(Mark One)
X Annual report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 for the fiscal year
ended December 29, 1995.
_ Transition report pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934 for the transition
period from _____ to _____.
Commission File Number 0-15782
SHOWBIZ PIZZA TIME, INC.
(Exact name of registrant as specified in its charter)
Kansas 48-0905805
(State or jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4441 West Airport Freeway
P.O. Box 152077
Irving, Texas 75015
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(214) 258-8507
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: None
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
Common Stock, par value $.10 each
(Title of Class)
Class A Preferred Stock, par value $60.00 each
(Title of Class)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes X No _
Indicate by check mark if disclosure of delinquent filers pursuant
to Item 405 of Regulation S-K is not contained herein, and will
not be contained, to the best of registrant's knowledge, in
definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this
Form 10-K. _
At March 15, 1996, an aggregate of 12,233,240 shares of the
registrant's Common Stock, par value of $.10 each (being the
registrant's only class of common stock), were outstanding, and
the aggregate market value thereof (based upon the last reported
sale price on March 15, 1996) held by non-affiliates of the
registrant was $160,899,925.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant's definitive Proxy Statement, to be
filed pursuant to Section 14(a) of the Act in connection with the
registrant's 1995 annual meeting of shareholders, have been
incorporated by reference in Part III of this report.
PAGE 1
P A R T I
Item 1. Business
General
ShowBiz Pizza Time, Inc. (the "Company"), was incorporated in
the State of Kansas in 1980 and is engaged in the family
restaurant/entertainment center business. The Company considers
this to be its sole industry segment.
The Company operated, as of March 15, 1996, 226 Chuck E.
Cheese's Pizza - ("Chuck E. Cheese's") restaurants (including four
restaurants managed by the Company for others). In addition, as of
March 15, 1996, franchisees of the Company operated 93 Chuck E.
Cheese's restaurants.
Chuck E. Cheese's Restaurants
Business Development
Chuck E. Cheese's restaurants offer a variety of pizza, a
salad bar, and selected sandwiches and desserts and feature musical
and comic entertainment by life-size, computer-controlled robotic
characters, family oriented games, rides and arcade-style
activities. The restaurants are intended to appeal to families
with children between the ages of 2 and 12. The Company opened its
first restaurant in March 1980.
The Company and its franchisees operate in a total of 44
states and the Company has concentrated its ownership and operation
of Chuck E. Cheese's restaurants within a 27-state area. See "Item
2. Properties."
The following table sets forth certain information with
respect to the Chuck E. Cheese's restaurants owned by the Company
(excludes restaurants managed by the Company for others and
franchised restaurants):
<TABLE>
<S> <C> <C> <C>
1995 1994 1993
----- ---- -----
Average annual revenues
per restaurant (1) $1,178,000 $1,206,000 $1,259,000
Number of restaurants open at end
of period 222 220 209
Percent of total restaurant revenues:
Food and beverage sales 70.2% 71.0% 71.6%
Game sales 26.6% 25.8% 25.3%
Merchandise sales 3.2% 3.2% 3.1%
_______
</TABLE>
(1) In computing these averages, only restaurants which were open
for a period greater than one year at the beginning of each
respective year were included (190, 159 and 139 restaurants in
1995, 1994 and 1993, respectively).
The revenues from Chuck E. Cheese's restaurants are seasonal in
nature. The restaurants tend to generate more revenues during the
first and third fiscal quarters as compared to the second and
fourth fiscal quarters.
PAGE 2
Each Chuck E. Cheese's restaurant generally employs a general
manager, one or two managers, an electronic specialist who is
responsible for repair and maintenance of the robotic characters
and games, and 45 to 75 food preparation and service employees,
most of whom work only part-time.
To maintain a unique and exciting environment in the restaurants,
the Company believes it is essential to reinvest capital through
the evolution of its games, rides and entertainment packages and
continuing enhancement of the facilities. The Company initiated a
remodel program in 1986 under which all Company-operated
restaurants were remodeled by the end of 1992. In 1994, the
Company initiated a "repositioning" program to evolve and expand
its efforts to significantly enhance its Chuck E. Cheese's
restaurants. The Company completed 21 restaurants under this
program in 1994 and 76 restaurants in 1995 which is approximately
43% of all Company-operated restaurants. The Company currently
intends to reposition substantially all Company-operated
restaurants by the end of 1996.
The Company opened 1 and 12 new Chuck E. Cheese's restaurants in
1995 and 1994, respectively. The Company is currently evaluating
the development of new Chuck E. Cheese's restaurants while
balancing the commitment of capital and human resources between
existing restaurants and new development.
In the event certain site characteristics considered essential
for the success of a restaurant deteriorate, the Company will
consider relocating the restaurant to a more desirable site.
The Company believes its ownership of trademarks to the names and
character likenesses featured in the robotic animation stage show
(and other in-store entertainment) in its restaurants to be an
important competitive advantage.
Restaurant Design and Entertainment
Chuck E. Cheese's restaurants are typically located in shopping
centers or in free-standing buildings and are generally 7,500 to
14,000 square feet in area. Depending primarily on the demographic
characteristics of a specific site, the building design of new
restaurants developed by the Company range from 8,000 to 10,000
square feet in area.
The dining area of each Chuck E. Cheese's restaurant features a
variety of comic and musical entertainment by computer-controlled
robotic characters, together with various animated props, located
on various stage type settings. The Company is currently
developing a new stage setting that will be evaluated in 1996. The
dining area typically provides table and chair seating for 250 to
375 customers.
Each Chuck E. Cheese's restaurant typically contains a separate
family oriented playroom area offering approximately 40 coin- and
token-operated attractions, including arcade-style games, kiddie
rides, video games, skill oriented games and other similar
entertainment. Certain games dispense tickets that can be redeemed
by the guests for prizes. Also included in the playroom area is an
expanded free ball-crawl with tubes and tunnels suspended from or
reaching to the ceiling or other free attraction for young
children. The playroom area normally occupies approximately 40% of
the restaurant's public area and contributes significantly to its
revenues. A limited number of free tokens are furnished with food
orders. Additional tokens may be purchased.
Food and Beverage Products
Each Chuck E. Cheese's restaurant offers varieties of pizza, a
salad bar and selected sandwiches and desserts. Standard beverages
are also served, along with beer and wine where permitted by local
laws. The Company believes that the quality of its food compares
favorably with that of its competitors.
The majority of food, beverages and other supplies used in the
Company-operated restaurants is currently distributed under a
system-wide agreement with a major food distributor. The Company
believes that this distribution system creates certain cost and
operational efficiencies for the Company.
PAGE 3
Marketing
The primary customer base for the Company's restaurants consists
of families having children between 2 and 12 years old. The
Company runs advertising campaigns which target families with young
children and features the family entertainment experiences
available at Chuck E. Cheese's restaurants, and is primarily aimed
at increasing the frequency of return visits. The primary
advertising medium continues to be television, due to its broad
access to family audiences and its ability to communicate the Chuck
E. Cheese's experience. The television advertising campaigns are
supplemented by promotional offers in newspapers and direct mail
advertisements.
Franchising
The Company began franchising its restaurants in October 1981 and
the first franchised restaurant opened in June 1982. At March 15,
1996, 93 Chuck E. Cheese's restaurants were operated by a total of
58 different franchisees, as compared to 101 of such restaurants at
March 17, 1995. The Company sold two franchises in 1995.
The Company opened a franchise restaurant in Chile during the
third quarter of 1994. Opportunities for further international
franchise development are being reviewed by the Company.
The Chuck E. Cheese's standard franchise agreements grant to the
franchisee the right to develop and operate a restaurant and use
the associated trademarks within the standards and guidelines
established by the Company. The franchise agreement presently
offered by the Company has an initial term of 15 years and includes
a 15-year renewal option. The earliest expiration dates of
outstanding Chuck E. Cheese's franchises are in 1997.
The franchise agreements governing existing franchised Chuck E.
Cheese's restaurants currently require each franchisee to pay: (i)
to the Company, in addition to an initial franchise fee of $50,000,
a continuing monthly royalty fee equal to 3.8% of gross sales;
(ii) to the Advertising Fund [an independent fund established and
managed by an association of the Company and its franchisees to pay
costs of system-wide advertising (the "Association")] an amount
equal to 0.9% of gross sales; and (iii) to the Entertainment Fund
(an independent fund established and managed by such Association to
further develop and improve entertainment attractions) an amount
equal to 0.4% of gross sales. The Chuck E. Cheese's franchise
agreements also require franchisees to expend at least 3% of gross
sales for local advertising. Under the Chuck E. Cheese's franchise
agreements, the Company is required, with respect to Company-
operated restaurants, to spend for local advertising and to
contribute to the Advertising Fund and the Entertainment Fund at
the same rates as franchisees.
Competition
The restaurant and entertainment industries are highly
competitive, with a number of major national and regional chains
being engaged in the pizza restaurant or entertainment business.
Although there are few other restaurant chains presently utilizing
the concept of combining robotic characters and restaurant
operations, there are several competitors presently combining
family entertainment and restaurant operations.
The Company believes that it will continue to encounter
competition in the future. Major national and regional chains,
some of which have capital resources as great or greater than the
Company, are expanding into the family restaurant and entertainment
markets. The Company believes that the principal competitive
factors affecting Chuck E. Cheese's restaurants are the relative
quality of food and service, quality and variety of offered
entertainment, and location and attractiveness of the restaurants
as compared to its competitors in the restaurant or entertainment
industries.
PAGE 4
Monterey's Tex-Mex Cafe Restaurants
The Company, through its wholly owned subsidiary BHC Acquisition
Corporation ("BAC"), operated 27 Monterey's Tex-Mex Cafe
restaurants. Effective May 5, 1994, the Company sold its
Monterey's Tex-Mex Cafe restaurants for an aggregate purchase price
consisting of approximately $6.7 million in cash, $4.7 million in
subordinated promissory notes and the retention of a 12 1/2% equity
interest in the acquiring company.
Trademarks
The Company owns various trademarks, including "Chuck E. Cheese"
and "ShowBiz Pizza" that are used in connection with the
restaurants and have been registered with the United States Patent
and Trademark Office. The duration of such trademarks is
unlimited, subject to continued use. The Company believes that it
holds the necessary rights for protection of the marks essential to
the conduct of their present restaurant operations.
Government Regulation
The development and operation of Chuck E. Cheese's restaurants
are subject to various federal, state and local laws and
regulations, including but not limited to those that impose
restrictions, levy a fee or tax, or require a permit or license on
the service of alcoholic beverages and the operation of games and
rides. The Company is subject to the Fair Labor Standards Act, the
Americans With Disabilities Act, and family leave mandates. A
significant portion of the Company's restaurant personnel are paid
at rates related to the minimum wage established by federal and
state law. Increases in such minimum wage result in higher labor
costs to the Company, which may be partially offset by price
increases and operational efficiencies.
Working Capital Practices
The Company attempts to maintain only sufficient inventory of
supplies in the restaurants which it operates to satisfy current
operational needs. The Company's accounts receivable consist
primarily of credit card receivables, franchise royalties,
management fees and advances to managed properties.
