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P R O S P E C T U S
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FM 1993A CORP.
Offer for all Outstanding
Privately Placed 9.75% Senior Secured Notes
due November 1, 2003
in Exchange for
Series B 9.75% Senior Secured Notes due November 1, 2003
Guaranteed by CRC-I Limited Partnership and CRC-II Limited Partnership
The offer will expire at midnight, New York City time,
on August 26, 1994, unless extended.
FM 1993A Corp. (the "Issuer"), a Delaware corporation, hereby offers
(the "Exchange Offer"), upon the terms and subject to the conditions set
forth herein and in the related Letter of Transmittal, to exchange up to
$70 million aggregate principal amount of Series B 9.75% Senior Secured Notes
due November 1, 2003 (the "New Notes") of the Issuer for a like amount of
privately placed 9.75% Senior Secured Notes due November 1, 2003 (the "Old
Notes" and together with the New Notes, the "Notes") from the holders (the
"Holders of Old Notes"; individually, a "Holder of Old Notes") thereof.
The Issuer has no debt securities of other indebtedness senior or junior to
the Notes.
The New Notes are being offered hereunder in order to satisfy the
obligations of the Issuer under a registration rights agreement dated as of
December 15, 1993 (the "Registration Rights Agreement") among the Issuer,
Foodmaker, Inc. ("Foodmaker" or "Lessee"), CRC-I Limited Partnership
("CRC-I"), CRC-II Limited Partnership ("CRC-II") and the purchasers of the
Old Notes who are signatories to the Registration Rights Agreement (the
"Initial Purchasers"). The Exchange Offer is designed to provide to Holders
of Old Notes an opportunity to acquire New Notes which, unlike the Old Notes,
are expected to be freely transferable at all times, subject to state
securities or "blue sky" law restrictions, provided that the Holder of Old
Notes is not an "affiliate" of the Issuer within the meaning of the
Securities Act of 1933, as amended (the "Securities Act"), and represents
that the New Notes are being acquired in the ordinary course of such holder's
business and that said Holder of Old Notes is not engaged in, and does not
intend to engage in, a distribution of the New Notes. With the exception of
the freely transferable nature of the New Notes, the New Notes are
substantially identical to the Old Notes. Both the Old Notes and the New
Notes are nonrecourse obligations of the Issuer guaranteed by CRC-I and
CRC-II, but are without recourse to the general partners of such limited
partnerships. Neither the Old Notes nor the New Notes are guaranteed by
Foodmaker. See "The Exchange Offer - Purpose of the Exchange Offer."
The Issuer will accept for exchange any and all validly tendered Old
Notes on or prior to midnight, New York time, on August 26, 1994, or
such later date to which the Exchange Offer is extended by the Issuer (the
"Expiration Date"). The Issuer will notify the Exchange Agent of any
extension by oral or written notice prior to 9:00 a.m., New York City time,
on the next business day after the previously scheduled Expiration Date.
Tenders of Old Notes made pursuant to the Exchange Offer may not be
withdrawn. Foodmaker will pay the expenses of the Exchange Offer.
The New Notes will bear interest from July 1, 1994. Accordingly,
Holders of Old Notes who receive New Notes in exchange for Old Notes will
forego accrued but unpaid interest on their exchanged Old Notes for the
period from July 1, 1994 to the date of exchange, but will be entitled to
such interest under the New Notes. See "Description of New Notes."
The Issuer makes no recommendation to Holders of Old Notes as to whether
to tender or refrain from tendering all or any portion of their Old Notes
pursuant to the Exchange Offer. In addition, no one has been authorized to
make any such recommendation. Holders of Old Notes must make their own
decision whether to tender pursuant to the Exchange Offer and, if so, the
principal amount of Old Notes to tender after reading this Prospectus and
consulting with their advisors, if any, based on their own financial position
and requirements.
The Exchange Offer is not conditioned upon any minimum principal amount
of Old Notes being tendered for exchange. However, the Exchange Offer is
subject to the non-occurrence of certain events. Notice of any termination
will be given promptly to the Holders of Old Notes and the Trustee. Notice
of any termination, alteration or waiver of any of the conditions of the
Exchange Offer will be given promptly to the Holders of Old Notes and the
Trustee. See "The Exchange Offer."
FOR A DISCUSSION OF CERTAIN OTHER CONSIDERATIONS RELEVANT TO AN INVESTMENT IN
THE NEW NOTES, SEE "RISK FACTORS."
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
COMMISSION OR ANY STATE COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
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The date of this Prospectus is July 27, 1994.
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INCORPORATION OF CERTAIN FOODMAKER DOCUMENTS BY REFERENCE
The following documents previously filed with the Securities and
Exchange Commission (the "Commission") by Foodmaker pursuant to the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), are
incorporated herein by reference and made a part hereof: (1) Foodmaker's
Annual Report on Form 10-K for the fiscal year ended October 3, 1993;
(2) Foodmaker's Quarterly Reports on Form 10-Q for the fiscal quarters ended
January 23, 1994, and April 17, 1994; and (3) Foodmaker's Current Report on
Form 8-K/A dated January 27, 1994.
Each document filed by Foodmaker pursuant to Sections 13(a), 13(c), 14
or 15(d) the Exchange Act after the date of this Prospectus and prior to the
termination of the Exchange Offer made hereby shall be deemed to be
incorporated by reference into this Prospectus and to be a part hereof from
the date of filing of such document.
Any statement contained herein or in a document incorporated or deemed
to be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement
contained herein or in any other subsequently filed document which also is or
is deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Prospectus.
This Prospectus incorporates documents by reference which are not
presented herein or delivered herewith. These documents are available upon
request from Foodmaker, Inc., Attn: Corporate Communications, 9330 Balboa
Avenue, San Diego, California 92123, (619) 571-2121. In order to ensure
timely delivery of the documents, any request should be made five business
days prior to date on which final investment decision must be made.
Foodmaker will provide without charge to each person, including any
beneficial owner of Old Notes, to whom this Prospectus is delivered, upon the
written or oral request of such person, a copy of any or all of the documents
which have been incorporated by reference in this Prospectus (other than
exhibits to such documents which are not specifically incorporated by
reference into such documents). Such requests should be directed to
Foodmaker, Inc., Attn: Corporate Communications, 9330 Balboa Avenue, San
Diego, California 92123, (619) 571-2121.
AVAILABLE INFORMATION
The Issuer has filed with the Commission a registration statement
relating to the New Notes offered hereby (herein, together with all
amendments and exhibits, referred to as the "Registration Statement") under
the Securities Act. This Prospectus does not contain all of the information
set forth in the Registration Statement, certain parts of which are omitted
in accordance with the rules and regulations of the Commission. For further
information, reference is hereby made to the Registration Statement.
Statements made in this Prospectus as to the contents of any contract,
agreement or other document referred to are not necessarily complete. With
respect to each such contract, agreement or other document filed as an
exhibit to the Registration Statement, reference is made to such exhibit for
a more complete description thereof. The Registration Statement and the
exhibits and schedules thereto may be inspected without charge and copied at
prescribed rates at the Public Reference Section of the Commission at Room
1024, 450 Fifth Street, N.W., Washington, D.C. 20549 and at the Commission's
regional offices at 7 World Trade Center, New York, New York 10048 and at the
Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661.
Foodmaker is subject to the informational requirements of the Exchange
Act and, in accordance therewith, files reports, proxy statements and other
information with the Commission. Such reports, proxy statements and other
information can be inspected, without charge, and copied at prescribed rates
at the Public Reference Section of the Commission at Room 1024, 450 Fifth
Street, N.W., Washington, D.C. 20549, and at the Commission's regional
offices at 7 World Trade Center, 13th Floor, New York, New York 10048 and at
the Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. Such reports, proxy statements and other information can
also be inspected at the offices of the New York Stock Exchange, Inc.,
20 Broad Street, New York, New York 10005.
The Issuer is required under the terms of an indenture dated as of
December 15, 1993, between the Issuer, as principal and agent for CRC-I and
CRC-II, and State Street Bank and Trust Company, as trustee (the "Trustee"),
as amended by an amendment dated as of July 15, 1994, among the Issuer, the
Trustee, CRC-I and CRC-II (as so amended, the "Indenture"), to provide a copy
of: (i) a balance sheet of the Issuer at the end of each year setting forth
in comparative form the figures for the corresponding period in the previous
fiscal year, and (ii) statements of income and retained
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earnings and of changes in cash flows of the Issuer for such year,
setting forth in comparative form the figures for the previous fiscal year,
all in reasonable detail and certified by the treasurer of the Issuer as
being accurate and complete and, if requested by the holders of more than 50%
of the aggregate principal amount of all outstanding Notes, or if required
under any applicable securities laws, accompanied by a report from a firm of
independent certified public accountants of nationally recognized reputation,
which report shall state that such financial statements fairly present
the financial condition of the Issuer and that the examination of such
accountants in connection therewith has been made in accordance with
generally accepted auditing standards.
The Issuer is also required to deliver to the Trustee, to be provided to
the Holders of Notes, copies of the annual reports and of the information,
documents, and other reports (or copies of such portions of any of the
foregoing as the Commission may by rules and regulations prescribe) that the
Issuer is required to file with the Commission pursuant to Section 13 or
15(d) of the Exchange Act. To the extent that the Issuer is not subject to
the reporting requirements of Section 13 or 15(d) of the Exchange Act, the
Issuer is required to file with the Commission and provide to the Trustee, to
be provided to the Holders of Notes, such annual and quarterly reports and
such information, documents and other reports (or copies of such portions of
any of the foregoing as the Commission may by rules and regulations
prescribe) as are specified in Sections 13 and 15(d) of the Exchange Act.
The Issuer shall also make such reports available to prospective purchasers
of the Old Notes upon the request of any beneficial holder or Holder of Old
Notes.
In addition, during the period beginning on the original issuance date
of the Old Notes and ending on the date that is three years from such date,
the Issuer will, during any period in which the Lessee or the Issuer is not
subject to Section 13 or 15(d) under the Exchange Act, make available to the
beneficial holders or Holders of Old Notes in connection with the sale
thereof, and make available to prospective purchasers of Old Notes from such
beneficial holder or Holders of Old Notes, the information required to be
delivered pursuant to Rule 144A(d)(4) under the Securities Act upon the
request of such beneficial holder or Holder of Old Notes. The Issuer will
also comply with the other provisions of TIA Section 314(a).
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Based on interpretive letters previously issued by the staff of the
Division of Corporation Finance of the Commission to third parties, the
Issuer believes that the New Notes issued pursuant to the Exchange Offer may
be offered for resale, resold and otherwise transferred by any Holder of New
Notes, without complying with the registration and prospectus delivery
provisions of the Securities Act, provided that such holder (i) is not an
"affiliate" or "promoter" (as such terms are defined in Rule 405 under the
Securities Act) of the Issuer, (ii) is not participating in a distribution of
the New Notes to be received in the Exchange Offer, (iii) is not, except as
noted below, a broker-dealer and (iv) is acquiring the New Notes in the
ordinary course of such holder's business. Based on the prior interpretive
letters, no broker-dealer may resell or otherwise transfer New Notes issued
pursuant to the Exchange Offer without complying with the registration
requirements of the Securities Act, unless (a) such broker-dealer is holding
Old Notes only as nominee, or (b) (i) such broker-dealer acquired the Old
Notes for its own account as a result of market-making or other trading
activities and undertakes to satisfy certain conditions consistent with the
requirements of the Securities Act, including the delivery of a prospectus
which contains a plan of distribution with respect to such resale
transactions (such plan of distribution need not name the broker-dealer or
disclose the amount of New Notes held by the broker-dealer), and (ii) such
broker-dealer has not entered into any arrangement or understanding with the
Issuer or an affiliate of the Issuer to distribute the New Notes received
pursuant to the Exchange Offer. If any Holder of Old Notes does not satisfy
any of the foregoing conditions, such holder may not be entitled to rely on
the previously issued interpretive letters.
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PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information appearing elsewhere in this Prospectus. Capitalized terms used
in this Prospectus are defined in the Glossary beginning on page 51 hereof.
The Issuer
On January 5, 1994, in a private placement transaction, the Issuer
issued and sold $70,000,000 aggregate principal amount of Old Notes.
Proceeds from the issuance of the Old Notes were used to purchase two secured
promissory notes issued by two special purpose Massachusetts limited
partnerships, CRC-I and CRC-II, in the principal amounts of $30,172,952 and
$39,827,048, from CRC-I and CRC-II, respectively (the "CRC-I Note" and the
"CRC-II Note", respectively; collectively, the "CRC Notes"). The Issuer is
making the Exchange Offer to satisfy its obligations under the Registration
Rights Agreement, which requires the Issuer to use its best efforts to effect
the Exchange Offer. The Issuer will not receive any additional proceeds from
the offering of the New Notes.
The Exchange Offer
Securities Offered . . . . . . . Up to $70,000,000 aggregate principal
amount of Series B 9.75% Senior Secured
Notes due November 1, 2003.
The Exchange Offer . . . . . . . The New Notes are being offered in exchange
for a like principal amount of the Old
Notes. The issuance of the New Notes is
intended to satisfy the obligations of the
Issuer under the terms of the Registration
Rights Agreement. The New Notes are
substantially identical to the Old Notes
except that the New Notes will be
registered under the Securities Act.
Expiration Date;
No Withdrawal Rights . . . . . The Exchange Offer will expire at midnight,
New York City time on August 26, 1994 or
such later date to which it is extended by
the Issuer. Old Notes tendered pursuant to
the Exchange Offer and the Letter of
Transmittal delivered herewith may not be
withdrawn.
Accrued Interest on the
New Notes. . . . . . . . . . . The New Notes will bear interest from and
including July 1, 1994 (the day after the
last date for which interest will have been
paid on the Old Notes prior to the
exchange). Accordingly, Holders of Old
Notes who receive New Notes in exchange for
Old Notes will forego accrued but unpaid
interest on their exchanged Old Notes for
the period from and including July 1, 1994
to the date of exchange, but will be
entitled to such interest on the New Notes.
Conditions of the Exchange
Offer. . . . . . . . . . . . . The Exchange Offer is subject to the non-
occurrence of certain events. See "The
Exchange Offer - Conditions to the Exchange
Offer."
Procedures for Tendering
Old Notes. . . . . . . . . . . Each Holder of Old Notes wishing to accept
the Exchange Offer must complete and sign
the Letter of Transmittal, in accordance
with the instructions contained therein,
and submit the Old Notes, together with the
Letter of Transmittal and any other
documents required by the Letter of
Transmittal, to the Exchange Agent
identified below. See "The Exchange Offer
- Procedures for Tendering."
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Guaranteed Delivery
Procedures . . . . . . . . . . Holders of Old Notes who wish to tender
their Old Notes and whose Old Notes are not
immediately available or who cannot deliver
their Old Notes and Letter of Transmittal
or any other documents required by the
Letter of Transmittal to the Exchange Agent
prior to the Expiration Date, must tender
their Old Notes according to the guaranteed
delivery procedures set forth in "The
Exchange Offer - Guaranteed Delivery
Procedures."
Acceptance of Old Notes
and Delivery of New Notes. . . The Issuer will accept for exchange any and
all Old Notes which are properly tendered
in the Exchange Offer prior to midnight,
New York City time, on the Expiration Date.
The New Notes issued pursuant to the
Exchange Offer will be delivered promptly
following the Expiration Date. See "The
Exchange Offer - Acceptance of Old Notes
for Exchange; Delivery of New Notes."
Dissenters' Rights . . . . . . . Holders of Old Notes will not have
dissenter's rights of appraisal in
connection with the Exchange Offer. See
"Incorporation of Certain Foodmaker
Documents by Reference;" "Management;" and
"Ownership of Equity Securities."
Tax Consequences . . . . . . . . See "Certain Federal Income Tax
Consequences."
Exchange Agent. . . . . . . . . State Street Bank and Trust Company;
telephone (617) 664-5608. See "The
Exchange Offer - Exchange Agent."
Terms Of The New Notes
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Terms Of The New Notes
Issuer . . . . . . . . . . . . . The Issuer is a special purpose corporation
formed for purposes of issuing the Old
Notes and the New Notes (for its own
account and as agent acting on behalf of
CRC-I and CRC-II) and purchasing the CRC
Notes.
Issue Principal Amount . . . . . Up to $70 million principal amount of
senior secured notes.
Comparison with Old Notes. . . . It is expected that the New Notes will be
freely transferable under the Securities
Act by Holders of New Notes who are not
affiliates of the Issuer, subject to any
restrictions on transfer imposed by state
securities or "blue sky" laws and those
described in "The Exchange Offer _ Resales
of New Notes." The Holders of Old Notes
are currently entitled to certain
registration rights pursuant to the
Registration Rights Agreement.
Consummation of the Exchange Offer will
satisfy the Issuer's obligations
thereunder, and Holders of Old Notes who do
not exchange their Old Notes for New Notes
will no longer be entitled to any
registration rights and will not be able to
reoffer, resell or otherwise dispose of
their Old Notes, unless they are
subsequently registered under the
Securities Act, which the Issuer is not
obligated under the Registration Rights
Agreement to do, or unless an exemption
from the registration requirements of the
Securities Act is available. See "The
Exchange Offer - Purpose of the Exchange
Offer." The New Notes otherwise will be
substantially identical in all respects to
the Old Notes.
To the extent that Holders of Old Notes do
not participate in the Exchange Offer and
Old Notes remain outstanding after the
consummation of the Exchange Offer, any
prepayments on the Notes would be made on a
pro rata basis pursuant to the prepayment
provisions contained in the Indenture. In
addition, Holders of New Notes and Old
Notes, together ("Holders of Notes"), will
have the voting and other rights described
therein.
Maturity . . . . . . . . . . . . November 1, 2003.
Interest Rate. . . . . . . . . . 9.75% per annum.
Priority . . . . . . . . . . . . The New Notes will be senior secured
indebtedness of the Issuer.
Interest Payment Dates . . . . . Semi-annual on the first business day of
each January and July, commencing on the
first business day of January, 1995 and
continuing through the first business day
of July, 2003. A final interest payment
will also be due at Maturity.
Optional Prepayment. . . . . . . Non-prepayable for five years after the
date of issue of the Old Notes. Thereafter
prepayable at the option of the Lessee in
the event of an "Early Termination" (i.e.,
termination of the Lease and a reconveyance
of the Deed of Trust) with respect to one
or more of the Existing Assets (other than
Potential Existing Asset) or Construction
Assets (other than Potential Construction
Assets), as the case may be, pursuant to
the CRC Leases and the CRC Notes at the
following premiums: year six - 5.00%, year
seven - 3.75%, year eight - 2.50%, year
nine - 1.25%, year ten - 0.00%. Any
principal amounts prepaid are required to
be credited against the payment due at the
beginning of the tenth year.
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Amortization . . . . . . . . . . Interest-only payments through year nine;
by the beginning of year ten, 50% of the
original Issue Principal Amount must have
been repaid; the balance is due upon
Maturity.
Collateral for Notes;
Guaranties . . . . . . . . . . . The New Notes will be secured primarily by,
among other things, the following
(collectively, the "Note Collateral"):
(1) The pledge by the Issuer to the Trustee
of the CRC Notes and the CRC
Collateral; and
(2) A pledge of the Issuer's rights in and
to the Collection Account, the
Construction Account, the Sinking Fund
Account and the Equity Collection
Account (each as described in
"Description of the Underlying
Transactions - Construction Account -
Collection, Administrative Expenses,
Sinking Fund and Equity Collection
Accounts") as well as certain other
accounts to be maintained by the
Trustee pursuant to the Indenture, and
all funds held therein.
The New Notes will also be fully and
unconditionally guaranteed by each of CRC-I
and CRC-II on a joint and several basis.
These guaranties will be nonrecourse to the
general partners of each of CRC-I and
CRC-II. One or both guarantors may be
unable to satisfy their obligations under
the guaranties if the guaranties are ever
called upon, which could result in less
than a full recovery under those
circumstances.
CRC-I Note Collateral. . . . . . The CRC-I Note is secured primarily by the
following (collectively, the "CRC-I
Collateral"):
(1) An absolute assignment to the Issuer of
CRC-I's rights as Lessor under the
CRC-I Lease;
(2) A first priority deed of trust in favor
of the Issuer on CRC-I's rights in the
Existing Assets under the Estates For
Years, as acquired; and
(3) A first priority deed of trust in favor
of the Issuer on Foodmaker's
reversionary rights in the Existing
Assets, as acquired.
The CRC-I Note is cross-collateralized with
the CRC-II Collateral.
CRC-II Note Collateral . . . . . The CRC-II Note is secured primarily by the
following (collectively, the "CRC-II
Collateral," and together with the CRC-I
Collateral, the "CRC Collateral").
(1) An absolute assignment to the Issuer of
CRC-II's rights as Lessor under the
CRC-II Lease;
(2) A first priority deed of trust in favor
of the Issuer on CRC-II's rights in the
Construction Assets under the Estates
For Years, as acquired; and
(3) A first priority deed of trust in favor
of the Issuer on Foodmaker's
reversionary rights in the Construction
Assets, as acquired.
The CRC-II Note is cross-collateralized
with the CRC-I Collateral.
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Payments of Principal and
Interest Prior to
Maturity; the Sinking
Fund . . . . . . . . . . . . . . The CRC Notes are interest-only through
year nine with interest payments required
semi-annually as described above. In
addition to the semi-annual interest
payments, CRC-I and CRC-II must pay $25,000
semi-annually through Maturity to fund
certain administrative expenses. Semi-
annual sinking fund payments of $747,402
through year nine, and earnings thereon,
and a special sinking fund payment of
$5,500,000 due the last business day of
December 2002, will be collectively applied
to pay a portion of the principal payment
due at the beginning of year ten. These
sinking fund obligations will be reduced to
the extent of an Early Termination. See
"Description of the Leases - Early
Termination; Lease Modification." All of
these payments are expected to be covered
by the Basic Rent and Special Rent payments
to be made by Foodmaker under the CRC
Leases. See "Description of the Leases -
Rental Rates."
By the beginning of year ten, the
outstanding balance of the Notes must be
reduced to $35,000,000 or less. The
sinking fund will be applied at the
beginning of year ten to reduce the
outstanding debt, and CRC-I and CRC-II will
be obligated to make an additional
principal payment equal to the difference
between $35,000,000 and the balance in the
sinking fund. This additional principal
payment is required to be covered by the
special rent payments and the purchase
price payable under the rejectable offer
required to be made by Foodmaker under the
CRC Leases not less than 120 nor more than
270 days prior to the first business day of
January, 2003 (the "Year Nine Termination
Date") (the "Year Nine Offer"). A failure
to satisfy the Issuer's sinking fund
obligations would constitute an Event of
Default under the Indenture. See
"Description of the Leases - Rejectable
Offer Requirements."
After the payment due at the beginning of
year ten, as described above, CRC-I and CRC-
II are required to make one additional semi-
annual payment on the first business day of
July, 2003 of interest only and $25,000 to
fund certain administrative expenses, and
upon Maturity must pay the remaining
principal balance plus accrued interest
plus a final $25,000 payment for
administrative expenses. These payments
are required to be covered by the Basic
Rent payable by Foodmaker under the CRC
Leases plus the rejectable offer required
to be made by Foodmaker under the CRC
Leases at Maturity (the "Termination Date
Rejectable Offer"). See "Description of
the Leases - Rejectable Offer
Requirements."
Certain Covenants. . . . . . . . The Indenture pursuant to which the New
Notes will be issued restricts, among other
things, the incurrence of additional
indebtedness, the use of proceeds from the
sale and issuance of the Old Notes, the
creation of certain liens, transactions
with affiliates, the engagement in any
business or activity other than that
expressly permitted by the Indenture, in
each case by the Issuer, and the merger or
consolidation of the Issuer or the transfer
of any part of the Trust Estate, except as
expressly permitted by the Indenture. See
"Description of New Notes - Certain
Covenants."
For more complete information regarding the
New Notes, see "Description of New Notes."
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The Underlying Transactions
The following is a summary description of the transactions underlying
the Exchange Offer. On January 5, 1994, in a private placement transaction,
the Issuer issued and sold $70,000,000 aggregate principal amount of Old
Notes. The Issuer used the proceeds from the sale of the Old Notes to
purchase the CRC Notes. The proceeds from the purchase of the CRC Notes were
used by CRC-I and CRC-II to enable each of them to acquire from Foodmaker
estates for years to expire on November 30, 2028 (the "Estates For Years,"
individually, an "Estate For Years") in: (1) in the case of CRC-I, 38
existing Jack In The Box restaurants (the "Existing Assets"), and (2) in the
case of CRC-II, four existing Jack In The Box restaurants and approximately
34 to-be-constructed Jack In The Box restaurants (collectively, the
"Construction Assets") subject to Foodmaker's right of substitution, as
described in "Description of the Leases - Right of Substitution." The
locations of the Existing Assets, including those Existing Assets to which
Foodmaker has not yet acquired fee title (the "Potential Existing Asset")
and the locations of the Construction Assets, including those Construction
Assets to which Foodmaker has not yet acquired fee title (the "Potential
Construction Assets;" individually, a "Potential Construction Asset"), are
identified in "Description of the Underlying Transactions - Schedule of
Properties."
Pursuant to a Note Purchase Agreement between the Issuer and CRC-I, a
portion of the proceeds from the sale of the Old Notes was used to purchase
the CRC-I Note, issued by CRC-I in the principal amount of $30,172,952, for a
purchase price equal to $28,633,100 (the "CRC-I Note Purchase Price").
Pursuant to a Note Purchase Agreement between the Issuer and CRC-II, a
portion of the proceeds from the sale of the Old Notes was used to purchase
the CRC-II Note, issued by CRC-II in the principal amount of $39,827,048, for
a purchase price equal to $37,794,505 (the "CRC-II Note Purchase Price").
The purchase price for each of the CRC Notes has been disbursed in full;
however, a portion of the purchase price for each such note has been held as
collateral security for the Notes by the Trustee acting on behalf of the
Holders of Notes, pursuant to the terms of the Indenture, to be released by
the Trustee to Foodmaker from time to time (a) in the case of the Potential
Existing Asset, as soon as Foodmaker has acquired fee title thereto and
conveyed an Estate For Years therein to CRC-I and all other conditions
contained in the Indenture to the release of the portion of the CRC-I Note
Purchase Price allocable thereto have been satisfied, and (b) in the case of
the Potential Construction Assets, as soon as Foodmaker has acquired fee
title thereto and conveyed an Estate for Years therein to CRC-II and all
other conditions contained in the Indenture to the release of the portion of
the CRC-II Note Purchase Price allocable thereto have been satisfied.
Concurrently with the acquisition by CRC-I of the Estate For Years in
the Existing Assets (other than the Potential Existing Asset), CRC-I leased
such Existing Assets to Foodmaker pursuant to a long-term, triple-net master
lease (the "CRC-I Lease"). Similarly, concurrently with the acquisition by
CRC-II of the Estate For Years in the Construction Assets (other than the
Potential Construction Assets), CRC-II leased such Construction Assets to
Foodmaker pursuant to a long-term, triple-net master lease (the "CRC-II
Lease"). As CRC-I acquires the Estates For Years in the Potential Existing
Assets, upon the acquisition by Foodmaker of the fee interest in the
locations thereof (subject to Foodmaker's right of substitution as it relates
to the Potential Existing Asset, as described in "Description of the Leases
- - Right of Substitution"), the CRC-I Lease will be amended to subject such
Potential Existing Asset to the CRC-I Lease. Likewise, as CRC-II acquires
the Estates For Years in the Potential Construction Assets, upon the
acquisition by Foodmaker of the fee interest in the locations thereof
(subject to Foodmaker's right of substitution as it relates to the Potential
Construction Assets, as described in "Description of the Leases - Right of
Substitution"), the CRC-II Lease will be amended to subject such Potential
Construction Assets to the CRC-II Lease. Each of the CRC Leases will have an
initial term expiring on November 1, 2003 (the "Basic Term").
