
statements or in the footnotes thereto, the financial condition and results of
operations of the Company and its Restricted Subsidiaries separate from the
financial information and results of operations of the Unrestricted Subsidiaries
of the Company) and, with respect to the annual information only, a report on
said financial statements (including the footnotes thereto) by the Company's
then certified independent accountants and (ii) all current reports that would
be required to be filed with the SEC on Form 8-K if the Company were required to
file such reports. In addition, whether or not required by the rules and
regulations of the SEC, the Company shall (without being required to register
the Notes under Section 12 of the Exchange Act) file a copy of all such
information and reports with the SEC for public availability (unless the SEC
will not accept such a filing) and make such information available to securities
analysts and prospective investors upon request. The Company and its Restricted
Subsidiaries shall, for so long as any Notes remain outstanding, furnish to the
Holders and to securities analysts and prospective investors, upon their
request, the information required to be delivered pursuant to Rule 144A(d)(4)
under the Securities Act. The Company shall also comply with the provisions of
TIA ss.314(a).
(b) If the Company instructs the Trustee to distribute any of the
documents described in clause (a) above to the Holders of Notes, the Company
shall provide the Trustee with a sufficient number of copies of all documents
that the Company may be required to deliver to the Holders of Notes under this
Section 4.04. Any such distribution by the Trustee pursuant to this clause (b)
shall be at the expense of the Company.
SECTION 4.05 Compliance Certificate
(a) The Company and each Guarantor shall deliver to the Trustee, within
90 days after the end of each fiscal year ending after the date hereof, an
Officers' Certificate stating, as to each Officer signing such certificate, that
a review of the activities of the company and its subsidiaries during the
preceding fiscal year has been conducted under his or her supervision and that
to the best of his or her knowledge each entity is not in default in the
performance or observance of any terms, provisions and conditions of this
Indenture (or, if a Default or Event of Default shall exist, describing all such
Defaults or Events of Default of which he or she may have knowledge and what
action the Company is taking or proposes to take with respect thereto). For
purposes of this Section 4.05, such compliance shall be determined without
regard to any period of grace or requirement of notice under this Indenture.
(b) So long as not contrary to the then current recommendations of the
American Institute of Certified Public Accountants, the year-end financial
statements delivered pursuant to Section 4.04(a) above shall be accompanied by a
written statement of the Company's independent public accountants (who shall be
a firm of established national reputation) that, in making the examination
necessary for certification of such financial statements, nothing has come to
their attention that would lead them to believe that the Company has violated
any provisions of Article Four or Article Five hereof or, if any such violation
has occurred, specifying the nature and period of existence thereof, it being
understood that such accountants shall not be liable directly or indirectly to
any Person for any failure to obtain knowledge of any such violation.
(c) The Company shall, so long as any of the Notes are outstanding,
upon becoming aware of any Default or Event of Default, deliver to the Trustee
an Officers' Certificate specifying such Default or Event of Default and what
action the Company is taking or proposes to take with respect thereto.
SECTION 4.06 Taxes
The Company shall pay or discharge or cause to be paid or discharged,
before the same shall become delinquent, (a) all material taxes, assessments and
governmental charges levied or imposed upon it or any Subsidiary or upon the
income, profits or property of the Company or any of its Subsidiaries and (b)
all material lawful claims for labor, materials and supplies, which, if unpaid,
might by law become a Lien upon the property of the Company or any of its
Subsidiaries that could produce a material adverse effect on the consolidated
financial condition of the Company; 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
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proceedings and in respect of which appropriate reserves (in the good faith
judgment of management of the Company) are being maintained in accordance with
GAAP.
SECTION 4.07 Stay, Extension and Usury Laws
The Company and each Guarantor covenants (to the extent that it may
lawfully do so) that it shall not at any time insist upon, plead, or in any
manner whatsoever claim or take the benefit or advantage of, any stay, extension
or usury 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 and
each Guarantor (to the extent that it may lawfully do so) hereby expressly
waives all benefit or advantage of any such law, and covenants that it shall
not, by resort to any such law, hinder, delay or impede the execution of any
power herein granted to the Trustee, but shall suffer and permit the execution
of every such power as though no such law has been enacted.
SECTION 4.08 Corporate Existence; Maintenance
of Properties and Insurance
Subject to Article 5 hereof, the Company shall do or cause to be done
all things necessary to preserve and keep in full force and effect (i) its
corporate existence, and the corporate, partnership or other existence of each
of its Restricted Subsidiaries, in accordance with the respective organizational
documents (as the same may be amended from time to time) of the Company or any
such Restricted Subsidiary and (ii) its (and its Restricted Subsidiaries')
rights (charter and statutory), licenses and franchises; provided, however, that
the Company shall not be required to preserve any such right, license or
franchise, or the corporate, partnership or other existence of any of its
Restricted Subsidiaries, if the Board of Directors or management of the Company
shall determine in good faith that the preservation thereof is no longer
desirable in the conduct of the business of the Company and its Subsidiaries,
taken as a whole, and that the loss thereof is not adverse in any material
respect to the Holders of Notes.
With such exceptions, if any, as are not material in the aggregate and
are not adverse in any material respect to the Holders of Notes, the Company
shall, and shall cause each of its Subsidiaries to, maintain its properties in
good working order and condition (subject to ordinary wear and tear) and make
all reasonably necessary repairs, renewals, replacements, additions and
improvements required for it to actively conduct and carry on its business.
The Company shall maintain insurance against loss or damage of the
kinds that, in the good faith judgment of the Company, are adequate and
appropriate for the conduct of the business of the Company and its Subsidiaries
in a prudent manner, with reputable insurers or with the government of the
United States of America or an agency or instrumentality thereof, in such
amounts, with such deductibles, and by such methods as shall be customary, in
the good faith judgment of the Company, for companies similarly situated in the
industry.
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SECTION 4.09 Limitation on the Incurrence of Indebtedness and
Issuance of Preferred Stock
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee
or otherwise become directly or indirectly liable, contingently or otherwise,
with respect to (collectively, "incur") any Indebtedness (including Acquired
Debt) and the Company shall not permit any of its Restricted Subsidiaries to
issue any shares of Preferred Stock (other than to the Company or a Wholly Owned
Restricted Subsidiary of the Company); provided, however, that the Company and
the Guarantors may incur Indebtedness (including Acquired Debt) if the
Consolidated Interest Coverage Ratio of the Company for the Company's most
recently ended four full fiscal quarters for which internal financial statements
are available immediately preceding the date on which such additional
Indebtedness is incurred would have been at least 2.50 to 1, determined on a pro
forma basis, as if the additional Indebtedness had been incurred at the
beginning of such four-quarter period and no Default or Event of Default shall
have occurred and be continuing at the time of, or would occur after giving
effect on a pro forma basis to, such incurrence.
The provisions of the first paragraph of this Section 4.09 shall not
apply to the incurrence of any of the following items of Indebtedness
(collectively, "Permitted Debt"):
(i) the incurrence by the Company and the Guarantors of
Indebtedness under (A) the Credit Facility, (B) Capital Lease
Obligations or (C) purchase money or mortgage financings; provided
that the aggregate amount of all Indebtedness (with letters of credit
being deemed for all purposes of this Indenture to have a principal
amount equal to the maximum potential liability of the Company and its
Restricted Subsidiaries in respect thereof) outstanding under this
clause (i) after giving effect to such incurrence, including all
Permitted Refinancing Indebtedness incurred to refund, refinance or
replace any Indebtedness incurred pursuant to this clause (i), does
not exceed a principal amount equal to $75.0 million less the
aggregate principal amount of all Indebtedness permanently repaid with
the Net Proceeds of any Asset Sale;
(ii) the incurrence by the Company and the Guarantors of
Indebtedness represented by the Notes, the Guarantees thereof and this
Indenture in the principal amount of Notes originally issued on the
Closing Date;
(iii) the incurrence by the Company and its Restricted
Subsidiaries of the Existing Indebtedness;
(iv) the incurrence by the Company and the Guarantors of
additional Indebtedness (other than Hedging Obligations) in an
aggregate principal amount not to exceed $10.0 million at any time
outstanding;
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(v) the incurrence by the Company and the Guarantors of
Indebtedness in connection with the acquisition of assets or a new
Wholly-Owned Restricted Subsidiary; provided that such Indebtedness
was incurred by the prior owner of such assets or such Restricted
Subsidiary prior to such acquisition by the Company and the Guarantors
and was not incurred in connection with, or in contemplation of, such
acquisition by the Company and the Guarantors and provided further
that the aggregate principal amount of Indebtedness incurred pursuant
to this clause (v) does not exceed $5.0 million at any time
outstanding;
(vi) the incurrence by the Company and its Restricted
Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or
the net proceeds of which are used to refund, refinance or replace
Indebtedness (other than Hedging Obligations and other than
Indebtedness permitted to be incurred pursuant to clause (iv), clause
(vii) or clause (ix) of this paragraph) that was permitted by this
Indenture to be incurred;
(vii) the incurrence by the Company or any of its Wholly Owned
Restricted Subsidiaries of intercompany Indebtedness between or among
the Company and its Wholly Owned Restricted Subsidiaries; provided,
however, that any subsequent issuance or transfer of Equity Interests
that results in any such Indebtedness being held by a Person other
than the Company or a Wholly Owned Restricted Subsidiary of the
Company, and any sale or other transfer of any such Indebtedness to a
Person that is not either the Company or a Wholly Owned Restricted
Subsidiary of the Company, shall be deemed, in each case, to
constitute an incurrence of such Indebtedness by the Company or such
Restricted Subsidiary, as the case may be;
(viii) the incurrence by the Company or any of its Restricted
Subsidiaries of Hedging Obligations that are incurred for the purpose
of hedging against fluctuations in currency values or for the purpose
of fixing or hedging interest rate risk with respect to any floating
rate Indebtedness of the Company or any of its Restricted Subsidiaries
that is permitted by the terms of this Indenture to be outstanding,
provided that the notional principal amount of any Hedging Obligations
does not exceed the principal amount of Indebtedness to which such
agreement relates; and
(ix) the Guarantee by the Company or any of its Restricted
Subsidiaries of Indebtedness of the Company or a Wholly Owned
Restricted Subsidiary of the Company that was permitted to be incurred
by another provision of this Section 4.09.
For purposes of determining the amount of any Indebtedness of any
Person under this Section 4.09, (a) the principal amount of any Indebtedness of
such Person arising by reason of such Person having granted or assumed a Lien on
its property to secure Indebtedness of another Person shall be the lower of the
fair market value of such property and the principal amount of such Indebtedness
outstanding (or committed to be advanced) at the time of determination; (b) the
amount of any Indebtedness of such Person arising by reason of such Person
having Guaranteed Indebtedness of another Person where the amount of such
Guarantee
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is limited to an amount less than the principal amount of the Indebtedness so
Guaranteed shall be such amount as so limited; and (c) Indebtedness shall not
include a non-recourse pledge by the Company or any of its Restricted
Subsidiaries of Investments in any Person that is not a Restricted Subsidiary of
the Company to secure the Indebtedness of such Person.
For purposes of determining compliance with this Section 4.09, in the
event that an item of Indebtedness meets the criteria of more than one of the
categories of Permitted Debt described in clauses (i) through (ix) above or is
entitled to be incurred pursuant to the first paragraph of this Section 4.09,
the Company shall, in its sole discretion, classify such item of Indebtedness in
any manner that complies with this Section 4.09 and such item of Indebtedness
will be treated as having been incurred pursuant to only one of such clauses or
pursuant to the first paragraph of this Section 4.09.
SECTION 4.10 Limitation on Restricted Payments
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, (i) declare or pay any dividend or make
any other payment or distribution on account of the Company's Equity Interests
(including, without limitation, any payment in connection with any merger (other
than the Merger) or consolidation involving the Company) or to any direct or
indirect holders of the Company's Equity Interests in their capacity as such
(other than dividends or distributions (a) payable in Equity Interests (other
than Disqualified Stock) of the Company or (b) payable to the Company or any
Guarantor that is a Wholly-Owned Restricted Subsidiary of the Company); (ii)
except for Permitted Investments in Persons that are, or after giving effect to
such Investments become, Subsidiaries of the Company, purchase, redeem or
otherwise acquire or retire for value (including without limitation, in
connection with any merger (other than the Merger) or consolidation involving
the Company) any Equity Interests of the Company or any Affiliate of the Company
(other than any such Equity Interests owned by the Company or any Wholly Owned
Restricted Subsidiary of the Company, any Equity Interests then being issued by
the Company or a Wholly Owned Restricted Subsidiary of the Company or any
Investment in a Person that, after giving effect to such Investment, is a Wholly
Owned Restricted Subsidiary of the Company); (iii) make any payment on or with
respect to, or purchase, redeem, repay, defease or otherwise acquire or retire
for value, any Indebtedness of the Company or any Guarantor that is subordinated
in right of payment to the Notes or any Guarantee thereof, except a regularly
scheduled payment of interest or principal; or (iv) make any Restricted
Investment (all such payments and other actions set forth in clauses (i) through
(iv) above being collectively referred to as "Restricted Payments"), unless, at
the time of and after giving effect to such Restricted Payment:
(a) no Default or Event of Default shall have occurred and be
continuing or would occur as a consequence thereof; and
(b) the Company would, at the time of such Restricted Payment and
after giving pro forma effect thereto as if such Restricted Payment
had been made at the
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beginning of the applicable four-quarter period, have been permitted
to incur at least $1.00 of additional Indebtedness pursuant to the
Consolidated Interest Coverage Ratio test set forth in the first
paragraph of Section 4.09 hereof if the number 2.50 in such paragraph
were 2.0; and
(c) such Restricted Payment, together with the aggregate amount
of all other Restricted Payments declared or made by the Company and
its Restricted Subsidiaries after the Closing Date (excluding
Restricted Payments permitted by clauses (ii), (iii), (v) and (vi) and
clause (viii) (if and to the extent that the reimbursement obligations
paid pursuant to clause (viii) are direct obligations of the Company
or any of its Restricted Subsidiaries and are in respect of letters of
credit issued prior to the Closing Date) of the next succeeding
paragraph), is less than the sum, without duplication, of (1) 50% of
the Adjusted Consolidated Net Income of the Company for the period
(taken as one accounting period) from the Closing Date to the end of
the Company's most recently ended fiscal quarter for which internal
financial statements are available at the time of such Restricted
Payment (or, if such Adjusted Consolidated Net Income for such period
is a deficit, less 100% of such deficit), plus (2) 100% of the
aggregate net cash proceeds received by the Company from the issue or
sale since the Closing Date of Equity Interests of the Company (other
than Disqualified Stock), or of Disqualified Stock or debt securities
of the Company that have been converted into such Equity Interests
(other than Equity Interests (or Disqualified Stock or convertible
debt securities) sold to a Subsidiary of the Company and other than
Disqualified Stock or convertible debt securities that have been
converted into Disqualified Stock), plus (3) to the extent that any
Restricted Investment (other than any Committed Restricted Investment)
that was made after the Closing Date is sold for cash or otherwise
liquidated or repaid for cash, the lesser of (A) the cash return of
capital with respect to such Restricted Investment (less the cost of
disposition, if any) (but only to the extent not included in subclause
(1) of this clause (c) or applied to reduce Unrestricted Investments
Outstanding) and (B) the initial amount of such Restricted Investment,
plus (4) to the extent that any Restricted Investment (other than any
Committed Restricted Investment) that was made after the Closing Date
in the form of a guarantee of Indebtedness is reduced as a result of a
reduction in the maximum principal amount of Indebtedness that may be
guaranteed under such guarantee, the amount of such reduction, plus
(5) to the extent that any Restricted Investment (other than any
Committed Restricted Investment) that was made after the Closing Date
in the form of the furnishing of a letter of credit as security for
Indebtedness or other obligations is reduced as a result of a
reduction in the maximum reimbursement obligations in respect of such
letter or credit, the amount of such reduction, plus (6) to the extent
that any Restricted Investment (other than any Committed Restricted
Investment) that was made after the Closing Date in the form of the
guarantee of a lease has been amortized (as provided in the definition
of "Investments"), the amount of such amortization, plus (7) to the
extent that any Restricted Investment (other than any Committed
Restricted Investment) that was made after the Closing Date in the
form of a guarantee of obligations other than Indebtedness or a lease
is reduced as a result of a reduction in the
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maximum liability under such guarantee, the amount of such reduction,
plus (8) in the event that (A) any Unrestricted Subsidiary shall have
been effectively designated by the Board of Directors of the Company
as a Restricted Subsidiary in accordance with the terms of this
Indenture and (B) immediately after giving effect to such designation
no Default or Event of Default shall have existed and such Subsidiary
shall have become a Wholly-Owned Restricted Subsidiary of the Company,
the lowest of (x) an amount equal to the fair market value (as
determined in good faith by the Board of Directors of the Company) at
the time of such designation of the outstanding Investments of the
Company and its Restricted Subsidiaries in the Subsidiary so
designated, (y) an amount equal to the net book value of such
outstanding Investments at the time of such designation and (z) an
amount equal to the amount of Restricted Investments (other than
Committed Restricted Investments) made by the Company and its
Restricted Subsidiaries in such Subsidiary after the Closing Date less
the amount, if any, of any amounts included in subclause (3), (4),
(5), (6) or (7) of this clause (c) in respect of such Subsidiary, plus
(9) $20.0 million.
The foregoing provisions will not prohibit (i) the payment of any
dividend within 60 days after the date of declaration thereof, if at said date
of declaration such payment would have complied with the provisions of the
Indenture; (ii) the redemption, repurchase, retirement, defeasance or other
acquisition of any subordinated Indebtedness or Equity Interests of the Company
in exchange for, or out of the net cash proceeds of the substantially concurrent
sale (other than to a Subsidiary of the Company) of, other Equity Interests of
the Company (other than any Disqualified Stock); provided that the amount of any
such net cash proceeds that are utilized for any such redemption, repurchase,
retirement, defeasance or other acquisition shall be excluded from clause (c)
(2) of the preceding paragraph; (iii) the redemption, repurchase, retirement,
defeasance or other acquisition of subordinated Indebtedness with the net cash
proceeds from an incurrence of Permitted Refinancing Indebtedness; (iv) the
repurchase, redemption or other acquisition or retirement for value of any
Equity Interests of the Company or any Restricted Subsidiary of the Company held
by any member of the Company's (or any of its Restricted Subsidiaries')
management or board of directors or any employee stock ownership plan; provided
that the aggregate price paid for all such repurchased, redeemed, acquired or
retired Equity Interests shall not exceed $1.0 million in any twelve-month
period; (v) Tax Distributions in respect of periods when the Company is an S
Corporation, (vi) Committed Restricted Investments; (vii) Restricted Investments
consisting of payments pursuant to guaranties (not prohibited by the provisions
of this Indenture) of Indebtedness; (viii) Restricted Investments consisting of
payments pursuant to reimbursement obligations in respect of letters of credit
(not prohibited by the provisions of the Indenture) securing Indebtedness or
other obligations; and (ix) Restricted Investments consisting of payments
pursuant to guaranties (not prohibited by the provisions of the Indenture) of
obligations (other than Indebtedness), provided, however, that at the time of,
and after giving effect to, any Restricted Payment permitted under clauses (i)
through (iv) no Default or Event of Default shall have occurred and be
continuing.
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The amount of all Restricted Payments (other than cash) shall be the
fair market value on the date of the Restricted Payment of the asset(s) or
securities proposed to be transferred or issued by the Company or such
Restricted Subsidiary, as the case may be, pursuant to the Restricted Payment.
The fair market value of any non-cash Restricted Payment shall be determined in
good faith by the Board of Directors whose resolution with respect thereto shall
be delivered to the Trustee. Notwithstanding the two preceding sentences, the
amount of any Restricted Investment that is a guarantee of (or the furnishing of
a letter or credit as security for) Indebtedness or other obligations shall be
as determined under the definition of "Investments." Not later than the date of
making any Restricted Payment, the Company shall deliver to the Trustee an
Officers' Certificate stating that such Restricted Payments were permitted and
setting forth the basis upon which the calculations required by this Section
4.10 were computed.
The Board of Directors may designate any Restricted Subsidiary to be an
Unrestricted Subsidiary if such designation would not cause a Default. For
purposes of making such determination, all outstanding Investments by the
Company and its Restricted Subsidiaries (except to the extent repaid in cash) in
the Subsidiary so designated will be deemed to be Restricted Payments at the
time of such designation and will reduce the amount available for Restricted
Payments under the first paragraph of this Section 4.10. All such outstanding
Investments in the Subsidiary so designated will be deemed to constitute
Investments in an amount equal to the sum of (a) the greater of (i) the net book
value of such Investments at the time of such designation and (ii) the fair
market value of such Investments at the time of such designation and (b) the
amount of such Investments constituting a guarantee of (or the furnishing of a
letter of credit as security for) Indebtedness or other obligations. Such
designation will only be permitted if such Restricted Payment would be permitted
at such time and if such Restricted Subsidiary otherwise meets the definition of
an Unrestricted Subsidiary.
Any such designation by the Board of Directors shall be evidenced to
the Trustee by filing with the Trustee a certified copy of the Board Resolution
giving effect to such designation and an Officers' Certificate certifying that
such designation complied with the foregoing conditions. If, at any time, any
Unrestricted Subsidiary would fail to meet the definition of an Unrestricted
Subsidiary, it shall thereafter cease to be an Unrestricted Subsidiary for
purposes of this Indenture and any Indebtedness of such Subsidiary shall be
deemed to be incurred by a Restricted Subsidiary of the Company as of such date
(and, if such Indebtedness is not permitted to be incurred as of such date under
Section 4.09 hereof, the Company shall be in default of such Section). The Board
of Directors of the Company may at any time designate any Unrestricted
Subsidiary to be a Restricted Subsidiary; provided that such designation shall
be deemed to be an incurrence of Indebtedness by a Restricted Subsidiary of the
Company of any outstanding Indebtedness of such Unrestricted Subsidiary and such
designation shall only be permitted if (i) such Indebtedness is permitted under
Section 4.09 hereof, calculated on a pro forma basis as if such designation had
occurred at the beginning of the four-quarter reference period, and (ii) no
Default or Event of Default would be in existence following such designation.
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SECTION 4.11 Limitation on Liens
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create, incur, assume or suffer to
exist any Lien securing Indebtedness or trade payables on any asset now owned or
hereafter acquired, or any income or profits therefrom or assign or convey any
right to receive income therefrom, unless the Notes are equally and ratably
secured with such Indebtedness or trade payables for so long as such
Indebtedness or trade payables are so secured; provided, however, that the
provisions of this sentence shall not prohibit Permitted Liens.
SECTION 4.12 Limitation on Transactions with Affiliates
The Company shall not, and shall not permit any of its Subsidiaries to,
make any payment to, or sell, lease, transfer or otherwise dispose of any of its
properties or assets to, or purchase any property or assets from, or enter into
or make or amend any transaction, contract, agreement, understanding, loan,
advance or guarantee with, or for the benefit of, any Affiliate of the Company
(each of the foregoing, an "Affiliate Transaction"), unless (i) such Affiliate
Transaction is on terms that are no less favorable to the Company or the
relevant Subsidiary than those that would have been obtained in a comparable
transaction by the Company or such Subsidiary with an unrelated Person and (ii)
the Company delivers to the Trustee (a) with respect to any Affiliate
Transaction or series of related Affiliate Transactions involving aggregate
payments or consideration in excess of $1.0 million, a resolution of the Board
of Directors set forth in an Officers' Certificate certifying that such
Affiliate Transaction complies with clause (i) above and that such Affiliate
Transaction has been approved by a majority of the independent members of the
Board of Directors and (b) with respect to any Affiliate Transaction or series
of related Affiliate Transactions involving aggregate payments or consideration
in excess of $5.0 million, an opinion as to the fairness to the Company or such
Subsidiary of such Affiliate Transaction from a financial point of view issued
by an accounting, appraisal or investment banking firm of national standing.
The foregoing provisions will not prohibit (i) any reasonable
employment agreement or other compensation plan or arrangement paid or made
available to officers or employees of the Company or its Subsidiaries for
services actually rendered or to be rendered and entered into by the Company or
any Subsidiary in the ordinary course of business and consistent with past
practice; (ii) transactions between or among the Company and/or its Wholly Owned
Restricted Subsidiaries; (iii) any Remote Guarantee or Permitted Investment or
any Restricted Payment that is permitted by the provisions of Section 4.10
hereof; (iv) transactions between or among Unrestricted Subsidiaries of the
Company; (v) the provision, in the ordinary course of business consistent with
past practice and for cash consideration not less than the cost thereof, of
support services (such as accounting, architectural, legal and administrative
services) by the Company and its Restricted Subsidiaries to Unrestricted
Subsidiaries of the Company and entities in which the Company has, directly or
indirectly, an equity interest of 20% or more; (vi) the Tax Payment Agreement;
(vii) leases or subleases by the Company and its Restricted Subsidiaries of real
property to Unrestricted Subsidiaries or Persons in which Unrestricted
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Subsidiaries have an equity interest to the extent that such leases or subleases
are in effect on the Closing Date; (viii) guarantees of Indebtedness or real
property lease obligations of Unrestricted Subsidiaries or entities in which
Unrestricted Subsidiaries have an equity interest to the extent that such
guarantees are in effect on the Closing Date; or (ix) payments by the Company to
Sbarro Enterprises, L.P. under the sublease for the Company's administrative
office building as in effect on the Closing Date.
SECTION 4.13 Limitation on Dividend and Other Payment Restrictions
Affecting Subsidiaries
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to
exist or become effective any consensual encumbrance or restriction on the
ability of any Restricted Subsidiary to (i) (a) pay dividends or make any other
distributions to the Company or any of its Restricted Subsidiaries (1) on its
Capital Stock or (2) with respect to any other interest or participation in, or
measured by, its profits, or (b) pay any indebtedness or other Obligations owed
to the Company or any of its Restricted Subsidiaries, (ii) make loans or
advances to the Company or any of its Restricted Subsidiaries, (iii) transfer
any of its properties or assets to the Company or any of its Restricted
Subsidiaries, (iv) grant Liens on its assets as security for the Notes or any
Guarantee thereof or (v) Guarantee the Notes or any renewals or refinancings
thereof, except for such encumbrances or restrictions (other than encumbrances
and restrictions in respect of clause (v) of this sentence) existing under or by
reason of (a) Existing Indebtedness as in effect on the Closing Date, (b) the
Credit Facility as in effect as of the Closing Date, and any amendments,
modifications, restatements, renewals, increases, supplements, refundings,
replacements or refinancings thereof, provided that such amendments,
modifications, restatements, renewals, increases, supplements, refundings,
replacement or refinancings are no more restrictive with respect to such
dividend and other payment restrictions than those contained in the Credit
Facility as in effect on the Closing Date, (c) the Notes, any Guarantee thereof
and the Indenture, (d) applicable law, (e) any instrument governing Indebtedness
or Equity Interests of a Person acquired by the Company or any of its Restricted
Subsidiaries as in effect at the time of such acquisition (except to the extent
such Indebtedness or Equity Interests were incurred in connection with or in
contemplation of such acquisition), which encumbrance or restriction is not
applicable to any Person, or the Equity Interests, properties or assets of any
Person, other than the Person, or the Equity Interests, property or assets of
the Person, so acquired, provided that, in the case of Indebtedness, such
Indebtedness was permitted by the terms of this Indenture to be incurred, (f) by
reason of customary nonassignment provisions (or provisions prohibiting
sublease) in leases entered into in the ordinary course of business and
consistent with past practices, (g) purchase money or mortgage obligations
permitted by this Indenture for property acquired in the ordinary course of
business that impose restrictions of the nature described in clause (iii) or
(iv) above on the property so acquired, (h) customary restrictions in asset or
stock sale agreements limiting transfer of such assets or stock pending the
closing of such sale, (i) customary non-assignment provisions in contracts
entered into in the ordinary course of business, or (j) Permitted Refinancing
Indebtedness, provided that the restrictions contained in the agreements
governing such
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Permitted Refinancing Indebtedness are no more restrictive than those contained
in the agreements governing the Indebtedness being refinanced.
SECTION 4.14 Covenants Relating to Tax Payment Agreement
If the Company elects to be treated as an S Corporation:
(a) the Company shall elect to be treated as an "S corporation" or its
equivalent for state and local income tax purposes in each state and locality in
which the Company does business that permits such an election, for the earliest
possible applicable taxable year;
(b) with respect to each of the Company's Subsidiaries as to which the
Company makes a valid "qualified subchapter S subsidiary" election under Section
1361(b)(3) of the Code, the Company shall make an equivalent election for state
and local income tax purposes, in each state and locality in which the Company
does business that permits such an election, for the earliest possible
applicable taxable year;
(c) except as permitted in paragraph 10 of the Tax Payment Agreement or
except in connection with the termination of the Company's status as an S
Corporation, the Company shall not take any action which it knows would
terminate any election made to be treated as an "S corporation" or its
equivalent for state or local income tax purposes, or for one or more of its
subsidiaries to be treated as a "qualified subchapter S subsidiary" or its
equivalent for state or local income tax purposes;
(d) the Company shall furnish the Trustee with (i) a copy of its
election to be treated as an S Corporation within 15 days after the filing
thereof, (ii) a copy of each determination of amounts permitted to be paid or
distributed to or for the benefit of, or required to be repaid by, the
shareholders of the Company under the Tax Payment Agreement, certified by the
Chief Financial Officer of the Company, on or prior to making such payment or
distribution or requesting such repayment, (iii) a copy of its federal income
tax return for each taxable year (and any amendment thereto) in which it claims
to be an S Corporation within 20 days after filing thereof, and (iv) a
certificate of the Company's certified independent accountants confirming the
computation of the amount determined under clause (a) of paragraph 4 of the Tax
Payment Agreement based on the Company's original federal income tax return for
such taxable year as filed, within 20 days after the Tax Return Date (as defined
in the Tax Payment Agreement) for each taxable year in which the Company claims
to be an S Corporation;
(e) the Company shall promptly notify the Trustee upon learning of the
termination of its status as an S Corporation for any reason;
(f) the Company shall file its original federal income tax return for
each taxable year in which it claims to be an S Corporation on or before the due
date thereof (including valid extensions of time to file such returns); and
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(g) the Company shall cause to be repaid to the Company all amounts
(including interest, where applicable) required to be repaid by the shareholders
of the Company pursuant to the Tax Payment Agreement. Any such repayments shall
be treated as capital contributions which shall not increase the amount
available for Restricted Payments, except for any such increase resulting from
such repayments causing an increase in Adjusted Consolidated Net Income.
SECTION 4.15 Payments for Consent
The Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, pay or cause to be paid any consideration, whether by
way of interest, fee or otherwise, to any Holder of any Notes for or as an
inducement to any consent, waiver or amendment of any of the terms or provisions
of this Indenture or the Notes unless such consideration is offered to be paid
and is paid to all Holders of Notes that consent, waive or agree to amend in the
time frame set forth in the solicitation documents relating to such consent,
waiver or agreement.
SECTION 4.16 Asset Sales
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, consummate an Asset Sale unless (i) the
Company (or such Restricted Subsidiary, as the case may be) receives
consideration at the time of such Asset Sale at least equal to the fair market
value (evidenced by a resolution of the Board of Directors of the Company set
forth in an Officers' Certificate delivered to the Trustee) of the assets or
Equity Interests issued or sold or otherwise disposed of and (ii) at least 75%
of the consideration therefor received by the Company or such Restricted
Subsidiary is in the form of cash or Cash Equivalents; provided that the amount
of (a) any liabilities (as shown on the Company's or such Restricted
Subsidiary's most recent balance sheet) of the Company or such Restricted
Subsidiary (other than contingent liabilities and liabilities that are by their
terms subordinated to the Notes or any Guarantee thereof) that are assumed by
the transferee of any such assets or Equity Interests pursuant to a customary
novation agreement that expressly releases the Company or such Restricted
Subsidiary from further liability and (b) any securities, notes or other
obligations received by the Company or such Restricted Subsidiary from such
transferee that are converted by the Company or such Restricted Subsidiary into
cash within 30 days after such Asset Sale (to the extent of the cash received)
shall be deemed to be cash for purposes of this provision.
Within 365 days after the receipt of any Net Proceeds from an Asset
Sale, the Company, at its option, may apply such Net Proceeds (i) to permanently
reduce any Senior Debt of the Company and/or its Wholly-Owned Restricted
Subsidiaries (and to correspondingly reduce commitments with respect thereto in
the case of revolving borrowings) or (ii) to the acquisition of a controlling
interest in another business, the making of a capital expenditure or the
acquisition of other assets (other than assets that would be classified as
current assets in accordance with GAAP), in each case, in the same or a
reasonably similar
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line of business as the Company and its Restricted Subsidiaries were engaged in
on the date of this Indenture or in any business reasonably complementary,
related or incidental thereto as determined in good faith by the Board of
Directors of the Company. Pending the final application of any such Net
Proceeds, the Company may apply such Net Proceeds to temporarily reduce
borrowings under the Credit Facility or invest such Net Proceeds in any manner
that is not prohibited by this Indenture. Any Net Proceeds from Asset Sales that
are not applied or invested as provided in the first sentence of this paragraph
will be deemed to constitute "Excess Proceeds." When the aggregate amount of
Excess Proceeds exceeds $5.0 million, the Company shall make an offer to all
Holders of Notes (an "Asset Sale Offer") to purchase the maximum principal
amount of Notes that does not exceed the Excess Proceeds at an offer price in
cash in an amount equal to 100% of the principal amount thereof, plus accrued
and unpaid interest and Liquidated Damages, if any, thereon to the date of
purchase, in accordance with the procedures set forth in Section 3.10 hereof. To
the extent that the aggregate principal amount of Notes tendered pursuant to an
Asset Sale Offer is less than the Excess Proceeds, the Company may use any
remaining Excess Proceeds for general corporate purposes. If the aggregate
principal amount of Notes tendered by Holders thereof exceeds the amount of
Excess Proceeds, the Trustee shall select the Notes to be purchased on a pro
rata basis (with such adjustments as may be deemed appropriate by the Trustee so
that only Notes in denominations of $1,000, or integral multiples thereof, shall
be purchased). Upon completion of an Asset Sale Offer, the amount of Excess
Proceeds shall be reset at zero. The Asset Sale Offer must be commenced within
30 days following the date on which the aggregate amount of Excess Proceeds
exceeds $5.0 million and remain open for at least 30 and not more than 40 days
(unless otherwise required by applicable law). The Company shall comply with the
requirements of Rule 14e-1 under the Exchange Act and any other securities laws
and regulations thereunder to the extent such laws and regulations are
applicable in connection with the repurchase of Notes pursuant to an Asset Sale
Offer.
SECTION 4.17 Offer to Repurchase Upon Change of Control
(a) Upon the occurrence of a Change of Control, unless notice of
redemption of the Notes in whole has been given pursuant to Sections 3.04 and
3.08 hereof, the Company shall make an offer to purchase all or any part (equal
to $1,000 or an integral multiple thereof) of each Holder's Notes pursuant to
the offer described below (the "Change of Control Offer") at an offer price in
cash (the "Change of Control Payment") equal to 101% of the aggregate principal
amount thereof, plus accrued and unpaid interest and Liquidated Damages, if any,
thereon to the date of purchase (the "Change of Control Payment Date").
(b) Notice of a Change of Control Offer shall be mailed by the Company,
with a copy to the Trustee, or, at the option of the Company and at the expense
of the Company, by the Trustee within 30 days following a Change of Control to
each Holder of Notes, with the following statements and/or information:
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(1) a Change of Control Offer is being made pursuant to
this Section 4.17 and that all Notes properly tendered
pursuant to such Change of Control Offer will be
accepted for payment;
(2) the purchase price, the expiration date of the Change
of Control Offer (the "Expiration Date"), which shall
be no earlier than 30 days nor later than 40 days from
the date such notice is mailed (except as may be
otherwise required by applicable law) and the Change of
Control Payment Date, which shall be no later than the
third Business Day following the Expiration Date;
(3) any Note not properly tendered will remain outstanding
and continue to accrue interest and Liquidated Damages,
if any;
(4) unless the Company defaults in the payment of the
Change of Control Payment, all Notes accepted for
payment pursuant to the Change of Control Offer will
cease to accrue interest and Liquidated Damages, if
any, on the Change of Control Payment Date;
(5) Holders electing to have a Note purchased pursuant to
any Change of Control Offer shall be required to
surrender the Note, with the form entitled "Option of
Holder to Elect Purchase" on the reverse of the Note
completed, or transfer by book-entry transfer, to the
Company, a depositary, if appointed by the Company, or
a Paying Agent and at the address specified in the
notice prior to the expiration of the Change of Control
Offer;
(6) Holders shall be entitled to withdraw their tendered
Notes and their election to require the Company to
purchase such Notes, provided that the Company, the
depositary or Paying Agent, as the case may be,
receives, not later than the close of business on the
Expiration Date, a telegram, telex, facsimile
transmission or letter setting forth the name of the
Holder, the principal amount of the Notes tendered for
purchase, and a statement that such Holder is
withdrawing his tendered Notes and his election to have
such Notes purchased;
(7) that Holders whose Notes are being purchased only in
part shall be issued new Notes equal in principal
amount to the unpurchased portion of the Notes
surrendered (or transferred by book-entry transfer),
which unpurchased portion must be equal to $1,000 in
principal amount or an integral multiple thereof; and
(8) a description of the transaction or transactions that
constitute the Change of Control.
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(c) The Company shall comply with the requirements of Rule 14e-1 under
the Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with the
repurchase of Notes pursuant to a Change of Control Offer.
(d) On the Change of Control Payment Date, the Company shall, to the
extent lawful, (1) accept for payment all Notes or portions thereof properly
tendered pursuant to the Change of Control Offer, (2) deposit with the Paying
Agent an amount equal to the aggregate Change of Control Payment in respect of
all Notes or portions thereof so tendered and (3) deliver, or cause to be
delivered, to the Trustee for cancellation the Notes so accepted together with
an Officers' Certificate stating the aggregate principal amount of Notes or
portions thereof being purchased by the Company. The Paying Agent shall promptly
mail or deliver to each Holder of Notes so tendered the Change of Control
Payment for such Notes, and the Trustee shall promptly authenticate and mail (or
cause to be transferred by book entry) to each Holder a new Note equal in
principal amount to any unpurchased portion of the Notes surrendered, if any;
provided that each such new Note shall be in a principal amount of $1,000 or an
integral multiple thereof. The Company shall publicly announce the results of
the Change of Control Offer on or as soon as practicable after the Change of
Control Payment Date.
(e) Notwithstanding the foregoing, if the Change of Control Payment
Date is on or after a Regular Record Date and on or before the related Interest
Payment Date, any accrued and unpaid interest and Liquidated Damages, if any,
shall be paid to the Person in whose name a Note is registered at the close of
business on such Regular Record Date, and no additional interest shall be
payable to Holders who tender Notes pursuant to the Change of Control Offer.
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(f) Notwithstanding the foregoing, the Company shall not be required to
make a Change of Control Offer upon a Change of Control if a third party makes
the Change of Control Offer in the manner, at the times and otherwise in
compliance with the requirements set forth in this Indenture applicable to a
Change of Control Offer made by the Company and purchases all Notes validly
tendered and not withdrawn under such Change of Control Offer.
(g) The Change of Control provisions described in this Section 4.17
will be applicable whether or not any other provisions of this Indenture are
applicable.
SECTION 4.18 Additional Subsidiary Guarantees
If the Company or any of its Subsidiaries shall acquire or create
another Subsidiary after the Closing Date, or any Unrestricted
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Subsidiary shall cease to be an Unrestricted Subsidiary and shall become a
Restricted Subsidiary, then the Company shall cause such Subsidiary to (i)
become (by a supplemental indenture executed and delivered to the Trustee in
form satisfactory to the Trustee) a Guarantor and (ii) deliver to the Trustee an
Opinion of Counsel reasonably satisfactory to the Trustee that such supplemental
indenture has been duly executed and delivered; provided, however, that any
Subsidiary that has been properly designated as an Unrestricted Subsidiary in
accordance with this Indenture shall not be required to become a Guarantor so
long as such Subsidiary continues to be an Unrestricted Subsidiary.
SECTION 4.19 Limitation on Issuances and Sales of Capital
Stock of Wholly-Owned Restricted Subsidiaries
The Company (i) shall not, and shall not permit any Wholly Owned
Restricted Subsidiary of the Company to, transfer, convey, sell, lease or
otherwise dispose of any Equity Interests or other ownership interests
(including convertible debt securities) of any Wholly Owned Restricted
Subsidiary of the Company to any Person (other than the Company or a Wholly
Owned Restricted Subsidiary of the Company), unless (a) such transfer,
conveyance, sale, lease or other disposition is of all the Equity Interests and
other ownership interests of such Wholly Owned Restricted Subsidiary and (b) the
Net Proceeds from such transfer, conveyance, sale, lease or other disposition
are applied in accordance with Sections 4.16 and 3.10 hereof, and (ii) shall not
permit any Wholly Owned Restricted Subsidiary of the Company to issue any of its
Equity Interests or other ownership interests (other than, if necessary, shares
of its Capital Stock constituting directors' qualifying shares) to any Person
other than to the Company or a Wholly Owned Restricted Subsidiary of the
Company.
ARTICLE 5.
SUCCESSORS
SECTION 5.01 Limitation on Merger, Consolidation or Sale of Assets
(a) The Company shall not consolidate or merge with or into (whether or
not the Company is the surviving Person), or sell, assign, transfer, lease,
convey or otherwise dispose of all or substantially all of its properties or
assets in one or more related transactions to, another Person unless (i) the
Company is the surviving Person or the Person formed by or surviving any such
consolidation or merger (if other than the Company) or to which such sale,
assignment, transfer, lease, conveyance or other disposition shall have been
made is a Person organized or existing under the laws of the United States, any
state thereof or the District of Columbia; (ii) the Person formed by or
surviving any such consolidation or merger (if other than the Company) or the
Person to which such sale, assignment, transfer, lease, conveyance or other
disposition shall have been made assumes all the obligations of the Company
under the Notes and this Indenture pursuant to a supplemental indenture in a
form reasonably satisfactory to the Trustee; (iii) immediately after giving
effect to such transaction no Default or Event of Default exists; and (iv)
except in the case of a merger of the Company with or into
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a Wholly Owned Restricted Subsidiary of the Company, the Company or the Person
formed by or surviving any such consolidation or merger (if other than the
Company), or to which such sale, assignment, transfer, lease, conveyance or
other disposition shall have been made (A) will have Consolidated Net Worth
immediately after the transaction equal to or greater than the Consolidated Net
Worth of the Company immediately preceding the transaction and (B) will, at the
time of such transaction and after giving pro forma effect thereto as if such
transaction had occurred at the beginning of the applicable four-quarter period,
be permitted to incur at least $1.00 of additional Indebtedness pursuant to the
Consolidated Interest Coverage Ratio test set forth in the first paragraph of
Section 4.09 hereof.
(b) The Company shall deliver to the Trustee prior to the consummation
of any proposed transaction subject to the foregoing clause (a) an Officers'
Certificate and an Opinion of Counsel, each stating that the proposed
transaction and such supplemental indenture comply with this Indenture. The
Trustee shall be entitled to conclusively rely upon such Officers' Certificate
and Opinion of Counsel.
SECTION 5.02 Successor Person Substituted
Upon any consolidation or merger, or any sale, assignment, transfer,
lease, conveyance or other disposition of all or substantially all of the assets
of the Company in accordance with Section 5.01 hereof, the successor Person
formed by such consolidation or into which the Company is merged or to which
such sale, assignment, transfer, lease, conveyance or other disposition is made
shall succeed to, and be substituted for (so that from and after the date of
such consolidation, merger, sale, lease, conveyance or other disposition, the
provisions of this Indenture referring to the "Company" shall refer instead to
the successor Person and not to the Company), 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.
ARTICLE 6.
DEFAULTS AND REMEDIES
SECTION 6.01 Events of Default
Each of the following constitutes an Event of Default:
(1) default for 30 days or more in the payment when due of
interest on, or Liquidated Damages, if any, with respect to, the
Notes; or
(2) default in payment when due (whether payable at maturity,
upon redemption or otherwise) of the principal of or premium, if any,
on the Notes; or
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(3) failure by the Company or any of its Restricted Subsidiaries
to comply with Section 3.10, 4.16, 4.17 or 5.01 hereof; or
(4) failure by the Company or any of its Restricted Subsidiaries
for 30 days after written notice by the Trustee or the Holders of at
least 25% in principal amount of the then outstanding Notes to comply
with any of its other agreements in this Indenture or the Notes other
than those referred to in clauses (1), (2) or (3) above; or
(5) default 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 of
its Restricted Subsidiaries (or the payment of which is guaranteed by
the Company or any of its Restricted Subsidiaries), whether such
Indebtedness or guarantee now exists, or is created after the Closing
Date, which default (a) is caused by a failure to pay principal of or
premium, if any, or interest on such Indebtedness prior to the
expiration of the grace period, if any, provided in such Indebtedness
on the date of such default (a "Payment Default") or (b) results in
the acceleration of such Indebtedness prior to its express maturity
and, in each case, the principal amount of any such Indebtedness,
together with the principal amount of any other such Indebtedness
under which there has been a Payment Default or the maturity of which
has been so accelerated, aggregates $5.0 million or more; or
(6) failure by the Company or any of its Restricted Subsidiaries
to pay final judgments aggregating in excess of $5.0 million and
either (a) any creditor commences enforcement proceedings upon any
such judgment or (b) such judgments are not paid, discharged or stayed
for a period of 60 days; or
(7) except as permitted by this Indenture, any Guarantee of the
Notes shall be held in any judicial proceeding to be unenforceable or
invalid or shall cease for any other reason to be in full force and
effect, or any Guarantor, or any Person acting on behalf of any
Guarantor, shall deny or disaffirm its obligations under its
Subsidiary Guarantee; or
(8) the Company, any Restricted Subsidiary that is a Significant
Subsidiary, or any group of Restricted Subsidiaries that, taken
together, would constitute a Significant Subsidiary, pursuant to or
within the meaning of any Bankruptcy Law:
(A) commences a voluntary case or proceeding,
(B) consents to the entry of an order for relief against it
in an involuntary case or proceeding,
(C) consents to the appointment of a Custodian of it or for
all or substantially all of its property,
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(D) makes a general assignment for the benefit of its
creditors, or
(E) admits in writing its inability generally to pay its
debts as the same become due; or
(9) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that:
(A) is for relief against the Company, any Restricted
Subsidiary that is a Significant Subsidiary or any group of
Restricted Subsidiaries that, taken together, would constitute a
Significant Subsidiary in an involuntary case or proceeding,
(B) appoints a Custodian of the Company, any Restricted
Subsidiary that is a Significant Subsidiary or any group of
Restricted Subsidiaries that, taken together, would constitute a
Significant Subsidiary or for all or a substantial part of the
property of the Company, any Restricted Subsidiary that is a
Significant Subsidiary or any group of Restricted Subsidiaries
that, taken together, would constitute a Significant Subsidiary,
or
(C) orders the liquidation of the Company, any Restricted
Subsidiary that is a Significant Subsidiary or any group of
Restricted Subsidiaries that, taken together, would constitute a
Significant Subsidiary,
and the order or decree contemplated by clause (A), (B) or (C) of this
clause (9) remains unstayed and in effect for 60 consecutive days.
SECTION 6.02 Acceleration of Maturity
If any Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in principal amount of the then outstanding Notes may
declare all the Notes and all other Obligations thereunder to be due and payable
immediately by notice in writing to the Company and the Trustee. Upon a
declaration of acceleration, the Notes and all other Obligations thereunder
shall become immediately due and payable.
Notwithstanding the foregoing, in the case of an Event of Default
specified in clause (8) or (9) of Section 6.01 hereof occurring with respect to
the Company, any Restricted Subsidiary that is a Significant Subsidiary or any
group; of Restricted Subsidiaries that, taken together, would constitute a
Significant Subsidiary, all outstanding Notes and all other Obligations
thereunder shall become immediately due and payable without further action or
notice.
If any Event of Default occurs by reason of any willful action (or
inaction) taken (or not taken) by or on behalf of the Company or any Guarantor
with the intention of avoiding
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payment of the premium that the Company would have had to pay if the Company
then had elected to redeem the Notes pursuant to Section 3.08 hereof, an
equivalent premium shall also become and be immediately due and payable to the
extent permitted by law upon the acceleration of the Notes.
SECTION 6.03 Other Remedies
If an Event of Default occurs and is continuing, the Trustee may pursue
any available remedy (under this Indenture or otherwise) to collect the payment
of principal of, premium, if any, Liquidated Damages, if any, and interest on
the Notes or to enforce the performance of any provision of the Notes, this
Indenture or the Registration Rights Agreement.
The Trustee may maintain a proceeding even if it does not possess any
of the Notes or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Holder of a Note in exercising any right or
remedy accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. All remedies are
cumulative to the extent permitted by law.
SECTION 6.04 Waiver of Past Defaults
Subject to Section 6.07 hereof, the Holders of a majority in aggregate
principal amount of the then outstanding Notes by notice to the Trustee may on
behalf of the Holders of all of the Notes waive an existing Default or Event of
Default and its consequences hereunder, except a continuing Default or Event of
Default in the payment of the principal of, premium, if any, interest or
Liquidated Damages, if any, on, any Note held by a non-consenting Holder;
provided, however, that the Holders of at least a majority in aggregate
principal amount of the Notes then outstanding may rescind an acceleration and
its consequences, including any related payment default that resulted from such
acceleration. 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 thereon.
SECTION 6.05 Control by Majority
The Holders of a majority in aggregate principal amount of the then
outstanding Notes may direct the time, method and place of conducting any
proceeding for exercising any remedy available to the Trustee or exercising any
trust or power conferred on it. However, subject to Section 7.01 hereof, the
Trustee may refuse to follow any direction that conflicts with law or this
Indenture that the Trustee determines may be unduly prejudicial to the rights of
other Holders of Notes or that may involve the Trustee in personal liability.
The Trustee may take any other action which it deems proper and which is not
inconsistent with any such direction. In the event the Trustee takes any action
or follows any direction pursuant to this Indenture, the Trustee shall be
entitled to indemnification reasonably satisfactory to it against any loss or
expense caused by taking such action or following such direction.
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SECTION 6.06 Limitation on Suits
No Holder of a Note will have any right to institute any proceeding
with respect to this Indenture or for any remedy hereunder, unless (i) such
Holder shall have previously given to the Trustee written notice of a continuing
Event of Default with respect to the Notes, (ii) the Holders of at least 25% in
aggregate principal amount of the Notes then outstanding shall have made written
request to the Trustee to institute such proceeding and, if requested by the
Trustee, provided indemnity satisfactory to the Trustee, with respect to such
proceeding, (iii) the Trustee shall not have received from the Holders of a
majority in aggregate principal amount of the Notes then outstanding a direction
inconsistent with such request and (iv) the Trustee shall have failed to
institute such proceeding within 30 days after such request and, if requested,
the provision of an indemnity satisfactory to the Trustee.
Notwithstanding anything to the contrary contained in this Section
6.06, any Holder of a Note shall have the right to institute a proceeding with
respect to this Indenture or the Notes or for any remedy in the following
instances:
(i) a Holder of a Note may institute suit for enforcement of
payment of principal of and premium, if any, or interest or Liquidated
Damages, if any, on such Note on or after the respective due dates
expressed in such Note (including upon acceleration thereof) or
(ii) Holders of a majority in principal amount of the
outstanding Notes may institute any proceeding with respect to this
Indenture or the Notes or any remedy thereunder; provided that, upon
institution of any proceeding or exercise of any remedy, such Holders
provide the Trustee with prompt written notice thereof.
A Holder of Notes may not use this Indenture to prejudice the rights of
another Holder of Notes or to obtain a preference or priority over another
Holder of Notes.
SECTION 6.07 Rights of Holders to Receive Payment
Notwithstanding any other provision of this Indenture, the right of any
Holder of a Note to receive payment of principal of, premium, if
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any, interest or Liquidated Damages, if any, on any Note, on or after the
respective due dates expressed in such Note, any Redemption Date, any Change of
Control Payment Date or any Purchase Date, or to bring suit for the enforcement
of any such payment on or after such respective dates, shall not be impaired or
affected without the consent of such Holder.
SECTION 6.08 Collection Suit by Trustee
If an Event of Default specified in Section 6.01(1) or (2) hereof
occurs and is continuing, the Trustee is authorized to recover judgment in its
own name and as trustee of an express trust against the Company or any Guarantor
for the whole amount of principal of, premium, if any, interest and Liquidated
Damages, if any, owing on the Notes and 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, and any other amounts due to the Trustee under Section
7.07 hereof.
SECTION 6.09 Trustee May File Proofs of Claim
The Trustee is authorized to file such proofs of claim and other papers
or documents as may be necessary or advisable in order to have the claims of the
Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and the
Holders of Notes allowed in any judicial proceedings relative to the Company (or
any Guarantor or other obligor upon the Notes), its creditors or its property
and shall be entitled and empowered to collect, receive and distribute any money
or other property payable or deliverable upon the conversion or exchange of the
Notes or upon any such claims and any custodian in any such judicial proceeding
is hereby authorized by each Holder of Notes to make such payments to the
Trustee and, in the event that the Trustee shall expressly consent to the making
of such payments directly to the Holders of Notes, to pay to the Trustee any
amount due to 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 7.07 hereof. To the extent that the payment of any such
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, and any other amounts due the Trustee under Section 7.07 hereof out
of the estate in any such proceeding, shall be denied for any reason, payment of
the same shall be secured by a Lien on, and shall be paid out of, any and all
distributions, dividends, money, securities and other properties that the
Holders of Notes may be entitled to receive in such proceeding whether in
liquidation or under any plan of reorganization or arrangement or otherwise.
Nothing herein contained shall be deemed to authorize the Trustee to authorize
or consent to or accept or adopt on behalf of any Holder of Notes 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 of Notes in any such proceeding.
SECTION 6.10 Priorities
If the Trustee collects any money pursuant to this Article 6, it shall,
pay out the money in the following order:
First: to the Trustee, its agents and attorneys for amounts due
under Section 7.07 hereof, including payment of all compensation,
expense and liabilities incurred, and all advances made, by the
Trustee and the costs and expenses of collection;
Second: to Holders of Notes for amounts due and unpaid on the
Notes for principal, premium, if any, interest and Liquidated Damages,
if any, ratably, without preference or priority of any kind, according
to the amounts due and payable on the
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Notes for principal, premium, if any, interest and Liquidated Damages,
if any, respectively;
Third: without duplication, to the Holders for any other
Obligations owing to the Holders under this Indenture, the
Registration Rights Agreement and the Notes; and
Fourth: to the Company or to such party as a court of competent
jurisdiction shall direct.
The Trustee may fix a record date and payment date for any payment to
Holders of Notes pursuant to this Section 6.10.
SECTION 6.11 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 or omitted by
it as a Trustee, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in the suit, having due regard to
the merits and good faith of the claims or defenses made by the party litigant.
This Section 6.11 does not apply to a suit by the Trustee, a suit by a Holder
pursuant to Section 6.07 hereof, or a suit by a Holder or Holders of more than
10% in principal amount of the then outstanding Notes.
ARTICLE 7.
TRUSTEE
SECTION 7.01 Duties of Trustee
(1) If an Event of Default has occurred and is continuing, the Trustee
shall exercise such of the rights and powers vested in it by this Indenture, and
use the same degree of care and skill in their exercise, as a prudent person
would exercise or use under the circumstances in the conduct of its own affairs.
(2) Except during the continuance of an Event of Default:
(A) the duties of the Trustee shall be determined solely by
the TIA or the express provisions of this Indenture and the Trustee
need perform, and be liable for (as set forth herein), only those
duties that are specifically set forth in the TIA or this Indenture and
no others, and no implied covenants or obligations shall be read into
this Indenture against the Trustee; and
(B) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements of
this Indenture, provided that the Trustee shall examine the
certificates and opinions to determine whether or not they conform to
the requirements of this Indenture.
(3) The Trustee may not be relieved from liabilities for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(A) this paragraph does not limit the effect of clause (2) of
this Section 7.01.
(B) the Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer, unless it is proved that
the Trustee was negligent in ascertaining the pertinent facts; and
(C) the Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 6.05 hereof.
(4) Whether or not therein expressly so provided, every provision of
this Indenture that in any way relates to the Trustee is subject to clauses (1),
(2) and (3) of this Section 7.01.
(5) No provision of this Indenture shall require the Trustee to expend
or risk its own funds or incur any liability. The Trustee shall be under no
obligation to exercise any of its rights and powers under this Indenture unless
the Holders shall have offered to the Trustee security and indemnity
satisfactory to it against any loss, liability or expense.
(6) The Trustee shall not be liable for interest on any money or other
assets received by it except as the Trustee may agree in writing with the
Company. Money or other assets held in trust by the Trustee need not be
segregated from other funds except to the extent required by law.
(7) 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 or
other paper or documents, 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 or any Subsidiary of the Company, personally or by agent or
attorney.
SECTION 7.02 Rights of Trustee
(1) The Trustee may conclusively rely and shall be fully protected in
relying upon any resolution, document, Officers' Certificate or any other
certificate, statement, instrument, opinion, report, notice, request, consent,
order, bond or other document believed by it to be
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genuine and to have been signed or presented by the proper Person. The Trustee
need not investigate any fact or matter stated in the document.