Employees
The number of persons employed by the Company varies seasonally,
with the greatest number being employed during the summer months.
On March 15, 1996, the Company had approximately 11,290 employees,
including 11,100 in the operation of Chuck E. Cheese's restaurants
and 190 employed by the Company in the Company's executive offices.
None of the Company's employees is a member of any union or
collective bargaining group. The Company considers its employee
relations to be good.
PAGE 5
Item 2. Properties
The following table sets forth certain information regarding the
Chuck E. Cheese's restaurants operated by the Company (excluding
four restaurants managed by the Company for others) as of March 15,
1996.
Chuck E.
State Cheese's
----- -------
Alabama 5
Arkansas 2
California 47
Colorado 4
Connecticut 5
Florida 15
Georgia 7
Illinois 14
Indiana 7
Kansas 1
Louisiana 4
Maryland 10
Massachusetts 10
Michigan 11
Missouri 7
Nevada 1
Nebraska 2
New Hampshire 2
New Jersey 9
New York 5
North Carolina 2
Ohio 11
Pennsylvania 7
Tennessee 2
Texas 26
Virginia 3
Wisconsin 3
----
222
====
Of the 226 Chuck E. Cheese's restaurants operated by the Company
as of March 15, 1996, 212 were leased by the Company and 14 were
owned by the Company. The leases of these restaurants will expire
at various times from 1996 to 2009, as described in the table
below.
Year of Number of Range of Renewal
Expiration Restaurants Options (Years)
---------- ------------- ----------------
1996 14 None to 10
1997 23 None to 10
1998 23 None to 15
1999 20 None to 15
2000 and thereafter 132 None to 20
PAGE 6
The leases of Chuck E. Cheese's restaurants contain terms which
vary from lease to lease, although a typical lease provides for a
primary term of 10 years, with two additional five-year options to
renew, and provides for annual minimum rent payments of
approximately $6.00 to $22.00 per square foot, subject to periodic
adjustment. Most of the restaurant leases require the Company to
pay the cost of repairs, insurance and real estate taxes and, in
most instances, provide for additional rent equal to the amount by
which a percentage (typically 6%) of gross revenues exceeds the
minimum rent.
Item 3. Legal Proceedings.
In June 1993, the Company was named as a nominal defendant in a
shareholders' derivative action in the 68th Judicial District Court
in Dallas County, Texas in which three of the Company's executive
officers, four of the Company's outside directors and The Hallwood
Group Incorporated ("Hallwood") were named defendants. The
plaintiffs in this lawsuit had alleged the individual defendants
(i) breached their fiduciary duties to stockholders, (ii) committed
constructive fraud and (iii) unjustly enriched themselves as a
result of alleged violations of federal securities laws and illegal
insider trading between July 13, 1992 and June 11, 1993. Although
the Company believes that the claims made were without merit, the
Company has settled the lawsuit. On November 27, 1995, the Court
issued an order for final judgement that approved the settlement of
the suit and dismissed it with prejudice.
In January 1994, the Company was named a defendant in a lawsuit
brought in the Supreme Court of the state of New York, County of
Queens, by Big Six Towers, Inc., in its purported capacity as a
landlord to the Company with regard to a restaurant/entertainment
center location in Queens County, New York, which the Company had
contracted to lease from the plaintiff. The plaintiff alleged that
the Company had breached the lease and was seeking total damages in
excess of $4.0 million against the Company. Although the Company
believes the claims made against it were without merit, the Company
has settled the lawsuit. On December 29, 1995, the parties filed
a stipulation of dismissal that accepted the settlement of the suit
and dismissed it with prejudice.
Certain other pending legal proceedings exist against the Company
which the Company believes are not material in amount or have
arisen in the ordinary course of its business.
Item 4. Submission of Matters to a Vote of Security Holders.
No matters were submitted to a vote of security holders during
the fourth quarter of 1995.
PAGE 7
P A R T I I
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters.
As of March 15, 1996, there were an aggregate of 12,233,240
shares of the Company's Common Stock outstanding and approximately
4,364 stockholders of record.
The Company's Common Stock is listed on the National Market
System of the National Association of Securities Dealers Automated
Quotation ("NASDAQ") system under the symbol "SHBZ". The following
table sets forth the highest and lowest prices per share of the
Common Stock during each quarterly period within the two most
recent years, as reported on the National Market System of NASDAQ:
<TABLE>
<S> <C> <C>
High Low
------ ------
1995 - 1st quarter $ 10 3/4 $ 7 5/8
- 2nd quarter 12 1/4 8 3/4
- 3rd quarter 13 5/8 11
- 4th quarter 13 3/8 10 7/8
1994 - 1st quarter $15 1/4 $ 11 3/4
- 2nd quarter 14 9 1/4
- 3rd quarter 11 1/4 7 1/4
- 4th quarter 9 1/8 7 1/4
</TABLE>
The Company may not pay any dividends to holders of its Common
Stock (except in shares of Common Stock) unless an amount equal to
all dividends then accrued on its Class A Preferred Stock par value
$60.00 per share ("the Preferred Stock") has been paid or set aside
to be paid. A dividend to holders of record of Preferred Stock as
of December 31, 1995 in the amount of $1.20 per share will be paid
on March 31, 1996.
The Company has not paid any dividends on its Common Stock and
has no present intention of paying cash dividends thereon in the
future. The Company plans to retain any earnings to finance
anticipated capital expenditures and reduce its long-term debt.
Future dividend policy with respect to the Common Stock will be
determined by the Board of Directors of the Company, taking into
consideration factors such as future earnings, capital
requirements, potential loan agreement restrictions and the
financial condition of the Company.
PAGE 8
Item 6. Selected Financial Data.
<TABLE>
<S> <C> <C> <C> <C> <C>
1995 1994 1993 1992 1991
------ ------ ------ ------ ------
(Thousands, except per share data)
Operating results (1)(2):
Revenues . . . . . . $ 263,783 $268,515 $272,344 $253,444 $208,389
Costs and expenses. . 263,408 265,402 254,097 228,194 189,456
-------- -------- -------- -------- -------
Income before
income taxes . . . . 375 3,113 18,247 25,250 18,933
Income taxes:
Current expense. . . . 701 869 1,751 1,161 1,050
Deferred expense
(benefit) . . . . . . (389) 1,568 4,605 8,586 6,285
------ ------ ------ ------- ------
312 2,437 6,356 9,747 7,335
------ ------ ------ ------ ------
Net income . . . . $ 63 $ 676 $ 11,891 $ 15,503 $ 11,598
====== ====== ====== ====== ======
Per Share (3):
Primary:
Net income
(loss) . . . . . . $ (.02) $ .03 $ .86 $ 1.11 $ .82
Weighted average
shares outstanding. 12,065 12,127 13,455 13,662 13,700
Fully diluted:
Net income (loss) . $ (.02) $ .03 $ .86 $ 1.11 $ .82
Weighted average
shares outstanding. 12,065 12,127 13,464 13,713 13,728
Cash flow data:
Cash provided by
operations . . . . $ 27,810 $ 30,819 $ 44,905 $ 44,246 $ 36,097
Cash used in
investing
activities . . . . (30,548) (22,576) (45,909) (35,872) (29,104)
Cash provided by
(used in) financing
activities . . . . 5,946 (10,373) 2,053 (7,631) (6,303)
Balance sheet data:
Total assets . . . .$ 199,010 $ 188,308 $193,649 $173,217 $158,563
Long-term obligations
(including current
portion and redeemable
preferred stock) . . 39,244 33,223 29,816 17,743 21,360
Shareholders' equity 126,487 125,515 136,647 132,167 115,500
Number of restaurants at year end:
Chuck E. Cheese's:
Company operated. . . 226 226 215 182 159
Franchise . . . . . . 93 106 110 113 113
------ ------ ------ ------ ------
319 332 325 295 272
Monterey's Tex-Mex
Cafe's 27 28 27
------ ------ ------ ------ ------
319 332 352 323 299
====== ====== ====== ====== ======
</TABLE>
- ----------------------
(1) Fiscal year 1992 was 53 weeks in length while fiscal years
1995, 1994, 1993, and 1991 were 52 weeks in length.
(2) Certain reclassifications of 1994, 1993, 1992 and 1991 amounts
have been made to conform to the 1995 presentation.
(3) No cash dividends on common stock were paid in any of the
years presented.
PAGE 9
Item 7. Management's Discussion and Analysis of Financial
Condition and Results Of Operations.
Results of Operations
1995 Compared to 1994
- ---------------------
Revenues declined 1.8% to $263.8 million in 1995 from $268.5
million in 1994 due to the sale of the Company's Monterey's Tex-
Mex Cafe restaurants effective May 5, 1994. Revenue generated by
the Company's Chuck E. Cheese's restaurants increased to $263.3
million in 1995 from $262.0 million in 1994 due to the net
additions of 11 Company restaurants in 1994 and two Company
restaurants in 1995. Sales from the Company's Chuck E. Cheese's
restaurants which were open during all of 1995 and 1994
("comparable store sales") declined 1.4% between the years.
Revenues from the Company's Monterey's Tex-Mex Cafe restaurants
were $6.5 million in 1994.
Income before income taxes decreased to $375,000 in 1995 from
$3.1 million in 1994. Included in income before taxes in 1994 is
a gain of $5.5 million related to the sale of the Company's
Monterey's Tex-Mex Cafe restaurants and a $2.3 million loss
associated with the impairment in fair value of certain Chuck E.
Cheese's restaurants. Income before income taxes in 1994 was also
reduced by approximately $900,000 due to a write-off of all
unamortized preopening expenses resulting from a change in the
estimated future benefit of such expenses. A material portion of
operating costs are fixed resulting in an erosion of operating
margins at lower sales levels. Net income declined to $63,000 in
1995 from $676,000 in 1994.
A summary of the results of operations of the Company as a
percentage of revenues for the last three fiscal years is shown
below.
<TABLE>
<S> <C> <C> <C>
1995 1994 1993
------ ------ ------
Revenues . . . . . . . . . . . . . . 100.0% 100.0% 100.0%
------ ------ ------
Costs and expenses:
Cost of sales. . . . . . . . . . . . 51.8% 51.3% 50.4%
Selling, general and administrative 17.0% 17.6% 15.5%
Depreciation and amortization 8.8% 9.7% 8.5%
Interest expense . . . . . . . . . . 1.2% .7% .3%
(Gain) loss on property transactions .1% (1.0%) .2%
Other operating expenses . . . . . . 21.0% 20.5% 18.4%
------ ------ ------
99.9% 98.8% 93.3%
------ ------ ------
Income before income taxes. . . . . . . . .1% 1.2% 6.7%
====== ====== ======
</TABLE>
Revenues
--------
Revenues decreased to $263.8 million in 1995 from $268.5 million
in 1994 due to the sale of the Company's Monterey's Tex-Mex Cafe
restaurants effective May 4, 1994. Comparable store sales of Chuck
E. Cheese's restaurants which were open during all of both 1995 and
1994 declined by 1.4% between the years. Average annual sales per
restaurant decreased to approximately $1,178,000 in 1995. Menu
prices were comparable between the two years. The increasing number
of completed repositioned restaurants resulted in a 2.3% increase
in comparable store sales in the fourth quarter of 1995 compared to
the same period of the prior year. This is the first quarter since
1992 that comparable store sales has increased from the prior year.