Since January 5, 1994, Foodmaker has been responsible for rental
payments on all of the Existing Assets (including the Potential Existing
Asset) under the CRC-I Lease regardless of whether CRC-I has acquired the
Estate For Years therein or whether all other conditions to the release of
the portions of the CRC-I Note Purchase Price allocable thereto have been
satisfied. Since January 5, 1994, Foodmaker has also been responsible for
rental payments on each Construction Asset (including the Potential
Construction Assets) under the CRC-II Lease regardless of whether each
Construction Asset has been acquired and/or construction has been completed
by Foodmaker and whether CRC-II has acquired an Estate For Years therein or
whether all other conditions to the release of the portion of the CRC-II Note
Purchase Price allocable thereto have been satisfied. As more fully
described in the "Description of the Underlying
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Transactions," the aggregate payments required to be made by Foodmaker
under the CRC-I Lease and the CRC-II Lease should be sufficient to pay
interest and principal on the Notes by the end of the Basic Term.
The CRC Leases require Foodmaker to make the Year Nine Offer not less
than 120 nor more than 270 days prior to the Year Nine Termination Date and
to purchase from CRC-I and CRC-II the Estates For Years in certain Properties
designated by Foodmaker in the Year Nine Offer in the minimum amount of $12
million (subject to Foodmaker's rights of Early Termination, see "Description
of the Leases - Early Termination; Lease Modification") which amount, when
added to the then existing balance in a sinking fund which Foodmaker is
required to fund on a semi-annual basis and at the end of year nine, pursuant
to the terms of the Leases, would be sufficient to liquidate 50% of the then
outstanding principal balance of the Notes. The CRC Leases also require
Foodmaker to make the Termination Date Rejectable Offer not less than 120 nor
more than 270 days prior to the last day of the Basic Term and to purchase
CRC-I's and CRC-II's Estates For Years in the remaining Properties in an
amount at least equal to the then outstanding principal balance of the Notes.
Said Rejectable Offer amounts will be reduced to the extent there is an Early
Termination, or in the event Foodmaker exercises its option to purchase
CRC-I's or CRC-II's Estate For Years in any of the Properties, in each case
pursuant to the CRC Leases and as described in the "Description of the
Leases." In order for CRC-I or CRC-II to reject either such Rejectable
Offer, CRC-I or CRC-II must deliver to the Trustee the principal balance of
the Notes allocable to the Properties as to which such Rejectable Offer has
been made, less the amount available in the sinking fund. See "Description
of the Leases - Rejectable Offer Requirements."
As collateral security for the CRC-I Note, CRC-I has granted to the
Issuer a security interest in and lien upon the CRC-I Collateral and CRC-II
has granted to the Issuer a security interest in and lien upon the CRC-II
Collateral. Similarly, as collateral security for the CRC-II Note, CRC-II
has granted to the Issuer a security interest in and lien upon the CRC-II
Collateral and CRC-I has granted to the Issuer a security interest in and
lien upon the CRC-I Collateral. The CRC-I Note and the CRC-II Note and the
CRC Collateral therefor has been pledged and assigned to the Trustee for the
benefit of Holders of Notes. In addition, each of CRC-I and CRC-II has
executed and delivered to the Trustee a guaranty of the Notes (the "CRC-I
Guaranty" and the "CRC-II Guaranty," respectively), which guaranties are
nonrecourse to the general partners of each of CRC-I and CRC-II.
Foodmaker owns, operates and franchises the Jack In The Box restaurant
concept. Jack In The Box, with system-wide sales of approximately $1 billion
in fiscal 1993, has restaurants located principally in the Western and
Southwestern United States. In addition, Foodmaker owns approximately 40% of
Family Restaurants, Inc., the operator of 357 full service family restaurants
located primarily in California and parts of the Southwest under the Carrow's
and Coco's formats and 307 full service Mexican restaurants nationwide
operated under the Chi-Chi's, El Torito and Casa Gallardo names at March 27,
1994.
Risk Factors
Prospective purchasers of the New Notes offered hereby should consider
the information set forth under "Risk Factors," as well as the other
information set forth in this Prospectus.
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Transaction Schematic
Narrative of graphical information presented in the Prospectus.
A diagram is presented illustrating the following activities:
Foodmaker, Inc.:
Sale of Estate for Years on Ex. Assets to CRC-I
Sale of Estate for Years on Con. Assets to CRC-II
Semi-Annual Lease Payments to Indenture Trustee
CRC-I Special-Purpose Entity (Ex. Assets) (1)(2):
CRC-I Note sold to Issuer and CRC-I Collateral assigned to Issuer
CRC-I Guaranty provided to Indenture Trustee
10-Year Lease of Ex. Assets to Foodmaker
CRC-II Special-Purpose Entity (Con. Assets) (1)(3):
CRC-II Note sold to Issuer and CRC-II Collateral assigned to Issuer
CRC-II Guaranty provided to Indenture Trustee
10-Year Lease of Con. Assets to Foodmaker
Issuer (1):
Sell Notes to Noteholders
Purchase of CRC-I Note from CRC-I
Purchase of CRC-II Note from CRC-II
Assignment of CRC-I Note, CRC-II Note and Collateral Therefor to
Indendure Trustee
Indenture Trustee:
Semi-Annual Payments of Principal and Interest to Noteholders
Makes Residual Payments to Issuer
Noteholders:
Notes Proceeds Remitted to Issuer
- -----------------------
(1) The Designated Officer is the sole officer of each of these entities or
its corporate general partner. The Designated Officer and the
Independent Director are the directors of each of these entities or its
corporate general partner. See "Description of the Underlying
Transactions - Corporate Governance."
(2) "Ex. Assets" refers to the Existing Assets (including the Potential
Existing Asset).
(3) "Con. Assets" refers to the Construction Assets (including the Potential
Construction Assets).
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RISK FACTORS
In addition to the other information set forth elsewhere in this
Prospectus, prospective investors should carefully consider the following
risk factors.
Consequences of a Foodmaker Bankruptcy
In the event a bankruptcy case is instituted by or against Foodmaker
under Title 11 of the United States Code (the "Bankruptcy Code"), Foodmaker
(assuming that the CRC Leases are treated as true leases as discussed below),
as debtor-in-possession, or its trustee in bankruptcy, would have the right,
subject to bankruptcy court approval, to assume or reject the Leases.
Pending the assumption or rejection of the Leases, it is possible that some
or all of the payments under the Leases may be interrupted or delayed for a
significant period of time. This would interrupt or delay payments on the
Notes. Although the Leases have been entered into in composite form with
respect to each leased Construction Asset and/or leased Existing Asset (a
"Leased Property;" collectively, the "Leased Properties"), it is possible
that Foodmaker, as debtor-in-possession, or its trustee in bankruptcy, would
assert the right to assume the Leases with respect to certain of such Leased
Properties while rejecting the Leases with respect to other Leased
Properties. Alternatively, Foodmaker, as debtor-in-possession, or its
trustee in bankruptcy, might assert a right to treat the obligations of
Foodmaker to make the Rejectable Offer during year nine and at the end of the
Basic Term of the Leases, as in the nature of a purchase obligation separate
from its lease obligations and which could be assumed or rejected in
bankruptcy separately from the lease obligations.
If any Lease were rejected, payments thereunder would terminate, leaving
the applicable Lessor without cash flow to make payments on the Notes. In
the event a Lease was rejected, the applicable Lessor (and by virtue of the
Indenture, the Trustee) would have an administrative priority claim for the
unpaid post-bankruptcy rental value of the Leased Properties used by the
Lessee and an unsecured non-priority claim for damages against Foodmaker's
bankruptcy estate but, under Section 502(b)(6) of the Bankruptcy Code, such
claim would be limited to an amount equal to the rent reserved under such
Lease, without acceleration, for the greater of one year or 15% (not to
exceed three years) of the remaining term of the Lease (plus pre-bankruptcy
rent already due but unpaid); if either Rejectable Offer obligation is not
treated as a separate obligation from the applicable Lease, such limitation
could also apply to the damages recoverable for a breach of such Rejectable
Offer obligation. By contrast, this limitation under Section 502(b)(6) would
not apply to holders of debt securities issued by Foodmaker. Therefore, if
Foodmaker were the subject of proceedings under the Bankruptcy Code and any
Lease were rejected, the damages that could be claimed for rejection, even
assuming full recovery on such claim (which may not occur), would not be
sufficient to repay the Notes.
If Foodmaker assumes the Leases, it would be required to cure or provide
adequate assurances that it would promptly cure any defaults, compensate or
provide adequate assurances that it will promptly compensate for any actual
pecuniary loss caused by such default, and provide adequate assurances of
future performance. Foodmaker also may have the right in a bankruptcy to
assume and assign the Leases without the applicable Lessor's consent, and be
relieved of liability therefor, but only if adequate assurance of future
performance by the assignee is provided.
Moreover, it is possible that a bankruptcy court could treat the
transactions described herein including the Leases not as a leasing
transaction but instead as a secured loan to Foodmaker, in which case the
bankruptcy court could permit Foodmaker to use or dispose of the Leased
Properties, subject to providing "adequate protection" (such as a lien on,
substitute collateral) to the applicable Lessor without the applicable
Lessor's consent and/or the consent of the Trustee and/or the Holders of
Notes, and to modify and to adversely affect the rights of the applicable
Lessor and/or the Trustee and/or the Holders of Notes, including reduction of
the secured amount and modification of the timing of payments that would
otherwise have been payable by Foodmaker under the Leases (in such event,
however, the above-described limitation under Section 502(b)(6) of the
Bankruptcy Code would not be applicable) and limitations on damages
recoverable by a landlord for a tenant's breach of a lease. The
characterization of the transaction as a secured loan to Foodmaker could also
arise under applicable non-bankruptcy law. In case the transaction is viewed
as a secured loan, the remedies available to the Lessors would be those of a
secured creditor, not a landlord. If the applicable Lessor is treated as a
secured creditor without a power of sale, the only remedy may be to foreclose
judicially even in states which permit non-judicial foreclosure.
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In the event a bankruptcy case is instituted by or against Foodmaker
under the Bankruptcy Code, Foodmaker, as debtor-in-possession, or its trustee
in bankruptcy would also have the right, subject to bankruptcy court
approval, to reject the Estates For Years in the Leased Properties granted to
the applicable Lessor in which case the applicable Lessor would have an
election either to pursue an unsecured nonpriority claim for damages against
Foodmaker's bankruptcy estate or to remain in possession of the Leased
Properties for the balance of the term of the Estates For Years. It is not
certain that the Leases would survive such a rejection, in which case
payments on the Notes could be discontinued. In addition, it is possible
that Foodmaker, as debtor-in-possession, or its trustee in bankruptcy, would
assert ownership interests in the various accounts established pursuant to
the Indenture and that Foodmaker would have the right to use such accounts
subject to providing adequate protection to the Trustee and/or the Holders of
Notes.
The occurrence of any of the foregoing events may have a material
adverse effect on the Holders of Notes.
Management of the Properties Following Termination of the Leases
The transaction documents from the underlying transactions do not
include obligations on the part of Foodmaker to continue to operate the
Leased Properties on behalf of the Issuer, CRC-I or CRC-II as Jack In The Box
restaurants after any termination of the Leases, nor are the Trustee or the
Holders of Notes granted any special franchise, license or similar
arrangements to use the Jack In The Box name or other trademarks or to
receive any other services from Foodmaker in connection with the operation of
a restaurant chain.
New Locations
At June 30, 1994, 20 of the Properties involved or expected to be
involved in the underlying transactions are Properties on which construction
of a Jack In The Box restaurant has not yet been completed or, in some cases,
started. The terms of the Leases do not require Foodmaker to begin or to
complete construction on such Properties by any specified date. In the event
a default was declared on the Notes and the Trustee was required to foreclose
on such Properties prior to the commencement or completion of the
contemplated construction, the value of the Properties held by the Trustee as
security for the Notes likely would be adversely affected by their incomplete
state. Difficulties or delays related to the construction process with
respect to one or more of such Properties could extend the period during
which these Properties are subject to such risk. In addition, the lack of
operating history of some of the restaurants could adversely affect the
market value of the related Properties.
Food Service Industry
Food service businesses are often affected by changes in consumer
tastes, national, regional, and local economic conditions, demographic
trends, traffic patterns, and the type, number and location of competing
restaurants. Multi-unit food service chains such as Foodmaker can also be
substantially adversely affected by publicity resulting from food quality,
illness, injury, or other health concerns or operating issues stemming from
one store or a limited number of stores. Dependence on frequent deliveries
of fresh produce also subjects food service businesses such as Foodmaker to
the risk that shortages or interruptions in supply caused by adverse weather
or other conditions could adversely affect the availability, quality and cost
of ingredients. In addition, factors such as inflation, increased food,
labor, and employee benefits costs, regional weather conditions, and the
unavailability of experienced management and hourly employees may also
adversely affect the food service industry in general and Foodmaker's results
of operations and financial condition in particular.
Lack of Public Market
Although Old Notes are eligible for trading in the Private Offerings,
Resales and Trading through Automated Linkages Market ("PORTAL"), there is
currently no established trading market for New Notes, and the Issuer has
taken no steps and does not intend to take steps to facilitate any public
trading market for New Notes. There can be no assurance that a market for
New Notes will develop. If a market for New Notes should develop, no
assurance can be given as to the liquidity of any such market, and New Notes
could trade at a substantial discount from their initial issue price.
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THE EXCHANGE OFFER
Purpose of the Exchange Offer
The Exchange Offer is designed to provide Holders of Old Notes with an
opportunity to acquire New Notes which, unlike the Old Notes, will be freely
tradable at all times, subject to any restrictions on transfer imposed by
state securities or "blue sky" laws; provided, however, that the Holder of
Old Notes is (i) not an affiliate or promoter of the Issuer within the
meaning of the Securities Act, (ii) represents that the New Notes are being
acquired in the ordinary course of business of such holder, and (iii) is not
engaged in, and does not intend to engage in, a distribution of the New
Notes.
The outstanding Old Notes, in the aggregate principal amount of
$70 million, were originally issued and sold on January 5, 1994. The
original sale to the Initial Purchasers was not registered under the
Securities Act in reliance upon the exemption provided by Section 4(2) of the
Securities Act. The Old Notes may not be reoffered, resold, or transferred
other than pursuant to a registration statement filed pursuant to the
Securities Act or unless an exemption from the registration requirements of
the Securities Act is available.
Pursuant to Rule 144 promulgated under the Securities Act, Old Notes may
generally be resold (a) commencing two years after the date of original
issuance, in an amount up to, for any three-month period, the greater of 1%
of the Old Notes then outstanding or the average weekly trading volume of the
Old Notes during the four calendar weeks immediately preceding the filing of
the required notice of sale with the Commission and (b) commencing three
years after the date of original issuance, in any amount and otherwise
without restriction by a Holder of Old Notes who is not, and has not been for
the preceding 90 days, an affiliate of the Issuer. The Old Notes are
eligible for trading on PORTAL, and may be resold to certain Qualified
Institutional Buyers pursuant to Rule 144A promulgated under the Securities
Act. Certain other exemptions may also be available under other provisions
of the federal securities laws for the resale of the Old Notes.
In connection with the original sale of the Old Notes, the Issuer
entered into the Registration Rights Agreement, pursuant to which it agreed
to file with the Commission a registration statement covering the exchange by
the Issuer of New Notes for Old Notes in a transaction designed to provide
Holders of Old Notes with identical New Notes that, with certain limitations,
will be freely tradable. The Registration Rights Agreement provides that the
Issuer, Foodmaker, CRC-I and CRC-II will (i) cause to be filed with the
Commission as soon as practicable after the date thereof, but in no event
later than May 4, 1994, a registration statement with respect to an offer by
the Issuer to each Holder of Old Notes of the opportunity to exchange their
Old Notes for New Notes, and (ii) use their best efforts to cause (A) such
registration statement to be declared effective, and (B) New Notes to be
delivered to the Registrar under the Indenture for delivery to all Holders of
Old Notes who have tendered Old Notes pursuant to an offer by the Issuer to
each Holder of Old Notes of the opportunity to exchange their Old Notes for
New Notes on or prior to September 4, 1994. The Issuer, Foodmaker, CRC-I and
CRC-II are required to keep the registration statement relating to the
Exchange Offer continuously effective for a period of not less than the
period required under applicable federal and state securities laws; provided,
however, that (i) the Exchange Offer is required to remain open, and (ii) the
registration statement relating to the Exchange Offer is required to remain
continuously effective for a period of at least 20 consecutive business days.
In addition, under certain circumstances the Issuer may be required to file a
shelf registration statement covering the Old Notes and to use its best
efforts to cause such registration statement to be declared effective.
In the event that: (a) the Registration Statement or, if required, a
shelf registration statement is not filed on or prior to May 4, 1994 (the
"Filing Date"); (b) the Exchange Offer is not consummated on or prior to
September 4, 1994 (the "Consummation Date") or the shelf registration
statement, if required, is not declared effective on or prior to August 4,
1994 (the "Effective Date"); (c) in the case of a shelf registration
statement, if required, the Commission issues a stop order suspending the
effectiveness of such shelf registration statement prior to the date which is
one year from the date on which such shelf registration statement was
declared effective; or (d) any of the Issuer, Foodmaker, CRC-I or CRC-II, for
the third time, notifies or is required to give notice of the happening of
any event that makes any statement in the shelf registration statement, if
required, untrue in any material respect or that requires the making of any
changes in such shelf registration statement, if any, so that it will not
contain any untrue statement of material fact or omit to state any material
fact required to be stated therein, then the Lessee will be required to pay,
or cause to be paid, in addition to amounts otherwise due under the Indenture
and the Old Notes, as liquidated damages, and not as a penalty, to each
Holder of Notes, an additional amount equal to (a) for each weekly period
beginning on the Filing Date and until the
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Consummation Date or the Effective Date, as applicable, $.05 per week per
$1,000 principal amount of the Old Notes held by such holder and (b) for
each weekly period commencing on the Consummation Date or the Effective
Date, as applicable, or thereafter, an additional amount equal to $.10
per week per $1,000 principal amount of Old Notes held by such holder;
provided, however, that such liquidated damages will, in each case, cease
to accrue on the date on which the Issuer's obligations with respect to
the Exchange Offer or the shelf registration statement, as applicable,
are satisfied.
The staff of the Division of Corporation Finance of the Commission has
issued certain interpretive letters that concluded, in circumstances similar
to those contemplated by the Exchange Offer, that new debt securities issued
in a registered exchange for outstanding debt securities, which new
securities are intended to be substantially identical to the securities for
which they are exchanged, may be offered for resale, resold and otherwise
transferred by the holders thereof (other than any holder that is an
affiliate of the issuer or a broker-dealer) without compliance with the
registration and prospectus delivery provisions of the Securities Act,
provided that the new securities are acquired in the ordinary course of such
holders' business and such holders have no arrangement with any person to
participate in the distribution of the new securities. See "- Resales of New
Notes." The Issuer has not requested or obtained an interpretive letter from
the staff of the Division of Corporation Finance with respect to this
Exchange Offer. By delivering the Letter of Transmittal, a Holder of Old
Notes tendering Old Notes for exchange will represent and warrant to the
Issuer that the Holder of Old Notes is acquiring the New Notes in the
ordinary course of its business and that the Holder of Old Notes is not
engaged in, and does not intend to engage in, a distribution of the New
Notes. Any Holder of Old Notes using the Exchange Offer to participate in a
distribution of the New Notes to be acquired in the Exchange Offer must
comply with the registration and prospectus delivery requirements of the
Securities Act in connection with a secondary resale transaction. Holders of
Old Notes who do not exchange their Old Notes pursuant to this Exchange Offer
will continue to hold Old Notes that are subject to restrictions on transfer.
It is expected that the New Notes will be freely transferable by the
Holders of New Notes subject to the limitations described in the immediately
preceding paragraph and in "- Resales of New Notes." Sales of New Notes
acquired in the Exchange Offer by Holders of New Notes who are "affiliates"
of the Issuer within the meaning of the Securities Act will be subject to
certain limitations on resale under Rule 144 of the Securities Act. Such
persons will only be entitled to sell New Notes in compliance with the volume
limitations set forth in Rule 144, and sales of New Notes by affiliates will
be subject to certain Rule 144 requirements as to the manner of sale, notice
and the availability of current public information regarding the Issuer. The
foregoing is a summary only of Rule 144 as it may apply to affiliates of the
Issuer. Any such persons must consult their own legal counsel for advice as
to any restrictions that might apply to the resale of their New Notes.
The New Notes otherwise will be identical in all respects (including
interest rate, maturity, security and restrictive covenants) to the Old Notes
for which they may be exchanged pursuant to this Exchange Offer.
Terms of the Exchange Offer
Upon the terms and subject to the conditions set forth herein and in the
accompanying Letter of Transmittal, the Issuer will exchange $50,000
principal amount of New Notes for each $50,000 principal amount of its
outstanding Old Notes. New Notes will be issued only in integral multiples
of $50,000 to each tendering Holder of Old Notes whose Old Notes are accepted
in the Exchange Offer.
The New Notes will bear interest from and including July 1, 1994 (the
day after the last date for which interest will have been paid on the Old
Notes prior to the exchange). Accordingly, Holders of Old Notes who receive
New Notes in exchange for Old Notes will forego accrued but unpaid interest
on their exchanged Old Notes for the period from and including July 1, 1994
to the date of exchange, but will be entitled to such interest under the New
Notes.
As of July 11, 1994, $70,000,000 aggregate principal amount of Old
Notes was outstanding. This Prospectus and the Letter of Transmittal are
being sent to all registered Holders of Old Notes. Tendering Holders of Old
Notes will not be required to pay brokerage commissions or fees or, subject
to the instructions in the Letter of Transmittal, transfer taxes with respect
to the exchange of Old Notes pursuant to the Exchange Offer. Foodmaker will
pay all charges and expenses, other than certain transfer taxes which may be
imposed, in connection with the Exchange Offer. See "- Payment of Expenses."
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Holders of Old Notes do not have any appraisal or dissenters' rights
under the Delaware General Corporation Law in connection with the Exchange
Offer.
Expiration Date; Extensions; Termination
The Exchange Offer will expire at midnight, New York City time, on
August 26, 1994 (the "Expiration Date"), subject to extension by the
Issuer by notice to the Exchange Agent as herein provided. The Issuer
reserves the right to extend the Exchange Offer at its discretion, in which
event the term "Expiration Date" shall mean the time and date on which the
Exchange Offer as so extended shall expire. The Issuer shall notify the
Exchange Agent of any extension by oral or written notice prior to 9:00 A.M.,
New York City time, on the next business day after the previously scheduled
Expiration Date. The rights reserved by the Issuer in this paragraph are in
addition to the Issuer's rights set forth below under the caption "-
Conditions to the Exchange Offer."
Procedures for Tendering
The acceptance by Holders of Old Notes of the Exchange Offer pursuant to
one of the procedures set forth below will constitute an agreement between
such Holder of Old Notes and the Issuer in accordance with the terms and
subject to the conditions set forth herein and in the Letter of Transmittal.
To be tendered effectively, the Old Notes, together with the properly
completed Letter of Transmittal (or facsimile thereof), executed by the
registered Holder of Old Notes, and any other documents required by the
Letter of Transmittal, must be received by the Exchange Agent at the address
set forth below prior to midnight, New York City time, on the Expiration
Date. LETTERS OF TRANSMITTAL AND OLD NOTES SHOULD NOT BE SENT TO THE ISSUER.
Signatures on a Letter of Transmittal must be guaranteed unless the Old
Notes tendered pursuant thereto are tendered (i) by a registered Holder of
Old Notes who has not completed the box entitled "Special Issuance and
Delivery Instructions" on the Letter of Transmittal or (ii) for the account
of any firm that is a member of a registered national securities exchange or
a member of the National Association of Securities Dealers, Inc. or a
commercial bank or trust company having an office in the United States (an
"Eligible Institution"). In the event that signatures on a Letter of
Transmittal are required to be guaranteed, such guarantee must be by an
Eligible Institution.
If the Letter of Transmittal is signed by a person other than a
registered Holder of Old Notes, such Old Note must be endorsed or accompanied
by appropriate bond powers, in either case signed exactly as the name or
names of such registered holder or holders appear on the Old Notes. If the
Letter of Transmittal or any Old Notes or bond powers are signed by trustees,
executors, administrators, guardians, attorneys-in-fact, officers of
corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and, unless waived by the Issuer,
proper evidence satisfactory to the Issuer of their authority to so act must
be submitted.
All questions as to the validity, form, eligibility (including time of
receipt) and acceptance of tendered Old Notes will be resolved by the Issuer,
whose determination will be final and binding. The Issuer reserves the
absolute right to reject any or all tenders that are not in proper form or
the acceptance of which would, in the opinion of counsel for the Issuer, be
unlawful. The Issuer also reserves the right to waive any irregularities or
conditions of tender as to particular Old Notes. The Issuer's interpretation
of the terms and conditions of the Exchange Offer (including the instructions
in the Letter of Transmittal) will be final and binding. Unless waived, any
irregularities in connection with tenders must be cured within such time as
the Issuer shall determine. Neither the Issuer nor the Exchange Agent shall
be under any duty to give notification of defects in such tenders or shall
incur liabilities for failure to give such notification. Tenders of Old
Notes will not be deemed to have been made until such irregularities
have been cured or waived. Any Old Notes received by the Exchange Agent that
are not properly tendered and as to which the irregularities have not been
cured or waived will be returned by the Exchange Agent to the tendering
Holder of Old Notes, unless otherwise provided in the Letter of Transmittal,
as soon as practicable following the Expiration Date. The Issuer's
acceptance for payment of Old Notes tendered pursuant to the Exchange Offer
will constitute a binding agreement between the tendering person and the
Issuer upon the terms and subject to the conditions of the Exchange Offer.
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THE METHOD OF DELIVERY OF OLD NOTES AND OTHER DOCUMENTS TO THE EXCHANGE
AGENT IS AT THE ELECTION AND RISK OF THE HOLDER OF OLD NOTES, BUT IF DELIVERY
IS BY MAIL IT IS SUGGESTED THAT THE MAILING BE MADE SUFFICIENTLY IN ADVANCE
OF THE EXPIRATION DATE TO PERMIT DELIVERY TO THE EXCHANGE AGENT BEFORE THE
EXPIRATION DATE.
Guaranteed Delivery Procedures
Holders of Old Notes who wish to tender their Old Notes and (i) whose
Old Notes are not immediately available, or (ii) who cannot deliver their Old
Notes, the Letter of Transmittal or any other required documents to the
Exchange Agent prior to the Expiration Date, may effect a tender if:
(a) The tender is made through an Eligible Institution (as defined in
the Indenture);
(b) Prior to the Expiration Date, the Exchange Agent receives from such
Eligible Institution a properly completed and duly executed Notice of
Guaranteed Delivery (by facsimile transmission, mail or hand delivery)
setting forth the name and address of the Holder of Old Notes, the
certificate number or numbers of such Old Notes and the principal amount of
Old Notes tendered, stating that the tender is being made thereby and
guaranteeing that, within five New York Stock Exchange trading days after the
Expiration Date, the Letter of Transmittal (or facsimile thereof) together
with the certificate(s) representing the Old Notes and any other documents
required by the Letter of Transmittal will be deposited by the Eligible
Institution with the Exchange Agent; and
(c) Such properly completed and executed Letter of Transmittal (or
facsimile thereof), as well as the certificate(s) representing all tendered
Old Notes in proper form for transfer and all other documents required by the
Letter of Transmittal are received by the Exchange Agent within five New York
Stock Exchange trading days after execution of the Notice of Guaranteed
Delivery.