(2) Before the Trustee acts or refrains from acting, it may consult
with counsel and it may require an Officers' Certificate or an Opinion of
Counsel or both which shall comply with Sections 1.05 and 12.04 hereof. The
Trustee shall not be liable for any action it takes or omits to take in good
faith in reliance on such Officers' Certificate or Opinion of Counsel. The
Trustee may consult with counsel and the advice of such counsel or any Opinion
of Counsel shall be full and complete authorization and protection from
liability, in respect of any action taken, suffered or omitted by it hereunder
in good faith and in reliance thereon.
(3) The Trustee may act through its attorneys, agents, custodians and
nominees and shall not be responsible for the misconduct or negligence of any
agent, custodian and nominee appointed with due care.
(4) The Trustee shall not be liable for any action it takes or omits to
take in good faith that it believes to be authorized or within the rights or
powers conferred upon it by this Indenture.
(5) Unless otherwise specifically provided in this Indenture, any
demand, request, direction or notice from the Company or any Guarantor shall be
sufficient if signed by an Officer of the Company or such Guarantor. A
permissive right granted to the Trustee hereunder shall not be deemed an
obligation to act.
(6) The Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request, order or
direction of any of the Holders pursuant to the provisions of this Indenture
including, without limitation, the provisions of Section 6.05 hereof, unless
such Holders shall have offered to the Trustee security or indemnity
satisfactory to the Trustee against the costs, expenses and liabilities that
might be incurred by it in compliance with such request, order or direction.
(7) The Trustee shall not be charged with knowledge of any Default or
Event of Default unless either (i) a Responsible Officer of the Trustee shall
have actual knowledge of such Default or Event of Default or (ii) written notice
of such Default or Event of Default shall have been given to the Trustee by the
Company or any Holder.
(8) In no event shall the Trustee be liable for the selection of
investments or for investment losses incurred thereon. The Trustee shall have no
liability in respect of losses incurred as a result of the liquidation of any
such investment prior to its stated maturity or the failure of the party
directing such investment to provide timely written investment direction;
provided in each such case that the Trustee shall have acted strictly in
accordance with written directions received from the instructing party. The
Trustee shall have no obligation to invest or reinvest any amounts held
hereunder in the absence of such written investment direction.
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(9) In the event that the Trustee is also acting as Paying Agent,
transfer agent, or Registrar hereunder, the rights and protections afforded to
the Trustee pursuant to this Article 7 shall also be afforded to such Paying
Agent, transfer agent, or Registrar.
SECTION 7.03 Individual Rights of Trustee
The Trustee, in its individual or any other capacity, may become the
owner or pledgee of Notes and may otherwise deal with the Company or any
Affiliate of the Company with the same rights it would have if it were not
Trustee. However, in the event that the Trustee acquires any conflicting
interest it must eliminate such conflict within 90 days, apply to the SEC for
permission to continue as trustee or resign. Any Agent may do the same with like
rights and duties. However, the Trustee is also subject to Sections 7.10 and
7.11 hereof.
SECTION 7.04 Trustee's Disclaimer
The Trustee shall not be responsible for and makes no representation as
to the validity or adequacy of this Indenture or the Notes, it shall not be
accountable for the Company's use of the proceeds from the Notes or any money
paid to the Company or upon the direction of the Company under any provision of
this Indenture, it shall not be responsible for the use or application of any
money received by any Paying Agent other than the Trustee, and it shall not be
responsible for any statement or recital herein or any statement in the Notes or
any other document in connection with the sale of the Notes or pursuant to this
Indenture other than its certificate of authentication.
SECTION 7.05 Notice of Defaults
If a Default or Event of Default occurs and is continuing and if it is
known to a Responsible Officer of the Trustee, the Trustee shall mail to Holders
of Notes a notice of the Default or Event of Default within 90 days after it
occurs. Except in the case of a Default or Event of Default in payment of
principal of, premium, if any, interest or Liquidated Damages, if any, on any
Note pursuant to Section 6.01(1) or (2) hereof, the Trustee may withhold the
notice if it in good faith determines that withholding the notice is in the
interests of Holders of Notes.
SECTION 7.06 Reports by Trustee to Holders of Notes
Within 60 days after each September 15 beginning with September 15,
2000, and for so long as Notes remain outstanding, the Trustee shall mail to the
Holders of Notes a brief report dated as of such reporting date that complies
with TIA ss. 313(a) (but if no event described in TIA ss. 313(a) has occurred
within the twelve months preceding the reporting date, no report need be
transmitted). The Trustee also shall comply with TIA ss. 313(b)(2). The Trustee
shall also transmit by mail all reports as required by TIA ss. 313(c).
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A copy of each report at the time of its mailing to the Holders of
Notes shall be mailed to the Company and filed with the SEC and each stock
exchange on which the Notes are listed in accordance with TIA ss. 313(d). The
Company shall promptly notify the Trustee when the Notes are listed on any
securities exchange or of any delisting thereof.
SECTION 7.07 Compensation and Indemnity
The Company and each of the Guarantors, jointly and severally, shall
pay to the Trustee, from time to time, as may be agreed upon between them,
reasonable compensation for its acceptance of this Indenture and services
hereunder. The Trustee's compensation shall not be limited by any law on
compensation of a trustee of an express trust. The Company and each of the
Guarantors, jointly and severally, shall reimburse the Trustee promptly upon
request for all reasonable disbursements, advances and expenses incurred or made
by it in addition to the compensation for its services in accordance with any
provision of this Indenture (including, without limitation, the reasonable
compensation, expenses and disbursements of its counsel and of all agents and
other persons not regularly in its employ (A) in connection with the
preparation, execution and delivery of this Indenture, any waiver or consent
hereunder, any modification or termination hereof, or any Event of Default or
alleged Event of Default; (B) if an Event of Default occurs, in connection with
such Event of Default and collection, bankruptcy, insolvency and other
enforcement proceedings relating thereto; (C) in connection with the
administration of the Trustee's rights pursuant hereto; or (D) in connection
with any removal of the Trustee pursuant to Section 7.08 hereof), except such
disbursements, advances and expenses as may be attributable to its negligence or
bad faith.
The Company and each of the Guarantors, jointly and severally, shall
indemnify the Trustee and its officers, directors, employees and agents against
any and all losses, liabilities, obligations, damages, penalties, judgments,
actions, suits, proceedings, reasonable costs and expenses (including reasonable
fees and disbursements of counsel) of any kind whatsoever which may be incurred
by the Trustee in connection with any investigative, administrative or judicial
proceeding (whether or not such indemnified party is designated a party to such
proceeding) arising out of or in connection with the acceptance or
administration of its duties under this Indenture, including the costs and
expenses of enforcing this Indenture against the Company or the Guarantors
(including this Section 7.07) and defending itself against any claim (whether
asserted by the Company or any Holder or any other Person) or liability in
connection with the exercise or performance of any of its duties or powers
hereunder; provided, however, that the Company need not reimburse any expense or
indemnify against any loss, obligation, damage, penalty, judgment, action, suit,
proceeding, reasonable cost or expense (including reasonable fees and
disbursements of counsel) of any kind whatsoever which may be incurred by the
Trustee in connection with any investigative, administrative or judicial
proceeding (whether or not such indemnified party is designated a party to such
proceeding) in which it is determined that the Trustee acted with gross
negligence or bad faith. The Trustee shall notify the Company promptly of any
claim for which it may seek indemnity. Failure by the Trustee to so notify the
Company shall not relieve the Company or the Guarantors of any of their
obligations hereunder. The Company and the Guarantors shall
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defend the claim and the Trustee shall cooperate in the defense. The Trustee may
have separate counsel and the Company and each of the Guarantors, jointly and
severally, shall pay the reasonable fees and expenses of such counsel. The
Company and the Guarantors need not pay for any settlement made without its
consent, which consent shall not be unreasonably withheld.
The obligations of the Company and the Guarantors under this Section
7.07 (including the reasonable fees and expenses of its agents and counsel)
shall survive the resignation or removal of the Trustee and the satisfaction and
discharge of this Indenture and any rejection or termination under any
Bankruptcy Law.
To secure the Company's payment obligations in this Section 7.07, the
Trustee shall have a Lien prior to the Notes on all money or property held or
collected by the Trustee, except that held in trust to pay principal, premium,
if any, and interest and Liquidated Damages, if any, on particular Notes. Such
Lien shall survive the satisfaction and discharge of this Indenture.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.01(8) or (9) hereof occurs, the expenses and the
compensation for the services (including the fees and expenses of its agents and
counsel) are intended to constitute expenses of administration under any
Bankruptcy Law.
The Trustee shall comply with the provisions of TIA ss. 313(b)(2) to
the extent applicable.
SECTION 7.09 Replacement of Trustee
A resignation or removal of the Trustee and appointment of a successor
Trustee shall become effective only upon the successor Trustee's acceptance of
appointment as provided in this Section 7.08.
The Trustee may resign in writing at any time and be discharged from
the trust hereby created by so notifying the Company. The Holders of a majority
in principal amount of the then outstanding Notes may remove the Trustee by so
notifying the Trustee and the Company in writing. The Company may remove the
Trustee if:
(1) the Trustee fails to comply with Section 7.10 hereof;
(2) the Trustee is adjudged a bankrupt or an insolvent or an
order for relief is entered with respect to the Trustee under any
Bankruptcy Law;
(3) a Custodian or public officer takes charge of the Trustee or
its property; or
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(4) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Company shall promptly appoint a successor
Trustee. Within one year after the successor Trustee takes office, the Holders
of a majority in principal amount of the then outstanding Notes may appoint a
successor Trustee to replace the successor Trustee appointed by the Company.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company or the
Holders of at least 10% in principal amount of the then outstanding Notes may
petition any court of competent jurisdiction for the appointment of a successor
Trustee.
If the Trustee, after written request by any Holder of Notes who has
been a Holder of a Note for at least six months, fails to comply with Section
7.10 hereof, such Holder of a Note may, on behalf of itself and all others
similarly situated, petition any court of competent jurisdiction for the removal
of the Trustee and the appointment of a successor Trustee.
The Company shall give or cause to be given notice of each resignation
and each removal of the Trustee to all Holders in the manner provided herein.
Each notice shall include the name of the successor Trustee and the address of
its Corporate Trust Office.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon, the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Holders of Notes. The retiring Trustee shall promptly transfer,
after payment of all amounts owing to the Trustee pursuant to Section 7.07
hereof, all property held by it as Trustee to the successor Trustee; provided
that all sums owing to the Trustee hereunder have been paid and subject to the
Lien provided for in Section 7.07 hereof. Notwithstanding replacement of the
Trustee pursuant to this Section 7.08, the Company's obligations under Section
7.07 hereof shall continue for the benefit of the retiring Trustee.
SECTION 7.09 successor Trustee by Merger, etc.
If the Trustee consolidates, merges or converts into, or transfers all
or substantially all of its corporate trust business (including the trust
created by this Indenture) to, another corporation, the successor corporation
without any further act shall be the successor Trustee.
SECTION 7.10 Eligibility; Disqualification
There shall at all times be a Trustee hereunder that is a corporation
organized and doing business under the laws of the United States of America or
of any state or territory thereof or of the District of
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Columbia that is authorized under such laws to exercise corporate trustee power,
that is subject to supervision or examination by federal, state, territorial or
District of Columbia authorities and that has, or is a wholly owned subsidiary
of a bank holding company that has, a combined capital and surplus of at least
$25,000,000 as set forth in its most recent published annual report of
condition.
If at any time the Trustee shall cease to be eligible in accordance
with the provisions of this Section 7.10 it shall resign immediately in the
manner and with the effect specified in this Article 7.
This Indenture shall always have a Trustee who satisfies the
requirements of the TIA, including TIA ss.ss. 310(a)(1), (2) and (5). The
Trustee is subject to TIA ss. 310(b).
SECTION 7.11 Preferential Collection of Claims Against Company
The Trustee is subject to TIA ss. 311(a), excluding any creditor
relationship listed in TIA ss. 311(b). A Trustee who has resigned or been
removed shall be subject to TIA ss. 311(a) to the extent indicated therein.
ARTICLE 8.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
SECTION 8.01 Option to Effect Legal Defeasance or Covenant Defeasance
The Company may, at its option, evidenced by an Officers' Certificate,
at any time, with respect to the Notes, elect to have either Section 8.02 or
8.03 hereof be applied to all Notes and Subsidiary Guarantees then outstanding
upon compliance with the conditions set forth in this Article 8.
SECTION 8.02 Legal Defeasance and Discharge
Upon the Company's exercise under Section 8.01 hereof of the option
applicable to this Section 8.02, the Company and each Guarantor shall, subject
to the satisfaction of the conditions set forth in Section 8.04 hereof, be
deemed to have been discharged from their respective obligations with respect to
all Notes and Subsidiary Guarantees then outstanding on the date the conditions
set forth below are satisfied (hereinafter, "Legal Defeasance"). For this
purpose, Legal Defeasance means that the Company and any Guarantor shall be
deemed to have paid and discharged the entire Indebtedness represented by the
Notes and any Subsidiary Guarantee then outstanding, which shall thereafter be
deemed to be "outstanding" only for the purposes of Section 8.05 hereof and the
other Sections of this Indenture referred to in (a) and (b) below, and to have
satisfied all their other obligations under such Notes and Subsidiary
Guarantees, and this Indenture (and the Trustee, on demand of and at the expense
of the Company, shall execute proper instruments prepared by the Company
acknowledging the same), except for the following provisions which shall survive
until otherwise terminated
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or discharged hereunder: (a) the rights of Holders of Notes then outstanding to
receive solely from the trust fund described in Section 8.04 hereof, and as more
fully set forth in such Section, payments in respect of the principal of,
premium, if any, interest and Liquidated Damages, if any, on such Notes when
such payments are due, or on the Redemption Date, as the case may be, (b) the
Company's obligations with respect to such Notes under Sections 2.03, 2.04,
2.05, 2.06, 2.07, 2.10, 4.02 and 4.03 hereof, (c) the rights, powers, trusts,
duties, indemnities and immunities of the Trustee hereunder and the Company's
obligations in connection therewith and (d) this Article 8. Subject to
compliance with this Article 8, the Company may exercise its option under this
Section 8.02 notwithstanding the prior exercise of its option under Section 8.03
hereof with respect to the Notes.
SECTION 8.03 Covenant Defeasance
Upon the Company's exercise under Section 8.01 hereof of the option
applicable to this Section 8.03, the Company and each Guarantor shall, subject
to the satisfaction of the conditions set forth in Section 8.04 hereof, be
released from its obligations under the covenants contained in Sections 4.04,
4.05, 4.06, 4.08, 4.09, 4.10, 4.11, 4.12, 4.13, 4.14 , 4.15, 4.16, 4.17, 4.18
and 4.19 and Article 5 hereof with respect to the outstanding Notes and the
Subsidiary Guarantees on and after the date the conditions set forth below are
satisfied (hereinafter, "Covenant Defeasance"), and the Notes shall thereafter
be deemed not to be "outstanding" for the purposes of any direction, waiver,
consent or declaration or act of Holders (and the consequences of any thereof)
in connection with such covenants, but shall continue to be deemed "outstanding"
for all other purposes hereunder (it being understood that such Notes and the
Subsidiary Guarantees shall not be deemed outstanding for financial accounting
purposes). For this purpose, Covenant Defeasance means that, with respect to the
outstanding Notes and the Subsidiary Guarantees, the Company and any Guarantor
may omit to comply with and shall have no liability in respect of any term,
condition or limitation set forth in any such covenant, whether directly or
indirectly, by reason of any reference elsewhere herein to any such covenant or
by reason of any reference in any such covenant to any other provision herein or
in any other document, and such omission to comply shall not constitute a
Default or Event of Default under Section 6.01(3) or (4) hereof, but, except as
specified above, the remainder of this Indenture and such Notes shall be
unaffected thereby. In addition, upon the Company's exercise under Section 8.01
hereof of the option applicable to this Section 8.03, subject to the
satisfaction of the conditions set forth in Section 8.04 hereof, Sections
6.01(3) through 6.01(7) hereof shall not constitute Events of Default.
SECTION 8.04 Conditions to Legal Defeasance or Covenant Defeasance
The following shall be the conditions to the application of either
Section 8.02 or 8.03 hereof to the outstanding Notes and the Subsidiary
Guarantees:
In order to exercise either Legal Defeasance or Covenant Defeasance, as
applicable:
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(a) the Company must irrevocably deposit, or cause to be
deposited, with the Trustee, in trust, for the benefit of the Holders
of Notes and without retaining any legal interest in the corpus of such
trust, cash in U.S. dollars, non-callable Government Securities, or a
combination thereof, in such amounts as will be sufficient, in the
opinion of a nationally recognized firm of independent public
accountants, to pay and discharge, and which shall be applied by the
Trustee to pay and discharge, the principal of and premium, if any,
interest and Liquidated Damages, if any, due on the outstanding Notes
on the Stated Maturity thereof or on the applicable Redemption Date, as
the case may be, and the Company must specify whether the Notes are
being defeased to maturity or to a particular Redemption Date;
(b) in the case of Legal Defeasance, the Company shall have
delivered to the Trustee an Opinion of Counsel in the United States
reasonably acceptable to the Trustee confirming that (1) the Company
has received from, or there has been published by, the U.S. Internal
Revenue Service a ruling or (2) since the Closing Date, there has been
a change in the applicable U.S. federal income tax law, in either case
to the effect that, and based thereon such Opinion of Counsel shall
confirm that, the Holders of the outstanding Notes will not recognize
income, gain or loss for U.S. federal income tax purposes, as a result
of such Legal Defeasance and will be subject to U.S. federal income tax
on the same amounts, in the same manner and at the same times as would
have been the case if such Legal Defeasance had not occurred;
(c) in the case of Covenant Defeasance, the Company shall have
delivered to the Trustee an Opinion of Counsel in the United States
reasonably acceptable to the Trustee confirming that the Holders of the
outstanding Notes will not recognize income, gain or loss for U.S.
federal income tax purposes as a result of such Covenant Defeasance and
will be subject to U.S. federal income tax on the same amounts, in the
same manner and at the same times as would have been the case if such
Covenant Defeasance had not occurred;
(d) no Default or Event of Default shall have occurred and be
continuing on the date of such deposit (other than a Default or Event
of Default resulting from the borrowing of funds to be applied to such
deposit) or, insofar as Events of Default under Section 6.01(8) or (9)
hereof are concerned, at any time in the period ending on the 91st day
after the date of such deposit;
(e) such Legal Defeasance or Covenant Defeasance shall not
result in a breach or violation of, or constitute a default under, any
material agreement or instrument (other than this Indenture) to which
the Company or any of its Subsidiaries is a party or by which the
Company or any of its Subsidiaries is bound;
(f) the Company shall have delivered to the Trustee an Opinion
of Counsel to the effect that after the 91st day following the deposit,
the trust funds will not be
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subject to the effect of any applicable bankruptcy,insolvency,
reorganization or similar laws affecting creditors' rights generally;
(g) the Company shall have delivered to the Trustee an
Officers' Certificate stating that the deposit was not made by the
Company with the intent of preferring the Holders of Notes over the
other creditors of the Company or with the intent of defeating,
hindering, delaying or defrauding creditors of the Company or others;
(h) the Company shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that all
conditions precedent provided for or relating to the Legal Defeasance
or the Covenant Defeasance, as the case may be, have been complied
with; and
(i) the Trustee shall have received such other documents and
assurances as the Trustee shall reasonably require.
SECTION 8.05 Deposited Money and Government Securities to
be Held in Trust; Other Miscellaneous Provisions
(a) Subject to the provisions of the last paragraph of Section 4.03
hereof and to Section 8.06 hereof, all money and Government Securities
(including the proceeds thereof) deposited with the Trustee (or other qualifying
trustee, collectively for purposes of this Section 8.05, the "Trustee") pursuant
to Section 8.04 hereof in respect of the Notes then outstanding shall be held in
trust and applied by the Trustee, in accordance with the provisions of such
Notes and this Indenture, to the payment, either directly or through any Paying
Agent as the Trustee may determine, to the Holders of such Notes of all sums due
and to become due thereon in respect of principal, premium, if any, interest and
Liquidated Damages, if any, but such money and Government Securities need not be
segregated from other funds except to the extent required by law.
(b) The Company shall pay and indemnify the Trustee against any tax,
fee or other charge imposed on or assessed against the cash or Government
Securities deposited pursuant to Section 8.04 hereof or the principal and
interest received in respect thereof other than any such tax, fee or other
charge which by law is for the account of the Holders of the Notes then
outstanding. This Section 8.05(b) shall survive the termination of this
Indenture, and the earlier removal or resignation of the Trustee.
SECTION 8.06 Repayment to Company
The Trustee shall deliver or pay to the Company from time to time upon
receipt of a written Company Request any money or Government Securities held by
it as provided in Section 8.04 hereof which, in the opinion of a nationally
recognized firm of independent public accountants expressed in a written
certification thereof delivered to the Trustee (which may be the opinion
delivered under Section 8.04(a) hereof) accompanied by an Officers'
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Certificate, are in excess of the amount thereof that would then be required to
be deposited to effect an equivalent Legal Defeasance or Covenant Defeasance.
SECTION 8.07 Reinstatement
If the Trustee or Paying Agent is unable to apply any United States
dollars or Government Securities in accordance with Section 8.02 or 8.03 hereof,
as the case may be, by reason of any order or judgment of any court or
governmental authority enjoining, restraining or otherwise prohibiting such
application, then the Company's and any Guarantor's obligations under this
Indenture and the Notes shall be revived and reinstated as though no deposit had
occurred pursuant to Section 8.02 or 8.03 hereof, as the case may be, until such
time as the Trustee or Paying Agent is permitted to apply all such money in
accordance with Section 8.02 or 8.03 hereof, as the case may be; provided,
however, that if the Company or any Guarantor makes any payment of principal of,
premium, if any, or interest or Liquidated Damages, if any, on any Notes
following the reinstatement of its obligations, the Company or such Guarantor
shall be subrogated to the rights of the Holders of such Notes to receive such
payment from the money or Government Securities held by the Trustee or Paying
Agent.
ARTICLE 9.
AMENDMENTS
SECTION 9.01 Without Consent of Holders
Notwithstanding Section 9.02 of this Indenture, the Company, the
Guarantors and the Trustee may amend or supplement this Indenture or the Notes
without the consent of any Holder of a Note:
(1) to cure any ambiguity, defect or inconsistency;
(2) to provide for uncertificated Notes in addition to or in
place of certificated Notes;
(3) to provide for assumption of the Company's or any
Guarantor's obligations to the Holders of the Notes in the case of a
merger, consolidation or sale of assets;
(4) to provide security for the Notes;
(5) to add a Guarantor under this Indenture;
(6) to make any change that would provide any additional
rights or benefits to the Holders of the Notes or that does not
adversely affect the legal rights hereunder of any Holder of the Notes;
or
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(7) to comply with requirements of the SEC in order to effect
or maintain the qualification of this Indenture under the TIA.
Upon the written request of the Company, and upon receipt by the
Trustee of an Officers' Certificate and an Opinion of Counsel in compliance with
Section 1.05 hereof, the Trustee shall join with the Company and the Guarantors
in the execution of any amendment or supplemental indenture authorized or
permitted by the terms of this Indenture and to make any further appropriate
agreements and stipulations that may be therein contained, but the Trustee shall
not be obligated to enter into any such amendment or supplemental indenture that
adversely affects its own rights, duties or immunities under this Indenture or
otherwise.
SECTION 9.02 With Consent of Holders
Except as provided below in this Section 9.02, this Indenture and the
Notes may be amended or supplemented with the consent of the Holders of at least
a majority in principal amount of the Notes then outstanding (including, without
limitation, consents obtained in connection with a purchase of, or tender offer
or exchange offer for, Notes), and, subject to Sections 6.04 and 6.07 hereof,
any existing default or compliance with any provision of this Indenture or the
Notes may be waived with the consent of the Holders of a majority in principal
amount of the then outstanding Notes (including consents obtained in connection
with a tender offer or exchange offer for Notes).
Upon the request of the Company, and upon the filing with the Trustee
of evidence satisfactory to the Trustee of the consent of the Holders of Notes
as aforesaid, and upon receipt by the Trustee of an Officers' Certificate and an
Opinion of Counsel in compliance with Section 1.05 hereof, the Trustee shall
join with the Company and the Guarantors in the execution of an amendment or
supplemental indenture unless such amendment or supplemental indenture adversely
affects the Trustee's own rights, duties or immunities under this Indenture or
otherwise, in which case the Trustee may in its discretion, but shall not be
obligated to, enter into such amendment or supplemental indenture.
It shall not be necessary for the consent of the Holders under this
Section 9.02 to approve the particular form of any proposed supplemental
indenture or amendment, but it shall be sufficient if such consent approves the
substance thereof.
After an amendment, supplement or waiver under this Section 9.02
becomes effective, the Company shall mail to the Holders of each Note affected
thereby a notice briefly describing the amendment, supplement or waiver. Any
failure of the Company to mail such notice, or any defect therein, shall not,
however, in any way impair or affect the validity of any such amendment or
supplemental indenture or waiver. Subject to Sections 6.04 and 6.07 hereof, the
Holders of a majority in aggregate principal amount of the Notes then
outstanding may waive compliance in a particular instance by the Company with
any provision of this Indenture or the Notes. However, without the consent of
each Holder of Notes affected, an amendment or waiver may not (with respect to
any Note held by a non-consenting Holder):
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(1) reduce the principal amount of the Notes whose Holders
must consent to anc amendment, supplement or waiver;
(2) reduce the principal of or change the fixed maturity of
any Note or alter the provisions with respect to the redemption of the
Notes or, if the Company has become obligated to make a Change of
Control Offer or an Asset Sale Offer, amend, change or modify the
obligation of the Company to make or consummate such Change of Control
Offer or Asset Sale Offer;
(3) reduce the rate of or change the time for payment of
interest or Liquidated Damages, if any, on any Note;
(4) waive a Default or Event of Default in the payment of
principal of or premium, interest or Liquidated Damages, if any, on the
Notes (except a rescission of acceleration of the Notes by the Holders
of at least a majority in aggregate principal amount of the Notes and
a waiver of the payment default that resulted from such acceleration);
(5) make any Note payable in money other than that stated in
such Note; (6) make any change in Section 6.04 or Section 6.07;
(7) waive a redemption payment with respect to any Note;
(8) except pursuant to Section 11.05 hereof, release any
Guarantor from its Subsidiary Guarantee; or
(9) make any change in the foregoing amendment and waiver
provisions of this Article 9.
SECTION 9.03 Compliance with Trust Indenture Act
Every amendment or supplement to this Indenture or the Notes shall be
set forth in an amendment or supplemental indenture that complies with the TIA
as then in effect.
SECTION 9.04 Revocation and Effect of Consents
Until an amendment, supplement or waiver becomes effective, a consent
to it by a Holder of a Note is a continuing consent by the Holder of a Note and
every subsequent Holder of a Note or portion of a Note that evidences the same
debt as the consenting Holder's Note, even if notation of the consent is not
made on any Note. However, any such Holder of a Note or subsequent Holder of a
Note may revoke the consent as to such Holder's Note or portion of such Note by
written notice to the Trustee received before the date the amendment, supplement
or waiver becomes effective. An
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amendment, supplement or waiver becomes effective in accordance with its terms
and thereafter binds every Holder of Notes, except as provided in Section 9.02
hereof.
SECTION 9.05 Notation on or Exchange of Notes
The Trustee may, but shall not be required to, place an appropriate
notation about an amendment, supplement or waiver on any Note thereafter
authenticated. The Company in exchange for all Notes may issue and the Trustee
shall authenticate new Notes that reflect the amendment, supplement or waiver.
Failure to make the appropriate notation or issue a new Note shall not
affect the validity and effect of such amendment, supplement or waiver.
SECTION 9.06 Trustee to Sign Amendments, etc.
The Trustee shall sign any amended or supplemental indenture or waiver
authorized pursuant to this Article 9 if the amendment or supplement or waiver
does not adversely affect the rights, duties, liabilities or immunities of the
Trustee. If it does, the Trustee may, but need not, sign it. In signing or
refusing to sign any amended or supplemental indenture or waiver, the Trustee
shall be entitled to receive, if requested, an indemnity satisfactory to it and
to receive and, subject to Section 7.01 hereof, shall be fully protected in
relying upon an Officers' Certificate and an Opinion of Counsel as conclusive
evidence that such amendment or supplemental indenture or waiver is authorized
or permitted by this Indenture, that it is not inconsistent herewith, and that
it will be valid and binding upon the Company and the Guarantors in accordance
with its terms. The Company may not sign an amendment or supplemental indenture
or waiver until the Board of Directors of the Company approves it.
ARTICLE 10.
SATISFACTION AND DISCHARGE
Section 10.01 Satisfaction and Discharge of Indenture
This Indenture shall be discharged and will cease to be of further
effect as to all Notes issued hereunder when:
(1) either:
(a) all Notes that have been authenticated (except
lost, stolen or destroyed Notes that have been replaced or
paid and Notes for whose payment money has theretofore been
deposited in trust and thereafter repaid to the Company) have
been delivered to the Trustee for cancellation; or
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(b) all Notes that have not been delivered to the
Trustee for cancellation have become due and payable by reason
of the giving of a notice of redemption or otherwise or will
become due and payable within one year or are to be called for
redemption within one year under irrevocable arrangements
satisfactory to the Trustee for the giving of notice of
redemption by the Trustee in the name of and at the expense of
the Company and the Company has irrevocably deposited or
caused to be deposited with the Trustee, in trust, for the
benefit of the Holders of the Notes, cash in U.S. dollars,
non-callable Government Securities, or a combination thereof,
in such amounts as will be sufficient, without consideration
of any reinvestment of interest, to pay and discharge the
entire indebtedness on the Notes not theretofore delivered to
the Trustee for cancellation for principal, premium and
Liquidated Damages, if any, and accrued interest to the date
of maturity or redemption;
(2) such deposit, if made pursuant to the preceding clause
1(b), will not result in a breach or violation of, or constitute a
default under, any material agreement or instrument to which the
Company or any of its Subsidiaries is a party or by which the Company
or any of its Subsidiaries is bound;
(3) the Company has paid or caused to be paid all sums payable
by it under this Indenture;
(4) the Company has delivered irrevocable instructions to the Trustee
to apply all money and Government Securities deposited pursuant to the
preceding clause 1(b) toward the payment of the Notes at maturity or
the redemption date, as the case may be;
(5) the Company has delivered to the Trustee an Officers'
Certificate stating that the deposit, if made pursuant to the preceding
clause 1(b), was not made by the Company with the intent of preferring
the Holders of Notes over the other creditors of the Company or with
the intent of defeating, hindering, delaying or defrauding creditors of
the Company or others;
(6) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent provided for or relating to the satisfaction and discharge of
this Indenture have been complied with; and
(7) the Trustee has received such other documents and
assurances as the Trustee shall reasonably require.
SECTION 10.02 Application of Trust Money
Subject to the provisions of the last paragraph of Section 4.03 all
money and Government Securities (including the proceeds thereof) deposited with
the Trustee pursuant to
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Section 10.01 hereof 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 as the Trustee may determine, to Persons
entitled thereto, of the principal (and premium, if any) and interest and
Liquidated Damages, if any, for whose payment such money has been deposited with
the Trustee.
If the Trustee or Paying Agent is unable to apply any money or
Government Securities in accordance with Section 10.01 hereof by reason of any
order or judgment of any court or governmental authority enjoining, restraining
or otherwise prohibiting such application, the Company's and any Guarantor's
obligations under this Indenture and the Notes shall be revived and reinstated
as though no such deposit had occurred pursuant to Section 10.01 hereof;
provided that if the Company or any Guarantor has made any payment of principal
of, premium, if any, or interest or Liquidated Damages, if any, on, any Notes
following the reinstatement of its obligations, the Company or such Guarantor
shall be subrogated to the rights of the Holders of such Notes to receive such
payment from the money held by the Trustee or Paying Agent.
ARTICLE 11.
SUBSIDIARY GUARANTEES
SECTION 11.01 Subsidiary Guarantee
For value received, the Guarantors, jointly and severally, hereby
unconditionally guarantee to the Holders of the Notes and to the Trustee the due
and punctual payment of the principal of, premium, if any, and interest and
Liquidated Damages, if any, (including interest and Liquidated Damages, if any,
accruing on or after the filing of a petition in bankruptcy or reorganization
relating to the Company, whether or not a claim for post-filing interest or
Liquidated Damages is allowed in such proceeding) on, the Notes, and all other
amounts payable by the Company under the Notes and under this Indenture
(collectively, the "Guaranteed Obligations"), when and as the same shall become
due and payable, whether at the stated maturity or by declaration of
acceleration, call for redemption or otherwise, according to the terms of the
Notes and this Indenture. Each Subsidiary Guarantee pursuant to this Article 11
constitutes a guarantee of payment in full when due and not merely a guarantee
of collectibility. Notwithstanding the foregoing, each Guarantor's liability
under this Section 11.01 shall be limited to the maximum amount that would not
result in such Guarantor's Subsidiary Guarantee under this Section 11.01
constituting a fraudulent conveyance or fraudulent transfer under applicable
law.
SECTION 11.02 Obligation of the Guarantors Unconditional
Except as provided in Section 11.05 hereof, the obligations of each
Guarantor hereunder shall be as aforesaid absolute and unconditional, and shall
not be impaired,
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modified, released or limited by any occurrence or condition
whatsoever, including, without limitation, (i) any compromise, settlement,
release, waiver, renewal, extension, indulgence or modification of, or any
change in, any of the obligations and liabilities of the Company contained in
the Notes or this Indenture, (ii) any impairment, modification, release or
limitation of the liability of the Company or its estate in bankruptcy, or any
remedy for the enforcement thereof, resulting from the operation of any present
or future provision of any applicable Bankruptcy Law, as amended, or other
statute or from the decision of any court, (iii) the assertion or exercise by
the Company, the Holders of Notes or the Trustee of any rights or remedies under
the Notes or this Indenture or their delay in or failure to assert or exercise
any such rights or remedies, (iv) the assignment or the purported assignment of
any property as additional security for the Notes, including all or any part of
the rights of the Company under this Indenture, (v) the extension of the time
for payment by the Company of any payments or other sums or any part thereof
owing or payable under any of the terms and provisions of the Notes or this
Indenture or of the time for performance by the Company of any other obligations
under or arising out of any such terms and provisions or the extension or the
renewal of any thereof, (vi) the modification or amendment (whether material or
otherwise) of any duty, agreement or obligation of the Company set forth in this
Indenture or the Notes, (vii) the voluntary or involuntary liquidation,
dissolution, sale or other disposition of all or substantially all of the
assets, marshalling of assets and liabilities, receivership, insolvency,
bankruptcy, assignment for the benefit of creditors, reorganization,
arrangement, composition or readjustment of, or other similar proceeding
affecting, the Company, or any of the Guarantors or any of their respective
assets, or the disaffirmance of this Subsidiary Guarantee pursuant to this
Article 11 or the Notes or this Indenture in any such proceeding, (viii) the
release or discharge of the Company from the performance or observance of any
agreement, covenant, term or condition contained in any of such instruments by
operation of law, (ix) the unenforceability of the Notes or this Indenture or
any Subsidiary Guarantee pursuant to this Article 11, or (x) any other
circumstance which might otherwise constitute a legal or equitable discharge of
a surety or guarantor.
SECTION 11.03 Waiver Relating to Subsidiary Guarantees
Each Guarantor hereby (i) waives diligence, presentment, demand of
payment, filing of claims with a court in the event of the merger, insolvency or
bankruptcy of the Company, any right to require a proceeding first against the
Company or to realize on any collateral, protest or notice with respect to the
Guaranteed Obligations and all demands whatsoever, (ii) acknowledges that any
agreement, instrument or document evidencing the Guaranteed Obligations may be
transferred and that the benefit of its obligations hereunder shall extend to
each holder of any agreement, instrument or document evidencing the Guaranteed
Obligations without notice to them, and (iii) covenants that its Subsidiary
Guarantee pursuant to this Article 11 will not be discharged except pursuant to
Section 11.04 hereof or by complete payment and performance of the Guaranteed
Obligations and of its Subsidiary Guarantee pursuant to this Article 11.
SECTION 11.04 Guarantors May Consolidate, etc., on Certain Terms
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Subject to Section 11.05 hereof, no Guarantor (including any existing
or future Restricted Subsidiary that becomes an additional Guarantor) may
consolidate with or merge with or into (whether or not such Guarantor is the
surviving Person) another Person, whether or not affiliated with such Guarantor,
or sell, assign, transfer, lease, convey or otherwise dispose of all or
substantially all of its properties or assets in one or more related
transactions to another Person, unless (i) the Person formed by or surviving
such consolidation or merger (if other than such Guarantor) or to which such
sale, assignment, transfer, lease, conveyance or other disposition shall have
been made is a Person organized and existing under the laws of the United States
of America, any state thereof, or the District of Columbia and expressly
assumes, pursuant to a supplemental indenture in form and substance reasonably
satisfactory to the Trustee, all the obligations of such Guarantor under the
Notes and this Indenture and (ii) immediately after giving effect to such
transaction, no Default or Event of Default exists. In connection with any
consolidation or merger contemplated by this Section 11.04, the Company shall
deliver to the Trustee prior to the consummation of the proposed transaction an
Officers' Certificate and an Opinion of Counsel, each stating that such
consolidation or merger and such supplemental indenture comply with this Article
11 and that all conditions precedent herein provided relating to such
transaction have been complied with.
The provisions of clause (i) of the preceding paragraph shall not apply
if the Person formed by or surviving the relevant consolidation or merger or to
which the relevant sale, assignment, transfer, lease, conveyance or other
disposition shall have been made is the Company, a Guarantor or a Person that is
not, after giving effect to such transaction, a Restricted Subsidiary of the
Company.
SECTION 11.05 Release of Subsidiary Guarantee
In the event (i) of a merger or consolidation to which a Guarantor is a
party, then the Person formed by or surviving such merger or consolidation (if,
after giving effect to such transaction, such Person is neither the Company nor
a Restricted Subsidiary of the Company) shall be released and discharged from
the obligations of such Guarantor under its Subsidiary Guarantee or (ii) of a
sale or other disposition (whether by merger, consolidation or otherwise) of all
of the Equity Interests of a Guarantor at the time owned by the Company and its
Restricted Subsidiaries to any Person that, after giving effect to such
transaction, is neither the Company nor a Restricted Subsidiary of the Company,
then such Guarantor shall be released and discharged from its obligations under
its Subsidiary Guarantee or (iii) that a Guarantor has been effectively
designated by the Board of Directors of the Company as an Unrestricted
Subsidiary in accordance with the terms of this Indenture, then such Guarantor
shall be released and discharged from its obligations under its Subsidiary
Guarantee; provided that, in the case of each of clauses (i), (ii) and (iii)
above, (A) the relevant transaction or designation, as the case may be, is in
compliance with the terms of this Indenture, (B) immediately after giving effect
to such transaction or designation, no Default or Event of Default shall exist
and (C) the Person being released and discharged shall have been released and
discharged from all obligations it might otherwise have under Guarantees of
Indebtedness of the Company or any of its Restricted Subsidiaries.
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Upon any Guarantor ceasing to be a Guarantor pursuant to any provision
of this Indenture, at the request of the Company which request shall be
accompanied by an Officers' Certificate and an Opinion of Counsel, each
certifying that no Event of Default (or event or condition which with the giving
of notice or the passage of time would become an Event of Default) exists and is
continuing and that all conditions precedent herein provided relating to this
Section 11.05 have been complied with, the Trustee shall execute and deliver an
appropriate instrument evidencing any such release. Any Guarantor not released
from its obligations under its Guarantee shall remain liable for the full amount
of principal of, premium, if any, and interest and Liquidated Damages, if any,
on the Notes and for the other obligations of such Guarantor under this
Indenture as and to the extent provided in this Indenture.
SECTION 11.06 Contribution of Guarantors
In the event that any Guarantor (such Guarantor being herein referred
to as the "Funding Party") shall make a payment under its Subsidiary Guarantee
pursuant to this Article 11, it shall be entitled to a contribution from each
other Guarantor (each, a "Contributor") in the amount of such Contributor's pro
rata share of the amount of such payment by such Funding Party so long as
exercise of such right does not impair the rights of Holders of Notes under any
Subsidiary Guarantee. The failure of a Contributor to discharge its obligations
under this Section 11.06 shall not affect the obligations of any Guarantor under
its Subsidiary Guarantee pursuant to this Article 11. The obligations under this
Section 11.06 shall be unaffected by any of the events described in Section
11.02 or any comparable events pertaining to the Funding Party, its Subsidiary
Guarantee or the undertakings in this Section 11.06.
SECTION 11.07. Reinstatement of Subsidiary Guarantees
Each Guarantee pursuant to this Article 11 shall, to the fullest
extent permitted by law, continue to be effective or be reinstated, as the case
may be, if at any time payment and performance of any of the Guaranteed
Obligations is, pursuant to applicable law, rescinded or reduced in amount, or
must otherwise be restored or returned by any Holder of Notes or by the Trustee,
whether as a "voidable preference," "fraudulent conveyance," "fraudulent
transfer," or otherwise, all as though such payment or performance had not been
made. In the event that any payment, or any part thereof, is rescinded, reduced,
restored or returned, the Guaranteed Obligations shall, to the fullest extent
permitted by law, be reinstated and deemed reduced only by such amount paid and
not so rescinded, reduced, restored or returned.
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ARTICLE 12.
MISCELLANEOUS
SECTION 12.01 Trust Indenture Act Controls
If any provision of this Indenture limits, qualifies or conflicts with
the duties imposed by TIA ss. 318(c), the imposed duties shall control.
SECTION 12.02 Notices
Any notice or communication by the Company, any Guarantor or the
Trustee to the others is duly given if in writing and delivered by hand
delivery, by first-class mail (registered or certified, return receipt
requested), by facsimile or by overnight air courier guaranteeing next day
delivery, to the others' addresses as follows:
If to the Company or any Guarantor:
Sbarro, Inc.
401 Broadhollow Road
Melville, New York 11747
Attention: Chief Financial Officer
Telecopier No.: (516) 715-4185
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with a copy to:
Sbarro, Inc.
401 Broadhollow Road
Melville, New York 11747
Attention: General Counsel
Telecopier No.: (516) 715-4186
with a copy to:
Parker Chapin Flattau & Klimpl, LLP
1211 Avenue of the Americas
New York, New York 10036
Attention: Richard A. Rubin
Telecopier No.: (212) 704-6288
If to the Trustee:
Firstar Bank, N.A.
Corporate Trust Department
101 East 5th Street, 12th Floor
St. Paul, Minnesota 55101
Attention: Frank P. Leslie, III
Telecopier No.: (651) 229-6415
The Company, any Guarantor or the Trustee by notice to the others may
designate additional or different addresses of subsequent notices or
communications.
All notices and communications (other than those sent to Holders of
Notes) shall be deemed to have been duly received: at the time delivered by
hand, if personally delivered; five Business Days after being deposited in the
mail, postage prepaid, if mailed; when receipt is confirmed, if sent by
facsimile; and the next Business Day after timely delivery to the courier, if
sent by overnight air courier guaranteeing next day delivery.
Any notice or communication to a Holder of Notes shall be mailed by
first-class mail, certified or registered, return receipt requested, to his
address shown on the register kept by the Registrar. Failure to mail a notice or
communication to a Holder of Notes or any defect in it shall not affect its
sufficiency with respect to other Holders of Notes.
If a notice or communication is mailed in the manner provided above
within the time prescribed, it is duly given, whether or not the addressee
receives it.
If the Company mails a notice or communication to Holders of Notes, it
shall mail a copy to the Trustee and each Agent at the same time.
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SECTION 12.03 Communication by Holders with Other Holders
Holders of Notes may communicate pursuant to TIA ss.312(b) with other
Holders of Notes with respect to their rights under this Indenture or the Notes.
The Company, any Guarantor, the Trustee, the Registrar and anyone else shall
have the protection of TIA ss.312(c). Upon qualification of this Indenture under
the TIA, the Trustee shall otherwise comply with TIA ss.312(b).
SECTION 12.04 Certificate and Opinion as to Conditions Precedent
Upon any request or application by the Company and/or any Guarantor to
the Trustee to take any action under this Indenture, the Company and/or any
Guarantor, as the case may be, shall furnish to the Trustee:
(1) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set
forth in Section 1.05 hereof) stating that, in the opinion of the
signers, all conditions precedent and covenants, if any provided for in
this Indenture relating to the proposed action have been complied with;
and
(2) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set
forth in Section 1.05 hereof) stating that, in the opinion of such
counsel, all such conditions precedent and covenants have been complied
with.
SECTION 12.05 Rules by Trustee and Agents
The Trustee may make reasonable rules for action by or at a meeting of
Holders of Notes. The Registrar or Paying Agent may make reasonable rules and
set reasonable requirements for its functions.
SECTION 12.06 Legal Holidays
In any case where any Interest Payment Date, any date established for
payment of Defaulted Interest pursuant to Section 2.12 hereof, or any Maturity
with respect to any Note shall not be a Business Day, then (notwithstanding any
other provisions of this Indenture) or the Notes payment of interest or
Liquidated Damages, if any, or principal (and premium, if any) 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 date established for
payment of Defaulted Interest pursuant to Section 2.12 hereof or Maturity, and
no interest shall accrue with respect to such payment for the period from and
after such Interest Payment Date or date established for payment of Defaulted
Interest pursuant to Section 2.12 or Maturity, as the case may be, to the next
succeeding Business Day.
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SECTION 12.07 No Personal Liability of Directors, Officers, Employees,
Incorporators and Stockholders
No director, officer, employee, incorporator or stockholder of the
Company or any Guarantor, as such, shall have any liability for any obligations
of the Company or such Guarantor under the Notes or this Indenture or for any
claim based on, in respect of, or by reason of, such obligations or their
creation. Each Holder of Notes by accepting a Note waives and releases all such
liability. The waiver and release shall be part of the consideration for the
issuance of the Notes.
SECTION 12.08 Governing Law; Submission to Jurisdiction
THIS INDENTURE AND THE NOTES SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK, AS APPLIED TO
CONTRACTS MADE AND PERFORMED ENTIRELY WITHIN THE STATE OF NEW YORK, WITHOUT
REGARD TO PRINCIPLES OF CONFLICT OF LAWS. BY THE EXECUTION AND DELIVERY OF THIS
INDENTURE, EACH OF THE COMPANY AND THE GUARANTORS SUBMITS TO THE JURISDICTION OF
ANY FEDERAL OR STATE COURT IN THE STATE OF NEW YORK IN ANY SUIT OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS INDENTURE.
SECTION 12.09 No Adverse Interpretation of Other Agreements
This Indenture may not be used to interpret any other indenture, loan
or debt agreement of the Company or its Subsidiaries or of any other Person. Any
such indenture, loan or debt agreement may not be used to interpret this
Indenture.
SECTION 12.10 Successors and Assigns
All covenants and agreements in this Indenture and the Notes by the
Company and the Guarantors shall bind their respective successors and assigns.
All covenants and agreements in this Indenture by the Trustee shall bind its
successor and assigns.
SECTION 12.11 Severability
In case any one or more of the provisions in this Indenture or in the
Notes shall be held invalid, illegal or unenforceable in any jurisdiction, in
any respect for any reason, the validity, legality and enforceability of any
such provision in every other jurisdiction and in every other respect, and of
the remaining provisions, shall not in any way be affected or impaired thereby,
it being intended that all of the provisions hereof shall be enforceable to the
full extent permitted by law.
-101-
<PAGE>
SECTION 12.12 Counterpart Originals
This Indenture may be executed in any number of counterparts, each of
which shall be deemed to be an original, but all of them together shall
represent the same agreement.
SECTION 12.13 Table of Contents, Headings, etc.
The Table of Contents, Cross-Reference Table and Headings of the
Articles and Sections of this Indenture have been inserted for convenience of
reference only, are not to be considered a part hereof and shall in no way
modify or restrict any of the terms or provisions hereof.
[Signatures on following pages]
-102-
<PAGE>
IN WITNESS WHEREOF, the undersigned have caused this Indenture to be
executed as of the date first above written.
SBARRO, INC.
By: /s/ Mario Sbarro
-----------------------------------------
Name: Mario Sbarro
Title: Chairman of the Board, President
and Chief Executive Officer
[Indenture Signature Page for the Company]
<PAGE>
SBARRO PROPERTIES, INC.
SBARRO AMERICA, INC.
SBARRO AMERICA PROPERTIES INC.
SBARRO'S OF TEXAS, INC.
ITALIAN FOOD FRANCHISING, INC.
COREST MANAGEMENT, INC.
FRANREST MANAGEMENT, INC.
LARKFIELD EQUIPMENT CORP.
SBARRO FOODS, INC.
SBARRO OF ROOSEVELT FIELD, INC.
SBARRO OF VIRGINIA, INC.
DEMEFAC LEASING CORP.
FRANCHISE CONTRACTING AND EQUIPMENT CORP.
MELVILLE ADVERTISING AGENCY INC.
SBARRO COMMACK, INC.
SBARRO OF LAS VEGAS, INC.
SBARRO OF HAWAII, INC.
SBARRO PENNSYLVANIA, INC.
SBARRO FRANCHISE ASSOCIATES, INC.
SBARRO H.D.F., INC.
N.H.D., INC.
BUSHRANGER HOLDING, INC.
MELVILLE PIZZERIA, INC.
SBARRO ONE WORLD TRADE, INC.
401 BROAD HOLLOW REALTY CORP.
401 BROAD HOLLOW FITNESS CENTER CORP.
SBARRO BISTROS, INC.
SYOSSET BISTRO, INC.
Each by its authorized officer:
/s/ Mario Sbarro
By:__________________________________
Name: Mario Sbarro
Title: President
<PAGE>
SBARRO DOMINION LIMITED
/s/ Mario Sbarro
By: _________________________________
Name: Mario Sbarro
Title: President
/s/ Joseph Sbarro
By: __________________________________
Name: Joseph Sbarro
Title: Secretary
[Indenture Signature Page for Guarantors]
<PAGE>
FIRSTAR BANK, N.A., as Trustee
/s/ Frank P. Leslie
By:________________________________
Name: Frank P. Leslie
Title: Vice President
[Indenture Signature Page for Trustee]
<PAGE>
EXHIBIT A
[Face of Note]
FOR GLOBAL NOTES: THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE
INDENTURE GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE
BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY
CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY
BE REQUIRED PURSUANT TO SECTION 2.06 OF THE INDENTURE, (II) THIS GLOBAL NOTE MAY
BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE
INDENTURE, (III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR
CANCELLATION PURSUANT TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL NOTE
MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF
THE COMPANY.]
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR
SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S.
PERSONS EXCEPT AS SET FORTH BELOW. BY ITS ACQUISITION HEREOF, THE HOLDER (1)
REPRESENTS THAT IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A
UNDER THE SECURITIES ACT), (2) AGREES THAT IT WILL NOT, WITHIN TWO YEARS AFTER
THE ORIGINAL ISSUANCE OF THIS SECURITY RESELL OR OTHERWISE TRANSFER THIS
SECURITY EXCEPT (A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF, (B) INSIDE THE
UNITED STATES TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A
UNDER THE SECURITIES ACT, (C) INSIDE THE UNITED STATES TO AN ACCREDITED INVESTOR
(AS DEFINED IN RULE 501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT) THAT,
PRIOR TO SUCH TRANSFER, FURNISHES (OR HAS FURNISHED ON ITS BEHALF BY A U.S.
BROKER-DEALER) TO THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS
AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER OF THIS SECURITY (THE
FORM OF WHICH LETTER CAN BE OBTAINED FROM THE TRUSTEE FOR THIS SECURITY), (D)
OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904
OF REGULATION S UNDER THE SECURITIES ACT, (E) PURSUANT TO THE EXEMPTION FROM
REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE), OR
(F) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND
(3) AGREES THAT IT WILL GIVE TO EACH PERSON TO WHOM THIS SECURITY IS TRANSFERRED
A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY
TRANSFER OF THIS SECURITY WITHIN ONE YEAR AFTER THE ORIGINAL ISSUANCE OF THIS
SECURITY, IF THE PROPOSED TRANSFEREE IS AN ACCREDITED INVESTOR, THE HOLDER MUST,
PRIOR TO SUCH TRANSFER, FURNISH TO THE TRUSTEE AND THE COMPANY SUCH
CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS EITHER OF THEM MAY
REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO
<PAGE>
AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT. AS USED HEREIN, THE TERMS "OFFSHORE
TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO THEM
BY REGULATION S UNDER THE SECURITIES ACT.
CUSIP: ______________
No. ____ U.S.$______________
SBARRO, INC.
11% Senior Notes due 2009
SBARRO, INC., a New York corporation. for value received, promises to
pay to __________________________, or its registered assigns, the principal sum
of _____________________________________ AND NO/100 UNITED STATES DOLLARS
(U.S.$___________) on September 15, 2009.
Interest Payment Dates: March 15 and September 15
Record Dates: March 1 and September 1
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.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
-2-
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Note to be signed
manually or by facsimile by its duly authorized officers.
SBARRO, INC.
By ___________________________________
Name:
Title:
By: ___________________________________
Name:
Title:
Dated:
(Trustee's Certificate of Authentication)
This is one of the Notes referred to
in the within-mentioned Indenture:
FIRSTAR BANK, N.A., as Trustee
By: __________________________________
Authorized Signatory
-3-
<PAGE>
[Reverse Side of Note]
SBARRO, INC.
11% Senior Notes due 2009
Capitalized terms used herein shall have the meanings assigned to
them in the Indenture referred to below unless otherwise indicated.
1 Interest.
SBARRO, INC., a New York corporation (the "Company", which term
includes any successor under the Indenture hereinafter referred to), promises to
pay interest on the principal amount of this Note at 11% per annum from
Septemper 28, 1999 until maturity and to pay Liquidated Damages, if any, payable
pursuant to the Registration Rights Agreement referred to below. The Company
will pay interest and Liquidated Damages, if any, semi-annually in arrears on
March 15 and September 15 of each year, or if any such day is not a Business
Day, on the next succeeding Business Day (each, an "Interest Payment Date").
Interest on the Notes will accrue from the most recent date to which interest
has been paid or, if no interest has been paid, from the date of issuance;
provided that if there is no existing Default in the payment of interest, and if
this Note is authenticated between a record date referred to on the face hereof
and the next succeeding Interest Payment Date, interest shall accrue from such
next succeeding Interest Payment Date; provided, further, that the first
Interest Payment Date shall be March 15, 2000. The Company shall pay interest
(including post-petition interest in any proceeding under any Bankruptcy Law) on
overdue principal and premium, if any, from time to time on demand at a rate
equal to 1% per annum in excess of the rate then in effect; it shall pay
interest (including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue installments of interest and Liquidated Damages, if
any (without regard to any applicable grace periods), from time to time on
demand at the same rate to the extent lawful. Interest will be computed on the
basis of a 360-day year of twelve 30-day months.
2. Method of Payment.
The Company will pay interest on the Notes (except defaulted interest)
and Liquidated Damages, if any, to the Persons who are registered Holders of
Notes at the close of business on the March 1 or September 1 next preceding the
Interest Payment Date, even if such Notes are canceled after such record date
and on or before such Interest Payment Date, except as provided in Section 2.12
of the Indenture with respect to defaulted interest. The Notes will be payable
as to principal, premium and Liquidated Damages, if any, and interest at the
office or agency of the Company maintained for such purpose within or without
the City and State of New York, or, at the option of the Company, payment of
interest and Liquidated Damages, if any, may be made by check mailed to the
Holders at their addresses set forth in the register of Holders, and provided
that payment by wire transfer of immediately available funds will be required
with respect to principal of and interest, premium and Liquidated Damages, if
any, on, all Global Notes and all other Notes the Holders of which shall have
provided wire transfer instructions to the Company or the Paying Agent at least
five Business Days prior to the applicable payment date. Such payment shall be
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.
-4-
<PAGE>
3. Paying Agent and Registrar.
Initially, FIRSTAR BANK, N.A., the Trustee under the Indenture, will
act as Paying Agent and Registrar. The Company may change any Paying Agent or
Registrar without notice to any Holder. The Company or any of its Subsidiaries
may not act in any such capacity.
4 Indenture.
The Company issued the Notes under an Indenture dated as of September
28, 1999 (the "Indenture") among the Company, the Guarantors named on the
signature pages thereto and the Trustee. The terms of the Notes include those
stated in the Indenture and those made part of the Indenture by reference to the
Trust Indenture Act of 1939, as amended (15 U.S. Code ss.ss. 77aaa- 77bbbb). The
Notes are subject to all such terms, and Holders are referred to the Indenture
and such Act for a statement of such terms. To the extent any provision of this
Note conflicts with the express provisions of the Indenture, the provisions of
the Indenture shall govern and be controlling. The Notes are general obligations
of the Company. Subject to the provisions of the Indenture, the Company may
issue Additional Notes under the Indenture.
5. Optional Redemption.
(a) On or after September 15, 2004, the Company shall have the option to
redeem the Notes, in whole or in part, upon not less than 30 nor more than 60
days' notice, at the redemption prices (expressed as percentages of principal
amount) set forth below plus accrued and unpaid interest and Liquidated Damages,
if any, thereon to the applicable redemption date, if redeemed during the
twelve-month period beginning on September 15 of the years indicated below:
Year Percentage
2004................................................................. 105.500%
2005................................................................. 103.667%
2006................................................................. 101.833%
2007 and thereafter.................................................. 100.000%
(b) On or prior to September 15, 2002, the Company may on any one or
more occasions redeem up to 35% of the aggregate principal amount of Notes
initially issued under the Indenture, including any Additional Notes issued
under the Indenture, at a redemption price of 111% of the principal amount
thereof, plus accrued and unpaid interest and Liquidated Damages, if any, to the
redemption date, with the net cash proceeds of one or more Public Equity
Offerings; provided that (i) at least 65% of the aggregate principal amount of
Notes originally issued under the Indenture, including any Additional Notes
issued under the Indenture, remain outstanding immediately following each such
redemption and (ii) such redemption shall occur within 60 days of the closing of
each such Public Equity Offering.