Revenues from franchise fees and royalties decreased by 15.1% in
1995 compared to 1994 primarily due to a 6.2% decline in comparable
franchise store sales for restaurants open all of 1995 and 1994,
and a decline in the number of restaurants operated each year.
During 1995, one new franchise restaurant opened and 14 franchise
restaurants closed.
PAGE 10
Costs and Expenses
------------------
Costs and expenses as a percentage of revenues increased to 99.9%
in 1995 from 98.8% in 1994.
Cost of sales increased as a percentage of revenues to 51.8% in
1995 from 51.3% in 1994. Cost of food, beverage, prize and
merchandise items for Chuck E. Cheese's restaurants as a percentage
of restaurant sales decreased to 17.9% in 1995 from 18.2% in 1994
primarily due to an increase in game sales as a percentage of total
restaurant sales. Labor expenses for Chuck E. Cheese's restaurants
as a percentage of restaurant sales increased to 30.9% in 1995 from
30.0% in 1994 primarily due to increased labor rates, reduced
management turnover and the decline in comparable store sales.
Selling, general and administrative expenses as a percentage of
revenues decreased to 17.0% in 1995 from 17.6% in 1994 due
primarily to a reduction in corporate overhead expenses.
Depreciation and amortization expense as a percentage of revenues
decreased to 8.8% in 1995 from 9.7% in 1994. Preopening expense
declined due to the write-off of all unamortized preopening expense
in the fourth quarter of 1994 resulting from a change in the
estimated useful future benefit of such expenses. Depreciation
expense declined due to the sale of Monterey's Tex-Mex Cafe
restaurants in May 1994 and a change effected in the first quarter
of 1995 in the estimated useful lives of certain fixed assets
based on a review of historical asset utilization. As a result of
this change, depreciation expense decreased approximately $2.3
million in 1995.
Interest expense increased to $3.1 million in 1995 from $1.9
million in 1994 primarily due to an increase in interest rates and
the Company's average outstanding debt between the periods.
The Company had a net loss on property transactions of $136,000
in 1995 compared to a net gain on property transactions of $2.6
million in 1994. In 1994, the Company recognized a gain of $5.5
million from the sale of substantially all of the assets of its
Monterey's Tex-Mex Cafe restaurants on May 5, 1994. The gain was
partially offset by a loss of approximately $2.3 million in 1994.
The loss was a result of the Company's decision to close one Chuck
E. Cheese's restaurant and the impairment in fair value of the
fixed assets of ten Chuck E. Cheese's restaurants due to the
Company's decision not to renew the leases as a result of the
deterioration of site characteristics. The Company will consider
possible relocation of some of the restaurants.
Other operating expenses increased as a percentage of revenues
to 21.0% in 1995 from 20.5% in 1994 primarily due to increased rent
expense and the decline in comparable store sales.
Net Income
----------
In 1994, the Company established an allowance of approximately
$1.1 million related to deferred tax credit carryforwards which are
estimated to expire in 1997. Income tax expense was increased by
approximately $1.1 million as a result of this allowance. The
Company's net income decreased to $63,000 in 1995 from $676,000 in
1994 due to the changes in revenues and expenses as discussed
above. The Company's primary and fully diluted earnings per share
decreased to a loss per share of $.02 in 1995 from earnings per
share of $.03 in 1994.
1994 Compared to 1993
- ---------------------
Revenues declined 1.4% to $268.5 million in 1994 from $272.3
million in 1993 due to the sale of the Company's Monterey's Tex-
Mex Cafe restaurants effective May 5, 1994. Revenue generated by
the Company's Chuck E. Cheese's restaurants increased to $262.0
million in 1994 from $253.3 million in 1993 due to the net addition
of 11 Company restaurants in 1994 and 33 Company restaurants in
1993. Sales from the Company's Chuck E. Cheese's restaurants which
were open during all of 1994 and 1993 ("comparable store sales")
declined 5.8% between the years. Revenues from the Company's
Monterey's Tex-Mex Cafe restaurants declined to $6.5 million in
1994 from $19.0 million in 1993 due to the sale of the Monterey's
restaurants mentioned above.
PAGE 11
Income before income taxes decreased to $3.1 million in 1994 from
$18.2 million in 1993. Included in income before income taxes for
1994 is a gain of $5.5 million related to the sale of the Company's
Monterey's Tex-Mex Cafe restaurants and a $2.3 million loss
associated with the impairment in fair value of certain Chuck E.
Cheese's restaurants. Income before income taxes in 1994 was also
reduced by approximately $900,000 due to a write-off of all
unamortized preopening expenses resulting from a change in the
estimated future benefit of such expenses. The decline in income
is primarily due to the decline in comparable store sales and
operating margins in the Company's Chuck E. Cheese's restaurants.
A material portion of operating costs are fixed resulting in an
erosion of operating margins at lower sales levels.
Revenues
--------
Revenues from the Company's Chuck E. Cheese's restaurants
increased by 3.4% to $262.0 million in 1994 from $253.3 million in
1993 due to sales from new restaurants opened throughout 1994 and
1993. Comparable store sales of Chuck E. Cheese's restaurants
which were open during all of both 1994 and 1993 declined by 5.8%
between the years. Average annual sales per restaurant decreased
to approximately $1,206,000 in 1994. Menu prices were comparable
between the two years.
Management believes that several factors may have contributed to
the comparable store sales decline, including increased competition
and to a lesser extent, a decrease in the number of restaurants
remodeled since 1992 and the impact of newly opened restaurants on
comparable store sales of existing restaurants in certain markets.
Some of the factors impacting comparable store sales are believed
to be negatively impacting sales volumes of newer restaurants
opened since 1990. During 1994, the average sales volume of the 70
new Chuck E. Cheese's restaurants opened in 1991 through 1993 was
3.0% lower than the average sales volume of existing restaurants
during the same period.
Revenues from franchise fees and royalties decreased by 5.6% in
1994 compared to 1993 primarily due to a 6.4% decline in comparable
franchise store sales for restaurants open all of 1994 and 1993,
and a decline in the number of restaurants operated each year.
During 1994, two new franchise restaurants opened and six franchise
restaurants closed.
Revenues from Monterey's Tex-Mex Cafe restaurants declined to
$6.5 million in 1994 compared to $19.0 million in 1993 due to the
sale of the Company's Monterey's Tex-Mex Cafe restaurants effective
May 5, 1994.
Costs and Expenses
------------------
Costs and expenses as a percentage of revenues increased to 98.8%
in 1994 from 93.3% in 1993.
Cost of sales increased as a percentage of revenues to 51.3% in
1994 from 50.4% in 1993. Cost of food, beverage, prize and
merchandise items for Chuck E. Cheese's restaurants as a percentage
of restaurant sales increased to 18.2% in 1994 from 18.0% in 1993
primarily due to increases in cheese costs and in costs relating to
the enhancement of certain prize and merchandise items. Labor
expenses for Chuck E. Cheese's restaurants as a percentage of
restaurant sales increased to 30.0% in 1994 from 29.0% in 1993
primarily due to the decline in comparable store sales and
enhancements in services provided to guests, including child
security.
Selling, general and administrative expenses as a percentage of
revenues increased to 17.6% in 1994 from 15.5% in 1993 due
primarily to increased advertising expense as a percentage of
revenues. Corporate overhead costs were impacted by an increase of
approximately $1.2 million primarily during the first three
quarters of 1994 as a result of increasing the number of
operational regional and district managers. Overhead costs were
also impacted in 1994 by an allowance for potential legal
settlements.
Depreciation and amortization expense as a percentage of revenues
increased to 9.7% in 1994 from 8.5% in 1993 primarily due to a
write-off of all unamortized preopening expenses of approximately
$900,000 resulting from a change in the estimated future benefit of
such expenses, the higher depreciation and amortization expense of
new restaurants relative to older restaurants and the decline in
comparable store sales.
PAGE 12
Interest expense increased to $1.9 million in 1994 from $797,000
in 1993 due primarily to an increase in long-term debt of $18.5
million since the third quarter of 1993 primarily to fund the
Company's repurchase of its common stock and an increase in
interest rates.
The Company had a net gain on property transactions of $2.6
million in 1994 compared to a loss on property transactions of
$675,000 in 1993. The Company recognized a gain of $5.5 million
from the sale of its Monterey's Tex-Mex Cafe restaurants effective
May 5, 1994. The gain was partially offset by a loss of
approximately $2.3 million in 1994. The loss was a result of the
Company's decision to close one Chuck E. Cheese's restaurant and
the impairment in fair value of the fixed assets of ten Chuck E.
Cheese's restaurants due to the Company's decision not to renew the
leases as a result of the deterioration of site characteristics or
the inability to renew the leases at acceptable rental terms. The
Company will consider possible relocation of some of the
restaurants. The Company provided for an additional loss on
property transactions of approximately $597,000 in 1994 compared to
$675,000 in 1993 due to the replacement of certain assets in
conjunction with the enhancement of facilities and entertainment
packages of restaurants.
Other operating expenses increased as a percentage of revenues
to 20.5% in 1994 from 18.4% in 1993 primarily due to increased
rent, utility and property tax expenses as a percentage of revenues
and the decline in comparable store sales.
Net Income
----------
In 1994, the Company established an allowance of approximately
$1.1 million related to deferred tax credit carryforwards which are
estimated to expire in 1997. Income tax expense was increased by
approximately $1.1 million as a result of this allowance. In 1993,
income tax expense was reduced approximately $971,000 primarily due
to a non-recurring tax gain resulting from the increased valuation
of the Company's deferred tax asset due to an increase in federal
corporate income tax rates enacted in 1993. The Company's net
income decreased to $676,000 in 1994 from $11.9 million in 1993 due
to the changes in revenues and expenses as discussed above. The
Company's primary and fully diluted earnings per share decreased to
$.03 per share in 1994 from $.86 per share in 1993.
Inflation
The Company's costs of operations, including but not limited to,
labor, supplies, utilities, financing and rental costs, are
significantly affected by inflationary factors. The Company pays
most of its part-time employees rates that are related to federal
and state mandated minimum wage requirements. Increases in any
such costs would result in higher costs to the Company, which the
Company expects would be partially offset by menu price increases
and increased efficiencies in operations.
Financial Condition, Liquidity and Capital Resources
Cash provided by operations declined to $27.8 million in 1995
from $30.8 million in 1994. Cash outflow from investing activities
for 1995 was $30.5 million. Cash inflow from financing activities
in 1995 was $5.9 million. The Company's primary requirements for
cash relate to planned capital expenditures and debt service. The
Company expects that it will satisfy such requirements from cash
provided by operations and funds available under its line of credit
or additional borrowings.