Upon request of the Exchange Agent, a Notice of Guaranteed Delivery will
be sent to Holders of Old Notes who wish to tender their Old Notes according
to the guaranteed delivery procedures set forth above.
Conditions to the Exchange Offer
If, prior to the consummation of the Exchange Offer, (i) any of the
Issuer, Foodmaker, CRC-I or CRC-II determines, based on a written opinion of
independent counsel provided to the Trustee, that (A) the New Notes would
not, upon receipt, be transferable by each Holder of New Notes without
restriction under the Securities Act and the Exchange Act and without
material restrictions under applicable "blue sky" or state securities laws
(provided that such Holder of New Notes is not an affiliate of any of the
Issuer, Foodmaker, CRC-I or CRC-II, that such New Notes are acquired in the
ordinary course of such Holder of New Notes and such Holder of New Notes has
no arrangement with any person to participate in the distribution of such New
Notes), (B) the interests of the Holders of Old Notes, taken as a whole,
would be materially adversely affected by the consummation of an exchange
offer, or (C) the Commission is unlikely to permit the consummation of an
exchange offer, or (ii) the holders of at least a majority of the then
outstanding aggregate principal amount of the Old Notes request that the
Issuer, Foodmaker, CRC-I and CRC-II abstain from consummating an exchange
offer based upon a written opinion of independent counsel provided to the
Issuer, Foodmaker, CRC-I and CRC-II to the effect that either (A) the
participation of such Holders of Old Notes in an exchange offer is not
legally permitted, or (B) a court decision or administrative action may be
reasonably expected to have a material adverse effect on such Holders of Old
Notes in the event such holders participate in an exchange offer, (iii) a
request is made by any Holder of Old Notes for, and the Lessee fails to
deliver by the later of (x) the fifteenth day following such request or
(y) the fifteenth day following the Filing Date, an opinion of counsel
reasonably acceptable to such Holder of Old Notes that the exchange of Old
Notes for New Notes pursuant to the Exchange Offer will be a tax-free
transaction for the tendering Holders of Old Notes, or (iv) an exchange
offer is not consummated prior to September 5, 1994, then the Issuer must
promptly deliver to the Holders of Old Notes and the Trustee notice thereof
(the "Exchange Offer Termination Notice") and must thereafter, pursuant to
the Registration Rights Agreement, file with the Commission, and obtain the
effectiveness of, a shelf registration statement pursuant to which the Old
Notes may be resold by the holders thereof under the Securities Act. If
such shelf registration statement is not filed on or prior to the Filing
Date or is not declared effective by the Commission on or prior to the
Effective Date, then the Issuer will be obligated to pay to Holders of Old
Notes the liquidated damages
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described above under "- Purpose of the Exchange Offer." No affirmative
conditions to the Exchange Offer remain to be satisfied or waived prior
to the consummation of the Exchange Offer.
Acceptance of Old Notes for Exchange; Delivery of New Notes
Upon the terms and subject to the conditions of the Exchange Offer, the
Issuer will accept all Old Notes validly tendered prior to midnight, New York
City time, on the Expiration Date. The Issuer will deliver New Notes in
exchange for Old Notes promptly following the Expiration Date.
For purposes of the Exchange Offer, the Issuer shall be deemed to have
accepted validly tendered Old Notes when, as and if the Issuer has given oral
or written notice thereof to the Exchange Agent. The Exchange Agent will act
as agent for the tendering Holders of Old Notes for the purpose of receiving
the New Notes. Under no circumstances will interest be paid by the Issuer or
the Exchange Agent by reason of any delay in making such payment or delivery.
In all cases, delivery of New Notes in exchange for Old Notes tendered
and accepted for exchange pursuant to the Exchange Offer will be made only
after timely receipt by the Exchange Agent of (i) certificates for such Old
Notes or timely confirmation (a "Book-Entry Confirmation") of the book-entry
transfer of the Old Notes into the Exchange Agent's account at The Depositary
Trust Company (the "Book-Entry Transfer Facility"), pursuant to the
procedures set forth in "Procedures for Tendering" above, (ii) the Letter of
Transmittal (or facsimile thereof), properly completed and duly executed,
with any required signature guarantees, or an Agent's Message in connection
with a book-entry transfer, and (iii) any other documents required by the
Letter of Transmittal.
If any tendered Old Notes are not accepted for exchange because of an
invalid tender, the occurrence of certain other events set forth herein or
otherwise, any such unaccepted Old Notes will be returned, at the Issuer's
expense, to the tendering Holder of Old Notes thereof as promptly as
practicable after the expiration or termination of the Exchange Offer.
Withdrawal Rights
Tenders of Old Notes made pursuant to the Exchange Offer are irrevocable
and may not be withdrawn.
Exchange Agent
State Street Bank and Trust Company (telephone (617) 664-5539) has been
appointed as Exchange Agent for the Exchange Offer. All correspondence in
connection with the Exchange Offer and the Letter of Transmittal should be
addressed to the Exchange Agent as follows:
By Hand: By Mail: By Overnight By Facsimile
State Street Bank State Street Bank Express:
and and State Street Bank (617) 664-5784
Trust Company Trust Company and
Corporate Trust Corporate Trust Trust Company
Window, 4th Floor Department Corporate Trust
Two International P.O. Box 778 Department
Place Boston, Two International
Boston, Massachusetts Place
Massachusetts 02102 Boston,
02110 Attn: Nancy Massachusetts
Attn: Nancy Bowker 02110
Bowker Attn: Nancy
Bowker
Requests for additional copies of the Prospectus or the Letter of
Transmittal should be directed to the Exchange Agent or the Issuer.
Payment of Expenses
Foodmaker will reimburse the Exchange Agent for its reasonable
out-of-pocket expenses in connection with the Exchange Offer. Foodmaker will
also pay all transfer taxes, if any, applicable to the exchange of Old Notes
pursuant to the Exchange Offer. If, however, New Notes, or substitute Old
Notes for principal amounts not exchanged, are to be delivered to, or are to
be registered or issued in the name of, any person other than the registered
Holder of Old Notes tendered hereby, or if tendered Old Notes are registered
in the name of any person other than the person signing the Letter
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of Transmittal, or if a transfer tax is imposed for any reason other than the
exchange of Old Notes pursuant to the Exchange Offer, the amount of any such
transfer taxes (whether imposed on the registered Holder of Old Notes or any
other person) will be payable by the tendering Holder of Old Notes. If
satisfactory evidence of payment of such taxes or exemption therefrom is not
submitted herewith, the amount of such transfer taxes will be billed directly
to such tendering Holder of Old Notes.
Foodmaker has not retained any dealer-manager or similar agent in
connection with the Exchange Offer and will not make any payments to brokers,
dealers or others for soliciting acceptances of the Exchange Offer.
Accounting Treatment
The New Notes will be recorded at the same carrying value as the Old
Notes, which is the principal amount, as reflected in the Issuer's accounting
records on the date of the exchange. Accordingly, no gain or loss for
accounting purposes will be recognized. The expenses of the Exchange Offer
will be capitalized by Foodmaker for accounting purposes.
Resales of New Notes
With respect to resales of New Notes, based on interpretive letters
previously issued by the staff of the Division of Corporation Finance of the
Commission to third parties, the Issuer believes that the New Notes issued
pursuant to the Exchange Offer may be offered for resale, resold and
otherwise transferred by any Holder of New Notes, without complying with the
registration and prospectus delivery provisions of the Securities Act,
provided that such holder (i) is not an "affiliate" or "promoter" (as such
terms are defined in Rule 405 under the Securities Act) of the Issuer,
(ii) is not participating in a distribution of the New Notes to be received
in the Exchange Offer, (iii) is not, except as noted below, a broker-dealer
and (iv) is acquiring the New Notes in the ordinary course of such holder's
business. Based on the prior interpretive letters, no broker-dealer may
resell or otherwise transfer New Notes issued pursuant to the Exchange Offer
without complying with the registration requirements of the Securities Act,
unless (a) such broker-dealer is holding Old Notes only as nominee, or
(b)(i) such broker-dealer acquired the Old Notes for its own account as a
result of market-making or other trading activities and undertakes to satisfy
certain conditions consistent with the requirements of the Securities
Act, including the delivery of a prospectus which contains a plan
of distribution with respect to such resale transactions (such plan of
distribution need not name the broker-dealer or disclose the amount of New
Notes held by the broker-dealer), and (ii) such broker-dealer has not entered
into any arrangement or understanding with the Issuer or an affiliate of the
Issuer to distribute the New Notes received pursuant to the Exchange Offer.
If any Holder of Old Notes does not satisfy any of the foregoing conditions,
such holder may not be entitled to rely on the previously issued interpretive
letters. If any other Holder of Old Notes is deemed to be an "underwriter"
within the meaning of the Securities Act or acquires New Notes in the
Exchange Offer for the purpose of distributing or participating in a
distribution of the New Notes, such holder must comply with the registration
and prospectus delivery requirements of the Securities Act in connection with
a secondary resale transaction, unless an exemption from registration is
otherwise available. By tendering Old Notes into the Exchange Offer,
registered Holders of Old Notes represent to the Issuer, among other things,
that (a) they are not "affiliates" or "promoters" of the Issuer (as those
terms are defined in Rule 405 under the Securities Act), (b) they are not
engaged in, do not intend to engage in, and have no arrangement or
understanding with any person to participate in, a distribution of the New
Notes to be issued in the Exchange Offer, and (c) are acquiring the New Notes
in the ordinary course of business.
Each broker-dealer that receives New Notes for its own account in
exchange for Old Notes must acknowledge that it will deliver a prospectus in
connection with any resale of such New Notes.
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USE OF PROCEEDS BY FOODMAKER
Net proceeds received by Foodmaker from the sale of the Estates for
Years in the Existing Assets and Construction Assets were $66,427,605
($70,000,000 face amount less $1,092,000 in bond discount and fees and
expenses paid at closing totaling $2,480,395). The net proceeds will be
utilized for the acquisition and construction of Jack In The Box restaurants
and related legal and other expenses.
SELECTED UNAUDITED PRO FORMA FINANCIAL DATA
The following selected unaudited pro forma estimate of operations of the
Issuer for the twelve-month period commencing on the date of and giving
effect to the following transactions and events: (i) the sale on January 5,
1994 of $70 million aggregate principal amount of Notes for approximately
$68.9 million; (ii) the concurrent purchase of CRC Notes with an aggregate
principal amount of $70 million for approximately $66.4 million; (iii) the
incurrence of approximately $2.5 million of deferred finance charges; and
(iv) the recordation of interest income on the CRC Notes and interest expense
on the Notes of approximately $7.2 million each, including net amortization
of the original issue discount and deferred finance charges, as applicable,
of approximately $.4 million.
The pro forma financial data presented herein do not purport to
represent what the Issuer's results of operations would have been had such
transactions in fact occurred at the beginning of the periods or to project
the Issuer's results of operations in any future period. The Selected
Unaudited Pro Forma Financial Data should be read in conjunction with the
Financial Statements, including the notes thereto, included herein.
UNAUDITED PRO FORMA ESTIMATE OF OPERATIONS
For the Initial Twelve Month Period
Estimated Revenues:
Interest income . . . . . . . . . . . . . . . . . . . $7,158,000
Estimated Expenses:
Interest expense. . . . . . . . . . . . . . . . . . . 7,158,000
---------
Pro forma estimated net earnings . . . . . . . . . . . . $ --
=========
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Results of Operations
The Issuer is a special purpose corporation, incorporated in the State
of Delaware in December 1993 for the benefit of Foodmaker in connection with
the transactions described herein. CRC-I and CRC-II are limited
partnerships, organized in December 1993 under the laws of the State of the
Commonwealth of Massachusetts for the benefit of Foodmaker in connection with
the underlying transactions. See "Description of the Underlying
Transactions." Operations commenced on January 5, 1994 with the issuance and
sale, in a private placement transaction, of $70 million aggregate principal
amount of Old Notes. The net sales proceeds from the sale of the Old Notes
were approximately $68.9 million, which proceeds were used to purchase the
CRC-I Note, issued in the principal amount of approximately $30.2 million,
and the CRC-II Note, issued in the principal amount of approximately
$39.8 million, for approximately $66.4 million (the total acquisition cost of
the Estates For Years purchased by CRC-I and CRC-II). The closing costs paid
by the Issuer were approximately $2.5 million. The Notes are due November 1,
2003, payable interest only at the rate of 9.75% per annum semi-annually on
the first business day of each January and July and continuing through the
first business day of July 2003. A mandatory prepayment of 50% of the
original balance of the Notes is due on the first business day of January
2002. The CRC Notes' payment and interest terms are equivalent to and
structured to coincide with the Notes such that funds will be available to
make payments on the Notes. In addition, the CRC Notes require semi-annual
sinking fund payments to a trustee of approximately $.7 million, which will
be utilized to partially fund the 50% prepayment due in January 2002. The
proceeds of the CRC Notes (of which approximately 43% relates to CRC-I and
57% to CRC-II) have been and will be used by CRC-I and CRC-II to purchase
Estates For Years in various Foodmaker restaurant properties and, in a
transaction accounted for as a financing, CRC-I and CRC-II will lease back
such properties to Foodmaker on terms which will provide the funds required
to make the necessary payments on CRC Notes. The Notes are secured by, among
other things, the CRC Notes, the CRC leases to Foodmaker, first priority
liens on the Leased Properties and any sinking fund or other amounts held in
trust.
Since the Issuer has equivalent notes receivable (the CRC Notes) and
notes payable (the Notes), including face amounts, net proceeds and stated
interest rates, interest income and expense should equate to approximately
$6.8 million annually, plus amortization of approximately $.4 million of
original issue discount and, as applicable, deferred finance charges on the
respective notes. For the first quarter, slightly less than one-fourth of
the annual amounts are reflected as interest income and expense, since the
Notes were issued a few days after the beginning of the quarter. The Issuer
has elected to be taxed as a Sub-chapter S Corporation under the Code and, as
a result, has no federal income tax liability.
CRC-I and CRC-II reflect the financing lease obligations of Foodmaker
(the CRC Leases) as 9.75% notes receivable and have equivalent notes payable
to the Issuer (the CRC Notes), with face amounts and net proceeds,
respectively, of approximately $30.2 million and approximately $28.7 million
for CRC-I and approximately $39.8 million and approximately $37.8 million for
CRC-II. As a result, interest income and expense, inclusive of amortization
of approximately $.2 million of original issue discount, will each be
approximately $2.9 million for CRC-I and approximately $3.9 million for
CRC-II, respectively. For the first quarter, slightly less than one-fourth
of the annual amounts are reflected as interest income and expense, since the
Old Notes were issued a few days after the beginning of the quarter.
Liquidity and Capital Resources
The Issuer's only source of liquidity is collection of scheduled
payments on the CRC Notes, which, in turn, are dependent upon Foodmaker's
payment on the CRC Leases. The basic amounts payable on the CRC Notes are
equal to, and timed to coincide with, the payments required to be made on the
Notes. The CRC Notes also require sinking fund payments to the Trustee,
which, in addition to the value of the Leased Properties, should provide an
increasing amount of security through year nine of the Notes. If Foodmaker
were to fail to make payments to CRC-I and CRC-II on the financing Leases,
CRC-I and CRC-II would be unable to make payments on the CRC Notes. The
Issuer would then be required to initiate proceedings to gain possession of,
liquidate or obtain tenants for the Leased Properties. Although the Issuer
believes that the value of the Leased Properties and other collateral will be
adequate to secure the Notes, there can be no assurance that such collateral
will continue to maintain its value or that it can be liquidated in
sufficient amounts or at the times required to satisfy all scheduled
principal and interest payments.
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BUSINESS
The Issuer
General
The Issuer is a special purpose corporation, incorporated in the State
of Delaware on December 22, 1993 for the benefit of Foodmaker in connection
with the transactions described herein. See "Description of the Underlying
Trans-actions." The purposes of the Issuer are limited to: (i) issuing and
selling the Notes, as principal and as agent for CRC-I and CRC-II, and
entering into the Indenture in connection therewith (the "Financing");
(ii) acquiring, owning and holding obligations of CRC-I and CRC-II, accounts,
investments and other property to be pledged as collateral for the Notes and
pledging such property as collateral for the Notes; and (iii) engaging in any
other activities that are necessary, suitable, or convenient to accomplish
the matters set forth in the foregoing clauses (i) and (ii). In furtherance
of such limited purposes, the Issuer may not create, incur or assume any
indebtedness other than pursuant to or in connection with the Financing and
the transactions contemplated thereby, or incur, assume, or guarantee the
indebtedness of any person or entity, including, without limitation, pursuant
to any purchase or repurchase agreement, capital lease, indemnity, or any
keep-well, take-or-pay, through-put, or other arrangement having the effect
of assuring or holding harmless any third person or entity against loss with
respect to any obligation of such other person or entity, unless such
indebtedness is an invoice, statement of account, check, work request,
purchase order or other similar document representing expenses relating to
the permitted activities of the Issuer described above. Nor does the Issuer
propose to (i) make loans to other persons, (ii) invest in the securities of
other issuers for the purpose of exercising control, (iii) underwrite the
securities of other issuers, (iv) engage in the purchase and sale of
investments, (v) offer securities in exchange for property, (vi) repurchase
or otherwise reacquire its shares or other securities. The principal
executive offices of the Issuer are located at 9330 Balboa Avenue, San Diego,
California 92123, and the Issuer's telephone number is (619) 571-2470.
Employees
Pursuant to the terms of the Indenture, the Issuer does not employ any
employees.
CRC-I
General
CRC-I is a Massachusetts special purpose limited partnership which was
organized solely for the purpose of participating in this Exchange Offer and
the underlying transactions. The original Certificate of Limited Partnership
of CRC-I was filed with the Secretary of State of the Commonwealth of
Massachusetts on December 8, 1993. The latest date upon which CRC-I is to
dissolve is December 31, 2043. The charter documents of CRC-I do not require
it to, nor does it intend to, hold annual meetings. The purposes of CRC-I
are limited to (i) acquiring, owning, holding and selling or otherwise
transferring (subject to the provisions of Section 1.06 of those certain
Deeds of Trust and Mortgages that have been (with respect to the Existing
Assets) or will be (with respect to the Potential Existing Asset) entered
into by CRC-I in connection with the transactions specified in (ii) below)
Estates For Years in the Existing Assets; (ii) the sale of mortgage notes to
the Issuer and encumbering, hypothecating, mortgaging and pledging its
interest in the Existing Assets owned by it as security for or in partial
satisfaction of such mortgage notes and certain other mortgage notes issued
by CRC-II; (iii) leasing the Existing Assets to Foodmaker pursuant to the
terms of a master lease; and (iv) engaging in any other activities which are
necessary to accomplish the foregoing purposes or are incidental thereto or
connected therewith. In furtherance of such limited purposes, CRC-I is not
permitted to create, incur or assume any indebtedness other than pursuant to
or in connection with the transactions specified in (ii) above and the
transactions contemplated thereby, or incur, assume, or guarantee the
indebtedness of any person or entity other than pursuant to or in connection
with the transactions specified in (ii) above or pursuant to a guaranty of
the obligations of the Issuer in connection with the Notes including, without
limitation, pursuant to any purchase or repurchase agreement, capital lease,
indemnity, or any keep-well, take-or-pay, through-put, or other arrangement
having the effect of assuring or holding harmless any third person or entity
against loss with respect to any obligation of such other person or entity,
unless such indebtedness is an invoice, statement of account, check, work
request, purchase order or other similar document representing expenses
relating to the permitted activities of CRC-I described above. Nor does
CRC-I propose to (i) make loans to other persons, (ii) invest in the
securities of other issuers, (iii) underwrite the securities of other
issuers, (iv) engage in the purchase and sale of
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investments, (v) offer securities in exchange for property, (vi) repurchase
or otherwise reacquire its shares or other securities. The General Partner
of CRC-I is CRC-I Corp. (the "CRC-I General Partner"), incorporated in the
Commonwealth of Massachusetts on December 8, 1993. The CRC-I General Partner
is responsible for the management of CRC-I, transacts all business for CRC-I
and has complete discretion in its management of all aspects of CRC-I's
affairs. The principal executive offices of CRC-I are located at 9330 Balboa
Avenue, San Diego, California 92123 and CRC-I's telephone number is (619)
571-2470.
Employees
CRC-I has no operations and does not employ any employees.
CRC-II
General
CRC-II is a Massachusetts special purpose limited partnership which was
organized solely for the purpose of effecting this Exchange Offer and the
underlying transactions. The original Certificate of Limited Partnership of
CRC-II was filed with the Secretary of State of the Commonwealth of
Massachusetts on December 1, 1993. The latest date upon which CRC-II is to
dissolve is December 31, 2043. The charter documents of CRC-II do not
require it to, nor does it intend to, hold annual meetings. The purposes of
CRC-II are limited to (i) acquiring, owning, holding and selling or otherwise
transferring (subject to the provisions of Section 1.06 of those certain
Deeds of Trust and Mortgages entered into by CRC-II in connection with the
transactions specified in (ii) below) Estates For Years in the Construction
Assets; (ii) selling mortgage notes to the Issuer and encumbering,
hypothecating, mortgaging and pledging its interest in the Construction
Assets owned by it as security for or in partial satisfaction of such
mortgage notes and certain other mortgage notes issued by CRC-I;
(iii) leasing the Construction Assets to Foodmaker pursuant to the terms of a
master lease; and (iv) engaging in any other activities which are necessary
to accomplish the foregoing purposes or are incidental thereto or connected
therewith. In furtherance of such limited purposes, CRC-II is not permitted
to create, incur or assume any indebtedness other than pursuant to or in
connection with the transactions specified in (ii) above and the transactions
contemplated thereby, or incur, assume, or guarantee the indebtedness of any
person or entity other than pursuant to or in connection with the
transactions specified in (ii) above or pursuant to a guaranty of the
obligations of the Issuer in connection with the Notes including, without
limitation, pursuant to any purchase or repurchase agreement, capital lease,
indemnity, or any keep-well, take-or-pay, through-put, or other arrangement
having the effect of assuring or holding harmless any third person or entity
against loss with respect to any obligation of such other person or entity,
unless such indebtedness is an invoice, statement of account, check, work
request, purchase order or other similar document representing expenses
relating to the permitted activities of CRC-II described above. Nor does
CRC-II propose to (i) make loans to other persons, (ii) invest in the
securities of other issuers, (iii) underwrite the securities of other
issuers, (iv) engage in the purchase and sale of investments, (v) offer
securities in exchange for property, (vi) repurchase or otherwise reacquire
its shares or other securities. The General Partner of CRC-II is CRC-II
Corp. (the "CRC-II General Partner"), incorporated in the Commonwealth of
Massachusetts on November 30, 1993. The CRC-II General Partner is
responsible for the management of CRC-II, transacts all business for CRC-II
and has complete discretion in its management of all aspects of CRC-II's
affairs. The principal executive offices of CRC-II are located at
9330 Balboa Avenue, San Diego, California 92123 and CRC-II's telephone number
is (619) 571-2470.
Employees
CRC-II has no operations and does not employ any employees.
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MANAGEMENT
The Issuer
Directors and Executive Officers
The following table sets forth the name, age and position with the
Issuer of each of the persons designated to serve as directors and executive
officers of the Issuer. Additional information with respect to each such
individual is contained below under "Background of Directors and Executive
Officers." Each Director of the Issuer will hold office until the next annual
meeting of stockholders of the Issuer or until his successor has been elected
and qualified. Officers of the Issuer are elected by the Board of Directors
of the Issuer and serve at the discretion of the Board. Robert H. Key owns
all of the outstanding shares of Common Stock of the Issuer, and has sole
voting power with respect to the election of directors. See, however,
"Description of Underlying Transactions - Corporate Governance Agreement."
Name Age Position(s)
---- --- -----------
Charles W. Duddles 53 President, Treasurer, Secretary and Director
Charles F. MacGill 71 Director
Background of Directors and Executive Officers
Mr. Duddles has been a director and President, Treasurer and Secretary
of the Issuer since December 1993. Mr. Duddles is also a director, Executive
Vice President and Chief Financial and Administrative Officer of Foodmaker
and has been since at least 1988.
Mr. MacGill is a director of the Issuer and has been since May 1994.
Mr. MacGill is also President and Chairman of the Board of Chartwell
Properties Corporation, a real estate investment company, and has been since
1987.
Executive Compensation
None of the directors or officers of the Issuer receive any compensation
from the Issuer or for their services in these capacities.
OWNERSHIP OF EQUITY SECURITIES
The Issuer
The following table sets forth, as of the date of this Prospectus, the
beneficial ownership of the Issuer's Common Stock.
Shares of
Name of Beneficial Common Percent
Owner Stock
------------------ --------- -------
Robert H. Key 100 100%
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DESCRIPTION OF THE UNDERLYING TRANSACTIONS
Net Note Sales Proceeds; Closing Costs; Costs of the Estates For Years
On January 5, 1994, in a private placement transaction, the Issuer
issued and sold $70,000,000 aggregate principal amount of Old Notes. The net
sales proceeds from the sale of the Old Notes were $68,908,000, which
proceeds were used to purchase the CRC Notes and pay closing costs of
$2,480,395. The total acquisition cost of the Estates For Years purchased by
CRC-I and CRC-II was $66,427,605.
Existing Assets
The CRC-I Note Purchase Price was in the amount of approximately $28.6
million. The proceeds from the sale of the CRC-I Note have been and will be
used by CRC-I to purchase Estates For Years from Foodmaker for terms ending
November 30, 2028 in 38 existing Jack In The Box restaurants consisting of an
aggregate of approximately 101,000 rentable square feet of space and situated
on an aggregate of approximately 19.6 acres of land. The locations of all of
the Existing Assets, including the Potential Existing Asset, are identified
in the Schedule of Properties below.
The full purchase price for the CRC-I Note was paid on January 5, 1994;
however, a portion of such funds has been deposited in the Additional Unit
Acquisition Account (a subaccount of the Construction Account) maintained by
the Trustee pursuant to the Indenture to be disbursed therefrom from time to
time to enable CRC-I to purchase Estates For Years in the Potential Existing
Asset from Foodmaker, as title to the fee interest therein is acquired by
Foodmaker, at which time such Properties will be subjected to the CRC-I
Lease. As of July 11, 1994, Estates For Years in the Existing Assets, other
than the Potential Existing Asset, had been acquired by CRC-I from the
proceeds of the CRC-I Note Purchase Price and were leased to Foodmaker
pursuant to the CRC-I Lease. At July 11, 1994, approximately $38,354,150 had
been disbursed for the acquisition of such Existing Assets. See "-
Construction Account." Pursuant to the terms of the CRC-I Lease, Foodmaker
has been and will be liable for the payment of rent from January 5, 1994 on
all of the Existing Assets, including the Potential Existing Asset,
regardless of the status of the acquisition by CRC-I of an Estate for Years
therein.
Construction Assets
The CRC-II Note Purchase Price was in the amount of approximately $37.8
million. The proceeds from the purchase of the CRC-II Note have been and
will be used by CRC-II to purchase Estates For Years from Foodmaker for terms
ending November 30, 2028 in four existing Jack In The Box restaurants and
approximately 34 to-be-constructed Jack In The Box restaurant locations
consisting of an aggregate of approximately 101,000 rentable square feet of
space and situated on an aggregate of approximately 19.6 acres of land. The
locations of all of the Construction Assets, including the Potential
Construction Assets, are identified in the Schedule of Properties below.