-5-
<PAGE>
(c) In addition, at any time prior to September 15, 2004, the Notes
will be subject to redemption at the option of the Company, in whole or in part,
upon not less than 30 nor more than 60 days' notice, at the Make-Whole Price,
plus accrued and unpaid interest and Liquidated Damages, if any, thereon to the
applicable redemption date.
6. Notice of Redemption.
A notice of redemption will be mailed at least 30 days but not more
than 60 days before the redemption date to each Holder whose Notes are to be
redeemed at its registered address. Notes in denominations larger than $1,000
may be redeemed in part but only in whole multiples of $1,000. On and after the
redemption date, unless the Company defaults in making the redemption payments,
interest and Liquidated Damages, if any, ceases to accrue on Notes or portions
thereof called for redemption.
7. Mandatory Redemption.
Except as set forth in paragraph 8 below, the Company shall not be
required to make mandatory redemption payments with respect to the Notes.
8. Repurchase at Option of Holder.
(a) If there is a Change of Control, unless notice of redemption of the
Notes in whole has been given pursuant to Sections 3.04 and 3.08 of the
Indenture, the Company shall be required to make an offer (a "Change of Control
Offer") to purchase all or any part (equal to $1,000 or an integral multiple
thereof) of each Holder's Notes at an offer price in cash equal to 101% of the
aggregate principal amount thereof, plus accrued and unpaid interest and
Liquidated Damages, if any, thereon to the date of purchase (the "Change of
Control Payment"). Notice of a Change of Control Offer shall be mailed within 30
days following a Change of Control to each Holder of the Notes containing the
information set forth in Section 4.17 of the Indenture.
(b) When the aggregate amount of Excess Proceeds from one or more Asset
Sales exceeds $5.0 million, the Company shall make an offer to all Holders of
Notes (an "Asset Sale Offer") to purchase the maximum principal amount of Notes
that does not exceed the Excess Proceeds at an offer price in cash in an amount
equal to 100% of the principal amount thereof, plus accrued and unpaid interest
and Liquidated Damages, if any, thereon to the date of purchase, in accordance
with the procedures set forth in the Indenture. To the extent that the aggregate
principal amount of Notes tendered pursuant to an Asset Sale Offer is less than
the Excess Proceeds, the Company may use any remaining Excess Proceeds for
general corporate purposes. If the aggregate principal amount of Notes tendered
exceeds the amount of Excess Proceeds, the Notes to be purchased shall be
selected on a pro rata basis.
9. Denominations, Transfer, Exchange.
The Notes are in registered form without coupons in denominations of
$1,000 and integral multiples of $1,000. The transfer of Notes may be registered
and Notes may be exchanged as provided in the Indenture. The Registrar and the
Trustee may require a Holder, among other things, to furnish appropriate
endorsements and transfer documents and the Company may require a Holder to pay
any taxes and fees required by law or permitted by the Indenture. The Company
need not exchange or register the transfer of any Note
-6-
<PAGE>
or portion of a Note selected for redemption, except for the unredeemed portion
of any Note being redeemed in part. Also, the Company need not exchange or
register the transfer of any Notes for a period of 15 days before the day of any
selection of Notes to be redeemed or during the period between a record date and
the next succeeding Interest Payment Date.
10. Persons Deemed Owners.
The registered Holder of a Note may be treated as its owner for all
purposes.
11. Amendment, Supplement And Waiver.
Subject to certain exceptions, the Indenture or the Notes may be
amended or supplemented with the consent of the Holders of at least a majority
in principal amount of the then outstanding Notes, and any existing default or
compliance with any provision of the Indenture or the Notes may be waived with
the consent of the Holders of a majority in principal amount of the then
outstanding Notes. Without the consent of any Holder of a Note, the Indenture or
the Notes may be amended or supplemented to cure any ambiguity, defect or
inconsistency, to provide for uncertificated Notes in addition to or in place of
certificated Notes, to provide for the assumption of the Company's or any
Guarantor's obligations to Holders of the Notes in case of a merger,
consolidation or sale of assets, to provide security for the Notes, to add a
Guarantor, to make any change that would provide any additional rights or
benefits to the Holders of the Notes or that does not adversely affect the legal
rights under the Indenture of any such Holder, or to comply with the
requirements of the SEC in order to effect or maintain the qualification of the
Indenture under the Trust Indenture Act.
12. Events of Default And Remedies.
Events of Default include: (i) default for 30 days or more in the
payment when due of interest on, or Liquidated Damages, if any, with respect to,
the Notes; (ii) default in payment when due (whether payable at maturity, upon
redemption or otherwise) of principal of or premium, if any, on the Notes; (iii)
failure by the Company or any of its Restricted Subsidiaries to comply with
Sections 3.10, 4.16, 4.17 or 5.01 of the Indenture; (iv) failure by the Company
or any of its Restricted Subsidiaries for 30 days after written notice by the
Trustee or the Holders of at least 25% in principal amount of the then
outstanding Notes to comply with any of its other agreements in the Indenture or
the Notes other than those referred to in clauses (i) through (iii) above; (v)
default 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 of its Restricted Subsidiaries (or the payment of
which is guaranteed by the Company or any of its Restricted Subsidiaries),
whether such Indebtedness or guarantee now exists, or is created after the
Closing Date, which default (a) is caused by a failure to pay principal of or
premium, if any, or interest on such Indebtedness prior to the expiration of the
grace period, if any, provided in such Indebtedness on the date of such default
(a "Payment Default") or (b) results in the acceleration of such Indebtedness
prior to its express maturity and, in each case, the principal amount of any
such Indebtedness, together with the principal amount of any other such
Indebtedness under which there has been a Payment Default or the maturity of
which has been so accelerated, aggregates $5.0 million or more; (vi) failure by
the Company or any of its Restricted Subsidiaries to pay final judgments
aggregating in excess of $5.0 million and either (a) any creditor commences
enforcement proceedings upon any such judgment or (b) such judgments are not
paid, discharged or stayed for a period of 60 days; (vii) except as permitted by
the Indenture, any
-7-
<PAGE>
Guarantee of the Notes shall be held in any judicial proceeding to be
unenforceable or invalid or shall cease for any other reason to be in full force
and effect, or any Guarantor, or any Person acting on behalf of any Guarantor,
shall deny or disaffirm its obligations under its Subsidiary Guarantee; and
(viii) certain events of bankruptcy or insolvency with respect to the Company,
any of its Restricted Subsidiaries that is a Significant Subsidiary or any group
of its Restricted Subsidiaries that, taken together, would constitute a
Significant Subsidiary. If any Event of Default occurs and is continuing, the
Trustee or the Holders of at least 25% in principal amount of the then
outstanding Notes may declare all the Notes and all other Obligations thereunder
to be due and payable by notice in writing to the Company and the Trustee.
Notwithstanding the foregoing, in the case of an Event of Default arising from
certain events of bankruptcy or insolvency, with respect to the Company, any of
its Restricted Subsidiaries that is a Restricted Subsidiary or any group of its
Restricted Subsidiaries that, taken together, would constitute a Significant
Subsidiary, all outstanding Notes will become due and payable without further
action or notice. Holders may not enforce the Indenture or the Notes except as
provided in the Indenture. Subject to certain limitations, Holders of a majority
in principal amount of the then outstanding Notes may direct the Trustee in its
exercise of any trust or power. The Trustee may withhold from Holders of the
Notes notice of any continuing Default or Event of Default (except a Default or
Event of Default relating to the payment of principal, premium, if any, interest
or Liquidated Damages, if any) if it determines that withholding notice is in
their interest. The Holders of a majority in aggregate principal amount of the
Notes then outstanding by notice to the Trustee may on behalf of the Holders of
all of the Notes waive any existing Default or Event of Default and its
consequences under the Indenture except a continuing Default or Event of Default
in the payment of principal of, premium and Liquidated Damages, if any, or
interest on the Notes.
13. Subsidiary Guarantees.
Pursuant to the Indenture, payment of the Notes is guaranteed, jointly
and severally, on a senior basis by Sbarro Properties, Inc., Sbarro America,
Inc., Sbarro America Properties Inc., Italian Food Franchising, Inc., Corest
Management, Inc., Franrest Management, Inc., Larkfield Equipment Corp., Sbarro
Foods, Inc., Sbarro of Roosevelt Field, Inc., Demefac Leasing Corp., Franchise
Contracting and Equipment Corp., Melville Advertising Agency Inc., Sbarro
Commack, Inc., Sbarro of Las Vegas, Inc., Sbarro of Hawaii, Inc., Sbarro
Franchise Associates, Inc., Sbarro H.D.F., Inc., N.H.D., Inc., Bushranger
Holding, Inc., Melville Pizzeria, Inc., Sbarro One World Trade, Inc., 401
Broadhollow Realty Corp., 401 Broadhollow Fitness Center Corp., Sbarro Bistros,
Inc., and Syosset Bistro, Inc., each a New York corporation, Sbarro's of Texas,
Inc., a Texas corporation, Sbarro of Virginia, Inc., a Virginia corporation,
Sbarro Dominion Limited, a Canadian corporation, and Sbarro Pennsylvania, Inc.,
a Pennsylvania corporation, and, under certain circumstances set forth in the
Indenture, may be guaranteed by certain other Restricted Subsidiaries of the
Company. Under certain circumstances set forth in the Indenture, each of the
Guarantors may be released from its obligations under the Indenture and the
Notes.
-8-
<PAGE>
14. Trustee Dealings With Company.
The Trustee, in its individual or any other capacity, may make loans
to, accept deposits from, and perform services for the Company, any Guarantor or
any Affiliate of the Company, and may otherwise deal with the Company, any
Guarantor or any Affiliate of the Company, as if it were not the Trustee.
15. No Recourse Against Others.
No director, officer, employee, incorporator or stockholder, of the
Company or any Guarantor, as such, shall have any liability for any obligations
of the Company or such Guarantor under the Notes or the Indenture or for any
claim based on, in respect of, or by reason of, such obligations or their
creation. Each Holder by accepting a Note waives and releases all such
liability. The waiver and release are part of the consideration for the issuance
of the Notes.
16. Authentication.
This Note shall not be valid until authenticated by the manual
signature of the Trustee or an authenticating agent.
17. aAbbreviations.
Customary abbreviations may be used in the name of a Holder or an
assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the
entireties), JT TEN (= joint tenants with right of survivorship and not as
tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors
Act).
18. Additional Rights of Holders of Restricted
Global Notes and Restricted Definitive Notes.
In addition to the rights provided to Holders of Notes under the Indenture,
Holders of Restricted Global Notes and Restricted Definitive Notes shall have
all the rights set forth in the Registration Rights Agreement dated as of
September 15, 1999 (the "Registration Rights Agreement"), among the Company, the
Guarantors and the Initial Purchasers.
19. Governing Law.
THE INDENTURE AND THE NOTES SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK, AS APPLIED TO
CONTRACTS MADE AND PERFORMED ENTIRELY WITHIN THE STATE OF NEW YORK, WITHOUT
REGARD TO PRINCIPLES OF CONFLICT OF LAWS.
20. CUSIP Numbers.
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Company has caused CUSIP numbers to be
printed on the Notes
-9-
<PAGE>
and the Trustee may use CUSIP numbers in notices of redemption as a convenience
to Holders. No representation is made as to the accuracy of such numbers either
as printed on the Notes or as contained in any notice of redemption and reliance
may be placed only on the other identification numbers placed thereon.
The Company will furnish to any Holder upon written request and without
charge a copy of the Indenture and/or the Registration Rights Agreement.
Requests may be made to:
SBARRO, INC.
401 Broadhollow Road
Melville, New York 11747
Attention: Chief Financial Officer
-10-
<PAGE>
ASSIGNMENT FORM
To assign this Note, fill in the form below:
(I) or (we) assign and transfer this Note to: ________________________________
(Insert assignee's legal name)
_______________________________________________________________________________
(Insert assignee's soc. sec. or tax I.D. no.)
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
(Print or type assignee's name, address and zip code)
and irrevocably appoint_________________________________________________________
to transfer this Note on the books of the Company. The agent may substitute
another to act for him.
Date: ________________________
Your Signature:__________________________
(Sign exactly as your name appears on
the face of this Note)
Signature Guarantee*:
* Participant in a recognized Signature Guarantee Medallion Program (or other
signature guarantor acceptable to the Trustee).
-11-
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the Company
pursuant to Section 4.16 or 4.17 of the Indenture, check the appropriate box
below:
/_/ Section 4.16 /_/ Section 4.17
If you want to elect to have only part of the Note purchased by the
Company pursuant to Section 4.16 or Section 4.17 of the Indenture, state the
amount you elect to have purchased:
$___________________
Date: _____________________
Your Signature: _____________________________
(Sign exactly as your name appears on the face
of this Note)
Tax Identification No.:
Signature Guarantee*: ______________
* Participant in a recognized Signature Guarantee Medallion Program (or other
signature guarantor acceptable to the Trustee).
-12-
<PAGE>
SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE
The following exchanges of a part of this Global Note for an interest
in another Global Note or for a Definitive Note, or exchanges of a part of
another Global Note or Definitive Note for an interest in this Global Note, have
been made:
<TABLE>
<CAPTION>
Principal Amount Signature of
Amount of decrease in Amount of increase in of this Global Note authorized signatory
Principal Amount Principal Amount following such of Trustee or
Date of Exchange of this Global Note of this Global Note decrease (or increase) Note Custodian
---------------- ---------------------- --------------------- --------------------- ----------------------
<S> <C> <C> <C> <C>
</TABLE>
-13-
<PAGE>
EXHIBIT B
FORM OF CERTIFICATE OF TRANSFER
SBARRO, INC.
401 Broadhollow Road
Melville, New York 11747
Attention: General Counsel
FIRSTAR BANK, N.A.
Corporate Trust Department
101 East 5th Street, 12th Floor
St. Paul, Minnesota 55101
Attention: Frank P. Leslie, III
ss Re: 11% Senior Notes due 2009
Reference is hereby made to the Indenture, dated as of September 28,
1999 (the "INDENTURE"), among SBARRO, INC., as issuer (the "COMPANY"), the
Guarantors named on the signature pages thereto and FIRSTAR BANK, N.A., as
trustee. Capitalized terms used but not defined herein shall have the meanings
given to them in the Indenture.
___________________ (the "TRANSFEROR") owns and proposes to transfer
the Note[s] or interest in such Note[s] specified in Annex A hereto, in the
principal amount of $___________ in such Note[s] or interests (the "TRANSFER"),
to ___________________________ (the "TRANSFEREE"), as further specified in Annex
A hereto. In connection with the Transfer, the Transferor hereby certifies that:
[CHECK ALL THAT APPLY]
1. |_| Check if Transferee will take delivery of a beneficial interest
in the 144A Global Note or a Definitive Note Pursuant to Rule 144A. The Transfer
is being effected pursuant to and in accordance with Rule 144A under the United
States Securities Act of 1933, as amended (the "SECURITIES ACT"), and,
accordingly, the Transferor hereby further certifies that the beneficial
interest or Definitive Note is being transferred to a Person that the Transferor
reasonably believed and believes is purchasing the beneficial interest or
Definitive Note for its own account, or for one or more accounts with respect to
which such Person exercises sole investment discretion, and such Person and each
such account is a "qualified institutional buyer" within the meaning of Rule
144A in a transaction meeting the requirements of Rule 144A and such Transfer is
in compliance with any applicable blue sky securities laws of any state of the
United States. Upon consummation of the proposed Transfer in accordance with the
terms of the Indenture, the transferred beneficial interest or Definitive Note
will be subject to the restrictions on transfer enumerated in the Private
Placement Legend printed on the 144A Global Note and/or the Definitive Note and
in the Indenture and the Securities Act.
<PAGE>
2. |_| Check if Transferee will take delivery of a beneficial interest
in the Regulation S Global Note or a Definitive Note pursuant to Regulation S.
The Transfer is being effected pursuant to and in accordance with Rule 903 or
Rule 904 under the Securities Act and, accordingly, the Transferor hereby
further certifies that (i) the Transfer is not being made to a person in the
United States and (x) at the time the buy order was originated, the Transferee
was outside the United States or such Transferor and any Person acting on its
behalf reasonably believed and believes that the Transferee was outside the
United States or (y) the transaction was executed in, on or through the
facilities of a designated offshore securities market and neither such
Transferor nor any Person acting on its behalf knows that the transaction was
prearranged with a buyer in the United States, (ii) no directed selling efforts
have been made in contravention of the requirements of Rule 903(b) or Rule
904(b) of Regulation S under the Securities Act, (iii) the transaction is not
part of a plan or scheme to evade the registration requirements of the
Securities Act and (iv) if the proposed transfer is being made prior to the
expiration of the Restricted Period, the transfer is not being made to a U.S.
Person or for the account or benefit of a U.S. Person (other than an Initial
Purchaser). Upon consummation of the proposed transfer in accordance with the
terms of the Indenture, the transferred beneficial interest or Definitive Note
will be subject to the restrictions on transfer enumerated in the Private
Placement Legend printed on the Regulation S Global Note, the Temporary
Regulation S Global Note and/or the Definitive Note and in the Indenture and the
Securities Act.
3. |_| Check and complete if Transferee will take delivery of a
beneficial interest in the IAI Global Note or a Definitive Note pursuant to any
provision of the Securities Act other than Rule 144A or Regulation S. The
Transfer is being effected in compliance with the transfer restrictions
applicable to beneficial interests in Restricted Global Notes and Restricted
Definitive Notes and pursuant to and in accordance with the Securities Act and
any applicable blue sky securities laws of any state of the United States, and
accordingly the Transferor hereby further certifies that (check one):
(a) |_| such Transfer is being effected pursuant to and in accordance
with Rule 144 under the Securities Act;
or
(b) |_| such Transfer is being effected to the Company or a subsidiary
thereof;
or
(c) |_| such Transfer is being effected pursuant to an effective
registration statement under the Securities Act and in compliance with the
prospectus delivery requirements of the Securities Act;
or
(d) |_| such Transfer is being effected to an Institutional Accredited
Investor and pursuant to an exemption from the registration requirements of
the Securities
-2-
<PAGE>
Act other than Rule 144A, Rule 144 or Rule 904, and the Transferor hereby
further certifies that it has not engaged in any general solicitation
within the meaning of Regulation D under the Securities Act and the
Transfer complies with the transfer restrictions applicable to beneficial
interests in a Restricted Global Note or Restricted Definitive Notes and
the requirements of the exemption claimed, which certification is supported
by (1) a certificate executed by the Transferee in the form of Exhibit D to
the Indenture and (2) an Opinion of Counsel provided by the Transferor or
the Transferee (a copy of which the Transferor has attached to this
certification), to the effect that such Transfer is in compliance with the
Securities Act. Upon consummation of the proposed transfer in accordance
with the terms of the Indenture, the transferred beneficial interest or
Definitive Note will be subject to the restrictions on transfer enumerated
in the Private Placement Legend printed on the IAI Global Note and/or
Definitive Notes and in the Indenture and the Securities Act.
4. |_| Check if Transferee will take delivery of a beneficial interest
in an Unrestricted Global Note or of an Unrestricted Definitive Note.
(a) |_| Check if Transfer is pursuant to Rule 144. (i) The Transfer is
being effected pursuant to and in accordance with Rule 144 under the
Securities Act and in compliance with the transfer restrictions contained
in the Indenture and any applicable blue sky securities laws of any state
of the United States and (ii) the restrictions on transfer contained in the
Indenture and the Private Placement Legend are not required in order to
maintain compliance with the Securities Act. Upon consummation of the
proposed Transfer in accordance with the terms of the Indenture, the
transferred beneficial interest or Definitive Note will no longer be
subject to the restrictions on transfer enumerated in the Private Placement
Legend printed on the Restricted Global Notes, on Restricted Definitive
Notes and in the Indenture.
(b) |_| Check if Transfer is Pursuant to Regulation S. (i) The
Transfer is being effected pursuant to and in accordance with Rule 904
under the Securities Act and in compliance with the transfer restrictions
contained in the Indenture and any applicable blue sky securities laws of
any state of the United States and (ii) the restrictions on transfer
contained in the Indenture and the Private Placement Legend are not
required in order to maintain compliance with the Securities Act. Upon
consummation of the proposed Transfer in accordance with the terms of the
Indenture, the transferred beneficial interest or Definitive Note will no
longer be subject to the restrictions on transfer enumerated in the Private
Placement Legend printed on the Restricted Global Notes, on Restricted
Definitive Notes and in the Indenture.
(c) |_| Check if Transfer is Pursuant to Other Exemption. (i) The
Transfer is being effected pursuant to and in compliance with an exemption
from the registration requirements of the Securities Act other than Rule
144 or Rule 904 and in compliance with the transfer restrictions contained
in the Indenture and any applicable blue sky securities laws of any State
of the United States and (ii) the restrictions on transfer contained in the
Indenture and the Private Placement Legend are not required in order to
maintain compliance with the Securities Act. Upon consummation of the
proposed Transfer in accordance with the terms of the Indenture, the
transferred beneficial interest or Definitive Note will not be subject to
the restrictions on transfer enumerated in the Private Placement Legend
printed on the Restricted Global Notes or Restricted Definitive Notes and
in the Indenture.
-3-
<PAGE>
This certificate and the statements contained herein are made for your
benefit and the benefit of the Company.
_______________________________________
[Insert Name of Transferor]
By: __________________________________
Name:
Title:
Dated: ___________________
p
<PAGE>
ANNEX A TO CERTIFICATE OF TRANSFER
1. The Transferor owns and proposes to transfer the following:
[CHECK ONE OF (a) OR (b)]
(a) |_| a beneficial interest in the:
(i) |_| 144A Global Note (CUSIP _________); or
(ii) |_| Regulation S Global Note (CUSIP _________); or
(iii) |_| IAI Global Note (CUSIP ____________); or
(b) [_| a Restricted Definitive Note.
2. After the Transfer the Transferee will hold:
[CHECK ONE]
(a) |_| a beneficial interest in the:
(i) |_| 144A Global Note (CUSIP _________); or
(ii) |_| Regulation S Global Note (CUSIP _________); or
(iii) |_| IAI Global Note (CUSIP ____________); or
(iv) |_| Unrestricted Global Note (CUSIP); or
(b) |_| a Restricted Definitive Note; or
(c) |_| an Unrestricted Definitive Note,
in accordance with the terms of the Indenture.
<PAGE>
EXHIBIT C
FORM OF CERTIFICATE OF EXCHANGE
SBARRO, INC.
401 Broadhollow Road
Melville, New York 11747
Attention: General Counsel
FIRSTAR BANK, N.A.
Corporate Trust Department
101 East 5th Street, 12th Floor
St. Paul, Minnesota 55101
Attention: Frank P. Leslie, III
Re: 11% Senior Notes due 2009
(CUSIP ____________)
Reference is hereby made to the Indenture, dated as of September 28,
1999 (the "INDENTURE"), among SBARRO, INC., as issuer (the "COMPANY"), the
Guarantors named on the signature pages thereto and FIRSTAR BANK, N.A., as
trustee. Capitalized terms used but not defined herein shall have the meanings
given to them in the Indenture.
__________________________ (the "OWNER") owns and proposes to exchange
the Note[s] or interest in such Note[s] specified herein, in the principal
amount of $____________ in such Note[s] or interests (the "EXCHANGE"). In
connection with the Exchange, the Owner hereby certifies that:
1. Exchange of Restricted Definitive Notes or Beneficial Interests in a
Restricted Global Note for Unrestricted Definitive Notes or Beneficial Interests
in an Unrestricted Global Note
(a) |_| Check if Exchange is from beneficial interest in a Restricted
Global Note to beneficial interest in an Unrestricted Global Note. In connection
with the Exchange of the Owner's beneficial interest in a Restricted Global Note
for a beneficial interest in an Unrestricted Global Note in an equal principal
amount, the Owner hereby certifies (i) the beneficial interest is being acquired
for the Owner's own account without transfer, (ii) such Exchange has been
effected in compliance with the transfer restrictions applicable to the Global
Notes and pursuant to and in accordance with the United States Securities Act of
1933, as amended (the "SECURITIES ACT"), (iii) the restrictions on transfer
contained in the Indenture and the Private Placement Legend are not required in
order to maintain compliance with the Securities Act and (iv) the beneficial
interest in an Unrestricted Global Note is being acquired in compliance with any
applicable blue sky securities laws of any state of the United States.
(b) |_| Check if Exchange is from beneficial interest in a Restricted
Global Note to Unrestricted Definitive Note. In connection with the Exchange of
the Owner's beneficial
<PAGE>
interest in a Restricted Global Note for an Unrestricted Definitive Note, the
Owner hereby certifies (i) the Definitive Note is being acquired for the Owner's
own account without transfer, (ii) such Exchange has been effected in compliance
with the transfer restrictions applicable to the Restricted Global Notes and
pursuant to and in accordance with the Securities Act, (iii) the restrictions on
transfer contained in the Indenture and the Private Placement Legend are not
required in order to maintain compliance with the Securities Act and (iv) the
Definitive Note is being acquired in compliance with any applicable blue sky
securities laws of any state of the United States.
(c) |_| Check if Exchange is from Restricted Definitive Note to
beneficial interest in an Unrestricted Global Note. In connection with the
Owner's Exchange of a Restricted Definitive Note for a beneficial interest in an
Unrestricted Global Note, the Owner hereby certifies (i) the beneficial interest
is being acquired for the Owner's own account without transfer, (ii) such
Exchange has been effected in compliance with the transfer restrictions
applicable to Restricted Definitive Notes and pursuant to and in accordance with
the Securities Act, (iii) the restrictions on transfer contained in the
Indenture and the Private Placement Legend are not required in order to maintain
compliance with the Securities Act and (iv) the beneficial interest is being
acquired in compliance with any applicable blue sky securities laws of any state
of the United States.
(d) |_| Check if Exchange is from Restricted Definitive Note to
Unrestricted Definitive Note. In connection with the Owner's Exchange of a
Restricted Definitive Note for an Unrestricted Definitive Note, the Owner hereby
certifies (i) the Unrestricted Definitive Note is being acquired for the Owner's
own account without transfer, (ii) such Exchange has been effected in compliance
with the transfer restrictions applicable to Restricted Definitive Notes and
pursuant to and in accordance with the Securities Act, (iii) the restrictions on
transfer contained in the Indenture and the Private Placement Legend are not
required in order to maintain compliance with the Securities Act and (iv) the
Unrestricted Definitive Note is being acquired in compliance with any applicable
blue sky securities laws of any state of the United States.
2. Exchange of Restricted Definitive Notes or Beneficial Interests in
Restricted Global Notes for Restricted Definitive Notes or Beneficial Interests
in Restricted Global Notes
(a) |_| Check if Exchange is from beneficial interest in a Restricted
Global Note to Restricted Definitive Note. In connection with the Exchange of
the Owner's beneficial interest in a Restricted Global Note for a Restricted
Definitive Note with an equal principal amount, the Owner hereby certifies that
the Restricted Definitive Note is being acquired for the Owner's own account
without transfer. Upon consummation of the proposed Exchange in accordance with
the terms of the Indenture, the Restricted Definitive Note issued will continue
to be subject to the restrictions on transfer enumerated in the Private
Placement Legend printed on the Restricted Definitive Note and in the Indenture
and the Securities Act.
(b) |_| Check if Exchange is from Restricted Definitive Note to
beneficial interest in a Restricted Global Note. In connection with the Exchange
of the Owner's Restricted Definitive Note for a beneficial interest in the
[CHECK ONE] |_| 144A Global Note, |_| Regulation S Global Note, |_| IAI Global
Note with an equal principal amount, the Owner hereby certifies (i) the
beneficial interest is being acquired for the Owner's own account without
transfer
-2-
<PAGE>
and (ii) such Exchange has been effected in compliance with the transfer
restrictions applicable to the Restricted Definitive Notes and pursuant to and
in accordance with the Securities Act, and in compliance with any applicable
blue sky securities laws of any state of the United States. Upon consummation of
the proposed Exchange in accordance with the terms of the Indenture, the
beneficial interest issued will be subject to the restrictions on transfer
enumerated in the Private Placement Legend printed on the relevant Restricted
Global Note and in the Indenture and the Securities Act.
This certificate and the statements contained herein are made for your
benefit and the benefit of the Company.
[Insert Name of Transferor]
By: _______________________________________
Name:
Title:
Dated: _________________________
-3-
<PAGE>
EXHIBIT D
FORM OF CERTIFICATE FROM
ACQUIRING INSTITUTIONAL ACCREDITED INVESTOR
SBARRO, INC.
401 Broadhollow Road
Melville, New York 11747
Attention: General Counsel
FIRSTAR BANK, N.A.
Corporate Trust Department
101 East 5th Street, 12th Floor
St. Paul, Minnesota 55101
Attention: Frank P. Leslie, III
Re: 11% Senior Notes due 2009
Reference is hereby made to the Indenture, dated as of September 28,
1999 (the "INDENTURE"), among SBARRO, INC., as issuer (the "COMPANY"), the
Guarantors named on the signature pages thereto and FIRSTAR BANK, N.A., as
trustee. Capitalized terms used but not defined herein shall have the meanings
given to them in the Indenture.
In connection with our proposed purchase of $____________ aggregate
principal amount of:
(a) |_| a beneficial interest in a Global Note, or
(b) |_| a Definitive Note,
we confirm that:
1. We understand that the Notes have not been registered under the
Securities Act of 1933, as amended (the "SECURITIES ACT"), and may not be sold
except as permitted in the following sentence. We agree on our own behalf and on
behalf of any investor account for which we are purchasing the Notes to offer,
sell or otherwise transfer such Notes prior to the date which is two years after
the later of the date of original issue and the last date on which the Company
or any affiliate of the Company was the owner of such Notes, or any predecessor
thereto (the "RESALE RESTRICTION TERMINATION DATE") only (a) to the Company, (b)
pursuant to a registration statement which has been declared effective under the
Securities Act, (c) for so long as the Notes are eligible for resale pursuant to
Rule 144A under the Securities Act, to a person we reasonably believe is a
qualified institutional buyer under Rule 144A (a "QIB") that purchases for its
own account or for the account of a QIB to whom notice is given that the
transfer is being made in reliance on Rule 144A, (d) pursuant to offers and
sales to non-U.S. Persons that occur outside the United States within the
meaning of Regulations S under the Securities Act, (e) to an institutional
"accredited investor" within the meaning of subparagraph (a)(1), (2), (3) or (7)
of Rule 501 under the Securities Act that is acquiring the Notes for its own
account or for the account of such an institutional "accredited investor" for
investment purposes and not with a view to, or for offer or
<PAGE>
sale in connection with, any distribution thereof in violation of the Securities
Act or (f) pursuant to any other available exemption from the registration
requirements of the Securities Act, subject in each of the foregoing cases to
any requirement of law that the disposition of our property and the property of
such investor account or accounts be at all times within our or their control
and to compliance with any applicable state securities laws. The foregoing
restrictions on resale will not apply subsequent to the Resale Restriction
Termination Date. If any resale or other transfer of the Notes is proposed to be
made pursuant to clause (e) above prior to the Resale Restriction Termination
Date, the transferor shall deliver a letter from the transferee substantially in
the form of this letter to the Trustee, which shall provide, among other things,
that the transferee is an institutional "accredited investor" within the meaning
of subparagraph (a)(1), (2), (3) or (7) or Rule 501 under the Securities Act and
that it is acquiring such Notes for investment purposes and not for distribution
in violation of the Securities Act. We acknowledge that the Company and the
Trustee reserve the right prior to any offer, sale or other transfer prior to
the Resale Restriction Termination Date of the Notes pursuant to clauses (d),
(e) and (f) above to require the delivery of an Opinion of Counsel,
certifications and/or other information satisfactory to the Company and the
Trustee.
2. We are an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) purchasing
for our own account or for the account of such an institutional "accredited
investor", and we are acquiring the Notes for investment purposes and not with a
view to, or for offer or sale in connection with, any distribution in violation
of the Securities Act and we have such knowledge and experience in financial and
business matters as to be capable of evaluating the merits and risks of our
investment in the Notes, and we and any accounts for which we are acting are
each able to bear the economic risk of our or its investment.
3. We are acquiring the Notes or beneficial interest therein purchased
by us for our own account or for one or more accounts (each of which is an
institutional "accredited investor") as to each of which we exercise sole
investment discretion.
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby.
____________________________________________
[Insert Name of Accredited Investor]
By: _______________________________________
Name:
Title:
Dated: _____________________
================================================================================
CREDIT AGREEMENT
DATED AS OF SEPTEMBER 23, 1999
BY AND AMONG
SBARRO, INC.
AND
EUROPEAN AMERICAN BANK
AS AGENT
AND
THE LENDERS PARTY HERETO
================================================================================
<PAGE>
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS.....................................1
SECTION 1.01. Definitions.......................................1
SECTION 1.02. Terms Generally..................................25
ARTICLE II
LOANS...............................................................26
SECTION 2.01. Revolving Credit Loans...........................26
SECTION 2.02. Revolving Credit Note............................27
SECTION 2.03. Letters of Credit................................27
ARTICLE III
PROVISIONS RELATING TO ALL EXTENSIONS OF CREDIT;
FEES AND PAYMENTS...................................................30
SECTION 3.01. Interest Rates; Continuation and Conversion
of Loans.......................................30
SECTION 3.02. Use of Proceeds..................................32
SECTION 3.03. Mandatory and Optional Prepayments...............32
SECTION 3.04. Fees.............................................33
SECTION 3.05. Inability to Determine Interest Rate. ..........34
SECTION 3.06. Illegality. ....................................34
SECTION 3.07. Increased Costs..................................34
SECTION 3.08. Indemnity. ......................................35
SECTION 3.09. Taxes............................................36
SECTION 3.10. Pro Rata Treatment and Payments..................37
SECTION 3.11. Funding and Disbursement of Loans................38
ARTICLE IV
REPRESENTATIONS AND WARRANTIES......................................38
SECTION 4.01. Organization, Powers. ..........................38
SECTION 4.02. Authorization of Borrowing, Enforceable
Obligations....................................39
SECTION 4.03. Financial Condition..............................39
SECTION 4.04. Taxes............................................40
SECTION 4.05. Title to Properties..............................40
SECTION 4.06. Litigation.......................................40
SECTION 4.07. Restrictions.....................................40
SECTION 4.08. Compliance with ERISA............................41
SECTION 4.09. Federal Reserve Regulations; Use of Proceeds.....41
SECTION 4.10. Approvals........................................41
SECTION 4.11. Subsidiaries.....................................42
SECTION 4.12. Hazardous Materials..............................42
SECTION 4.13. Investment Company Act...........................42
SECTION 4.14. No Default.......................................42
i
<PAGE>
SECTION 4.15. Material Contracts...............................42
SECTION 4.16. Permits and Licenses.............................42
SECTION 4.17. Compliance with Law..............................43
SECTION 4.18. Y2K..............................................43
SECTION 4.19. Fiscal Year End..................................43
SECTION 4.20. Certain Agreements...............................43
SECTION 4.21. Representations and Warranties Contained in
Certain Agreements...............................43
SECTION 4.22. Disclosure.......................................44
ARTICLE V
CONDITIONS OF LENDING...............................................44
SECTION 5.01. Conditions to Initial Extension of Credit........44
SECTION 5.02. Conditions to All Extensions of Credit...........47
ARTICLE VI
AFFIRMATIVE COVENANTS...............................................48
SECTION 6.01. Existence, Properties, Insurance.................48
SECTION 6.02. Payment of Taxes.................................48
SECTION 6.03. Financial Statements, Reports, etc...............48
SECTION 6.04. Books and Records; Access to Premises............51
SECTION 6.05. Notice of Adverse Change.........................51
SECTION 6.06. Notice of Default................................51
SECTION 6.07. Notice of Litigation.............................51
SECTION 6.08. Notice of Default in Other Agreements............51
SECTION 6.09. Notice of ERISA Event............................51
SECTION 6.10. Notice of Environmental Law Violations...........52
SECTION 6.11. Notice Regarding Material Contracts..............52
SECTION 6.12. Compliance with Applicable Laws..................52
SECTION 6.13. Subsidiaries.....................................52
SECTION 6.14. Environmental Laws...............................53
SECTION 6.15. Imposition of Restrictive Covenants..............53
ARTICLE VII
NEGATIVE COVENANTS..................................................54
SECTION 7.01. Liens............................................54
SECTION 7.02. Indebtedness.....................................54
SECTION 7.03. Guaranties.......................................54
SECTION 7.04. Asset Sales......................................54
SECTION 7.05. Sales of Receivables. ..........................55
SECTION 7.06. Investments......................................55
SECTION 7.07. Nature of Business...............................55
SECTION 7.08. Sale and Leaseback...............................55
SECTION 7.09. Federal Reserve Regulations......................55
SECTION 7.10. Accounting Policies and Procedures...............55
ii
<PAGE>
SECTION 7.11. Hazardous Materials..............................56
SECTION 7.12. Limitations on Fundamental Changes...............56
SECTION 7.13. Financial Covenants..............................56
SECTION 7.14. Senior Notes.....................................57
SECTION 7.15. Restricted Payments..............................57
SECTION 7.16. Transactions with Affiliates.....................60
SECTION 7.17. Amendments to Certain Agreements.................61
SECTION 7.18. Issuance of Preferred Stock......................61
SECTION 7.19. S Corporation Matters............................61
SECTION 7.20. Limitation on Issuances and Sales of Capital
Stock..........................................62
ARTICLE VIII
EVENTS OF DEFAULT...................................................63
SECTION 8.01. Events of Default................................63
ARTICLE IX
THE AGENT...........................................................66
SECTION 9.01. Appointment, Powers and Immunities...............66
SECTION 9.02. Reliance by Agent................................66
SECTION 9.03. Events of Default................................66
SECTION 9.04. Rights as a Lender...............................67
SECTION 9.05. Indemnification..................................67
SECTION 9.06. Non-Reliance on Agent and Other Lenders..........67
SECTION 9.07. Failure to Act...................................68
SECTION 9.08. Resignation of the Agent.........................68
SECTION 9.09. Sharing of Collateral and Payments...............68
ARTICLE X
MISCELLANEOUS.......................................................69
SECTION 10.01. Notices..........................................69
SECTION 10.02. Effectiveness; Survival..........................70
SECTION 10.03. Expenses.........................................70
SECTION 10.04. Amendments and Waivers...........................71
SECTION 10.05. Successors and Assigns; Participations...........72
SECTION 10.06. No Waiver; Cumulative Remedies...................75
SECTION 10.07. APPLICABLE LAW...................................75
SECTION 10.08. SUBMISSION TO JURISDICTION.......................75
SECTION 10.09. Confidentiality..................................76
SECTION 10.10. Severability.....................................76
SECTION 10.11. Right of Setoff..................................77
SECTION 10.12. Headings.........................................77
SECTION 10.13. Construction.....................................77
SECTION 10.14. Counterparts.....................................77
iii
<PAGE>
SCHEDULES
Schedule I - Subsidiaries
Schedule II - Existing Liens
Schedule III - Existing Indebtedness
Schedule IV - [Reserved]
Schedule V - Material Contracts
Schedule VI - Existing Letters of Credit
Schedule VII - Committed Restricted Investments
EXHIBITS
Exhibit A - Form of Revolving Credit Note
Exhibit B - Form of Corporate Guaranty
Exhibit C - Form of Assignment and Acceptance Agreement
Exhibit D - Form of Opinion of Counsel
iv
<PAGE>
CREDIT AGREEMENT dated as of September 23, 1999, by and among SBARRO, INC.,
a New York corporation (the "Company"), the LENDERS which from time to time are
parties to this Agreement (individually, a "Lender" and, collectively, the
"Lenders"), and EUROPEAN AMERICAN BANK, a New York banking corporation, as
Agent.
RECITALS
The Company has requested the Lenders to extend credit from time to
time and the Lenders are willing to extend such credit to the Company, subject
to the terms and conditions hereinafter set forth.
Accordingly, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.01. DEFINITIONS. As used herein, the following words and
terms shall have the following meanings:
"Adjusted Consolidated Net Income" shall mean, with respect to any
Person for any period, the sum of (i) the Consolidated Net Income of such Person
for such period plus (ii) the aggregate amount of intangible amortization
charges resulting from the Merger to the extent that such intangible
amortization charges were deducted in computing such Consolidated Net Income.
"Adjusted Libor Loans" shall mean Loans at such time as they are made
and/or being maintained at a rate of interest based upon Reserve Adjusted Libor.
"Affiliate" shall mean with respect to a specified Person, another
Person which, directly or indirectly, controls or is controlled by or is under
common control with such specified Person. For the purpose of this definition,
"control" of a Person shall mean the power, direct or indirect, to direct or
cause the direction of the management or policies of such Person whether through
the ownership of voting securities, by contract or otherwise; provided that, in
any event, any Person who owns directly or indirectly 10% or more of the
securities having ordinary voting power for the election of directors or other
governing body of a corporation or 10% or more of the partnership (other than as
a limited partner of such other Person) or other ownership interest of any
Person, other than a corporation, will be deemed to control such corporation or
other Person.
"Agent" shall mean European American Bank in its capacity as
administrative agent for the Lenders under this Agreement or its successor Agent
permitted pursuant to Section 9.08.
1
<PAGE>
"Aggregate Letters of Credit Outstandings" shall mean, at a particular
time, the sum of (a) the aggregate maximum stated amount at such time which is
available or available in the future to be drawn under all outstanding Letters
of Credit, (b) the aggregate amount of all payments made by the Issuing Lender
on behalf of the Lenders under any Letter of Credit that have not been
reimbursed by the Company at such time and (c) the aggregate maximum exposure of
the Company under any guarantees of the Company of reimbursement obligations
under letters of credit then outstanding that were issued by any Lender for the
account of any Affiliate of the Company.
"Aggregate Outstandings" shall mean, at a particular time, the sum of
(a) the Aggregate Letters of Credit Outstandings at such time and (b) the
aggregate outstanding principal amount of all Revolving Credit Loans at such
time.
"Agreement" shall mean this Credit Agreement dated as of September 23,
1999, as it may hereafter be amended, restated, supplemented or otherwise
modified from time to time.
"Applicable Margin" shall mean (a) with respect to an Adjusted Libor
Loan, the percentage set forth below under the heading "Libor Margin" opposite
the applicable ratio and (b) with respect to a Prime Rate Loan, the percentage
set forth below under the heading "Prime Margin" opposite the applicable ratio:
Consolidated Senior Debt Libor Margin Prime Margin
to Consolidated EBITDA (360 day basis) (360 day basis)
- ----------------------- --------------- ---------------
Equal to or less than 1.50% 0%
3.00:1.00
Greater than 3.00:1.00 but 1.75% 0%
equal to or less than
3.25:1.00
Greater than 3.25:1.00 but 2.00% .25%
equal to or less than
3.50:1.00
Greater than 3.50:1.00 but 2.25% .50%
equal to or less than
3.75:1.00
Greater than 3.75:1.00 2.50% .75%
Notwithstanding the foregoing, during the period commencing on and including the
Closing Date and ending on the day immediately preceding the date the Applicable
Margin is reset in
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accordance with the next sentence, the Libor Margin shall be 2.25% and the Prime
Margin shall be .50%. The Applicable Margin will be reset with respect to each
Loan on each date which is five Business Days following the date of receipt by
the Agent of the financial statements referred to in Section 6.03(a) and Section
6.03(b) together with a certificate of the Chief Financial Officer of the
Company certifying the ratio of Consolidated Senior Debt to Consolidated EBITDA
and setting forth the calculation thereof in detail for the then most recently
completed fiscal quarter of the Company. If any such financial statement and
certificate are not received by the Agent within the time period required
pursuant to Section 6.03(a) or Section 6.03(b), as the case may be, the
Applicable Margin will be reset, based on a ratio of Consolidated Senior Debt to
Consolidated EBITDA of greater than 3.75:1.00 from the date such financial
statement and certificate were due until the date which is five Business Days
following the receipt by the Agent of such financial statements and certificate,
provided, however, that the Lenders shall not in any way be deemed to have
waived any Default or Event of Default, including without limitation, an Event
of Default resulting from the failure of the Company to comply with Section 7.13
of this Agreement, or any rights or remedies hereunder or under any other Loan
Document in connection with the failure of the Agent to receive such financial
statements and certificate. During the occurrence and continuance of a Default
or an Event of Default, no downward adjustment, and only upward adjustments,
shall be made to the Libor Margin and Prime Margin; provided, however, any
downward adjustment shall become effective on the date, if any, on which such
Default or Event of Default shall cease to be continuing.
"Asset Sale" shall mean (i) the sale, lease (as lessor), conveyance or
other disposition (collectively, "dispositions") of any assets or rights
(including, without limitation, by way of a sale and leaseback), other than
dispositions of inventory in the ordinary course of business consistent with
past practices and the disposition in the ordinary course of obsolete or worn
out equipment or other equipment no longer necessary or no longer usable for its
business, and (ii) the issuance of Equity Interests by any Corporate Guarantor
or the disposition by the Company or a Corporate Guarantor of Equity Interests
in any of the Corporate Guarantors (other than directors' qualifying shares or
shares required by applicable law to be held by a Person other than the Company
or a Corporate Guarantor); provided, however, that the term Asset Sale shall not
include any disposition of any assets or rights or any issuance or disposition
of Equity Interests if such transaction would have been an Asset Sale in the
absence of this proviso to the extent that the gross proceeds thereof do not
exceed, in aggregate amount together with all other such dispositions or
issuances, $3.0 million in any fiscal year of the Company and $5.0 million
during the term of this Agreement (the "Excluded Proceeds"); provided, however,
that the Excluded Proceeds are applied within 360 days of such sale by the
Company or the Corporate Guarantor, as applicable, to the acquisition of a
controlling interest in another business, the making of a Capital Expenditure or
the other acquisition of assets (other than assets that would be classified as
current assets in accordance with Generally Accepted Accounting Principles), in
each case, subject to Section 7.07 ("Excluded Proceeds Permitted Use").
Notwithstanding the foregoing, the following will be deemed not to be Asset
Sales: (i) a transfer of assets or rights or Equity Interests by the Company to
a Corporate Guarantor which is a wholly-owned Subsidiary or by a Corporate
Guarantor which is a wholly-owned Subsidiary to the Company or to another
Corporate
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<PAGE>
Guarantor which is a wholly-owned Subsidiary; (ii) an issuance of Equity
Interests by a Corporate Guarantor which is a wholly-owned Subsidiary of the
Company to the Company or to another Corporate Guarantor which is a wholly-owned
Subsidiary of the Company; (iii) a Permitted Investment or Restricted Payment
that is permitted pursuant to Section 7.15, and (iv) a disposition of Eligible
Investments solely for cash or other Eligible Investments.
"Assignment and Acceptance Agreement" shall mean an Assignment and
Acceptance entered into by a Lender and an assignee and accepted by the Agent,
in the form attached hereto as Exhibit C or any other form approved by the
Agent.
"Board of Directors" shall mean, with respect to any Person, the board
of directors of such Person, or any duly authorized committee of such board of
directors.
"Borrowing Date" shall mean, with respect to any Loan, the date on
which such Loan is disbursed to the Company.
"Business Day" shall mean (a) any day not a Saturday, Sunday or legal
holiday, on which banks in New York City are open for business and (b) as it
relates to any payment, determination, funding or notice to be made or given in
connection with any Adjusted Libor Loan, any day specified in clause (a) on
which trading is carried on by and between banks in Dollar deposits in the
London interbank eurodollar market.
"Capital Expenditures" shall mean additions to property and equipment
of the Company which, in conformity with Generally Accepted Accounting
Principles, are included as "additions to property, plant or equipment" or
similar items which would be reflected in the statement of cash flow of the
Company, including, without limitation, property and equipment which are the
subject of Capital Leases.
"Capital Lease" shall mean any lease the obligations of which are
required to be capitalized on the balance sheet of a Person in accordance with
Generally Accepted Accounting Principles.
"Capital Stock" shall mean (i) in the case of a corporation, corporate
stock, (ii) in the case of an association or business entity, any and all
shares, interests, participations, rights or other equivalents (however
designated) of corporate stock, (iii) in the case of a partnership, limited
liability company or limited liability partnership, partnership or membership
interests (whether general or limited) and (iv) any other ownership interest not
described in the preceding clauses (i) through (iii) if such interest confers on
the owner thereof the right to receive a share of the profits and losses of, or
distributions of assets of, the issuing Person.
"Cash Collateral" shall mean a deposit by the Company made in
immediately available funds to a cash collateral account at the Agent and the
taking of all action required to provide the Agent, for the ratable benefit of
the Lenders, a first priority perfected security interest in such deposit.
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<PAGE>
"Change of Control" shall mean the occurrence of any of the following:
(i) the sale, lease, transfer, conveyance or other disposition, in one or a
series of related transactions, directly or indirectly, of all or substantially
all of the assets of the Company or the Company and the Corporate Guarantors
taken as a whole to any Person or "group" (as such term is used in Section
13(d)(3) of the Securities and Exchange Act of 1934, as amended (the "Exchange
Act"), other than to one or more Permitted Holders, (ii) the adoption of a plan
relating to the liquidation or dissolution of the Company, (iii) the
consummation of any transaction (including, without limitation, any merger or
consolidation) the result of which is that any Person or group, other than one
or more Permitted Holders, becomes the "beneficial owner" (as such term is
defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act, except that a
Person shall be deemed to have "beneficial ownership" of all securities that
such Person has the right to acquire, whether such right is currently
exercisable or is exercisable only upon the occurrence of a subsequent
condition), directly or indirectly, of more than 35% of the Voting Stock of the
Company (measured by voting power rather than number of shares) or (iv) the
first day on which a majority of the members of the Board of Directors of the
Company are not Continuing Directors.
"Chief Financial Officer" shall mean the Chief Financial Officer of
the Company.
"Closing Date" shall mean the date of the initial extension of credit
under this Agreement but in no event later than September 30, 1999.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
"Commitment Proportion" shall mean with respect to each Lender at the
time of determination, the proportion its Revolving Credit Commitment bears to
the Total Revolving Credit Commitment.
"Committed Restricted Investments" shall mean up to $13.9 million of
Investments that were, as of August 30, 1999, committed to be made by the
Company and the Corporate Guarantors as set forth on Schedule VII hereto.
"Company" shall have the meaning set forth in the preamble hereto.
"Consolidated EBITDA" shall mean for any period, Consolidated Net
Income (or consolidated net loss), plus the sum, without duplication, of (a)
Consolidated Interest Expense, (b) depreciation and amortization expenses or
charges, (c) all income and franchise taxes to any government or governmental
instrumentality expensed on the Company's books (whether paid or accrued), (d)
non-cash charges and non-recurring charges, if any, relating to the final
settlement of the litigation described in the first paragraph under "Business -
Legal Proceedings" of the Preliminary Offering Memorandum of the Company dated
September 2, 1999 with respect to the Senior Notes if and to the extent deducted
as an expense in calculating Consolidated Net Income provided the aggregate
amount of such charges added back shall not exceed $1,600,000, and (e) the Tax
Distributions, if any, made by the Company if and to the extent deducted as an
expense
5
<PAGE>
in calculating Consolidated Net Income, in each case, determined in accordance
with Generally Accepted Accounting Principles applied on a consistent basis. All
of the foregoing categories shall be calculated with respect to the Company and
the Corporate Guarantors on a consolidated basis and shall be calculated
(without duplication) as of the end of each applicable fiscal quarter for the
four fiscal quarter periods then ended.
"Consolidated Interest Expense" shall mean for any period the sum,
without duplication, of (i) the consolidated interest expense of the Company and
the Corporate Guarantors for such period, whether paid or accrued (including,
without limitation, amortization of debt issuance costs and original issue
discount, non-cash interest payments, the interest component of any deferred
payment obligations, the interest component of all payments associated with
Capital Leases, commissions, discounts and other fees and charges incurred in
respect of letter of credit or bankers' acceptance financings, and net payments
(if any) pursuant to Hedging Obligations), (ii) the consolidated interest
expense of the Company and the Corporate Guarantors that was capitalized during
such period, and (iii) the product of (x) any preferred stock dividends declared
or paid or payable in cash, and (y) a fraction, the numerator of which is one
and the denominator of which is one minus the then current combined federal,
state and local statutory tax rate of the Person issuing or paying such
dividend, expressed as a decimal, determined, in each case, on a consolidated
basis and in accordance with Generally Accepted Accounting Principles.
Consolidated Interest Expense shall be calculated with respect to the Company
and the Corporate Guarantors on a consolidated basis and shall be calculated
without duplication as of the end of each applicable fiscal quarter for the four
fiscal quarters then ended; provided, however, that for the first three fiscal
quarters following the Closing Date, Consolidated Interest Expense shall be
determined on a pro forma basis as if interest bearing indebtedness had been
incurred at the beginning of such four-quarter period.
"Consolidated Net Income" shall mean, with respect to the Company for
any period, the aggregate of the Net Income of the Company and the Corporate
Guarantors for such period, on a consolidated basis, determined in accordance
with Generally Accepted Accounting Principles less the amount of all Tax
Distributions, if any, made by the Company from the beginning of such period
through the date that is 30 days after the end of such period; provided that (i)
the Net Income of any Person that is neither the Company nor a Corporate
Guarantor or that is accounted for by the equity method of accounting shall be
excluded, except that the Net Income of such Person shall be included to the
extent of the amount of dividends or distributions paid in cash by such Person
during such period to the Company or a Corporate Guarantor which is a
wholly-owned Subsidiary of the Company (other than any such dividends or
distributions (x) which the Company elects not to include in the computation of
Consolidated Net Income at the time of the computation thereof or (y) which
consist of payments to the Company referred to in subclause 3 of clause (c) of
the first paragraph under Section 7.15), (ii) the net income (but not loss) of
any Corporate Guarantor shall be excluded to the extent that the declaration or
payment of dividends or similar distributions by that Corporate Guarantor of
that net income is not at the date of determination permitted without any prior
governmental approval (that has not been obtained) or, directly or indirectly,
by operation of the terms of its charter or any agreement, instrument,
6
<PAGE>
judgment, decree, order, statute, rule or governmental regulation applicable to
that Corporate Guarantor or its stockholders, (iii) the Net Income of any Person
acquired in a pooling of interests transaction for any period prior to the date
of such acquisition shall be excluded, (iv) the cumulative effect of a change in
accounting principles shall be excluded to the extent it would cause
Consolidated Net Income to exceed Consolidated Net Income calculated without
giving effect to such change, and (v) any non-cash write-off or charge
(excluding any such non-cash write-off or charge to the extent it represents an
accrual of or reserve of cash expenses in any future period) in respect of the
disposition or write-down of fixed assets other than in the ordinary course of
business shall be excluded.
"Consolidated Senior Debt" shall mean Indebtedness of the Company or
any Corporate Guarantor that is not subordinated in right of payment to any
other Indebtedness of the Company or such Corporate Guarantor, including,
without limitation, Indebtedness under the Senior Notes and the Revolving Credit
Loans. For purposes of calculating Consolidated Senior Debt pursuant to the
definition of "Applicable Margin" and "Unused Fee Rate", Consolidated Senior
Debt shall include the aggregate principal amount of Senior Note Payments, if
any, made pursuant to Section 7.14 during the period commencing on the Closing
Date and ending on (and including) the date of determination thereof.
"Continuing Director" shall mean, as of any date of determination, any
member of the Board of Directors of the Company who (i) was a member of such
Board of Directors on the Closing Date or (ii) was nominated or elected to the
Board of Directors of the Company with the approval of a majority of the
Continuing Directors who were members of such Board at the time of such
nomination or election.
"Corporate Guarantors" shall mean, collectively, each Person
identified on Schedule I which is not designated as an Unrestricted Subsidiary
and each Person who, from time to time, executes a Corporate Guaranty in
accordance with Section 6.13.
"Corporate Guaranty" shall mean the Corporate Guaranty in the form
attached hereto as Exhibit B to be executed and delivered by each Corporate
Guarantor as the same may hereafter be amended, restated, supplemented or
otherwise modified from time to time.
"Default" shall mean any condition or event which upon notice, lapse
of time or both would constitute an Event of Default.
"Disqualified Stock" means any Capital Stock that, by its terms (or by
the terms of any security into which it is convertible or for which it is
exchangeable), or upon the happening of any event, matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at
the option of the holder thereof, in whole or in part, on or prior to the date
that is 91 days after the Revolving Credit Commitment Termination Date.
"Dollar" and the symbol "$" shall mean lawful money of the United
States of America.
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<PAGE>
"Eligible Investments" shall mean (a) direct obligations of the United
States of America or any governmental agency thereof which are fully guaranteed
by the United States of America, provided that such obligations mature within
six months from the date of acquisition thereof; or (b) dollar denominated
certificates of time deposit maturing within one year issued by any bank
organized and existing under the laws of the United States or any state thereof
and having aggregate capital and surplus in excess of $500,000,000; or (c) money
market mutual funds having assets in excess of $2,500,000,000; or (d) commercial
paper rated not less than P-1 or A-1 or their equivalent by Moody's Investors
Service, Inc. or Standard & Poor's Ratings Group, respectively; or (e) tax
exempt securities of a U.S. issuer rated A or better by Standard and Poor's
Ratings Group or Moody's Investors Service, Inc.; or (f) repurchase obligations
with a term of not more than seven days for underlying securities of the type
described in clauses (a) and (b) above entered into with any financial
institution meeting the qualifications specified in clause (b) above; or (g)
investments in money market funds that invest exclusively in securities of the
types described in clauses (a) through (f) above; or (h) Eurodollar time
deposits with maturities not exceeding six months or less from the date of
acquisition with any domestic commercial bank having capital and surplus in
excess of $500 million and a Keefe Bank Watch Rating of AB or better.