In 1995, the Company refinanced its previous credit facility of
$30.8 million expiring in January 1996 with an increased facility
of $38 million. The new credit facility consists of certain term
notes totalling $18 million with annual interest of 10.02% maturing
in 2001, term notes totalling $10 million with annual interest
equal to the London Interbank Offered Rate ("LIBOR") plus 3.5%
maturing in 2000, term loans of $5.0 million with annual interest
equal to LIBOR plus 3.5% maturing in 1997 and a $5 million line of
credit due June 1997 with interest provided at prime plus 1/2%, or
at the Company's option, LIBOR plus 3%. The Company is required to
comply with certain financial ratio tests during the terms of the
loan agreements.
PAGE 13
The Company believes that the success of its facility and
enhancement program in addition to new restaurant development will
continue to be significant factors in its ability to generate
increased revenues over the foreseeable future. The Company
continues to evolve and expand its efforts to significantly enhance
its Chuck E. Cheese's locations. This "repositioning" program is
being carried out on a market by market basis and involves: an
improved exterior identity, a facility upgrade, an expanded free
ball-crawl with tubes and tunnels suspended from or reaching to the
ceiling, and an enhancement of the variety and number of games and
rides offered to its guests. The Company completed 21 restaurants
under this program in 1994 and 76 restaurants in 1995 which is
approximately 43% of all Company operated restaurants. The Company
currently plans to reposition substantially all Company-operated
restaurants by the end of 1996. The Company anticipates that the
repositioning of the remaining restaurants will cost on the average
approximately $300,000 per restaurant. However, this amount can
vary significantly at a particular restaurant depending on several
factors, including the restaurant's square footage, date of the
most recent remodel and the existing assets at the restaurant. In
the event certain site characteristics considered essential to the
success of a restaurant deteriorate, the Company will consider
closing the restaurant or relocating the restaurant to a more
desirable site.
The Company is implementing several strategies designed to
strengthen the sales vitality of its existing restaurant base in
what management believes is a competitive market. The Company is
refining its marketing plan; the Company has accelerated its
commitment of capital to existing stores; and the Company is
limiting its new restaurant development to ensure that the sales
vitality of the Company's existing restaurant base and new
restaurant growth are both given appropriate priority. As a result
of these strategies, comparable store sales increased 2.3% in the
fourth quarter of 1995. The Company continues to experience
increases in comparable store sales in 1996.
The Company believes it will realize substantial benefit from
utilization of approximately $67 million in net operating loss
carryforwards to reduce its future federal income tax liability.
Such net operating loss carryforwards expire from years 1999
through 2001. Although the use of such carryforwards could, under
certain circumstances, be limited, the Company is presently unaware
of the occurrence of any event which would result in the imposition
of such limitation. The Company has adopted an amendment to its
Restated Articles of Incorporation which is intended to prevent
changes in ownership of its common stock that would cause such
limitation. In addition, the Company has investment tax credit,
job tax credit and alternative minimum tax credit carryforwards of
approximately $7 million. The investment tax credit and the job
tax credit carryforwards expire in years 1997 through 2010. Tax
credit carryforwards can be utilized by the Company only after all
net operating loss carryforwards have been realized. If the
Company's results of operations do not improve, a portion of the
net operating loss and tax credit carryforwards could expire prior
to utilization, resulting in a charge against income. Taxable
income for the five years ending December 30, 1994 was $53 million.
Based on current results of the repositioned restaurants and the
Company's current plans to reposition substantially all of its
Company-owned restaurants by the end of 1996, the Company currently
projects future taxable income levels sufficient to realize its net
operating loss and tax credit carryforwards prior to their
expiration after considering an allowance of $1.1 million for the
estimated expiration of tax credit carryforwards in 1997.
PAGE 14
Item 8. Financial Statements and Supplementary Data
SHOWBIZ PIZZA TIME, INC.
YEARS ENDED DECEMBER 29, 1995, DECEMBER 30, 1994
AND DECEMBER 31, 1993
CONTENTS
Page
-----
Independent auditors' report. . . . . . . . . . . . . . . . . . . . . 16
Consolidated financial statements:
Consolidated balance sheets. . . . . . . . . . . . . . . . . . . 17
Consolidated statements of earnings. . . . . . . . . . . . . . . 18
Consolidated statements of shareholders' equity. . . . . . . . . 19
Consolidated statements of cash flows. . . . . . . . . . . . . . 20
Notes to consolidated financial statements . . . . . . . . . . . 21
PAGE 15
INDEPENDENT AUDITORS' REPORT
Board of Directors and Shareholders
ShowBiz Pizza Time, Inc.
Irving, Texas
We have audited the accompanying consolidated balance sheets of
ShowBiz Pizza Time, Inc. and subsidiary as of December 29, 1995 and
December 30, 1994 and the related consolidated statements of
earnings, shareholders' equity, and cash flows for each of the
three years in the period ended December 29, 1995. 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 statements 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, such consolidated financial statements present
fairly, in all material respects, the financial position of ShowBiz
Pizza Time, Inc. and subsidiary as of December 29, 1995 and
December 30, 1994 and the results of their operations and their
cash flows for each of the three years in the period ended December
29, 1995, in conformity with generally accepted accounting
principles.
As discussed in Note 1 to the consolidated financial statements,
the Company changed its method of accounting for preopening costs
in 1994.
DELOITTE & TOUCHE LLP
Dallas, Texas
February 23, 1996
PAGE 16
SHOWBIZ PIZZA TIME, INC.
CONSOLIDATED BALANCE SHEETS
DECEMBER 29, 1995 AND DECEMBER 30, 1994
(Thousands, except share data)
<TABLE>
ASSETS
<S> <C> <C>
December 29, December 30,
1995 1994
------------- -------------
Current assets:
Cash and cash equivalents . . . . . . . . $ 5,589 $ 2,381
Accounts receivable, including receivables
from related parties of $415 and $416,
respectively. . . . . . . . . . . . . . . 3,327 3,361
Current portion of notes receivable,
including receivables from
related parties of $327 and $300,
respectively . . . . . . . . . . . . . . 608 529
Inventories . . . . . . . . . . . . . . . . 3,589 3,107
Prepaid expenses. . . . . . . . . . . . . . 2,781 2,900
Current portion of deferred tax asset . . . 4,147 3,583
------- -------
Total current assets . . . . . . . . . . . . . 20,041 15,861
-------- -------
Investments in related parties. . . . . . . . 761 699
-------- -------
Property and equipment. . . . . . . . . . . . 137,181 130,190
-------- ---------
Deferred tax asset. . . . . . . . . . . . . . 28,582 29,414
-------- ---------
Other assets:
Notes receivable, less current portion,
including receivables from
related parties of $1,983 and $1,708,
respectively . . . . . . . . . . . . . . 7,072 6,705
Deferred charges, less amortization . . . . 2,599 2,083
Other . . . . . . . . . . . . . . . . . . . 2,774 3,356
------- -------
12,445 12,144
------- -------
$ 199,010 $ 188,308
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt . . . . $ 95 $ 10,060
Accounts payable and
accrued liabilities . . . . . . . . . . 29,836 26,545
-------- --------
Total current liabilities. . . . . . . 29,931 36,605
-------- --------
Long-term debt, less current portion. . . . . 35,753 19,947
-------- --------
Deferred credits. . . . . . . . . . . . . . . 3,443 3,025
-------- --------
Other liabilities . . . . . . . . . . . . . . 1,391 1,314
-------- --------
Commitments and contingencies
Redeemable preferred stock, $60 par
value, redeemable for
$2,974 in 2005. . . . . . . . . . . . . . 2,005 1,902
-------- --------
Shareholders' equity:
Common stock, $.10 par value;
authorized 30,000,000 shares;
14,290,061 and 14,337,235 shares
issued, respectively . . . . . . . . . 1,429 1,434
Capital in excess of par value. . . . . . 154,230 156,532
Retained earnings . . . . . . . . . . . . 4,733 5,012
Deferred compensation . . . . . . . . . . (3,642) (7,200)
Less treasury shares of 2,072,784
at both dates, at cost . . . . . . . . (30,263) (30,263)
-------- --------
126,487 125,515
-------- --------
$ 199,010 $ 188,308
======== ========
</TABLE>
See notes to consolidated financial statements.
PAGE 17
SHOWBIZ PIZZA TIME, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
YEARS ENDED DECEMBER 29, 1995,
DECEMBER 30, 1994 AND DECEMBER 31, 1993
(Thousands, except per share data)
<TABLE>
<S> <C> <C> <C>
1995 1994 1993
---- ----- -----
Food and beverage revenues. . . . . . $182,376 $189,257 $197,090
Games and merchandise revenues. . . . . 76,969 74,331 70,242
Franchise fees and royalties. . . . . . 3,464 4,078 4,321
Interest income, including related
party income of $222, $209,
and $177, respectively. . . . . . . 872 688 346
Joint venture income. . . . . . . . . . 102 161 345
------- -------- -------
263,783 268,515 272,344
--------- -------- --------
Costs and expenses:
Cost of sales . . . . . . . . . . 136,700 137,729 137,343
Selling, general and administrative
expenses, including related party expenses
of $125 in each year . . . . . . 44,794 47,263 42,129
Depreciation and amortization 23,184 26,032 23,058
Interest expense, including related party
expense of $99 in 1993 . . . . . 3,118 1,861 797
(Gain) loss on property
transactions . . . . . . . . . . 136 (2,597) 675
Other operating expenses. . . . . . 55,476 55,114 50,095
------- ------- -------
263,408 265,402 254,097
-------- ------- -------
Income before income taxes. . . . . . . 375 3,113 18,247
Income taxes:
Current expense . . . . . . . . . . . 701 869 1,751
Deferred (benefit) expense. . . . . . (389) 1,568 4,605
------- ------- -------
312 2,437 6,356
------- -------- -------
Net income. . . . . . . . . . . . . . $ 63 $ 676 $ 11,891
======= ======= =======
Earnings per common and common equivalent share:
Primary:
Net income (loss). . . . . . . $ (.02) $ .03 $ .86
======= ======= =======
Weighted average shares
outstanding. . . . . . . . . 12,065 12,127 13,455
======= ======== =======
Fully diluted:
Net income (loss). . . . . . . $ (.02) $ .03 $ .86
======= ======= =======
Weighted average shares
outstanding. . . . . . . . . 12,065 12,127 13,464
======= ======= =======
</TABLE>
See notes to consolidated financial statements.
PAGE 18
SHOWBIZ PIZZA TIME, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
YEARS ENDED DECEMBER 29, 1995,
DECEMBER 30, 1994 AND DECEMBER 31, 1993
(Thousands, except per share data)
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
Common Capital in Retained Deferred Treasury
Stock Excess of Earnings Compen- Stock
Shares Par Value Par Value (Deficit) sation Shares Cost
------- -------- --------- ------- -------- ------ ------
Balances, Jan 1, 1993 . .
12,965 $1,297 $143,219 $ (6,872) $ (666) 212 $(4,811)
Net income . . . . .
11,891
Redeemable preferred stock
accretion . . . . (104)
Redeemable preferred
stock dividends,
$4.80 per share . . . . . . . . . (238)
Stock options exercised. . . . . . .