The full purchase price for the CRC-II Note was paid on January 5, 1994;
however, a portion of such funds has been deposited in the Construction
Account maintained by the Trustee pursuant to the Indenture to be disbursed
therefrom from time to time to enable CRC-II to purchase the Estates For
Years in the Potential Construction Assets from Foodmaker, as title to the
fee interest therein is acquired by Foodmaker (at which time such Properties
will be subjected to the CRC-II Lease), and to enable Foodmaker to build Jack
In The Box restaurants thereon. See "- Construction Account." As of
July 11, 1994, Estates For Years in the Construction Assets, other than the
Potential Construction Assets, had been acquired by CRC-II from the proceeds
of the CRC-II Note Purchase Price and were leased to Foodmaker pursuant to
the CRC-II Lease; at such date all of the Potential Construction Assets were
owned by Foodmaker. At July 11, 1994, approximately $23,946,170 had been
disbursed for the acquisition of such Construction Assets. Estates For Years
in the Potential Construction Assets will be acquired from time to time and
will be subjected to the CRC-II Lease as Foodmaker acquires the fee interest
and CRC-II acquires the Estate For Years therein. Pursuant to the terms of
the CRC-II Lease, Foodmaker has been and will be liable for the payment of
rent from January 5, 1994 on all of the Construction Assets acquired by
Foodmaker (including the Potential Construction Assets), regardless of the
status of the acquisition by CRC-II of an Estate For Years therein and/or the
completion of construction thereof.
26
<PAGE>
<PAGE>
The Properties
The usable area of a typical building constructed on a Property consists
of approximately 50% kitchen space and 50% dining space and includes
approximately 20-30 uncovered outdoor parking places. The Properties
initially have been and are expected to be operated as Jack In The Box
restaurants. Although no assurances can be given that problems will not
occur with respect to particular Properties, management does not believe that
the selection criteria for Properties (or Substitute Properties) has been or
will be adverse to the interests of the Holders of Notes.
Schedule Of Properties
Existing Assets (as of July 11,1994)(1)
<TABLE>
<CAPTION>
Semi-
Annual Allocated
Restaur- Opening Rent Allocated Purchase
No. ant # Location City State Date Amount Percentage Price
(a) (b) (c)
- --------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C> <C> <C>
1 0293 465 South Fairfax Los Angeles CA 08/67 48,510 1.1591566% 770,000
2 0624 5801 Bellaire Boulevard Houston TX 12/66 41,265 0.9860359% 655,000
3 0633 1395 Federal Road Houston TX 02/69 34,020 0.8129151% 540,000
4 0635 2101 9th Avenue North Texas City TX 04/69 41,895 1.0010898% 665,000
5 0640 4400 West Fuqua Houston TX 05/69 26,460 0.6322673% 420,000
6 0641 7447 Spencer Highway Pasadena TX 06/69 44,415 1.0613058% 705,000
7 0662 3333 Red Bluff Pasadena TX 04/73 33,075 0.7903341% 525,000
8 0672 8767 South Main Houston TX 09/84 48,826 1.1666836% 775,000
9 0678 916 S. Sam Houston Dr. Huntsville TX 10/74 39,690 0.9484009% 630,000
10 0685 839 East Mulberry St. Angleton TX 06/77 39,375 0.9408739% 625,000
11 0691 419 South Washington Cleveland TX 10/78 39,375 0.9408739% 625,000
12 1112 901 East Curry Road Tempe AZ 09/90 63,629 1.5204522% 1,010,000
13 1160 1402 East Ash Globe AZ 10/75 45,675 1.0914137% 725,000
14 1403 41 E. Edwardsville Road Woodriver IL 10/69 33,075 0.7903341% 525,000
15 1405 1649 Washington Alton IL 03/70 42,210 1.0086168% 670,000
16 1410 1800 North Illinois Swansea IL 04/88 69,299 1.6559381% 1,100,000
17 1412 1360 Highway 50 O'Fallon IL 10/89 61,109 1.4602363% 970,000
18 1413 830 Edwardsville Road Troy IL 05/90 62,054 1.4828173% 985,000
19 3174 13369 Firestone Blvd. Norwalk CA 03/86 77,804 1.8591668% 1,235,000
20 3251 315 South Brea Brea CA 10/91 69,299 1.6559381% 1,100,000
21 3306 57930 Twenty Nine Palms Yucca Valley CA 04/93 68,512 1.6371206% 1,087,500
22 3605 11080 Scarsdale Blvd. Houston TX 07/86 43,470 1.0387248% 690,000
23 3641 3317 First Street Rosenberg TX 08/92 55,950 1.3369442% 888,100
24 3642 15919 JFK Houston TX 09/92 54,180 1.2946425% 860,000
25 3648 5107 I-10 Baytown TX 04/93 60,322 1.4414188% 957,500
26 4007 15354 Manchester Road Ellisville MO 10/69 46,935 1.1215217% 745,000
27 4031 7520 Manchester Maplewood MO 04/70 28,350 0.6774292% 450,000
28 4052 322 Taylor Hazelwood MO 09/90 59,534 1.4226013% 945,000
29 8409 479 Ranier Avenue South Renton WA 10/69 50,715 1.2118456% 805,000
30 0021 4751 El Cajon Blvd. San Diego CA 05/61 37,800 0.9032389% 600,000
31 0250 2701 Brooklyn Avenue Los Angeles CA 02/65 40,950 0.9785089% 650,000
32 0273 23813 South Avalon Carson CA 05/66 37,170 0.8881850% 590,000
33 0654 2210 North Alexander Baytown TX 04/70 29,925 0.7150642% 475,000
34 0676 1010 Richmond Wharton TX 08/74 36,225 0.8656040% 575,000
</TABLE>
27
<PAGE>
<PAGE>
Existing Assets (as of July 11,1994)(Cont.)(1)
<TABLE>
<CAPTION>
Semi-
Annual Allocated
Restaur- Opening Rent Allocated Purchase
No. ant # Location City State Date Amount Percentage Price
(a) (b) (c)
- --------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C> <C> <C>
35 1116 1001 North 24th Street Phoenix AZ 09/90 55,440 1.3247505% 880,000
36 1121 1180 Highway 20 Cottonwood AZ 09/90 63,550 1.2795885% 850,000
37 1402 1180 Nameoki Road Granite IL 07/69 28,350 0.6774292% 450,000
<FN>
(1) The Existing Assets also include the Potential Existing Asset, set forth
separately below.
</TABLE>
Potential Existing Asset (as of July 11,1994)
<TABLE>
<CAPTION>
Semi-
Annual Allocated
Restaur- Opening Rent Allocated Purchase
No. ant # Location City State Date Amount Percentage Price
(a) (b) (c)
- --------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C> <C> <C>
38 1414 300 South Buchanan Edwardsville IL 09/90 55,440 1.3247505% 880,000
</TABLE>
Construction Assets (as of July 11,1994)(2)
<TABLE>
<CAPTION>
Semi-
Annual Allocated
Restaur- Opening Rent Allocated Purchase
No. ant # Location City State Date Amount Percentage Price
(d) (a) (b) (c)
- --------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C> <C> <C>
1 3254 Slauson & Greenwood City of Commerce CA 04/94 76,355 1.8245427% 1,212,000
2 3304 3830 W. Sierra Way Acton CA 05/94 79,379 1.8968018% 1,260,000
3 3409 Hwy. 99 & Lander Turlock CA 03/94 69,929 1.6709921% 1,110,000
4 3647 College @ Lindbergh Beaumont TX 04/94 54,211 1.2953952% 860,500
5 3649 NEC Hwy. 290 @ Senate Houston TX 04/94 61,676 1.4737849% 979,000
6 3651 I-10 At Hwy. 62 Orange TX 06/94 57,140 1.3653962% 907,000
7 3653 Sunshine & Tyler Harlingen TX 06/94 54,432 1.3006641% 864,000
8 3654 I-10 At FM 359 Brookshire TX 3rd Qtr 53,550 1.2795885% 850,000
9 3655 U.S. 83 & Bryan Road Mission TX 05/94 52,164 1.2464697% 828,000
10 3659 Tyler @ South M Harlingen TX 04/94 57,730 1.3794717% 916,350
11 3665 Airline & I-610 Houston TX 06/94 65,519 1.5656142% 1,040,000
12 3737 Hwy. 360 & Green Oaks Grand Prairie TX 05/94 69,929 1.6709921% 1,110,000
13 8451 1467 Olney Avenue Port WA 11/88 51,660 1.2344266% 820,000
14 8455 610 So. Burlington Blvd Burlington WA 05/90 53,550 1.2795885% 850,000
15 8470 4717 Evergreen Everett WA 09/92 68,115 1.6276366% 1,081,200
16 8474 20746 108th Ave. Kent WA 11/92 61,928 1.4798065% 983,000
17 1123 I-10 & Fortuna Yuma AZ 07/94 54,148 1.2938898% 859,500
18 3646 Washington @ Spur Beaumont TX 07/94 55,755 1.3322774% 885,000
19 3666 FM 518 & 270 League City TX 07/94 53,865 1.2871155% 855,000
20 3668 State Hwy. 146 & IH10 Mont Belvieu TX 07/94 50,715 1.2118456% 805,000
21 3669 Westheimer & Hwy. 6 Houston TX 07/94 60,164 1.4376553% 955,000
22 3670 Hwy. 518 & Hwy. 582 Friendswood TX 07/94 58,589 1.4000204% 930,000
23 3019 Santa Fe & Bobier Vista CA 4th Qtr 71,819 1.7161540% 1,140,000
24 3296 Pico Canyon & Lyons Santa Clarita CA 06/94 83,506 1.9954054% 1,325,500
</TABLE>
28
<PAGE>
<PAGE>
Construction Assets (as of July 11,1994)(cont.)(2)
<TABLE>
<CAPTION>
Semi-
Annual Allocated
Restaur- Opening Rent Allocated Purchase
No. ant # Location City State Date Amount Percentage Price
(d) (a) (b) (c)
- --------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C> <C> <C>
25 3657 Woodlands Dr. @ I-45 The Woodlands TX 06/94 66,401 1.5866898% 1,054,000
26 3660 N. 10th & Pecan McAllen TX 3rd Qtr 72,219 1.7257133% 1,146,350
27 3661 Nolana Loop & N. 2nd McAllen TX 05/94 51,187 1.2231361% 812,500
28 3739 Mockingbird & Stammons Dallas TX 4th Qtr 78,214 1.8689519% 1,241,500
<FN>
*Unopened Construction Assets are expected to be completed by the 3rd or 4th quarter of calendar year 1994, as noted.
(2) The Construction Assets also include the Potential Construction Assets, set forth separately below.
</TABLE>
Potential Construction Assets (as of July 11,1994)
<TABLE>
<CAPTION>
Semi-
Annual Allocated
Restaur- Opening Rent Allocated Purchase
No. ant # Location City State Date Amount Percentage Price
(a) (b) (c)
- --------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C> <C> <C>
29 3427 Main St. & Mission Ridge Manteca CA 07/94 74,203 1.7731122% 1,177,836
30 3314 China Lake @ College Ridgecrest CA 4th Qtr 54,495 1.3021695% 865,000
31 3316 Stockdale Hwy. @ 15 Kern County CA 4th Qtr 64,787 1.5481049% 1,028,369
32 3318 Hwy. 14 @ Hwy. 58 Mojave CA 4th Qtr 67,724 1.6183031% 1,075,000
33 3672 FM 1960 & Lee Road Houston TX 3rd Qtr 61,109 1.4602363% 970,000
34 8477 NWC Pacific Ave. & Military Spanaway WA 3rd Qtr 69,860 1.6693361% 1,108,900
35 3675 Silber & I-10 Houston TX 3rd Qtr 61,109 1.4602363% 970,000
36 3742 St. Hwy. 121 & Harwood Bedford TX 3rd Qtr 62,369 1.4903443% 990,000
37 3745 377 @ Loop 820 Haltom TX 4th Qtr 51,660 1.2344266% 820,000
38 4066 Dorset & I-270 St. Louis MO 4th Qtr 69,866 1.6694867% 1,109,000
<FN>
(a) Semi-Annual Rent Amount for each Property represents the sum of the semi-annual payment of Basic Rent plus the Special
Rent allocated to such property based upon the Allocated Percentage (computed as specified below) specified for each Property.
(b) Allocated Percentage is the numerical result of dividing the Allocated Purchase Price specified for each Property by
the gross proceeds received by Foodmaker from the underlying transactions ($66,427,605).
(c) Allocated Purchase Price is Foodmaker's estimate of the fair market value of each property based upon, in the case of
recently acquired or to be acquired Properties, actual cost, and, in the case of all other Properties, the opinion of its
Restaurant Development Department, which employs real estate representatives in the areas where the Properties are located.
There can be no assurances that in all or in each instance the Allocated Purchase Price accurately reflects the fair market
value of the Properties or that, if the Properties were sold, the Allocated Purchase Price would bear any relationship to
the amount actually received upon a sale of the Properties.
(d) Unopened Construction Assets are expected to be completed by the 3rd or 4th quarter of calendar year 1994, as noted.
</TABLE>
The CRC Leases
The terms of the CRC Leases are summarized under "Description of the
Leases" below.
29
<PAGE>
<PAGE>
Use of Properties
The Properties have been and are expected to be initially operated as
Jack In The Box restaurants, and will be subject to a use limitation
requiring that they be used for restaurant purposes or other business uses
within Foodmaker's principal lines of business for the three years after
January 5, 1994. Thereafter there are no use limitations on the Properties
other than those imposed by law or regulations.
Right of Substitution
Foodmaker may effect a substitution (a "Substitution") of any Property
listed on the Schedule of Properties above with a Substitute Property in any
of the following circumstances: (a) a casualty or condemnation which
Foodmaker determines has rendered the Property permanently unsuitable for
continuation of the then existing business use, (b) Foodmaker determines any
Property to be uneconomic for continuation of the then existing business use,
or (c) in the case of Potential Construction Assets or Potential Existing
Asset, prior to being subjected to the applicable Lease.
Although no assurances can be given that problems will not occur with
respect to certain locations, management does not believe that the selection
criteria for Properties or Substitute Properties has been or is intended to
be adverse to
the interests of Holders of Notes. The Substitute Property must have a fair
market value not less than the then current fair market value of the Property
being substituted at the time of such substitution, as confirmed by an
independent appraisal (or as certified by Foodmaker in the case of a
Substitute Property substituted for a Potential Construction Asset or
Potential Existing Asset prior to being subjected to the applicable CRC
Lease). Foodmaker must (1) convey to CRC-I or CRC-II, as applicable, an
Estate For Years of a duration equal to the then remaining Estate For Years
of the substituted Property, and lease from CRC-I or CRC-II, as applicable,
the Substitute Property and (2) pay all charges incident to such conveyance
of the Substitute Property. Such Substitute Property must also be encumbered
as collateral for the CRC Notes pursuant to a deed of trust which would, in
turn, be pledged as collateral for the Notes. Foodmaker shall receive a
release from the lien of the Indenture, applicable deed of trust and Lease as
it relates to the Property so substituted.
Optional Prepayment
The Issuer may not prepay the Notes at any time, in whole or in part,
during the first five years after the date of issuance of the Old Notes,
January 5, 1994. Thereafter, the Notes may be prepaid in connection with an
Early Termination under the Leases, at par plus a premium (the "Prepayment
Premium") equal to the following percentage of the principal amount of the
Notes to be prepaid: year six - 5.00%, year seven - 3.75%, year eight -
2.50%, year nine - 1.25%, and year ten - 0.00%. (See "Description of the
Leases - Early Termination; Lease Modification.")
Mandatory Prepayment
By the beginning of year ten, the outstanding balance of the Notes must
be reduced to $35,000,000 or less. The sinking fund will be applied at the
beginning of year ten to reduce the outstanding debt, and CRC-I and CRC-II
will be obligated to make an additional principal payment equal to the
difference between $35,000,000 and the balance in the sinking fund. This
additional principal payment is required to be covered by the special rent
payments and the purchase price payable under the Year Nine Offer required to
be made by Foodmaker under the Leases prior to the Year Nine Termination
Date. See "Description of the Leases - Rejectable Offer Requirements."
Indenture Defaults
The following constitute Events of Default under the Indenture:
(a) failure to pay principal of or interest on the Notes when due; (b) a
material misrepresentation which remains uncured 30 days after notice
thereof, with a reasonable and necessary extension during diligent pursuit of
a cure for those misrepresentations which by their nature cannot be cured
within 30 days; (c) bankruptcy events with respect to the Issuer, CRC-I,
CRC-II or Foodmaker which are not dismissed within the applicable cure
periods; and (d) other customary defaults. See "Description of New Notes -
Events of Default and Remedies."
30
<PAGE>
<PAGE>
Acceleration of Senior Secured Notes
Upon the occurrence of an Indenture Default which is not cured by the
Issuer, CRC-I, CRC-II or Foodmaker, the Trustee will be entitled to
accelerate the principal of the Notes and premium, if any. The Issuer may
not foreclose upon the deeds of trust on Foodmaker's reversionary rights on
the Existing Assets or the Construction Assets unless a default under the CRC
Leases (a "Lease Default") or under the Foodmaker Mortgages has occurred and
is continuing.
Limited Recourse
The recourse for repayment of the Notes is limited to the Note
Collateral, the CRC-I Guaranty and the CRC-II Guaranty (which guaranties are
nonrecourse to the general partners of each of CRC-I and CRC-II). The Issuer
will not have any personal liability with respect to the Notes except for
certain customary nonrecourse exclusions, principally costs incurred by the
Trustee or any Holder of Notes because of the Issuer's fraud, willful
misrepresentations, waste, misappropriation or intentional damage of or to
any of the Trust Estates. Additionally, the limitations on recourse against
the Issuer would not apply if the Issuer attempted to materially delay any
foreclosure by the Trustee against the Trust Estate or if the Issuer claimed
that any Note, or the Indenture, or the underlying mortgage documents, were
invalid or unenforceable to the extent that it would preclude foreclosure.
Similarly, the recourse for repayment of the CRC Notes is limited to the CRC
Collateral.
Construction Account
On January 5, 1994, approximately $28.1 million was placed in the
Construction Account established pursuant to the Indenture. At July 11,
1994, approximately $10.6 million of such funds were held in the Construction
Account (including the Additional Unit Acquisition Account) for the purpose
of (a) funding the acquisition by CRC-I of an Estate For Years in the
Potential Existing Asset (unless Foodmaker exercises its right of
Substitution and thereby substitutes another asset for a Potential Existing
Asset), and (b) funding the acquisition by CRC-II of an Estate For Years in,
and the construction by Foodmaker, pursuant to the CRC-II Lease, of a Jack In
The Box restaurant on, each of the Potential Construction Assets (unless
Foodmaker exercises its right of Substitution and thereby substitutes another
asset for a Potential Construction Asset). The funds from the Construction
Account (including the Additional Unit Acquisition Account) are required to
be remitted promptly and in full to Foodmaker as (i) CRC-I acquires an Estate
For Years in each Potential Existing Asset, or (ii) Foodmaker acquires a fee
interest and CRC-II acquires an Estate For Years in each Potential
Construction Asset, in an amount which reflects the land acquisition cost of
such asset plus, in the case of Potential Construction Assets, the estimated
cost to construct the improvements thereon (subject to satisfaction of
certain conditions set forth in the Indenture). Whether or not the funds
disbursed from the Construction Account are sufficient to acquire or complete
the Potential Construction Assets, Foodmaker must complete the improvements
on the Construction Assets once they are acquired. In the event that
Foodmaker is able to complete and deliver the Construction Assets for a total
amount less than that amount set aside in the Construction Account, such
excess amount shall be released to Foodmaker. There is no deadline by which
the funds in the Construction Account (including the Additional Unit
Acquisition Account) must be disbursed.
If an unremedied Lease Default (as described in "Description of the
Leases - Defaults and Remedies") occurs, the Trustee may, in addition to
exercising its remedies under the Indenture, apply the funds available in the
Construction Account to pay the principal, premium, if any, and accrued
interest on the Notes.
Collection, Administrative Expenses, Sinking Fund and Equity Collection
Accounts
All amounts paid by Foodmaker under the Leases are remitted directly to
the Trustee for deposit in the Collection, Administrative Expenses, Sinking
Fund, and the Equity Collection Accounts established pursuant to the
Indenture. The rent payments are made available for application to payment
of interest on the Notes on each semi-annual Interest Payment Date, for
payment or deposit into the Administrative Expenses Account of $25,000 on
each semi-annual Interest Payment Date under the Indenture for projected
Indenture expenses, and to fund $747,402 semi-annually through year nine into
the Sinking Fund Account to create a source for payment of a portion of the
principal payment due at the end of year nine.
31
<PAGE>
<PAGE>
All proceeds of any hazard insurance or condemnation (in excess of
$500,000 for any one Property or $3 million in the aggregate at any time),
are required to be deposited in a separate Proceeds Account held by the
Trustee, and disbursed, as required, to fund the restoration of the damaged
or condemned Property (unless Foodmaker elects to substitute or consummate an
Early Termination of the Property, as herein described, in which case the
insurance or condemnation proceeds shall be released to Foodmaker upon
consummation thereof) except in the event of a Lease Default, in which case
such proceeds will be available to pay principal of and accrued interest on
the Notes. See "Description of the Leases - Defaults and Remedies."
Amounts owed to the applicable Lessor by Foodmaker under the CRC Leases
in connection with any Early Termination, the Rejectable Offer requirements
or the exercise of any option by Foodmaker (as described in "Description of
the Leases"), in excess of the sums payable on the Notes, are required to be
deposited in a separate Equity Collection Account and are required to be held
by the Trustee until all sums owing under the Notes have been paid in full.
If an unremedied Lease Default occurs, the Trustee may, in addition to
exercising its remedies under the Indenture, apply the funds in the
Collection Account, the Sinking Fund Account and the Equity Collection
Account to pay principal of and accrued interest on the Notes. In the
absence of an Event of Default under the Indenture, all excess monies in the
Collection Account not required to pay the principal, premium, if any, and
interest on the Notes on a Payment Date will be free of the lien of the
Indenture and may be distributed to the Lessee and/or the Issuer.
No Other Indebtedness or Activities
Neither the Issuer, CRC-I nor CRC-II is permitted to incur additional
indebtedness or to own other assets or engage in other business activities.
Corporate Governance
Each of the Issuer, CRC-I Corp. and CRC-II Corp., and their shareholders
(the "Shareholders"), Foodmaker, a designated individual who is both an
officer and director of Foodmaker (the "Designated Officer") and an
individual unaffiliated with the Issuer, CRC-I Corp or CRC-II Corp. (the
"Independent Director") have entered into the Agreement Regarding Corporate
Governance, amended and restated as of May 4, 1994 (the "Corporate Governance
Agreement"), which sets forth the respective rights and responsibilities of
the parties with respect to specific corporate governance issues relating to
the Issuer, CRC-I Corp. and CRC-II Corp. Pursuant to the terms of the
Corporate Governance Agreement, the Shareholders are obligated to elect the
Designated Officer (or his successor) and the Independent Director (or his
successor) as the two directors of each of the Issuer, CRC-I Corp. and CRC-II
Corp. The Independent Director and the Designated Officer have agreed, in
their capacities as directors of the Issuer, CRC-I Corp. and CRC-II Corp., to
elect the Designated Officer to all officer positions of each of the Issuer,
CRC-I Corp. and CRC-II Corp.
Foodmaker and the Designated Officer have agreed that the Designated
Officer (or his successor), in the capacity of Designated Officer of the
Issuer, CRC-I Corp. and CRC-II Corp., will not take any of the following
actions without the prior written consent of (i) the holders of 51% or more
of the limited partnership interests in CRC-I or CRC-II, in the case of an
action proposed to be taken by either of CRC-I or CRC-II, (ii) the holders of
51% or more of the limited partnership interests of each of CRC-I and CRC-II,
in the case of an action proposed to be taken by the Issuer: (a) any waiver,
amendment or consent to a deviation by Foodmaker relating to any of the
Transaction Documents to which Foodmaker is a party; (b) any action to accept
or reject the Year Nine Offer or the Termination Date Rejectable Offer by
Foodmaker; or (c) any action which would constitute or result in a breach by
the Issuer, CRC-I Corp. or CRC-II Corp. of any of the Transaction Documents.
The Designated Officer (or his successor) is also obligated to take any other
action on behalf of the Issuer, CRC-I Corp. and CRC-II Corp. upon receipt of
the same written consent requirements noted above, provided that such action
is not in violation of the organizational documents of the Issuer, CRC-I
Corp. or CRC-II Corp. Foodmaker also agreed to take, and agrees to cause the
Designated Officer (or his successor) to take (at Foodmaker's expense), all
necessary action to ensure that the Issuer, CRC-I Corp. and CRC-II Corp.
remain at all times in compliance with the Transaction Documents, and to
effectuate transfers of the limited partnership interests in either CRC-I or
CRC-II upon the request of at least 51% of the holders of the limited
partnership interest of the affected entity.
32
<PAGE>
<PAGE>
The Issuer's Certificate of Incorporation provides that its directors
shall not be personally liable to the Issuer or its stockholders for monetary
damages arising as a result of a director's breach of his or her fiduciary
duty.
In addition, the Indenture provides that subject to certain exceptions
set forth therein, neither the Trustee nor the Holders of Notes may seek or
obtain judgment against the Issuer or any of the Issuer's officers,
directors, shareholders or employees for payment of principal or interest
under the Notes, or any sums payable under the Indenture, and the sole
recourse of the Trustee and the Holders of Notes against the Issuer for any
default in the payment of such principal or interest or other sums shall be
limited to the Trust Estate.
Trustee
State Street Bank and Trust Company serves as Trustee. The Trustee's
fees will be paid with the funds deposited in the Administrative Expenses
Account, excess funds available in the Collection Account, or through
additional rent payments due under the Leases.
Tax Opinion
In connection with the offering of the Old Notes, a legal opinion was
delivered that the Old Notes would be classified as debt of CRC-I and CRC-II
for federal income tax purposes; this opinion did not address any other
federal income tax consequences or other tax consequences related to the
acquisition, ownership or disposition of the Old Notes. The legal opinion
was delivered in reliance upon a Certificate of Representations delivered
by Foodmaker including certain certifications relating to the current value
and projected future value of the Existing Assets and the Construction
Assets, among other things. If the certifications provided by Foodmaker
in the Certificate of Representations were incorrect, then the legal
opinion as to the classification of the Old Notes for federal income tax
purposes would be adversely affected. Purchasers of the Old Notes have
been advised that Foodmaker was not an independent third party to the
offering of the Old Notes, and was not relying on an independent third
party, for the purposes of its Certificate of Representations as to value.
The legal opinion was based on laws, regulations, rulings and decisions in
effect at the time, all of which are subject to change by legislative,
administrative or judicial action, which change may be retroactive. Said
legal opinion is not binding upon the Internal Revenue Service or any court,
and no ruling has been obtained from the Internal Revenue Service as to the
classification of the Old Notes for federal income tax purposes in the
transaction. Investors should consult with their own tax advisors in
determining the federal, state, local and other tax consequences to them of
the purchase, ownership and disposition of the New Notes. See "Certain
Federal Income Tax Consequences."