"Environmental Law" shall mean any law, ordinance, rule, regulation,
or policy having the force of law of any Governmental Authority relating to
pollution or protection of the environment or to the use, handling,
transportation, treatment, storage, disposal, release or discharge of Hazardous
Materials, including, without limitation, the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended (42 U.S.C. Sections
9601, et seq.), the Hazardous Materials Transportation Act, as amended (49
U.S.C. Sections 1801, et seq.) the Resource Conservation and Recovery Act, as
amended (42 U.S.C. Sections 6901, et seq.) and the rules and regulations
promulgated pursuant thereto.
"Equity Interests" shall mean Capital Stock and all warrants, options
or other rights to acquire Capital Stock (but excluding any debt security that
is convertible into, or exchangeable for, Capital Stock).
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time.
"ERISA Affiliate" shall mean each person (as defined in Section 3(9)
of ERISA) which together with the Company or any Affiliate of the Company would
be deemed to be a member of the same "controlled group" within the meaning of
Section 414(b), (c), (m) or (o) of the Code.
"Eurocurrency Reserve Requirement" shall mean a fraction (expressed as
a decimal), the numerator of which is the number one and the denominator of
which is the number one minus the aggregate (without duplication) of the rates
(expressed as a decimal) of reserve requirements in effect on such day
(including, without limitation, basic, supplemental, marginal and emergency
reserves, under any regulations of the Board of Governors of the Federal Reserve
System or any
8
<PAGE>
other governmental authority having jurisdiction with respect thereto) as from
time to time in effect, dealing with reserve requirements prescribed for
eurocurrency funding (currently referred to as "eurocurrency liabilities" in
Regulation D) maintained by any Lender. For purposes hereof each Adjusted Libor
Loan shall be deemed to constitute a "eurocurrency liability" as defined in
Regulation D, and subject to the reserve requirements of "Regulation D," without
benefit of credit or proration, exemptions or offsets which might otherwise be
available to the Lenders from time to time under Regulation D.
"Event of Default" shall have the meaning set forth in Article VIII.
"Excluded Proceeds" shall have the meaning set forth in the definition
of "Asset Sale".
"Excluded Proceeds Permitted Use" shall have the meaning set forth in
the definition of "Asset Sale".
"Executive Officer" shall mean any of the Chairman, Vice Chairman,
President, the Chief Executive Officer, the Chief Financial Officer or the
Secretary of the Company or any Corporate Guarantor, as applicable, and their
respective successors, if any, designated by the board of directors thereof.
"Existing Indebtedness" means the Indebtedness of the Company and the
Corporate Guarantors (other than the Indebtedness evidenced by the Notes and the
Senior Notes) in existence on the Closing Date and set forth in a Schedule III,
until such Indebtedness is repaid. Existing Indebtedness shall include, without
duplication, (a) certain guarantees of obligations for borrowed money (the
"Borrowed Money Obligations") including the Company's guarantee of 40% of up to
$11.0 million of Indebtedness from time to time outstanding of Boulder Creek
Holding LLC and Boulder Creek Venture LLC under loan agreements with HSBC Bank
U.S.A., as they may be amended and in effect from time to time, (b) certain
guarantees of reimbursement obligations in respect of letters of credit, (c) any
guarantee by the Company or any Corporate Guarantor of Indebtedness issued in
exchange for, or the net proceeds of which are used to refund, refinance or
replace, Borrowed Money Obligations at the time guaranteed pursuant to a
guarantee referred to in clause (a) above ("Guaranteed Refinancing
Indebtedness"), to the extent that (x) the principal amount of such Guaranteed
Refinancing Indebtedness does not exceed the principal amount of the guaranteed
Borrowed Money Obligations so refunded, refinanced or replaced and (y) the
obligor(s) of such Guaranteed Refinancing Indebtedness are the same as the
obligors on the guaranteed Borrowed Money Obligations being refunded, refinanced
or replaced, and (d) any guarantee of reimbursement obligations in respect of a
letter of credit issued in replacement for a letter of credit in respect of
which the reimbursement obligations are guaranteed pursuant to a guarantee
referred to in clause (b) above (a "Replacement Letter of Credit") to the extent
that (x) the amount of Indebtedness represented by the guarantee of
reimbursement obligations in respect of the Replacement Letter of Credit does
not exceed the amount of Indebtedness represented by the guarantee of
reimbursement obligations in respect of the letter of credit so replaced and (y)
the obligor(s) of the reimbursement obligations in respect of the Replacement
Letter of Credit are
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<PAGE>
the same as the obligor(s) of the reimbursement obligations in respect of the
letter of credit so replaced. For purposes of this Agreement, (a) any guarantee
by the Company or any Corporate Guarantor of Guaranteed Refinancing Indebtedness
shall not be deemed to be an additional Investment to the extent that (x) the
provisions of subclauses (x) and (y) of clause (c) of the preceding sentence are
satisfied in respect of such Guaranteed Refinancing Indebtedness and (y) the
guarantee of the Borrowed Money Obligations refunded, refinanced or replaced by
such Guaranteed Refinancing Indebtedness was entered into prior to August 30,
1999 or constitutes a Committed Restricted Investment and (b) any guarantee by
the Company or any Corporate Guarantor of reimbursement obligations in respect
of a Replacement Letter of Credit shall not be deemed to be an additional
Investment to the extent that (x) the provisions of subclauses (x) and (y) of
clause (d) of the preceding sentence are satisfied in respect of such guarantee
and such Replacement Letter of Credit and (y) the guarantee of the reimbursement
obligations in respect of the letter of credit replaced by such Replacement
Letter of Credit was entered into prior to August 30, 1999, or constitutes a
Committed Restricted Investment.
"Existing Letters of Credit" shall mean, collectively, each standby
letter of credit issued by European American Bank prior to the Closing Date
which remains in effect on the Closing Date as set forth on Schedule VI hereto.
"Federal Funds Effective Rate" shall mean, for any day, the weighted
average of the rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal fund brokers, as published on the
next succeeding Business Day by the Federal Reserve Bank of New York, or, if
such rate is not so published for any day which is a Business Day, the average
of the quotations for the day of such transactions received by the Agent from
three Federal fund brokers of recognized standing selected by the Agent.
"Generally Accepted Accounting Principles" shall mean those generally
accepted accounting principles in the United States of America, as in effect
from time to time.
"Governmental Authority" shall mean any nation or government, any
state, province, city or municipal entity or other political subdivision
thereof, and any governmental, executive, legislative, judicial, administrative
or regulatory agency, department, authority, instrumentality, commission, board
or similar body, whether federal, state, provincial, territorial, local or
foreign.
"Hazardous Materials" shall mean any explosives, radioactive
materials, or other materials, wastes, substances, or chemicals regulated as
toxic hazardous or as a pollutant, contaminant or waste under any applicable
Environmental Law.
"Hedging Obligations" shall mean with respect to any Person, the
obligations of such Person under any interest rate swap, collar, cap, floor or
forward rate agreement or other agreement regarding the hedging of interest rate
risk exposure executed in connection with hedging the interest rate exposure of
such Person, and any confirming letter executed pursuant to such agreement, all
as amended, supplemented, restated or otherwise modified from time to time.
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"Indebtedness" shall mean, without duplication, as to any Person or
Persons (a) indebtedness for borrowed money; (b) indebtedness for the deferred
purchase price of property or services (other than trade payables and accrued
expenses incurred in the ordinary course of business); (c) indebtedness
evidenced by bonds, debentures, term notes or other similar instruments; (d)
obligations and liabilities of a third party (other than the Company or any
Corporate Guarantor) secured by a Lien upon property owned by such Person,
whether or not owing by such Person and even though such Person has not assumed
or become liable for the payment thereof; (e) guarantees by such Person of
Indebtedness of another Person; (f) obligations or liabilities of such Person
created or arising under any conditional sales contract or other title retention
agreement with respect to property used and/or acquired by such Person; (g)
obligations of such Person as lessee under Capital Leases; (h) net liabilities
of such Person under Hedging Obligations and foreign currency exchange
agreements, as calculated on a basis satisfactory to the Agent and in accordance
with accepted practice; (i) all obligations of such Person in respect of
banker's acceptances; and (j) all obligations, contingent or otherwise of such
Person as an account party or applicant in respect of letters of credit.
"Interest Payment Date" shall mean as to any Loan, (a) the first day
of each month during the term hereof and (b) the date such Loan is paid in full
or in part.
"Interest Period" shall mean with respect to any Adjusted Libor Loan:
(a) initially, the period commencing on the date such Adjusted Libor
Loan is made and ending one, two, three or six months thereafter, as selected by
the Company in its notice of borrowing or in its notice of conversion from a
Prime Rate Loan given, in each case, in accordance with the terms of Articles II
and III hereof; and
(b) thereafter, each period commencing on the last day of the next
preceding Interest Period applicable to such Adjusted Libor Loan and ending one,
two, three or six months thereafter, as selected by the Company by irrevocable
written notice (or telephonic notice promptly confirmed in writing) to the Agent
not later than 11:00 a.m. New York, New York time three Business Days prior to
the last day of the then current Interest Period with respect to such Adjusted
Libor Loan and the Agent shall promptly notify each of the Lenders of such
notice; provided, however, that all of the foregoing provisions relating to
Interest Periods are subject to the following:
(i) if any Interest Period would otherwise end on a day which is
not a Business Day, such Interest Period shall be extended to the next
succeeding Business Day unless the result of such extension would be
to carry such Interest Period into another calendar month in which
event such Interest Period shall end on the immediately preceding
Business Day;
(ii) if the Company shall fail to give notice as provided in
clause (b) above, the Company shall be deemed to have requested
conversion of the affected
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Adjusted Libor Loan to a Prime Rate Loan on the last day of the then
current Interest Period with respect thereto;
(iii) any Interest Period that begins on the last Business Day of
a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest
Period) shall end on the last Business Day of a calendar month; and
(iv) no more than four (4) Interest Periods may exist at any one
time with respect to all outstanding Revolving Credit Loans.
"Investments" shall mean, with respect to any Person, all investments
by such Person in other Persons (including Affiliates) in the forms of (a)
direct or indirect loans (including guarantees of (or the furnishing of letters
of credit as security for) Indebtedness or other obligations but excluding
Remote Guarantees), (b) advances or capital contributions (excluding (i) salary
and bonus advances, and commission, travel and similar advances, to officers and
employees made in the ordinary course of business consistent with past practice
and (ii) amounts payable by shareholders of the Company pursuant to the
provisions of the Tax Payment Agreement), (c) purchases or other acquisitions
for consideration of Indebtedness, Equity Interests or other securities, and (d)
payments pursuant to guarantees of Indebtedness or other obligations (including
payments made or required to be made pursuant to Remote Guarantees), together
with all items that are or would be classified as investments on a balance sheet
prepared in accordance with Generally Accepted Accounting Principles, excluding,
however, trade accounts receivable and bank deposits made in the ordinary course
of business consistent with past practice. The amount of any Investment by any
Person that constitutes a guarantee of (or the furnishing of a letter of credit
as security for) Indebtedness or other obligations shall be deemed to be (a) if
such Investment is a guarantee of Indebtedness, the maximum principal amount of
Indebtedness that may be guaranteed under such guarantee, (b) if such Investment
is the furnishing of a letter of credit, the maximum reimbursement obligation in
respect of such letter of credit, (c) if such Investment is a guarantee of a
lease, the lesser of (A) the sum of (i) the total amount of fixed rent
(excluding escalations resulting from a rise in the consumer price index or
similar index and excluding amounts required to be paid for insurance, taxes,
gas, electricity, common area charges and other similar charges) provided for in
such lease during the term thereof, and (ii) the product of (x) the Company's
estimate (as determined in good faith by the Board of Directors whose resolution
with respect thereto shall be delivered to the Agent and, reasonably, acceptable
to the Required Lenders) of the amounts (exclusive of fixed rent) that will be
payable under such lease in respect of the first year of the term thereof and
(y) the number of years of the term of such lease and (B) the maximum liability
of such Person under such guarantee and (d) if such Investment is a guarantee of
obligations other than Indebtedness or a lease, the maximum liability of such
Person under such guarantee. If an Investment by a Person consists of the
guarantee of a lease and the amount of such Investment is determined under
subclause (A) of clause (c) of the preceding sentence, such Investment shall be
deemed to be amortized on a straight line basis over the term of the lease (or
the remaining term of the lease if the Investment is made or deemed to
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have been made after the commencement of the term of the lease). If an
Investment by a Person consists of the guarantee of a lease and the amount of
such Investment is determined under subclause (B) of clause (c) of the second
preceding sentence, such Investment shall be deemed to be amortized as and to
the extent that the maximum liability of such Person under such guarantee (as
determined in good faith by the Board of Directors of the Company and,
reasonably acceptable to the Required Lenders, whose resolution with respect
thereto shall be delivered to the Agent) is reduced. Any unamortized portion of
an Investment by a Person that consists of a guarantee of a lease shall be
deemed to be amortized on such date, if any, as such Person has no further
liability under such guarantee. If an Investment by a Person consists of the
guarantee of a lease and the fixed rent under such lease is increased or the
term of such lease is extended, (a) such Person shall be deemed to have made a
new Investment on the date (and computed as if the term of the lease commenced
as of the date) on which the action which increased the fixed rent or extended
the term occurred and (b) the unamortized portion immediately prior to such date
of such Person's original Investment by reason of such guarantee shall be deemed
to be amortized on such date. If the Company or any Corporate Guarantor sells or
otherwise disposes of any Equity Interests of any Corporate Guarantor which is a
direct or indirect wholly-owned Subsidiary of the Company such that, after
giving effect to any such sale or disposition, such Person is no longer a
wholly-owned Subsidiary of the Company, the Company shall be deemed to have made
an Investment on the date of any such sale or disposition equal to sum of (a)
the fair market value of the Equity Interests of such Corporate Guarantor not
sold or disposed of in an amount determined in accordance with the last
paragraph of Section 7.15 and (b) the amount of the Investments by the Company
and the Corporate Guarantors constituting a guarantee of (or the furnishing of a
letter of credit as security for) Indebtedness or other obligations of such
Corporate Guarantor.
"Issuing Lender" shall mean the entity which is the Agent, in its
capacity as the issuer of Letters of Credit hereunder.
"Lenders" shall have the meaning set forth in the preamble hereto.
"Lending Office" shall mean, for each Lender, the office specified
under such Lender's name on the signature pages hereof with respect to each Type
of Loan, or such other office as such Lender may designate in writing from time
to time to the Company and the Agent with respect to such Type of Loan.
"Letter of Credit" shall mean any Standby Letter of Credit issued by
the Issuing Lender for the account of the Company pursuant to the terms of this
Agreement including the Existing Letters of Credit.
"Lien" shall mean any lien (statutory or otherwise), security
interest, mortgage, deed of trust, pledge, charge, conditional sale, title
retention agreement, Capital Lease or other encumbrance or similar right of
others, or any agreement to give any of the foregoing.
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"Loan Documents" shall mean, collectively, this Agreement, the Notes,
the Corporate Guaranties, and each other agreement executed in connection with
the transactions contemplated hereby or thereby, as each of the same may
hereafter be amended, restated, supplemented or otherwise modified from time to
time.
"Loans" shall mean, collectively, the Revolving Credit Loans.
"Mandatory Senior Payment" shall mean a purchase of Senior Notes
pursuant to Section 4.16 of the Senior Note Indenture with those proceeds from
an Asset Sale (other than a Non- Equity Asset Sale) remaining after giving
effect to prepayment of the Revolving Credit Loans pursuant to Section 3.03.
"Material Adverse Effect" shall mean a material adverse effect upon
(a) the business, operations, property, prospects or condition (financial or
otherwise) of the Company or of the Company and the Corporate Guarantors, taken
as a whole, or (b) the ability of the Company or any Corporate Guarantor to
perform in any material respect any obligations under any Loan Document to which
it is a party.
"Material Contract" shall mean each contract, instrument or agreement
the breach or termination of which could reasonably be expected to have a
Material Adverse Effect.
"Merger" shall mean the merger of SMLLC with and into the Company
pursuant to the Merger Agreement.
"Merger Agreement" shall mean that certain Amended and Restated
Agreement and Plan of Merger, dated as of January 19, 1999, among the Company,
SMLLC and Mario Sbarro, Joseph Sbarro, Joseph Sbarro (1994) Family Limited
Partnership, Anthony Sbarro, and Mario Sbarro and Franklin Montgomery, not
individually but as trustees under that certain Trust Agreement dated April 28,
1984 for the benefit of Carmela Sbarro and her descendants, as the same may be
further amended, restated, supplemented or otherwise modified from time to time
as permitted pursuant to the terms thereof.
"Merger Payment" shall mean the cash payment due to shareholders and
stock option holders of the Company entitled to receive such payment for their
shares of the Company's capital stock and options to purchase capital stock,
respectively, at the effective time of the Merger in accordance with the Merger
Agreement.
"Net Income" means, with respect to any Person, the net income (loss)
of such Person, determined in accordance with Generally Accepted Accounting
Principles and before any reduction in respect of preferred stock dividends,
excluding, however, (i) any gain (but not loss), together with any related
provision for taxes on such gain (but not loss), realized in connection with (a)
any Asset Sale (including, without limitation, dispositions pursuant to sale and
leaseback transactions) or (b) the disposition of any securities by such Person
or any of its Subsidiaries or
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the extinguishment of any Indebtedness of such Person or any of its
Subsidiaries, and (ii) any extraordinary gain or extraordinary non-cash loss and
any nonrecurring gain (but not loss), together with any related provision for
taxes on such extraordinary gain or extraordinary non-cash loss or nonrecurring
gain (but not loss).
"Net Proceeds" shall mean the aggregate cash proceeds received by the
Company or any Corporate Guarantor in respect of any Asset Sale permitted
pursuant to Section 7.04 (including, without limitation, any cash received upon
the sale or other disposition of any non-cash consideration received in any such
sale, but only as and when received), net of (i) the direct costs relating to
such sale (including, without limitation, legal, accounting and investment
banking fees, and sales commissions) and any relocation expenses incurred as a
result thereof, (ii) taxes paid or payable as a result thereof (after taking
into account any available tax credits or deductions and any tax sharing
arrangements), (iii) amounts required to be applied to the repayment of
Indebtedness secured by a Lien on the asset or assets that were the subject of
such sale and (iv) any reserve for adjustment in respect of the sale price of
such asset or assets established in accordance with Generally Accepted
Accounting Principles.
"Non-Equity Asset Sale" shall mean an Asset Sale described in clause
(i) of the definition thereof.
"Note Purchase Agreement" shall mean the Note Purchase Agreement,
dated the date hereof, by and among the Company, the guarantors and purchasers
identified therein pursuant to which the Company issued the Senior Notes, as
amended, supplemented or modified from time to time.
"Notes" shall mean, collectively, the Revolving Credit Notes.
"Obligations" shall mean all obligations, liabilities and indebtedness
of the Company to the Lenders, the Issuing Lender and the Agent, whether now
existing or hereafter created, absolute or contingent, direct or indirect, due
or not, whether created directly or acquired by assignment or otherwise, arising
under or relating to this Agreement, the Notes or any other Loan Document
including, without limitation, all obligations, liabilities and indebtedness of
the Company with respect to the principal of and interest on the Loans,
reimbursement of Letters of Credit, including, without limitation, the Existing
Letters of Credit, and all fees, costs, expenses and indemnity obligations of
the Company hereunder or under any other Loan Document.
"Participant" shall have the meaning set forth in Section 10.05(b).
"Payment Office" shall mean the Agent's office located at 730 Veterans
Memorial Highway, Hauppauge, New York 11788 or such other office as the Agent
may designate from time to time.
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"PBGC" shall mean the Pension Benefit Corporate Guaranty Corporation
established pursuant to Section 4002 of ERISA, or any successor thereto.
"Permitted Debt" shall mean each of the following items of
Indebtedness:
(i) the incurrence by the Company and the Corporate Guarantors of
Indebtedness under (A) this Agreement and the other Loan Documents,
(B) obligations under Capital Leases or (C) purchase money
indebtedness and mortgage loans secured solely by liens on the real
property, improvements, fixtures and related personal property which
customarily secures such a loan which are the subject of such loan
(other than a loan secured solely by the real property and
improvements of 401 Broad Hollow Realty Corp. (or any successor
thereto) located at 401 Broadhollow Road, Melville, New York unless
such loan is in the principal amount of $12,000,000 or more and the
proceeds from such loan are used to pay (i) if the aggregate
outstanding principal balance of the Revolving Credit Loans is less
than $12,000,000, then the outstanding principal amount of the
Revolving Credit Loans and (ii) if the aggregate outstanding principal
balance of the Revolving Credit Loans is equal to or greater than
$12,000,000 then the lesser of (x) the outstanding principal amount of
the Revolving Credit Loans or (y) the full amount of such proceeds;
provided that the aggregate amount of all Indebtedness (with letters
of credit being deemed for all purposes of this Agreement to have a
principal amount equal to the maximum potential liability of the
Company and the Corporate Guarantors in respect thereof) outstanding
under this clause (i) after giving effect to such incurrence,
including all Permitted Refinancing Indebtedness incurred to refund,
refinance or replace any Indebtedness incurred pursuant to this clause
(i), does not exceed an aggregate principal amount equal to $75.0
million less the aggregate principal amount of all Indebtedness
permanently repaid with the Net Proceeds of any Asset Sale;
(ii) the incurrence by the Company and the Corporate Guarantors
of Indebtedness represented by the Senior Notes, the guarantees
thereof and the Senior Note Indenture in the principal amount of the
Senior Notes originally issued on the Closing Date; provided the
aggregate original principal amount of the Senior Notes shall not
exceed $255,000,000;
(iii) the incurrence by the Company and the Corporate Guarantors
of the Existing Indebtedness;
(iv) [Reserved];
(v) [Reserved];
(vi) the incurrence by the Company and any Corporate Guarantor of
Permitted Refinancing Indebtedness in exchange for, or the net
proceeds of which are used to refund, refinance or replace
Indebtedness (other than Hedging Obligations and other than
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Indebtedness permitted to be incurred pursuant to clause (vii) or
clause (ix) of this paragraph) that was permitted by this Agreement to
be incurred;
(vii) the incurrence by the Company or any Corporate Guarantor
which is a wholly owned Subsidiary of intercompany Indebtedness
between or among the Company and any such wholly owned Subsidiary,
provided, however, that any subsequent issuance or transfer of Equity
Interests that results in any such Indebtedness being held by a Person
other than the Company or a Corporate Guarantor which is a wholly
owned Subsidiary of the Company, and any sale or other transfer of any
such Indebtedness to a person that is not either the Company or a
Corporate Guarantor which is a wholly owned Subsidiary of the Company,
shall be deemed, in each case, to constitute an incurrence of such
Indebtedness by the Company or such Corporate Guarantor, as the case
may be;
(viii) the incurrence by the Company or any Corporate Guarantor
of Hedging Obligations that are incurred for the purpose of hedging
against fluctuations in currency values or for the purpose of fixing
or hedging interest rate risk with respect to any floating rate
Indebtedness of the Company or any Corporate Guarantor that is
permitted by the terms of this Agreement to be outstanding, provided
that the notional principal amount of any Hedging Obligations does not
exceed the principal amount of Indebtedness to which such agreement
relates;
(ix) the guarantee by the Company or any Corporate Guarantor of
Indebtedness of the Company or a Corporate Guarantor which is a wholly
owned Subsidiary of the Company that was permitted to be incurred by
another provision of this definition;
(x) Subordinated Debt; and
(xi) the guaranties permitted pursuant to Section 7.03.
For purposes of determining the amount of any Indebtedness of any
Person under this definition, (a) the principal amount of any Indebtedness of
such Person arising by reason of such Person having granted or assumed a Lien on
its property to secure Indebtedness of another Person shall be the lower of the
fair market value of such property and the principal amount of such Indebtedness
outstanding (or committed to be advanced) at the time of determination; (b) the
amount of any Indebtedness of such Person arising by reason of such Person
having guaranteed Indebtedness of another Person where the amount of such
guarantee is limited to an amount less than the principal amount of the
Indebtedness so guaranteed shall be such amount as so limited; and (c)
Indebtedness shall not include a non-recourse pledge by the Company or any
Corporate Guarantor of Investments in any Person that is not a Corporate
Guarantor to secure the Indebtedness of such Person. For purposes of determining
compliance with Section 7.02, in the event that an item of Indebtedness meets
the criteria of more than one of the categories of Permitted Debt described in
clauses (i) through (xi) above, the Company shall, in its sole
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<PAGE>
discretion, classify such item of Indebtedness in only one of such clauses and
such item of Indebtedness will be treated as having been incurred pursuant to
only one of such clauses.
"Permitted Holder" shall mean Mario Sbarro, Anthony Sbarro, Joseph
Sbarro, their respective spouses and lineal descendants, any spouse of any such
lineal descendant who is a full time employee of the Company or any of its
Subsidiaries, any trust for the benefit of one or more of the foregoing, any
Person in which one or more of the foregoing holds 80% or more of the Voting
Stock (measured by voting power rather than number of shares) and the trust
created under that certain Trust Agreement dated April 28, 1984 for the benefit
of Carmela Sbarro and her descendants.
"Permitted Investments" shall mean (i) any Investment in the Company
or in a Corporate Guarantor which is a wholly-owned Subsidiary of the Company;
(ii) any Investment in Eligible Investments; (iii) any Investment by the Company
or any Corporate Guarantor in a Person, if as a result of such Investment (a)
such Person becomes a wholly-owned Subsidiary of the Company and a Corporate
Guarantor or (b) such Person is merged, consolidated or amalgamated with or into
(provided the Company or the Corporate Guarantor is the surviving entity), or
transfers or conveys substantially all of its assets to, or is liquidated into,
the Company or a Corporate Guarantor which is a wholly-owned Subsidiary of the
Company; (iv) any Investment made as a result of the receipt of non-cash
consideration from an Asset Sale that was made pursuant to and in compliance
with Section 7.04; (v) any acquisition of assets received solely in exchange for
the issuance of Equity Interests (other than Disqualified Stock) of the Company;
(vi) Investments received in connection with the settlement of any ordinary
course obligations owed to the Company or any Corporate Guarantor; and (vii)
other Investments (including Investments in the form of guarantees of, or
providing letters of credit as security for, Indebtedness or other obligations
but excluding Committed Restricted Investments) in entities engaged in lines of
business consistent with the requirements in Section 7.07 if, after giving
effect to such Investment, the aggregate amount of Unrestricted Investments
Outstanding does not exceed $20,000,000.
"Permitted Liens" shall mean (i) Liens in favor of the Company or any
Corporate Guarantor; (ii) Liens securing the Obligations to the Lenders; (iii)
Liens on real property and improvements which are the subject of mortgage loans
permitted pursuant to clause (i) of the definition of Permitted Debt; provided,
that the outstanding principal amount of Indebtedness secured by such Liens
(other than Liens on the real property, improvements, fixtures and related
personal property which customarily secures such a loan owned by 401 Broad
Hollow Realty Corp. (or any successor thereto) located at 401 Broadhollow Road,
Melville, New York) permitted by this clause (iii) shall not at any time exceed
$50,000,000, (iv) Liens to secure the performance of statutory obligations,
surety or appeal bonds, performance bonds or other obligations of a like nature
incurred in the ordinary course of business; (v) Liens identified on Schedule
II; (vi) Liens for taxes, assessments or governmental charges or claims that are
not yet delinquent or that are being contested in good faith by appropriate
proceedings promptly instituted and diligently concluded; provided that any
reserve or other appropriate provision as shall be required in conformity with
Generally Accepted Accounting Principles shall have been made
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therefore; (vii) Liens securing Permitted Refinancing Indebtedness to the extent
that the Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded was permitted to be secured by a Lien provided that such Liens do not
extend to any assets other than those that secured the Indebtedness being
extended, refinanced, renewed, replaced, defeased or refunded; (viii) Liens
incurred in the ordinary course of business of the Company or any Corporate
Guarantor with respect to obligations that do not exceed $2,000,000 in the
aggregate at any one time outstanding and that (a) are not incurred in
connection with the borrowing of money or the obtaining of advances or credit
(including, without limitation, trade credit in the ordinary course of business)
and (b) do not in the aggregate materially detract from the value of the
property or materially impair the use thereof in the operation of business by
the Company or such Corporate Guarantor, and (ix) purchase money Liens securing
the purchase price for fixed or capital assets (other than real property), and
Liens on the equipment which is the subject of a Capital Lease granted to the
lessor thereunder; provided in each case (i) no Default or Event of Default
shall have occurred or be continuing or shall occur after giving effect to such
Lien, (ii) such purchase money Lien does not exceed 100% of the purchase price
of, and encumbers only, the property acquired, and (iii) such purchase money
Lien does not secure any Indebtedness other than in respect of the purchase
price of the asset acquired.
"Permitted Refinancing Indebtedness" shall mean any Indebtedness of
the Company or any Corporate Guarantor issued in exchange for, or the net
proceeds of which are used to extend, refinance, renew, replace, defease or
refund other Indebtedness (other than Hedging Obligations and other than
Indebtedness permitted to be incurred pursuant to clauses (vii) and (ix) of the
definition of Permitted Debt), of the Company or any Corporate Guarantor;
provided that: (i) the principal amount (or accreted value, if applicable) of
such Permitted Refinancing Indebtedness does not exceed the principal amount of
(or accreted value, if applicable), plus premium and accrued interest on, the
Indebtedness so extended, refinanced, renewed, replaced, defeased or refunded
(plus the amount of reasonable expenses incurred in connection therewith); (ii)
such Permitted Refinancing Indebtedness has a final maturity date later than the
final maturity date of, and has a Weighted Average Life to Maturity equal to or
greater than the Weighted Average Life to Maturity of, the Indebtedness being
extended, refinanced, renewed, replaced, defeased or refunded; (iii) if the
Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded
is subordinated in right of payment to the Obligations or any Corporate
Guaranty, such Permitted Refinancing Indebtedness is subordinated in right of
payment to the Obligations or any Corporate Guaranty or such Hedging Obligations
on terms at least as favorable to the Lenders as those contained in the
documentation governing the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded; and (iv) such Indebtedness is incurred either by
the Company or by the Corporate Guarantor that is an obligor on the Indebtedness
being extended, refinanced, renewed, replaced, defeased or refunded.
"Person" shall mean any natural person, corporation, limited liability
company, limited liability partnership, business trust, joint venture,
association, company, partnership, Governmental Authority or other entity.
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<PAGE>
"Plan" shall mean any multi-employer or single-employer plan defined
in Section 4001 of ERISA, which covers, or at any time during the five calendar
years preceding the date of this Agreement covered, employees of the Company,
any Corporate Guarantor or an ERISA Affiliate on account of such employees'
employment by the Company, any Corporate Guarantor or an ERISA Affiliate.
"Prime Rate" shall mean the rate per annum announced by the entity
which is the Agent from time to time as its prime rate in effect at its
principal office, each change in the Prime Rate shall be effective on the date
such change is announced to become effective.
"Prime Rate Loans" shall mean Loans at such times as they are being
made and/or maintained at a rate of interest based on the Prime Rate.
"Purchasing Lender" shall have the meaning set forth in Section
10.05(c).
"Regulation D" shall mean Regulation D of the Board of Governors of
the Federal Reserve System, as the same may be amended or supplemented from time
to time.
"Registration Rights Agreement" shall mean the Registration Rights
Agreement to be executed on or prior to the Closing Date by and among the
Company, the Corporate Guarantors named therein, and Bear, Stearns & Co. Inc.,
as initial purchaser, as the same may be amended, supplemented or modified from
time to time.
"Remote Guarantee" shall mean a guarantee of a tenant's obligations
under a lease of real property which does not apply to obligations accruing in
respect of periods subsequent to the date on which the tenant surrenders
possession of the leased premises to the landlord (whether or not such surrender
is authorized by the terms of the lease), does not apply to any breach arising
from any such surrender and does not apply to any obligations that may have been
accelerated under the provisions of the lease.
"Reportable Event" shall mean an event described in Section 4043(c) of
ERISA with respect to a Plan as to which the 30 day notice requirement has not
been waived by the PBGC.
"Required Lenders" shall mean Lenders owed at least 61% of the sum of
the aggregate unpaid principal amount of the Loans or, if no Loans are
outstanding, Lenders having at least 61% of the Total Revolving Credit
Commitments.
"Reserve Adjusted Libor" shall mean, with respect to the Interest
Period pertaining to an Adjusted Libor Loan, a rate per annum equal to the
product (rounded upwards to the next higher 1/16 of one percent) of (a) the
annual rate of the interest at which Dollar deposits of an amount comparable to
the amount of such Adjusted Libor Loan and for a period equal to the Interest
Period applicable thereto which appears on Telerate Page 3750 at approximately
11:00 A.M. (London time) on the second Business Day prior to the commencement of
such Interest Period or
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if such rate does not appear on Telerate Page 3750 as of such date and time, the
rate per annum appearing on Reuters Screen Libor Page as the London interbank
offered rate for deposits in Dollars at approximately 11:00 A.M. (London time)
on the second Business Day prior to the commencement of such Interest Period for
a term equal to such Interest Period, provided, however; if more than one rate
is specified on Reuters Screen Libor Page, the applicable rate shall be the
arithmetic mean of all such rates multiplied by (b) the Eurocurrency Reserve
Requirement.
"Restricted Investment" shall mean an Investment other than a
Permitted Investment.
"Restricted Payment" shall have the meaning set forth in Section 7.15.
"Revolving Credit Commitment" shall mean, with respect to each Lender,
the obligation of such Lender to make Revolving Credit Loans to the Company and
to acquire participations in Letters of Credit in an aggregate amount not to
exceed the amount set forth opposite such Lender's name on the signature pages
hereof under the caption "Revolving Credit Commitment", as such amounts may be
adjusted in accordance with the terms of this Agreement.
"Revolving Credit Commitment Period" shall mean the period from and
including the Closing Date to, but not including, the Revolving Credit
Commitment Termination Date or such earlier date as the Revolving Credit
Commitments shall terminate as provided herein.
"Revolving Credit Commitment Termination Date" shall mean the fifth
anniversary of the Closing Date.
"Revolving Credit Loan" shall have the meaning specified in Section
2.01.
"Revolving Credit Note" shall have the meaning specified in Section
2.02.
"S Corporation" means a corporation that is treated as an "S
corporation" for federal income tax purposes.
"Senior Note Payment" shall mean a direct or indirect prepayment,
repayment, defeasance, purchase, redemption, or optional prepayment or optional
repayment of principal of, any Senior Note, including without limitation any
Mandatory Senior Note Payment.
"Senior Notes" shall mean the Senior Notes due 2009 in the aggregate
original principal amount of not less than $245,000,000 or greater than
$255,000,000 to be issued by the Company pursuant to the Note Purchase Agreement
and the Senior Note Indenture on or prior to the Closing Date.
"Senior Note Indenture" shall mean the Indenture to be executed on or
prior to the Closing Date by the Company, the Corporate Guarantors identified
therein, and FIRSTAR Bank, as trustee, pursuant to which the Company shall issue
the Senior Notes, as amended, supplemented or modified from time to time.
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"SMLLC" shall mean Sbarro Merger LLC, a New York limited liability
company.
"Solvent" shall mean with respect to any Person as of the date of
determination thereof that (a) the amount of the "present fair saleable value"
of the assets of such Person will, as of such date, exceed the amount of all
"liabilities of such Person, contingent or otherwise," as of such date, as such
quoted terms are determined in accordance with applicable federal and state laws
governing determinations of the insolvency of debtors, (b) the present fair
saleable value of the assets of such Person will, as of such date, be greater
than the amount that will be required on its debts as such debts become absolute
and matured, (c) such Person will not have as of such date, an unreasonably
small amount of capital with which to conduct its business, and (d) such Person
will be able to pay its debts as they mature.
"Standby Letter of Credit" shall mean any letter of credit issued to
support an obligation of a Person and which may be drawn on only upon the
failure of such Person to perform such obligation or other contingency.
"Subordinated Debt" shall mean all debt which is subordinated in right
of payment to the prior final payment in full of the Obligations on terms
satisfactory to and approved in writing by the Required Lenders, having a final
maturity on a date after the Revolving Credit Commitment Termination Date and
which requires no payments (whether principal, interest or otherwise) prior to
the Revolving Credit Commitment Termination Date.
"Subsidiary" shall mean, with respect to any Person, (i) any
corporation, association or other business entity of which more than 50% of the
total voting power of shares of Capital Stock entitled (without regard to the
occurrence of any contingency) to vote in the election of at least a majority of
the directors, managers or trustees thereof is at the time owned or controlled,
directly or indirectly, by such Person or one or more of the other Subsidiaries
of that Person (or a combination thereof) and (ii) any partnership (a) the sole
general partner or the managing general partner of which is such Person or a
Subsidiary of such Person or (b) the only general partners of which are such
Person or one or more Subsidiaries of such Person (or any combination thereof).
"Tax Distributions" shall mean amounts paid or distributed to or for
the benefit of shareholders of the Company (net of amounts repaid by such
shareholders) pursuant to and in accordance with the Tax Payment Agreement as in
effect on the Closing Date.
"Taxes" shall have the meaning set forth in Section 3.09.
"Tax Payment Agreement" shall mean the Tax Payment Agreement, dated as
of the Closing Date, among the Company, Mario Sbarro, Joseph Sbarro, Joseph
Sbarro (1994) Family Limited Partnership, Anthony Sbarro, and Mario Sbarro and
Franklin Montgomery, not individually but as trustees under that certain Trust
Agreement dated April 28, 1984 for the benefit of Carmela Sbarro and her
descendants, and any future shareholders of the Company that may become parties
thereto.
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"Telerate Page 3750" shall mean the display designated as "Page 3750"
on the Associated Press-Dow Jones Telerate Service (or such other page as may
replace Page 3750 on the Associated Press-Dow Jones Telerate Service or such
other service as may be nominated by the British Bankers' Association as the
information vendor for the purpose of displaying British Bankers' Association
interest settlement rates for Dollar deposits). Each Reserve Adjusted Libor rate
determined on the rate displayed on Telerate Page 3750 shall be subject to
corrections, if any, made in such rate and displayed by the Associated Press-Dow
Jones Telerate Service within one hour of the time when such rate is first
displayed by such service.
"Total Revolving Credit Commitment" shall mean, at any time, the
aggregate of the Revolving Credit Commitments in effect at such time which,
initially, shall be $30,000,000.
"Type" shall mean as to any Loan its status as a Prime Rate Loan or an
Adjusted Libor Loan.
"Unfunded Current Liability" of any Plan shall mean the amount, if
any, by which the present value of the accrued benefits under the Plan as of the
close of its most recent plan year exceeds the fair market value of the assets
allocable thereto, determined in accordance with Section 412 of the Code.
"Unrestricted Investments Outstanding" shall mean, at any time of
determination, in respect of any Permitted Investments made in any Person
pursuant to clause (vii) of the definition of the term Permitted Investments
(and any Investments (other than Committed Restricted Investments) made in such
Person by the Company or any Corporate Guarantor during the period from August
30, 1999 to the Closing Date), the difference between (i) the sum of all
Permitted Investments theretofore made by the Company or any Corporate Guarantor
in such Person on or after the date of this Agreement pursuant to clause (vii)
of the definition of Permitted Investments plus the sum of all Investments
(other than Committed Restricted Investments) made by the Company or any
Corporate Guarantor in such Person during the period from August 30, 1999 to the
Closing Date minus (ii) the sum of, without duplication, (a) the amount of all
dividends and distributions paid in cash by such Person after August 30, 1999 to
the Company or a Corporate Guarantor (to the extent that the Company does not
elect to include the amount of such dividends and distributions in the
computation of Consolidated Net Income pursuant to the parenthetical of clause
(i) of the definition thereof at the time of determination), (b) all repayments
after August 30, 1999 by such Person of the principal amount of loans or
advances that constitute Permitted Investments theretofore made by the Company
or any Corporate Guarantor in such Person pursuant to clause (vii) of the
definition of Permitted Investments or that constitute loans or advances (other
than Committed Restricted Investments) made by the Company or any Corporate
Guarantor in such Person during the period from August 30, 1999 to the Closing
Date, (c) any other reduction made in cash of such Investments by the Company or
any Corporate Guarantor in such Person, (d) if any Permitted Investment made in
such Person by the Company or any Corporate Guarantor pursuant to clause (vii)
of the definition of the term Permitted Investments (or if any Investment (other
than Committed Restricted Investments) made in such Person by the Company or any
Corporate Guarantor during the period from August 30, 1999 to the Closing Date)
was in the form of a guarantee of Indebtedness, the amount of any reduction in
the
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maximum principal amount of Indebtedness that may be guaranteed under such
guarantee, (e) if any Permitted Investment made in such Person by the Company,
any Corporate Guarantor pursuant to clause (vii) of the definition of the term
Permitted Investments (or if any Investment (other than Committed Restricted
Investments) made in such Person by the Company or any Corporate Guarantor
during the period from August 30, 1999 to the Closing Date) was in the form of
the furnishing of a letter of credit as security for Indebtedness or other
obligations, the amount of any reduction in the maximum reimbursement
obligations in respect of such letter or credit, (f) if any Permitted Investment
made in such Person by the Company or any Corporate Guarantor pursuant to clause
(vii) of the definition of the term Permitted Investments (or if any Investment
(other than Committed Restricted Investments) made in such Person by the Company
or any Corporate Guarantor during the period from August 30, 1999 to the Closing
Date) was in the form of the guarantee of a lease, the amount of amortization
(as provided in the definition of "Investments") of such Investment and (g) if
any Permitted Investment made in such Person by the Company or any Corporate
Guarantor pursuant to clause (vii) of the definition of the term Permitted
Investments (or if any Investment (other than Committed Restricted Investments)
made in such Person by the Company or any Corporate Guarantor during the period
from August 30, 1999 to the Closing Date) was in the form of a guarantee of
obligations other than Indebtedness or a lease, the amount of any reduction in
the maximum liability under such guarantee; provided that (x) the amount of
Unrestricted Investments Outstanding in respect of any Person in respect of such
Investments shall at no time be a negative amount and (y) the amount of
Unrestricted Investments Outstanding in respect of any Permitted Investments
theretofore made in any Person pursuant to clause (vii) of the definition of the
term Permitted Investments (and any Investments (other than Committed Restricted
Investments) made in such Person by the Company or any Corporate Guarantor
during the period from August 30, 1999 to the Closing Date) shall be zero if, at
the time of determination, such Person is a Corporate Guarantor which is a
wholly-owned Subsidiary of the Company.
"Unrestricted Subsidiary" shall mean each of the Subsidiaries of the
Company listed on Schedule I and not designated thereon as a Corporate Guarantor
and any Subsidiary of the Company formed or acquired after the Closing Date
which is designated as an Unrestricted Subsidiary in accordance with the last
sentence of Section 6.13, in each case, only to the extent that such Subsidiary
(a) is not party to any agreement, contract, arrangement or understanding with
the Company or any Corporate Guarantor unless the terms of any such agreement,
contract, arrangement or understanding comply with Section 7.16, (b) is a Person
with respect to which neither the Company nor any Corporate Guarantor has any
direct or indirect obligation (i) to subscribe for additional Equity Interests
or (ii) to maintain or preserve such Person's financial condition or to cause
such Person to achieve any specified levels of operating results and (c) is not
a guarantor of, and is not otherwise directly or indirectly providing credit
support for, any Indebtedness of the Company or any Corporate Guarantor.
"Unused Fee Rate" shall mean the percentage set forth below opposite
the applicable ratio:
Consolidated Senior Debt Unused Fee Rate
to Consolidated EBITDA (360 day basis)
- ------------------------ ---------------
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Equal to or less than 3.00.1.00 .25%
Greater than 3.00.1.00 but equal .30%
to or less than 3.25.1.00
Greater than 3.25:1.00 but equal .35%
to or less than 3.50.1.00
Greater than 3.50:1.00 but equal .40%
to or les than 3.75:1.00
Greater than 3:75:1.00 .45%
Notwithstanding the foregoing, during the period commencing on and including the
Closing Date and ending on the day immediately preceding the date the Unused Fee
Rate is reset in accordance with the next sentence, the Unused Fee Rate shall be
.40%. The Unused Fee Rate will (a) be reset on each date which is five Business
Days following the date of receipt by the Agent of the financial statements
referred to in Section 6.03(a) and Section 6.03(b) together with a certificate
of the Chief Financial Officer of the Company certifying the ratio of
Consolidated Senior Debt to Consolidated EBITDA and setting forth the
calculation thereof in detail; for the then most recently completed fiscal
quarter of the Company. If any such financial statement and certificate are not
received by the Agent within the time period required pursuant to Section
6.03(a) or Section 6.03(b), as the case may be, the Unused Fee Rate will be
reset, based on a ratio of Consolidated Funded Debt to Consolidated EBITDA of
greater than 3.75:1.00 from the date such financial statement and certificate
were due until the date which is five Business Days following the receipt by the
Agent of such financial statements and certificate, provided, however, that the
Lenders shall not in any way be deemed to have waived any Default or Event of
Default, including without limitation, an Event of Default resulting from the
failure of the Company to comply with Section 7.13 of this Agreement, or any
rights or remedies hereunder or under any other Loan Document in connection with
the failure of the Agent to receive such financial statements and certificate.
During the occurrence and continuance of a Default or an Event of Default, no
downward adjustment, and only upward adjustments, shall be made to the Unused
Fee Rate; provided, however, any downward adjustment shall become effective on
the date, if any, on which such Default or Event of Default shall cease to be
continuing.
"Voting Stock" of any Person as of any date shall mean Capital Stock
of such Person that is at the time entitled to vote in the election of at least
a majority of the directors, managers, trustees or other governing body of such
Person.
"Weighted Average Life to Maturity" shall mean when applied to any
Indebtedness at any date, the number of years obtained by dividing (i) the sum
of the products obtained by multiplying (a) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (b) the
number of years (calculated to the nearest one-twelfth) that will elapse between
such date and the making of such payment, by (ii) the then outstanding principal
amount of such Indebtedness.
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SECTION 1.02. TERMS GENERALLY. The definitions of terms herein shall
apply equally to the singular and plural forms of the terms defined. Whenever
the context may require, pronouns stated in the masculine, feminine or neuter
gender shall include the masculine, feminine and the neuter. Except as otherwise
herein specifically provided, each accounting term used herein shall have the
meaning given to it under Generally Accepted Accounting Principles. The term
"including" shall not be limited or exclusive, unless specifically indicated to
the contrary. The word "will" shall be construed to have the same meaning in
effect as the word "shall". The words "herein", "hereof" and "hereunder" and
other words of similar import refer to this Agreement as a whole, including the
schedules hereto, all of which are by this reference incorporated into this
Agreement.
ARTICLE II
LOANS
SECTION 2.01. REVOLVING CREDIT LOANS. (a) Subject to the terms and
conditions, and relying upon the representations and warranties, set forth
herein, each Lender severally agrees to make loans (individually a "Revolving
Credit Loan" and, collectively, the "Revolving Credit Loans") to the Company
from time to time during the Revolving Credit Commitment Period up to but not
exceeding at any one time outstanding the amount of its Revolving Credit
Commitment; provided, however, that no Revolving Credit Loan shall be made if,
after giving effect to such Revolving Credit Loan, the Aggregate Outstandings
would exceed the Total Revolving Credit Commitment in effect at such time.
During the Revolving Credit Commitment Period, the Company may from time to time
borrow, repay and reborrow hereunder on or after the Closing Date hereof and
prior to the Revolving Credit Commitment Termination Date, subject to the terms,
provisions and limitations set forth herein. The Revolving Credit Loans may be
(i) Adjusted Libor Loans, (ii) Prime Rate Loans or (iii) a combination thereof.
(b) The Company shall give the Agent irrevocable written notice (or
telephonic notice promptly confirmed in writing) not later than 11:00 a.m., New
York, New York time, three Business Days prior to the date of each proposed
Adjusted Libor Loan under this Section 2.01 or prior to 11:00 a.m. New York, New
York time on the date of each proposed Prime Rate Loan under this Section 2.01.
Such notice shall be irrevocable and shall specify (i) the amount and Type of
the proposed borrowing, (ii) the proposed use of the loan proceeds, (iii) the
initial Interest Period if an Adjusted Libor Loan, and (iv) the proposed
Borrowing Date. Upon receipt of such notice from the Company, the Agent shall
promptly notify each Lender thereof. Each borrowing pursuant to the Total
Revolving Credit Commitment shall be, subject to availability therefor, in an
aggregate principal amount of (i) $400,000 or whole multiples of $100,000 in
excess thereof, with respect to Prime Rate Loans and (ii) $1,000,000 (or
$500,000 if there is only a single Lender) or whole multiples of $500,000 in
excess thereof with respect to Adjusted Libor Loans.
(c) The Company shall have the right, upon not less than three
Business Days' prior written notice to the Agent, to terminate the Total
Revolving Credit Commitment or from time to time to permanently reduce the
amount of the Total Revolving Credit Commitment; provided, however, that no such
termination or reduction shall be permitted if, after giving effect thereto and
to any prepayments of the Revolving Credit Loans made on the effective date
thereof, the
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Aggregate Outstandings would exceed the Total Revolving Credit Commitment as
then reduced; provided, further, that any such termination or reduction
requiring prepayment of any Adjusted Libor Loan shall be made only on the last
day of the Interest Period with respect thereto or on the date of payment in
full of all amounts owing pursuant to Section 3.08 as a result of such
termination or reduction. The Agent shall promptly notify each Lender of each
notice from the Company to terminate or permanently reduce the amount of the
Total Revolving Credit Commitment pursuant to this Section 2.01(c). Any such
reduction shall be in the amount of $1,000,000 (or $500,000 if there is only a
single Lender) or whole multiples of $100,000 in excess thereof, and shall
reduce permanently the amount of the Total Revolving Credit Commitment then in
effect.
(d) The several agreement of the Lenders to make Revolving Credit
Loans pursuant to this Section 2.01 shall automatically terminate on the
Revolving Credit Commitment Termination Date. Upon such termination, the Company
shall immediately repay in full the principal amount of the Revolving Credit
Loans then outstanding, together with all accrued interest thereon and all other
amounts due and payable hereunder.
SECTION 2.02. REVOLVING CREDIT NOTE. The Revolving Credit Loans made
by each Lender shall be evidenced by a promissory note of the Company
(individually a "Revolving Credit Note" and, collectively, the "Revolving Credit
Notes"), in the form attached hereto as Exhibit A, each appropriately completed,
duly executed and delivered on behalf of the Company and payable to the order of
such Lender in a principal amount equal to the Revolving Credit Commitment of
such Lender. Each Revolving Credit Note shall (a) be dated the Closing Date, (b)
be stated to mature on the Revolving Credit Commitment Termination Date, and (c)
bear interest from the date thereof until paid in full on the unpaid principal
amount thereof from time to time outstanding as provided in Section 3.01. Each
Lender is authorized to record the date, Type and amount of each Revolving
Credit Loan and the date and amount of each payment or prepayment of principal
of each Revolving Credit Loan in such Lender's records or on the grid schedule
annexed to the Revolving Credit Note; provided, however, that the failure of a
Lender to set forth each such Revolving Credit Loan, payment and other
information shall not in any manner affect the obligation of the Company to
repay each Revolving Credit Loan made by such Lender in accordance with the
terms of its Revolving Credit Note and this Agreement. The Revolving Credit
Note, the grid schedule and the books and records of each Lender shall
constitute conclusive evidence of the information so recorded absent manifest
error.
SECTION 2.03. LETTERS OF CREDIT. (A) LETTERS OF CREDIT - GENERALLY.
Subject to the terms and conditions set forth in this Agreement, upon written
request of the Company in accordance herewith, the Issuing Lender shall issue
Letters of Credit, at any time during the Revolving Credit Commitment Period,
with pro rata participation by all of the Lenders in accordance with their
respective Commitment Proportions. Notwithstanding the foregoing, at no time
shall the Aggregate Letters of Credit Outstanding exceed $10,000,000, and no
Letter of Credit shall be issued or created if, after giving effect to the same,
the Aggregate Outstandings would exceed the Total Revolving Credit Commitment.
Furthermore, notwithstanding anything contained herein to the contrary, the
Issuing Lender shall be under no obligation to issue a Letter of Credit if any
order, judgment or decree of any court, arbitrator or governmental authority
shall
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purport by its terms to enjoin, restrict or restrain the Issuing Lender in any
respect relating to the issuance of such Letter of Credit or a similar letter of
credit, or any law, rule, regulation, policy, guideline or directive (whether or
not having the force of law) from any governmental authority with jurisdiction
over the Issuing Lender shall prohibit or direct the Issuing Lender in any
respect relating to the issuance of such Letter of Credit or a similar letter of
credit, or shall impose upon the Issuing Lender with respect to any Letter of
Credit, any restrictions, any reserve or capital requirement or any loss, cost
or expense not reimbursed by the Company to the Issuing Lender. Each request for
issuance of a Letter of Credit shall be in writing and shall be received by the
Issuing Lender by no later than 12:00 p.m. on the day which is at least two
Business Days prior to the proposed date of issuance or creation, as applicable.
Such issuance or creation, as applicable, shall occur by no later than 5:00 p.m.
on the proposed date of issuance or creation (assuming proper prior notice as
aforesaid). Subject to the terms and conditions contained herein the expiry
dates, amounts and beneficiaries of the Letters of Credit will be as designated
by the Company. The Issuing Lender shall promptly notify the Lenders of the
amounts of all Letters of Credit issued hereunder and of any extension,
reduction, termination or amendment of any Letter of Credit. Each Letter of
Credit issued by the Issuing Lender hereunder shall identify: (i) the dates of
issuance and expiry of such Letter of Credit, (ii) the amount of such Letter of
Credit (which shall be a sum certain), (iii) the beneficiary of such Letter of
Credit, and (iv) the drafts and other documents necessary to be presented to the
Issuing Lender upon drawing thereunder. No Letter of Credit shall expire more
than one year from the date of issuance thereof provided a Letter of Credit may
contain a renewal or so called "evergreen provision" providing for successive
annual renewals of such Letter of Credit. The Company agrees to execute and
deliver to the Issuing Lender such further documents and instruments in
connection with any Letter of Credit issued (including without limitation,
applications therefor) created hereunder as the Issuing Lender in accordance
with its customary practices may request.
(B) DRAWINGS UNDER LETTERS OF CREDIT. The Company hereby absolutely
and unconditionally promises to pay to the Issuing Lender on the date of each
drawing under a Letter of Credit, in immediately available funds from its
accounts, the amount of such drawing under such Letter of Credit. If the Company
requests a Revolving Credit Loan pursuant to Section 2.01 not later than 11:00
a.m. on the date of the drawing under a Letter of Credit in accordance with the
terms hereof and if each of the conditions precedent to the making of such Loan
set forth in Article V of this Agreement has been satisfied, on the date of a
drawing under a Letter of Credit, the amount of such drawing, plus interest
thereon, for which the Issuing Lender has not been reimbursed by the Company
shall become a Prime Rate Loan made by the Lenders to the Company on such day.
The Issuing Lender agrees to notify each Lender of the amount of each drawing
under a Letter of Credit promptly upon the occurrence thereof. Each Lender
agrees that if notified of any draw under a Letter of Credit prior to 12:00 noon
on a Business Day then prior to 4:00 p.m. on the same Business Day (or, if
notified after such time on a Business Day, not later than 12:00 noon on the
next succeeding Business Day) it will make available to the Issuing Lender at
its office located at the Payment Office of the Issuing Lender (or such other
payment office as may be designated by the Issuing Lender, in federal funds or
other immediately available funds, its Commitment Proportion of any such drawing
or payment, plus any interest which shall have accrued thereon, provided that
each Lender's obligation shall be reduced by its Commitment
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Proportion of any reimbursement by the Company in respect of any such drawing or
payment pursuant to this Section 2.03.
(C) LETTER OF CREDIT OBLIGATIONS ABSOLUTE. (i) The obligation of the
Company to reimburse the Issuing Lender as provided hereunder in respect of
drawings or payments under Letters of Credit shall rank pari passu with the
obligation of the Company to repay the Loans hereunder, shall be absolute and
unconditional under any and all circumstances. Without limiting the generality
of the foregoing, the obligation of the Company to reimburse the Issuing Lender
in respect of drawings under Letters of Credit shall not be subject to any
defense based on the non- application or misapplication by the beneficiary of
the proceeds of any such payment or the legality, validity, regularity or
enforceability of the Letters of Credit or any related document or any dispute
between or among the Company, the beneficiary of any Letter of Credit or any
financing institution or other party to which any Letter of Credit may be
transferred. The Issuing Lender may accept or pay any draft presented to it
under any Letter of Credit regardless of when drawn or made and whether or not
negotiated, if such draft, accompanying certificate or documents and any
transmittal advice are presented or negotiated on or before the expiry date of
the Letter of Credit or any renewal or extension thereof then in effect, and
conforms to the terms and conditions of such Letter of Credit. Furthermore,
neither the Issuing Lender nor any of its correspondents shall be responsible,
as to any document presented under a Letter of Credit which appears to be
regular on its face, and appears on its face to be in substantial compliance
with the terms of the Letter of Credit, for the validity or sufficiency of any
signature or endorsement, for delay in giving any notice or failure of any
instrument to bear adequate reference to the Letter of Credit, or for failure of
any person to note the amount of any draft on the reverse of the Letter of
Credit. The Issuing Lender shall have the right, in its sole discretion, to
decline to accept any documents and to decline making payment under any Letter
of Credit if the documents presented are not in strict compliance with the terms
of such Letter of Credit.