48 5 573
Warrants exercised . . . . . . . . .
855 85 1,435
Stock grant plan . . . . . . . . . .
414 41 12,000 (12,000)
Tax expense from exercise
of stock options
and stock grants . . . . . . . . .
(37)
Treasury stock acquired. . . . . . .
834 (11,939)
Amortization of deferred
compensation. . . . . . . . . . .
2,732
Stock issued under
401(k) plan . . . . . . . . . . .
1 36
- ------ ----- ------- ------ ------ ----- ------
Balances, Dec. 31, 1993 . . . . . . . . .
14,283 1,428 157,226 4,677 (9,934) 1,046 (16,750)
Net income . . . . . . . . . . . . . 676
Redeemable preferred
stock accretion . . . . . . . . .(103)
Redeemable preferred
stock dividends,
$4.80 per share . . . . . . . . .(238)
Stock options exercised. . . . . . .
54 6 234
Tax expense from exercise
of stock options
and stock grants. . . . . . . . . .
(928)
Treasury stock acquired. . . . . . . .
1,027 (13,513)
Amortization of deferred
compensation. . . . . . . . . . . . . 2,734
- ------ ----- ------- ------ ------- ------ -------
Balances, Dec. 30, 1994 . . . . . . . . . . .
14,337 1,434 156,532 5,012 (7,200) 2,073 (30,263)
Net income . . . . . . . . . . . . 63
Redeemable preferred
stock accretion . . . . . . . . (104)
Redeemable preferred
stock dividends,
$4.80 per share . . . . . . . . (238)
Stock options exercised. . . . . .
13 1 89
Stock grant shares forfeited . . .
(60) (6) (1,737) 1,737
Tax expense from exercise
of stock options
and stock grants. . . . . . . . .
(654)
Amortization of deferred
compensation. . . . . . . . . . . 1,821
- ------ ------ ------- ------ ------ ----- ------
Balances, Dec. 29, 1995 . . . . . . . . .
14,290 $1,429 $154,230 $ 4,733 $(3,642) 2,073 $(30,263)
====== ====== ======== ======= ======= ===== =======
</TABLE>
See notes to consolidated financial statements.
PAGE 19
SHOWBIZ PIZZA TIME, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 29, 1995,
DECEMBER 30, 1994 AND DECEMBER 31, 1993
(Thousands)
<TABLE>
<S> <C> <C> <C>
1995 1994 1993
------ ------ ------
Operating activities:
Net income. . . . . . . . . . . . . $ 63 $ 676 $11,891
Adjustments to reconcile
net income to cash provided by
operations:
Depreciation and amortization . . 23,184 26,032 23,058
Deferred income tax
expense (benefit) . . . . . . . (389) 1,568 4,605
(Gain) loss on property
transactions. . . . . . . . . . 136 (2,597) 675
Compensation expense under
stock grant plan. . . . . . . . 1,821 2,734 2,756
Other . . . . . . . . . . . . . . 418 619 399
Net change in receivables,
inventories, prepaids,
payables and accrued
liabilities . . . . . . . . . . 2,577 1,787 1,521
------- ------ -------
Cash provided by operations 27,810 30,819 44,905
------- ------- -------
Investing activities:
Purchases of property
and equipment . . . . . . . . . . (28,277) (29,421) (44,600)
Proceeds from disposition
of property and equipment . . . . 20 6,725 250
Payments received on
notes receivable. . . . . . . . . 2,503 2,992 978
Additions to notes
receivable. . . . . . . . . . . . (3,047) (2,169) (724)
Change in deferred charges,
investments and other assets. . . (1,747) (703) (1,813)
------- ------- -------
Cash used in investing
activities. . . . . . . . . . (30,548) (22,576) (45,909)
------- ------- -------
Financing activities:
Proceeds from line of credit. . . . 38,895 8,535 24,050
Payments on line of credit. . . . . (32,995) (5,235) (10,550)
Reduction of debt and capital
lease obligations, including
payments to related parties
of $1,658 in 1993 . . . . . . . . (59) (47) (1,692)
Redeemable preferred
stock dividends . . . . . . . . . (238) (238) (238)
Acquisition of treasury
stock . . . . . . . . . . . . . . (13,513) (11,939)
Exercise of stock options
and warrants, including
exercise by a related party
of $1,488 in 1993 . . . . . . . . 90 240 2,098
Other . . . . . . . . . . . . . . . 253 (115) 324
------ ------- -------
Cash provided by (used in)
financing activities. . . . . 5,946 (10,373) 2,053
------- ------- -------
Increase (decrease) in
cash and cash equivalents . . . . . 3,208 (2,130) 1,049
Cash and cash equivalents,
beginning of year . . . . . . . . . 2,381 4,511 3,462
------- ------- -------
Cash and cash equivalents,
end of year . . . . . . . . . . . . $ 5,589 $ 2,381 $ 4,511
======= ======= =======
</TABLE>
See notes to consolidated financial statements.
PAGE 20
SHOWBIZ PIZZA TIME, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 29, 1995,
DECEMBER 30, 1994 AND DECEMBER 31, 1993
1. Summary of significant accounting policies:
Operations:
ShowBiz Pizza Time, Inc. (the "Company") operates and
franchises family restaurant entertainment centers as Chuck E.
Cheese's restaurants, and through BHC Acquisition Corporation
("BAC"), its wholly owned subsidiary, also operated Monterey's
Tex-Mex Cafe restaurants. The Monterey's Tex-Mex Cafe
restaurants were sold effective May 5, 1994.
Fiscal year:
The Company's fiscal year is 52 or 53 weeks and ends on the
Friday nearest December 31. References to 1995, 1994 and 1993
are for the fiscal years ended December 29, 1995, December 30,
1994 and December 31, 1993, respectively. Fiscal years 1995,
1994 and 1993 were each 52 weeks in length.
Basis of consolidation:
The consolidated financial statements include the accounts of
the Company and BAC. All significant intercompany accounts and
transactions have been eliminated.
Cash and cash equivalents:
Cash and cash equivalents of the Company are composed of
demand deposits with banks and short-term cash investments with
remaining maturities of three months or less from the date of
purchase by the Company.
Inventories:
Inventories of food, paper products and supplies are stated at
the lower of cost or market on a first-in, first-out basis.
Property and equipment, depreciation and amortization:
Property and equipment are stated at cost. Depreciation and
amortization are provided by charges to operations over the
estimated useful lives of the assets, or the lease term if less,
by the straight-line method. During the first quarter of 1995,
the Company changed its estimate of the useful lives of certain
fixed assets (Note 5). As a result of this change, income
before income taxes increased approximately $2.3 million, net
income increased approximately $1.4 million and earnings per
share increased approximately $.12 in 1995.
Deferred charges and related amortization:
Loan costs are deferred and amortized over the term of the
respective agreements. Franchise rights are amortized over the
remaining life of the franchise agreements. In the fourth
quarter of 1994, the Company revised its estimate of the future
benefit for preopening expenses. As a result, the Company
expensed all unamortized preopening expenses of approximately
$900,000. The Company now expenses all preopening expenses as
incurred. Previously, preopening expenses were amortized over a
two year period. Other deferred charges are amortized over
various periods of up to five years. All amortization is
provided by the straight-line method.
PAGE 21
SHOWBIZ PIZZA TIME, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
YEARS ENDED DECEMBER 29, 1995,
DECEMBER 30, 1994 AND DECEMBER 31, 1993
1. Summary of significant accounting policies (continued):
Franchise fees and royalties:
The Company recognizes initial franchise fees upon fulfillment
of all significant obligations to the franchisee. Royalties
from franchisees are accrued as earned.
Impairment of intangibles and long-lived assets:
Impairment losses are recognized if the future cash flows
expected to be generated by intangibles and long-lived assets
are less than the carrying value of the assets. The impairment
loss is equal to the amount by which the carrying value of the
assets exceeds the fair value of the assets.
Reclassifications:
In 1995, the Company adopted the single step format for
presenting its Consolidated Statements of Earnings. Certain
reclassifications of 1994 and 1993 amounts have been made to
conform to the 1995 presentation.
Use of estimates and assumptions:
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
period. Significant estimates are used in determining the
realization of the deferred tax asset, the liability for self-
insured reserves and the collectibility of receivables. Actual
results could differ from those estimates.
Accounting for stock-based compensation:
The Company has elected to not apply the accounting provisions
of the Statement of Financial Accounting Standards No. 123
"Accounting for Stock-Based Compensation" issued by the
Financial Accounting Standards Board.
2. Significant transactions:
Effective May 5, 1994, the Company sold its Monterey's Tex-Mex
Cafe restaurants for an aggregate purchase price consisting of
approximately $6.7 million in cash, $4.7 million in subordinated
promissory notes and the retention of a 12 1/2% equity interest in
the acquiring company. Due to the Company's substantial equity
interest, the acquiring company is a related party subsequent to
the transaction. Revenues from the Company's Monterey's Tex-Mex
Cafe restaurants were $6.5 million in 1994. Income before
income taxes was $6.3 million in 1994 including a gain of $5.5
million from the sale.
The Company provided for a loss of approximately $2.3 million
in 1994 as a result of the Company's decision to close one Chuck
E. Cheese's restaurant and the impairment in fair value of the
fixed assets of ten Chuck E. Cheese's restaurants. The
impairment in fair value of the ten restaurants is due to the
Company's decision not to renew the leases as a result of the
deterioration of site characteristics or the inability to renew
the leases at acceptable rental terms.
PAGE 22
3. Accounts receivable:
<TABLE>
<S> <C> <C>
1995 1994
------- ------
(thousands)
Trade. . . . . . . . . . . . . . . . . . . .$ 516 $ 382
Other. . . . . . . . . . . . . . . . . . . . 2,886 3,454
------- -------
3,402 3,836
Less allowance for
doubtful collection. . . . . . . . . . . . (75) (475)
------- -------
$ 3,327 $ 3,361
======= =======
</TABLE>
SHOWBIZ PIZZA TIME, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
YEARS ENDED DECEMBER 29, 1995,
DECEMBER 30, 1994 AND DECEMBER 31, 1993
4. Notes receivable:
The Company's notes receivable at December 29, 1995 and
December 30, 1994 arose principally as a result of the sale of
restaurants, lines of credit established with the International
Association of ShowBiz Pizza Time Restaurants, Inc., a related
party (Note 19), and advances to franchisees, joint ventures and
managed properties. All obligors under the notes receivable
are principally engaged in the restaurant industry. The notes
have various terms, but most are payable in monthly installments
of principal and interest through 2000, with interest rates
ranging from 7.5% to 12.0%. The notes are generally
collateralized by the related property and equipment. Balances
of notes receivable are net of an allowance for doubtful
collection of $354,000 and $139,000 at December 29, 1995 and
December 30, 1994, respectively.
5. Property and equipment:
In 1995, the Company changed its estimate of the useful lives of
certain fixed assets.