33
<PAGE>
<PAGE>
DESCRIPTION OF NEW NOTES
The following is a summary of important terms of the New Notes. Copies
of the New Notes and the Indenture may be obtained upon request from the
Issuer. Capitalized terms used herein and not otherwise defined in this
Prospectus have the meanings ascribed to them in the Indenture.
To the extent that Holders of Old Notes do not participate in the
Exchange Offer and Old Notes remain outstanding after the consummation of the
Exchange Offer, Old Notes and New Notes will be repurchased and/or redeemed
pro rata pursuant to the repurchase and redemption provisions contained
therein and in the Indenture. In addition, Holders of New Notes and Holders
of Old Notes, together, will have the voting rights, rights to comply with
notice provisions and other rights specified in the Indenture.
General
The New Notes will be senior secured obligations of the Issuer, limited
in aggregate principal amount to $70,000,000, secured by certain property and
assets as described below and sometimes referred to herein as the
"Collateral." References herein to the "Collateral Documents" include all
documents entered into to create or perfect the security interests in the
Collateral. The New Notes will bear interest at the rate of 9.75% per annum,
payable in cash semi-annually on the first business day of January and July
of each year, commencing on the first business day of January, 1995, to
Holders of Notes at the close of business on the previous business day.
Interest will be computed on the basis of a 360-day year of twelve 30-day
months and the actual number of days elapsed (with respect to partial
months). The New Notes will rank pari passu with any Old Notes that remain
outstanding.
The New Notes will be issued only in fully registered form, without
coupons, in denominations of $50,000 and integral multiples thereof.
Security for the New Notes; Guaranties
The New Notes will be secured primarily by the Note Collateral, which
consists of the following: (1) the pledge by the Issuer to the Trustee of
the CRC-I Note and the CRC-II Note and the CRC Collateral; and (2) a pledge
of the Issuer's rights in and to the Collection Account, the Construction
Account, the Sinking Fund Account and the Equity Collection Account (see
"Description of the Underlying Transactions - Construction Account -
Collection, Administrative Expenses, Sinking Fund and Equity Collection
Accounts") as well as certain other accounts to be maintained by the Trustee
pursuant to the Indenture, and all funds held therein.
If an unremedied Lease Default occurs, the Trustee may, in addition to
exercising its remedies under the Indenture, apply the funds in the
Construction Account, the Collection Account, the Sinking Fund Account and
the Equity Collection Account to pay principal of and accrued interest on the
Notes. In the absence of an Event of Default under the Indenture, all excess
monies in the Collection Account not required to pay the principal, premium,
if any, and interest on the Notes on a Payment Date will be free of the lien
of the Indenture and may be distributed to the Lessee and/or the Issuer.
The New Notes will also be fully and unconditionally guaranteed by each
of CRC-I and CRC-II on a joint and several basis. These guaranties will be
nonrecourse to the general partners of each of CRC-I and CRC-II. One or both
guarantors may be unable to satisfy their obligations under the guaranties if
the guaranties are ever called upon, which would result in a less than full
recovery under those circumstances.
The Issuer is required, at its expense, to maintain insurance policies
providing for title insurance for each property that is subject to the CRC
Mortgages and the Foodmaker Mortgages, collectively and severally.
Optional Prepayment
The Issuer may not prepay the Notes at any time, in whole or in part,
during the first five years after the date of issuance of the Old Notes,
January 5, 1994. Thereafter, the Notes may be prepaid in connection with an
Early
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Termination under the Leases, at par plus a premium (the "Prepayment
Premium") equal to the following percentage of the principal amount of the
Notes to be prepaid: year six - 5.00%, year seven - 3.75%, year eight -
2.50%, year nine - 1.25%, and year ten - 0.00%. Any principal amounts
prepaid are required to be credited against the payment due at the beginning
of the tenth year. (See "Description of the Leases - Early Termination;
Lease Modification").
Mandatory Prepayment
By the beginning of year ten, the outstanding balance of the Notes must
be reduced to $35,000,000 or less. The sinking fund will be applied at the
beginning of year ten to reduce the outstanding debt, and CRC-I and CRC-II
will be obligated to make an additional principal payment equal to the
difference between $35,000,000 and the balance in the sinking fund. This
additional principal payment is required to be covered by the special rent
payments and the purchase price payable under the Year Nine Offer required to
be made by Foodmaker under the Leases prior to the Year Nine Termination
Date. See "Description of the Leases - Rejectable Offer Requirements."
Certain Covenants
The Indenture contains certain covenants with respect to the Issuer.
The covenants include, but are not limited to, the following:
Limitation on Use of Proceeds
The Indenture provides that the Issuer will use the proceeds from the
sale of the Old Notes solely for the purposes set forth therein and not for
the purchase of any security that constitutes "margin stock" or "margin
securities" within the meaning of Regulations G, T, U or X of the Board of
Governors of the Federal Reserve System (or any successor regulations
thereto). See "- Limitations on Lines of Business" and "Business - The
Issuer."
Limitations on Additional Indebtedness
The Indenture provides that the Issuer will not incur or have
outstanding any indebtedness, or incur, assume, or guarantee the indebtedness
of any Person (including, without limitation, pursuant to any purchase or
repurchase agreement, any indemnity, or any keep-well, take-or-pay, through-
put, or other arrangement having the effect of assuring or holding harmless
any third Person against loss with respect to any obligation of such other
Person) other than pursuant to the Indenture, unless such indebtedness is an
invoice, statement of account, check, work request, purchase order or other
similar document representing expenses relating to permitted activities of
the Issuer in accordance with the terms of the Indenture.
Change of Control
The Indenture provides that the Issuer will not cause, permit or
acquiesce in any sale, transfer, assignment or other disposition of the
interests of the shareholders in the Issuer which would result in a transfer,
cumulatively, of 49% or more of the shareholder interests in the Issuer.
Limitation on Liens
The Indenture provides that the Issuer will not (a) permit the validity
or effectiveness of the Indenture or any Grant thereunder to be impaired, or
permit the lien of the Indenture to be amended, hypothecated, subordinated,
terminated or discharged, or permit any Person to be released from any
covenants or obligations with respect to the Indenture or the Notes or any
document executed pursuant thereto, except as may be expressly permitted
thereby; (b) permit any lien, charge, adverse claim, security interest,
mortgage or other encumbrance (other than the lien of the Indenture and any
lien for taxes not yet due and payable) to be created on or extend to or
otherwise arise upon or burden the Trust Estate or any part thereof, any
interest therein or the proceeds thereof, or (c) take any action that would
permit the lien of the Indenture not to constitute a valid first priority
perfected security interest in the Trust Estate.
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Existence of Issuer
The Indenture provides that the Issuer will maintain in full force and
effect its existence, rights and franchises as a corporation, organized under
the laws of the State of Delaware, separate and apart from any of its
Affiliates, and will obtain and preserve its qualification to do business as
a foreign corporation, in each jurisdiction in which such qualification is or
shall be necessary to protect the validity and enforceability of the
Indenture, the Notes or the Trust Estate. The Issuer may not amend its
Certificate of Incorporation or by-laws without the written consent of the
Majority Noteholders. The Issuer at all times will be operated in accordance
with the provisions of its Certificate of Incorporation, by-laws and any laws
or regulations applicable to it, and shall observe all corporate formalities,
including keeping its own separate books and records, having its own bank
accounts and keeping its funds separate from the funds of its shareholders,
holding periodic meetings of its directors and shareholders, and having
officers that (when acting in their capacity as officers of the Issuer) act
in such corporation's best interests, and is able to fund from its own assets
all of its activities and expenses. The charter and by-laws of the Issuer
provide that a unanimous vote of all directors of the Issuer is necessary for
(a) any merger or consolidation, (b) any voluntary bankruptcy filing and any
declaration of insolvency for any purpose for the Issuer, or (c) any
amendment of the Issuer's charter, or of its by-laws if such amendment
pertains to certain matters, including, but not limited to, limitations on
lines of business and certain negative covenants, as set forth in the
Indenture.
Limitation on Transactions with Affiliates
The Indenture provides that the Issuer will not enter into or permit to
exist, directly or indirectly, any transaction (including, without
limitation, the purchase, sale, lease or exchange of any property or the
rendering of any service) with any Affiliate of the Issuer, except for
transactions in the ordinary course of the business of the Issuer and upon
fair and commercially reasonable terms which are no less favorable to the
Issuer than would be obtained in a comparable arm's-length transaction with a
Person that is not such an Affiliate.
Protection of Trust Estate
The Indenture provides that the Issuer will from time to time execute
and deliver all such supplements and amendments thereto and all such
financing statements, continuation statements, instruments of further
assurance and other instruments, and will take such other action as may be
necessary or, upon request of the Trustee or the Majority Noteholders,
advisable to: (a) grant more effectively all or any portion of the Trust
Estate; (b) maintain or preserve the lien (and the priority thereof) of the
Indenture or to carry out more effectively the purposes thereof; (c) perfect,
publish notice of, or protect the validity of any Grant made or intended to
be made by the Indenture; (d) enforce any of the Mortgage Note Documents,
Eligible Investments, or other instruments included in the Trust Estate, or
the CRC Leases; (e) preserve and defend title to the Trust Estate and the
rights therein of the Trustee and the Holders of Notes in such Trust Estate
against the claims of all Persons and parties; and (f) pay any and all taxes
levied or assessed upon all or any part of the Trust Estate.
The Indenture further provides that the Trustee will not (a) remove any
portion of the Trust Estate that consists of money or is evidenced by an
instrument, certificate, or other writing including, without limitation, the
CRC Notes, (i) from the jurisdiction in which it was held at the date the
most recent Opinion of Independent Counsel was delivered pursuant to the
Indenture (or from the jurisdiction in which it was held as described in the
Opinion of Independent Counsel, delivered on January 5, 1994), if no Opinion
of Independent Counsel has yet been delivered pursuant to the Indenture or
(ii) from the possession of the Person who held it on such date or (b) cause
or permit ownership or the pledge of any portion of the Trust Estate to be
recorded on the books of a Person (i) located in a different jurisdiction
from the jurisdiction in which such ownership or pledge was recorded at such
date or (ii) other than the Person on whose books such ownership or pledge
was recorded at such date, unless the Trustee shall have first received an
Opinion of Independent Counsel to the effect that the lien and perfected
first priority security interest created by the Indenture with respect to
such property will continue to be maintained after giving effect to such
action or actions.
Pursuant to the Indenture, the Issuer will pay or cause to be paid any
taxes levied on the Issuer on account of the Issuer's ownership of the Trust
Estate.
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Opinions as to Trust Estate
The Indenture provides that on or before December 31 in the third
calendar year following January 5, 1994 and on December 31 in each third year
thereafter, the Issuer will furnish to the Trustee an Opinion of Independent
Counsel either (a) stating that, in the opinion of such counsel, such action
has been taken with respect to the recording, filing, re-recording and
refiling of the Indenture, any indentures supplemental thereto and any other
requisite documents as is necessary to maintain the lien and perfected first
priority security interest created by the Indenture with respect to the Trust
Estate and reciting the details of such action, or (b) stating that, in the
opinion of such counsel, no such action is necessary to maintain such lien
and perfected first priority security interest. Such Opinion of Independent
Counsel will also describe the recording, filing, re-recording, and refiling
of the Indenture, any indentures supplemental thereto and any other requisite
documents that will, in the opinion of such counsel, be required to maintain
the lien and perfected first priority security interest of the Indenture with
respect to the Trust Estate. The fees and expenses incurred in connection
with each such Opinion of Independent Counsel will be Administrative Expenses
payable in accordance with the terms of the Indenture, and any such fees and
expenses not so paid will be paid by the Trustee, to the extent funds are
available from the Trust Estate or are otherwise provided to the Trustee, on
behalf of the Issuer subject to the Trustee's right of reimbursement
therefor. In addition, the Issuer will furnish to the Trustee the Opinions
of Counsel required pursuant to TIA Section 314(b).
Performance of Obligations
The Indenture provides that the Issuer shall not take any action, and
will use its best efforts not to permit any action to be taken by others,
that would release any Person from any of such Person's covenants or
obligations under the Mortgage Note Documents or the CRC Leases or under any
instrument included in the Trust Estate or which would result in the
amendment, hypothecation, subordination, termination, or discharge of, or
impair the validity or effectiveness of, any of the Mortgage Note Documents,
the CRC Leases or any such instrument, except as provided in the Indenture or
such Mortgage Note Document, the CRC Leases or other instrument.
Limitation on Mergers or Consolidations
The Indenture provides that the Issuer generally may not consolidate or
merge with or into any other Person or convey or transfer its properties and
assets to any Person.
Limitation on Lines of Business
The Indenture provides that the Issuer shall not engage in any business
or activity other than: (a) issuing and selling the Notes pursuant to the
Indenture and acquiring, owning, and pledging the Trust Estate in accordance
with the terms of the Indenture; (b) issuing or incurring indebtedness
permitted by the terms of the Indenture (see "- Certain Covenants -
Limitations on Additional Indebtedness"); and (c) engaging in any other
activities which are necessary, suitable, or convenient to accomplish the
matters set forth above or are incidental thereto or connected therewith.
The organizational documents of the Issuer provide that the Issuer is
restricted to engaging only in such business or activities.
Limitations on Transfer and Encumbrance of Trust Estate
The Indenture provides that the Issuer will not sell, transfer,
exchange, or otherwise dispose of, or pledge, mortgage, hypothecate, or
otherwise encumber (or permit such to occur or suffer such to exist), any
part of the Trust Estate, except as expressly permitted by the Indenture.
Limitation on Payment of Taxes
The Indenture provides that the Issuer will not claim any credit on, or
make any deduction from, the principal or interest payable with respect to
the Notes (other than the amounts required to be withheld in accordance with
the Code) or assert any claim against any present or future Holders of Notes,
by reason of the payment of any taxes levied or assessed upon any part of the
Trust Estate.
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Restrictions on Issuer's Exercise of Lessor's Rights Under Leases
The Indenture provides that the Issuer shall not exercise any right of
the Lessor under either of the CRC Leases (including, without limitation, any
right to make any election or determination or give any consent, direction,
or waiver under such CRC Lease) without the prior written approval of the
Trustee, all of which rights are assigned to the Trustee by virtue of the CRC
Lease Assignments, including the collateral assignments thereof by the Issuer
to the Trustee. To the extent any such consent may not be unreasonably
withheld by CRC-I or CRC-II under the applicable CRC Lease, the Trustee and
the Holders of Notes shall be bound by such reasonableness standard.
Limitation on Status as Investment Company
The Indenture provides that the Issuer shall at all times while the
Notes are outstanding take all actions necessary to ensure that the Issuer is
at all times exempt from and need not register as an "investment company"
under the Investment Company Act, and shall at no time allow itself to be
controlled by an "investment company" as defined in the Investment Company
Act.
Restriction on Purchase of Notes
The Indenture provides that the Issuer may not acquire any Notes.
Reports and Other Information
Reports
The Issuer is required to deliver to the Trustee, to be provided to the
Holders of Notes, copies of the annual reports and of the information,
documents, and other reports (or copies of such portions of any of the
foregoing as the Commission may by rules and regulations prescribe) that the
Issuer is required to file with the Commission pursuant to Section 13 or
15(d) of the Exchange Act. To the extent that the Issuer is not subject to
the reporting requirements of Section 13 or 15(d) of the Exchange Act, the
Issuer is required to file with the Commission and provide to the Trustee, to
be provided to the Holders of Notes, such annual and quarterly reports and
such information, documents and other reports (or copies of such portions of
any of the foregoing as the Commission may by rules and regulations
prescribe) as are specified in Sections 13 and 15(d) of the Exchange Act.
The Issuer is also required to make such reports available to prospective
purchasers of the Old Notes upon the request of any beneficial holder or
Holder of Old Notes. The Issuer shall also provide any other information
required by TIA Section 314(a).
Provision of Rule 144A Information
During the period beginning on the original issuance date of the Old
Notes and ending on the date that is three years from such date, the Issuer
will, during any period in which the Lessee or the Issuer is not subject to
Section 13 or 15(d) under the Exchange Act, make available to any beneficial
holder or Holder of Old Notes in connection with the sale thereof, and to any
prospective purchaser of Old Notes from such beneficial holder or holder, the
information required to be delivered pursuant to Rule 144A(d)(4) under the
Securities Act upon the request of such beneficial holder or Holder of Old
Notes.
Statement as to Compliance
Promptly upon request by the Trustee or any Holder of Notes, the Issuer
will deliver to the Trustee an Officer's Certificate stating, as to each
signer thereof, that:
(a) a review of the activities of the Issuer during the preceding
six-month period and of the Issuer's performance under the Indenture has
been made under his or her supervision; and
(b) to the best of his or her knowledge, based on such review, the
Issuer has fulfilled all of its obligations under the Indenture and the
Mortgage Note Documents throughout such six-month period, has
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complied fully with the terms and provisions hereof and no Default
exists thereunder, or, if there has or had been a Default during such
quarter, specifying each such Default known to him and the nature and
status thereof.
In addition, the Issuer is required to furnish to the Trustee, not less
often than annually, an Officer's Certificate as to such officer's knowledge
of the Issuer's compliance with all conditions and covenants under the
Indenture.
Payment Date Statement
The Issuer is required under the Indenture to prepare a statement (the
"Payment Date Statement") not later than the second business day preceding
each Payment Date. Upon request by the Trustee, the Issuer shall provide or
cause the Lessee to provide the Trustee with all information not in the
Trustee's possession and necessary to prepare each Payment Date Statement in
a timely manner. The Trustee shall forward copies of the Payment Date
Statement to each Holder of Notes on each Payment Date and the Trustee shall
not be liable for any error made in calculating or otherwise determining the
information required to be set forth in the Payment Date Statement as set
forth in the Indenture, except for any error resulting from negligence,
willful misconduct, or bad faith on the part of the Trustee or its employees.
Pursuant to the terms of the Indenture, the Issuer is required to indemnify
the Trustee for any loss, liability or expense incurred without negligence,
willful misconduct or bad faith on the part of the Trustee or its employees
arising out of the Trustee's preparation and delivery of the Payment Date
Statement and disbursements made pursuant thereto.
Events of Default and Remedies
The Indenture defines an "Event of Default" as one of the following
events: (a) the occurrence and continuance of any CRC Lease Event of Default
or Mortgage Event of Default (see "Description of the Leases - Defaults and
Remedies"); (b) the failure by the Issuer to pay any interest, premium or
principal on any Note or to make any deposit required under the Notes to be
made to the Sinking Fund Account or the Administrative Expenses Account, when
due and payable; (c) the failure by the Issuer to perform or observe any
other term, provision, covenant, obligation, or agreement of the Indenture
and, subject to certain exceptions, the continuance of such failure for a
period of 30 days from the earlier of actual knowledge thereof by any
Responsible Issuer Officer or written notice thereof to the Issuer by the
Trustee or to the Issuer and the Trustee by any Holder of Notes; (d) if any
representation, warranty or certification made by or on behalf of the Issuer
in or pursuant to the Indenture or by the Issuer in or pursuant to any other
document entered into by the Issuer or in connection with any of the
transactions contemplated by the Indenture or any other document entered into
by the Issuer in connection with any of the transactions contemplated by the
Indenture shall prove to have been false or incorrect on the date as of which
made and such breach remains uncured 30 days after notice thereof has been
given to the Issuer or after the expiration of any reasonable and necessary
extension (which shall not be for more than 90 days) given by the Trustee for
those misrepresentations which by their nature cannot be cured in 30 days and
which Issuer is diligently proceeding to cure; (e) certain events of
bankruptcy, insolvency, reorganization or similar proceedings in respect of
the Issuer, CRC-I, CRC-II, Foodmaker or any General Partner; or (f) default
by any party under the Registration Rights Agreement.
If an Event of Default occurs and is continuing, the Majority
Noteholders may declare the principal of all the Notes to be immediately due
and payable by written notice to the Issuer and the Trustee, and upon any
such declaration such principal, together with interest accrued thereon and
any premium payable in connection therewith, shall become immediately due and
payable; provided, however, that if an Event of Default specified in
clause (e), above, occurs, then such principal, together with interest
accrued thereon and any premium payable in connection therewith shall become
immediately due and payable without any such declaration, demand, presentment
or notice or any other action (all of which are waived) and references herein
to "declaration of acceleration" shall include such automatic acceleration.
At any time after such a declaration of acceleration of Maturity has
been made and before a judgment or decree for payment of the money due has
been obtained by the Trustee, the Majority Noteholders, by written notice to
the Issuer and the Trustee, may rescind and annul such declaration and the
consequences thereof if: (a) the Issuer has paid or irrevocably deposited
with the Trustee on behalf of the Holders of Notes a sum sufficient to pay:
(i) all overdue installments of interest, premium, if any, and principal on
all Notes; (ii) all sums paid or advanced by the Trustee hereunder and the
reasonable compensation, expenses, disbursements, and advances, if any, of
the Trustee and its agents and counsel; and (iii) all sums payable to the
Holders of Notes pursuant to the terms of the Indenture and the reasonable
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compensation, expenses, disbursements, and advances of their counsel;
and (b) all Events of Default, other than the non-payment of the interest on
or principal of Notes that have become due solely by such acceleration, have
been cured or waived as provided in the Indenture.
Subject to certain provisions of the Indenture regarding the impairment
or waiver of specified rights of a Holder of Notes, (including, but not
limited to, the right to receive payment of the principal, premium, if any,
or interest on or after the Payment Dates expressed in such Notes), no Holder
of Notes shall have any right to institute any Proceedings, judicial or
otherwise, with respect to the Indenture, or for the appointment of a
receiver or trustee, or for any other remedy thereunder, unless, among other
things:
(a) the holders of not less than 25% in Aggregate Outstanding
Amount of Notes shall have made written request to the Trustee to
institute Proceedings in respect of such Event of Default in its own
name as Trustee hereunder;
(b) such Holder(s) of Notes have offered to the Trustee reasonable
indemnity;
(c) the Trustee has failed to institute any such Proceeding within
30 days after its receipt of such notice, request and offer of
indemnity; and
(d) no direction inconsistent with such written request has been
given to the Trustee during such 30-day period by the Majority
Noteholders.
In the event the Trustee receives conflicting or inconsistent requests
and indemnity from two or more groups of Holders of Notes, neither group
constituting the Majority Noteholders, the Trustee in its sole discretion may
determine what action, if any, will be taken.
Modification of the Indenture
The Indenture provides that the Trustee and the Issuer may enter into an
indenture or indentures supplemental to the Indenture for the purpose of
adding any provisions to, or changing or eliminating any of the provisions of
the Indenture or of modifying the rights of the Holders of Notes under the
Indenture, except in certain circumstances that will require unanimous
consent, including without limitation (i) changes with respect to payment of
principal, premium and interest (upon redemption, maturity or otherwise),
(ii) the creation of any lien ranking prior to or on a parity with the lien
of the Indenture with respect to any part of the Trust Estate, and
(iii) termination of the lien of the Indenture.
The Indenture also provides that the Issuer and the Trustee may amend or
supplement the Indenture or the Notes without the consent of or notice to the
Holders of Notes to, among other things, (i) provide for the issuance of the
New Notes to be exchanged for Old Notes pursuant to a Registered Exchange
Offer (as defined in the Registration Rights Agreement), (ii) cure any
ambiguity, defect or inconsistency, (iii) make any change that does not
materially and adversely affect the legal or other rights of any Holder of
Notes, (iv) evidence and provide for the acceptance of appointment thereunder
by a successor Trustee, or (v) comply with any requirements of the Commission
in connection with the qualification of the Indenture under the TIA.
The Indenture further provides that the provision regarding the
withdrawal of funds from the Sinking Fund Account shall not be amended or
supplemented without the prior written consent of Foodmaker.
Satisfaction and Discharge of the Indenture
The Indenture will be discharged and the liens Granted thereunder will
cease and the Issuer will be relieved of all obligations thereunder, provided
no Default (as defined in the Indenture) or Event of Default has occurred and
is continuing, except as to (i) rights of registration of transfer and
exchange, (ii) substitution of mutilated, destroyed, lost or stolen Notes,
(iii) the rights of Holders of Notes to receive payments of principal and
interest, (iv) the rights, obligations and immunities of the Trustee
thereunder, and (v) the rights of Holders of Notes as beneficiaries with
respect to the property deposited with the Trustee and payable to all or any
of them; and the Trustee, on demand of and at the expense of
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the Issuer, shall execute proper instruments acknowledging satisfaction
and discharge of the Indenture (except as limited above), when:
(1) all Notes theretofore authenticated and delivered (subject to
certain exceptions set forth in the Indenture) have been paid in full;
(2) the Issuer has paid or caused to be paid in full all other sums
payable under the Indenture; and
(3) the Issuer has delivered to the Trustee an Officer's Certificate
and Opinion of Counsel stating that all conditions precedent to the
satisfaction and discharge of the Indenture with respect to the Notes have
been complied with.
Concerning the Trustee
The Indenture provides that, except during the continuance of an Event
of Default, the Trustee will perform only such duties as are specifically set
forth in the Indenture. The Majority Noteholders will have the right to
direct the time, method and place of conducting any Proceeding for any remedy
available to the Trustee or any right, remedy, trust or power conferred on
the Trustee, subject to certain exceptions. The Indenture provides that
following an Event of Default and acceleration of the indebtedness incurred
under the Indenture, the Trustee will be required, in the exercise of its
power, to use the same degree of care and skill as a prudent person would
exercise or use under similar circumstances in the conduct of such person's
own affairs. Subject to certain provisions of the Indenture, the Trustee
will be under no duty to exercise any of its rights or powers under the
Indenture at the request of any Holder of Notes, unless such holder shall
have offered to the Trustee reasonable indemnity against the costs, expenses
and liabilities to be incurred in compliance with such request.
The Indenture and the TIA contain certain limitations on the rights of
the Trustee, should it become a creditor of the Issuer, to obtain payment of
claims in certain cases or to realize on certain property received in respect
of any such claim as security or otherwise. Subject to the TIA, the Trustee
will be permitted to engage in other transactions, provided that if the
Trustee acquires any conflicting interest as described in the TIA it must
eliminate such conflict or resign.
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DESCRIPTION OF THE LEASES
Concurrently with the acquisition by CRC-I of the Estate For Years in
the Existing Assets (other than the Potential Existing Asset), CRC-I leased
such Existing Assets to Foodmaker pursuant to the CRC-I Lease. Similarly,
concurrently with the acquisition by CRC-II of the Estate For Years in the
Construction Assets (other than the Potential Construction Assets), CRC-II
leased such Construction Assets to Foodmaker pursuant to the CRC-II Lease.
As CRC-I acquires the Estates For Years in the Potential Existing Asset,
upon the acquisition by Foodmaker of the fee interest in the locations
thereof (subject to Foodmaker's right of Substitution as it relates to the
Potential Existing Asset, as described in "- Right of Substitution"), the
CRC-I Lease will be amended to subject such Potential Existing Asset to the
CRC-I Lease. Likewise, as CRC-II acquires the Estate For Years in the
Potential Construction Assets, upon the acquisition by Foodmaker of the fee
interest in the locations thereof (subject to Foodmaker's right of
Substitution as it relates to the Potential Construction Assets, as described
in "- Right of Substitution"), the CRC-II Lease will be amended to subject
such Potential Construction Assets to the CRC-II Lease.
Properties and Aggregate Net Rentable Building Area
The Properties are located in six states: Arizona, California,
Illinois, Missouri, Texas and Washington. These assets have been and are
expected to initially be operated as Jack In The Box restaurants and have
been and will be subject to use limitations requiring that they be used for
restaurant purposes, or other business uses within Foodmaker's principal
lines of business, for three years commencing on January 5, 1994. There are
approximately 202,000 square feet of net rentable retail space (which
includes kitchen, dining and food storage space).