(ii) Any action, inaction or omission on the part of the Issuing
Lender or any of its correspondents under or in connection with any Letter of
Credit or the related instruments, documents or property, if in good faith and
in conformity with such laws, regulations or customs as are applicable, shall be
binding upon the Company and shall not place the Issuing Lender or any of its
correspondents under any liability to the Company in the absence of (x) gross
negligence or willful misconduct by the Issuing Lender or its correspondents or
(y) the failure by the Issuing Lender to pay under a Letter of Credit after
presentation of a draft and documents strictly complying with such Letter of
Credit unless the Issuing Lender is prohibited from making such payment pursuant
to a court order. The Issuing Lender's rights, powers, privileges and immunities
specified in or arising under this Agreement are in addition to any heretofore
or at any time hereafter otherwise created or arising, whether by statute or
rule of law or contract. All Letters of Credit issued hereunder will, except to
the extent otherwise expressly provided hereunder, be governed by the Uniform
Customs and Practice for Documentary Credits (1993 Revision), International
Chamber of Commerce, Publication No. 500, and any subsequent revisions thereof.
(d) OBLIGATIONS OF LENDERS IN RESPECT OF LETTERS OF CREDIT. Each
Lender acknowledges that each Letter of Credit issued by the Issuing Lender
pursuant to this Agreement
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is issued by the Issuing Lender on behalf of and with the ratable participation
of all of the Lenders (i.e., in accordance with their Commitment Proportions),
and each Lender agrees to make the payments required by subsection (b) hereof
and agrees to be responsible for its pro rata share of all liabilities incurred
by the Issuing Lender in respect of each Letter of Credit issued, established,
opened or extended by the Issuing Lender hereunder for the account of the
Company, including the Existing Letters of Credit. Each Lender agrees with the
Issuing Lender and the other Lenders that its obligation to make the payments
required by subsection (b) hereof shall not be affected in any way by any
circumstances (other than the gross negligence or willful misconduct of the
Issuing Lender) occurring before or after the making of any payment by the
Issuing Lender pursuant to any Letter of Credit, including, without limitation:
(i) any modification or amendment of, or any consent, waiver, release or
forbearance with respect to, any of the terms of this Agreement or any other
instrument or document referred to herein; (ii) the existence of any Default or
Event of Default; or (iii) any change of any kind whatsoever in the financial
position or credit worthiness of the Company.
(e) LETTERS OF CREDIT COLLATERAL. In the event any Letter of Credit
shall not have matured or presentment for honor shall not have occurred on or
prior to the Revolving Commitment Termination Date or such earlier date on which
the Total Revolving Credit Commitments shall terminate, the Company shall
provide the Agent with Cash Collateral in an amount equal to the aggregate
undrawn amounts of such Letters of Credit. Such Cash Collateral shall be applied
by the Agent to reimburse the Issuing Lender for drawings under such Letters of
Credit which the Issuing Lender has not been so reimbursed.
ARTICLE III
PROVISIONS RELATING TO ALL EXTENSIONS OF CREDIT;
FEES AND PAYMENTS
SECTION 3.01. INTEREST RATES; CONTINUATION AND CONVERSION OF LOANS.
(a) Each Prime Rate Loan shall bear interest for the period from the
date thereof on the unpaid principal amount thereof at a fluctuating rate per
annum equal to the Prime Rate plus the Applicable Margin.
(b) Each Adjusted Libor Loan shall bear interest for the Interest
Period applicable thereto on the unpaid principal amount thereof at a rate per
annum equal to the Reserve Adjusted Libor determined for each Interest Period
thereof in accordance with the terms hereof plus the Applicable Margin.
(c) Upon the occurrence and during the continuance of an Event of
Default the outstanding principal amount of the Loans (excluding any defaulted
payment of principal accruing interest in accordance with clause (d) below),
shall, at the option of the Required Lenders, bear interest payable on demand at
a rate of interest 3% per annum in excess of the interest rate otherwise then in
effect.
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(d) If the Company shall default in the payment of the principal of or
interest on any portion of any Loan or any other amount becoming due hereunder,
whether with respect to reimbursement of drawings under Letters of Credit,
interest, fees, expenses or otherwise, the Company shall pay interest on such
defaulted amount accruing from the date of such default up to and including the
date of actual payment (after as well as before judgment) at a rate of 3% per
annum in excess of the rate otherwise in effect or, if no rate is in effect, 3%
per annum in excess of the Prime Rate.
(e) The Company may elect from time to time to convert outstanding
Loans from Adjusted Libor Loans to Prime Rate Loans by giving the Agent at least
three Business Day's prior irrevocable written notice (or telephonic notice
promptly confirmed in writing) of such election, provided that any such
conversion of Adjusted Libor Loans shall only be made on the last day of an
Interest Period with respect thereto or upon the date of payment in full of any
amounts owing pursuant to Section 3.08 as a result of such conversion. Upon
receipt of such notice, the Agent shall promptly notify each Lender thereof. The
Company may elect from time to time to convert outstanding Loans from Prime Rate
Loans to Adjusted Libor Loans by giving the Agent irrevocable written notice of
such election not later than 11:00 a.m. New York, New York time, three Business
Days prior to the date of the proposed conversion. Upon receipt of such notice
the Agent shall promptly notify each Lender thereof. All or any part of
outstanding Prime Rate Loans may be converted as provided herein, provided that
each conversion shall be in the principal amount of $1,000,000 (or $500,000 if
there is only one Lender) or whole multiples of $500,000 in excess thereof, and
further provided that no Default or Event of Default shall have occurred and be
continuing. Any conversion to or from Adjusted Libor Loans hereunder shall be in
such amounts and be made pursuant to such elections so that, after giving effect
thereto, the aggregate principal amount of all Adjusted Libor Loans having the
same Interest Period shall not be less than $1,000,000 (or $500,000 if there is
only one Lender).
(f) Any Adjusted Libor Loan in a minimum principal amount of
$1,000,000 (or $500,000 if there is only one Lender) may be continued as such
upon the expiration of an Interest Period with respect thereto by compliance by
the Company with the notice provisions contained in the definition of "Interest
Period"; provided, that no Adjusted Libor Loan may be continued as such when any
Default or Event of Default has occurred and is continuing, but shall be
automatically converted to a Prime Rate Loan on the last day of the Interest
Period in effect when the Agent is notified, or otherwise has actual knowledge,
of such Default or Event of Default.
(g) If the Company shall fail to select the duration of any Interest
Period for any Adjusted Libor Loan in accordance with the definition of
"Interest Period" set forth in Section 1.01, the Company shall be deemed to have
selected an Interest Period of one month.
(h) No Loan may be requested or continued as, or converted to, an
Adjusted Libor Loan with an Interest Period that extends beyond the Revolving
Credit Commitment Termination Date.
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(i) Anything in this Agreement or in any Note to the contrary
notwithstanding, the obligation of the Company to make payments of interest
shall be subject to the limitation that payments of interest shall not be
required to be paid to the Lender to the extent that the charging or receipt
thereof would not be permissible under the law or laws applicable to the Lender
limiting the rates of interest that may be charged or collected by the Lender.
If the provisions of this Agreement or any Note would at any time otherwise
require payment by the Company to the Lender of any amount of interest in excess
of the maximum amount then permitted by applicable law the interest payments
shall be reduced to the extent necessary so that the Lender shall not receive
interest in excess of such maximum amount. To the extent that, pursuant to the
foregoing sentence, the Lender shall receive interest payments hereunder or
under any Note in an amount less than the amount otherwise provided herein or in
any Note, such deficit (hereinafter called the "Interest Deficit") will cumulate
and will be carried forward (without interest) until the termination of this
Agreement. Interest otherwise payable to the Lender hereunder and under any Note
for any subsequent period shall be increased by such maximum amount of the
Interest Deficit that may be so added without causing the Lender to receive
interest in excess of the maximum amount then permitted by applicable law. The
amount of the Interest Deficit shall to the extent not prohibited by law be
treated as a prepayment penalty and paid in full at the time of any optional
prepayment by the Company to the Lender of all or any part of the Loans. The
amount of the Interest Deficit relating to a Note at the time of any complete
payment of such Note at that time outstanding shall be cancelled and not paid.
(j) Interest on each Loan shall be payable in arrears on each Interest
Payment Date and shall be calculated on the basis year of 360 days and shall be
payable for the actual days elapsed. Any rate of interest on the Loans or other
Obligations which is computed on the basis of the Prime Rate shall change when
and as the Prime Rate changes in accordance with the definition thereof. Each
determination by the Agent of an interest rate under this Section 3.01 or fee
under Section 3.04 shall, absent manifest error, be conclusive and binding for
all purposes.
SECTION 3.02. USE OF PROCEEDS. The proceeds of the Revolving Credit
Loans shall be used solely (i) to finance (x) a portion of the Merger Payment
and (y) a portion of the expenses incurred by the Company in connection with the
Merger, provided that the sum of (x) and (y) shall not exceed $15,000,000, and
(ii) to finance the Company's general corporate purposes, (other than any
acquisition of all or substantially all of the Equity Interests of another
Person which is not approved by the board of directors or other governing body
of the Person to be acquired). Letters of Credit shall be issued for purposes in
connection with and in the ordinary course of the business of the Company and
consistent with the historical purposes of letters of credit issued for the
account of the Company prior to the date hereof.
SECTION 3.03. MANDATORY AND OPTIONAL PREPAYMENTS.
(a) In the event of any Asset Sale permitted pursuant to Section 7.04,
the Company shall apply within one Business Day of the closing of such Asset
Sale the Net Proceeds therefrom to pay the Revolving Credit Loans then
outstanding; provided, however, in the event that the Net Proceeds or any
portion thereof constitute Excluded Proceeds, then the Company shall apply such
Excluded Proceeds to pay the Revolving Credit Loans within 361 days of the
closing of such Asset
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Sale to the extent such Excluded Proceeds have not been applied to an Excluded
Proceeds Permitted Use. If such Net Proceeds arise from a Non-Equity Asset Sale
such payment shall permanently reduce the Total Revolving Credit Commitment by
an amount equal to the aggregate principal amount of Revolving Credit Loans
repaid. In the event the amount of such Net Proceeds from a Non-Equity Asset
Sale exceeds the outstanding principal amount of the Revolving Credit Loans
outstanding on the date of any mandatory repayment required hereunder, then the
Total Revolving Credit Commitment shall be reduced by an amount equal to such
excess Net Proceeds. If after making a mandatory prepayment pursuant to this
Section 3.03(a) as a result of a Non- Equity Asset Sale, the Aggregate Letters
of Credit Outstanding exceeds the Total Revolving Credit Commitment, the Company
shall, on the closing date of such sale, provide to the Agent Cash Collateral
for the ratable benefit of the Issuing Lender in an amount equal to such excess.
(b) The Company may at any time and from time to time prepay the then
outstanding Loans, in whole or in part, without premium or penalty, except as
provided in Section 3.08, upon written notice to the Agent (or telephonic notice
promptly confirmed in writing) not later than 11:00 a.m. New York, New York
time, three Business Days before the date of prepayment with respect to
prepayments of Adjusted Libor Loans, or 11:00 a.m. New York, New York time one
Business Day before the date of prepayment with respect to Prime Rate Loans.
Each notice shall be irrevocable and shall specify the date and amount of
prepayment and whether such prepayment is of Adjusted Libor Loans or Prime Rate
Loans or a combination thereof, and if a combination thereof, the amount of
prepayment allocable to each. Upon receipt of such notice, the Agent shall
promptly notify each Lender thereof. If such notice is given, the Company shall
make such prepayment, and the amount specified in such notice shall be due and
payable, on the date specified therein together with accrued interest to (but
excluding) such date on the amount repaid. Each partial prepayment pursuant to
this Section 3.03 shall be in a principal amount of (x) $400,000 or whole
multiples of $100,000 in excess thereof with respect to Prime Rate Loans and (y)
$1,000,000 (or $500,000 if there is only a single Lender) or whole multiples of
$500,000 in excess thereof with respect to Adjusted Libor Loans.
SECTION 3.04. FEES. (a) The Company agrees to pay the Agent for its
own account, such agency and other fees as agreed between the Company and the
Agent.
(b) The Company shall pay to each Lender a commitment fee equal to
such Lender's Commitment Proportion of an amount equal to (x) the average daily
unused portion of the Total Revolving Credit Commitment multiplied by (y) the
Unused Fee Rate, from the date of this Agreement until the Revolving Credit
Commitment Termination Date. The commitment fee shall be calculated on the basis
of a year of 360 days for the actual number of days elapsed and shall be payable
on the last Business Day of each calendar quarter, commencing December 31, 1999,
and on the Revolving Credit Commitment Termination Date and on any day the Total
Revolving Credit Commitment is permanently reduced in whole or in part.
(c) The Company shall pay to the Issuing Lender, on demand, for the
Issuing Lender's own account all customary fees charged by the Issuing Lender
with respect to the processing, issuance, administration, renewal, extension,
amendment, payment and negotiation of letters of credit.
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(d) The Company shall pay to the Agent for the account of each Lender
a participation fee with respect to each Lender's participation in Letters of
Credit which shall accrue at a rate per annum equal to .875% multiplied by the
stated amount of each Letter of Credit at the time of issuance thereof, and
payable on the date of such issuance and each anniversary of such date
thereafter to the extent the applicable Letter of Credit remains outstanding on
such date. Such fee shall be calculated on the basis of 360 days for the actual
number of days from the date of issuance of the Letter of Credit or anniversary,
as applicable, to the earlier of the next succeeding anniversary or the date on
which the Letter of Credit expires if there is no drawing thereunder.
SECTION 3.05. INABILITY TO DETERMINE INTEREST RATE. In the event that
the Agent shall have determined (which determination shall be conclusive and
binding upon the Company) that, by reason of circumstances affecting the London
interbank market, adequate and reasonable means do not exist for ascertaining
the Reserve Adjusted Libor applicable pursuant to Section 3.01(b) for any
requested Interest Period with respect to (a) the making of an Adjusted Libor
Loan, (b) an Adjusted Libor Loan that will result from the requested conversion
of a Prime Rate Loan into an Adjusted Libor Loan, or (c) the continuation of an
Adjusted Libor Loan beyond the expiration of the then current Interest Period
with respect thereto, the Agent shall forthwith give notice by telephone of such
determination, promptly confirmed in writing, to the Company and each Lender.
From the date of such notice until the Agent notifies the Company that the
circumstances giving rise to the suspension described herein no longer exist,
the Company shall not have the right to request or continue an Adjusted Libor
Loan or to convert a Prime Rate Loan to an Adjusted Libor Loan.
SECTION 3.06. ILLEGALITY. Notwithstanding any other provisions herein,
if any introduction of or change in any law, regulation, treaty or directive or
in the interpretation or application thereof shall make it unlawful for any
Lender to make or maintain Adjusted Libor Loans as contemplated by this
Agreement, such Lender shall forthwith give notice by telephone of such
circumstances, promptly confirmed in writing, to the Agent, which notice the
Agent shall promptly transmit to the Company and the other Lenders and (a) the
commitment of such Lender to make and to allow conversion to or continuations of
Adjusted Libor Loans shall forthwith be cancelled for the duration of such
illegality and (b) the Loans then outstanding as Adjusted Libor Loans, if any,
shall be converted automatically to Prime Rate Loans on the next succeeding last
day of each Interest Period applicable to such Adjusted Libor Loans or within
such earlier period as may be required by law. The Company shall pay to such
Lender, upon demand, any additional amounts required to be paid pursuant to
Section 3.08 hereof.
SECTION 3.07. INCREASED COSTS. (a) In the event that any introduction
of or change in, on or after the date hereof, any applicable law, regulation,
treaty, order, directive or in the interpretation or application thereof
(including, without limitation, any request, guideline or policy, whether or not
having the force of law, of or from any central bank or other Governmental
Authority and including, without limitation, Regulation D), by any authority
charged with the administration or interpretation thereof shall occur, which:
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(i) shall subject any Lender or the Issuing Lender to any tax of any
kind whatsoever with respect to this Agreement, any Note, any Loan, or any
Letter of Credit or change the basis of taxation of payments to such Lender or
the Issuing Lender of principal, interest, fees or any other amount payable
hereunder (other than any franchise tax or tax that is measured with respect to
the overall net income of such Lender or the Issuing Lender or Lending Office of
such Lender or the Issuing Lender and that is imposed by the United States of
America, or any political subdivision or taxing authority thereof or therein, or
by any jurisdiction in which such Lender's Lending Office or the Issuing
Lender's Lending Office is located, or by any jurisdiction in which such Lender
is organized, has its principal office or is managed and controlled); or
(ii) shall impose, modify or hold applicable any reserve, special
deposit, compulsory loan or similar requirement (whether or not having the force
of law) against assets held by, or deposits or other liabilities in or for the
account of, advances or loans by, or other credit extended by, or any other
acquisition of funds by, any office of any Lender or the Issuing Lender; or
(iii) shall impose on any Lender or the Issuing Lender any other
condition, or change therein;
and the result of any of the foregoing is to increase the cost to such Lender or
the Issuing Lender of making, renewing or maintaining or participating in
advances or extensions of credit hereunder or to reduce any amount receivable
hereunder, in each case by an amount which such Lender or the Issuing Lender
deems material, then, in any such case, the Company shall pay such Lender or the
Issuing Lender, on demand therefor, such additional amount or amounts as such
Lender or the Issuing Lender shall have determined will compensate such Lender
or the Issuing Lender for such increased costs or reduction.
(b) If any Lender or the Issuing Lender shall have determined that the
adoption of any applicable law, rule or regulation regarding capital adequacy,
or any change therein, or any change in the interpretation or administration
thereof by any governmental authority, central bank or comparable agency charged
with the interpretation or administration thereof, or compliance by any Lender
or the Issuing Lender (or any lending office of any Lender or the Issuing
Lender) or any Lender's or the Issuing Lender's holding company, with any
request or directive regarding capital adequacy (whether or not having the force
of the law) of any such authority, central bank or comparable agency, has or
would have the effect of reducing the rate of return on such Lender's or the
Issuing Lender's capital or on the capital of such Lender's or the Issuing
Lender's holding company as a consequence of its obligations hereunder to a
level below that which such Lender or the Issuing Lender could have achieved but
for such adoption, change or compliance (taking into consideration such Lender's
or the Issuing Lender's policies and the policies of such Lender's or the
Issuing Lender's holding company with respect to capital adequacy) by an amount
deemed by such Lender or the Issuing Lender to be material, then from time to
time, the Company shall pay to such Lender or the Issuing Lender on demand
therefor the additional amount or amounts as such Lender or the Issuing Lender
shall have determined will compensate such Lender or Issuing Lender or such
Lender's or the Issuing Lender's holding company for such reduction. Such
Lender's or the Issuing Lender's determination of such amounts shall be
conclusive and binding on the Company absent manifest error.
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(c) In the event any Lender or the Issuing Lender shall be entitled to
compensation pursuant to Section 3.07(a) or Section 3.07(b), it shall promptly
notify the Agent and the Company of the event by reason of which it has become
so entitled; provided, however, no failure on the part of any Lender or the
Issuing Lender to demand compensation under clause (a) or clause (b) above on
one occasion shall constitute a waiver of its right to demand compensation on
any other occasion.
SECTION 3.08. INDEMNITY. The Company agrees to indemnify each Lender
and to hold each Lender harmless from any loss, cost or expense which such
Lender may sustain or incur, including, without limitation, interest or fees
payable by such Lender to lenders of funds obtained by it in order to maintain
Adjusted Libor Loans hereunder, as a consequence of (a) default by the Company
in payment of the principal amount of or interest on any Adjusted Libor Loan,
(b) default by the Company to accept or make a borrowing of an Adjusted Libor
Loan or a conversion into or continuation of an Adjusted Libor Loan after the
Company has requested such borrowing, conversion or continuation, (c) default by
the Company in making any prepayment of any Adjusted Libor Loan after the
Company gives a notice in accordance with Section 3.03 of this Agreement and/or
(d) the making of any payment or prepayment (whether mandatory or optional) of
an Adjusted Libor Loan or the making of any conversion of an Adjusted Libor Loan
to a Prime Rate Loan on a day which is not the last day of the applicable
Interest Period with respect thereto. A certificate of a Lender setting forth
such amounts shall be conclusive absent manifest error. The Company shall pay
such Lender the amount shown as due on any certificate within five days after
receipt thereof.
SECTION 3.09. TAXES. (a) Except as required by law, all payments made
by the Company under this Agreement shall be made free and clear of, and without
reduction for or on account of, any present or future taxes, levies, imposts,
duties, charges, fees, deductions or withholdings, now or hereafter imposed,
levied, collected, withheld or assessed by any Governmental Authority, excluding
income and franchise taxes imposed on the Agent, the Issuing Lender or a Lender
by (i) the United States of America or any political subdivision or taxing
authority thereof or therein, (ii) the jurisdiction under the laws of which the
Agent, the Issuing Lender or such Lender is organized or in which it has its
principal office or is managed and controlled or any political subdivision or
taxing authority thereof or therein, or (iii) any jurisdiction in which such
Lender's Lending Office or the Issuing Lender's lending office is located or any
political subdivision or taxing authority thereof or therein (such non-excluded
taxes being called "Taxes"). If any Taxes are required to be withheld from any
amounts payable to the Agent, the Issuing Lender or any Lender hereunder, or
under the Notes, the amount so payable to the Agent, the Issuing Lender or such
Lender shall be increased to the extent necessary to yield to the Agent, the
Issuing Lender or such Lender (after payment of all Taxes and free and clear of
all liability in respect of such Taxes) interest or any such other amounts
payable hereunder at the rates or in the amounts specified in this Agreement and
the Notes. Whenever any Taxes are payable by the Company, as promptly as
possible thereafter, the Company shall send to the Agent for its own account or
for the account of the Issuing Lender or such Lender, as the case may be, a
certified copy of an original official receipt showing payment thereof. If the
Company fails to pay Taxes when due to the appropriate taxing authority or fails
to remit to the Agent the required
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receipts or other required documentary evidence, the Company shall indemnify the
Agent, the Issuing Lender and the Lenders for any incremental taxes, interest or
penalties that may become payable by the Agent, the Issuing Lender or such
Lender as a result of any such failure together with any expenses payable by the
Agent, the Issuing Lender or such Lender in connection therewith.
(b) Prior to the first Interest Payment Date, each Lender that is not
organized under the laws of the United States or a state thereof agrees that it
will deliver to the Agent (i) two duly completed copies of United States
Internal Revenue Service Form 1001 or 4224 or successor applicable form, as the
case may be, certifying in each case that such Lender is entitled to receive
payments under this Agreement without deduction or withholding of any United
States federal income taxes, and (ii) an Internal Revenue Service Form W-8 or
W-9 or successor applicable form, as the case may be, to establish an exemption
from United States back-up withholding tax. Each Lender which delivers to the
Company and the Agent a Form 1001 or 4224 and Form W-8 or W-9 pursuant to the
preceding sentence further undertakes to deliver to the Agent two further copies
of the said statement and Form 1001 or 4224 and Form W-8 or W-9, or successor
applicable forms, or other manner of certification, as the case may be, on or
before the date that any such letter or form expires or becomes obsolete or
after the occurrence of any event requiring a change in the most recent letter
and form previously delivered by it to the Agent, and such extensions or
renewals thereof as may reasonably be requested by the Agent, certifying in the
case of a Form 1001 or 4224 that such Lender is entitled to receive payments
under this Agreement without deduction or withholding of any United States
federal income taxes. If a Lender fails to provide a copy or form required
pursuant to this Section 3.09(b), upon notice by the Company to the Agent and
such Lender, (i) the Company shall be entitled to deduct or withhold on payments
to the Agent or such Lender as a result of such failure, as required by law, and
(ii) the Company shall not be required to make payments of additional amounts
with respect to withheld Taxes pursuant to Section 3.09(a) to the extent such
withholding is required solely of the failure of Agent or Lender to provide the
necessary copy or form.
SECTION 3.10. PRO RATA TREATMENT AND PAYMENTS. (a) Each borrowing by
the Company from the Lenders, each conversion of a Loan pursuant to Section
3.01(e) or continuation of a Loan pursuant to Section 3.01(f), each payment by
the Company on account of any fee (other than with respect to fees for the
account of the Agent and the Issuing Lender described in Section 3.04 and
reimbursements by the Company to the Issuing Lender with respect to drawings
under Letters of Credit pursuant to Section 2.03) and any reduction of the
Revolving Credit Commitments of the Lenders hereunder shall be made pro rata
according to the respective relevant Commitment Proportions of the Lenders. Each
payment (including each prepayment) by the Company on account of principal of
and interest on each Loan shall be made pro rata according to the respective
outstanding principal amounts of such Loans held by each Lender. All payments
(including prepayments) to be made by the Company on account of principal,
interest, fees and reimbursement obligations shall be made without set-off or
counterclaim and shall be made to the Agent, for the account of the Lenders
(except as specified in Sections 2.03(b) and Section 3.04) at the Payment Office
of the Agent in Dollars in immediately available funds. The Agent shall
distribute such payments to the Lenders promptly upon receipt in like funds by
wire transfer of each Lender's portion of such payment to such Lender for the
account of its Lending Office. The
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Agent may, in its sole discretion, directly charge principal and interest
payments and fees due in respect of the Loans to the Company's accounts at the
Payment Office or other office of the Agent. The Issuing Lender may, in its sole
discretion, directly charge reimbursement obligations with respect to Letters of
Credit to the Company's accounts at any office of the Issuing Lender. Except as
otherwise provided in the definition of "Interest Period", if any payment
hereunder becomes due and payable on a day other than a Business Day, such
payment shall be extended to the next succeeding Business Day, and, with respect
to payments of principal, interest thereon or fees shall be payable at the then
applicable rate during such extension.
SECTION 3.11. FUNDING AND DISBURSEMENT OF LOANS. (a) Each Lender shall
make each Loan to be made by it hereunder available to the Agent at the Payment
Office for the account of such office and the Agent by 1:00 p.m. New York, New
York time on the Borrowing Date in Dollars in immediately available funds.
Unless any applicable condition specified in Article V has not been satisfied,
the amount so received by the Agent will be made available to the Company at the
Payment Office by crediting the account of the Company with such amount and in
like funds as received by the Agent; provided, however, that if the proceeds of
any Loan or any portion thereof are to be used to prepay outstanding Loans, then
the Agent shall apply such proceeds for such purpose to extent necessary and
credit the balance, if any, to the Company's account.
(b) Unless the Agent shall have been notified in writing by any Lender
prior to a proposed Borrowing Date that such Lender will not make the amount
which would constitute its Commitment Proportion of the borrowing on such
Borrowing Date available to the Agent, the Agent may assume that such Lender has
made such amount available to the Agent on such Borrowing Date, and the Agent
may, in reliance upon such assumption, make available to the Company a
corresponding amount. If such amount is not made available to the Agent until a
date after such Borrowing Date, such Lender shall pay to the Agent on demand
interest on such Lender's Commitment Proportion of such borrowing at a rate
equal to the greater of (i) the daily average Federal Funds Rate and (ii) a rate
determined by the Agent in accordance with banking industry rules on interbank
compensation during such period, from and including such Borrowing Date to the
date on which such Lender's Commitment Proportion of such borrowing shall have
become immediately available to the Agent. A certificate of the Agent submitted
to any Lender with respect to any amounts due pursuant to this Section 3.11(b)
shall be conclusive absent manifest error. Nothing herein shall be deemed to
relieve any Lender from its obligations to fulfill its commitment hereunder or
to prejudice any right which the Company may have against any Lender as a result
of any default by such Lender hereunder.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
In order to induce the Lenders to enter into this Agreement and to
make the Loans herein provided for, the Company represents and warrants to the
Agent and each Lender that:
SECTION 4.01. ORGANIZATION, POWERS. The Company and each Corporate
Guarantor (a) is a corporation, general partnership or limited liability company
as indicated on
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Schedule I attached hereto duly organized, validly existing and in good standing
under the laws of the state of its incorporation or formation, (b) has the
corporate, limited liability or partnership power, as applicable, and authority
to own its properties and to carry on its business as now being conducted, (c)
is duly qualified to do business in every jurisdiction wherein the conduct of
its business or the ownership of its properties are such as to require such
qualification except those jurisdictions in which the failure to be so qualified
could not reasonably be expected to have a Material Adverse Effect, and (d) has
the corporate power to execute, deliver and perform each of the Loan Documents
to which it is a party, including, without limitation, with respect to the
Company, the power to obtain extensions of credit hereunder and to execute and
deliver the Notes.
SECTION 4.02. AUTHORIZATION OF BORROWING, ENFORCEABLE OBLIGATIONS. The
execution, delivery and performance by the Company of this Agreement, and the
other Loan Documents to which it is a party, the borrowings and the other
extensions of credit to the Company hereunder, and the execution, delivery and
performance by each of the Corporate Guarantors of the Loan Documents to which
such Corporate Guarantor is a party, (a) have, with respect to the Company and
each Corporate Guarantor, been duly authorized by all requisite corporate,
limited liability or partnership action as applicable, (b) will not violate or
require any consent (other than consents as have been made or obtained and which
are in full force and effect) under (i) any provision of law applicable to the
Company or any Corporate Guarantor, any rule or regulation of any Governmental
Authority, or the certificate of incorporation or by-laws, articles of
organization, operating agreement or partnership agreement as applicable of the
Company or of any Corporate Guarantor or (ii) any order of any court or other
Governmental Authority binding on the Company or any Corporate Guarantor or any
indenture, agreement or other instrument to which the Company or any Corporate
Guarantor is a party, or by which the Company or any Corporate Guarantor or any
of its property is bound, and (c) will not be in conflict with, result in a
breach of or constitute (with due notice and/or lapse of time) a default under,
any such indenture, agreement or other instrument, or result in the creation or
imposition of any Lien, of any nature whatsoever upon any of the property or
assets of the Company or any Corporate Guarantor other than as contemplated by
this Agreement or the other Loan Documents. This Agreement and each other Loan
Document to which the Company or any Corporate Guarantor is a party constitutes
a legal, valid and binding obligation of the Company and each such Corporate
Guarantor, as the case may be, enforceable against the Company and each such
Corporate Guarantor, as the case may be, in accordance with its terms except to
the extent that enforcement may be limited by applicable bankruptcy, fraudulent
conveyance, reorganization, moratorium, insolvency and similar laws affecting
creditors' rights generally or by equitable principles of general application,
regardless of whether considered in a proceeding in equity or at law or by
equitable principles of general application.
SECTION 4.03. FINANCIAL CONDITION. (a) The Company has heretofore
furnished to each Lender (i) the audited consolidated balance sheet of the
Company and the related statements of income, retained earnings and cash flow of
the Company and its Subsidiaries, audited by Arthur Andersen LLP, independent
certified public accountants, as of January 3, 1999 and for the fiscal year then
ended and (ii) the management prepared unaudited consolidated balance sheet and
the related statements of income, retained earnings and cash flow of the
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Company and its Subsidiaries as of July 18, 1999 and for the twenty-eight week
period then ended. Such financial statements were prepared in conformity with
Generally Accepted Accounting Principles, applied on a consistent basis, and
fairly present the financial condition and results of operations of the Company
and its Subsidiaries as of the date of such financial statements and for the
periods to which they relate and, since July 18, 1999, no Material Adverse
Effect has occurred, except to the extent reflected on the pro forma financial
statements referred to in Section 5.01(n)(i) hereof (subject to adjustments
resulting from the interest rate and discount applicable to the Senior Notes).
The Company shall deliver to the Agent, with a copy for each Lender, a
certificate of the Chief Financial Officer of the Company to that effect on the
Closing Date. Other than obligations and liabilities arising in the ordinary
course of business since July 18, 1999 and the indebtedness evidenced by the
Senior Notes, the Existing Indebtedness and the Committed Restricted
Investments, neither the Company nor any Subsidiaries have incurred any
obligations or liabilities contingent or otherwise that would be required to be
included on the face of, or in footnotes to, consolidated financial statements
of the Company, which are not reflected or disclosed on such statements other
than obligations of the Company and its Subsidiaries incurred in the ordinary
course of business (which shall be deemed to exclude obligations or liabilities
arising from acquisitions by the Company or any of its Subsidiaries of the
business or assets (including, without limitation stock) of any Person).
(b) The Company, individually and together with the Corporate
Guarantors, is Solvent and immediately after giving effect to the Merger and to
each Loan and each other extension of credit contemplated by this Agreement and
the execution of each Loan Document, will be Solvent.
SECTION 4.04. TAXES. All assessed deficiencies resulting from Internal
Revenue Service examinations of the federal income tax returns of the Company or
any Corporate Guarantor have been discharged or reserved against in accordance
with Generally Accepted Accounting Principles. The Company and each Corporate
Guarantor has filed or caused to be filed all federal, state and local tax
returns which are required to be filed, and has paid or has caused to be paid
all taxes as shown on said returns or on any assessment received by them, to the
extent that such taxes have become due, except taxes which are being contested
in good faith and which are reserved against in accordance with Generally
Accepted Accounting Principles.
SECTION 4.05. TITLE TO PROPERTIES. The Company and each Corporate
Guarantor has good title to their respective properties and assets reflected on
the financial statements referred to in Section 4.03 hereof, except for such
properties and assets as have been disposed of since the date of such financial
statements as no longer used or useful in the conduct of their respective
businesses or as have been disposed of in the ordinary course of business or as
permitted pursuant to this Agreement, and all such properties and assets are
free and clear of all Liens other than Permitted Liens.
SECTION 4.06. LITIGATION. (a) There are no actions, suits or
proceedings (whether or not purportedly on behalf of the Company or of any
Corporate Guarantor) pending or, to the knowledge of the Company or any
Corporate Guarantor, threatened against the Company or any Corporate Guarantor
at law or in equity or before or by any Governmental Authority, which
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involve any of the transactions contemplated herein or which, if adversely
determined against the Company or such Corporate Guarantor, could reasonably be
expected to result in a Material Adverse Effect; and (b) neither the Company nor
any Corporate Guarantor is in default with respect to any judgment, writ,
injunction, decree, rule or regulation of any Governmental Authority which could
reasonably be expected to result in a Material Adverse Effect.
SECTION 4.07. RESTRICTIONS. Neither the Company nor any Corporate
Guarantor is subject to any charter or other corporate restriction, or any
judgment, order, writ, injunction, decree or regulation which could reasonably
be expected to have a Material Adverse Effect.
SECTION 4.08. COMPLIANCE WITH ERISA. Each Plan is in compliance with
in all material respects with ERISA; no Plan is insolvent or in reorganization,
no Plan or Plans have an Unfunded Current Liability in excess of $1,000,000
individually or in the aggregate, and no Plan has an accumulated or waived
funding deficiency in excess of $1,000,000, individually or in the aggregate;
neither the Company, any Corporate Guarantor nor any ERISA Affiliate has
incurred any liability to or on account of a Plan pursuant to Section 515, 4062,
4063, 4064, 4201 or 4204 of ERISA or reasonably expects to incur any liability
under any of the foregoing sections on account of the prior termination of
participation in or contributions to any such Plan in excess of $1,000,000,
individually or in the aggregate, no proceedings have been instituted to
terminate any Plan which would cause the Company to incur a liability in excess
of $1,000,000, individually or in the aggregate, in each case; no condition
exists which could reasonably be expected to present a risk to the Company, any
Corporate Guarantor or any ERISA Affiliate of incurring a liability to or on
account of a Plan pursuant to the foregoing provisions of ERISA and the Code in
excess of $1,000,000 individually or in the aggregate; no lien imposed under the
Code or ERISA on the assets of the Company, any Corporate Guarantor or any of
its ERISA Affiliates exists or could reasonably be expected to arise on account
of any Plan which secures liabilities in excess of $1,000,000, individually or
in the aggregate; and the Company and each Corporate Guarantor may terminate
contributions to any other employee benefit plans maintained by it without
incurring any liability to any Person interested therein in excess of $1,000,000
individually or in the aggregate.
SECTION 4.09. FEDERAL RESERVE REGULATIONS; USE OF PROCEEDS. (a)
Neither the Company nor any Corporate Guarantor is engaged principally in, nor
has as one of its important activities, the business of extending credit for the
purpose of purchasing or carrying any "margin stock" (within the meaning of
Regulation U of the Board of Governors of the Federal Reserve System of the
United States, as amended from time to time).
(b) No part of the proceeds of any Loan and no other extension of
credit hereunder will be used, whether directly or indirectly, and whether
immediately, incidentally or ultimately, (i) to purchase or to carry margin
stock or to extend credit to others for the purpose of purchasing or carrying
margin stock, or to refund indebtedness originally incurred for such purposes,
or (ii) for any purpose which violates or is inconsistent with the provisions of
Regulation T, U or X of the Board of Governors of the Federal Reserve System.
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(c) The proceeds of each Loan, and each other extension of credit
hereunder shall be used solely for the purposes permitted under Section 3.02.
SECTION 4.10. APPROVALS. No registration with or consent or approval
of, or other action by, any Governmental Authority or any other Person is
required in connection with the execution, delivery and performance of this
Agreement by the Company or any Corporate Guarantor, or with the execution and
delivery of other Loan Documents to which the Company or any Corporate Guarantor
is a party or, with respect to the Company, the borrowings and each other
extension of credit hereunder.
SECTION 4.11. SUBSIDIARIES. Attached hereto as Schedule I is a correct
and complete list of each of the Company's Subsidiaries as of the Closing Date
showing as to each Subsidiary, its name, type of entity (i.e., corporation,
limited liability company, etc.), the jurisdiction of its incorporation or
formation, the holders of the Voting Stock in each Subsidiary, the outstanding
Voting Stock held by such holders and whether the Subsidiary is an Unrestricted
Subsidiary. Schedule I shall be deemed updated after the date hereof with
respect to any Subsidiary with respect to which the Company has complied with
its obligations under Section 6.13. All of the outstanding capital stock of the
Company will, immediately following completion of the Merger, be owned
beneficially and of record by the Persons indicated as such owners on Schedule
I.
SECTION 4.12. HAZARDOUS MATERIALS. The Company and each Corporate
Guarantor is in compliance with all applicable Environmental Laws and neither
the Company nor any Corporate Guarantor has used Hazardous Materials on, from,
or affecting any property now owned or occupied, previously owned or occupied,
or hereafter owned or occupied by the Company or any Corporate Guarantor in any
manner which violates any applicable Environmental Law, except where any such
violations could not, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect. To the Company's knowledge, no prior owner of
any such property or any tenant, subtenant, prior tenant or prior subtenant have
used Hazardous Materials on, from, or affecting such property in any manner
which violates any applicable Environmental Law, except where any such
violations could not, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect
SECTION 4.13. INVESTMENT COMPANY ACT. Neither the Company nor any
Corporate Guarantor is an "investment company", or a company "controlled" by an
"investment company", within the meaning of the Investment Company Act of 1940,
as amended.
SECTION 4.14. NO DEFAULT. No Default or Event of Default has occurred
and is continuing.
SECTION 4.15. MATERIAL CONTRACTS. All Material Contracts are disclosed
on Schedule V hereto as the same may be updated from time to time by the Company
by written notice to the Agent. Each such Material Contract is in full force and
effect and is binding upon and enforceable against the Company and any Corporate
Guarantor, in each case, to the extent they are a party thereto, and, to the
Company's knowledge, all other parties thereto in accordance
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with its terms, and there exists no default, under any Material Contract by the
Company or any Corporate Guarantor or, to the Company's knowledge, by any other
party thereto which has not been fully cured or waived, except those that could
not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
SECTION 4.16. PERMITS AND LICENSES. The Company and each Corporate
Guarantor has all permits, licenses, certifications, authorizations and
approvals required for it lawfully to own and operate their respective
businesses except those the failure of which to have could not, individually or
in the aggregate, reasonably be expected to have a Material Adverse Effect.
SECTION 4.17. COMPLIANCE WITH LAW. The Company and each Corporate
Guarantor are each in compliance, with all laws, rules, regulations, orders and
decrees which are applicable to the Company or any Corporate Guarantor, or to
any of their respective properties, except where the failure to comply could
not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
SECTION 4.18. Y2K. Any reprogramming required to permit the proper
functioning, in and following the year 2000, of (a) the Company's or any
Corporate Guarantor's computer systems and (b) equipment containing embedded
microchips (including systems and equipment supplied by others or with which the
Company's or any Corporate Guarantor's systems interface), and the testing of
all such systems and equipment, as so reprogrammed has been completed, except to
the extent the failure to conduct such reprogramming or testing could not
reasonably be expected to have a Material Adverse Effect. The cost to the
Company and each Corporate Guarantor's of such reprogramming and testing and of
the reasonably foreseeable consequences of the year 2000 to the Company and each
Corporate Guarantor (including, without limitation, reprogramming errors and the
failure of others' systems or equipment) will not result in a Default or Event
of Default or have a Material Adverse Effect. Except for such of the
reprogramming referred to in the preceding sentence as may be necessary, the
computer and management information systems of the Company and each Corporate
Guarantor are and, with ordinary course upgrading and maintenance, will continue
to be sufficient to permit the Company and each Corporate Guarantor to conduct
their respective businesses without having a Material Adverse Effect.
SECTION 4.19. FISCAL YEAR END. The next succeeding six fiscal year
ends of the Company are January 2, 2000, December 31, 2000, December 30, 2001,
December 29, 2002, December 28, 2003 and January 2, 2005.
SECTION 4.20. CERTAIN AGREEMENTS. The Merger Agreement and the Note
Purchase Agreement, a true, correct and complete copy of each of which has
heretofore been furnished to each Lender (including all schedules, exhibits,
annexes, amendments and disclosure letters referred to therein are delivered
pursuant thereto) have each been duly executed and delivered by the parties
thereto, and on the date hereof is, and on the Closing Date will be, in full
force and effect in accordance with its terms.
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SECTION 4.21. REPRESENTATIONS AND WARRANTIES CONTAINED IN CERTAIN
AGREEMENTS. Without limiting or modifying the representations and warranties of
the Company contained herein, the representations and warranties of the Company
and of SMLLC contained in the Merger Agreement and the Company and the Corporate
Guarantors contained in the Note Purchase Agreement will be true and correct in
all material respects on the Closing Date as if made on and as of the Closing
Date; and the Lenders are entitled to rely on the representations and warranties
of the Company to the same extent as those such representations and warranties
were set forth in full herein. The Company is in compliance with its covenants
and agreements set forth in the Note Purchase Agreement and the Company and
SMLLC are each in compliance with their respective covenants and agreements set
forth in the Merger Agreement.
SECTION 4.22. DISCLOSURE. Neither this Agreement, any other Loan
Document, nor any other document, certificate or written statement furnished to
the Agent, the Issuing Lender, or any Lender by or on behalf of the Company or
any Corporate Guarantor for use in connection with the transactions contemplated
by this Agreement contains any untrue statement of material fact or omits to
state a material fact necessary in order to make the statements contained herein
or therein not misleading in light of the circumstances in which they were made.
ARTICLE V
CONDITIONS OF LENDING
SECTION 5.01. CONDITIONS TO INITIAL EXTENSION OF CREDIT. The
obligation of each Lender to make its initial Loan hereunder and the obligation
of the Issuing Lender to issue the initial Letter of Credit hereunder, are
subject to the following conditions precedent:
(a) NOTES. On or prior to the Closing Date, the Agent shall have
received for the account of each Lender a Revolving Credit Note duly executed by
the Company.
(b) CORPORATE GUARANTIES. On or prior to the Closing Date, the Agent
shall have received, with a counterpart for each Lender, the Corporate
Guaranties duly executed by each Corporate Guarantor.
(c) OPINION OF COUNSEL. On or prior to the Closing Date, the Agent
shall have received, with a copy for each Lender, a written opinion of counsel
for the Company and the Corporate Guarantors dated the Closing Date and
addressed to the Agent and the Lenders, substantially in the form of Exhibit D
attached hereto.
(d) SUPPORTING DOCUMENTS. On or prior to the Closing Date, the Agent
shall have received, with a copy for each Lender, (i) a copy of a certificate of
good standing for the Company and each Corporate Guarantor from the secretary of
state of the states of their organizational jurisdiction dated as of a recent
date; (ii) certified copies of the certificate of incorporation, the by-laws,
articles of organization, operating agreement or partnership agreement, as
applicable, of the Company and each Corporate Guarantor; (iii) a certificate of
the Secretary or an Assistant Secretary of the Company and of the Secretary,
Assistant Secretary or member as
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applicable, of each Corporate Guarantor dated the Closing Date and certifying:
(x) that neither the certificate of Incorporation, the by-laws, articles of
organization, operating agreement or partnership agreement, as applicable, of
the Company nor of any Corporate Guarantor has been amended since the date of
their certification (or if there has been any such amendment, attaching a
certified copy thereof); (y) that attached thereto is a true and complete copy
of resolutions adopted by the board of directors of the Company and by the board
of directors or other governing body or Persons of each Corporate Guarantor
authorizing the execution, delivery and performance of each Loan Document to
which it is a party and, with respect to the Company, the borrowings and other
extensions of credit hereunder; and (z) the incumbency and specimen signature of
each officer of the Company and of each officer or other authorized Person of
each Corporate Guarantor executing each Loan Document to which the Company or
any Corporate Guarantor is a party and any certificates or instruments furnished
pursuant hereto or thereto, and a certification by another officer of the
Company and each Corporate Guarantor as to the incumbency and signature of the
Secretary or Assistant Secretary of the Company and each Corporate Guarantor;
and (iv) such other documents as the Agent may reasonably request.
(e) OFFICER'S CERTIFICATE. The Agent shall have received, with a copy
for each Lender, a certificate from a duly authorized Executive Officer of the
Company stating that (i) the representations and warranties of the Company
contained in this Agreement and the other Loan Documents to which it is a party
are true and correct on and as of the Closing Date with the same effect as
though such representations and warranties were made on and as of such date,
unless such representation or warranty is as of a specific date, in which case,
as of such date, and (ii) no Default or Event of Default has occurred or is
continuing on the Closing Date.
(f) INSURANCE. On or prior to the Closing Date, the Agent shall have
received a certificate or certificates evidencing insurance coverage from an
independent insurance broker or brokers confirming the insurance required to be
maintained pursuant to Section 6.01 hereof.
(g) ASSETS FREE FROM LIENS. Prior to the Closing Date, the Agent shall
have received UCC-1 financing statement, tax and judgment lien searches
evidencing that the Company's and each Corporate Guarantor's accounts
receivable, inventory, equipment and all other assets are free and clear of all
Liens except Permitted Liens.
(h) FEES AND EXPENSES. On or prior to the Closing Date, the Agent
shall have received for itself and for the account of the Lenders (i) all fees
payable to the Lenders pursuant to the Loan Documents on or prior to the Closing
Date, (ii) reimbursement of expenses in accordance with Section 10.03 and (iii)
fees payable to the Agent which are required to be paid to the Agent on the
Closing Date pursuant to any agreement between the Company and the Agent.
(i) NO LITIGATION. There shall exist no action, suit, investigation,
litigation or proceeding affecting the Company or any Corporate Guarantor
pending or threatened before any court, governmental agency or arbiter that
could reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect.
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(j) CONSENTS AND APPROVALS. All governmental and third party consents
and approvals necessary in connection with the transactions contemplated by this
Agreement and the other Loan Documents shall have been obtained (without the
imposition of any conditions that are not acceptable to the Required Lenders)
and shall remain in effect, and no law or regulation shall be applicable in the
reasonable judgment of the Required Lenders that imposes materially adverse
conditions upon the transactions contemplated hereby.
(k) NO MATERIAL ADVERSE CHANGES. There shall not have occurred any
material adverse change in the business, operations, properties, prospects or
condition (financial or otherwise) of the Company or the Company and the
Corporate Guarantors taken as a whole since July 18, 1999 other than, with
respect to financial condition only, the payment on the Closing Date of the
Merger Payment and the incurrence on the Closing Date of indebtedness under the
Senior Notes.
(l) MERGER AGREEMENT. The conditions to the effectiveness of the
Merger as set forth in the Merger Agreement shall be fulfilled in a manner
satisfactory to the Required Lenders and the Merger Agreement shall not have
been amended, modified, supplemented or otherwise changed and no material term
or condition thereof shall have been waived, without the prior consent of the
Required Lenders.
(m) SENIOR NOTES. The Initial Purchaser (as defined in the Note
Purchase Agreement) shall have purchased, or shall concurrently purchase on the
effective date of the Merger, the Senior Notes pursuant to and in accordance
with the Note Purchase Agreement and the Company shall have received gross
proceeds from the issuance of the Senior Notes in an amount not less than
$245,000,000 which shall be available to finance a portion of the Merger
Payment. The Agent shall have received, with a copy for each Lender, a
certificate of a duly authorized Executive Officer of the Company certifying
that the transactions referred to in paragraph (l) and this paragraph (m) have
been effected or that such transactions shall be effected contemporaneously with
the initial Revolving Credit Loan hereunder.
(n) PRO FORMA FINANCIAL STATEMENTS. (a) No event or circumstance shall
have occurred which would cause any of the assumptions made in (i) the pro forma
financial statements of the Company and its Subsidiaries (which were based upon
the financial statements of the Company for the twenty-eight week period ending
July 18, 1999, contained in the Company's Preliminary Confidential Offering
Memorandum dated September 2, 1999 and which reflect the consummation of the
Merger) or (ii) the projections for the Company and its Subsidiaries for the
five-year period commencing on the proposed Closing Date delivered to the Agent
on August 31, 1999 to be unreasonable in any material respect (other than
revisions resulting from the final determination of the interest rate on the
Senior Notes) and (b) if the interest rate with respect to the Senior Notes is
established at 12.5% or more, receipt and satisfactory review by the Lenders of
(i) revised pro forma financial statements of the Company and its Subsidiaries
prepared on the same basis as those referred to in clause (a) and (ii) revised
projections for the Company and the Corporate Guarantors for a five-year period
commencing on the proposed Closing Date;
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(o) CERTAIN AGREEMENTS. The Agent and the Lenders shall have received
a true, correct and complete copy of the Senior Note Indenture and of the
Registration Rights Agreement (including all schedules, exhibits, annexes,
amendments and disclosure letters referred to therein) each of which shall be in
form and substance satisfactory to the Required Lenders; provided, however, the
forms thereof delivered to the Agent prior to the date hereof (as modified by
the "Description of Notes" delivered to the Agent via facsimile from Bowne of
New York on September 24, 1999) shall be deemed satisfactory so long as they are
not revised or modified in any manner unsatisfactory to the Required Lenders.
(p) OTHER INFORMATION, DOCUMENTATION. The Agent and the Lenders shall
have received such other and further information and documentation as any of
them may reasonably request, including, but not limited to, any information or
documentation relating to compliance by the Company and each Corporate Guarantor
with the requirements of all Environmental Laws.
(q) COMPLETION OF PROCEEDINGS. All corporate and other proceedings,
and all documents, instruments and other legal matters in connection with the
transactions contemplated by the Loan Documents, shall be reasonably
satisfactory in form and substance to the Agent, the Lenders and their counsel.
SECTION 5.02. CONDITIONS TO ALL EXTENSIONS OF CREDIT. The obligation
of each Lender to make each Loan hereunder and the obligation of the Issuing
Lender to issue, amend, renew or extend any Letter of Credit, including, without
limitation, the initial Loan and the initial Letter of Credit are subject to the
following additional conditions precedent:
(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties
by the Company and each Corporate Guarantor pursuant to this Agreement and the
other Loan Documents to which each is a party shall be true and correct on and
as of the Borrowing Date or as of the date of issuance, amendment, renewal or
extension of such Letter of Credit, as applicable, with the same effect as
though such representations and warranties had been made on and as of such date
unless such representation is as of a specific date, in which case, as of such
date.
(b) NO DEFAULT. No Default or Event of Default shall have occurred and
be continuing on the Borrowing Date or on the date of issuance, amendment,
renewal or extension of a Letter of Credit or will result after giving effect to
the Loan requested or the requested issuance, amendment, renewal or extension of
a Letter of Credit.
(c) ADDITIONAL DOCUMENTATION. With respect to the issuance, amendment,
renewal or extension of any Letter of Credit, the Issuing Lender shall have
received the documents and instruments requested by the Issuing Lender in
accordance with the last sentence of Section 2.03(a).
Each borrowing hereunder and each issuance, amendment, renewal or extension of a
Letter of Credit shall constitute a representation and warranty of the Company
that the statements contained
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in clauses (a) and (b) of Section 5.02 are true and correct on and as of the
Borrowing Date or as of the date of issuance, amendment, renewal or extension of
a Letter of Credit, as applicable.
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ARTICLE VI
AFFIRMATIVE COVENANTS
The Company covenants and agrees with the Lenders that so long as the
Revolving Credit Commitments remain in effect or any of the principal of or
interest on the Notes or any other Obligations hereunder shall be unpaid, it
will, and will cause each Corporate Guarantor to:
SECTION 6.01. EXISTENCE, PROPERTIES, INSURANCE. (a) Do or cause to be
done all things necessary to preserve and keep in full force and effect its
corporate, partnership or limited liability company, as applicable, existence,
rights and franchises and comply in all material respects with all laws
applicable to it (except for mergers, sales of assets and consolidations
permitted pursuant to Section 7.12); (b) at all times maintain, preserve and
protect all franchises and trade names and preserve all of its property used or
useful in the conduct of its business and keep the same in good repair, working
order and condition and from time to time make, or cause to be made, all needful
and proper repairs, renewals, replacements, betterments and improvements thereto
so that the business carried on in connection therewith may be properly and
advantageously conducted in the ordinary course at all times, except to the
extent that the failure to do so could reasonably be expected, individually or
in the aggregate, to have a Material Adverse Effect; and (c) at all times
maintain insurance covering its assets and its businesses with financially sound
and reputable insurance companies or associations in such amounts and against
such risks (including, without limitation, hazard, business interruption, public
liability and product liability) as are usually carried by companies engaged in
the same or similar business.
SECTION 6.02. PAYMENT OF TAXES. Pay and discharge or cause to be paid
and discharged promptly all taxes, assessments and government charges or levies
imposed upon it or upon its income and profits, or upon any of its property,
real, personal or mixed, or upon any part thereof, before the same shall become
in default; provided, however, that neither the Company nor any Corporate
Guarantor shall be required to pay and discharge or cause to be paid and
discharged any such tax, assessment, charge, levy or claim so long as the
validity thereof shall be contested in good faith by appropriate proceedings,
and the Company or such Corporate Guarantor, as the case may be, shall have set
aside on its books adequate reserves determined in accordance with Generally
Accepted Accounting Principles with respect to any such tax, assessment, charge,
levy or claim so contested; provided, further, that the Company and each
Corporate Guarantor will pay or cause to be paid all such taxes, assessments,
charges, levies or claims prior to foreclosure of any Lien which has attached as
security therefor.
SECTION 6.03. FINANCIAL STATEMENTS, REPORTS, ETC. Furnish to the Agent
and each Lender:
(a) as soon as available, but in any event within 90 days (or
such longer period which companies which are subject to the reporting
requirements of the Securities and Exchange Act of 1934, as amended,
are permitted to file with the Securities and Exchange Commission its
annual report on Form 10-K, giving effect to any permitted extensions
obtained by the Company but, in any event, not to exceed 105 days)
after the end of each fiscal year of the Company, (i) a copy of the
audited consolidated balance sheet of the
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Company and its Subsidiaries as of the end of such year and the
related audited consolidated statements of income, shareholders'
equity and cash flow for such year, in each case, setting forth in
comparative form the respective figures as of the end of and for the
previous fiscal year, and accompanied by a report thereon of
independent certified public accountants of recognized national
standing selected by the Company and not reasonably unsatisfactory to
the Required Lenders (the "Auditor"), which report shall not have a
"going concern" or like qualification or exception or qualification or
exception as to the scope of the audit and shall be to the effect that
such financial statements present fairly in all material respects the
financial condition and results of operation of the Company and its
Subsidiaries in accordance with Generally Accepted Accounting
Principles, consistently applied; (ii) a copy of the corresponding
supplemental consolidating balance sheets and income statements of the
Company, the Corporate Guarantors (as a group) and the Unrestricted
Subsidiaries (as a group) and, to the extent required by Generally
Accepted Accounting Principles or by applicable rules or regulations
of the Securities and Exchange Commission, each Corporate Guarantor
setting forth, commencing with the financial statements for the first
date or period after December 31, 2000, in comparative form the
respective figures as of the end of and for the previous fiscal year
or fiscal quarter, as applicable, and which support the financial
statements delivered pursuant to clause (i), and (iii) a copy of the
corresponding unaudited supplementary balance sheet and income
statement of the Company and the Corporate Guarantors on a
consolidated basis as of the end of such year and for such year, in
each case of (i) and (ii) and (iii) prepared in accordance with
Generally Accepted Accounting Principles, applied on a consistent
basis, and with respect to the statements referred to in clause (ii)
and (iii) accompanied by a certificate of the Chief Financial Officer
to that effect that such financial statements present fairly in all
material respects the financial condition and results of operation of
the Company and the Corporate Guarantors in accordance with Generally
Accepted Accounting Principles and a customary supplemental financial
information report thereon by the Auditor;
(b) as soon as available, but in any event not later than 45 days
(or such longer period which companies which are subject to the
reporting requirements of the Securities and Exchange Act of 1934, as
amended, are permitted to file with the Securities and Exchange
Commission its quarterly report on Form 10-Q, giving effect to any
permitted extensions obtained by the Company but, in any event, not to
exceed 60 days) after the end of the first, second and third quarterly
period of each fiscal year of the Company, (i) a copy of the interim
unaudited consolidated balance sheet of the Company and its
Subsidiaries as of the end of each such quarter and the related
interim statements of income, shareholders equity and cash flow for
such quarter and the portion of the fiscal year through such date
prepared in accordance with Generally Accepted Accounting Principles,
consistently applied, and setting forth in comparative form the
respective figures for the corresponding date and period in the
previous fiscal year, in each case prepared by the Chief Financial
Officer and accompanied by a certificate executed by the Chief
Financial Officer to the effect that such financial statements present
fairly in all material respects the financial condition and results of
operation of the Company and its Subsidiaries in accordance with
Generally Accepted Accounting Principles consistently
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applied subject to normal year end adjustments; (ii) a copy of the
corresponding consolidated interim balance sheet of the Company and
the Corporate Guarantors as of the end of such quarter and the related
corresponding unaudited consolidated interim statements of income, for
such quarter and the portion of the fiscal year through such date, and
(iii) a copy of the corresponding supplemental consolidating balance
sheets and income statements of the Company, the Corporate Guarantors
(as a group), the Unrestricted Subsidiaries (as a group), and, to the
extent required by Generally Accepted Accounting Principles or by
applicable rules or regulations of the Securities and Exchange
Commission, each Corporate Guarantor, in each case of (ii) and (iii),
prepared by management of the Company, and setting forth, commencing
with the financial statements for the first date or period after
December 31, 2000, in comparative form the respective figures for the
corresponding date and period in the previous fiscal year or fiscal
quarter, as applicable, and prepared in accordance with Generally
Accepted Accounting Principles, consistently applied.