<TABLE>
<S> <C> <C> <C> <C>
Previous New
Lives Lives 1995 1994
------ ------ ----- ------
(in years) (thousands)
Land and improvements. . . . . 0 - 10 0 - 20 $ 4,630 $ 4,650
Leasehold improvements . . . . 4 - 15 4 - 20 118,041 107,928
Buildings and improvements . . 4 - 25 4 - 25 8,789 8,789
Furniture, fixtures
and equipment. . . . . . . . 2 - 10 2 - 15 97,703 87,756
Property leased under
capital leases (Note 8). 10 - 15 10 - 15 1,328 1,328
------- -------
230,491 210,451
Less accumulated depreciation
and amortization . . . . . . . . . . . . . . . . . . (94,781) (81,805)
-------- -------
135,710 128,646
Construction in progress . . . . . . . . . . . . . . 1,471 1,544
------- -------
$ 137,181 $ 130,190
======== =======
</TABLE>
PAGE 23
6. Deferred charges:
<TABLE>
<S> <C> <C>
1995 1994
------ ------
(thousands)
Franchise rights . . . . . . . . . . . . $ 5,000 $ 5,000
Loan costs . . . . . . . . . . . . . . . 1,223 434
Other. . . . . . . . . . . . . . . . . . 579 557
------ ------
6,802 5,991
Less accumulated amortization. . . . . . (4,203) (3,908)
------ ------
$ 2,599 $ 2,083
====== ======
</TABLE>
7. Accounts payable and accrued liabilities:
<TABLE>
<S> <C> <C>
1995 1994
----- -----
(thousands)
Accounts payable . . . . . . . . . . . . . . $ 12,851 $ 10,819
Salaries and wages . . . . . . . . . . . . . 4,215 3,990
Insurance. . . . . . . . . . . . . . . . . . 8,805 7,670
Taxes, other than income . . . . . . . . . . 2,561 2,528
Other. . . . . . . . . . . . . . . . . . . . 1,404 1,538
------ ------
$ 29,836 $ 26,545
====== ======
</TABLE>
SHOWBIZ PIZZA TIME, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
YEARS ENDED DECEMBER 29, 1995,
DECEMBER 30, 1994 AND DECEMBER 31, 1993
8. Leases:
The Company leases certain restaurants and related property
and equipment under operating and capital leases. All leases
require the Company to pay property taxes, insurance and
maintenance of the leased assets. The leases generally have
initial terms of seven to 30 years with various renewal options.
Following is a summary of property leased under capital
leases:
<TABLE>
<S> <C> <C>
1995 1994
----- -----
(thousands)
Buildings and improvements. . . . . . . $ 1,328 $ 1,328
Less accumulated depreciation . . . . . (877) (771)
------ -----
$ 451 $ 557
====== =====
</TABLE>
PAGE 25
Scheduled annual maturities of the obligations for capital and
operating leases as of December 29, 1995, are:
<TABLE>
<S> <C> <C>
Years Capital Operating
------ -------- ---------
(thousands)
1996 . . . . . . . . . . . . . . . . . . . $ 292 $ 26,755
1997 . . . . . . . . . . . . . . . . . . . 292 24,182
1998 . . . . . . . . . . . . . . . . . . . 256 21,271
1999 . . . . . . . . . . . . . . . . . . . 184 19,087
2000 . . . . . . . . . . . . . . . . . . . 184 17,223
2001-2009 (aggregate payments) . . . . . . 1,055 39,317
------ -------
Minimum future lease payments 2,263 $147,835
========
Less amounts representing interest . . . . (1,115)
-------
Present value of future
minimum lease payments. . . . . . . . . 1,148
Less current portion (95)
------
$ 1,053
=======
</TABLE>
Certain of the Company's real estate leases, both capital and
operating, require payment of contingent rent in the event
defined revenues exceed specified levels.
The Company's rent expense is comprised of the following:
<TABLE>
<S> <C> <C> <C>
1995 1994 1993
----- ----- -----
(thousands)
Minimum. . . . . . . . . . . . $28,730 $28,003 $25,305
Contingent . . . . . . . . . . 146 216 185
------ ------ ------
$28,876 $28,219 $25,490
====== ======= =======
</TABLE>
PAGE 24
SHOWBIZ PIZZA TIME, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
YEARS ENDED DECEMBER 29, 1995
DECEMBER 30, 1994 AND DECEMBER 31, 1993
9. Long-term debt:
<TABLE>
<S> <C> <C>
1995 1994
----- -----
(thousands)
Term loan, 10.02%, due
June 2001 . . . . . . . . . . . . . . . . . . . . . $ 18,000
Term loan, LIBOR plus
3.5%, due June 2000 . . . . . . . . . . . . . . . . . 10,000
Term loans, LIBOR plus
3.5%, due October 1997. . . . . . . . . . . . . . . . 5,000
Revolving bank loan, prime
plus 1/2% or LIBOR plus 3%,
due June 1997 . . . . . . . . . . . . . . . . . . . . 1,700
Revolving bank loan, prime
plus 1% to 2.75%, due
January 1996. . . . . . . . . . . . . . . . . . . . . $ 28,800
Obligations under capital
leases (Note 8) . . . . . . . . . . . . . . . . . . . . 1,148 1,207
------ -------
35,848 30,007
Less current portion. . . . . . . . . . . . . . . . . . (95) (10,060)
------- -------
$ 35,753 $19,947
======= ======
</TABLE>
In 1995, the Company refinanced its previous credit facility
of $30.8 million expiring in January 1996 with an increased
facility of $38 million. The new credit facility consists of
certain term notes totalling $33 million and a $5 million
revolving loan agreement. A 3/8% annual commitment fee is
payable on any unused credit line. The Company is required to
comply with certain financial ratio tests during the terms of
the loan agreements.
As of December 29, 1995, scheduled annual maturities of all
long-term debt (exclusive of obligationsd under capital leases)
are $6.7 million in 1997, $10 million in 2000 and $18 million in
2001.
10. Commitments and contingencies:
The Company has guaranteed certain obligations related to
restaurant building and equipment leases. The underlying assets
are collateral for the leases and the makers or assignees of all
of the obligations are required to perform thereunder before the
Company is required to fulfill its guarantee. In the event of
default by the maker or assignee, the Company, in almost all
cases, may make payment under the guarantees in accordance with
the original payment schedule and has the right to locate
potential buyers or subtenants for the assets. As of December
29, 1995, such guarantees aggregated approximately $586,000.
11. Litigation:
The Company is involved in litigation arising in the normal
course of its business. Based on information presently
available, the Company believes there will be no material
effects on the Company's financial position, results of
operations or cash flows as a result of such litigation.
12. Redeemable preferred stock:
As of December 29, 1995, the Company had 49,570 shares of its
redeemable preferred stock authorized and outstanding. The
stock pays dividends at $4.80 per year, subject to a minimum
cash flow test. As of December 29, 1995, one quarterly
dividend, totaling $59,484 or $1.20 per share, was accrued but
not yet paid. The redeemable preferred stock has been recorded
at the net present value and is being accreted on the straight-
line basis. The Company's restated articles of incorporation
provide for the redemption of such shares at $60 per share in
2005. During the continuation of any event of default by the
Company, the preferred shareholders shall be able to elect a
majority of the directors of the Company.
PAGE 25
SHOWBIZ PIZZA TIME, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
YEARS ENDED DECEMBER 29, 1995,
DECEMBER 30, 1994 AND DECEMBER 31, 1993
13. Earnings per common share:
Earnings per common and common equivalent share were computed
based on the weighted average number of common and common
equivalent shares outstanding during the period. Net income
available per common share has been adjusted for the items
indicated.
Earnings per common and common equivalent share were computed
as follows (thousands, except per share data):
<TABLE>
<S> <C> <C> <C>
1995 1994 1993
------ ------ ------
Net income . . . . . . . . . . . $ 63 $ 676 $11,891
Accretion of redeemable
preferred stock. . . . . . . . (104) (103) (104)
Redeemable preferred
stock dividends. . . . . . . . (238) (238) (238)
------ ------ -----
Adjusted income (loss)
applicable to common shares. . . $ (279) $ 335 $11,549
====== ====== ======
Primary:
Weighted average common
shares outstanding . . . . . 12,065 12,078 12,816
Common stock equivalents:
Stock purchase warrants. . . . 426
Other. . . . . . . . . . . . . 49 213
------- ------- -------
Weighted average shares
outstanding. . . . . . . . . 12,065 12,127 13,455
======= ======= =======
Earnings (loss) per common
and common equivalent share.$ (.02) $ .03 $ .86
======= ======= =======
Fully Diluted:
Weighted average common
shares outstanding . . . . . 12,065 12,078 12,816
Common stock equivalents:
Stock purchase warrants. . . . 426
Other. . . . . . . . . . . . . 49 222
------- ------- -------
Weighted average shares
outstanding. . . . . . . . . 12,065 12,127 13,464
======= ======= =======
Earnings (loss) per common
and common equivalent share. $ (.02) $ .03 $ .86
======= ======= =======
</TABLE>
14. Franchise fees and royalties:
At December 29, 1995, 93 Chuck E. Cheese's restaurants were
operated by a total of 57 different franchisees. The standard
franchise agreements grant to the franchisee the right to
develop and operate a restaurant and use the associated trade
names, trademarks and service marks within the standards and
guidelines established by the Company.
Initial franchise fees included in revenues were $98,000,
$315,000 and $82,500 in 1995, 1994 and 1993, respectively.
15. Cost of sales:
<TABLE>
<S> <C> <C> <C>
1995 1994 1993
------ ------ ------
(thousands)
Food, beverage and
related supplies . . . . . . $ 43,412 $ 46,328 $ 48,435
Games and merchandise. . . . . 13,285 12,369 11,375
Labor . . . . . . . . 80,003 79,032 77,533
------- ------- -------
$136,700 $137,729 $137,343
======= ======= =======
</TABLE>
PAGE 26
SHOWBIZ PIZZA TIME, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
YEARS ENDED DECEMBER 29, 1995,
DECEMBER 30, 1994 AND DECEMBER 31, 1993
16. Income taxes:
The significant components of income tax expense are as follows:
<TABLE>
<S> <C> <C> <C>
1995 1994 1993
------ ------ ------
(thousands)
Current expense. . . . . . . . . . $ 701 $ 869 $ 1,751
Deferred expense:
Utilization of operating
loss carryforwards . . . . . . 1,138 2,204 6,078
Net tax benefits from
exercise of stock
options and stock grants . . . . (654) (928) (37)
Increase in valuation of
deferred tax asset . . . . . . . (971)
Allowance for tax credit
carryforwards expiring in 1997 . 1,104
Tax credits. . . . . . . . . . . . (127) (237) (465)
Other (primarily temporary
differences related to
depreciation) . . . . . . . . . (746) (575)
------- ------- -------
$ 312 $ 2,437 $ 6,356
======= ======= =======
</TABLE>
At December 29, 1995, the Company has recorded a deferred tax
asset of approximately $33.0 million reflecting the $24.7
million tax effect of $67.0 million in net operating loss
carryforwards, $7.3 million in tax credit carryforwards and tax
effected net taxable deductions of $796,000. Realization of the
deferred tax asset is dependent on generating sufficient taxable
income prior to expiration of these carryforwards. Tax credit
carryforwards can be utilized only after all net operating loss
carryforwards have been realized. In 1994, the Company recorded
a valuation allowance of $1.1 million for tax credit
carryforwards which are estimated to expire in 1997. Although
realization is not assured, the Company believes it is more
likely than not that the deferred tax asset will be realized.