Basic Term and Renewal Options
The CRC Leases became effective on January 5, 1994 and extend for an
initial period expiring on November 1, 2003 (the "Basic Term"). Provided
that the Notes are repaid and the Note Collateral is released from the lien
of the Indenture, Lessee may exercise, separately and independently with
respect to each Leased Property, four successive renewal terms ("Renewal
Terms") of five years each (except that the Renewal Term will be six years
with regard to those Properties in which the Estates For Years have been
purchased by Lessee pursuant to the Year Nine Offer), plus a fifth renewal
term ending November 30, 2028, exercisable by written notice to Lessor no
later than 30 days after the date Lessor delivers to Lessee a valid Year Nine
Rejection Notice or Rejection Notice pursuant to the terms of the CRC Leases
and no later than 180 days prior to the expiration of each Renewal Term
thereafter.
Rental Rates
The CRC Leases require Foodmaker to pay the amount of $6,875,000 per
year in the aggregate for all of the Properties, payable in arrears in two
equal semi-annual installments through the end of year nine of the Basic
Term, each of which is due on or before the last business day of June and
December in every year of the Basic Term commencing on the last business day
of June, 1994 ("Basic Rent"). This payment will adjust in the case of an
Early Termination of a Property to reflect the principal reduction under the
terms of the CRC Notes. Foodmaker is liable for the full Basic Rent payment
relating to the Existing Assets and the Construction Assets commencing on
January 5, 1994 regardless of the status of acquisition of the Potential
Existing Asset or the Potential Construction Assets or construction of the
Construction Assets.
With each semi-annual payment of Basic Rent, the Lessee will also be
obligated to make a special rent payment in arrears in the amount of $747,402
through year nine, which payment will be paid directly to Trustee on behalf
of CRC-I or CRC-II (as applicable) and will be deposited in the Sinking Fund
Account (the "Special Rent"). In addition, at the beginning of year ten
(i.e., the first business day of January, 2003) the Lessee will be obligated
to make a special rent payment in an amount equal to the difference between
$23,000,000 and the balance on deposit in the Sinking Fund Account. The
foregoing semi-annual special rent payments of $747,402 and the special rent
payment equal to the difference between $23,000,000 and the balance in the
Sinking Fund Account at the beginning of year ten will adjust in the case of
the Early Termination of any Property.
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All amounts which Lessee is required to pay or discharge pursuant to the
Lease in addition to Basic Rent and Special Rent (including every fee,
charge, overdue interest and cost which may be added for nonpayment or late
payment thereof) will constitute additional rent ("Additional Rent").
Rents payable pursuant to the Leases may not be decreased without the
consent of the Majority Noteholders.
Maintenance, Repairs and Alterations
At its own expense, Lessee is required to keep the Leased Properties in
good order, condition and repair, ordinary wear and tear or loss by fire or
other casualty excepted, and in compliance with all Legal Requirements and
Environmental Laws, subject to certain rights to contest set forth in the
Leases.
Lessee, at its sole cost and expense, may make alterations and
improvements to the Leased Properties without Lessor's prior consent, free
and clear of liens, provided that the alterations or improvements do not
diminish the value of such properties.
Title to alterations and improvements vests in Lessor subject to the
term of the Estates For Years. Title to Trade Fixtures (as defined in the
Leases) and other personal property and operating equipment of Lessee remains
with Lessee and Lessee may remove its Trade Fixtures and other personal
property and operating equipment at any time during the term of the Leases,
provided that Lessee repairs any damage to the Leased Properties resulting
from such removal.
It is anticipated that all of the Properties will require some capital
improvements over the next ten years. Generally, Foodmaker expects that its
restaurants will require interior improvements approximately every five years
and exterior improvements approximately every ten years.
Utilities and Taxes
During the term of the Leases, Lessee must pay for all utility,
communication and other services furnished to the Leased Properties to the
extent rendered or used on or about such properties. Lessee must also pay
all real property taxes and any general and special assessments subject to
certain rights to contest set forth in the Leases. Lessee is not obligated
to pay taxes levied against Lessor unless those taxes are in lieu of any tax
or assessment that would be payable by the Lessee under the Leases. Lessee
must pay all taxes, assessments, license fees and other charges that are
levied or assessed against its personal property and Trade Fixtures.
Insurance
The Leases obligate Lessee to maintain standard fire and extended
coverage insurance, including endorsements for vandalism, malicious mischief,
business interruption and sprinkler leakage (herein "All Risks Insurance"),
on the Leased Properties covering all replacements and additions thereto and
all building materials and other property which constitute part of such
properties in a manner consistent with insurance maintained by Lessee on
properties similar to such properties and in any event in amounts not less
than the actual replacement cost of such properties, excluding land cost and
other uninsurable items and with deductibles customarily maintained by
Lessee. Each Lessee requires Lessee to maintain comprehensive general
liability insurance, in the minimum amount of $5,000,000 per occurrence for
bodily injury and/or property damage, for all of the Properties collectively,
not individually, leased thereunder. Lessee is required to obtain insurance
from insurance companies with a General Policy Rating of "A:VIII" or better
in Best's Key Rating Guide and a Standard and Poor's Corporation rating of
"B+" or better or a Moody's Investors Service, Inc. rating of Ba3 or better.
Lessor's insurance policy rights will be assigned to the Trustee and the
Trustee will be named as an additional insured with respect to such policies.
The minimum limits of the required insurance will in no way limit the
liability of Lessee under the Leases.
Management believes that the above-described insurance should be adequate
to cover any liability of the Issuer, CRC-I or CRC-II as owners or landlords
of the Leased Properties, but that such coverage could be insufficient to
cover Foodmaker's liability as operator of the restaurants located on the
Leased Properties in the event of a catastrophic situation.
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Indemnification
Lessee must indemnify and hold the Indemnified Parties harmless from any
and all claims resulting from Lessee's use of the Leased Properties or
otherwise relating to such properties during the term of the Leases.
Furthermore, Lessee must provide indemnification to each Indemnified Party
for any and all environmental contamination or damage which occurs prior to
the expiration of the Leases. Lessee is required to remediate any
environmental contamination in accordance with applicable laws. While no
assurances can be given as to the absence of material environmental
contamination relating to any of the Properties, Lessee is not aware of any
such material contamination. Neither Lessee nor any of its affiliates has
been named as a Potentially Responsible Party with respect to any of the
Properties.
Damage, Destruction or Condemnation
If a Leased Property is totally or partially destroyed by fire or other
casualty, or is subject to a taking by a governmental authority pursuant to
condemnation or other like action, Lessee must restore the Leased Property to
substantially its previous condition, whether or not the insurance or
condemnation proceeds are sufficient to cover the cost of restoration, unless
Lessee elects to effect a Substitution or an Early Termination. Lessee may
not terminate the Leases and is not entitled to an abatement of rent (except
for rental adjustments resulting from an Early Termination) in the event of
such damage, destruction or condemnation. Insurance or condemnation proceeds
in excess of $500,000 for any one Leased Property or $3,000,000 in the
aggregate at any time will be held by the Trustee and disbursed in progress
payments as the work of restoration progresses, or, if Lessee elects a
Substitution or Early Termination, upon consummation of such Substitution or
Early Termination.
Right of Substitution
Lessee may effect a Substitution of any Property with a Substitute
Property in any of the following circumstances: (i) a casualty or
condemnation which, upon the sole determination of Lessee, renders the Leased
Property permanently unsuitable for continuation of the then existing
business use, (ii) Lessee determines any Leased Property to be economically
infeasible for continuation of the then existing business, or (iii) in the
case of the Potential Construction Assets or Potential Existing Asset, prior
to being subjected to the applicable Lease.
The Substitute Property must have a fair market value not less than the
then current fair market value of the Property subject to the applicable
Lease as confirmed by an independent appraisal (or as certified by Foodmaker
in the case of a Substitute Property substituted for a Potential Construction
Asset or Potential Existing Asset prior to being subjected to the applicable
Lease) at the time of such Substitution. Foodmaker must (i) convey to the
applicable Lessor an Estate For Years of a duration equal to the then
remaining Estate For Years of the substituted Property and lease-back from
Lessor the Substitute Property in accordance with the terms of and for the
remaining term of the applicable Lease, and (ii) pay all charges incident to
such conveyance of the Substitute Property. Such Substitute Property must
also be encumbered as collateral for the CRC Notes pursuant to a deed of
trust which would, in turn, be pledged as collateral for the Notes.
Foodmaker will receive a release from the lien of the Indenture, the
applicable deed of trust and Lease as it relates to the Property for which
another Property has been substituted.
Early Termination; Lease Modification
At any time after the first business day of January, 1999, Lessee will
have the right to effect an Early Termination with respect to any Property
from the applicable Lease. In order to do so, the Lessee must initially make
a "Special Sinker Rent" payment of 23/35ths of the Termination Value for the
Property. The Lessee must then make an offer to purchase the Property for a
price which is no less than the Termination Value of such Property plus the
Termination Premium thereon (equivalent to the Prepayment Premium applicable
to the CRC Notes) minus the "Special Sinker Rent" payment. These payments
will be made directly to the Trustee and applied as prepayments under the CRC
Notes. The applicable Lessor may reject this offer only if it counteroffers
with a higher price and only if it has prepaid the applicable portion of the
applicable CRC Note plus the prepayment premium. (See "Terms of the
Transaction - Payments at Option of the
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Issuer.") No further "Special Sinker Rent" is due once payments of "Special
Sinker Rent" in the aggregate amount of 23/70ths of the Termination Values
of all Properties have been made.)
Upon any Early Termination, the Basic Rent and Special Rent payments due
under the applicable Lease will be adjusted to reflect the reduction in the
principal balance of the applicable CRC Note. Foodmaker will receive a
release from the lien of the Indenture, the applicable deed of trust and
Lease as it relates to the Property so terminated. Foodmaker will also be
entitled to apply a portion of the Sinking Fund Account balance to the
"Special Sinker Rent" payment due under the CRC Leases.
Under the terms of the Indenture, the Lessors may neither alter nor
terminate the Leases before the expiration of the Basic Term under the
Leases.
Assignment/Subletting; Surrender
Lessee may sublease all or any part of the Leased Properties to
subtenants. The term of the sublease may not extend beyond the then current
term of the Leases. Any subletting by Lessee will not relieve Lessee of any
of its obligations under the Leases. Lessee may assign its rights and
obligations under either Lease provided there is no default and such an
assignment shall not operate to release Lessee from its obligations under the
Leases. The Leases provide that all of their provisions will bind the
parties and their respective permitted successors and assigns.
Surrender or mutual cancellation of the Leases will, at Lessor's option,
operate as an assignment to it of any or all approved subleases or
subtenancies.
Defaults and Remedies
Lease Defaults by Lessee are defined in the Leases to include:
(i) failure to pay rent for all of the Properties under each of the CRC-I
Lease and the CRC-II Lease when due; (ii) failure to observe or perform any
covenants or provisions of the Leases, where such failure is not cured within
thirty (30) days after written notice from Lessor of such failure (or such
additional period of time as may be reasonable to cure the same with
reasonable diligence); (iii) the making by Lessee of any general assignment
for the benefit of creditors, filing by Lessee of any bankruptcy petition or
a filing against Lessee of any bankruptcy petition which is not dismissed
within sixty (60) days, the appointment of a trustee or receiver to take
possession of Lessee, Lessee's interest in any Property or all or a
substantial part of Lessee's other assets or the attachment or levy upon
Lessee's interest in any Property which is not discharged within sixty (60)
days; (iv) a final judgment for payment in excess of $1,000,000 is rendered
against but not remitted by Lessee within sixty (60) days of such judgment
(subject to Lessee's right to appeal such judgment and post a stay bond);
(vi) an acceleration of Lessee's obligations under any single indebtedness or
capital lease in excess of $25,000,000 or under more than one indebtedness or
capital lease in the aggregate amount of $50,000,000 has occurred.
Upon a Lease Default, subject to applicable state laws, Lessor has the
following rights: (i) to accelerate Lessee's obligation to make the
Rejectable Offers described below, in which case the purchase price payable
shall be not less than the Termination Values of all Properties covered
thereby, plus the Termination Premium applicable thereto (See "Description of
the Underlying Transactions - Optional Prepayment "), (ii) to terminate
Leases and recover damages for default; and (iii) to continue the Leases in
effect and recover rent and all other payments as they become due. The
transaction documents include certain limitations on the ability of the
Lessor to terminate the Leases and recover payments due from Lessee in an
amount in excess of the difference between (A) the Termination Values of all
Properties covered thereon, plus the Termination Premium applicable thereto
and (B) the fair market value of the Estates For Years for the Properties
covered by the applicable Lease for the remaining term of such Estates For
Years.
Rejectable Offer Requirements
By the beginning of year ten, the outstanding balance of the Notes must
be reduced to $35,000,000 or less. The balance on deposit in the Sinking
Fund Account plus Special Rent payments due during year nine is expected to
be sufficient to discharge $23,000,000 of that obligation. The funds
required to pay the remaining $12,000,000 are expected to come from the Year
Nine Offer, in which the Lessee is required to make an irrevocable offer to
purchase for at least
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$12,000,000, CRC-I's and CRC-II's Estates for Years in various
Properties (the Termination Values of which, when added together,
total $35,000,000). To the extent that the Lessee has elected Early
Termination or has exercised its Year Nine Option, the amount required to be
funded by the Year Nine Offer will be reduced. The purpose of the Year Nine
Offer (taking into account any Early Termination election or exercise of the
Year Nine Option by Lessee), together with the application of funds in the
Sinking Fund Account and Special Rent payments, is to reduce the original
balance of the Notes by 50% and to reduce the total Termination Values of the
Properties by approximately 50%.
Under the Leases, Lessee must also, prior to the end of the Basic Term,
make the Termination Date Rejectable Offer to purchase the Estate For Years
in the remaining Properties covered thereby for a purchase price at least
equal to the Termination Values of such Properties. This payment shall be
sufficient to pay the remaining principal balance due under the CRC Notes on
November 1, 2003. The amounts due under the Rejectable Offers will be
reduced to the extent Foodmaker exercises its option to purchase (described
below) some or all of the Estates For Years or elects Early Termination.
If Lessor accepts the Rejectable Offers, the applicable Estates For
Years must be conveyed to Lessee in accordance with the provisions in the
Leases and the purchase price under the Rejectable Offers shall be delivered
to the Trustee for payment of the principal and interest then due under the
Notes.
Pursuant to the terms of the Leases, the applicable Lessor has the right
to reject each Rejectable Offer. However, pursuant to the terms of the
Indenture, the applicable Lessor may only reject each Rejectable Offer
provided Lessor shall deposit with Trustee cash in the amount necessary to
pay the principal and interest then due under the Notes, less the amount
available in the sinking fund. Should Lessor reject any Rejectable Offer,
Lessee may elect to exercise any one of the following options on a Property-
by-Property basis:
(1) Terminate the Lease as of the last day of the Basic Term.
(2) Extend and renew the Lease pursuant to the Renewal Options.
(3) Elect to merge its reversionary interest with the Estate For Years
in such Property, in which event either the Lessee will purchase the
applicable Lessor's Estate For Years or the applicable Lessor will purchase
the Lessee's reversionary interest in such Property at the prices designated
in the Lease.
Right of First Refusal and Option Right
Lessee shall have the right and option, exercisable within 15 business
days, to elect to purchase one or more of the applicable Lessor's Estate For
Years in the Leased Properties if the applicable Lessor receives a bona fide
written offer to purchase one or more Leased Properties and if Lessor intends
to accept such an offer. Exercise of such right and option shall not affect
the deed of trust encumbering such Leased Property as security for the CRC
Notes, nor shall such right apply to a foreclosure sale; but provided no
Lease Default is continuing such right shall remain exercisable after a
foreclosure sale. There shall be no merger of the lessee's leasehold estate
and the Estate For Years on account of any such acquisition of an Estate For
Years.
Lessee shall have an option to purchase, at the beginning of year ten,
the applicable Lessor's Estate For Years in one or more Leased Properties
having Termination Values not in excess of 50% of the Termination Values of
all the Leased Properties. The option price will equal the fair market value
of the relevant Estate For Years provided that it must be not less than 12/35
of the Termination Values of such Leased Properties. CRC-I and CRC-II will
be obligated to make an additional principal payment equal to the difference
between $35,000,000 and the balance in the sinking fund which will be covered
by the Special Rent payment payable on the last business day of December
2002. Lessee shall also have an option to purchase the applicable Lessors'
Estate For Years in one or more of the Leased Properties on the last day of
the Basic Term or the last day of any Renewal Term or Extended Term. The
option price will equal the Fair Market Value of the relevant Estate For
Years, provided that if the option is exercised on or about the last day of
the Basic Term, the option price shall not be less than the Termination
Values of the Remaining Properties. Exercise of either such option shall not
affect the deed of trust encumbering such Leased Property as security for the
CRC Notes, but provided no Lease Default is continuing, such options shall
remain exercisable after a foreclosure sale.
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CERTAIN LEGAL ASPECTS OF REAL PROPERTY LEASES
Concurrently with the acquisition by CRC-I of the Estate for Years in
the Existing Assets (other than the Potential Existing Asset), and
concurrently with the acquisition by CRC-II of the Estate for Years in the
Construction Assets (other than the Potential Construction Assets), CRC-I
leased the Existing Assets back to Foodmaker pursuant to the CRC-I Lease, and
CRC-II leased the Construction Assets back to Foodmaker pursuant to the CRC-
II Lease. The CRC-I Lease is to be periodically amended to include the
Potential Existing Asset as CRC-I acquires an Estate for Years with respect
to such Properties, and the CRC-II Lease is similarly to be amended to
include the Potential Construction Assets as CRC-II acquires an Estate for
Years with respect to such Properties.
Certain issues can arise following lessee's breach of its obligations or
following lessee's violation of the various restrictions set forth in the
lease. Generally, a lease will not automatically terminate upon such a
default by the lessee, nor will the lessor automatically be entitled to
regain possession of the leased premises. Rather, the lessee's default
entitles the lessor to enforce certain rights and proceed with certain
remedies, which rights and remedies might include monetary damages, specific
performance and/or the right to terminate the lease and regain possession of
the leased premises. However, as explained below, a lessor is generally not
entitled to use self help in enforcing the terms of the lease, but rather,
the lessor must follow certain procedures dictated by applicable law,
particularly where the desired remedy is eviction of the lessee and
termination of the lease. A lessor is also generally entitled to waive its
rights upon such a default, and may allow the lessee to remain in possession
and continue the lease notwithstanding lessee's default.
A lessor's rights and remedies with respect to a lessee's default under
a lease, as well as the requisite methods for enforcing those rights, vary
significantly from state to state, and are usually dictated by specific
applicable law. In most instances the applicable law will be the law of the
state where the leased premises are located, although the parties may attempt
to direct that another jurisdiction's laws apply to the provisions of the
lease. Such choice of law provisions, however, are not always automatically
applied by the courts. Generally, the specific statutory law of the
appropriate jurisdiction covering landlord/tenant rights and remedies will
apply, and the lessor is generally required to strictly comply with these
statutory provisions in order to enforce its rights under the lease.
Mandatory compliance with many of these statutory provisions and requirements
may be required regardless of the parties desires to the contrary, and
regardless of the express language of the lease. As a result, a lessor
facing a breach by its lessee of the obligations set forth in the lease may
discover that it is not able to avail itself of all of the rights specified
in the lease, at least without strictly complying with the applicable
statutes. Such compliance may involve actions or procedures not described in
or otherwise implied by the language of the lease and may delay or otherwise
impede the enforcement of the written provisions of the lease.
With specific respect to the CRC-I Lease and the CRC-II Lease, the
governing law is stated to be the law of the state of California, however,
specific provisions concerning the law of the various other States where the
Properties in question are located have also been included. These
provisions, as well as any other statutorily mandated requirements in the
jurisdictions where the Properties are located, will apply in the event of
Foodmaker's default of its obligations under the CRC Leases. While there are
a variety of restrictions and obligations under the CRC Leases which
Foodmaker might breach, Foodmaker's breach of its obligation to pay rent
under the CRC Leases as and when due may be the most potentially damaging to
the Holders of Notes. Moreover, the statutory requirements of a lessor
discussed above will apply to such a default by Foodmaker, requiring that CRC-
I and CRC-II (or the Trustee) follow certain procedures in response thereto.
Again, these requirements vary from state to state and the paragraphs below
summarize the existing statutory procedure in the States of California and
Texas, where a majority of the Properties are located.
Lessor's Rights Upon Lessee's Default Under California Law
Under California law, if a lessee has defaulted on its obligation to pay
rent, the lessor is entitled to recover possession of the leased premises
from the lessee, in addition to monetary damages and other remedies.
However, recovery of possession cannot occur automatically, even if the lease
itself contains an express self operative forfeiture provision. Rather, the
lessor would be obligated to follow the statutory procedures specifically set
forth in the California statutes, which procedure is typically referred to as
an action in unlawful detainer. The unlawful detainer action is intended to
provide a lessor with an expeditious means of recovering possession of the
leased premises following lessee's breach of the lease; however, it has
certain limitations, and as a rule, strict compliance with all aspects of the
statutory
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procedure is required. Although other possible remedies exist in
California such as an action to quiet title and an action for ejectment,
unlawful detainer is by far the most prevalent and is generally the most
advantageous for the lessor.
California's unlawful detainer procedure requires the lessor to provide
lessee with a three (3) day written notice to either pay the rent or quit
possession of the leased premises. Such notice is only required if the
lessor seeks to evict the lessee and recover possession of the leased
premises, it is not necessarily required where alternative remedies such as
monetary damages are being sought. The notice must be served upon lessee in
strict accordance with the statute, must include a statement as to the
specific covenant breached, and if the same be the payment of rent, must set
forth the amount of rent then owing but unpaid. The lessor must also demand
in its notice lessee's payment of the rent or performance of the breached
obligation, and it must also state that if payment is not made or performance
is not had within three (3) days following service thereof, lessee must
relinquish possession of the leased premises. The lessor is obligated by
statute to accept the lessee's payment of the delinquent rent made within the
three (3) day period, and in such case the lease will not terminate but will
continue pursuant to its terms. The lessor is not obligated to accept the
lessee's payment of delinquent rent beyond the three (3) day period. If the
lessee's default is of a non-monetary nature, the lessor will not be entitled
to terminate the lease unless the lessee's non-monetary default or breach is
of a "material" or "substantial" nature, which determination is an issue of
fact to be decided by a court of law. Regardless of any express language in
the lease to the contrary, under California law, absent a voluntary
abandonment or surrender of the leased premises by lessee, a lessor may not
retake possession of the leased premises following lessee's default without
complying with the aforesaid statutory requirements, and doing otherwise may
result in lessor waiving its rights to so terminate, and in a breach of
lessor's obligation to provide lessee with quiet enjoyment of the leased
premises under the lease.
Because the primary purpose of an unlawful detainer action is to provide
a summary procedure for the recovery of possession of real property, the
scope of the proceedings are limited to issues regarding possession. As a
result, the lessee's response, which must be provided within five (5) days,
is required to be very limited in scope. With the exception of certain
claims specifically set forth in the statute, the lessee is not permitted to
cross-complain or otherwise raise affirmative defenses unrelated to the issue
of possession. It is possible, however, for the court to inquire into the
equitable considerations affecting lessee's right to possession, such as
whether the lessee's relationship with its lessor is something beyond a
landlord/tenant relationship. Similarly, the lessor's right to recover
additional monetary damages under the unlawful detainer action are
restricted. The additional monetary damages obtainable by the lessor are
specifically described by California statutes, and must be sought in a
separate civil action apart from the unlawful detainer action. Because the
primary purpose of the unlawful detainer action is to regain possession, the
lessee will only be entitled under such action to recover the amount of the
unpaid rent owing up to the date of termination, and the amount accruing
after termination through the unlawful detainer judgment (plus reasonable
costs associated with the action and attorney fees if so provided in the
lease). The additional monetary damages available in a separate action apart
from the unlawful detainer action include not only the unpaid rent or other
charges due and owing as of the date of termination (together with interest
thereon), but also the amount of rent which lessor could have earned but for
lessee's breach and the corresponding termination of the lease, minus the
amount which lessee demonstrates could be reasonably avoided by lessor, and
any other damages necessary to compensate lessor for the detriment which
lessee proximately caused by its failure to perform.
In a California unlawful detainer action, the lessor must first file a
complaint with the court of proper jurisdiction, and as stated above, the
lessee has five (5) days within which to respond. The lessor will generally
simultaneously file a request with the court asking for a trial date. The
lessee is generally entitled to a jury trial with full rights of discovery,
and the trial date will generally be designated within thirty (30) days of
the request (depending upon the jurisdiction); however, this period may be
significantly extended depending upon the complexities of the case. If the
lessor is successful at trial, the court will issue a judgment entitling
lessor to a writ of possession, which writ of possession the lessor is
entitled to take to the county sheriff for enforcement. The county sheriff
will thereafter instruct the lessee to vacate the leased premises, and will
further physically remove the lessee if compliance is not had generally
within five (5) additional days. Upon such vacation, lessor is entitled to
relet the leased premises without regard to the prior lease.
Lessor's Rights Upon Lessee's Default Under Texas Law
Upon a lessee's failure to pay rent in Texas, a lessor may choose to sue
immediately for anticipatory breach of the contract and recover damages for
such breach or may continue to enforce the lease and sue for rentals as they
become due. The lessor is not required to mitigate his damages by locating
another lessee to occupy the leased premises and replace the
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lost rental stream. However, if another tenant is found and takes
possession of the leased premises on behalf of the original lessee, the
landlord may recover from his original lessee only the difference between the
rent contracted for with that lessee and the rent to be paid by the
substituted tenant.
If the lessee does not voluntarily vacate the leased premises, the
lessor may recover possession of the leased premises through a statutory
remedy known as forcible detainer. Exercise of this remedy does not preclude
actions for rent or other damages. However, the forcible detainer action
must be filed in a justice court, where very low monetary limits on claims
allowed typically preclude the joinder of an action for rent in the same
proceeding. Thus, a separate action must be brought for recovery of rent.
Texas statutes require that a landlord provide at least three (3) days'
written notice prior to filing a forcible detainer suit. Unlike the
California statute, a shorter or longer notice period is allowed if so
specified in a written lease. If the landlord wishes to be eligible to
recover attorney's fees and the lease does not specify the landlord's right
to such fees, the landlord must additionally give the lessee a written demand
stating that the lessee must vacate the premises within eleven (11) days or
that lessee will be subject to a suit including the potential award of
attorney's fees to the landlord. This demand must be sent to the lessee ten
(10) days prior to the filing of the forcible detainer suit.
At the time a complaint is filed, the landlord may also file a
possession bond. The lessee may then remain in possession only by filing a
counterbond and, within six (6) days following receipt of notice of the
landlord's action, demanding trial on the issue of possession. If the
lessee fails to take such action, the lessor may be put in possession
promptly after expiration of the six-day period. Should the lessee properly
contest possession, the landlord cannot gain possession until five (5) days
following completion of the court proceeding and judgment in favor of the
landlord. An appeal of the justice court's ruling may be made by a trial de
novo in a county court. A substantial period of time may thus be consumed
by a contested forcible detainer action.