(c) a certificate prepared and signed by the Chief Financial
Officer in form and substance reasonably acceptable to the Lenders
with each delivery required by clauses (a) and (b) above, as to
whether or not, as of the close of such preceding period and at all
times during such preceding period, the Company or each Corporate
Guarantor, as the case may be, was in compliance with all the
provisions in this Agreement, showing a detailed computation of
financial covenants and quantitative negative covenants and, if the
Chief Financial Officer shall have obtained knowledge of any default
in such compliance or notice of such default, he shall disclose in
such certificate such default or defaults or notice thereof and the
nature thereof, whether or not the same shall constitute a Default or
an Event of Default hereunder;
(d) promptly after the preparation thereof, a copy of the annual
budget or projection prepared with respect to the Company and/or any
Corporate Guarantor;
(e) promptly after receipt thereof, a copy of the management
letter and internal control letter, if any, prepared by the Auditor;
(f) if applicable, promptly after filing thereof, copies of all
regular and periodic financial information, proxy materials and other
information and reports (including, without limitation, reports on
Form 8-K) which the Company or any Corporate Guarantor shall file with
the Securities and Exchange Commission;
(g) promptly after submission to any government or regulatory
agency, all documents and information furnished to such government or
regulatory agency other than such documents and information prepared
in the normal course of business and which could not reasonably be
expected to result in any materially adverse action to be taken by
such agency;
(h) promptly following delivery thereof, copies of all reports,
notices and other materials delivered to the holders of the Senior
Notes generally; and
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(i) promptly, from time to time, such other information regarding
the operations, business affairs and condition (financial or
otherwise) of the Company or any Corporate Guarantor as any Lender may
reasonably request.
SECTION 6.04. BOOKS AND RECORDS; ACCESS TO PREMISES. Keep adequate
records and proper books of record and account in which complete entries will be
made in a manner to enable the preparation of financial statements in accordance
with Generally Accepted Accounting Principles, and which shall reflect all
financial transactions of the Company and its Subsidiaries. At any time during
normal business hours and from time to time, permit any Lender or any agent or
representative thereof, to examine and make copies of any abstracts from the
books and records of such information which the Lenders deem necessary or
desirable (including, without limitation, the financial records of the Company
and the Corporate Guarantors) and to visit the properties of the Company or any
Corporate Guarantor and to discuss their respective affairs, finances and
accounts with any of their respective executive officers or the Company's
independent accountants.
SECTION 6.05. NOTICE OF ADVERSE CHANGE. Promptly notify each Lender in
writing of (a) any change in the business or the operations of the Company or
any Corporate Guarantor which could reasonably be expected to have a Material
Adverse Effect, and (b) any information which indicates that any financial
statements which are the subject of any representation contained in this
Agreement, or which are furnished to the Agent or the Lenders pursuant to this
Agreement, fail, in any material respect, to present fairly, as of the date
thereof and for the period covered thereby, the financial condition and results
of operations purported to be presented therein, disclosing the nature thereof.
SECTION 6.06. NOTICE OF DEFAULT. Promptly notify each Lender of any
Default or Event of Default which shall have occurred, which notice shall
include a written statement as to such occurrence, specifying the nature thereof
and the action (if any) which is proposed to be taken with respect thereto.
SECTION 6.07. NOTICE OF LITIGATION. Promptly notify each Lender of any
action, suit or proceeding at law or in equity or by or before any governmental
instrumentality or other agency which, if adversely determined against the
Company or any Corporate Guarantor on the basis of the allegations and
information set forth in the complaint or other notice of such action, suit or
proceeding, or in the amendments thereof, if any, could reasonably be expected
to have a Material Adverse Effect.
SECTION 6.08. NOTICE OF DEFAULT IN OTHER AGREEMENTS. Promptly notify
each Lender of any default in the performance, observance or fulfillment of any
of the obligations, covenants or conditions contained in any agreement or
instrument to which the Company or any Corporate Guarantor is a party which
default could reasonably be expected to have a Material Adverse Effect.
SECTION 6.09. NOTICE OF ERISA EVENT. Promptly deliver to each Lender a
certificate of the Chief Financial Officer of the Company setting forth details
as to such
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occurrence and such action, if any, which the Company, such Corporate Guarantor
or such ERISA Affiliate is required or proposes to take, together with any
notices required or proposed to be given to or filed with or by the Company,
such Corporate Guarantor ERISA Affiliate, the PBGC, a Plan participant or the
Plan administrator, with respect thereto: that a Reportable Event has occurred
with respect to a Plan, that an accumulated funding deficiency has been incurred
or an application may be or has been made to the Secretary of the Treasury for a
waiver or modification of the minimum funding standard (including any required
installment payments) or an extension of any amortization period under Section
412 of the Code with respect to a Plan, that a Plan has been terminated,
reorganized, partitioned or declared insolvent under Title IV of ERISA, that one
or more Plans have an Unfunded Current Liability giving rise to a Lien under
ERISA, that proceedings may be or have been instituted to terminate a Plan, that
a proceeding has been instituted pursuant to Section 515 of ERISA to collect a
delinquent contribution to a Plan, or that the Company, any Corporate Guarantor
or any ERISA Affiliate will incur any liability (including any contingent or
secondary liability) to or on account of the termination of or withdrawal from a
Plan under Section 4062, 4063, 4064, 4201 or 4204 of ERISA if any of the
foregoing could, individually or in the aggregate, reasonably be expected to
cause the Company or the Corporate Guarantors to incur liabilities in excess of
$1,000,000, individually or in the aggregate. The Company will deliver to each
Lender a complete copy of the annual report (Form 5500) of each Plan that is a
single employer Plan (within the meaning of Section 4001(a)(15) of ERISA), filed
with the Internal Revenue Service. In addition to any certificates or notices
delivered to each Lender pursuant to the first sentence hereof, copies of annual
reports and any other notices received by the Company or any Corporate Guarantor
and required to be delivered to each Lender hereunder shall be delivered to each
Lender no later than ten days after the later of the date such report or notice
has been filed with the Internal Revenue Service or the PBGC, given to Plan
participants or received by the Company or a Corporate Guarantor.
SECTION 6.10. NOTICE OF ENVIRONMENTAL LAW VIOLATIONS. Promptly notify
each Lender of the receipt of any notice of an action, suit, and proceeding
before any court or governmental department, commission, board, bureau, agency
or instrumentality, domestic or foreign, pending against the Company or any
Corporate Guarantor relating to any alleged violation of any Environmental Law
which could reasonably be expected to have a Material Adverse Effect.
SECTION 6.11. NOTICE REGARDING MATERIAL CONTRACTS. Promptly notify
each Lender of (a) any termination (prior to the end of its stated term),
material amendment, material supplement or other material modification of any
Material Contract and (b) the occurrence of a material default by the Company or
any Corporate Guarantor or by any other party to any Material Contract of which
the Company or any Corporate Guarantor is aware.
SECTION 6.12. COMPLIANCE WITH APPLICABLE LAWS. Comply with the
requirements of all applicable laws, rules, regulations and orders of any
Governmental Authority, the breach of which could reasonably be expected to have
a Material Adverse Effect.
SECTION 6.13. SUBSIDIARIES. Promptly notify the Lenders (a) prior to
the occurrence thereof, of the creation, establishment or acquisition, in any
manner, of any Subsidiary of the Company or any Corporate Guarantor not existing
on the date hereof, (b) of the designation
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of an Unrestricted Subsidiary as a "Restricted Subsidiary" (as that term is
defined in the Senior Note Indenture), and (c) of the failure of any Subsidiary
which was an Unrestricted Subsidiary to conform with all the requirements
applicable to an Unrestricted Subsidiary as set forth in the definition thereof,
and, in each case of clause (a), (b) and (c), promptly cause, subject to the
next succeeding sentence, each such Subsidiary to execute a Corporate Guaranty,
concurrently with the creation, establishment or acquisition of such Subsidiary,
and concurrently with the delivery of each Corporate Guaranty pursuant to this
Section 6.13 provide to the Agent the supporting documents identified in clauses
(i), (ii), and (iii) of Section 5.01(d) in each case with respect to the
Subsidiary executing the same, together with a favorable written opinion of
counsel to such Subsidiary in form and substance reasonably satisfactory to the
Lenders, as to the due execution, delivery and enforceability of such documents
and such other matters as the Lenders may reasonably request. Notwithstanding
the foregoing, any Subsidiary of an Unrestricted Subsidiary and any future
Subsidiary which is properly designated as an Unrestricted Subsidiary in
accordance with the terms of the Indenture shall not be required to be or become
a Corporate Guarantor provided, however, that if any Unrestricted Subsidiary is
subsequently designated a "Restricted Subsidiary" (as that term is defined in
the Senior Note Indenture), the Company shall promptly cause such Subsidiary to
execute and deliver a Corporate Guaranty and the related supporting documents
and opinion of counsel referred to above; provided, further, no Corporate
Guarantor may be designated at any time as an Unrestricted Subsidiary.
SECTION 6.14. ENVIRONMENTAL LAWS. Comply in all respects with the
requirements of all Environmental Laws, provide to the Lenders all documentation
in connection with such compliance that the Lenders may reasonably request, and
defend, indemnify, and hold harmless the Agent and each Lender and their
respective employees, agents, officers, and directors, from and against any
claims, demands, penalties, fines, liabilities, settlements, damages, costs, or
expenses of whatever kind or nature, known or unknown, contingent or otherwise,
arising out of, or in any way related to: (a) the presence, disposal, or release
of any Hazardous Materials on any property at any time owned or occupied by the
Company or any Corporate Guarantor; (b) any personal injury (including wrongful
death) or property damage (real or personal) arising out of or related to such
Hazardous Materials; (c) any lawsuit brought or threatened, settlement reached,
or government order relating to such Hazardous Materials, and/or (d) any
violation of applicable Environmental Laws, including, without limitation,
reasonable attorney and consultant fees, investigation and laboratory fees,
court costs, and litigation expenses if such failure to so comply in the
preceding clauses (a) through (d) could, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.
SECTION 6.15. IMPOSITION OF RESTRICTIVE COVENANTS. In the event the
Company shall enter into an amendment or modification of the Senior Note
Indenture which amendment or modification would cause the covenants or
restrictions contained therein to be more restrictive than the covenants
contained in Article VII of this Agreement, then such covenants or restrictions
shall be deemed included in this Agreement as if fully set forth herein and the
Company shall immediately notify the Agent of the same and shall execute such
amendments or other agreements with the Agent and the Banks as the Agent or the
Required Banks shall reasonably deem necessary to evidence such inclusion. In
the event the Required Lenders approve an amendment, supplement or modification
to the Senior Note Indenture pursuant to Section 7.17 which contains any
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modification to any restriction or covenant therein or adds any additional
restriction or covenant, and the Required Lenders do not require an amendment to
this Agreement as a condition thereto, then such modified or additional
restrictions or covenants shall not be deemed for purposes of this Section 6.15
to be more restrictive than the covenants and restrictions in Article VII of
this Agreement.
ARTICLE VII
NEGATIVE COVENANTS
The Company covenants and agrees with the Lenders that so long as the
Revolving Credit Commitments remain in effect or any of the principal of or
interest on any Note or any other Obligations hereunder shall be unpaid, it will
not, and will not cause or permit any Corporate Guarantor, directly or
indirectly, to:
SECTION 7.01. LIENS. Incur, create, assume or suffer to exist any Lien
on any of their respective assets now or hereafter owned other than Permitted
Liens.
SECTION 7.02. INDEBTEDNESS. Incur, create, assume or suffer to exist
or otherwise become liable in respect of any Indebtedness other than Permitted
Debt or Indebtedness constituting Permitted Investments or Committed Restricted
Investments.
SECTION 7.03. GUARANTIES. Except guaranties constituting Permitted
Debt, Permitted Investments or Restricted Payments, guarantee, endorse, become
surety for, or otherwise in any way become or be responsible for the
Indebtedness or obligations of any Person (other than by endorsement of
negotiable instruments for collection in the ordinary course), whether by
agreement to maintain working capital or equity capital or otherwise maintain
the net worth or solvency of any Person or by agreement to purchase the
Indebtedness of any other Person, or agreement for the furnishing of funds,
directly or indirectly, through the purchase of goods, supplies or services for
the purpose of discharging the Indebtedness of any other Person or otherwise, or
enter into or be a party to any contract for the purchase of merchandise,
materials, supplies or other property if such contract provides that payment for
such merchandise, materials, supplies or other property shall be made regardless
of whether delivery of such merchandise, supplies or other property is ever made
or tendered.
SECTION 7.04. ASSET SALES. Enter into or consummate an Asset Sale
unless (i) the Company (or the Corporate Guarantor, as the case may be) receives
consideration at the time of such Asset Sale at least equal to the fair market
value (evidenced by a resolution of the Board of Directors of the Company set
forth in a certificate executed by an Executive Officer and delivered to the
Agent and reasonably acceptable to the Required Lenders) of the assets or Equity
Interests issued or sold or otherwise disposed of and (ii) at least 75% of the
consideration therefor received by the Company or such Restricted Subsidiary is
in the form of cash or Eligible Investments; provided that the amount of (a) any
liabilities (as shown on the Company's or such Corporate Guarantor's most recent
balance sheet) of the Company or such Corporate Guarantor (other than contingent
liabilities and liabilities that are by their terms subordinated to the Notes or
any
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guarantee thereof) that are assumed by the transferee of any such assets or
Equity Interests pursuant to a customary novation agreement that expressly
releases the Company or such Corporate Guarantor from further liability and (b)
any securities, notes or other obligations received by the Company or such
Corporate Guarantor from such transferee that are converted by the Company or
such Corporate Guarantor into cash or Eligible Investments within 30 days after
such Asset Sale (to the extent of the cash received) shall be deemed to be cash
for purposes of this provision. Upon receipt of the Net Proceeds from an Asset
Sale, the Company shall apply such Net Proceeds in accordance with Section 3.03
hereof.
SECTION 7.05. SALES OF RECEIVABLES. Sell, transfer, discount or
otherwise dispose of accounts receivable arising in the ordinary course of
business owing to the Company or any Corporate Guarantor, with or without
recourse, except for collection in the ordinary course of business.
SECTION 7.06. INVESTMENTS. Make or commit to make any Investment other
than Permitted Investments or Restricted Payments constituting Investments.
SECTION 7.07. NATURE OF BUSINESS. Change or alter, in any material
respect, the nature of its business from the nature of the business engaged in
by it on the date hereof, which nature shall include, without limitation, the
sale or distribution of food products and related products.
SECTION 7.08. SALE AND LEASEBACK. Enter into any arrangement, directly
or indirectly, with any Person whereby it shall sell or transfer any property,
whether real or personal, used or useful in its business, whether now owned or
hereafter acquired, of it or any Corporate Guarantor, if at the time of such
sale or disposition it intends to lease or otherwise acquire the right to use or
possess (except by purchase) such property or like property for a substantially
similar purpose; except that the Company may enter into sale-leaseback
arrangements provided that the aggregate consideration received by Company and
the Corporate Guarantors for any property subject to such an arrangement shall
not exceed $500,000 in the aggregate during the term of this Agreement.
SECTION 7.09. FEDERAL RESERVE REGULATIONS. Permit any Loan or the
proceeds of any Loan to be used for any purpose which violates or is
inconsistent with the provisions of Regulation T, U or X of the Board of
Governors of the Federal Reserve System.
SECTION 7.10. ACCOUNTING POLICIES AND PROCEDURES. Permit any change in
the accounting policies and procedures of the Company or any Corporate
Guarantor, including a change in fiscal year (other than to a calendar year end,
in which event appropriate adjustments shall be made to the dates specified in
Section 7.13(a)), provided, however, that any policy or procedure required to be
changed by the Financial Accounting Standards Board (or other board or committee
thereof) in order to comply with Generally Accepted Accounting Principles may be
so changed.
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SECTION 7.11. HAZARDOUS MATERIALS. Cause or permit any of its
properties or assets to be used to generate, manufacture, refine, transport,
treat, store, handle, dispose of, transfer, produce or process Hazardous
Materials, except in compliance with all applicable federal, state and local
laws or regulations, or cause or permit, as a result of any intentional or
negligent act or omission on the part of the Company or any Corporate Guarantor,
a release of Hazardous Materials onto such property or asset or onto any other
property if such action could reasonably be expected to have a Material Adverse
Effect.
SECTION 7.12. LIMITATIONS ON FUNDAMENTAL CHANGES. Merge or consolidate
with, or sell, assign, lease or otherwise dispose of (whether in one transaction
or in a series of transactions) all or substantially all of its assets (whether
now or hereafter acquired) to, any Person, or acquire all of the stock or all or
substantially all of the assets or the business of any Person or liquidate, wind
up or dissolve or suffer any liquidation or dissolution; provided, however, that
(i) the Company and the Corporate Guarantors may acquire assets primarily for
the purpose of acquiring store locations from third parties (including
franchisees) provided that the aggregate purchase price of all such acquisitions
shall not exceed $6,500,000 in any year and (ii) any Corporate Guarantor may
merge or consolidate with or sell, assign, lease (as lessor) or otherwise
dispose of all or substantially all of its assets (whether now or hereafter
acquired) to the Company or any other Corporate Guarantor.
SECTION 7.13. FINANCIAL COVENANTS.
(a) CONSOLIDATED SENIOR DEBT TO CONSOLIDATED EBITDA. Permit the ratio
of Consolidated Senior Debt to Consolidated EBITDA as of the end of any fiscal
quarter of the Company to be greater than the ratio set forth below opposite the
applicable period:
Period Ratio
------ -----
Closing Date through January 1, 2000 4.50: 4.50:1.0 0
January 2, 2000 through December 30, 2000 4.50:1.00
December 31, 2000 through December 29, 2001 4.30:1.00
December 30, 2001 through December 28, 2002 4.10:1.00
December 29, 2002 and thereafter 3.90:1.00
(b) CONSOLIDATED EBITDA TO CONSOLIDATED INTEREST EXPENSE. Permit the
ratio of Consolidated EBITDA to Consolidated Interest Expense as of the end of
any fiscal quarter of the Company to be less than 2.00:1.00.
SECTION 7.14. SENIOR NOTES. Make a Senior Note Payment; provided,
however, if (a) no Default or Event of Default has occurred and is continuing or
would occur after giving effect to the Senior Note Payment, (b) the Consolidated
EBITDA determined from the most recent financial statements delivered to the
Lenders pursuant to Section 6.03 is not less than $75,000,000, (c) after giving
effect to the Senior Note Payment the Eligible Investments plus an amount equal
to the Total Revolving Credit Commitment less the Aggregate Outstandings is not
less than $30,000,000, and (d) the Senior Notes to be purchased are repurchased
at a discount
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from the face amount thereof (or not in excess of the face amount thereof in the
event of a Mandatory Senior Payment), then the Company may make Senior Note
Payments.
SECTION 7.15. RESTRICTED PAYMENTS. (i) Declare or pay any dividend or
make any other payment or distribution on account of the Company's Equity
Interests (including, without limitation, any payment in connection with any
merger (other than the Merger) or consolidation involving the Company) or to any
direct or indirect holders of the Company's Equity Interests in their capacity
as such (other than dividends or distributions (a) payable in Equity Interests
(other than Disqualified Stock) of the Company or (b) payable to the Company or
any Corporate Guarantor that is a wholly-owned Subsidiary of the Company); (ii)
except for Permitted Investments in Persons that are, or after giving effect to
such Investments become, Subsidiaries of the Company, purchase, redeem or
otherwise acquire or retire for value (including, without limitation, in
connection with any merger (other than the Merger) or consolidation involving
the Company) any Equity Interests of the Company or any Affiliate of the Company
(other than any such Equity Interests owned by the Company or any wholly-owned
Subsidiary of the Company which is a Corporate Guarantor, any Equity Interests
then being issued by the Company or a wholly-owned Subsidiary of the Company
which is a Corporate Guarantor or any Investment in a Person that, after giving
effect to such Investment, is a wholly-owned Subsidiary of the Company which is
a Corporate Guarantor); (iii) [Reserved]; or (iv) make any Restricted Investment
(all such payments and other actions set forth in clauses (i), (ii) and (iv)
above being collectively referred to as "Restricted Payments"), unless, at the
time of and after giving effect to such Restricted Payment:
(a) no Default or Event of Default shall have occurred and be
continuing or would occur as a consequence thereof; and
(b) the Company would, at the time of such Restricted Payment and
after giving pro forma effect thereto as if such Restricted Payment
had been made at the beginning of the applicable four-quarter period,
have been permitted to incur at least $1.00 of additional Indebtedness
pursuant to the Consolidated EBITDA to Consolidated Interest Expense
covenant set forth in Section 7.13(b); and
(c) such Restricted Payment, together with the aggregate amount
of all other Restricted Payments declared or made by the Company and
the Corporate Guarantors after the Closing Date (excluding Restricted
Payments permitted by clauses (ii), (iii), (v) and (vi) and clause
(viii) (if and to the extent that the reimbursement obligations paid
pursuant to clause (viii) are direct obligations of the Company or any
of the Corporate Guarantors and are in respect of letters of credit
issued prior to the Closing Date) of the next succeeding paragraph),
is less than the sum, without duplication, of
(1) 50% of the Adjusted Consolidated Net Income of the
Company for the period (taken as one accounting period) from the
Closing Date to the end of the Company's most recently ended
fiscal quarter for which internal financial statements are
available at the time of such Restricted Payment (or, if such
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Adjusted Consolidated Net Income for such period is a deficit,
less 100% of such deficit), plus
(2) 100% of the aggregate net cash proceeds received by the
Company from the issue or sale since the Closing Date of Equity
Interests of the Company (other than Disqualified Stock), or of
Disqualified Stock or debt securities of the Company that have
been converted into such Equity Interests (other than Equity
Interests (or Disqualified Stock or convertible debt securities)
sold to a Subsidiary of the Company and other than Disqualified
Stock or convertible debt securities that have been converted
into Disqualified Stock), plus
(3) to the extent that any Restricted Investment (other than
any Committed Restricted Investment) that was made after the
Closing Date is sold for cash or otherwise liquidated or repaid
for cash, the lesser of (A) the cash return of capital with
respect to such Restricted Investment (less the cost of
disposition, if any) (but only to the extent not included in
subclause (1) of this clause (c) or applied to reduce
Unrestricted Investments Outstanding) and (B) the initial amount
of such Restricted Investment, plus
(4) to the extent that any Restricted Investment (other than
any Committed Restricted Investment) that was made after the
Closing Date in the form of a guarantee of Indebtedness is
reduced as a result of a reduction in the maximum principal
amount of Indebtedness that may be guaranteed under such
guarantee, the amount of such reduction, plus
(5) to the extent that any Restricted Investment (other than
any Committed Restricted Investment) that was made after the
Closing Date in the form of the furnishing of a letter of credit
as security for Indebtedness or other obligations is reduced as a
result of a reduction in the maximum reimbursement obligations in
respect of such letter of credit, the amount of such reduction,
plus
(6) to the extent that any Restricted Investment (other than
any Committed Restricted Investment) that was made after the
Closing Date in the form of the guarantee of a lease has been
amortized (as provided in the definition of "Investments"), the
amount of such amortization, plus
(7) to the extent that any Restricted Investment (other than
any Committed Restricted Investment) that was made after the
Closing Date in the form of a guarantee of obligations other than
Indebtedness or a lease is reduced as a result of a reduction in
the maximum liability under such guarantee, the amount of such
reduction, plus
(8) in the event that (A) any Unrestricted Subsidiary shall
become a Corporate Guarantor and (B) immediately after giving
effect to such event no Default or Event of Default shall have
existed and such Subsidiary shall have
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become a wholly-owned Subsidiary of the Company, the lowest of
(x) an amount equal to the fair market value (as determined in
good faith by the Board of Directors of the Company and
reasonably acceptable to the Required Lenders) at the time of
such designation of the outstanding Investments of the Company
and the Corporate Guarantors in the Subsidiary so designated, (y)
an amount equal to the net book value of such outstanding
Investments at the time of such designation and (z) an amount
equal to the amount of Restricted Investments (other than
Committed Restricted Investments) made by the Company and the
Corporate Guarantors in such Subsidiary after the Closing Date
less the amount, if any, of any amounts included in subclause
(3), (4), (5), (6) or (7) of this clause (c) in respect of such
Subsidiary, plus
(9) $20.0 million; provided, however, that the Restricted Payment
identified in this clause (9) (i) shall not be made prior to January
1, 2000, (ii) on or after January 1, 2000, no more than $10,000,000 of
such payment shall be distributed in any one fiscal quarter, and (iii)
for the Company's fiscal year ending December 31, 2000, the sum of all
distributions or loans to shareholders of the Company shall not exceed
an amount equal to (x) if the Company is an S Corporation, the
Company's taxable income for such fiscal year determined in accordance
with Section 1363 of the Code less the aggregate Tax Distributions
with respect to such fiscal year or (y) if the Company is not an S
Corporation, then the Adjusted Consolidated Net Income of the Company
for such fiscal year; provided further, that the Company shall no
longer be subject to the foregoing proviso if the Company obtains a
mortgage loan on its real property improvements, fixtures and related
personal property customarily securing such loans located at 401
Broadhollow Road, Melville, New York in a principal amount of at least
$12,000,000, the proceeds of which are used to pay (i) if the
aggregate outstanding principal balance of the Revolving Credit Loans
is less than $12,000,000, then the outstanding principal amount of the
Revolving Credit Loans and (ii) if the aggregate outstanding principal
balance of the Revolving Credit Loans is $12,000,000 or greater, then
the lesser of (x) the outstanding principal amount of the Revolving
Credit Loans or (y) the full amount of such proceeds.
The foregoing provisions will not prohibit (i) the payment of any
dividend within 60 days after the date of declaration thereof, if at said date
of declaration such payment would have complied with the provisions of this
Agreement; (ii) the redemption, repurchase, retirement, defeasance or other
acquisition of any Subordinated Indebtedness or Equity Interests of the Company
in exchange for, or out of the net cash proceeds of the substantially concurrent
sale (other than to a Subsidiary of the Company) of, other Equity Interests of
the Company (other than any Disqualified Stock); provided that the amount of any
such net cash proceeds that are utilized for any such redemption, repurchase,
retirement, defeasance or other acquisition shall be excluded from clause (c)
(2) of the preceding paragraph; (iii) the redemption, repurchase, retirement,
defeasance or other acquisition of Subordinated Indebtedness with the net cash
proceeds from an incurrence of Permitted Refinancing Indebtedness; (iv) the
repurchase, redemption or other acquisition or retirement for value of any
Equity Interests of the Company or any Corporate Guarantor held by any member of
the Company's (or any Corporate Guarantor's) management or board of directors or
any employee stock ownership; provided that the aggregate price paid for
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all such repurchased, redeemed, acquired or retired Equity Interests shall not
exceed $1.0 million in any twelve-month period; (v) Tax Distributions in respect
of periods when the Company is an S Corporation, (vi) Committed Restricted
Investments; (vii) Restricted Investments consisting of payments pursuant to
guaranties (not prohibited by the provisions of the Senior Note Indenture) of
Indebtedness; (viii) Restricted Investments consisting of payments pursuant to
reimbursement obligations in respect of letters of credit (not prohibited by the
provisions of the Agreement) securing Indebtedness or other obligations; and
(ix) Restricted Investments consisting of payments pursuant to guaranties (not
prohibited by the provisions of the Agreement) of obligations (other than
Indebtedness), provided, however, that at the time of, and after giving effect
to, any Restricted Payment permitted under clauses (i) through (iv) no Default
or Event of Default shall have occurred and be continuing.
The amount of all Restricted Payments (other than cash) shall be the
fair market value on the date of the Restricted Payment of the asset(s) or
securities proposed to be transferred or issued by the Company or any Corporate
Guarantor, as the case may be, pursuant to the Restricted Payment.
Notwithstanding the preceding sentence, the amount of any Restricted Investment
that is a guarantee of (or the furnishing of a letter or credit as security for)
Indebtedness or other obligations shall be as determined under the definition of
"Investments." Not later than the date of making any Restricted Payment, the
Company shall deliver to the Agent an officers' certificate executed by an
Executive Officer of the Company stating that such Restricted Payments were
permitted and setting forth the basis upon which the calculations required by
this Section 7.15 were computed.
SECTION 7.16. TRANSACTIONS WITH AFFILIATES. Make or permit any
Subsidiary of the Company to make any payment to, or sell, lease, transfer or
otherwise dispose of any of its properties or assets to, or purchase any
property or assets from, or enter into or make or amend any transaction,
contract, agreement, understanding, loan, advance or guarantee with, or for the
benefit of, any Affiliate of the Company (each of the foregoing, an "Affiliate
Transaction"), unless (i) such Affiliate Transaction is on terms that are no
less favorable to the Company or the relevant Subsidiary than those that would
have been obtained in a comparable transaction by the Company or such Subsidiary
with an unrelated Person and (ii) the Company delivers to the Agent (a) with
respect to any Affiliate Transaction or series of related Affiliate Transactions
involving aggregate payments or consideration in excess of $1.0 million, a
resolution of the Board of Directors set forth in a certificate executed by an
Executive Officer certifying that such Affiliate Transaction complies with
clause (i) above and that such Affiliate Transaction has been approved by a
majority of the independent members of the Board of Directors of the Company and
(b) with respect to any Affiliate Transaction or series of related Affiliate
Transactions involving aggregate payments or consideration in excess of $5.0
million, an opinion as to the fairness to the Company or such Subsidiary of such
Affiliate Transaction from a financial point of view issued by an accounting,
appraisal or investment banking firm of national standing.
The foregoing provisions will not prohibit (i) any reasonable
employment agreement or other compensation plan or arrangement paid or made
available to officers or employees of the Company or its Subsidiaries for
services actually rendered or to be rendered and entered into by
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the Company or any Subsidiary in the ordinary course of business and consistent
with past practice; (ii) transactions between or among the Company and/or
Corporate Guarantors which are wholly owned Subsidiaries of the Company; (iii)
any Remote Guarantee or Permitted Investment or any Restricted Payment that is
permitted by the provisions of this Agreement; (iv) transactions between or
among Unrestricted Subsidiaries of the Company; (v) the provision, in the
ordinary course of business consistent with past practice and for cash
consideration not less than the cost thereof, of support services (such as
accounting, architectural, legal and administrative services) by the Company and
the Corporate Guarantors to Unrestricted Subsidiaries of the Company and
entities in which the Company has, directly or indirectly, an equity interest of
20% or more; (vi) the Tax Payment Agreement; (vii) leases or subleases by the
Company and the Corporate Guarantors of real property to Unrestricted
Subsidiaries or Persons in which Unrestricted Subsidiaries have an equity
interest to the extent that such leases or subleases are in effect on the
Closing Date; (viii) guarantees of Indebtedness or real property lease
obligations of Unrestricted Subsidiaries or entities in which Unrestricted
Subsidiaries have an equity interest to the extent that such guarantees are in
effect on the Closing Date; or (ix) payments by the Company to Sbarro
Enterprises, L.P. under the sublease for the Company's administrative office
building as in effect on the Closing Date.
SECTION 7.17. AMENDMENTS TO CERTAIN AGREEMENTS. Without the prior
consent of the Required Banks, amend, supplement or modify the Senior Note
Indenture, the Senior Notes, the Note Purchase Agreement, the Tax Payment
Agreement or the Registration Rights Agreement in any material respect or in any
manner adverse to the Lenders; provided, however, any amendment or supplement
which solely designates one or more Restricted Subsidiaries (as defined in the
Senior Note Indenture) as guarantors under the Senior Note Indenture shall not
be deemed an amendment, supplement or modification which is adverse to the
Lenders or which is material.
SECTION 7.18. ISSUANCE OF PREFERRED STOCK. Issue any Capital Stock of
a Corporate Guarantor of any class or classes (however designated) that ranks
prior, as to the payment of dividends or as to the distribution of assets upon
any voluntary or involuntary liquidation, dissolution or winding up of the
issuer thereof to shares of Capital Stock of any other class of such Issuer;
provided, however, the Corporate Guarantors may issue preferred stock to the
Company or any other Corporate Guarantor.
SECTION 7.19. S CORPORATION MATTERS. If the Company elects to be
treated as an S Corporation:
(a) the Company shall elect to be treated as an "S corporation" or its
equivalent for state and local income tax purposes in each state and locality in
which the Company does business that permits such an election, for the earliest
possible applicable tax year;
(b) with respect to each of the Company's Subsidiaries as to which the
Company makes a valid "qualified subchapter S subsidiary" election under Section
1361(b)(3) of the Code, the Company shall make an equivalent election for state
and local income tax purposes, in each state
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and locality in which the Company does business that permits such an election,
for the earliest possible applicable tax year;
(c) except as permitted in paragraph 10 of the Tax Payment Agreement
or except in connection with the termination of the Company's status as an S
Corporation, the Company shall not take any action which it knows would
terminate any election made to be treated as an "S corporation" or its
equivalent for state and local income tax purposes, or for one or more of its
subsidiaries to be treated as a "qualified subchapter S subsidiary" or its
equivalent for state and local income tax purposes;
(d) the Company shall furnish the Agent with (i) a copy of its
election to be treated as an S Corporation within 15 days after the filing
thereof, (ii) a copy of each determination of amounts permitted to be paid or
distributed to or for the benefit of, or required to be repaid by, the
shareholders of the Company under the Tax Payment Agreement, certified by the
Chief Financial Officer of the Company, on or prior to making such payment or
distribution or requesting such repayment, (iii) a copy of its federal income
tax return for each taxable year (and any amendment thereto) in which it claims
to be an S Corporation within 20 days after filing thereof, and (iv) a
certificate of the Company's certified independent accountants confirming the
computation of the amount determined under clause (a) of paragraph 4 of the Tax
Payment Agreement based on the Company's original federal income tax return for
such taxable year as filed, within 20 days after the Tax Return Date (as defined
in the Tax Payment Agreement) for each taxable year in which the Company claims
to be an S Corporation;
(e) the Company shall promptly notify the Agent and each Lender upon
learning the termination of its status as an S Corporation for any reason;
(f) the Company shall file its original federal income tax return for
each taxable year in which it claims to be an S Corporation on or before the due
date thereof (including valid extensions of time to file such returns); and
(g) the Company shall cause to be repaid to the Company all amounts
(including interest, where applicable) required to be repaid by the shareholders
of the Company pursuant to the Tax Payment Agreement. Any such repayments shall
be treated as capital contributions which shall not increase the amount
available for Restricted Payments, except for any such increase resulting from
such repayments causing an increase in Adjusted Consolidated Net Income.
SECTION 7.20. LIMITATION ON ISSUANCES AND SALES OF CAPITAL STOCK. The
Company (i) shall not, and shall not permit any Corporate Guarantor which is a
wholly owned Subsidiary of the Company to, transfer, convey, sell, lease or
otherwise dispose of any Equity Interests or other ownership interests
(including convertible debt securities) of any Corporate Guarantor which is a
wholly owned Subsidiary of the Company to any Person (other than the Company or
a Corporate Guarantor which is a wholly owned Subsidiary of the Company), unless
(a) such transfer, conveyance, sale, lease or other disposition is of all the
Equity Interests and other ownership interests of a Corporate Guarantor which is
a wholly-owned Subsidiary of the
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Company and (b) the Net Proceeds from such transfer, conveyance, sale, lease or
other disposition are applied in accordance with Section 3.03 and 7.04 hereof,
and (ii) shall not permit any Corporate Guarantor which is a wholly owned
Subsidiary of the Company to issue any of its Equity Interests or other
ownership interests (other than, if necessary, shares of its Capital Stock
constituting directors' qualifying shares) to any Person other than to the
Company or a Corporate Guarantor which is a wholly owned Subsidiary of the
Company.
ARTICLE VIII
EVENTS OF DEFAULT
SECTION 8.01. EVENTS OF DEFAULT. In the case of the happening of any
of the following events (each an "Event of Default"):
(a) failure of the Company to pay the principal of or interest on
any Loan, any reimbursement obligations with respect to a drawing
under any Letter of Credit (including, without limitation, any
Existing Letter of Credit), or any fees under this Agreement as and
when due and payable, and with respect to interest payments and fee
payments only, such failure shall continue unremedied for a period of
three (3) Business Days;
(b) default shall be made in the due observance or performance of
(i) any covenant, condition or agreement set forth in Article VII or
Section 6.03, or (ii) any other covenant, condition or agreement of
the Company or any Corporate Guarantor to be performed pursuant to
this Agreement or any other Loan Document (other than those specified
in clauses (a) or (b)(i) of this Section 8.01) if such default, if
capable of cure, shall continue unremedied for a period of fifteen
(15) days;
(c) any representation or warranty made or deemed made by the
Company or any Corporate Guarantor in this Agreement or any other Loan
Document shall prove to be false or misleading in any material respect
when made or given or when deemed made or given;
(d) any report, certificate, financial statement or other
instrument furnished by the Company or any Corporate Guarantor in
connection with this Agreement or any other Loan Document or the
borrowings hereunder, shall prove to be false or misleading in any
material respect when made or given or when deemed made or given;
(e) default in the performance or compliance in respect of any
agreement or condition relating to any Indebtedness of the Company or
any Corporate Guarantor in excess of $1,000,000 individually or in the
aggregate (other than the Notes), if the effect of such default is to
accelerate the maturity of such Indebtedness or to permit the holder
or obligee thereof (or a trustee on behalf of such holder or obligee)
to cause such Indebtedness to become due prior to the stated maturity
thereof, or, any such Indebtedness shall not be paid when due;
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(f) the Company or any Corporate Guarantor shall (i) voluntarily
commence any proceeding or file any petition seeking relief under
Title 11 of the United States Code or any other federal or state
bankruptcy, insolvency or similar law, (ii) consent to the institution
of, or fail to controvert in a timely and appropriate manner, any such
proceeding or the filing of any such petition, (iii) apply for or
consent to the employment of a receiver, trustee, custodian,
sequestrator or similar official for the Company or any Corporate
Guarantor or for a substantial part of its property; (iv) file an
answer admitting the material allegations of a petition filed against
it in such proceeding, (v) make a general assignment for the benefit
of creditors, (vi) take corporate action for the purpose of effecting
any of the foregoing, or (vii) become unable or admit in writing its
inability or fail generally to pay its debts as they become due;
(g) an involuntary proceeding shall be commenced or an
involuntary petition shall be filed in a court of competent
jurisdiction seeking (i) relief in respect of the Company or any
Corporate Guarantor or of a substantial part of their respective
property, under Title 11 of the United States Code or any other
federal or state bankruptcy insolvency or similar law, (ii) the
appointment of a receiver, trustee, custodian, sequestrator or similar
official for the Company or any Corporate Guarantor or for a
substantial part of their property, or (iii) the winding-up or
liquidation of the Company or any Corporate Guarantor and, in the case
of clauses (i), (ii) or (iii), such proceeding or petition shall
continue undismissed for 60 days or an order or decree approving or
ordering any of the foregoing shall continue unstayed and in effect
for 60 days;
(h) One or more orders, judgments or decrees for the payment of
money in excess of $1,000,000 in the aggregate shall be rendered
against the Company or any Corporate Guarantor and the same shall not
have been paid in accordance with such judgment, order or decree or
settlement and either (i) an enforcement proceeding shall have been
commenced by any creditor upon such judgment, order or decree, or (ii)
there shall have been a period of thirty (30) days during which a stay
of enforcement of such judgment, order or decree, by reason of pending
appeal or otherwise, was not in effect;
(i) any Plan shall fail to maintain the minimum funding standard
required for any Plan year or part thereof or a waiver of such
standard or extension of any amortization period is applied for or
granted under Section 412 of the Code, any Plan is terminated by the
Company or any ERISA Affiliate or the subject of termination
proceedings under ERISA, any Plan shall have an Unfunded Current
Liability, a Reportable Event shall have occurred with respect to a
Plan or the Company, any Corporate Guarantor, or any ERISA Affiliate
shall have incurred a liability to or on account of a Plan under
Section 515, 4062, 4063, 4201 or 4204 of ERISA, and there shall result
from any such event or events the imposition of a lien upon the assets
of the Company or any Corporate Guarantor, the granting of a security
interest on such assets, or a liability to the PBGC or a Plan or a
trustee appointed under ERISA or a penalty under Section 4971 of the
Code, in case such lien, security interest or penalty involves an
amount in excess of $1,000,000;
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(j) any material provision of any Loan Document shall for any
reason cease to be in full force and effect in accordance with its
terms or the Company or any Corporate Guarantor shall so assert in
writing;
(k) a Change of Control shall have occurred without the prior
written consent of the Required Lenders;
(l) an Event of Default (as that term is defined in the Senior
Note Indenture) shall have occurred; or
(m) the Company shall fail to "Consummate" the "Exchange Offer"
(as those terms are defined in the Registration Rights Agreement)
within one year of the date it is first required to pay "Liquidated
Damages" (as that term is defined in the Registration Rights
Agreement);
then, at any time thereafter during the continuance of any such event, the Agent
may, and, upon the request of the Required Lenders, shall, by written or
telephonic notice to the Company, take any or all of the following actions, at
the same or different times, (a) terminate their Revolving Credit Commitments
and (b) declare (i) the Notes, both as to principal and interest, (ii) an amount
equal to the maximum amount that may be drawn under all Letters of Credit
(including, without limitation, the Existing Letters of Credit) then outstanding
(whether or not any beneficiary under any Letter of Credit shall have presented
or be entitled to present the drafts and other documents required to draw under
such Letter of Credit), and (iii) all other Obligations, to be forthwith due and
payable without presentment, diligence, demand, protest or other notice of any
kind, all of which are hereby expressly waived, anything contained herein or in
the Notes to the contrary notwithstanding; provided, however, that if an event
specified in Section 8.01(f) or (g) shall have occurred, the Revolving Credit
Commitments shall automatically terminate and interest, principal and amounts
referred to in the preceding clauses (b), (i), (ii), and (iii) shall be
immediately due and payable without presentment, demand, protest, or other
notice of any kind, all of which are expressly waived, anything contained herein
or in the Notes to the contrary notwithstanding. With respect to all Letters of
Credit (including, without limitation, the Existing Letters of Credit) that
shall not have matured or presentment for honor shall not have occurred, the
Company shall provide the Agent with Cash Collateral in an amount equal to the
aggregate undrawn amount of such letters of credit. Such Cash Collateral shall
be applied by the Agent to reimburse the Issuing Lender for drawings under
Letters of Credit (including, without limitation, the Existing Letters of
Credit) for which the Issuing Lender has not been reimbursed and, to the extent
not so applied, shall be held for the satisfaction of the reimbursement
obligations of the Company at such time or, if the maturity of the Loans has
been accelerated, be applied to satisfy other Obligations.
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ARTICLE IX
THE AGENT
SECTION 9.01. APPOINTMENT, POWERS AND IMMUNITIES. Each Lender hereby
irrevocably appoints and authorizes the Agent to act as its agent hereunder,
under the Loan Documents with such powers as are specifically delegated to the
Agent by the terms of this Agreement and the other Loan Documents, together with
such other powers as are reasonably incidental thereto. The Agent shall have no
duties or responsibilities except those expressly set forth in this Agreement
and the other Loan Documents and shall not be a trustee for any Lender, nor is
the Agent acting in a fiduciary capacity of any kind under this Agreement or the
other Loan Documents or in respect thereof or in respect of any Lender. The
Agent shall be not responsible to the Lenders for any recitals, statements,
representations or warranties contained in this Agreement or the other Loan
Documents, in any certificate or other document referred to or provided for in,
or received by any of them under, this Agreement or the other Loan Documents, or
for the value, validity, effectiveness, genuineness, enforceability or
sufficiency of this Agreement or the other Loan Documents or any other document
referred to or provided for herein or therein or for the collectibility of the
Loans or for the validity, effectiveness or value of any interest or security
covered by the Loan Documents or for the value of any collateral or for the
validity or effectiveness of any assignment, mortgage, pledge, security
agreement, financing statement, document or instrument, or for the filing,
recording, re-filing, continuing or rerecording of any thereof or for any
failure by the Company or any Corporate Guarantor to perform any of its
obligations hereunder or under the other Loan Documents. The Agent may take all
actions by itself and/or it may employ agents and attorneys-in-fact, and shall
not be responsible, except as to money or the securities received by it or its
authorized agents, for the negligence or misconduct of itself or its employees
or of any such agents or attorneys-in-fact, if such agents or attorneys-in-fact
are selected by it with reasonable care. Neither the Agent nor any of its
directors, officers, employees or agents shall be liable or responsible for any
action taken or omitted to be taken by it hereunder under the other Loan
Documents or in connection herewith or therewith, except for its own gross
negligence or willful misconduct.
SECTION 9.02. RELIANCE BY AGENT. The Agent shall be entitled to rely
upon, and shall not incur any liability for relying upon, any certification,
notice or other communication (including any thereof by telephone, telex,
telegram or cable) believed by it to be genuine and correct and to have been
signed or sent by or on behalf of the proper Person or Persons, and upon advice
and statements of legal counsel, independent accountants and other experts
selected by the Agent. As to any matters not expressly provided for by this
Agreement or the other Loan Documents, the Agent shall in all cases be fully
protected in acting, or in refraining from acting, hereunder or under the other
Loan Documents in accordance with instructions signed by the Required Lenders,
or such other number of Lenders as is specified in Section 10.04 hereof, and
such instructions of the Required Lenders or other number of Lenders as
aforesaid and any action taken or failure to act pursuant thereto shall be
binding on all of the Lenders.
SECTION 9.03. EVENTS OF DEFAULT. The Agent shall not be deemed to have
knowledge of the occurrence of a Default or Event of Default (other than the
non-payment of
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principal of or interest on the Loans to the extent the same is required to be
paid to the Agent for the account of the Lenders) unless the Agent has received
notice from a Lender or the Company specifying such Default or Event of Default
and stating that such notice is a "Notice of Default". In the event that the
Agent receives such a notice of the occurrence of a Default or Event of Default,
the Agent shall give prompt notice thereof to the Lenders. The Agent shall
(subject to Section 9.07 hereof) take such action with respect to such Default
or Event of Default as shall be directed by the Required Lenders, except as
otherwise provided in Section 10.04 hereof; provided that unless and until the
Agent shall have received such directions, the Agent may (but is not obligated
to) take such action, or refrain from taking such action, with respect to such
Default or Event of Default as it shall deem advisable in the best interest of
the Lenders.
SECTION 9.04. RIGHTS AS A LENDER. With respect to its Revolving Credit
Commitment and the Loans made by it, the Agent in its capacity as a Lender
hereunder shall have the same rights and powers hereunder as any other Lender
and may exercise the same as though it were not acting as the Agent, and the
term "Lender" or "Lenders" shall, unless the context otherwise indicates,
include the entity which is the Agent in its individual capacity. The entity
which is the Agent and its Affiliates may (without having to account therefor to
any Lender) accept deposits from, lend money to and generally engage in any kind
of banking, trust or other business with the Company or its Affiliates, as if it
were not acting as the Agent, and, except to the extent otherwise herein
specifically set forth, the entity which is the Agent may accept fees and other
consideration from the Company or its Affiliates, for services in connection
with this Agreement or any of the other Loan Documents or otherwise without
having to account for the same to the Lenders.
SECTION 9.05. INDEMNIFICATION. The Lenders shall indemnify the Agent
(to the extent not reimbursed by the Company under Section 10.03 hereof),
ratably in accordance with the aggregate outstanding principal amount of the
Loans made by the Lenders (or, if no Loans are at the time outstanding, ratably
in accordance with their respective Revolving Credit Commitments), for any and
all liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind and nature whatsoever which
may be imposed on, incurred by or asserted against the Agent in its capacity as
the Agent in any way relating to or arising out of this Agreement or any of the
other Loan Documents or any other documents contemplated by or referred to
herein or therein or the transactions contemplated hereby and thereby
(including, without limitation, the costs and expenses which the Company is
obligated to pay under Section 10.03 hereof or under the applicable provisions
of any other Loan Document) or the enforcement of any of the terms hereof or of
the other Loan Documents, provided that no Lender shall be liable for any of the
foregoing to the extent they arise from the gross negligence or willful
misconduct of the Agent.
SECTION 9.06. NON-RELIANCE ON AGENT AND OTHER LENDERS. Each Lender
agrees that it has, independently and without reliance on the Agent or any other
Lender, and based on such documents and information as it has deemed
appropriate, made its own credit analysis of the Company and the Corporate
Guarantors and decision to enter into this Agreement and that it will,
independently and without reliance upon the Agent or any other Lender, and based
on such
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documents and information as it shall deem appropriate at the time, continue to
make its own analysis and decisions in taking or not taking action under this
Agreement and the other Loan Documents. The Agent shall not be required to keep
itself informed as to the performance or observance by the Company and the
Corporate Guarantors of this Agreement, the other Loan Documents or any other
document referred to or provided for herein or therein or to inspect the
properties or books of the Company and the Corporate Guarantors. Except for
notices, reports and other documents and information expressly required to be
furnished to the Lenders by the Agent hereunder or under the other Loan
Documents, the Agent shall not have any duty or ability to provide any Lender
with any credit or other information concerning the affairs, financial condition
or business of the Company and the Corporate Guarantors, which may come into the
possession of the Agent or any of its Affiliates.
SECTION 9.07. FAILURE TO ACT. Except for action expressly required of
the Agent hereunder or under the other Loan Documents, the Agent shall in all
cases be fully justified in failing or refusing to act hereunder or thereunder
unless it shall be indemnified to its satisfaction by the Lenders against any
and all liability (except gross negligence and willful misconduct) and expense
which may be incurred by it by reason of taking or continuing to take any such
action.
SECTION 9.08. RESIGNATION OF THE AGENT. Subject to the appointment and
acceptance of a successor Agent as provided in this Section 9.08, the Agent may
resign at any time by notifying the Lenders and the Company. Upon any such
resignation, the Required Lenders shall have the right, in consultation with the
Company to appoint a successor to the Agent. If no successor shall have been so
appointed by the Required Lenders and shall have accepted such appointment
within 30 days after the resigning Agent gives notice of its resignation, then
the resigning Agent may, on behalf of the Lenders, appoint a successor Agent.
Upon the acceptance of its appointment as Agent hereunder by a successor, such
successor shall succeed to and become vested with all the rights, powers,
privileges and duties of the resigning Agent, and the resigning Agent shall be
discharged from its duties and obligations hereunder. The fees payable by the
Company to a successor Agent shall be the same as those payable to its
predecessor unless otherwise agreed between the Company and such successor.
After the Agent's resignation hereunder, the provisions of this Article and
Section 10.03 shall continue in effect for the benefit of such resigning Agent
in respect of any actions taken or omitted to be taken by it while it was acting
as the Agent.
SECTION 9.09. SHARING OF COLLATERAL AND PAYMENTS. In the event that at
any time any Lender shall obtain payment in respect of a Note or interest
thereon, or a participation in any Letter of Credit, or receive any collateral
in respect thereof, whether voluntarily or involuntarily, through the exercise
of a right of banker's lien, set-off or counterclaim against the Company or the
Corporate Guarantors or otherwise, in a greater proportion than the proportion
received by any other Lender in respect of the corresponding Note held by it or
interest thereon, or its participation in any Letter of Credit, then the Lender
so receiving such greater proportionate payment shall purchase for cash from the
other Lender or Lenders such portion of each such other Lender's or Lenders'
Loan or participation in any Letter of Credit, or shall provide such other
Lenders with the benefits of any such collateral, or the proceeds thereof, as
shall be necessary to cause the
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Lender receiving the proportionate over-payment to share the excess payment or
benefits of such collateral or proceeds ratably with each of the Lenders each of
which shall have a lien on its ratable portion of the amount described hereafter
obtained from the Company or any Guarantor; provided, however, that if all or
any portion of such excess payment or benefits is thereafter recovered from the
Lender which received the proportionate over-payment, such purchase shall be
rescinded, and the purchase price and benefits returned, to the extent of such
recovery, but without interest. The Company agrees, to the extent it may do so
under applicable law, that each Lender so purchasing a portion of another
Lender's Loan or participation in any Letter of Credit may exercise all rights
of payment (including, without limitation, rights of set-off) with respect to
such portion as fully as if such Lender were the direct holder of such portion.
ARTICLE X
MISCELLANEOUS
SECTION 10.01. NOTICES. All notices, requests and demands to or upon
the respective parties hereto to be effective shall be in writing (including
telecopy), and unless otherwise expressly provided herein, shall be conclusively
deemed to have been received by a party hereto and to be effective on the day on
which delivered by hand to such party or one Business Day after being sent by
overnight mail to the address set forth below, or, in the case of telecopy
notice, when acknowledged as received, or if sent by registered or certified
mail, three (3) Business Days after the day on which mailed in the United
States, addressed to such party at such address:
(a) if to the Agent, at
European American Bank
730 Veterans Memorial Highway
Hauppauge, New York 11788
Attention: Account Officer
Sbarro, Inc.
Telecopy: (516) 360-7112
(b) if to the Company, at
Sbarro, Inc.
401 Broadhollow Road
Melville, New York 11747
Attention: Chief Financial Officer
Telecopy: (516) 715-4185
with a copy to:
Sbarro, Inc.
401 Broadhollow Road
Melville, New York 11747
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Attention: General Counsel
Telecopy: (516) 715-4186
with a copy to:
Parker Chapin Flattau & Klimpl, LLP
1211 Avenue of the Americas
New York, New York 10036
Attention: Richard A. Rubin
Telecopy: (212) 704-6288
(c) if to any Lender, to its address set forth in the
signature page of this Agreement and to the person so
designated
- and -
(d) as to each such party at such other address as such
party shall have designated to the other in a written
notice complying as to delivery with the provisions of
this Section 10.01.
(e) The failure to provide copies of any notice as provided
in Section 10.01(b) shall not effect the validity of a
notice that is otherwise properly given.
SECTION 10.02. EFFECTIVENESS; SURVIVAL. This Agreement shall become
effective on the date on which all parties hereto shall have signed a
counterpart copy hereof and shall have delivered the same to the Agent. All
representations and warranties made herein and in the other Loan Documents and
in the certificates delivered pursuant hereto or thereto shall survive the
making by the Lenders of the Loans, the issuance by the Issuing Lender of
Letters of Credit, in each case, as herein contemplated and the execution and
delivery to the Lenders of the Notes evidencing the Loans and shall continue in
full force and effect so long as the Obligations hereunder are outstanding and
unpaid and the Revolving Credit Commitments are in effect. The obligations of
the Company pursuant to Section 3.07, Section 3.08, Section 3.09 and Section
10.03 shall survive termination of this Agreement and payment of the
Obligations.
SECTION 10.03. EXPENSES. The Company agrees (a) to indemnify, defend
and hold harmless the Agent, the Issuing Lender and each Lender and their
respective officers, directors, employees, and affiliates (each, an "indemnified
person") from and against any and all losses, claims, damages, liabilities or
judgments to which any such indemnified person may be subject and arising out of
or in connection with the Loan Documents, the financings contemplated hereby,
the use of any proceeds of such financings or any related transaction or any
claim, litigation, investigation or proceeding relating to any of the foregoing,
whether or not any of such indemnified persons is a party thereto, and to
reimburse each of such indemnified persons upon demand for any reasonable legal
or other expenses incurred in connection with the investigation or defending any
of the foregoing; provided that the foregoing indemnity will not, as to any
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indemnified person, apply to losses, claims, damages, liabilities, judgments or
related expenses to the extent arising from the wilful misconduct or gross
negligence of such indemnified person, (b) to pay or reimburse the Agent for all
its reasonable out-of-pocket costs and expenses incurred in connection with the
preparation and execution of and any amendment, supplement or modification to
this Agreement, the Notes any other Loan Documents, and any other documents
prepared in connection herewith or therewith, and the consummation of the
transactions contemplated hereby and thereby, including without limitation, the
reasonable fees and disbursements of Farrell Fritz, P.C., counsel to the Agent,
and (c) to pay or reimburse each Lender and the Agent for all their costs and
expenses incurred in connection with the enforcement and preservation of any
rights under this Agreement, the Notes, the other Loan Documents, and any other
documents prepared in connection herewith or therewith, including, without
limitation, the reasonable fees and disbursements of counsel (including, without
limitation, in-house counsel) to the Agent and to the several Lenders, including
all such out-of-pocket expenses incurred during any work-out, restructuring or
negotiations in respect of the Obligations.