The amount of the deferred tax asset considered realizable could
be reduced in the near term if estimates of future taxable
income are reduced.
As of December 29, 1995, the Company has investment tax credit
and jobs tax credit carryforwards totaling $5,258,000 and
$548,000, respectively, and alternative minimum tax credits of
$1,513,000.
In August 1993, new federal tax legislation was enacted that
increased the Company's federal tax rate to 35% effective
December 31, 1993. As a result, the Company's deferred tax
asset and net income were increased by approximately $971,000
and deferred tax expense decreased in the same amount.
A schedule of expiring NOL's and tax credits by fiscal year
are as follows:
<TABLE>
<S> <C> <C>
Amount
---------------------
Years NOL's Tax Credits
- ---------- -------- ----------
(thousands)
1997 . . . . . . . . . . . . . . . . . . . . . $ 1,104
1998 . . . . . . . . . . . . . . . . . . . . . 4,007
1999 . . . . . . . . . . . . . . . . . . . . . $34,000 395
2000 . . . . . . . . . . . . . . . . . . . . . 19,000 149
2001 . . . . . . . . . . . . . . . . . . . . . 14,000 19
2002 - 2010. . . . . . . . . . . . . . . . . . 132
------- -------
$67,000 $ 5,806
======= =======
</TABLE>
The Company's alternative minimum tax credits have no
expiration date.
PAGE 27
SHOWBIZ PIZZA TIME, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
YEARS ENDED DECEMBER 29, 1995,
DECEMBER 30, 1994 AND DECEMBER 31, 1993
16. Income taxes (continued):
Current tax laws and regulations relating to substantial
changes in control may limit the utilization of net operating
loss and tax credit carryforwards in any one year. As of
December 29, 1995, no limitation of such carryforwards has
occurred.
A reconciliation of the statutory rate to taxes provided is as
follows:
<TABLE>
<S> <C> <C> <C>
1995 1994 1993
------ ----- -----
(thousands)
Statutory rate . . . . . . . . . . . . 34.0% 34.0% 35.0%
State income taxes . . . . . . . . . . 106.1% 14.8% 5.1%
Increase in valuation
of deferred tax asset . . . . . . . (5.3%)
Allowance for tax credit carryforwards . 35.5%
Tax credits earned . . . . . . . . . . (33.9%) (6.9%) (2.6%)
Other. . . . . . . . . . . . . . . . . (23.0%) .9% 2.6%
------- ------ -------
Income taxes provided. . . . . . . . . 83.2% 78.3% 34.8%
======= ====== =======
</TABLE>
17. Fair value of financial instruments:
The Company has certain financial instruments consisting
primarily of cash, cash equivalents, notes receivable, notes
payable and redeemable preferred stock. The carrying amount of
cash and cash equivalents approximates fair value because of the
short maturity of those instruments. The carrying amount of the
Company's notes receivable, notes payable and redeemable
preferred stock approximates fair value based on the interest
rates charged on instruments with similar terms and risks. The
estimated fair value of the Company's redeemable preferred stock
is $3.0 million.
18. Supplemental cash flow information:
<TABLE>
<S> <C> <C> <C>
1995 1994 1993
------ ------ ------
(thousands)
Cash paid during the year for:
Interest. . . . . . . . . . . . . $ 3,055 $ 1,781 $ 912
Income taxes . . . . . . . . . . 801 1,389 1,769
Supplemental schedule of noncash
investing and financing activities:
Notes received in connection
with the disposition of property
and equipment . . . . . . . . . . 4,650
Investment received in connection
with the disposition of
property and equipment . . . . 438
Notes and accounts receivable
canceled in connection with the
acquisition of property
and equipment . . . . . . . . . 483
</TABLE>
19. Related party transactions:
The Hallwood Group, Incorporated ("Hallwood") is the
beneficial owner of approximately 14.6% of the outstanding
common stock of the Company. The directors of Hallwood serve as
a majority of the directors of the Company and Integra - A Hotel
and Restaurant Company ("Integra").
PAGE 28
SHOWBIZ PIZZA TIME, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
YEARS ENDED DECEMBER 29, 1995,
DECEMBER 30, 1994 AND DECEMBER 31, 1993
19. Related party transactions (continued):
In December 1993, the Company fully repaid approximately $1.7
million in a term loan payable to a third party assigned by
Integra. The Company made annual payments to Hallwood of
$125,000 for consulting services in 1995, 1994, and 1993. In
consideration for rent reductions resulting from Hallwood's
negotiation of the Company's home office lease agreement in
December 1990, the Company assigned to Hallwood its sublease
interest in the home office building subleased to Integra with
a fair value of approximately $120,000 per year. Integra
vacated this space in 1995.
The Company paid $99,000 in interest to Integra for 1993.
In 1993, Hallwood and its affiliate exercised warrants to
purchase 835,873 shares of common stock. The exercise price of
the warrants was $1.78 per share.
During 1993, the Company advanced $30,000 to joint ventures
in which the Company has a 50% interest or less. Principal and
interest are payable in monthly installments, with interest at
various rates from prime to 12%. The Company also has
miscellaneous accounts receivable from joint ventures of
approximately $410,000 and $393,000 at December 29, 1995 and
December 30, 1994, respectively.
In September 1990, the Company entered into an agreement to
grant the International Association of ShowBiz Pizza Time
Restaurants, Inc. (the "Association") a $2.0 million line of
credit, at prime. In December 1993, the Company granted the
Association a $1.0 million line of credit, at prime, for
advertising production. In November 1994, available borrowings
under the lines of credit were reduced to a total of $2.4
million at an annual interest rate of prime plus 1/2%. In
December 1995, the lines were renegotiated to provide the
Association with available borrowings of $3,750,000 at 10.5%
which expire December 31, 1996. The Association was established
to develop and improve entertainment attractions and produce
system wide advertising. Two officers of the Association are
also officers of the Company. At December 29, 1995,
approximately $1,869,000 was outstanding under these lines of
credit. The Company also had a miscellaneous account receivable
from the Association of $5,000 and $22,000 at December 29, 1995
and December 30, 1994, respectively.
20. Employee benefit plans:
The Company has employee benefit plans that include: a)
executive bonus compensation plans based on the performance of
the Company; b) non-statutory stock option plans for its
employees and non-employee directors and c) a stock grant plan.
In 1995, the Company increased the number of shares of the
Company's common stock which may be issued under its employee
stock option plan by 500,000 shares to an aggregate of 1,848,025
shares. All shares must be granted before December 31, 1998.
The exercise price for options granted under the plan may not be
less than the fair market value of the Company's common stock at
date of grant. Options may not be exercised until the employee
has been continuously employed at least one year after the date
of grant. Options which expire or terminate may be re-granted
under the plan.
In 1995, the Company adopted a stock option plan for its non-
employee directors. The number of shares of the Company's
common stock that may be issued under this plan cannot exceed
100,000 shares. Options are granted at the fair market value of
the Company's common stock at the date of grant.
PAGE 29
SHOWBIZ PIZZA TIME, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
YEARS ENDED DECEMBER 29, 1995,
DECEMBER 30, 1994 AND DECEMBER 31, 1993
20. Employee benefit plans (continued):
<TABLE>
<S> <C> <C> <C>
1995 1994 1993
------ ------ ------
Options outstanding,
beginning of year. . . . 506,635 372,662 276,297
Granted . . . . . . . 261,240 341,500 158,800
Exercised . . . . . . (12,826) (51,714) (47,885)
Terminated. . . . . . (189,088) (155,813) (14,550)
------- ------- -------
Options outstanding,
end of year
($2.45-$33.50 per share). 565,961 506,635 372,662
======= ======= =======
Options:
Exercisable . . . . . 135,349 175,317 261,490
Available for grant . 699,719 171,871 357,558
</TABLE>
The options granted in 1995 are at exercise prices ranging
from $8.50 to $11.88 per share. In January 1996, the Company
granted 180,661 additional options at an exercise price of
$12.43 per share.
The number of shares of the Company's common stock which may
be awarded to senior executives of the Company under the Stock
Grant Plan is 1,145,758 shares. An aggregate of 414,508 shares
were awarded pursuant to the plan in 1993. None were awarded in
1995 and 1994. Compensation expense recognized by the Company
pursuant to this plan was $1,821,000, $2,734,000 and $2,756,000
in 1995, 1994 and 1993, respectively. All shares are subject to
forfeiture upon termination of the participant's employment by
the Company over vesting periods ranging from 2 years to 6
years. The shares are nontransferable during the vesting
periods.
As a result of shares awarded to the Company's Chairman of the
Board and Chief Executive Officer, the Company recognized
deferred compensation of $12.0 million in 1993. In 1995, the
Company's Chairman of the Board and Chief Executive Officer
forfeited 60,000 shares of unvested common stock of the Company
previously awarded to him under the Company's stock grant plan.
As a result of this forfeiture, deferred compensation and
capital in excess of par value were reduced by approximately
$1.7 million. The deferred compensation is amortized over the
compensated periods of service through 1997.
The Company has adopted the ShowBiz 401(k) Retirement and
Savings Plan, to which it may at its discretion make an annual
contribution out of its current or accumulated earnings.
Contributions by the Company may be made in the form of its
common stock or in cash. In 1993, the Company made a
contribution of approximately $36,000 in common stock for the
1992 plan year. No contributions were made for the 1994 and
1993 plan year. The Company plans to contribute $23,000 in
common stock for the 1995 plan year 1995.
PAGE 30
SHOWBIZ PIZZA TIME, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
YEARS ENDED DECEMBER 29, 1995,
DECEMBER 30, 1994 AND DECEMBER 31, 1993
21. Quarterly results of operations (unaudited):
The following summarizes the unaudited quarterly results of
operations for the years ended December 29, 1995 and December
30, 1994 (thousands, except per share data).
<TABLE>
<S> <C> <C> <C> <C>
Fiscal year ended December 29, 1995
-----------------------------------------------
March 31 June 30 Sept. 29 Dec. 29
------- ------- ------- -------
Revenues . . . . . . . $ 72,751 $ 62,643 $ 66,976 $ 61,413
Income (loss) before
income taxes . . . . 4,266 (1,963) 287 (2,215)
Net income (loss). . . 2,565 (1,180) 61 (1,383)
Per Share:
Primary and fully diluted:
Net income (loss). . .$ .21 $ (.10) $ .00 $ (.12)
Fiscal year ended December 30, 1994
-------------------------------------------------
April 1 July 1 Sept. 30 Dec. 30
------- ------- ------- -------
Revenues . . . . . . $ 76,469 $ 64,175 $ 68,502 $ 59,369
Income (loss) before
income taxes . . . 5,481 2,255 1,696 (6,319)
Net income (loss). . 3,425 1,248 1,024 (5,021)
Per Share:
Primary and fully diluted:
Net income (loss). .$ .27 $ .10 $ .08 $ (.42)
</TABLE>
In the second quarter of 1994, the Company recognized a gain
of $5.5 million from the sale of its Monterey's Tex-Mex Cafe
restaurants. This was partially offset by a $2.0 million loss
associated with the impairment in fair value of certain Chuck E.