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CERTAIN FEDERAL INCOME TAX CONSEQUENCES
An exchange of an Old Note for a New Note pursuant to the Exchange Offer
will not be treated as a material change in the terms of the Old Notes. As a
result, each New Note will be treated as a continuation of the corresponding
Old Note. An exchanging Holder of Old Notes' holding period for a New Note
will include its holding period for the Old Note. In addition, such holder
will not recognize any gain or loss, and its basis and other tax attributes
with respect to the New Note will be the same as its basis and other tax
attributes with respect to the Old Note. The Exchange Offer will result in
no federal income tax consequences to a nonexchanging Holder of Old Notes.
The preceding discussion summarizing certain federal income tax
consequences of the Exchange Offer reflects the opinion of Gibson, Dunn &
Crutcher, counsel to the Issuer, as to material federal income tax
consequences expected to result from the Exchange Offer. An opinion of
counsel is not binding on the Internal Revenue Service ("IRS") or the courts,
and there can be no assurances that the IRS will not take, and that a court
would not sustain, a position contrary to that described above. Moreover,
the foregoing discussion is for general information only and does not
constitute comprehensive tax advice to any particular Holder of Old Notes.
The summary is based on the current provisions of the Internal Revenue Code
of 1986, as amended, and applicable Treasury regulations, judicial authority
and administrative pronouncements. Those consequences could be modified by
future changes in the relevant law, which could have retroactive effect.
Each Holder of Old Notes should consult its own tax adviser as to these and
any other federal income tax consequences of the Exchange Offer as well as
any tax consequences to it under state, local or other law.
LEGAL MATTERS
The validity of the New Notes offered hereby will be passed upon for the
Issuer by Gibson, Dunn & Crutcher, San Diego, California ("Counsel"). Such
firm also has rendered an opinion as to the federal income tax consequences
of the Exchange Offer. See "Certain Federal Income Tax Consequences." The
validity of the CRC-I Guaranty and the CRC-II Guaranty as to the New Notes
will be passed upon for CRC-I and CRC-II by Hinckley, Allen & Snyder,
Providence, Rhode Island.
EXPERTS
The financial statements of the Issuer, CRC-I and CRC-II, as of March 31,
1994 and December 31, 1993, and for the three months ended March 31, 1994
included in the Prospectus and Registration Statement have been included
herein in reliance on the reports of KPMG Peat Marwick, independent certified
public accountants, appearing elsewhere herein, and upon the authority of
said firm as experts in accounting and auditing. The consolidated financial
statements of Foodmaker and related schedules as of October 3, 1993 and
September 27, 1992 and for the fifty-three weeks ended October 3, 1993 and
fifty-two weeks ended September 27, 1992 and September 29, 1991, incorporated
by reference herein, have been incorporated by reference herein in reliance
upon the reports of KPMG Peat Marwick, independent certified public
accountants, incorporated by reference herein and upon the authority of said
firm as experts in accounting and auditing.
The consolidated financial statements of Family Restaurants, Inc.
(formerly The Restaurant Enterprises Group, Inc.) incorporated by reference
from Foodmaker's Current Report on Form 8-K/A dated January 27, 1994 have
been audited by Deloitte & Touche, independent auditors, as stated in their
report which includes an explanatory paragraph relating to Family
Restaurants, Inc. entering into bankruptcy on November 23, 1993, which is
incorporated herein by reference, and have been so incorporated in reliance
upon the report of such firm given upon their authority as experts in
accounting and auditing.
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GLOSSARY
Additional Rent - All amounts which Lessee is required to pay or
discharge pursuant to the Lease in addition to Basic Rent and Special Rent
(including every fee, charge, overdue interest and cost which may be added
for nonpayment or late payment thereof).
Administrative Expenses - Without duplication, the sum of: (a) certain
amounts due to and expenses incurred by the Trustee relating to the
administration and maintenance of the Trust Estate as set forth in the
Indenture; (b) any fees and expenses, other than fees and expenses paid in
connection with the issuance of the Notes, due to the respective counsel of
the Holders of Notes and the Trustee; (c) certain amounts due to Holders of
Notes; and (d) any fees and expenses payable to the Rating Agencies other
than in connection with the issuance of the Notes.
Affiliate - of any specified Person: (a) Any other Person controlling
or controlled by or under common control with such specified Person; and
(b) any partner of such Person if such Person is a partnership, or any
shareholder of such Person if such Person is a corporation. For the purposes
of this definition, "control," when used with respect to any specified
Person, means the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities,
by contract, or otherwise; and the terms "controlling" and "controlled" have
meanings correlative to the foregoing.
Agent's Message - A message, transmitted by the Book-Entry Transfer
Facility to, and received by, the Exchange Agent and forming a part of a Book-
Entry Confirmation, which states that such Book-Entry Transfer Facility has
received an express acknowledgment from the participant in such Book-Entry
Transfer Facility tendering the Old Notes which are the subject of such Book-
Entry Confirmation, that such participant has received and agrees to be bound
by the terms of the Letter of Transmittal, and that the Issuer may enforce
such agreement against such participant.
Aggregate Outstanding Amount - The aggregate principal amount of all
Outstanding Notes.
All Risks Insurance - Standard fire and extended coverage insurance,
including endorsements for vandalism, malicious mischief, business
interruption and sprinkler leakage, maintained by the Lessee pursuant to the
Leases on the Leased Properties covering all replacements and additions
thereto and all building materials and other property which constitute part
of such properties in a manner consistent with insurance maintained by Lessee
on properties similar to such properties and, in any event, in amounts not
less than the actual replacement cost of such properties, excluding land cost
and other uninsurable items and with deductibles customarily maintained by
Lessee.
Authorized Officer - With respect to the Issuer, any Person whose name
and specimen signature appears on a list of Authorized Officers furnished to
the Trustee as certified by the Secretary of the Issuer. With respect to the
Trustee or any other bank or trust company acting as trustee of an express
trust or as custodian, a Responsible Officer. With respect to the Lessee,
any Person whose name and specimen signature appears on a list of Authorized
Officers furnished to the Trustee as certified by the Secretary of the
Lessee.
Bankruptcy Code - Title 11 of the United States Code.
Basic Rent - $6,875,000 per year in the aggregate for all of the
Properties, payable by Foodmaker pursuant to the CRC Leases.
Basic Term - The initial term of each of the CRC Leases expiring on
November 1, 2003.
Book-Entry Confirmation - Confirmation of the book-entry transfer of the
Old Notes into the Exchange Agent's account at the Book-Entry Transfer
Facility pursuant to the "Procedures for Tendering."
Code - The Internal Revenue Code of 1986, as amended, or any successor
statute(s).
Collateral Documents - All documents entered into to create or perfect
the security interests in the Collateral.
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Commission - The Securities and Exchange Commission.
Construction Assets - Four existing Jack In The Box restaurants and
approximately thirty-four to-be-constructed Jack In The Box restaurants in
which Estates For Years have been or will be acquired by CRC-II. See
"Description of the Underlying Transactions - Schedule of Properties."
Consummation Date - September 4, 1994 (the date by which the Exchange
Offer is required to be consummated pursuant to the terms of the Registration
Rights Agreement).
Corporate Governance Agreement - The Agreement Regarding Corporate
Governance, amended and restated as of May 4, 1994.
CRC-I - CRC-I Limited Partnership, a Massachusetts limited partnership.
CRC-I Collateral - Primarily: (1) an absolute assignment to the Issuer
of CRC-I's rights as Lessor under the CRC-I Lease; (2) a first priority deed
of trust in favor of the Issuer on CRC-I's rights in the Existing Assets
under the Estates For Years, as acquired; and (3) a first priority deed of
trust in favor of the Issuer on Foodmaker's reversionary rights in the
Existing Assets, as acquired.
CRC-I Guaranty - A full and unconditional guaranty of the Notes,
executed and delivered to the Trustee by CRC-I, which is nonrecourse to the
general partners of CRC-I.
CRC-I Lease - The master lease dated December 15, 1993, pursuant to
which CRC-I, as Lessor, will lease the Existing Assets to Foodmaker, as
Lessee.
CRC-I Note - The secured promissory note issued by CRC-I in the
principal amount of $30,172,952 and purchased by the Issuer with the proceeds
of the Old Notes.
CRC-I Note Purchase Price - The purchase price of the CRC-I Note,
$28,633,100.
CRC-II - CRC-II Limited Partnership, a Massachusetts limited
partnership.
CRC-II Collateral - Primarily: (1) an absolute assignment to the Issuer
of CRC-II's rights as Lessor under the CRC-II Lease; (2) a first priority
deed of trust in favor of the Issuer on CRC-II's rights in the Construction
Assets under the Estates For Years, as acquired; and (3) a first priority
deed of trust in favor of the Issuer on Foodmaker's reversionary rights in
the Construction Assets, as acquired.
CRC-II Guaranty - A full and unconditional guaranty of the Notes,
executed and delivered to the Trustee by CRC-II, which is nonrecourse as to
the general partners of CRC-II.
CRC-II Lease - The master lease dated December 15, 1993, pursuant to
which CRC-II, as Lessor, will lease the Construction Assets to Foodmaker, as
Lessee.
CRC-II Note - The secured promissory note issued by CRC-II in the
principal amount of $39,827,048 and purchased by the Issuer with the proceeds
of the Old Notes.
CRC-II Note Purchase Price - The purchase price of the CRC-II Note,
$37,794,505.
CRC Collateral - Collectively, the CRC-I Collateral and the CRC-II
Collateral.
CRC Leases - Collectively, the CRC-I Lease and the CRC-II Lease.
CRC Notes - Collectively, the CRC-I Note and the CRC-II Note.
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declaration of acceleration - A declaration by the Majority Noteholders,
made if an Event of Default occurs and is continuing, that the principal of
all the Notes is immediately due and payable, or an automatic acceleration
that occurs upon certain Events of Default.
Designated Officer - A designated individual who is both an officer and
director of Foodmaker and whom the Shareholders are obligated to elect as a
director of, and the Independent Director is obligated to elect to all
officer positions of, the Issuer, CRC-I and CRC-II, pursuant to the Corporate
Governence Agreement.
Early Termination - A termination that may be effected by Foodmaker, as
Lessee, pursuant to the applicable Lease on any Property at any time after
the first business day of January, 1999 and prior to the termination of that
Lease.
Effective Date - August 4, 1994 (the date by which the shelf
registration is required to be declared effective pursuant to the terms of
the Registration Rights Agreement).
Eligible Institution - Any firm that is a member of a registered
national securities exchange or a member of the National Association of
Securities Dealers, Inc. or a commercial bank or trust company having an
office in the United States.
Environmental Laws - The Resource Conservation and Recovery Art (42
U.S.C. Section 6901 et seq.), as amended by the Hazardous and Solid Waste
Amendments of 1984, the Comprehensive Environmental Response, Compensation
and Liability Act (42 U.S.C. Section 9601 et seq.), as amended by the
Superfund Amendments and Reauthorization Act of 1986, the Hazardous Materials
Transportation Act (49 U.S.C. Section 1801 et seq.), the Toxic Substances
Control Act (15 U.S.C. Section 2601 et seq.), the Clean Air Act (42 U.S.C.
Section 9402 et seq.), the Clean Water Act (33 U.S.C. Section 1251 et seq.),
the Federal Insecticide, Fungicide and Rodenticide Act (7 U.S.C. Section 136
et seq.), the Occupational Safety and Health Act (29 U.S.C. Section 651 et
seq.) and all applicable federal, state and local environmental laws,
including obligations under the common law, ordinances, rules, regulations,
private agreements (such as covenants, conditions and restrictions), orders,
consent decrees, judgments, permits, licenses, authorizations, codes and
publications, as any of the foregoing may have been or may be from time to
time amended, supplemented or supplanted, and any other federal, state or
local laws, including obligations under the common law, ordinances, rules,
regulations, private agreements (such as covenants, conditions and
restrictions) and publications, now or hereafter existing relating to
regulation or control of Hazardous Substances or environmental health and
safety.
Estates For Years - With respect to CRC-I, the Estates For Years to
expire on November 30, 2028 in the Existing Assets, and with respect to
CRC-II, the Estates For Years to expire on November 30, 2028 in the
Construction Assets. An estate for years in real property, wherein the
individual or entity being granted such an estate acquires a certain interest
in the subject real property that includes the right of exclusive possession,
is expressly stated to exist for some fixed and determinate period such that
the estate has a definite beginning and a definite ending. The grantor of
such an estate for years retains a reversionary interest in the subject real
property which is realized upon expiration of the stated term.
Event Of Default - Certain events the occurrence of which trigger the
default of a party under the Indenture. See "Description of New Notes --
Events of Defaults and Remedies."
Exchange Act - The Securities Exchange Act of 1934, as amended.
Exchange Offer - The offer by the Issuer to exchange up to $70 million
aggregate principal amount of New Notes for a like amount of Old Notes.
Exchange Offer Termination Notice - Notice of termination of the
Exchange Offer.
Existing Assets - Thirty-eight existing Jack In The Box restaurants in
which Estates For Years have been or will be acquired by CRC-I. See
"Description of the Underlying Transactions - Schedule of Properties."
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Expiration Date - The last date upon which the Issuer will accept for
exchange validly tendered Old Notes, August 26, 1994, or such later date
to which the Exchange Offer is extended by the Issuer.
Filing Date - May 4, 1994 (the date by which the Registration Statement,
of which this Prospectus is a part, or, if required, a shelf registration
statement was to be filed by the Issuer).
Financing - The Issuer's issuing and selling of the Notes, as principal
and as agent for CRC-I and CRC-II, and entering into the Indenture in
connection therewith.
Foodmaker - Foodmaker, Inc., a Delaware corporation.
Foodmaker Mortgages - With respect to each Property, the mortgage, deed
of trust, deed to secure debt or other security document now or hereafter
executed by Foodmaker creating a first priority, perfected lien on and
security interest in, among other things, Foodmaker's reversionary interest
in such Property, in favor of the Issuer, as collateral for the CRC Notes,
with a collateral assignment thereof by the Issuer to the Trustee as security
for the payment of the Notes, or all of such mortgages, collectively.
General Partner - With respect to CRC-I, CRC-I Corp., a Massachusetts
corporation, and with respect to CRC-II, CRC-II Corp., a Massachusetts
corporation.
Grant - To grant, bargain, sell, warrant, alienate, demise, release,
convey, assign, transfer, mortgage, charge, pledge, create and grant a
security interest in and right of set-off against, deposit, set over, and
confirm. A Grant of the CRC Notes and the other Mortgage Note Documents, or
of any other instrument or agreement Granted hereunder, shall include all
rights, powers, privileges, remedies, options and other benefits (but none of
the obligations) of the Granting party thereunder, including without
limitation the immediate and continuing right to claim for, to collect, to
receive and to give any receipt for principal, premium, if any, and interest
payments in respect of the CRC Notes and all other monies and other property
payable thereunder or in respect thereof, to give and to receive notices and
other communications, to make waivers or other agreements, to exercise all
rights, powers, privileges, remedies, options and other benefits, to bring
Proceedings in the name of the Granting party or otherwise, and generally to
do and to receive anything that the Granting party is or may be entitled to
do or to receive thereunder or with respect thereto.
Holders Of New Notes - The holders of record of the New Notes.
Holders Of Notes - Holders of Old Notes and Holders of New Notes,
collectively.
Holders Of Old Notes - The holders of record of the Old Notes.
Indemnified Party - Each of Lessor, Lessor's Mortgagee, the Indenture
Trustee, each Holder of Notes and their respective Affiliates, directors,
officers, employees, successors and assigns.
Indenture - The indenture pursuant to which the Notes have been or will
be issued dated as of December 15, 1993, between the Issuer, as principal and
agent for CRC-I and CRC-II, and the Trustee, as amended by an amendment dated
as of July 15, 1994, among the Issuer, CRC-I, CRC-II and the Trustee.
Independent - When used with respect to any specified Person, means such
a Person who (a) is in fact independent of the Issuer, the Lessee, CRC-I,
CRC-II and of any Affiliate of any thereof, (b) does not have any direct
financial interest or any material indirect financial interest in the Issuer,
the Lessee, CRC-I, CRC-II or in any Affiliate of any thereof, and (c) is not
connected with the Issuer, the Lessee, CRC-I, CRC-II or any Affiliate of any
thereof as an officer, employee, promoter, underwriter, trustee, partner
(whether general or limited), director, shareholder, beneficiary or Person
performing similar functions or having similar ownership interests. Whenever
it is provided herein that any Independent Person's opinion or certificate
shall be furnished to the Trustee, such Person shall be appointed by Issuer
Order and such opinion or certificate shall state that the signer has read
this definition and that the signer is Independent within the meaning hereof.
"Independent" when used with respect to any accountant shall include an
accountant who audits the books of any Person referred to in clause (a) above
if, in addition to satisfying the criteria set forth above, the
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accountant is independent with respect to such Person within the meaning
of Rule 101 of the Code of Ethics of the American Institute of Certified
Public Accountants.
Independent Director - An individual unaffiliated with the Issuer, CRC-I
Corp. or CRC-II Corp. who meets the requirements set forth in the Issuer's
Certificate of Incorporation.
Initial Purchasers - The purchasers of the Old Notes who are signatories
to the Registration Rights Agreement.
Installment Payment Date - The first business day of each January and
July, from and including July, 1994 through and including July, 2003.
Issuer - FM 1993A Corp., a Delaware corporation.
Lease Default - Any event of default as defined under the Leases. See
"Description of the Leases - Defaults and Remedies."
Leased Properties - The Existing Assets, other than the Potential
Existing Asset, and the Construction Assets, other than the Potential
Construction Assets.
Leases - The CRC-I Lease and the CRC-II Lease, together.
Legal Requirements - All laws, rules, orders, ordinances, regulations
and requirements now or hereafter enacted or promulgated, of every government
and municipality having jurisdiction over Lessee or the Leased Properties and
of any agency thereof, relating to Lessee or the Leased Properties, or the
improvements, or the facilities or equipment thereon or therein, or the
streets, sidewalks, curbs and gutters adjoining the Leased Properties, or the
appurtenances to such Properties, or the franchises and privileges connected
therewith, including without limitation the Americans with Disabilities Act
and Environmental Laws, all rules, orders and regulations of the National
Board of Fire Underwriters or other body exercising similar functions in
connection with the prevention of fire or the correction of hazardous
conditions which apply to the Leased Properties, and all private covenants,
conditions and restrictions affecting such properties.
Lessee - Foodmaker, Inc.
Majority Noteholders - The holders of more than 50% of the Aggregate
Outstanding Amount of the Notes.
Maturity - With respect to any Note, the date on which the entire unpaid
principal of and interest on such Note becomes due and payable as provided
therein or in the Indenture, whether at the Stated Maturity or by declaration
of acceleration pursuant to the terms of the Indenture.
Mortgage Note Documents - The meaning specified in the Mortgages.
New Notes - The Issuer's Series B 9.75% Senior Secured Notes due
November 1, 2003.
Note Collateral - The pledge by the Issuer to the Trustee of the CRC
Notes and the CRC Collateral, and a pledge of the Issuer's rights in and to
certain accounts to be maintained by the Trustee pursuant to the Indenture,
and all funds held therein.
Notes - The Old Notes and the New Notes, collectively.
Officer's Certificate - A certificate signed on behalf of any Person by
the principal executive officer, principal financial officer or principal
accounting officer of such Person.
Old Notes - The Issuer's privately placed 9.75% Senior Secured Notes due
November 1, 2003.
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Opinion Of Independent Counsel - A written opinion, in form and
substance reasonably satisfactory to the Trustee, addressed to the Trustee
and the Holders of Notes, of a law firm which shall be Independent and which
shall be reasonably satisfactory to the Trustee.
Opinion Of Counsel - A written opinion of counsel in form and substance
reasonably satisfactory to the recipient of such opinion, which opinion may
be subject to any necessary or customary qualifications, exceptions, or
limitations. The counsel may be an employee of or counsel to the Issuer,
CRC-I, CRC-II or the Trustee.
Outstanding - With respect to the Notes, as of the date of
determination, all Notes theretofore authenticated and delivered under the
Indenture except: (a) Notes theretofore cancelled by the Note Registrar;
(b) Notes or portions thereof for whose payment money in the necessary amount
has been theretofore irrevocably deposited with the Trustee in trust for the
Holders of Notes pursuant to the provisions of the Indenture; (c) Notes in
exchange for or in lieu of which other Notes have been authenticated and
delivered pursuant to the Indenture; and (d) Notes alleged to have been
mutilated, destroyed, lost, or stolen for which replacement Notes have been
issued as provided in the Indenture; provided that, in determining whether
the holders of the requisite Aggregate Outstanding Amount of the Notes have
given any request, demand, authorizations, direction, notice, consent, or
waiver under the Indenture, any Notes owned by or pledged to the Issuer,
CRC-I or CRC-II, any limited partner of CRC-I or CRC-II, or any general
partner of CRC-I or CRC-II or any Affiliate of any thereof shall be
disregarded and deemed not to be Outstanding, except that, in determining
whether the Trustee shall be protected in relying upon any such request,
demand, authorization, direction, notice, consent, or waiver, only Notes that
the Trustee knows to be so owned or so pledged shall be disregarded. Notes
owned by a Person described in the immediately preceding sentence that have
been pledged in good faith may be regarded as Outstanding if the pledgee
certifies to the Trustee the pledgee's right so to act with respect to such
Notes and that the pledgee is not any of the Persons described in the
immediately preceding sentence.
Payment Date - With respect to each semi-annual installment or deposit
payable under the Notes, each Installment Payment Date, and with respect to
the final payment or deposit at Maturity, the Stated Maturity specified in
the Notes.
Payment Date Statement - A statement to be prepared by the Issuer not
later than the second business day preceding each payment date containing
certain information pertaining to the interest, premium, and principal, if
any, to be paid; the amount of cash held in certain accounts; the amount of
certain investments held in certain accounts; the amount to be withdrawn from
certain accounts; the balance remaining in certain accounts; the amount due
to the Trustee; the amount of certain administrative expenses; the amount of
rent received; the amount of rent credited to certain interest and principal
payments; the amounts deposited in certain accounts; and the amount of
certain income payable to Foodmaker.
Person - Any individual, corporation, partnership, joint venture,
association, joint stock company, trust, unincorporated organization, or
government or any agency or political subdivision thereof.
PORTAL - Private Offerings, Resales and Trading through Automated
Linkages Market.
Potential Construction Assets - Those Construction Assets which
Foodmaker has not yet acquired fee title to. For a complete listing see
"Description of the Underlying Transactions -- Schedule of Properties."
Potential Existing Asset - The Existing Asset which Foodmaker has not
yet acquired fee title to. For a complete listing see "Description of the
Underlying Transactions -- Schedule of Properties."
Prepayment Premium - The premium above par the Issuer must pay if the
Notes are prepaid in connection with an Early Termination under the Leases,
equal to the following percentages of the principal amount of the Notes to be
prepaid: year six-5.00%, year seven-3.75%, year eight-2.50%, year
nine-1.25%, and year ten-0.00%.
Proceeding - Any suit in equity, action at law, or other judicial or
administrative proceeding.
Properties - The Construction Assets and the Existing Assets,
collectively.
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Property - A Construction Asset or an Existing Asset.
Registered Exchange Offer - An offer by the Issuer to each Holder of the
Old Notes of the opportunity to exchange all outstanding Old Notes for the
New Notes in an aggregate principal amount equal to the aggregate principal
amount of the Old Notes.
Registration Rights Agreement - An agreement dated as of December 15,
1993, among the Issuer, Foodmaker, CRC-I, CRC-II, and the Initial Purchasers
pursuant to which the Holders of Old Notes were granted certain registration
rights.
Registration Statement - The registration statement relating to the New
Notes, together with all amendments and exhibits filed with the Commission
under the Securities Act.
Rejectable Offer - Each of the Year Nine Offer and the Termination Date
Rejectable Offer.
Rejection Notice - Written notice of Lessor's rejection of the
Termination Date Rejectable Offer.
Renewal Terms - Four successive renewal terms of five years each (except
that the Renewal Term will be six years with regard to those Properties in
which the Estates For Years have been purchased by Lessee pursuant to the
Year Nine Offer), plus a fifth renewal term ending November 30, 2028, that
Lessee may exercise when certain terms of the Notes are satisfied.
Responsible Issuer Officer - Any officer of the Issuer, including any
president, vice president, secretary, treasurer, assistant vice president,
assistant secretary, assistant treasurer or any other officer of the Issuer
customarily performing functions similar to those performed by the persons
who at the time shall be such officers, respectively or to whom any matter is
referred because of his or her knowledge of, or familiarity with, this
Indenture or the transactions contemplated hereby.
Responsible Officer - When used with respect to the Trustee, any officer
within the Corporate Trust Office of the Trustee (or any successor group of
the Trustee) including any vice president, assistant vice president,
assistant secretary, or any other officer of the Trustee customarily
performing functions similar to those performed by the persons who at the
time shall be such officers, and to whom any corporate trust matter relating
to the transactions contemplated by the provisions of this Indenture is
referred because of his or her knowledge of, or familiarity with, the
particular subject.
Securities Act - The Securities Act of 1933, as amended.
Shareholders - The original shareholders of the Issuer, CRC-I Corp. and
CRC-II Corp.
Sinking Fund Account - The sinking fund account established and
maintained by the Trustee pursuant to the Indenture.
Special Rent - A semi-annual rent payment in arrears, in the amount of
$747,402 through year nine, and payment in an amount equal to the difference
between $23,000,000 and the balance on deposit in the Sinking Fund Account,
payable on the last business day of December 2002, which payment will be paid
directly to Trustee by the Lessee on behalf of CRC-I or CRC-II (as
applicable) to be deposited in the Sinking Fund Account.
Special Sinker Rent - A payment of 23/35ths of the Termination Value for
the Property made by the Lessee in order to effectuate an Early Termination
pursuant to the Leases.
Substitute Property - A property used to replace a Property listed on
the "Schedule of Properties" in the event of a Substitution.
Substitution - A substitution effected by Foodmaker of any Property
listed on the "Schedule of Properties" with a Substitute Property.
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Termination Date Rejectable Offer - An irrevocable offer required to be
made by the Lessee at the end of the Leases' Basic Term to purchase the
Estate for Years in the remaining Properties for a purchase price at least
equal to the Termination Values of such Properties.
Termination Value - A Property's initial allocated portion of the
applicable CRC-I or CRC-II original note balance.
TIA - The Trust Indenture Act of 1939 (15 U.S. Code Sections 77aaa-
77bbbb) as in effect on the date of execution of this Indenture.
Trade Fixtures - Certain items specified in the Leases plus all other
items of machinery, equipment or personal property which Lessee utilizes to
conduct its business on the Leased Property.
Transaction Documents - All documents relating to the offer and sale of
the Notes and the CRC Leases to which the Issuer, CRC-I Corp. and/or CRC-II
Corp. is a party, as set forth in the Corporate Governance Agreement.