SECTION 10.04. AMENDMENTS AND WAIVERS. With the written consent of the
Required Lenders, the Agent and the Company may, from time to time, enter into
written amendments, supplements or modifications hereto for the purpose of
adding any provisions to this Agreement or the Notes or any of the other Loan
Documents or changing in any manner the rights of the Lenders or of the Company
hereunder or thereunder, and with the written consent of the Required Lenders
the Agent on behalf of the Lenders may execute and deliver to the Company a
written instrument waiving, on such terms and conditions as the Agent or the
Required Lenders may specify in such instrument, any of the requirements of this
Agreement or the Notes or any of the other Loan Documents or any Default or
Event of Default; provided, however, that no such waiver and no such amendment,
or supplement or modification shall (a) extend the maturity of any Note, or any
installment thereof, (b) reduce the rate or extend the time of payment of
interest on any Note or any fees payable to the Lenders hereunder, (c) reduce
the principal amount of any Note or the amount of any reimbursement due in
respect of any Letter of Credit, (d) increase the Total Revolving Credit
Commitments, (e) amend, modify or waive any provision of this Section 10.04, (f)
reduce the percentage specified in the definition of Required Lenders or amend
or modify any other provision hereof specifying the number or percentage of
Lenders required to waive, amend or modify any rights hereunder or make any
determination granting consent hereunder, (g) consent to the assignment or
transfer by the Company or any Corporate Guarantor of any of its rights or
obligations under this Agreement, or (h) release any Corporate Guarantor from
its Corporate Guaranty, or limit any Corporate Guarantor's liability with
respect to its Corporate Guaranty, in each case specified in clauses (a) through
(h) above without the written consent of all the Lenders; and provided, further,
that no such waiver and no such amendment, supplement or modification shall (a)
amend, modify, supplement or waive any provision of Article IX with respect to
the Agent without the written consent of the Agent or (b) increase the amount of
any Lender's Revolving Credit Commitment without the written consent of such
Lender. Any such waiver and any such amendment, supplement or modification shall
apply equally to each of the Lenders and shall be binding upon the Company, the
Lenders, the Agent and all future holders of the Notes.
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SECTION 10.05. SUCCESSORS AND ASSIGNS; PARTICIPATIONS.
(a) This Agreement shall be binding upon and inure to the benefit of
the Company, the Lenders, the Agent, all future holders of the Notes and their
respective successors and assigns, except that the Company may not assign or
transfer any of its rights or obligations under this Agreement without the prior
written consent of each Lender and no Lender may assign or transfer its rights
or obligations under this Agreement except in accordance with this Section
10.05.
(b) Any Lender may, in accordance with applicable law, at any time
sell to one or more banks or other financial institutions ("Participants")
participating interests in any Loan owing to such Lender, any Note held by such
Lender, any Revolving Credit Commitment of such Lender or any other interest of
such Lender hereunder. In the event of any such sale by a Lender of
participating interests to a Participant, such Lender's obligations under this
Agreement to the other parties under this Agreement shall remain unchanged, such
Lender shall remain solely responsible for the performance thereof, such Lender
shall remain the holder of any such Note for all purposes under this Agreement,
and the Company and the Agent shall continue to deal solely and directly with
such Lender in connection with such Lender's rights and obligations under this
Agreement. The Company agrees that each Participant shall be entitled to the
benefits of Sections 3.07, 3.08 and 3.10 with respect to its participation in
the Revolving Credit Commitments and in the Loans, Letters of Credit outstanding
from time to time; provided, however, that no Participant shall be entitled to
receive any greater amount pursuant to such sections than the transferor Lender
would have been entitled to receive in respect of the amount of the
participation transferred by such transferor Lender to such Participant had no
such transfer occurred. No Participant shall have the right to consent to any
amendment to, or waiver of, any provision of this Agreement, except the
transferor Lender may provide in its agreement with the Participant that such
Lender will not, without the consent of the Participant, agree to any amendment
or waiver described in clause (a) through clause (h) of Section 10.04.
Notwithstanding anything in this Section 10.05(b) to the contrary, European
American Bank shall not sell to any Participant pursuant to this Paragraph (b)
unless after giving effect to such sale the Revolving Credit Commitment of
European American Bank held for its own account and in which it has not sold any
participation or made any assignment would not be less than an amount equal to
$25,000,000 less, in the event the Total Revolving Credit Commitment is less
than $30,000,000, an amount equal to $25,000,000 multiplied by a fraction the
numerator of which is the then Total Revolving Credit Commitment and the
denominator of which is $30,000,000; provided, however, European American Bank
shall not be subject to the foregoing restriction in the event of a sale to a
Participant (i) after the occurrence of an Event of Default or (ii) if it is
required by any law, rule, regulation, order or decree of any Governmental
Authority to reduce its obligations with respect to its Revolving Credit
Commitment.
(c) Subject to the last sentence of this paragraph (c) any Lender may,
in accordance with applicable law, at any time sell to any Lender or any
domestic banking affiliate thereof, or, with the consent of the Agent and (so
long as no Default or Event of Default shall have occurred and be continuing)
the Company (which consent shall not be unreasonably withheld), to one or more
additional banks or financial institutions ("Purchasing Lenders") all or any
part of its rights
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and obligations under this Agreement and the Notes pursuant to an Assignment and
Acceptance Agreement, executed by such Purchasing Lender, such transferor Lender
and the Agent (and, in the case of an Assignment and Acceptance Agreement
relating to a Purchasing Lender that is not then a Lender or a domestic banking
affiliate thereof, also executed by the Company to the extent the Company's
consent is required pursuant to ), and delivered to the Agent for its
acceptance. Upon such execution, delivery and acceptance from and after the
effective date specified in such Assignment and Acceptance Agreement, (i) the
Purchasing Lender thereunder shall be a party hereto and, to the extent provided
in such Assignment and Acceptance Agreement, have the rights and obligations of
a Lender hereunder with Revolving Credit Commitments and the issuance of Letters
of Credit as set forth therein and (ii) the transferor Lender thereunder shall,
to the extent provided in such Assignment and Acceptance Agreement, be released
from its obligations under this Agreement (and, in the case of an Assignment and
Acceptance Agreement covering all or the remaining portion of a transferor
Lender's rights and obligations under this Agreement, such transferor Lender
shall cease to be a party hereto except as to Sections 3.07, 3.08, 3.09 and
10.03 for the period prior to the effective date). Such Assignment and
Acceptance Agreement shall be deemed to amend this Agreement to the extent, and
only to the extent, necessary to reflect the addition of such Purchasing Lender
and the resulting adjustment of Commitment Proportions arising from the purchase
by such Purchasing Lender of all or a portion of the rights and obligations of
such transferor Lender under or in respect of this Agreement and the Notes. On
or prior to the effective date specified in such Assignment and Acceptance
Agreement, the Company, at its own expense, shall execute and deliver to the
Agent, in exchange for the surrendered Notes, a new Note to the order of such
Purchasing Lender in an amount equal to the Revolving Credit Commitment assumed
by it pursuant to such Assignment and Acceptance Agreement and, if the
transferor Lender has retained any Revolving Credit Commitment hereunder, a new
Note to the order of the transferor Lender in an amount equal to such Revolving
Credit Commitment retained by it hereunder. Such new Notes shall be in a
principal amount equal to the principal amount of such surrendered Notes, shall
be dated the date of the Notes they replace and shall otherwise be in the form
of the Notes replaced thereby. The Notes surrendered by the transferor Lender
shall be returned by the Agent to the Company marked "cancelled". Anything in
this Section 10.05 to the contrary notwithstanding, (i) no transfer to a
Purchasing Lender shall be made pursuant to this paragraph (c) if such transfer
by any one transferor Lender to any one Purchasing Lender (other than a
Purchasing Lender which is a Lender hereunder prior to such transfer) is in
respect of less than $5,000,000 of the Revolving Credit Commitments of such
transferor Lender or (y) if less than the entire Revolving Credit Commitment of
such transferor Lender is transferred, after giving effect to such transfer the
Revolving Credit Commitment held by any Transferor Lender would be less than
$5,000,000 with respect to the Revolving Credit Commitments and (ii) European
American Bank shall not make or transfer to a Purchasing Lender pursuant to this
Paragraph (c) if after giving effect to such transfer the Revolving Credit
Commitment held by European American Bank for its own account and in which it
has not sold any participation shall not be less than an amount equal to
$25,000,000 less, in the event the Total Revolving Credit Commitment is less
than $30,000,000, an amount equal to $25,000,000 multiplied by a fraction the
numerator of which is the then Total Revolving Credit Commitment and the
denominator of which is $30,000,000; provided, however, European American Bank
shall not be subject to the forgoing restriction in the event of a transfer to a
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Purchasing Lender (i) after the occurrence of an Event of Default or (ii) the
extent it is required by any law, rule, regulation, order or decree of any
Governmental Authority to reduce its Revolving Credit Commitment.
(d) The Agent shall maintain at its address referred to in Section
10.01 a copy of each Assignment and Acceptance Agreement delivered to it and a
register (the "Register") for the recordation of the names and addresses of the
Lenders and the commitments of, and principal amount of the Loans owing to, each
Lender from time to time. The entries in the Register shall be conclusive, in
the absence of manifest error and the Company, the Agent and the Lenders may
treat each Person whose name is recorded in the Register as the owner of the
Loans recorded therein for all purposes of this Agreement. The Register shall be
available for inspection by the Company or any Lender at any reasonable time and
from time to time upon reasonable prior notice.
(e) Upon its receipt of an Assignment and Acceptance Agreement
executed by a transferor Lender and a Purchasing Lender (and, in the case of a
Purchasing Lender that is not then a Lender or an Affiliate thereof, by the
Company) together with payment by the Purchasing Lender to the Agent of a
registration and processing fee of $3,000 if the Purchasing Lender is not a
Lender prior to the execution of an Assignment and Acceptance Agreement and
$2,500 if the Purchasing Lender is a Lender prior to the execution of an
Assignment and Acceptance Agreement, the Agent shall (i) accept such Assignment
and Acceptance Agreement, (ii) record the information contained therein in the
Register, and (iii) give prompt notice of such acceptance and recordation to the
Lenders and the Company.
(f) The Company authorizes each Lender to disclose to any Participant
or Purchasing Lender (each, a "Transferee") and any prospective Transferee any
and all financial information in such Lender's possession concerning the Company
and its Affiliates which has been delivered to such Lender by or on behalf of
the Company pursuant to this Agreement or which has been delivered to such
Lender by the Company in connection with such Lender's credit evaluation of the
Company and the Corporate Guarantors prior to entering into this Agreement.
(g) If, pursuant to this Section 10.05, any interest in this
Agreement, a participation agreement, or any Note is transferred to any
transferee which is organized under the laws of any jurisdiction other than the
United States or any State thereof, the transferor Lender shall cause such
Transferee, concurrently with the effectiveness of such transfer, (i) to
represent to the transferor Lender (for the benefit of the transferor Lender,
the Agent and the Company) that under applicable law and treaties no taxes will
be required to be withheld by the Agent, the Company, or the transferor Lender
with respect to any payments to be made to such Transferee in respect of the
Loans, (ii) to furnish to the Agent, the transferor Lender and the Company
either U.S. Internal Revenue Service Form 4224 or U.S. Internal Revenue Service
Form 1001 (wherein such Transferee claims entitlement to complete exemption from
U.S. federal withholding tax on all interest payments hereunder) and (iii) to
agree (for the benefit of the Agent, the transferor Lender and the Company) to
provide the Agent, the transferor Lender and the Company a new Form 4224 or Form
1001 upon the expiration or obsolescence of any previously delivered form and
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comparable statements in accordance with applicable U.S. laws and regulations
and amendments duly executed and completed by such Transferee, and to comply
from time to time with all applicable U.S. laws and regulations with regard to
such withholding tax exemption. If a Lender fails to provide a form required
pursuant to this Section 10.05(g), upon notice by the Company to the Agent and
such Lender, (i) the Company shall be entitled to deduct or withhold on payments
to the Agent or such Lender as a result of such failure, as required by law, and
(ii) the Company shall not be required to make payments of additional amounts
with respect to withheld Taxes pursuant to Section 3.09(a) to the extent such
withholding is required solely of the failure of Agent or Lender to provide the
necessary form.
(h) Any Lender may at any time pledge or assign or grant a security
interest in all or any part of its rights under this Agreement and its Notes to
a Federal Reserve Bank, provided that no such assignment shall release the
transferor Lender from its Revolving Credit Commitments or its obligations
hereunder or substitute any such pledgee or assignee for such Lender as a party
to this Agreement.
SECTION 10.06. NO WAIVER; CUMULATIVE REMEDIES. Neither any failure nor
any delay on the part of any Lender, the Issuing Lender or the Agent in
exercising any right, power or privilege hereunder or under any Note or any
other Loan Document shall operate as a waiver thereof, nor shall a single or
partial exercise thereof preclude any other or further exercise of any other
right, power or privilege. The rights, remedies, powers and privileges herein
provided or provided in the other Loan Documents are cumulative and not
exclusive of any rights, remedies powers and privileges provided by law.
SECTION 10.07. APPLICABLE LAW. THIS AGREEMENT AND THE NOTES SHALL BE
CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK,
WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OR CHOICE OF LAW.
SECTION 10.08. SUBMISSION TO JURISDICTION; JURY WAIVER. THE COMPANY
HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY FEDERAL OR STATE COURT IN
THE STATE OF NEW YORK, COUNTY OF NEW YORK, COUNTY OF NASSAU OR COUNTY OF SUFFOLK
IN ANY ACTION, SUIT OR PROCEEDING BROUGHT AGAINST IT AND RELATED TO OR IN
CONNECTION WITH THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR ANY OF THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, AND TO THE EXTENT PERMITTED BY
APPLICABLE LAW, THE COMPANY HEREBY WAIVES AND AGREES NOT TO ASSERT BY WAY OF
MOTION, AS A DEFENSE OR OTHERWISE, IN ANY SUCH SUIT, ACTION OR PROCEEDING ANY
CLAIM THAT IT IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF SUCH FEDERAL OR
STATE COURTS, THAT THE SUIT, ACTION OR PROCEEDING IS BROUGHT IN AN INCONVENIENT
FORUM, THAT THE VENUE OF THE SUIT, ACTION OR PROCEEDING IS IMPROPER, OR THAT
THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR ANY OTHER DOCUMENT OR INSTRUMENT
REFERRED TO
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HEREIN OR THEREIN OR THE SUBJECT MATTER HEREOF OR THEREOF MAY NOT BE LITIGATED
IN OR BY SUCH FEDERAL OR STATE COURTS. TO THE EXTENT PERMITTED BY APPLICABLE
LAW, THE COMPANY AGREES NOT TO (I) SEEK AND HEREBY WAIVES THE RIGHT TO ANY
REVIEW OF THE JUDGMENT OF ANY SUCH FEDERAL OR STATE COURT BY ANY FEDERAL OR
STATE COURT OF ANY OTHER NATION OR JURISDICTION WHICH MAY BE CALLED UPON TO
GRANT AN ENFORCEMENT OF SUCH JUDGMENT OR (II) ASSERT ANY COUNTERCLAIM IN ANY
SUCH SUIT, ACTION OR PROCEEDING UNLESS SUCH CLAIM CONSTITUTES A COMPULSORY
COUNTERCLAIM UNDER APPLICABLE RULES OF CIVIL PROCEDURE. THE COMPANY AGREES THAT
SERVICE OF PROCESS MAY BE MADE UPON IT BY CERTIFIED OR REGISTERED MAIL TO THE
ADDRESS FOR NOTICES SET FORTH IN THIS AGREEMENT OR ANY METHOD AUTHORIZED BY THE
LAWS OF NEW YORK. EACH PARTY HERETO WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER
OR IN CONNECTION WITH THIS AGREEMENT, THE NOTES OR ANY OTHER LOAN DOCUMENT.
SECTION 10.09. CONFIDENTIALITY. The Agent and each of the Lenders
agree that it will not disclose without the prior consent of the Company (other
than to affiliates of such Lenders and their respective directors, employees,
auditors, counsel or other professional advisors and their respective counsel
who are advised of the need to maintain the confidentiality thereof) any
Confidential Information (as defined below) with respect to the Company or any
Subsidiary of the Company which is furnished by the Company or any Subsidiary of
the Company; provided that any Lender may disclose any such information (a) that
is or has become generally available to the public; (b) as may be required or
appropriate (i) in any report, statement or testimony submitted to any
municipal, state or federal or other governmental regulatory body having or
claiming to have jurisdiction over such Lender or to the Federal Reserve Board
or the Federal Deposit Insurance Corporation or similar organizations (whether
in the United States or elsewhere) or their successors or (ii) in connection
with any request or requirement of any such regulatory body; (c) as may be
required or appropriate in response to any summons or subpoena or in connection
with any litigation; (d) to comply with any law, order, regulation or ruling
applicable to such Lender; and (e) to any prospective Transferee in connection
with any contemplated transfer of any of the Revolving Credit Notes or any
interest therein by such Lender; provided that such prospective Transferee
agrees to be bound by this Section 10.09 to the same extent as such Lender. As
used herein "Confidential Information" shall mean information with respect to
the Company which is not generally available to the public other than such
information which after the date hereof becomes generally available to the
public through no fault or action by any Lender or becomes available to a Lender
on a nonconfidential basis from a source other than the Company which to such
Lender's knowledge is not prohibited from disclosing such information by any
contractual, legal or fiduciary obligation owed to the Company.
SECTION 10.10. SEVERABILITY. In case any one or more of the provisions
contained in this Agreement, any Note or any other Loan Document should be
invalid, illegal or
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unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein and therein shall not in any way be
affected or impaired thereby.
SECTION 10.11. RIGHT OF SETOFF. If an Event of Default shall have
occurred and be continuing, the Agent, the Issuing Lender, each Lender and each
Affiliate of each Lender are each hereby authorized at any time and from time to
time, to the fullest extent permitted by law, to set off and apply any and all
deposits (general or special, time or demand, provisional or final) at any time
held and other indebtedness at any time owing by the Agent, the Issuing Lender,
any Lender or any Affiliate of any Lender to or for the credit or the account of
the Company against any and all of the Obligations of the Company now and
hereafter existing under this Agreement and the Notes held by such Lender,
irrespective of whether or not such Lender shall have made any demand under this
Agreement or any Note and although such Obligations may be unmatured. The rights
of the Agent, the Issuing Lender, each Lender and each Affiliate of each Lender
under this Section 10.11 are in addition to other rights and remedies
(including, without limitation, other rights of setoff) which they may have.
SECTION 10.12. HEADINGS. Section headings used herein are for
convenience of reference only and are not to affect the construction of or be
taken into consideration in interpreting this Agreement.
SECTION 10.13. CONSTRUCTION. This Agreement is the result of
negotiations between, and has been reviewed by, each of the Company, the Agent,
the Lenders and their respective counsel. Accordingly, this Agreement shall be
deemed to be the product of each party hereto, and no ambiguity shall be
construed in favor of or against either the Company, the Agent, or any Lender.
SECTION 10.14. COUNTERPARTS. This Agreement may be executed in two or
more counterparts, each of which shall constitute an original, but all of which,
taken together, shall constitute one and the same agreement.
[THE NEXT PAGE IS THE SIGNATURE PAGE]
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IN WITNESS WHEREOF, the Company, the Agent and the Lenders have caused
this Agreement to be duly executed by their duly authorized officers, as of the
day and year first above written.
SBARRO, INC.
By: /s/ Mario Sbarro
----------------------------------------
Name: Mario Sbarro
Title: Chairman of the Board, President
and Chief Executive Officer
EUROPEAN AMERICAN BANK
REVOLVING CREDIT AS AGENT AND AS A LENDER
COMMITMENT:$30,000,000
By: /s/ Stuart N. Berman
---------------------------------------
Name: Stuart N. Berman
Title: Vice President
Lending Office for Prime
Rate Loans and Adjusted Libor Loans:
European American Bank
730 Veterans Memorial Highway
Hauppauge, New York 11788
Address for Notices:
European American Bank
730 Veterans Memorial Highway
Hauppauge, New York 11788
Attention: Sbarro, Inc.
Account Officer
Telecopy: (516) 360-7112
S-1
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EXHIBIT A
REVOLVING CREDIT NOTE
$ Uniondale, New York
September __, 1999
FOR VALUE RECEIVED, SBARRO, INC., a New York corporation (the
"Company"), promises to pay to the order of (the "Lender"), on or before
September __, 2004, DOLLARS ($______________) or, if less, the unpaid principal
amount of all Revolving Credit Loans made by the Lender to the Company under the
Credit Agreement referred to below.
The Company promises to pay interest on the unpaid principal amount
hereof from the date hereof until paid in full at the rates and at the times
which shall be determined, and to make principal repayments on this Note at the
times which shall be determined, in accordance with the provisions of the Credit
Agreement referred to below.
This Note is one of the "Revolving Credit Notes" referred to in the
Credit Agreement dated as of September __, 1999, by and among the Company,
European American Bank, as Agent, and the various Lenders (including the Lender)
as are, or may from time to time become, parties thereto (as the same may be
amended, modified or supplemented from time to time, the "Credit Agreement") and
is issued pursuant to and entitled to the benefits of the Credit Agreement to
which reference is hereby made for a more complete statement of the terms and
conditions under which the Revolving Credit Loans evidenced hereby were made and
are to be repaid. Capitalized terms used herein without definition shall have
the meanings set forth in the Credit Agreement.
Each of the Lender and any subsequent holder of this Note agrees, by
its acceptance hereof, that before transferring this Note it shall record the
date, Type and amount of each Revolving Credit Loan and the date and amount of
each payment or prepayment of principal of each Revolving Credit Loan previously
made hereunder on the grid schedule annexed to this Note; provided, however,
that the failure of the Lender or holder to set forth such Revolving Credit
Loans, payments and other information on the attached grid schedule shall not in
any manner affect the obligation of the Company to repay the Revolving Credit
Loans made by the Lender in accordance with the terms of this Note.
This Note is subject to optional and mandatory prepayments pursuant to
Section 3.03 of the Credit Agreement.
Upon the occurrence of an Event of Default, the unpaid balance of the
principal amount of this Note together with all accrued but unpaid interest
thereon, may become, or may be declared to be, due and payable in the manner,
upon the conditions and with the effect provided in the Credit Agreement.
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All payments of principal and interest in respect of this Note shall
be made in lawful money of the United States of America in immediately available
funds at the office of European American Bank, the Agent for the Lenders under
the Credit Agreement, located at 730 Veterans Memorial Highway, Hauppauge, New
York 11788 or at such other place as shall be designated in writing for such
purpose in accordance with the terms of the Credit Agreement.
No reference herein to the Credit Agreement and no provision of this
Note or the Credit Agreement shall alter or impair the obligation of the
Company, which is absolute and unconditional, to pay the principal of and
interest on this Note at the place, at the respective times, and in the currency
herein prescribed.
The Company and endorsers of this Note waive presentment, diligence,
demand, protest, and notice of any kind in connection with this Note.
THIS NOTE SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES
OF CONFLICTS OF LAW.
IN WITNESS WHEREOF, the Company has caused this Note to be executed
and delivered by its duly authorized officer, as of the day and year and at the
place first above written.
SBARRO, INC.
By:_______________________________________
Title:
2
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SCHEDULE
Date Principal Type Applicable Amount of Notation
of Amount of of Interest Interest Principal Made
Loan Loan Loan Rate Period Paid By
- ---- --------- ---- -------- ---------- --------- --------
3
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EXHIBIT B
CORPORATE GUARANTY
THIS CORPORATE GUARANTY is entered into as of the ___ day of
September, 1999, by EACH OF THE UNDERSIGNED (each a "Corporate Guarantor" and,
collectively, the "Corporate Guarantors") in favor of and for the benefit of the
Agent and the Lenders, as defined in the Credit Agreement referred to below.
RECITALS
A. Pursuant to a Credit Agreement dated the date hereof, by and among
Sbarro, Inc. (the "Company"), European American Bank, as Agent, and the various
Lenders as are or may from time to time become parties thereto (as the same may
be amended, modified or supplemented from time to time, the "Credit Agreement"),
the Company will receive loans and other financial accommodations from the Agent
and Lenders and will incur Obligations.
B. The Corporate Guarantors, being members of a group of entities
affiliated with the Company and being engaged in related businesses, will
receive direct and indirect benefits from such loans and financial
accommodations.
C. Each Corporate Guarantor wishes to grant the Agent and Lenders
assurance in connection with the payment and performance by the Company of all
of its present and future Obligations, and, to that effect, to guaranty the
Obligations as set forth herein.
Accordingly, each Corporate Guarantor hereby agrees as follows:
1. CORPORATE GUARANTY.
(a) Each Corporate Guarantor, jointly and severally, unconditionally
and irrevocably guarantees to the Agent and the Lenders the full and punctual
payment by the Company, when due, whether at the stated due date, by
acceleration or otherwise, of all Obligations of the Company, howsoever created,
arising or evidenced, voluntary or involuntary, whether direct or indirect,
absolute or contingent now or hereafter existing or owing to the Agent or the
Lenders (collectively, the "Guaranteed Obligations"). This Corporate Guaranty is
an absolute, unconditional, continuing guaranty of payment and not of collection
of the Guaranteed Obligations and includes Guaranteed Obligations arising from
successive transactions which shall either continue such Guaranteed Obligations
or from time to time renew such Guaranteed Obligations after the same have been
satisfied. This Corporate Guaranty is in no way conditioned upon any attempt to
collect from the Company or upon any other event or contingency, and shall be
binding upon and enforceable against each Corporate Guarantor without regard to
the validity or enforceability of the Credit Agreement, the Notes or any other
Loan Document or of any term of any thereof. If for any reason the Company shall
fail or be unable duly and punctually to pay any of the Guaranteed Obligations
(including, without limitation amounts that would become due but for the
operation of the automatic stay under Section 362(a) of the Bankruptcy Code, 11
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U.S.C. ss. 362(a)), each Corporate Guarantor will forthwith pay the same, in
cash, immediately upon demand.
(b) In the event the Credit Agreement, any Note or any other Loan
Document shall be terminated as a result of the rejection thereof by any
trustee, receiver or liquidating agent of the Company or any of its properties
in any bankruptcy, insolvency, reorganization, arrangement, composition,
readjustment, liquidation, dissolution or similar proceeding, each Corporate
Guarantor's obligations hereunder shall continue to the same extent as if the
Credit Agreement, such Note or such other Loan Document had not been so
rejected.
(c) Each Corporate Guarantor shall pay all costs, expenses (including,
without limitation, reasonable attorneys' fees and disbursements) incurred in
connection with the enforcement of the Guaranteed Obligations of the Company
under the Credit Agreement or the Note or any other Loan Document to the extent
that such costs, expenses and damages are not paid by the Company pursuant to
the respective documents.
(d) Each Corporate Guarantor further agrees that if any payment made
by the Company or any Corporate Guarantor to the Agent or the Lenders on any
Obligation is rescinded, recovered from or repaid by the Agent or the Lenders,
in whole or in part, in any bankruptcy, insolvency or similar proceeding
instituted by or against the Company or any Corporate Guarantor, this Corporate
Guaranty shall continue to be fully applicable to such Guaranteed Obligation to
the same extent as though the payment so recovered or repaid had never
originally been made on such Guaranteed Obligation.
(e) If any Event of Default shall have occurred and be continuing, the
Agent, the Lenders, and any affiliate of the Agent or Lender each are hereby
authorized at any time and from time to time, to the fullest extent permitted by
law, to set off and apply any and all deposits (general or special, time or
demand, provisional or final) at any time held and other indebtedness at any
time owing by the Agent or the Lenders, or any affiliate of the Agent or a
Lender, to or for the credit or the account of any Corporate Guarantor against
any of and all the obligations of any Corporate Guarantor now or hereafter
existing under this Corporate Guaranty, irrespective of whether or not the Agent
or any Lender shall have made any demand hereunder and although such obligations
may be unmatured. The rights under this paragraph 1(e) are in addition to other
rights and remedies (including other rights of set off) which the Agent and the
Lenders may have.
2. CORPORATE GUARANTY CONTINUING, ABSOLUTE, UNLIMITED.
The obligations of each Corporate Guarantor hereunder shall be
continuing, absolute, irrevocable, unlimited and unconditional, shall not be
subject to any counterclaim, set-off, deduction or defense based upon any claim
any Corporate Guarantor may have against the Agent, any Lender or the Company or
any other person, and shall remain in full force and effect without regard to,
and, to the fullest extent permitted by applicable law, shall not be released,
discharged or in any way affected by, any circumstance or condition (whether or
not any Corporate Guarantor
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shall have any knowledge or notice thereof) whatsoever which might constitute a
legal or equitable discharge or defense including, but not limited to, (a) any
express or implied amendment, modification or supplement to the Credit
Agreement, any Note, or any other Loan Document or any other agreement referred
to in any thereof, or any other instrument applicable to the Company or to the
Loans, or the Letters of Credit or any part thereof; (b) any failure on the part
of the Company to perform or comply with the Credit Agreement, any Note or any
other Loan Document or any failure of any other person to perform or comply with
any term of the Credit Agreement, any Note, or any other Loan Document or any
other agreement as aforesaid; (c) any waiver, consent, change, extension,
indulgence or other action or any action or inaction under or in respect of the
Credit Agreement, any Note, or any other Loan Document or any other agreement as
aforesaid, whether or not the Agent, any Lender, the Company or any Corporate
Guarantor has notice or knowledge of any of the foregoing; (d) any bankruptcy,
insolvency, reorganization, arrangement, readjustment, composition, liquidation
or similar proceeding with respect to the Company, or its properties or its
creditors, or any action taken by any trustee or receiver or by any court in any
such proceeding; (e) any furnishing or acceptance of security or any release of
any security; (f) any limitation on the liability or obligations of the Company
under the Credit Agreement, any Note or any other Loan Document or any
termination, cancellation, frustration, invalidity or unenforceability, in whole
or in part, of the Credit Agreement, any Note, this Corporate Guaranty or any
other Loan Document or any term of any thereof; (g) any lien, charge or
encumbrance on or affecting any Corporate Guarantor's or any of the Company's
respective assets and properties; (h) any act, omission or breach on the part of
the Agent or any Lender under the Credit Agreement, any Note or any other Loan
Document or any other agreement at any time existing between the Agent, any
Lender and the Company or any law, governmental regulation or other agreement
applicable to the Agent, any Lender or any Loan; (i) any claim as a result of
any other dealings among the Agent, any Lender, any Corporate Guarantor or the
Company; (j) the assignment of this Corporate Guaranty, the Credit Agreement,
any Note or any other Loan Document by the Agent or any Lender to any other
Person in accordance with the terms of the Agreement; or (k) any change in the
name of the Agent, any Lender, the Company or any other Person referred to
herein.
3. WAIVER.
Each Corporate Guarantor unconditionally waives, to the fullest extent
permitted by applicable law: (a) notice of any of the matters referred to in
Section 2 hereof; (b) all notices which may be required by statute, rule of law
or otherwise to preserve any rights against any Corporate Guarantor hereunder,
including, without limitation, notice of the acceptance of this Corporate
Guaranty, or the creation, renewal, extension, modification or accrual of the
Guaranteed Obligations or notice of any other matters relating thereto, any
presentment, demand, notice of dishonor, protest, nonpayment of any damages or
other amounts payable under the Credit Agreement, any Note or any other Loan
Documents; (c) any requirement for the enforcement, assertion or exercise of any
right, remedy, power or privilege under or in respect of the Credit Agreement,
any Note or any other Loan Documents, including, without limitation, diligence
in collection or protection of or realization upon the Guaranteed Obligations or
any part
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thereof or any collateral thereof; (d) any requirement of diligence; (e) any
requirement to mitigate the damages resulting from a default by the Company
under the Credit Agreement, any Note or any other Loan Documents; (f) the
occurrence of every other condition precedent to which any Corporate Guarantor
or the Company may otherwise be entitled; (g) the right to require the Agent or
the Lenders to proceed against the Company or any other person liable on the
Guaranteed Obligations, to proceed against or exhaust any security held by the
Company or any other person, or to pursue any other remedy in the Agent's or any
Lender's power whatsoever, and (h) the right to have the property of the Company
first applied to the discharge of the Guaranteed Obligations.
The Agent and the Lenders may, at their election, exercise any right
or remedy they may have against the Company without affecting or impairing in
any way the liability of any Corporate Guarantor hereunder and each Corporate
Guarantor waives, to the fullest extent permitted by applicable law, any defense
arising out of the absence, impairment or loss of any right of reimbursement,
contribution or subrogation or any other right or remedy of any Corporate
Guarantor against the Company, whether resulting from such election by the Agent
or the Lenders or otherwise. Each Corporate Guarantor waives any defense arising
by reason of any disability or other defense of the Company or by reason of the
cessation for any cause whatsoever of the liability, either in whole or in part,
of the Company to the Agent and the Lenders for the Guaranteed Obligations.
Each Corporate Guarantor assumes the responsibility for being and
keeping informed of the financial condition of the Company and of all other
circumstances bearing upon the risk of nonpayment of the Guaranteed Obligations
and agrees that neither the Agent nor the Lenders shall have any duty to advise
any Corporate Guarantor of information regarding any condition or circumstance
or any change in such condition or circumstance. Each Corporate Guarantor
acknowledges that neither the Agent nor the Lenders have made any
representations to any Corporate Guarantor concerning the financial condition of
the Company.
4. REPRESENTATIONS AND COVENANTS OF EACH CORPORATE GUARANTOR.
(a) Each Corporate Guarantor hereby represents and warrants that the
representations and warranties contained in Article IV of the Credit Agreement,
to the extent they relate to such Corporate Guarantor, are true and correct as
of the date hereof and such Corporate Guarantor further agrees that the Agent
and the Lenders are entitled to rely on such representations and warranties to
the same extent as though the same were set forth in full herein.
(b) Each Corporate Guarantor hereby agrees to perform the covenants
contained in Article VI and Article VII of the Credit Agreement, to the extent
they relate to such Corporate Guarantor, and the Agent and the Lenders are
entitled to rely on such agreement to perform such covenants to the same extent
as though the same were set forth in full herein.
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<PAGE>
5. PAYMENTS.
Each payment by each Corporate Guarantor to the Agent and the Lenders
under this Corporate Guaranty shall be made in the time, place and manner
provided for payments in the Credit Agreement without set-off or counterclaim to
the account at which such payment is required to be paid by the Company under
the Credit Agreement.
6. PARTIES.
This Corporate Guaranty shall inure to the benefit of the Agent, the
Lenders and their respective successors, assigns or transferees, and shall be
binding upon the Corporate Guarantors and their respective successors and
assigns. No Corporate Guarantor may delegate any of its duties under this
Corporate Guaranty without the prior written consent of the Lenders.
7. NOTICES.
Any notices, requests and demands to or upon the respective parties
hereto to be effective shall be in writing and, unless otherwise expressly
provided herein, shall be conclusively deemed to have been received by a party
hereto and to be effective on the day on which delivered to such party at the
address set forth below, or, in the case of telecopy notice, when acknowledged
as received, or if sent by registered or certified mail, on the third Business
Day after the day on which mailed in the United States, addressed to such party
at said address:
(a) if to the Agent and/or the Lenders,
European American Bank,
as Agent
730 Veterans Memorial Highway
Hauppauge, New York 11788
Attention: Account Officer
Sbarro, Inc.
Telecopy: (516) 360-7112
(b) if to a Corporate Guarantor, at
c/o Sbarro, Inc.
401 Broad Hollow Road
Melville, New York 11747
Attention: Chief Financial Officer
Telecopy: (516) 715-4185
with a copy to:
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Sbarro, Inc.
401 Broadhollow Road
Melville, New York 11747
Attention: General Counsel
Telecopy: (516) 715-4186
with a copy to:
Parker Chapin Flattau & Klimpl, LLP
1211 Avenue of the Americas
New York, New York 10036
Attention: Richard A. Rubin
Telecopy: (212) 704-6288
(c) as to each such party at such other address as such party shall
have designated to the other in a written notice complying as to
delivery with the provisions of this Section 7.
(d) The failure to provide copies of any notice as provided in
Section 7 shall not effect the validity of a notice that is
otherwise properly given.
8. REMEDIES.
Each Corporate Guarantor stipulates that the remedies at law in
respect of any default or threatened default by a Corporate Guarantor in the
performance of or compliance with any of the terms of this Corporate Guaranty
are not and will not be adequate, and that any of such terms may be specifically
enforced by a decree for specific performance or by an injunction against
violation of any such terms or otherwise.
9. RIGHTS TO DEAL WITH THE COMPANY.
At any time and from time to time, without terminating, affecting or
impairing the validity of this Corporate Guaranty or the obligations of any
Corporate Guarantor hereunder, the Lenders may deal with the Company in the same
manner and as fully as if this Corporate Guaranty did not exist and shall be
entitled, among other things, to grant the Company, without notice or demand and
without affecting any Corporate Guarantor's liability hereunder, such extension
or extensions of time to perform, renew, compromise, accelerate or otherwise
change the time for payment of or otherwise change the terms of indebtedness or
any part thereof contained in or arising under the Credit Agreement, any Note or
any other Loan Documents, or to waive any obligation of the Company to perform,
any act or acts as the Lenders may deem advisable.
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<PAGE>
10. SUBROGATION.
(a) Upon any payment made or action taken by a Corporate Guarantor
pursuant to this Corporate Guaranty, such Corporate Guarantor shall, subject to
the provisions of Sections 10(b) and (c) hereof, be fully subrogated to all of
the rights of the Lenders against the Company arising out of the action or
inaction of the Company for which such payment was made or action taken by such
Corporate Guarantor.
(b) Any claims of such Corporate Guarantor against the Company arising
from payments made or actions taken by such Corporate Guarantor pursuant to the
provisions of this Corporate Guaranty shall be in all respects subordinate to
the full and complete or final and indefeasible payment or performance and
discharge, as the case may be, of all amounts, obligations and liabilities, the
payment or performance and discharge of which are guaranteed by this Corporate
Guaranty, and no payment hereunder by a Corporate Guarantor shall give rise to
any claim of such Corporate Guarantor against the Lenders.
(c) Notwithstanding anything to the contrary contained in this Section
10, no Corporate Guarantor shall be subrogated to the rights of the Lenders
against the Company until all of the Obligations of the Company have been paid
finally and indefeasibly in full, and that subrogation shall be suspended upon
the occurrence of the events described in Section 1(d) until the Lenders are
indefeasibly paid in full.
11. SURVIVAL OF REPRESENTATIONS, WARRANTIES, ETC.
All representations, warranties, covenants and agreements made herein,
including representations and warranties deemed made herein, shall survive any
investigation or inspection made by or on behalf of the Lenders and shall
continue in full force and effect until all of the obligations of the Corporate
Guarantors under this Corporate Guaranty shall be fully performed in accordance
with the terms hereof, and until the payment in full of the Guaranteed
Obligations.
12. GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL. THIS
CORPORATE GUARANTY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICT OR
CHOICE OF LAW. EACH CORPORATE GUARANTOR HEREBY IRREVOCABLY SUBMITS TO THE
JURISDICTION OF ANY FEDERAL OR STATE COURT IN THE STATE OF NEW YORK, COUNTY OF
NEW YORK, COUNTY OF NASSAU OR COUNTY OF SUFFOLK IN ANY ACTION, SUIT OR
PROCEEDING BROUGHT AGAINST IT AND RELATED TO OR IN CONNECTION WITH THIS
CORPORATE GUARANTY OR THE TRANSACTIONS CONTEMPLATED HEREBY, AND TO THE EXTENT
PERMITTED BY APPLICABLE LAW, EACH CORPORATE GUARANTOR HEREBY WAIVES AND AGREES
NOT TO ASSERT BY WAY OF MOTION, AS A DEFENSE OR OTHERWISE IN ANY SUCH SUIT,
ACTION OR PROCEEDING, ANY CLAIM THAT IT IS NOT
7
<PAGE>
PERSONALLY SUBJECT TO THE JURISDICTION OF SUCH FEDERAL OR STATE COURTS, THAT THE
SUIT, ACTION OR PROCEEDING IS BROUGHT IN AN INCONVENIENT FORUM, THAT THE VENUE
OF THE SUIT, ACTION OR PROCEEDING IS IMPROPER, OR THAT THIS CORPORATE GUARANTY
OR ANY DOCUMENT OR ANY INSTRUMENT REFERRED TO HEREIN OR THE SUBJECT MATTER
THEREOF MAY NOT BE LITIGATED IN OR BY SUCH COURTS. TO THE EXTENT PERMITTED BY
APPLICABLE LAW, EACH CORPORATE GUARANTOR AGREES (I) NOT TO SEEK AND HEREBY
WAIVES THE RIGHT TO ANY REVIEW OF THE JUDGMENT OF ANY SUCH FEDERAL OR STATE
COURT BY ANY FEDERAL OR STATE COURT OF ANY OTHER NATION OR JURISDICTION WHICH
MAY BE CALLED UPON TO GRANT AN ENFORCEMENT OF SUCH JUDGMENT AND (II) NOT TO
ASSERT ANY COUNTERCLAIM, IN ANY SUCH SUIT, ACTION OR PROCEEDING UNLESS SUCH
CLAIM CONSTITUTES A COMPULSORY COUNTERCLAIM UNDER APPLICABLE RULES OF CIVIL
PROCEDURES. EACH CORPORATE GUARANTOR AGREES THAT SERVICE OF PROCESS MAY BE MADE
UPON IT BY CERTIFIED OR REGISTERED MAIL TO THE ADDRESS FOR NOTICES SET FORTH IN
THIS CORPORATE GUARANTY OR ANY METHOD AUTHORIZED BY THE LAWS OF NEW YORK. THE
LENDERS AND EACH CORPORATE GUARANTOR IRREVOCABLY WAIVE ALL RIGHT TO TRIAL BY
JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO
THIS CORPORATE GUARANTY, THE LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY.
13. MISCELLANEOUS.
(a) All capitalized terms used herein and not defined herein shall
have the meanings specified in the Credit Agreement.
(b) This Corporate Guaranty is the joint and several obligation of
each Corporate Guarantor, and may be enforced against each Corporate Guarantor
separately, whether or not enforcement of any right or remedy hereunder has been
sought against any other Corporate Guarantor. Each Corporate Guarantor
acknowledges that its obligations hereunder will not be released or affected by
the failure of the other Corporate Guarantors to execute the Corporate Guaranty
or by a determination that all or a part of this Corporate Guaranty with respect
to any other Corporate Guarantor is invalid or unenforceable.
(c) If any term of this Corporate Guaranty or any application thereof
shall be invalid or unenforceable, the remainder of this Corporate Guaranty and
any other application of such term shall not be affected thereby.
(d) Any term of this Corporate Guaranty may be amended, waived,
discharged or terminated only by an instrument in writing signed by each
Corporate Guarantor and the Lenders.
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<PAGE>
(e) The headings in this Corporate Guaranty are for purposes of
reference only and shall not limit or define the meaning hereof.
(f) No delay or omission by a Lender in the exercise of any right
under this Corporate Guaranty shall impair any such right, nor shall it be
construed to be waiver thereof; nor shall any single or partial exercise of any
right hereunder preclude any other or further exercise of any other right.
IN WITNESS WHEREOF, the undersigned have caused this Corporate
Guaranty to be executed and delivered as of the day and year first above
written.
By:_______________________________________
Title:
By:_______________________________________
Title:
By:_______________________________________
Title:
By:_______________________________________
Title:
9
<PAGE>
EXHIBIT C
ASSIGNMENT AND ACCEPTANCE AGREEMENT
Dated __________________
Reference is hereby made to the Credit Agreement dated September __,
1999 (as amended, modified or supplemented from time to time the "Credit
Agreement") by and among SBARRO, INC., a New York corporation (the "Company"),
the lenders signatory thereto (collectively, the "Lenders"), EUROPEAN AMERICAN
BANK, as Agent for the Lenders (in such capacity, the "Agent"). Capitalized
terms used herein that are defined in the Credit Agreement and not otherwise
defined herein shall have the respective meanings ascribed thereto in the Credit
Agreement.
________________________________, a _________________ (the
"Assignor"), and _________________________________, a _________________ (the
"Assignee"), agree as follows:
1. The Assignor hereby sells and assigns to the Assignee, without
recourse, and without representation or warranty except as expressly set forth
herein, and the Assignee hereby irrevocably purchases and assumes from the
Assignor, a ___% interest in and to all of the Assignor's rights and obligations
under the Credit Agreement as of the Effective Date (as defined below)
(including, without limitation, such percentage interest in each of the
Assignor's Revolving Credit Commitment as in effect on the Effective Date, the
Loans owing to the Assignor on the Effective Date, the Revolving Credit Note
held by the Assignor and the participations in Letters of Credit held by the
Assignor on the Effective Date).
2. The Assignor: (i) represents and warrants that as of the date
hereof its Revolving Credit Commitment (without giving effect to assignments
thereof that have not yet become effective) is $___________, and the aggregate
outstanding principal amount of the Revolving Credit Loans owing to it (without
giving effect to assignments thereof that have not yet become effective) is
$___________ and $__________ respectively; (ii) represents and warrants that it
is the legal and beneficial owner of the interest being assigned by it
hereunder, and that such interest is free and clear of any adverse claim; (iii)
makes no representation or warranty and assumes no responsibility with respect
to any statements, warranties or representations made in or in connection with
the Credit Agreement or any other instrument or document furnished pursuant
thereto; (iv) makes no representation or warranty and assumes no responsibility
with respect to the financial condition of the Company or any Subsidiary of the
Company or the performance or observance by the Company or any Subsidiary of the
Company of their respective obligations under the Credit Agreement or any other
instrument or document furnished pursuant thereto or the enforceability of any
such agreement, instrument or document; and (v) attaches the Revolving Credit
Note referred to in paragraph 1 above and requests that the Agent exchange such
note for a Revolving Credit Note dated the Effective Date in the principal
amount of $_____________
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payable to the order of the Assignee and a Revolving Credit Note dated the
Effective Date in the principal amount of $________________ payable to the order
of the Assignor.
3. The Assignee: (i) confirms that it has received a copy of the
Credit Agreement, together with copies of such financial statements and such
other documents and information as it has deemed appropriate to make its own
credit analysis and decision to enter into this Assignment and Acceptance; (ii)
agrees that it will, independently and without reliance upon the Agent, the
Assignor or any other Lender and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under the Credit Agreement; (iii) appoints and
authorizes the Agent to take such action as its agent on its behalf and to
exercise such powers under the Credit Agreement as are delegated to the Agent by
the terms thereof, together with such powers as are reasonably incidental
thereto; (iv) agrees that it will perform in accordance with their terms all of
the obligations which by the terms of the Credit Agreement are required to be
performed by it as a Lender; and (v) specifies as its addresses for Prime Rate
Loans and Adjusted Libor Loans (and address for notices) the offices set forth
beneath its name on the signature pages hereof.
4. The effective date for this Assignment and Acceptance shall be
_________________ (the "Effective Date") which shall not be earlier than five
Business Days after the acceptance and recording by the Agent of the executed
Assignment and Acceptance. Following the execution of this Assignment and
Acceptance, it will be delivered to the Agent for acceptance by the Agent and
accompanied by the fee payable to the Agent as referred to in Section 10.05(c)
of the Credit Agreement.
5. Upon such acceptances, as of the Effective Date: (i) the Assignee
shall be a party to the Credit Agreement and, to the extent provided in this
Assignment and Acceptance, have the rights and obligations of a Lender
thereunder and under the other Loan Documents, and (ii) the Assignor shall, to
the extent provided in this Assignment and Acceptance, relinquish its rights
(except Sections 3.07, 3.08, 3.10 and 10.03 for the period prior to the
Effective Date) and be released from its obligations under the Credit Agreement.
6. Upon such acceptance, from and after the Effective Date, the Agent
shall make all payments under the Credit Agreement and the Notes in respect of
the interest assigned hereby (including, without limitation, all payments of
principal, interest and commitment fees with respect thereto) to the Assignee.
The Assignor and Assignee shall make all appropriate adjustments in payments
under the Credit Agreement and the Notes for periods prior to the Effective Date
directly between themselves.
7. This Assignment and Acceptance shall be governed by, and construed
in accordance with, the laws of the State of New York without regard to its
rules pertaining to conflicts of laws.
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<PAGE>
IN WITNESS WHEREOF, the Assignor and the Assignee have caused this
Assignment and Acceptance to be executed by their officers thereunto duly
authorized as of the date first set forth above.
[NAME OF ASSIGNOR]
By: ____________________________________________
Title
[NAME OF ASSIGNEE]
By: ____________________________________________
Title
Lending Office for Prime Rate Loans:
Lending Office for Adjusted Libor
Loans:
Attention:
Address for Notices:
Attention:
Telecopy No.:
Accepted this _____ day
of _______________, ____
EUROPEAN AMERICAN BANK, as
Agent
By: _________________________________
Name:
Title:
3
<PAGE>
SBARRO, INC.*
By: _________________________________
Name:
Title:
- ---------------
* If required pursuant to Section 10.05(c).
4
<PAGE>
EXHIBIT D
[LETTERHEAD OF COUNSEL TO THE
COMPANY AND ITS SUBSIDIARIES]
September __, 1999
European American Bank, as Agent
for the benefit of the Lenders
Ladies and Gentlemen:
We have acted as counsel to Sbarro, Inc. (the "Company"), a New York
corporation, and [insert Corporate Guarantors] (each a "Corporate Guarantor" and
collectively, the "Corporate Guarantors"), in connection with the Credit
Agreement (the "Agreement") dated the date hereof among the Company, European
American Bank, as Agent, and the lender parties thereto, pursuant to which the
Lenders have agreed to extend credit to the Company in an aggregate principal
amount not to exceed $30,000,000. Capitalized terms used herein and not
otherwise defined herein shall have the respective meanings set forth in the
Agreement.
In acting as such counsel, we have examined:
(a) a counterpart of the Agreement executed by the Company;
(b) the Revolving Credit Note executed by the Company in favor of each
Lender; and
(c) a counterpart of the Corporate Guaranty executed by each Corporate
Guarantor.
The documents referred to in items (a) through (c) above are hereinafter
referred to collectively as the "Loan Documents".
We have assumed the authenticity of all documents submitted to us as
originals, the conformity to the originals of all documents submitted to us as
certified, conformed or photostatic copies and the authenticity of the originals
of such copies. We have also examined originals, or copies certified to our
satisfaction, of such corporate records, certificates of public officials,
certificates of corporate officers of the Company and each Corporate Guarantor
and such other instruments and documents as we have deemed necessary as a basis
for the opinions hereinafter set forth. As to questions of fact, we have, to the
extent that such facts were not independently established by us, relied upon
such certificates.
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Based upon the foregoing and subject to the qualifications set forth
herein, we are of the opinion that,
1. The Company and the Corporate Guarantors are each a corporation or
limited liability company, as indicated on Schedule I to the Credit Agreement,
duly organized, validly existing and in good standing under the laws of the
jurisdiction of their incorporation or formation and in good standing in each
jurisdiction wherein the conduct of its business or any ownership of its
properties requires it to be qualified to do business except where the failure
to be so qualified could not reasonably be expected to have a Material Adverse
Effect, and each has the corporate or limited liability company power and
authority, as applicable, to own its assets and to transact the business in
which it is now engaged and to execute and perform each of the Loan Documents to
which it is a party.
2. The Company and the Corporate Guarantors each have the requisite
corporate or limited liability company power and authority, as applicable, to
execute, deliver and perform the Loan Documents to which it is a party, each of
which has been duly authorized by all necessary and proper corporate or limited
liability company action.
3. The Loan Documents to which the Company or the Corporate Guarantors
are a party constitute the legal, valid and binding obligation of the Company
and the Corporate Guarantors (to the extent they are a party thereto)
enforceable against the Company and each Corporate Guarantor, as the case may
be, in accordance with their respective terms subject as to enforcement by
applicable bankruptcy, insolvency, reorganization or similar laws affecting the
enforcement of creditors' rights generally, and by equitable principles of
general application.
4. Neither the execution and delivery by the Company and the Corporate
Guarantors of the Loan Documents to which they are a party nor the performance
by the Company or the Corporate Guarantors of their respective obligations under
the Loan Documents, will (a) violate any law, rule or regulation or, to our
knowledge, any order or decree of any court or governmental instrumentality
binding upon the Company or any Corporate Guarantor, or (b) contravene the
Certificate of Incorporation or By-Laws, or the Articles of Organization and
Operating Agreement, as applicable, of the Company or any Corporate Guarantor
or, result in a breach of or constitute a default (with due notice or lapse of
time or both) under any agreements to which the Company or any Corporate
Guarantor is bound of which we are aware, or, to our knowledge, result in the
creation or imposition of any lien, charge, or encumbrance upon any of the
property or assets of the Company or any Corporate Guarantor.
5. Neither the Company nor any Corporate Guarantor is an "investment
company" or a company "controlled" by an "investment company" within the meaning
of the Investment Company Act of 1940.
6. No consent or authorization of, filing with or other act by or in
respect of any governmental authority is required to be obtained by the Company
or any Corporate Guarantor
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<PAGE>
for the valid execution, delivery and performance of the Loan Documents to which
they are a party.
7. Assuming the proceeds of each extension of credit pursuant to the
Credit Agreement are used for the purposes set forth in Section 3.02 of the
Agreement, the making of the loans contemplated therein and the application of
the proceeds thereof will not violate the provisions of Regulation T, U or X of
the Board of Governors of the Federal Reserve System.
8. To the best of our knowledge there are no actions, suits or
proceedings against any of the Company or any Corporate Guarantor, pending or
threatened against the Company or any Corporate Guarantor, before any court,
governmental agency or arbitrator which challenges the validity or
enforceability of any Loan Document or which, if adversely determined against
the Company or any Corporate Guarantor could reasonably be expected to have a
Material Adverse Effect.
Very truly yours,
REGISTRATION RIGHTS AGREEMENT
BY AND AMONG
SBARRO, INC.,
THE GUARANTORS NAMED ON THE
SIGNATURE PAGES HERETO
AND
BEAR, STEARNS & CO. INC.
AS INITIAL PURCHASER
DATED AS OF SEPTEMBER 28, 1999
<PAGE>
This Registration Rights Agreement (this "Agreement") is made and
entered into as of September 28, 1999, by and among Sbarro, Inc., a New York
corporation (the "Issuer") and the Guarantors named on the signature pages
hereto (each a "Guarantor" and collectively, the "Guarantors"), on the one hand,
and Bear, Stearns & Co. Inc. (the "Initial Purchaser"), on the other hand, who
has agreed to purchase a specified number of the Issuer's 11% Series A Senior
Notes due 2009 (the "Initial Notes") pursuant to the Purchase Agreement (as
defined below).
This Agreement is made pursuant to the Note Purchase Agreement, dated as of
September 23, 1999 (the "Purchase Agreement"), by and among the Issuer, the
Guarantors and the Initial Purchaser (i) for the benefit of the Issuer, the
Guarantors and the Initial Purchaser and (ii) for the benefit of the holders
from time to time of the Notes (including the Initial Purchaser). In order to
induce the Initial Purchaser to purchase the Initial Notes, the Issuer and the
Guarantors have agreed to provide the registration rights set forth in this
Agreement. The execution and delivery of this Agreement is a condition to the
obligations of the Initial Purchaser set forth in Section 8 of the Purchase
Agreement. Capitalized terms used herein and not otherwise defined shall have
the meaning assigned to them in the Indenture, dated as of September 28, 1999,
among the Issuer, the Guarantors and Firstar Bank, N.A., as Trustee, relating to
the Initial Notes and the Exchange Notes (the "Indenture").
The parties hereby agree as follows:
SECTION 1. DEFINITIONS
As used in this Agreement, the following capitalized terms shall have the
following meanings:
Broker-Dealer: Any broker or dealer registered under the Exchange Act.
Broker-Dealer Transfer Restricted Securities: Exchange Notes that are
acquired by a Broker-Dealer in the Exchange Offer in exchange for Initial Notes
that such Broker-Dealer acquired for its own account as a result of market
making activities or other trading activities (other than Initial Notes acquired
directly from the Company or any of its affiliates).
Closing Date: The date of this Agreement.
Commission: The Securities and Exchange Commission.
Consummate: An Exchange Offer shall be deemed "Consummated" for purposes of
this Agreement upon the occurrence of (i) the filing and effectiveness under the
Securities Act of the Exchange Offer Registration Statement relating to the
Exchange Notes to be issued in the Exchange Offer, (ii) the maintenance of such
Registration Statement continuously effective and the keeping of the Exchange
Offer open for a period not less than
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the minimum period required pursuant to Section 3(b) hereof, and (iii) the
delivery by the Issuer to the Registrar under the Indenture of Exchange Notes in
the same aggregate principal amount at maturity as the aggregate principal
amount at maturity of Initial Notes that were tendered by Holders thereof
pursuant to the Exchange Offer.