Trust Estate - All of the Issuer's right, title and interest now owned
or hereafter acquired in, to and under all of (but none of its obligations
with respect to any of) its assets, whether now existing or hereafter coming
into existence, including, without limitation, (a) the CRC Notes, the CRC-I
Lease Assignment, the CRC-II Lease Assignment, the CRC-I Mortgages, the
CRC-II Mortgages, the Foodmaker Mortgages, the Deposit Accounts Security
Agreements, and the Financing Statements, and all other Mortgage Note
Documents, including, without limitation, any collateral that may be acquired
by foreclosure or deed in lieu of foreclosure and all proceeds of or to which
the Issuer is entitled under any of the foregoing, including without
limitation, Insurance and Condemnation Proceeds, Liquidation Proceeds and all
income from REO Properties; (b) all funds from time to time held in the
Collection Account, including Reinvestment Income (if any) thereon; (c) all
funds from time to time held in the Construction Account, including
Reinvestment Income thereon; (d) all funds from time to time held in the
Proceeds Account, including Reinvestment Income (if any) thereon; (e) all
funds from time to time held in any REO Account, including Reinvestment
Income thereon; (f) all funds from time to time held in the Administrative
Expenses Account, including Reinvestment Income (if any) thereon; (g) all
funds from time to time held in the Closing Costs Account, including
Reinvestment Income (if any) thereon; (h) all funds from time to time held in
the Sinking Fund Account, including Reinvestment Income thereon; (i) all
funds from time to time held in the Equity Collection Account, including
Reinvestment Income thereon; (j) all funds from time to time held in the
Additional Unit Acquisition Account, including Reinvestment Income thereon;
(k) the Insurance Policies; (l) other contracts or agreements of the Issuer;
(m) all other property, real or personal, tangible or intangible; and (n) all
proceeds of any of the foregoing of every kind and nature whatsoever,
including without limitation, proceeds of proceeds, and the conversion,
voluntary or involuntary, of any of the foregoing into cash or other property
(including, but not limited to, any Eligible Investments).
Trustee - State Street Bank and Trust Company, and its successors in
interest and any corporation resulting from or surviving any consolidation or
merger to which it or its successors may be a party or any successor trustee
at the time serving as successor trustee as permitted hereunder.
Year Nine Offer - The irrevocable offer that Lessee is required to make
under the terms of the Leases to purchase CRC-I's and CRC-II's Estates For
Years in Properties having an aggregate Termination Value of at least 50% of
the Termination Values of all Properties initially covered by the CRC Leases
during year nine of the Leases.
Year Nine Rejection Notice - Written notice of Lessor's rejection of the
Year Nine Offer.
Year Nine Termination Date - The first business day of January, 2003.
58
<PAGE>
<PAGE>
INDEX TO FINANCIAL STATEMENTS
Page
FM 1993A CORP. ----
- --------------
For the Periods ended March 31, 1994 and December 31, 1993:
Independent Auditors' Report F-2
Balance Sheets F-3
Statements of Operations F-4
Statements of Stockholder's Equity F-5
Statements of Cash Flows F-6
Notes to Financial Statements F-7
CRC-I LIMITED PARTNERSHIP
- -------------------------
For the Periods ended March 31, 1994 and December 31, 1993:
Independent Auditors' Report F-8
Balance Sheets F-9
Statements of Operations F-10
Statements of Partners' Capital F-11
Statements of Cash Flows F-12
Notes to Financial Statements F-13
CRC-II LIMITED PARTNERSHIP
- --------------------------
For the Periods ended March 31, 1994 and December 31, 1993:
Independent Auditors' Report F-14
Balance Sheets F-15
Statements of Operations F-16
Statements of Partners' Capital F-17
Statements of Cash Flows F-18
Notes to Financial Statements F-19
F-1
<PAGE>
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors
FM 1993A Corp.:
We have audited the accompanying balance sheets of FM 1993A Corp. as of
March 31, 1994 and December 31, 1993, and the related statements of
operations, stockholder's equity, and cash flows for the three months ended
March 31, 1994 and for the period from December 22, 1993 (inception) through
December 31, 1993. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statemsnts are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of FM 1993A Corp. as of
March 31, 1994 and December 31, 1993, and the results of its operations and
its cash flows for the three months ended March 31, 1994 and for the period
from December 22, 1993 (inception) through December 31, 1993 in conformity
with generally accepted accounting principles.
KPMG PEAT MARWICK
San Diego, California
July 11, 1994
F-2
<PAGE>
<PAGE>
FM 1993A CORP.
BALANCE SHEETS
ASSETS
March 31, December 31,
1994 1993
----------- -----------
Cash . . . . . . . . . . . . . . . . . . . . $ 100 $ 100
Accrued interest receivable. . . . . . . . . 1,668,333 --
Long-term notes receivable . . . . . . . . . 66,520,246 --
Deferred finance charges . . . . . . . . . . 2,416,542 --
----------- -----------
TOTAL. . . . . . . . . . . . . . . . . . . . $70,605,221 $ 100
=========== ===========
LIABILITIES AND STOCKHOLDER'S EQUITY
Accrued interest payable . . . . . . . . . . $ 1,668,333 $ --
Long-term notes payable. . . . . . . . . . . 68,936,788 --
Stockholder's equity:
Common stock, no par value,
1,000 shares authorized,
100 shares issued and outstanding. . . . 100 100
----------- -----------
TOTAL. . . . . . . . . . . . . . . . . . . . $70,605,221 $ 100
=========== ===========
See accompanying notes to financial statements.
F-3
<PAGE>
<PAGE>
FM 1993A CORP.
STATEMENTS OF OPERATIONS
Three months Inception
ended through
March 31, 1994 December 31, 1993
-------------- -----------------
Revenues:
Interest income. . . . . . . . . . . . $ 1,760,974 $ --
Administrative fee income. . . . . . . 12,500 --
----------- -----------
1,773,474 --
----------- -----------
Expenses:
Interest expense . . . . . . . . . . . 1,760,974 --
Administrative fee expense . . . . . . 12,500 --
----------- -----------
1,773,474 --
----------- -----------
Net earnings . . . . . . . . . . . . . . $ -- $ --
=========== ===========
See accompanying notes to financial statements.
F-4
<PAGE>
<PAGE>
FM 1993A CORP.
STATEMENTS OF STOCKHOLDER'S EQUITY
Three months Inception
ended through
March 31, 1994 December 31, 1993
-------------- -----------------
Balance at beginning of period . . . . . $ 100 $ --
Issuance of common stock . . . . . . . . -- 100
Net earnings for the period. . . . . . . -- --
---------- ----------
Balance at end of period . . . . . . . . $ 100 $ 100
========== ==========
See accompanying notes to financial statements.
F-5
<PAGE>
<PAGE>
FM 1993A CORP.
STATEMENTS OF CASH FLOWS
Three months Inception
ended through
March 31, 1994 December 31, 1993
-------------- -----------------
Cash flows from operations:
Net earnings . . . . . . . . . . . . . . . $ -- $ --
Increase in accrued interest receivable. . (1,668,333) --
Increase in accrued interest payable . . . 1,668,333 --
----------- -----------
Cash flows provided by operations. . . . -- --
----------- -----------
Cash flows from investing activities:
Long-term notes receivable purchased . . . (66,427,605) --
----------- -----------
Cash flows used in investing activities. (66,427,605) --
----------- -----------
Cash flows from financing activities:
Proceeds from issuance of long-term
notes payable. . . . . . . . . . . . . . 68,908,000 --
Deferred finance charges incurred in
issuance of long-term notes payable. . . (2,480,395) --
Issuance of common stock . . . . . . . . . -- 100
----------- -----------
Cash flows provided by
financing activities. . . . . . . . . 66,427,605 100
----------- -----------
Net increase in cash . . . . . . . . . . . . -- 100
Cash at beginning of period. . . . . . . . . 100 --
----------- -----------
Cash at end of period. . . . . . . . . . . . $ 100 $ 100
=========== ===========
See accompanying notes to financial statements.
F-6
<PAGE>
<PAGE>
FM 1993A CORP.
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION
FM 1993A Corp. (the "Company") was incorporated in the State of Delaware
on December 22, 1993 for the purpose of: (i) issuing and selling debt
obligations ("Notes"), as principal and as agent for CRC-I Limited
Partnership ("CRC-I") and CRC-II Limited Partnership ("CRC-II),
Massachusetts limited partnerships, and (ii) acquiring, owning and holding
obligations of CRC-I and CRC-II as well as accounts, investments and other
property to be pledged as collateral for the Notes. The Company may not
engage in any other activities other than those required to accomplish the
foregoing.
CRC-I and CRC-II (collectively, "CRC") are special purpose limited
partnerships organized to (i) acquire, own, hold and sell or transfer
estates for years in various existing and to-be-constructed Foodmaker,
Inc. restaurant properties, (ii) sell mortgage notes to the Company
accompanied by a pledge of the foregoing estates for years, and (iii)
lease the restaurant properties to Foodmaker. CRC-I and CRC-II may not
engage in any other activities other than those required to accomplish the
foregoing.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Cash Equivalents, for the purposes of statements of cash flows, are
considered to be all highly liquid investments with a maturity of three
months or less when purchased.
Amortization - Original issue discount and deferred finance charges are
amortized using the effective interest method over the life of the
related notes and have been included as a component of interest income
and interest expense.
Income taxes - The Company has elected to be taxed as a Sub-chapter S
Corporation under the Internal Revenue Code and, as a result, has no
federal income tax liability.
3. SIGNIFICANT TRANSACTIONS
On January 5, 1994, in a private placement transaction, FM 1993A Corp.
issued and sold $70 million aggregate principal amount of Notes (the
"Notes") for $68.9 million, less offering expenses of $2.5 million, which
proceeds were used to purchase for $66.4 million, notes receivable from
CRC-I and CRC-II with an aggregate principal amount of $70 million
(collectively, the "CRC Notes"). The Notes are due November 1, 2003,
payable interest only at the rate of 9.75% per annum semi-annually on
July 1 and January 1 each year, with a mandatory prepayment of 50% of the
original principal on the first business day of January 2003. The CRC
Notes' payment and interest terms are equivalent to and structured to
coincide with the Notes such that funds will be available to make payments
on the Notes. In addition, the CRC Notes require semi-annual sinking fund
payments to a trustee of $747 thousand, which will be utilized to
partially fund the 50% prepayment in January 2003. CRC-I and CRC-II used
the proceeds of the CRC Notes (of which approximately 43% relates to CRC-I
and 57% to CRC-II) to purchase estates for years in various Foodmaker
restaurant properties and, in a transaction accounted for as a financing,
will lease back such properties to Foodmaker on terms which will provide
the funds necessary to make the CRC Notes' payments. The Notes are
secured by, among other things, the CRC Notes, the CRC leases to
Foodmaker, first priority liens on the underlying properties and any
sinking fund or other amounts held in trust.
The Company's only source of liquidity is collection of scheduled payments
on the CRC Notes, which, in turn, are dependent upon Foodmaker's payments
on the CRC leases. If Foodmaker were to fail to make payments to CRC-I
and CRC-II on the financing leases, CRC-I and CRC-II would be unable to
make payments on the CRC Notes. The Company would then be required to
initiate proceedings to gain possession of, liquidate or obtain tenants
for the restaurant properties. Although the Company believes the value of
the restaurant properties and other collateral will be adequate to secure
the Notes, there can be no assurance that, if necessary, such collateral
will continue to maintain its value or that it can be liquidated in
sufficient amounts or at times required to satisfy all scheduled principal
and interest payments.
F-7
<PAGE>
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Partners
CRC-I Limited Partnership.:
We have audited the accompanying balance sheets of CRC-I Limited Partnership,
a limited partnership, as of March 31, 1994 and December 31, 1993, and the
related statements of operations, partners' capital, and cash flows for the
three months ended March 31, 1994 and for the period from December 8, 1993
(inception) through December 31, 1993. These financial statements are the
responsibility of the Partnership's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statemsnts are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of CRC-I Limited
Partnership as of March 31, 1994 and December 31, 1993, and the results of
its operations and its cash flows for the three months ended March 31, 1994
and for the period from December 8, 1993 (inception) through December 31, 1993
in conformity with generally accepted accounting principles.
KPMG PEAT MARWICK
San Diego, California
July 11, 1994
F-8
<PAGE>
<PAGE>
CRC-I LIMITED PARTNERSHIP
BALANCE SHEETS
ASSETS
March 31, December 31,
1994 1993
----------- -----------
Cash . . . . . . . . . . . . . . . . . . . . $ 100 $ 100
Accrued interest receivable. . . . . . . . . 719,122 --
Long-term notes receivable . . . . . . . . . 28,673,032 --
----------- -----------
TOTAL. . . . . . . . . . . . . . . . . . . . $29,392,254 $ 100
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
Accrued interest payable . . . . . . . . . . $ 719,122 $ --
Long-term notes payable. . . . . . . . . . . 28,673,032 --
Partners' Capital:
General Partner. . . . . . . . . . . . . . 1 1
Limited Partner. . . . . . . . . . . . . . 99 99
----------- -----------
Total Partners' Capital. . . . . . . . . 100 100
----------- -----------
TOTAL. . . . . . . . . . . . . . . . . . . . $29,392,254 $ 100
=========== ===========
See accompanying notes to financial statements.
F-9
<PAGE>
<PAGE>
CRC-I LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS
Three months Inception
ended through
March 31, 1994 December 31, 1993
-------------- -----------------
Revenues:
Interest income. . . . . . . . . . . . $ 759,054 $ --
Administrative fee income. . . . . . . 6,250 --
---------- ----------
765,304 --
---------- ----------
Expenses:
Interest expense . . . . . . . . . . . 759,054 --
Administrative fee expense . . . . . . 6,250 --
---------- ----------
765,304 --
---------- ----------
Net earnings . . . . . . . . . . . . . . $ -- $ --
========== ==========
See accompanying notes to financial statements.
F-10
<PAGE>
<PAGE>
CRC-I LIMITED PARTNERSHIP
STATEMENTS OF PARTNERS' CAPITAL
General Limited
Partner Partner Total
------- ------- -----
Initial capital contributions. . . . . . . . $ 1 $ 99 $ 100
----- ----- -----
Balance at December 31, 1993 . . . . . . . . 1 99 100
Net earnings for the period. . . . . . . . . -- -- --
----- ----- -----
Balance at March 31, 1994. . . . . . . . . . $ 1 $ 99 $ 100
===== ===== =====
See accompanying notes to financial statements.
F-11
<PAGE>
<PAGE>
CRC-I LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
Three months Inception
ended through
March 31, 1994 December 31, 1993
-------------- -----------------
Cash flows from operations:
Net earnings . . . . . . . . . . . . . . . $ -- $ --
Increase in accrued interest receivable. . (719,122) --
Increase in accrued interest payable . . . 719,122 --
----------- -----------
Cash flows provided by operations. . . . -- --
----------- -----------
Cash flows from investing activities:
Long-term notes receivable purchased . . . (28,633,100) --
----------- -----------
Cash flows used in investing activities. (28,633,100) --
----------- -----------
Cash flows from financing activities:
Proceeds from issuance of
long-term notes payable. . . . . . . . . 28,633,100 --
Initial capital contributions. . . . . . . -- 100
----------- -----------
Cash flows provided by
financing activities . . . . . . . . . 28,633,100 100
----------- -----------
Net increase in cash . . . . . . . . . . . . -- 100
Cash at beginning of period. . . . . . . . . 100 --
----------- -----------
Cash at end of period. . . . . . . . . . . . $ 100 $ 100
=========== ===========
See accompanying notes to financial statements.
F-12
<PAGE>
<PAGE>
CRC-I LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION
CRC-I Limited Partnership ("CRC-I") and another similar special purpose
limited partnership, CRC-II Limited Partnership ("CRC-II"),
(collectively, "CRC") were organized December 8, 1993 to (i) acquire, own,
hold and sell or transfer estates for years in various existing and to-be-
constructed Foodmaker, Inc. restaurant properties, (ii) sell mortgage
notes to the FM 1993A Corp. accompanied by a pledge of the foregoing
estates for years, and (iii) lease the restaurant properties to Foodmaker.
CRC-I and CRC-II may not engage in any other activities other than those
required to accomplish the foregoing.
FM 1993A Corp. was incorporated in the State of Delaware on December 22,
1993 for the purpose of: (i) issuing and selling debt obligations
("Notes"), as principal and as agent for CRC-I and CRC-II, Massachusetts
limited partnerships, and (ii) acquiring, owning and holding obligations
of CRC-I and CRC-II as well as accounts, investments and other property to
be pledged as collateral for the Notes. FM 1993A Corp. may not engage in
any other activities other than those required to accomplish the
foregoing.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Cash Equivalents, for the purposes of statements of cash flows, are
considered to be all highly liquid investments with a maturity of three
months or less when purchased.
Amortization - Original issue discount is amortized using the effective
interest method over the life of the related notes and has been included
as a component of interest income and interest expense.
Income taxes - No provision for income taxes has been made as the
liability for such taxes is that of the partners rather than the
partnership.
3. SIGNIFICANT TRANSACTIONS
On January 5, 1994, in a private placement transaction, FM 1993A Corp.
issued and sold $70 million aggregate principal amount of Notes (the
"Notes") for $68.9 million, less offering expenses of $2.5 million, which
proceeds were used to purchase for $66.4 million, notes receivable from
CRC-I and CRC-II with an aggregate principal amount of $70 million
(collectively, the "CRC Notes"). The Notes are due November 1, 2003,
payable interest only at the rate of 9.75% per annum semi-annually on
July 1 and January 1 each year, with a mandatory prepayment of 50% of the
original principal on the first business day of January 2003. The CRC
Notes' payment and interest terms are equivalent to and structured to
coincide with the Notes such that funds will be available to make payments
on the Notes. In addition, the CRC Notes require semi-annual sinking fund
payments to a trustee of $747 thousand, which will be utilized to
partially fund the 50% prepayment in January 2003. CRC-I and CRC-II used
the proceeds of the CRC Notes (of which approximately 43% relates to CRC-I
and 57% to CRC-II) to purchase estates for years in various Foodmaker
restaurant properties and, in a transaction accounted for as a financing,
will lease back such properties to Foodmaker on terms which will provide
the funds necessary to make the CRC Notes' payments. The Notes are
secured by, among other things, the CRC Notes, the CRC leases to
Foodmaker, first priority liens on the underlying properties and any
sinking fund or other amounts held in trust.
CRC's only source of liquidity is collection of Foodmaker's payments on
the CRC leases. If Foodmaker were to fail to make payments to CRC on the
financing leases, CRC would be unable to make payments on the CRC Notes.
CRC would then be required to initiate proceedings to gain possession of,
liquidate or obtain tenants for the restaurant properties. Although CRC
believes the value of the restaurant properties and other collateral will
be adequate to secure the CRC leases, there can be no assurance that, if
necessary, such collateral will continue to maintain its value or that it
can be liquidated in sufficient amounts or at times required to satisfy
all scheduled principal and interest payments.
F-13
<PAGE>
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Partners
CRC-II Limited Partnership.:
We have audited the accompanying balance sheets of CRC-II Limited
Partnership, a limited partnership, as of March 31, 1994 and
December 31, 1993, and the related statements of operations, partners'
capital, and cash flows for the three months ended March 31, 1994 and for the
period from December 8, 1993 (inception) through December 31, 1993. These
financial statements are the responsibility of the Partnership's management.
Our responsibility is to express an opinion on these financial statements
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statemsnts are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of CRC-II Limited
Partnership as of March 31, 1994 and December 31, 1993, and the results of
its operations and its cash flows for the three months ended March 31, 1994
and for the period from December 8, 1993 (inception) through December 31, 1993
in conformity with generally accepted accounting principles.
KPMG PEAT MARWICK
San Diego, California
July 11, 1994
F-14
<PAGE>
<PAGE>
CRC-II LIMITED PARTNERSHIP
BALANCE SHEETS
ASSETS
March 31, December 31,
1994 1993
----------- -----------
Cash . . . . . . . . . . . . . . . . . . . . $ 100 $ 100
Accrued interest receivable. . . . . . . . . 949,211 --
Long-term notes receivable . . . . . . . . . 37,847,214 --
----------- -----------
TOTAL. . . . . . . . . . . . . . . . . . . . $38,796,525 $ 100
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
Accrued interest payable . . . . . . . . . . $ 949,211 $ --
Long-term notes payable. . . . . . . . . . . 37,847,214 --
Partners' Capital:
General Partner. . . . . . . . . . . . . . 1 1
Limited Partner. . . . . . . . . . . . . . 99 99
----------- -----------
Total Partners' Capital. . . . . . . . . 100 100
----------- -----------
TOTAL. . . . . . . . . . . . . . . . . . . . $38,796,525 $ 100
=========== ===========
See accompanying notes to financial statements.
F-15
<PAGE>
<PAGE>
CRC-II LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS
Three months Inception
ended through
March 31, 1994 December 31, 1993
-------------- -----------------
Revenues:
Interest income. . . . . . . . . . . . $1,001,920 $ --
Administrative fee income. . . . . . . 6,250 --
---------- ----------
1,008,170 --
---------- ----------
Expenses:
Interest expense . . . . . . . . . . . 1,001,920 --
Administrative fee expense . . . . . . 6,250 --
---------- ----------
1,008,170 --
---------- ----------
Net earnings . . . . . . . . . . . . . . $ -- $ --
========== ==========
See accompanying notes to financial statements.
F-16
<PAGE>
<PAGE>
CRC-II LIMITED PARTNERSHIP
General Limited
Partner Partner Total
------- ------- -----
Initial capital contributions. . . . . . . . $ 1 $ 99 $ 100
----- ----- -----
Balance at December 31, 1993 . . . . . . . . 1 99 100
Net earnings for the period. . . . . . . . . -- -- --
----- ----- -----
Balance at March 31, 1994. . . . . . . . . . $ 1 $ 99 $ 100
===== ===== =====
See accompanying notes to financial statements.
F-17
<PAGE>
<PAGE>
CRC-II LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
Three months Inception
ended through
March 31, 1994 December 31, 1993
-------------- -----------------
Cash flows from operations:
Net earnings . . . . . . . . . . . . . . . $ -- $ --
Increase in accrued interest receivable. . (949,211) --
Increase in accrued interest payable . . . 949,211 --
----------- -----------
Cash flows provided by operations. . . . -- --
----------- -----------
Cash flows from investing activities:
Long-term notes receivable purchased . . . (37,794,505) --
----------- -----------
Cash flows used in investing activities. (37,794,505) --
----------- -----------
Cash flows from financing activities:
Proceeds from issuance of
long-term notes payable. . . . . . . . . 37,794,505 --
Initial capital contributions. . . . . . . -- 100
----------- -----------
Cash flows provided by
financing activities . . . . . . . . . 37,794,505 100
----------- -----------
Net increase in cash . . . . . . . . . . . . -- 100
Cash at beginning of period. . . . . . . . . 100 --
----------- -----------
Cash at end of period. . . . . . . . . . . . $ 100 $ 100
=========== ===========
See accompanying notes to financial statements.
F-18
<PAGE>
<PAGE>
CRC-II LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION
CRC-II Limited Partnership ("CRC-II") and another similar special purpose
limited partnership, CRC-I Limited Partnership ("CRC-I"), (collectively,
"CRC") were organized December 8, 1993 to (i) acquire, own, hold and sell
or transfer estates for years in various existing and to-be-constructed
Foodmaker, Inc. restaurant properties, (ii) sell mortgage notes to the FM
1993A Corp. accompanied by a pledge of the foregoing estates for years,
and (iii) lease the restaurant properties to Foodmaker. CRC-I and CRC-II
may not engage in any other activities other than those required to
accomplish the foregoing.
FM 1993A Corp. was incorporated in the State of Delaware on December 22,
1993 for the purpose of: (i) issuing and selling debt obligations
("Notes"), as principal and as agent for CRC-I and CRC-II, Massachusetts
limited partnerships, and (ii) acquiring, owning and holding obligations
of CRC-I and CRC-II as well as accounts, investments and other property to
be pledged as collateral for the Notes. FM 1993A Corp. may not engage in
any other activities other than those required to accomplish the
foregoing.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Cash Equivalents, for the purposes of statements of cash flows, are
considered to be all highly liquid investments with a maturity of three
months or less when purchased.
Amortization - Original issue discount is amortized using the effective
interest method over the life of the related notes and has been included
as a component of interest income and interest expense.
Income taxes - No provision for income taxes has been made as the
liability for such taxes is that of the partners rather than the
partnership.
3. SIGNIFICANT TRANSACTIONS
On January 5, 1994, in a private placement transaction, FM 1993A Corp.
issued and sold $70 million aggregate principal amount of Notes (the
"Notes") for $68.9 million, less offering expenses of $2.5 million, which
proceeds were used to purchase for $66.4 million, notes receivable from
CRC-I and CRC-II with an aggregate principal amount of $70 million
(collectively, the "CRC Notes"). The Notes are due November 1, 2003,
payable interest only at the rate of 9.75% per annum semi-annually on
July 1 and January 1 each year, with a mandatory prepayment of 50% of the
original principal on the first business day of January 2003. The CRC
Notes' payment and interest terms are equivalent to and structured to
coincide with the Notes such that funds will be available to make payments
on the Notes. In addition, the CRC Notes require semi-annual sinking fund
payments to a trustee of $747 thousand, which will be utilized to
partially fund the 50% prepayment in January 2003. CRC-I and CRC-II used
the proceeds of the CRC Notes (of which approximately 43% relates to CRC-I
and 57% to CRC-II) to purchase estates for years in various Foodmaker
restaurant properties and, in a transaction accounted for as a financing,
will lease back such properties to Foodmaker on terms which will provide
the funds necessary to make the CRC Notes' payments. The Notes are
secured by, among other things, the CRC Notes, the CRC leases to
Foodmaker, first priority liens on the underlying properties and any
sinking fund or other amounts held in trust.
CRC's only source of liquidity is collection of Foodmaker's payments on
the CRC leases. If Foodmaker were to fail to make payments to CRC on the
financing leases, CRC would be unable to make payments on the CRC Notes.
CRC would then be required to initiate proceedings to gain possession of,
liquidate or obtain tenants for the restaurant properties. Although CRC
believes the value of the restaurant properties and other collateral will
be adequate to secure the CRC leases, there can be no assurance that, if
necessary, such collateral will continue to maintain its value or that it
can be liquidated in sufficient amounts or at times required to satisfy
all scheduled principal and interest payments.
F-19
<PAGE>
<PAGE>
==================================== =================================
No dealer, salesman or other
person has been authorized to give
any information or to make any
representation in connection with
this Exchange Offer other than FM 1993A CORP.
those contained in this
Prospectus, and if given or made,
such information or representation
must not be relied upon as having
been authorized by the Issuer.
This Prospectus does not $70,000,000
constitute an offer to sell, or a Series B
solicitation of an offer to buy, 9.75% Senior Secured Notes
any securities other than the due November 1, 2003
securities to which it relates
an offer to sell or the
solicitation of an offer to buy
such securities in any
circumstances in which such offer
or solicitation is unlawful.
Neither the delivery of this
Prospectus nor any sale made
hereunder shall, under any
circumstances, create any
implication that there has been no _____________
change in the affairs of the
Issuer since the date hereof or PROSPECTUS
that the information contained
herein is correct as of any time _____________
subsequent to its date.
___________
TABLE OF CONTENTS
Page
----
Incorporation Of Certain
Foodmaker Documents By
Reference. . . . . . . . . . 2
Available Information . . . . 2
Prospectus Summary. . . . . . 5 July 27, 1994
Transaction Schematic . . . . 12
Risk Factors. . . . . . . . . 13
The Exchange Offer. . . . . . 15
Use of Proceeds by Foodmaker. 21
Selected Unaudited Pro Forma
Financial Data . . . . . . . 21
Management's Discussion And
Analysis Of Financial
Condition And Results Of
Operations . . . . . . . . . 22
Business. . . . . . . . . . . 23
Management. . . . . . . . . . 25
Ownership Of Equity
Securities . . . . . . . . . 25
Description Of The Underlying
Transactions . . . . . . . . 26
Description Of New Notes. . . 34
Description Of The Leases . . 42
Certain Legal Aspects of
Real Property Leases . . . . 47
Certain Federal Income Tax
Consequences . . . . . . . . 50
Legal Matters . . . . . . . . 50
Experts . . . . . . . . . . . 50
Glossary. . . . . . . . . . . 51
Index To Financial
Statements . . . . . . . . . F-1
==================================== =================================