Effectiveness Target Date: As defined in Section 5.
Exchange Act: The Securities Exchange Act of 1934, as amended.
Exchange Notes: The 11% Series B Senior Notes due 2009, of the same class
under the Indenture as the Initial Notes, to be issued to Holders in exchange
for Transfer Restricted Securities pursuant to this Agreement.
Exchange Offer: The registration by the Issuer under the Securities Act of
the Exchange Notes pursuant to a Registration Statement pursuant to which the
Issuer offers the Holders of all outstanding Transfer Restricted Securities the
opportunity to exchange all such outstanding Transfer Restricted Securities held
by such Holders for Exchange Notes in an aggregate principal amount at maturity
equal to the aggregate principal amount at maturity of the Transfer Restricted
Securities tendered in such exchange offer by such Holders.
Exchange Offer Registration Statement: The Registration Statement relating
to the Exchange Offer, including the related Prospectus.
Exempt Resales: The transactions in which the Initial Purchaser propose to
sell the Initial Notes to certain qualified institutional buyers, as such term
is defined in Rule 144A under the Securities Act.
Holders: As defined in Section 2(b) hereof.
Indemnified Holder: As defined in Section 8(a) hereof.
Indenture: As defined in the preamble hereto.
Initial Purchaser: As defined in the preamble hereto.
Initial Notes: The 11% Series A Senior Notes due 2009, of the same class
under the Indenture as the Exchange Notes, for so long as such securities
constitute Transfer Restricted Securities.
Initial Placement: The issuance and sale by the Issuer of the Initial Notes
to the Initial Purchaser pursuant to the Purchase Agreement.
Interest Payment Date: As defined in the Notes.
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Liquidated Damages: As defined in Section 5 hereto.
NASD: National Association of Securities Dealers, Inc.
Notes: The Initial Notes and the Exchange Notes.
Person: An individual, partnership, corporation, limited liability company,
trust or unincorporated organization, or a government or agency or political
subdivision thereof.
Prospectus: The prospectus included in a Registration Statement, as
amended or supplemented by any prospectus supplement and by all other amendments
thereto, including post-effective amendments, and all material incorporated by
reference into such Prospectus.
Registration Default: As defined in Section 5 hereof.
Registration Statement: Any registration statement of the Issuer relating
to (a) an offering of Exchange Notes pursuant to the Exchange Offer or (b) the
registration for resale of Transfer Restricted Securities pursuant to the Shelf
Registration Statement, which is filed pursuant to the provisions of this
Agreement, in each case, including the Prospectus included therein, all
amendments and supplements thereto (including post-effective amendments) and all
exhibits and material incorporated by reference therein.
Restricted Broker-Dealer: Any Broker-Dealer which holds Broker-Dealer
Transfer Restricted Securities.
Securities Act: The Securities Act of 1933, as amended.
Shelf Filing Deadline: As defined in Section 4 hereof.
Shelf Registration Statement: As defined in Section 4 hereof.
TIA: The Trust Indenture Act of 1939 (15 U.S.C. Section 77aaa-77bbbb) as in
effect on the date of the Indenture.
Transfer Restricted Securities: Each Note until the earliest to occur
of (i) the date on which such Note has been exchanged by a person other than a
broker-dealer for an Exchange Note in the Exchange Offer, (ii) following the
exchange by a broker-dealer in the Exchange Offer of a Note for an Exchange
Note, the date on which such Exchange Note is sold to a purchaser who receives
from such broker-dealer on or prior to the date of such sale a copy of the
prospectus contained in the Exchange Offer Registration Statement, (iii) the
date on which such Note has been effectively registered under the Securities Act
and disposed of in accordance with the Shelf Registration Statement or (iv) the
date on which such Note may be
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<PAGE>
freely transferred without registration under the Securities Act or is
distributed to the public pursuant to Rule 144 under the Securities Act.
Underwritten Registration or Underwritten Offering: A registration in which
securities of the Issuer are sold to an underwriter for reoffering to the
public.
SECTION 2. SECURITIES SUBJECT TO THIS AGREEMENT
(a) Transfer Restricted Securities. The securities entitled to the benefits
of this Agreement are the Transfer Restricted Securities.
(b) Holders of Transfer Restricted Securities. On any date of
determination, any Person in whose name Transfer Restricted Securities are
registered in accordance with the Indenture is deemed to be a holder of Transfer
Restricted Securities (each, a "Holder").
SECTION 3. REGISTERED EXCHANGE OFFER
(a) Unless the Exchange Offer shall not be permissible under applicable law
or Commission policy (after the procedures set forth in Section 6(a) below have
been complied with), the Issuer and the Guarantors shall (i) cause to be filed
with the Commission on or prior to 60 days after the Closing Date, a
Registration Statement under the Securities Act relating to the Exchange Notes
and the Exchange Offer, (ii) use their respective best efforts to cause such
Registration Statement to become effective on or prior to 180 days after the
Closing Date, (iii) in connection with the foregoing, (A) file all pre-effective
amendments to such Registration Statement as may be necessary in order to cause
such Registration Statement to become effective, (B) if applicable, file a
post-effective amendment to such Registration Statement pursuant to Rule 430A
under the Securities Act and (C) cause all necessary filings in connection with
the registration and qualification of the Exchange Notes to be made under the
Blue Sky laws of such jurisdictions as are necessary to permit Consummation of
the Exchange Offer and (iv) upon the effectiveness of such Registration
Statement, commence the Exchange Offer. The Exchange Offer shall be on the
appropriate form to permit registration of the Exchange Notes to be offered in
exchange for the Transfer Restricted Securities and sales of Broker-Dealer
Transfer Restricted Securities by Restricted Broker-Dealers as contemplated by
Section 3(c) below.
(b) The Issuer and the Guarantors shall cause the Exchange Offer
Registration Statement to be effective continuously, and shall keep the Exchange
Offer open, for a period of not less than the minimum period required under
applicable federal and state securities laws to Consummate the Exchange Offer;
PROVIDED, HOWEVER, that in no event shall such period be less than 30 days after
the date notice of the Exchange Offer is mailed to the Holders. The Issuer and
the Guarantors shall cause the Exchange Offer to comply with all applicable
federal and state securities laws. No securities other than the Notes or any
additional notes issued by the Issuer under the Indenture prior to the
Consummation of the Exchange Offer shall be
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included in the Exchange Offer Registration Statement. The Issuer and the
Guarantors shall use their respective best efforts to issue, on or prior to 30
days after the Exchange Offer Registration Statement is declared effective by
the Commission, Exchange Notes in exchange for all Notes tendered prior thereto
in the Exchange Offer.
(c) The Issuer shall indicate in a "Plan of Distribution" section contained
in the Prospectus forming a part of the Exchange Offer Registration Statement
that any Restricted Broker-Dealer who holds Initial Notes that are Transfer
Restricted Securities and that were acquired for its own account as a result of
market-making activities or other trading activities (other than Transfer
Restricted Securities acquired directly from the Issuer or one of its
affiliates), may exchange such Initial Notes pursuant to the Exchange Offer;
however, such Broker-Dealer may be deemed to be an "underwriter" within the
meaning of the Securities Act and must, therefore, deliver a prospectus meeting
the requirements of the Securities Act in connection with any resales of the
Exchange Notes received by such Broker-Dealer in the Exchange Offer, which
prospectus delivery requirement may be satisfied by the delivery by such
Broker-Dealer of the Prospectus contained in the Exchange Offer Registration
Statement. Such "Plan of Distribution" section shall also contain all other
information with respect to such resales by Restricted Broker-Dealers that the
Commission may require in order to permit such resales pursuant thereto, but
such "Plan of Distribution" shall not name any such Broker-Dealer or disclose
the amount of Notes held by any such Broker-Dealer except to the extent required
by the Commission.
(d) The Issuer and the Guarantors shall use their respective best efforts
to keep the Exchange Offer Registration Statement continuously effective,
supplemented and amended as required by the provisions of Section 6(c) below to
the extent necessary to ensure that it is available for resales of Broker-Dealer
Transfer Restricted Securities acquired by Restricted Broker-Dealers for their
own accounts as a result of market-making activities or other trading
activities, and to ensure that it conforms with the requirements of this
Agreement, the Securities Act and the policies, rules and regulations of the
Commission as announced from time to time, for a period ending on the earlier of
(i) 30 days from the date on which the Exchange Offer Registration Statement is
declared effective and (ii) the date on which a Restricted Broker-Dealer is no
longer required to deliver a prospectus in connection with market-making or
other trading activities.
(e) The Issuer and the Guarantors shall provide sufficient copies of the
latest version of such Prospectus to Restricted Broker-Dealers promptly upon
request at any time during such 30-day (or shorter as provided in the foregoing
sentence) period in order to facilitate such resales.
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SECTION 4. SHELF REGISTRATION
(a) Shelf Registration. If (i) the Issuer is not required to file an
Exchange Offer Registration Statement or not permitted to Consummate the
Exchange Offer because the Exchange Offer is not permitted by applicable law or
Commission policy or not otherwise permitted by the Commission (after the
procedures set forth in Section 6(a) below have been complied with), (ii) for
any reason the Exchange Offer is not Consummated within 210 days after the
Closing Date, or (iii) the Initial Purchaser that is a Holder of Transfer
Restricted Securities notifies the Company prior to the 20th day following
Consummation of the Exchange Offer that (a) it is prohibited by law or
Commission policy from participating in the Exchange Offer, (b) it may not
resell the Exchange Notes acquired by it in the Exchange Offer to the public
without delivering a prospectus and the prospectus contained in the Exchange
Offer Registration Statement is not appropriate or available for such resales,
or (c) such Holder is a Broker-Dealer and holds Initial Notes acquired directly
from the Issuer or one of its affiliates, then the Issuer and the Guarantors
shall:
(x) cause to be filed a shelf registration statement pursuant to Rule
415 under the Securities Act, which may be an amendment to the Exchange
Offer Registration Statement (in either event, the "Shelf Registration
Statement") as soon as practicable but in any event on or prior to 60 days
after the obligation to file the Shelf Registration Statement arises (such
date being the "Shelf Filing Deadline"), which Shelf Registration Statement
shall provide for resales of all Transfer Restricted Securities the Holders
of which shall have provided the information required pursuant to Section
4(b) hereof; and
(y) use its best efforts to cause such Shelf Registration Statement to
be declared effective by the Commission on or before the 180th day after
such obligation arises.
The Issuer and the Guarantors shall use their respective best efforts to keep
such Shelf Registration Statement continuously effective, supplemented and
amended as required by the provisions of Sections 6(b) and (c) hereof to the
extent necessary to ensure that it is available for resales of Notes by the
Holders of Transfer Restricted Securities entitled to the benefit of this
Section 4(a), and to ensure that it conforms with the requirements of this
Agreement, the Securities Act and the policies, rules and regulations of the
Commission as announced from time to time, for a period of at least two years
following the effective date of such Shelf Registration Statement (or shorter
period that will terminate when all the Notes covered by such Shelf Registration
Statement have been sold pursuant to such Shelf Registration Statement or are
otherwise no longer Transfer Restricted Securities).
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(b) Provision by Holders of Certain Information in Connection with the
Shelf Registration Statement. No Holder of Transfer Restricted Securities may
include any of its Transfer Restricted Securities in any Shelf Registration
Statement pursuant to this Agreement unless and until such Holder furnishes to
the Issuer in writing, within 10 business days after receipt of a request
therefor, such information as the Issuer may reasonably request for use in
connection with any Shelf Registration Statement or Prospectus or preliminary
Prospectus included therein. Each Holder as to which any Shelf Registration
Statement is being effected agrees to furnish promptly to the Issuer all
information required to be disclosed in order to make the information previously
furnished to the Issuer by such Holder not materially misleading.
SECTION 5. LIQUIDATED DAMAGES
(a) If (i) any of the Registration Statements required by this Agreement is
not filed with the Commission on or prior to the date specified for such filing
in this Agreement, (ii) any of such Registration Statements has not been
declared effective by the Commission on or prior to the date specified for such
effectiveness in this Agreement, regardless of the reasonableness of any efforts
made by or on behalf of the Issuer and the Guarantors to cause such Registration
Statement to become effective), (iii) the Company and the Guarantors fail to
consummate the Exchange Offer within 30 days of the date the Exchange Offer
Registration Statement was declared effective, or (iv) any Registration
Statement required by this Agreement is filed and declared effective but shall
thereafter cease to be effective or fail to be usable for the periods specified
in Sections 3(d) and 4(a) hereof without being succeeded immediately by a
post-effective amendment to such Registration Statement that cures such failure
and that is itself immediately declared effective (each such event referred to
in clauses (i) through (iv), a "Registration Default"), then the Issuer will pay
liquidated damages ("Liquidated Damages") to each Holder of Transfer Restricted
Securities, with respect to the first 90-day period immediately following the
occurrence of the first Registration Default, in an amount equal to $.05 per
week per $1,000 principal amount of Transfer Restricted Securities held by such
Holder. The amount of the Liquidated Damages will increase by an additional $.05
per week per $1,000 principal amount of Transfer Restricted Securities with
respect to each subsequent 90-day period until all Registration Defaults have
been cured, up to a maximum amount of Liquidation Damages of $.50 per week per
$1,000 principal amount of Transfer Restricted Securities. All accrued
Liquidated Damages will be paid by the Issuer on each interest Payment Date in
the manner specified by the Indenture for the payment of interest. Following the
cure of all Registration Defaults, the accrual of Liquidated Damages will cease;
provided, that no Holder of Transfer Restricted Securities who is not entitled
to the benefits of a Shelf Registration statement shall be entitled to receive
Liquidated Damages by reason of a Registration Default that pertains to a Shelf
Registration Statement and no Holder of Transfer Restricted Securities or any
other Holder of Transfer Restricted Securities who is entitled to the benefits
of a Shelf Registration Statement shall be entitled to receive Liquidated
Damages by reason of a Registration Default that pertains to an Exchange Offer.
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(b) All obligations of the Issuer set forth in the preceding paragraph that
are outstanding with respect to any Transfer Restricted Security at the time
such security ceases to be a Transfer Restricted Security shall survive until
such time as all such obligations with respect to such Note shall have been
satisfied in full.
SECTION 6. REGISTRATION PROCEDURES
(a) Exchange Offer Registration Statement. In connection with the Exchange
Offer, the Issuer and the Guarantors shall comply with all of the provisions of
Section 6(c) below, shall use their respective best efforts to effect such
exchange to permit the sale of Broker-Dealer Transfer Restricted Securities
being sold in accordance with the intended method or methods of distribution
thereof, and shall comply with all of the following provisions:
(i) If in the reasonable opinion of counsel to the Issuer there is a
question as to whether the Exchange Offer is permitted by applicable law, the
Issuer and the Guarantors hereby agree to seek a no-action letter or other
favorable decision from the Commission allowing the Issuer and the Guarantors to
Consummate an Exchange Offer for such Initial Notes. The Issuer and the
Guarantors hereby agree to pursue the issuance of such a decision to the
Commission staff level but shall not be required to take commercially
unreasonable action to effect a change of Commission policy. The Issuer and the
Guarantors hereby agree, however, to (A) participate in telephonic conferences
with the Commission staff, (B) deliver to the Commission staff an analysis
prepared by counsel to the Issuer setting forth the legal bases, if any, upon
which such counsel has concluded that such an Exchange Offer should be permitted
and (C) diligently pursue a favorable resolution by the Commission staff of such
submission.
(ii) As a condition to its participation in the Exchange Offer pursuant to
the terms of this Agreement, each Holder of Transfer Restricted Securities shall
furnish, upon the request of the Issuer, prior to the Consummation thereof, a
written representation to the Issuer (which may be contained in the letter of
transmittal contemplated by the Exchange Offer Registration Statement) to the
effect that (A) it is not an affiliate of the Issuer, (B) it is not engaged in,
and does not intend to engage in, and has no arrangement or understanding with
any person to participate in, a distribution of the Exchange Notes to be issued
in the Exchange Offer and (C) it is acquiring the Exchange Notes in its ordinary
course of business. In addition, all such Holders of Transfer Restricted
Securities shall otherwise cooperate in the Issuer's preparations for the
Exchange Offer. Each Holder shall acknowledge and agree that any Broker-Dealer
and any such Holder using the Exchange Offer to participate in a distribution of
the securities to be acquired in the Exchange Offer (1) could not under
Commission policy as in effect on the date of this Agreement rely on the
position of the Commission enunciated in Morgan Stanley and Co., Inc. (available
June 5, 1991) and Exxon Capital Holdings Corporation (available May 13, 1988),
as interpreted in the Commission's letter to Shearman & Sterling dated July 2,
1993, and similar no-action letters (which may
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include any no-action letter obtained pursuant to clause (i) above), and (2)
must comply with the registration and prospectus delivery requirements of the
Securities Act in connection with a secondary resale transaction and that such a
secondary resale transaction must be covered by an effective registration
statement containing the selling security holder information required by Item
507 or 508, as applicable, of Regulation S-K if the resales are of Exchange
Notes obtained by such Holder in exchange for Initial Notes acquired by such
Holder directly from the Issuer.
(b) Shelf Registration Statement. In connection with the Shelf Registration
Statement, the Issuer and the Guarantors shall comply with all the provisions of
Section 6(c) below and shall use their respective best efforts to effect such
registration to permit the sale of the Transfer Restricted Securities being sold
in accordance with the intended method or methods of distribution thereof, and
pursuant thereto the Issuer and the Guarantors will as expeditiously as possible
prepare and file with the Commission a Registration Statement relating to the
registration on any appropriate form under the Securities Act, which form shall
be available for the sale of the Transfer Restricted Securities in accordance
with the intended method or methods of distribution thereof.
(c) General Provisions. In connection with any Registration Statement and
any Prospectus required by this Agreement to permit the sale or resale of
Transfer Restricted Securities (including, without limitation, any Registration
Statement and the related Prospectus required to permit resales of Broker-Dealer
Transfer Restricted Securities by Restricted Broker-Dealers), the Issuer and the
Guarantors shall:
(i) use their respective best efforts to keep such Registration
Statement continuously effective and provide all requisite financial statements
for the period specified in Section 3 or 4 of this Agreement, as applicable;
upon the occurrence of any event that would cause any such Registration
Statement or the Prospectus contained therein (A) to contain a material
misstatement or omission or (B) not to be effective and usable for resale of
Transfer Restricted Securities during the period required by this Agreement, the
Issuer and the Guarantors shall file promptly an appropriate amendment to such
Registration Statement, in the case of clause (A), correcting any such
misstatement or omission, and, in the case of either clause (A) or (B), use
their respective best efforts to cause such amendment to be declared effective
and such Registration Statement and the related Prospectus to become usable for
their intended purpose(s) as soon as practicable thereafter;
(ii) prepare and file with the Commission such amendments and
post-effective amendments to the Registration Statement as may be necessary to
keep the Registration Statement effective for the applicable period set forth in
Section 3 or 4 hereof, as applicable, or such shorter period as will terminate
when all Transfer Restricted Securities covered by such Registration Statement
have been sold; cause the Prospectus to be supplemented by any required
Prospectus supplement, and as so supplemented to be filed pursuant to Rule 424
under the Securities Act, and to comply fully with the applicable
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provisions of Rules 424 and 430A under the Securities Act in a timely manner;
and comply with the provisions of the Securities Act with respect to the
disposition of all securities covered by such Registration Statement during the
applicable period in accordance with the intended method or methods of
distribution by the sellers thereof set forth in such Registration Statement or
supplement to the Prospectus;
(iii) advise the underwriter(s), if any, and selling Holders promptly
and, if requested by such Persons, confirm such advice in writing, (A) when the
Prospectus or any Prospectus supplement or post-effective amendment has been
filed, and, with respect to any Registration Statement or any post-effective
amendment thereto, when the same has become effective, (B) of any request by the
Commission for amendments to the Registration Statement or amendments or
supplements to the Prospectus or for additional information relating thereto,
(C) of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement under the Securities Act or of the
suspension by any state securities commission of the qualification of the
Transfer Restricted Securities for offering or sale in any jurisdiction, or the
initiation of any proceeding for any of the preceding purposes, (D) of the
existence of any fact or the happening of any event that makes any statement of
a material fact made in the Registration Statement, the Prospectus, any
amendment or supplement thereto, or any document incorporated by reference
therein untrue in any material respect, or that requires the making of any
additions to or changes in the Registration Statement or the Prospectus in order
to make the statements therein not misleading in any material respect. If at any
time the Commission shall issue any stop order suspending the effectiveness of
the Registration Statement, or any state securities commission or other
regulatory authority shall issue an order suspending the qualification or
exemption from qualification of the Transfer Restricted Securities under state
securities or Blue Sky laws, the Issuer and the Guarantors shall use their
respective best efforts to obtain the withdrawal or lifting of such order at the
earliest possible time;
(iv) furnish without charge to the Initial Purchaser and each of the
underwriter(s), if any, before filing with the Commission, copies of any
Registration Statement or any Prospectus included therein or any amendments or
supplements to any such Registration Statement or Prospectus, which documents
will be subject to the review of the Initial Purchaser and underwriter(s), if
any, for a period of at least five business days, and the Issuer and the
Guarantors will not file any such Registration Statement or Prospectus or any
amendment or supplement to any such Registration Statement or Prospectus
(including all such documents incorporated by reference) to which the Initial
Purchaser or the underwriter(s), if any, shall reasonably object in writing
within five business days after the receipt thereof (such objection to be deemed
timely made upon confirmation of telecopy transmission within such period). The
objection of the Initial Purchaser or underwriter, if any, shall be deemed to be
reasonable if such Registration Statement, amendment, Prospectus or supplement,
as applicable, as proposed to be filed, contains a material misstatement or
omission;
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(v) promptly prior to the filing of any document that is to be
incorporated by reference into a Registration Statement or Prospectus provide
copies of such document to the Initial Purchaser and to the underwriter(s), if
any, and make the Issuer's and the Guarantors' representatives available for
discussion of such document and other customary due diligence matters, and
include such information in such document prior to the filing thereof as the
underwriter(s), if any, reasonably may request;
(vi) make available upon request at reasonable times for inspection by
the Initial Purchaser, any managing underwriter participating in any disposition
pursuant to such Registration Statement, and any attorney or accountant retained
by any of the underwriter(s), for customary diligence purposes, all financial
and other records, pertinent corporate documents of the Issuer and the
Guarantors and cause the Issuer's and the Guarantors' officers, directors and
employees to supply all information reasonably requested by any such
underwriter, attorney or accountant in connection with such Registration
Statement subsequent to the filing thereof and prior to its effectiveness;
(vii) if requested by any selling Holders and the underwriter(s), if
any, promptly incorporate in any Registration Statement or Prospectus, pursuant
to a supplement or post-effective amendment, if necessary, such information as
such selling Holders and underwriter(s), if any, may reasonably request to have
included therein, including, without limitation, information relating to the
"Plan of Distribution" of the Transfer Restricted Securities, information with
respect to the principal amount of Transfer Restricted Securities being sold to
such underwriter(s), if any, the purchase price being paid therefor and any
other terms of the offering of the Transfer Restricted Securities to be sold in
such offering; and make all required filings of such Prospectus supplement or
post-effective amendment as soon as practicable after the Issuer is notified of
the matters to be incorporated in such Prospectus supplement or post-effective
amendment;
(viii) except with respect to the Exchange Offer, use their respective
best efforts to (a) if the Transfer Restricted Securities have been rated prior
to the initial sale of such Transfer Restricted Securities, confirm that such
ratings will apply to the Transfer Restricted Securities covered by a
Registration Statement, or (b) cause the Transfer Restricted Securities covered
by a Registration Statement to be rated with the appropriate rating agencies, if
so requested by the Holders of a majority in aggregate principal amount of Notes
covered thereby or the underwriter(s), if any;
(ix) furnish to each selling Holder and each of the underwriter(s), if
any, without charge, at least one copy of the Registration Statement, as first
filed with the Commission, and of each amendment thereto, including financial
statements and schedules, all documents incorporated by reference therein and
all exhibits (including exhibits incorporated therein by reference);
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(x) deliver to each selling Holder and each of the underwriter(s), if
any, without charge, as many copies of the Prospectus (including each
preliminary prospectus) and any amendment or supplement thereto as such Persons
reasonably may request; the Issuer and the Guarantors hereby consent to the use
(in accordance with applicable law) of the Prospectus and any amendment or
supplement thereto by each of the selling Holders and each of the
underwriter(s), if any, in connection with the offering and the sale of the
Transfer Restricted Securities covered by the Prospectus or any amendment or
supplement thereto;
(xi) enter into such agreements (including an underwriting agreement),
and make such representations and warranties, and take all such other actions in
connection therewith in order to expedite or facilitate the disposition of the
Transfer Restricted Securities pursuant to any Registration Statement
contemplated by this Agreement, all to such extent as may be reasonably
requested by the Initial Purchaser or by any underwriter in connection with any
sale or resale pursuant to any Registration Statement contemplated by this
Agreement; and whether or not an underwriting agreement is entered into and
whether or not the registration is an Underwritten Registration, the Issuer and
the Guarantors shall:
(A) furnish to each underwriter, if any, in such substance
and scope as they may reasonably request and as are customarily made
by issuers to underwriters in primary underwritten offerings, upon the
date of the Consummation of the Exchange Offer and, if applicable, the
effectiveness of the Shelf Registration Statement:
(1) a certificate of the Issuer, dated the date of
Consummation of the Exchange Offer or the date of
effectiveness of the Shelf Registration Statement, as the
case may be, signed by (y) the President or any Vice
President and (z) the Chief Financial Officer of the Issuer,
and a certificate of each Guarantor, signed by two
authorized officers of such Guarantor, dated the date of
Consummation of the Exchange Offer or the date of
effectiveness of the Shelf Registration Statement, as the
case may be, confirming, as of the date thereof, the matters
set forth in Section 8(a) of the Purchase Agreement but
applying, mutatis mutandis, to the Shelf Registration
Statement in each place where reference is made to the
Offering Memorandum in such Section 8(a), and to the date of
effectiveness of the Shelf Registration Statement in each
place where reference is made to "the Closing Date" or "the
date hereof" in such Section 8(a), and such other matters as
such parties may reasonably request;
(2) an opinion, dated the date of Consummation of
the Exchange Offer or the date of effectiveness of the Shelf
Registration Statement, as the case may be, of counsel for
the Issuer and the Guarantors covering the matters set forth
in Exhibit C to the Purchase Agreement and such other matter
as such parties may reasonably request; and
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(3) a customary comfort letter, dated as of the
date of Consummation of the Exchange Offer or the date of
effectiveness of the Shelf Registration Statement, as the
case may be, from the Issuer's and the Guarantors'
independent accountants, in the customary form and covering
matters of the type customarily covered in comfort letters
by underwriters in connection with primary underwritten
offerings, and, to the extent applicable, affirming the
matters set forth in the comfort letter delivered pursuant
to Section 8 of the Purchase Agreement, without exception;
(B) set forth in full or incorporate by reference in the
underwriting agreement, if any, the indemnification provisions and
procedures of Section 8 hereof with respect to all parties to be
indemnified pursuant to said Section; and
(C) deliver such other documents and certificates as may be
reasonably requested by such parties to evidence compliance with
clause (A) above and with any customary conditions contained in the
underwriting agreement or other agreement entered into by the Issuer
and the Guarantors pursuant to this clause (xi), if any.
(xii) If at any time the representations and warranties of the Issuer
and the Guarantors contemplated in clause (A)(1) above cease to be true and
correct in any material respect, the Issuer and the Guarantors shall so advise
the Initial Purchaser and the underwriter(s), if any, and each selling Holder
promptly and, if requested by such Persons, shall confirm such advice in
writing;
(xiii) prior to any public offering of Transfer Restricted Securities,
cooperate with the selling Holders, the underwriter(s), if any, and their
respective counsel in connection with the registration and qualification of the
Transfer Restricted Securities under the securities or Blue Sky laws of such
jurisdictions as the selling Holders or underwriter(s) may request and do any
and all other acts or things necessary or advisable to enable the disposition in
such jurisdictions of the Transfer Restricted Securities covered by the Shelf
Registration Statement; provided, however, that neither the Issuer nor any
Guarantor shall be required to register or qualify as a foreign corporation
where it is not then so qualified or to take any action that would subject it to
the service of process in suits or to taxation, other than as to matters and
transactions relating to the Registration Statement, in any jurisdiction where
it is not then so subject;
(xiv) issue, upon the request of any Holder of Initial Notes covered
by the Shelf Registration Statement, Exchange Notes, having an aggregate
principal amount at maturity equal to the aggregate principal amount at maturity
of Initial Notes surrendered to the Issuer by such Holder in exchange therefor
or being sold by such Holder; such Exchange Notes to be registered in the name
of such Holder or in the name of the purchaser(s) of such
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Notes, as the case may be, in exchange for the Initial Notes held by such Holder
that shall be surrendered to the Issuer for cancellation;
(xv) in connection with any sale of Transfer Restricted Securities
that will result in such securities no longer being Transfer Restricted
Securities, cooperate with the selling Holders and the underwriter(s), if any,
to facilitate the timely preparation and delivery of certificates representing
Transfer Restricted Securities to be sold and not bearing any restrictive
legends; and, subject to the terms of the Indenture, enable such Transfer
Restricted Securities to be in such denominations and registered in such names
as the Holders or the underwriter(s), if any, may request at least two business
days prior to any sale of Transfer Restricted Securities made by such
underwriter(s);
(xvi) use their respective best efforts to cause the Transfer
Restricted Securities covered by the Registration Statement to be registered
with or approved by such other governmental agencies or authorities as may be
necessary to enable the seller or sellers thereof or the underwriter(s), if any,
to consummate the disposition of such Transfer Restricted Securities, subject to
the proviso contained in clause (xiii) above;
(xvii) if any fact or event contemplated by clause (c)(iii)(D) above
shall exist or have occurred, prepare a supplement or post-effective amendment
to the Registration Statement or related Prospectus or any document incorporated
therein by reference or file any other required document so that, as thereafter
delivered to the purchasers of Transfer Restricted Securities, the Prospectus
will not contain an untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein not misleading;
(xviii) provide a CUSIP number for all Transfer Restricted Securities
not later than the effective date of the Registration Statement and provide the
Trustee under the Indenture with printed certificates for the Transfer
Restricted Securities which are in a form eligible for deposit with The
Depositary Trust Company;
(xix) cooperate and assist in any filings required to be made with the
NASD and in the performance of any due diligence investigation by any
underwriter (including any qualified independent underwriter) that is required
to be retained in accordance with the rules and regulations of the NASD;
(xx) otherwise use their respective best efforts to comply with all
applicable rules and regulations of the Commission, and make generally available
to its security holders, as soon as practicable, a consolidated earnings
statement meeting the requirements of Rule 158 (which need not be audited) for
the twelve-month period (A) commencing at the end of any fiscal quarter in which
Transfer Restricted Securities are sold to underwriters in a firm or best
efforts Underwritten Offering or (B) if not sold to underwriters in such an
offering, beginning with the first month of the Issuer's first fiscal quarter
commencing after the effective date of the Registration Statement;
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(xxi) cause the Indenture to be qualified under the TIA not later than
the effective date of the first Registration Statement required by this
Agreement, and, in connection therewith, cooperate with the Trustee and the
Holders of Notes to effect such changes to the Indenture as may be required for
such Indenture to be so qualified in accordance with the terms of the TIA; and
execute and use their respective best efforts to cause the Trustee to execute,
all documents that may be required to effect such changes and all other forms
and documents required to be filed with the Commission to enable such Indenture
to be so qualified in a timely manner; and
(xxii) provide promptly to each Holder upon request each document
filed by the Issuer and, if any, filed by the Guarantors with the Commission
pursuant to the requirements of Section 13 and Section 15(d) of the Exchange
Act.
(d) Each Holder agrees by acquisition of a Transfer Restricted Security
that, upon receipt of any notice from the Issuer of the existence of any fact of
the kind described in Section 6(c)(iii)(D) hereof, such Holder will forthwith
discontinue disposition of Transfer Restricted Securities pursuant to the
applicable Registration Statement until such Holder's receipt of the copies of
the supplemented or amended Prospectus contemplated by Section 6(c)(xvii)
hereof, or until it is advised in writing (the "Advice") by the Issuer that the
use of the Prospectus may be resumed, and has received copies of any additional
or supplemental filings that are incorporated by reference in the Prospectus. If
so directed by the Issuer, each Holder will deliver to the Issuer (at the
Issuer's expense) all copies, other than permanent file copies then in such
Holder's possession, of the Prospectus covering such Transfer Restricted
Securities that was being used at the time of receipt of such notice. In the
event the Issuer shall give any such notice, the time period regarding the
effectiveness of such Registration Statement set forth in Section 3 or 4 hereof,
as applicable, shall be extended by the number of days during the period from
and including the date of the giving of such notice pursuant to Section
6(c)(iii)(D) hereof to and including the date when each selling Holder covered
by such Registration Statement shall have received the copies of the
supplemented or amended Prospectus contemplated by Section 6(c)(xvii) hereof or
shall have received the Advice; however, no such extension shall be taken into
account in determining whether Liquidated Damages are due pursuant to Section 5
hereof or the amount of such Liquidated Damages, it being agreed that the
Issuer's option to suspend use of a Registration Statement pursuant to this
paragraph shall be treated as a Registration Default for purposes of Section 5.
SECTION 7. REGISTRATION EXPENSES
(a) All expenses incident to the Issuer's and the Guarantors' performance
of or compliance with this Agreement will be borne by the Issuer regardless of
whether a Registration Statement becomes effective, including without
limitation: (i) all registration and filing fees and expenses (including filings
made by the Initial Purchaser or a Holder with the NASD (and, if applicable, the
fees and expenses of any "qualified independent underwriter" and its counsel
that may be required by the rules and regulations of the NASD)); (ii) all fees
-15-
<PAGE>
and expenses of compliance with federal securities and state Blue Sky or
securities laws; (iii) all expenses of printing (including printing certificates
for the Exchange Notes to be issued in the Exchange Offer and printing of
Prospectuses), messenger and delivery services and telephone; (iv) all fees and
disbursements of counsel for the Issuer and the Guarantors and the Holders of
Transfer Restricted Securities; and (v) all fees and disbursements of
independent certified public accountants of the Issuer (including the expenses
of any special audit and comfort letters required by or incident to such
performance).
The Issuer and the Guarantors will, in any event, bear their
respective internal expenses (including, without limitation, all salaries and
expenses of their respective officers and employees performing legal or
accounting duties), the expenses of any annual audit and the fees and expenses
of any Person, including special experts, retained by the Issuer and the
Guarantors.
Each Holder shall pay all commissions and transfer taxes, if any,
relating to the sale or disposition of such Holder's Notes.
(b) In connection with any Registration Statement required by this
Agreement (including, without limitation, the Exchange Offer Registration
Statement and the Shelf Registration Statement), the Issuer and the Guarantors
will reimburse the Initial Purchaser and the Holders of Transfer Restricted
Securities who are tendering Notes in the Exchange Offer or selling or reselling
Notes pursuant to the "Plan of Distribution" contained in the Exchange Offer
Registration Statement or the Shelf Registration Statement, as applicable, for
the reasonable fees and disbursements of not more than one counsel, who shall be
Kramer Levin Naftalis & Frankel LLP or such other counsel as may be chosen by
the Holders of a majority in principal amount of the Transfer Restricted
Securities for whose benefit such Registration Statement is being prepared.
SECTION 8. INDEMNIFICATION
(a) The Issuer and the Guarantors agree, jointly and severally, to
indemnify and hold harmless (i) each Holder and (ii) each person, if any, who
controls (within the meaning of Section 15 of the Securities Act or Section 20
of the Exchange Act) any Holder (any of the persons referred to in this clause
(ii) being hereinafter referred to as a controlling person) and (iii) the
respective officers, directors, partners, employees, representatives and agents
of any Holder or any controlling person (any person referred to in clause (i),
(ii) or (iii) may hereinafter be referred to as an "Indemnified Holder"), to the
fullest extent lawful, from and against any and all losses, claims, damages,
liabilities, judgments, actions and expenses (including without limitation and
as incurred, reimbursement of all reasonable costs of investigating, preparing,
pursuing, settling, compromising, paying or defending any claim or action, or
any investigation or proceeding by any governmental agency or body, commenced or
threatened, including the reasonable fees and expenses of counsel to any
Indemnified Holder), joint or several, directly or indirectly caused by, related
to, based upon, arising out
-16-
<PAGE>
of or in connection with any untrue statement or alleged untrue statement of a
material fact contained in any Registration Statement or Prospectus (or any
amendment or supplement thereto), or any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, except insofar as (i) such losses, claims,
damages, liabilities or expenses are caused by an untrue statement or omission
or alleged untrue statement or omission that is made in reliance upon and in
conformity with information relating to any of the Holders furnished in writing
to the Issuer by any of the Holders expressly for use therein or (ii) if a
subsequent purchaser asserts that its losses, claims, damages, liabilities or
expenses were caused by any untrue statement or omission or any alleged untrue
statement or omission made in a preliminary prospectus, if a copy of the
Prospectus in which such untrue statement or omission or alleged untrue
statement or omission was corrected had not been sent or given to such
subsequent purchaser by the Holder, provided that the Issuer had delivered to
such Holder such Prospectus in requisite quantity and on a timely basis to
permit such delivery. This indemnity agreement shall be in addition to any
liability which the Issuer may otherwise have.
In case any action or proceeding (including any governmental or regulatory
investigation or proceeding) shall be brought or asserted against any of the
Indemnified Holders with respect to which indemnity may be sought against the
Issuer and the Guarantors, such Indemnified Holder (or the Indemnified Holder
controlled by such controlling person) shall promptly notify the Issuer in
writing (provided, that the failure to give such notice shall not relieve the
Issuer and the Guarantors of its obligations pursuant to this Agreement except
to the extent that it has been prejudiced in any material respect by such
failure or from any liability which it may otherwise have). Such Indemnified
Holder shall have the right to employ its own counsel in any such action, but
the fees and expenses of such counsel shall be paid by the Indemnified Holder or
Holders unless (i) the employment of such counsel shall have been authorized in
writing by the Issuer in connection with the defense of such action, (ii) the
Issuer shall not have employed counsel to take charge of the defense of such
action within a reasonable time after notice of commencement of the action or
(iii) the Indemnified Holder or Holders shall have reasonably concluded that
there may be defenses available to it or them which are different from or
additional to those available to the Issuer, in any of which events such fees
and expenses of counsel shall be borne by the Issuer and the Guarantors. The
Issuer and the Guarantors shall not, in connection with any one such action or
proceeding or separate but substantially similar or related actions or
proceedings in the same jurisdiction arising out of the same general allegations
or circumstances, be liable for the reasonable fees and expenses of more than
one separate firm of attorneys (in addition to any local counsel) at any time
for such Indemnified Holders, which firm shall be designated by the Holders. The
Issuer and the Guarantors shall be liable for any settlement of any such action
or proceeding effected with the Issuer's prior written consent, which consent
shall not be withheld unreasonably, and the Issuer and the Guarantors agree to
indemnify and hold harmless any Indemnified Holder from and against any loss,
claim, damage, liability or expense by reason of any settlement of any action
effected with the written consent of the Issuer. The Issuer and the Guarantors
shall not, without the prior written consent of each
-17-
<PAGE>
Indemnified Holder, settle or compromise or consent to the entry of judgment in
or otherwise seek to terminate any pending or threatened action, claim,
litigation or proceeding in respect of which indemnification or contribution may
be sought hereunder (whether or not any Indemnified Holder is a party thereto),
unless such settlement, compromise, consent or termination includes an
unconditional release of each Indemnified Holder from all liability arising out
of such action, claim, litigation or proceeding.
(b) Each Holder of Transfer Restricted Securities agrees, severally
and not jointly, to indemnify and hold harmless (i) the Issuer and the
Guarantors, (ii) each person, if any, who controls the Issuer or any of the
Guarantors within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act, and (iii) the officers, directors, partners, employees,
representatives and agents of the Issuer or the Guarantors to the same extent as
the foregoing indemnity from the Issuer and the Guarantors to each of the
Indemnified Holders, but only with respect to claims and actions based on
information relating to such Holder furnished in writing by such Holder
expressly for use in any Registration Statement. In case any action or
proceeding shall be brought against the Issuer and the Guarantors or their
respective officers, directors, partners, employees, representatives and agents
or any such controlling person in respect of which indemnity may be sought
against a Holder of Transfer Restricted Securities, such Holder shall have the
rights and duties given to the Issuer and the Guarantors, and the Issuer and the
Guarantors or their respective directors or officers or such controlling person
shall have the rights and duties given to each Holder, by the preceding
paragraph. In no event shall the liability of any selling Holder hereunder be
greater in amount than the dollar amount of the proceeds received by such Holder
upon the sale of the Registrable Securities giving rise to such indemnification
obligation.
(c) If the indemnification provided for in this Section 8 is
unavailable to an indemnified party under Section 8(a) or Section 8(b) hereof
(other than by reason of exceptions provided in those Sections) in respect of
any losses, claims, damages, liabilities, judgments, actions or expenses
referred to therein, then each applicable indemnifying party, in lieu of
indemnifying such indemnified party, shall contribute to the amount paid or
payable by such indemnified party as a result of such losses, claims, damages,
liabilities or expenses (i) in such proportion as is appropriate to reflect the
relative benefits received by the Issuer and the Guarantors on the one hand and
the Holders on the other hand from the Initial Placement (which in the case of
the Issuer and the Guarantors shall be deemed to be equal to the total gross
proceeds from the Initial Placement as set forth on the cover page of the
Offering Memorandum), the amount of Liquidated Damages which did not become
payable as a result of the filing of the Registration Statement resulting in
such losses, claims, damages, liabilities, judgments actions or expenses, and
such Registration Statement, or (ii) if such allocation is not permitted by
applicable law, the relative fault of the Issuer and the Guarantors on the one
hand and of the Indemnified Holder on the other in connection with the
statements or omissions which resulted in such losses, claims, damages,
liabilities or expenses, as well as any other relevant equitable considerations.
The relative fault of the Issuer and the Guarantors on the one hand and of the
Indemnified Holder on the other shall be determined by reference to,
-18-
<PAGE>
among other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to
information supplied by the Issuer or by the Indemnified Holder and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The amount paid or payable by a party as a
result of the losses, claims, damages, liabilities and expenses referred to
above shall be deemed to include, subject to the limitations set forth in the
second paragraph of Section 8(a), any legal or other fees or expenses reasonably
incurred by such party in connection with investigating or defending any action
or claim.
The Issuer and the Guarantors and each Holder of Transfer Restricted
Securities agree that it would not be just and equitable if contribution
pursuant to this Section 8(c) were determined by pro rata allocation (even if
the Holders were treated as one entity for such purpose) or by any other method
of allocation which does not take account of the equitable considerations
referred to in the immediately preceding paragraph. The amount paid or payable
by an indemnified party as a result of the losses, claims, damages, liabilities
or expenses referred to in the immediately preceding paragraph shall be deemed
to include, subject to the limitations set forth above, any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 8, none of the Holders (and its related Indemnified
Holders) shall be required to contribute, in the aggregate, any amount in excess
of the amount by which the total value of the Initial Notes held by such Holder
exceeds the amount of any damages which such Holder has otherwise been required
to pay by reason of such untrue or alleged untrue statement or omission or
alleged omission. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Holders' obligations to contribute pursuant to this
Section 8(c) are several in proportion to the respective principal amount at
maturity of Initial Notes held by each of the Holders hereunder and not joint.
SECTION 9. RULE 144A
The Issuer and the Guarantors hereby agree with each Holder, for so long as
any Notes are Transfer Restricted Securities and during any period in which the
Issuer or such Guarantor (i) is not subject to Section 13 or 15(d) of the
Exchange Act, to make available to such Holder or beneficial owner of Transfer
Restricted Securities in connection with any sale thereof and any prospective
purchaser of such Transfer Restricted Securities designated by such Holder or
beneficial owner, the information required by Rule 144A(d)(4) under the
Securities Act in order to permit resales of such Transfer Restricted Securities
pursuant to Rule 144A, and (ii) is subject to Section 13 or 15(d) of the
Exchange Act, to make all filings required thereby in a timely manner in order
to permit resales of such Transfer Restricted Securities pursuant to Rule 144.
SECTION 10. PARTICIPATION IN UNDERWRITTEN REGISTRATIONS
-19-
<PAGE>
No Holder may participate in any Underwritten Registration hereunder unless
such Holder (a) agrees to sell such Holder's Transfer Restricted Securities on
the basis provided in any underwriting arrangements approved by the Persons
entitled hereunder to approve such arrangements and (b) completes and executes
all reasonable questionnaires, powers of attorney, indemnities, underwriting
agreements, lock-up letters and other documents required under the terms of such
underwriting arrangements.
SECTION 11. SELECTION OF UNDERWRITERS
The Holders of Transfer Restricted Securities covered by the Shelf
Registration Statement who desire to do so may sell such Transfer Restricted
Securities in an Underwritten Offering. In any such Underwritten Offering, the
investment banker or investment bankers and manager or managers that will
administer the offering will be selected by the Issuer and the Guarantors.
SECTION 12. MISCELLANEOUS
(a) Remedies. The Issuer and the Guarantors agree that monetary damages
would not be adequate compensation for any loss incurred by reason of a breach
by any of them of the provisions of this Agreement and hereby agree to waive the
defense in any action for specific performance that a remedy at law would be
adequate.
(b) No Inconsistent Agreements. Neither the Issuer nor any Guarantor will,
on or after the date of this Agreement, enter into any agreement with respect to
its securities that is inconsistent with the rights granted to the Holders in
this Agreement or otherwise conflicts with the provisions hereof. Neither the
Issuer nor any Guarantor has previously entered into any agreement granting any
registration rights with respect to its securities to any Person. The rights
granted to the Holders hereunder do not in any way conflict with and are not
inconsistent with the rights granted to the holders of the Issuer's and the
Guarantors' securities under any agreement in effect on the date hereof.
(c) Adjustments Affecting the Notes. Neither the Issuer nor any Guarantor
will take any action, or permit any change to occur, with respect to the Notes
that would materially and adversely affect the ability of the Holders to
Consummate any Exchange Offer.
(d) Amendments and Waivers. The provisions of this Agreement may not be
amended, modified or supplemented, and waivers or consents to or departures from
the provisions hereof may not be given unless the Issuer and the Guarantors have
obtained the written consent of Holders of a majority of the then outstanding
principal amount at maturity of Transfer Restricted Securities. Notwithstanding
the foregoing, a waiver or consent to departure from the provisions hereof that
(i) relates exclusively to the rights of Holders whose securities are being
tendered pursuant to the Exchange Offer and that does not affect directly or
indirectly the rights of other Holders whose securities are not being tendered
pursuant to
-20-
<PAGE>
such Exchange Offer may be given by the Holders of a majority of the outstanding
principal amount at maturity of Transfer Restricted Securities being tendered or
registered or (ii) relates exclusively to the rights of Holders whose securities
are being registered in a Shelf Registration and that does not affect directly
or indirectly the rights of other Holders whose securities are not included in
such Shelf Registration may be given by the Holders of a majority of the
outstanding principal amount at maturity of Transfer Restricted Securities being
so registered; provided that, in either case, with respect to any matter that
directly or indirectly affects the rights of the Initial Purchaser hereunder,
the Issuer and Guarantors shall obtain the written consent of such Initial
Purchaser with respect to which such amendment, qualification, supplement,
waiver, consent or departure is to be effective.
(e) Notices. All notices and other communications provided for or permitted
hereunder shall be made in writing by hand-delivery, first-class mail
(registered or certified, return receipt requested), telex, telecopier, or air
courier guaranteeing overnight delivery:
(i) if to a Holder, at the address set forth on the records of the
Registrar under the Indenture, with a copy to the Registrar under the Indenture;
and
(ii) if to the Issuer and the Guarantors:
Sbarro, Inc.
401 Broadhollow Road
Melville, New York 11747
Telecopier No.: (516) 715-4185
Attention: Chief Financial Officer
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five business
days after being deposited in the mail, postage prepaid, if mailed; when
answered back, if telexed; when receipt acknowledged, if telecopied; and on the
next business day, if timely delivered to an air courier guaranteeing overnight
delivery.
Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the Trustee at the
address specified in the Indenture.
(f) Successors and Assigns. This Agreement shall inure to the benefit of
and be binding upon the successors and assigns of each of the parties, including
without limitation and without the need for an express assignment, subsequent
Holders of Transfer Restricted Securities; provided however, that this
Agreement shall not inure to the benefit of or be binding upon a successor or
assign of a Holder unless and to the extent such successor or assign acquired
Transfer Restricted Securities from such Holder.
-21-
<PAGE>
(g) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(h) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(i) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE
CONFLICT OF LAW RULES THEREOF.
(j) Severability. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable, the validity, legality and enforceability of
any such provision in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.
(k) Entire Agreement. This Agreement together with the other Operative
Documents (as defined in the Purchase Agreement) is intended by the parties as a
final expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein,
with respect to the registration rights granted by the Issuer with respect to
the Transfer Restricted Securities. This Agreement supersedes all prior
agreements and understandings between the parties with respect to such subject
matter.
-22-
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
SBARRO, INC.
By:/s/ Mario Sbarro
----------------------------
Name: Mario Sbarro
Title: President
SBARRO PROPERTIES, INC.
By:/s/ Mario Sbarro
----------------------------
Name: Mario Sbarro
Title: President
SBARRO AMERICA, INC.
By:/s/ Mario Sbarro
----------------------------
Name: Mario Sbarro
Title: President
SBARRO AMERICA PROPERTIES, INC.
By:/s/ Mario Sbarro
----------------------------
Name: Mario Sbarro
Title: President
SBARRO'S OF TEXAS, INC.
By:/s/ Mario Sbarro
----------------------------
Name: Mario Sbarro
Title: President
ITALIAN FOOD FRANCHISING, INC.
By:/s/ Mario Sbarro
----------------------------
Name: Mario Sbarro
Title: President
-23-
<PAGE>
COREST MANAGEMENT, INC.
By:/s/ Mario Sbarro
----------------------------
Name: Mario Sbarro
Title: President
FRANREST MANAGEMENT, INC.
By:/s/ Mario Sbarro
----------------------------
Name: Mario Sbarro
Title: President
LARKFIELD EQUIPMENT CORP.
By:/s/ Mario Sbarro
----------------------------
Name: Mario Sbarro
Title: President
SBARRO FOODS, INC.
By:/s/ Mario Sbarro
----------------------------
Name: Mario Sbarro
Title: President
SBARRO OF ROOSEVELT FIELD, INC.
By:/s/ Mario Sbarro
----------------------------
Name: Mario Sbarro
Title: President
SBARRO OF VIRGINIA, INC.
By:/s/ Mario Sbarro
----------------------------
Name: Mario Sbarro
Title: President
DEMEFAC LEASING CORP.
By:/s/ Mario Sbarro
----------------------------
Name: Mario Sbarro
Title: President
-24-
<PAGE>
FRANCHISE CONTRACTING AND EQUIPMENT
CORP.
By:/s/ Mario Sbarro
----------------------------
Name: Mario Sbarro
Title: President
MELVILLE ADVERTISING AGENCY INC.
By:/s/ Mario Sbarro
----------------------------
Name: Mario Sbarro
Title: President
SBARRO COMMACK, INC.
By:/s/ Mario Sbarro
----------------------------
Name: Mario Sbarro
Title: President
SBARRO DOMINION LIMITED
By:/s/ Mario Sbarro
----------------------------
Name: Mario Sbarro
Title: President
By:/s/ Joseph Sbarro
----------------------------
Name: Joseph Sbarro
Title: Secretary
SBARRO OF LAS VEGAS, INC.
By:/s/ Mario Sbarro
----------------------------
Name: Mario Sbarro
Title: President
SBARRO OF HAWAII, INC.
By:/s/ Mario Sbarro
----------------------------
Name: Mario Sbarro
Title: President
-25-
<PAGE>
SBARRO PENNSYLVANIA, INC.
By:/s/ Mario Sbarro
----------------------------
Name: Mario Sbarro
Title: President
SBARRO FRANCHISE ASSOCIATES, INC.
By:/s/ Mario Sbarro
----------------------------
Name: Mario Sbarro
Title: President
SBARRO H.D.F, INC.
By:/s/ Mario Sbarro
----------------------------
Name: Mario Sbarro
Title: President
N.H.D., INC.
By:/s/ Mario Sbarro
----------------------------
Name: Mario Sbarro
Title: President
BUSHRANGER HOLDING, INC.
By:/s/ Mario Sbarro
----------------------------
Name: Mario Sbarro
Title: President
MELVILLE PIZZERIA, INC.
By:/s/ Mario Sbarro
----------------------------
Name: Mario Sbarro
Title: President
SBARRO ONE WORLD TRADE, INC.
By:/s/ Mario Sbarro
----------------------------
Name: Mario Sbarro
Title: President
-26-
<PAGE>
401 BROAD HOLLOW REALTY CORP.
By:/s/ Mario Sbarro
----------------------------
Name: Mario Sbarro
Title: President
401 BROAD HOLLOW FITNESS CENTER
CORP.
By:/s/ Mario Sbarro
----------------------------
Name: Mario Sbarro
Title: President
SBARRO BISTROS, INC.
By:/s/ Mario Sbarro
----------------------------
Name: Mario Sbarro
Title: President
SYOSSET BISTRO, INC.
By:/s/ Mario Sbarro
----------------------------
Name: Mario Sbarro
Title: President
-27-
<PAGE>
The foregoing Registration Rights Agreement is hereby confirmed and accepted as
of the date first above written.
BEAR, STEARNS & CO. INC.
By: /S/ Randall Paulson
-----------------------
Name: Randall Paulson
Title: Managing Director
-28-
[SBARRO LETTERHEAD]
PRESS RELEASE
CONTACT: ROBERT G. ROONEY
CHIEF FINANCIAL OFFICER
SBARRO, INC.
(516) 715-4167
SUMMARY: SBARRO REPORTS AGREEMENT TO SELL SENIOR
NOTES TO FINANCE ITS PREVIOUSLY ANNOUNCED
GOING PRIVATE TRANSACTION.
FOR IMMEDIATE RELEASE
Melville, L.I., New York . . . . . . . . . . . . . . . . . .September 24, 1999
Sbarro, Inc. (listed New York Stock Exchange "SBA") has agreed to sell
11.00% Senior Notes due 2009 in the aggregate principal amount at maturity of
$255.0 million at a price of 98.514% of par to yield 11.25% per annum. The Notes
will be sold to qualified institutional buyers in a private placement under Rule
144A under the Securities Act of 1933.
The Company will use the net proceeds of the offering to finance a
portion of the aggregate consideration required to consummate its previously
announced going private transaction, pursuant to which a newly-formed entity
owned by members of the Sbarro family will merge with and into the Company.
Shareholders of the Company, other than those members of the Sbarro family, will
receive $28.85 per share in cash following the closing of the merger in exchange
for the approximately 13.5 million shares (65.6% of outstanding shares) of the
Company's Common Stock owned by them. The transaction is scheduled to close on
September 28, 1999.
This press release does not constitute an offer to sell or the
solicitation of an offer to buy the securities. The securities will not be
registered under the Securities Act or applicable state securities laws, and may
not be offered or sold in the United States absent registration under the
Securities Act and applicable state securities laws or available exemptions from
such registration requirements.
The Company is a leading owner, operator and franchisor of
quick-service restaurants serving a wide variety of Italian specialty foods
under the "Sbarro" and "Sbarro the Italian Eatery" names. As of July 18, 1999
the Sbarro system included 908 Sbarro restaurants, consisting of 634
<PAGE>
Company-owned and 274 franchised restaurants.
****
[SBARRO LETTERHEAD]
PRESS RELEASE
CONTACT: Robert G. Rooney
Chief Financial Officer
SBARRO, INC.
(516) 715-4167
SUMMARY: SBARRO reports completion of its previously
announced going private transaction.
FOR IMMEDIATE RELEASE
Melville, L.I., New York . . . . . . . . . . . .. . . . . . . september 29, 1999
Sbarro, Inc. (listed New York Stock Exchange "SBA") today reported
that it has completed its previously announced going private transaction. The
transaction was pursuant to a merger agreement under which a newly-formed entity
owned by members of the Sbarro family was merged with and into the Company.
Shareholders of the Company, other than those members of the Sbarro family, will
receive $28.85 per share in cash in exchange for the approximately 13.5 million
shares (65.6% of outstanding shares) of the Company's Common Stock owned by
them.
The transaction was funded through the placement of $255.0 million of
11.0% Senior Notes due 2009 at a price of 98.514% of par to yield 11.25% per
annum and substantially all of the Company's cash on hand. The Company also
entered into a new $30.0 million Senior Revolving Credit Facility from European
American Bank
Shareholders will shortly be receiving appropriate instructions to
exchange their shares for the cash consideration.
This press release does not constitute an offer to sell or the
solicitation of an offer to buy the securities. The securities will not be
registered under the Securities Act or applicable state securities laws, and may
not be offered or sold in the United States absent registration under the
Securities Act and applicable state securities laws or available exemptions from
such registration requirements.
The Company develops and operates a national chain of family-style,
cafeteria-type Italian restaurants under the Sbarro name. At July 18, 1999, the
end of the Company's second fiscal quarter, there were 908 Sbarro restaurants in
operation, 634 of which were Company-owned and 274 of which were franchised.
<PAGE>
###