Cheese's restaurants.
The fourth quarter of 1994 includes a $1.1 million increase in
income tax expense due to a reduction in deferred tax credit
carryforwards which are estimated to expire in 1997, a write-off
of approximately $900,000 for preopening expenses due to a
change in the estimated future benefit of such expenses and a
reserve of approximately $400,000 for the impairment in fair
value of certain Chuck E. Cheese's restaurants.
PAGE 31
INDEPENDENT AUDITORS' REPORT
Board of Directors and Shareholders
ShowBiz Pizza Time, Inc.
Irving, Texas
We have audited the consolidated financial statements of ShowBiz
Pizza Time, Inc. and subsidiary as of December 29, 1995 and
December 30, 1994, and for each of the three years in the
period ended December 29, 1995 and have issued our report
thereon dated February 23, 1996; such report which discloses a
change in the method of accounting for preopening expenses in 1994,
is included elsewhere in this Form 10-K. Our audits also included
the consolidated financial statement schedule of ShowBiz Pizza
Time, Inc. and subsidiary, listed in Item 14. This consolidated
financial statement schedule is the responsibility of the Company's
management. Our responsibility is to express an opinion based on
our audits. In our opinion, such consolidated financial statement
schedule, when considered in relation to the basic consolidated
financial statements taken as a whole, presents fairly in all
material respects the information set forth therein.
DELOITTE & TOUCHE LLP
Dallas, Texas
February 23, 1996
PAGE 32
SCHEDULE II
SHOWBIZ PIZZA TIME, INC.
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
<TABLE>
<S> <C> <C> <C> <C> <C>
Column A Column B Column C Column D Column E
- -------------------------------------------------------------------------
Additions
charged
Balance at to costs Balance at
beginning of and end of
Description of period expenses Deductions period
===========================================================================
(Thousands)
Allowance for doubtful accounts:
Years ended:
Dec. 29, 1995. . . . $ 475 $ 400 (A) $ 75
===== ====== =====
Dec. 30, 1994. . . . $ 266 $ 209 $ 475
===== ===== =====
Dec. 31, 1993. . . . $ 150 $ 116 $ 266
===== ===== =====
Accumulated amortization -- deferred charges:
Years ended:
Dec. 29, 1995. . . $ 3,909 $ 1,781 $ 1,487 (B) $ 4,203
======= ====== ===== ======
Dec. 30, 1994. . . $ 6,307 $ 2,854 $ 5,252 (B) $ 3,909
====== ====== ===== ======
Dec. 31, 1993. . . $ 7,789 $ 2,110 $ 3,592 (B) $ 6,307
====== ====== ===== ======
Reserve for uncollectible notes receivable:
Years ended:
Dec. 29, 1995. . . $ 139 $ 215 $ 354
===== ====== ======
Dec. 30, 1994 . . $ 139 $ 139
====== =====
Dec. 31, 1993 . . $ 320 320(C)
===== ======
</TABLE>
__________
(A) Settlement of previously reserved accounts.
(B) Write-off of deferred charges.
(C) Adjustment to notes receivable reserve.
PAGE 33
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure.
None.
P A R T I I I
Item 10. Directors and Executive Officers of the Registrant.
The information required by this Item regarding the directors and
executive officers of the Company shall be included in the
Company's definitive Proxy Statement to be filed pursuant to
Regulation 14A in connection with the Company's 1996 annual meeting
of stockholders and is incorporated herein by reference thereto.
Item 11. Executive Compensation.
The information required by this Item regarding the directors
and executive officers of the Company shall be included in the
Company's definitive Proxy Statement to be filed pursuant to
Regulation 14A in connection with the Company's 1996 annual meeting
of stockholders and is incorporated herein by reference thereto.
Item 12. Security Ownership of Certain Beneficial Owners and
Management.
The information required by this Item shall be included in the
Company's definitive Proxy Statement to be filed pursuant to
Regulation 14A in connection with Company's 1996 annual meeting of
stockholders and is incorporated herein by reference thereto.
Item 13. Certain Relationships and Related Transactions.
The information required by this Item shall be included in the
Company's definitive Proxy Statement to be filed pursuant to
Regulation 14A in connection with the Company's 1996 annual meeting
of stockholders and is incorporated herein by reference thereto.
PAGE 34
P A R T I V
Item 14. Exhibits, Financial Statement Schedules, and Reports on
Form 8-K.
(a) The following documents are filed as a part of this
report:
(1) Financial Statements and Supplementary Data:
Independent auditors' report.
ShowBiz Pizza Time, Inc. consolidated financial
statements:
Consolidated balance sheets as of December 29, 1995 and
December 30, 1994.
Consolidated statements of earnings for the years
ended December 29, 1995, December 30, 1994, and
December 31, 1993.
Consolidated statements of shareholders' equity for the
years ended December 29, 1995, December 30, 1994, and
December 31, 1993.
Consolidated statements of cash flows for the years
ended December 29, 1995, December 30, 1994, and December
31, 1993.
Notes to consolidated financial statements.
(2) Financial Statement Schedules:
ShowBiz Pizza Time, Inc.
------------------------
II --- Valuation and qualifying accounts and reserves.
PAGE 35
(3) Exhibits:
- --------
EXHIBITS
- --------
Exhibit
Number Description
3(a) Restated Articles of Incorporation of the Company, dated May
29, 1992 (filed as Exhibit 3(a) to the Company's Annual
Report on Form 10-K for the year ended January 1, 1993, and
incorporated herein by reference).
3(b) Restated Bylaws of the Company, dated August 16, 1994 (filed
as Exhibit 3 to the Company's Quarterly Report on Form 10-Q
for the quarter ended September 30, 1994, and incorporated
herein by reference).
3(c) Amendment to the Bylaws, dated May 5, 1995 (filed as Exhibit
3 to the Company's Quarterly Report on Form 10-Q for the
quarter ended June 30,1995, and incorporated herein by
reference).
4(a) Specimen form of certificate representing $.10 par value
Common Stock (filed as Exhibit 4(a) to the Company's Annual
Report on Form 10-K for the year ended December 28, 1990, and
incorporated herein by reference).
4(b) Specimen form of certificate representing $60 par value Class
A Preferred Stock (filed as Exhibit 4(b) to the Company's
Annual Report on Form 10-K for the year ended December 28,
1990, and incorporated herein by reference).
10(a)(1)
Amended and Restated Employment Agreement dated April 14,
1993, between the Company and Richard M. Frank (filed as
Exhibit 10(a)(8) to the Company's Quarterly Report on Form
10-Q for the quarter ended April 2, 1993, and incorporated
herein by reference).
10(a)(2)
Consulting Agreement dated January 5, 1989 between the Company
and Richard M. Frank (filed as Exhibit 10(a)(5) to the
Company's Annual Report on Form 10-K for the year ended
December 27, 1991, and incorporated herein by reference).
PAGE 37
10(a)(3)
Amendment to Consulting Agreement dated January 29, 1992,
amending the Consulting Agreement dated January 5, 1989
between the Company and Richard M. Frank (filed as Exhibit
10(a)(6) to the Company's Annual Report on Form 10-K for the
year ended December 27, 1991, and incorporated herein by
reference).
10(a)(4)
Stock Grant Trust Agreement dated January 29, 1992, among the
Company,Richard M. Frank, Ronald F. Saupe and Kevin J.
Shepherd (filed as Exhibit 10(a)(7) to the Company's Annual
Report on Form 10-K for the year ended December 27, 1991, and
incorporated herein by reference).
10(b)
Employment Agreement dated January 4, 1994, between the
Company and Michael H. Magusiak (filed as Exhibit 10(b) to the
Company's Annual Report on Form 10-K for the year ended
December 31, 1993, and incorporated herein by reference).
10(c)(1)
Non-Statutory Stock Option Plan of the Company, as amended to
date (filed as Exhibit 10(a)(1) to Company's Quarterly Report
on Form 10-Q for the quarter ended September 30, 1994, and
incorporated herein by reference).
10(c)(2)
Specimen form of Contract under the Non-Statutory Stock Option
Plan of the Company, as amended to date (filed as Exhibit
10(a)(2) to the Company's Quarterly Report on Form 10-Q for
the quarter ended September 30, 1994, and incorporated herein
by reference).
10(d)(1)
Stock Grant Plan of the Company, as amended to date (filed as
Exhibit 10(d)(1) to the Company's Annual Report on Form 10-K
for the year ended December 31, 1993, and incorporated herein
by reference).
10(d)(2)
Specimen form of Certificate of Participation to certain
participants under the Stock Grant Plan of the Company (filed
as Exhibit 10(e)(3) to the Company's Annual Report on Form 10-K for the
year ended December 29, 1989, and incorporated herein by reference).
10(e)
Financial and Management Consulting Services Agreement between
the Company and The Hallwood Group Incorporated (filed as
Exhibit 10(i) to the Company's Annual Report on Form 10-K for
the year ended December 30,1988, and incorporated herein by
reference).
10(f)
Stock Purchase and Registration Agreement dated as of May 5,
1992, among the Company, The Hallwood Group Incorporated and
certain shareholders of the Company (filed as Exhibit 28 to
the Company's Registration Statement on Form S-3 (No. 33-48307)
and incorporated herein by reference).
PAGE 38
10(g)
Note Purchase Agreement dated June 15, 1995, between Allstate
Life Insurance Company, Connecticut Mutual Life Insurance
Company, C M Life Insurance Company, MassMutual Corporate
Value Partners Limited,Massachusetts Mutual Life Insurance
Company, Modern Woodmen of America, and the Company (filed as
Exhibit 10 (a)(1) to the Company's Quarterly Report on Form
10-Q for the quarter ended June 30, 1995, and incorporated
herein by reference).
10(h)
10.02% Series A Senior Note Due 2001, in the stated
amount of $10,000,000.00, dated June 15, 1995, between Allstate
Life Insurance Company and the Company (filed as Exhibit 10 (b)(1)
to the Company's Quarterly Report on Form 10-Q for the quarter
ended June 30, 1995, and incorporated herein by reference).
10(i)(1)
10.02% Series A Senior Note Due 2001, in the stated amount
of$1,000,000.00, dated June 15, 1995, between Connecticut
Mutual Life Insurance Company and the Company (filed as
Exhibit 10 (c)(1) to the Company's Quarterly Report on Form
10-Q for the quarter ended June 30,1995, and incorporated
herein by reference).
10(i)(2)
10.02% Series A Senior Note Due 2001, in the stated amount
of$1,000,000.00, dated June 15, 1995, between Connecticut
Mutual Life Insurance Company and the Company (filed as
Exhibit 10 (c)(2) to the Company's Quarterly Report on Form
10-Q for the quarter ended June 30,1995, and incorporated
herein by reference).
10(i)(3)
10.02% Series A Senior Note Due 2001, in the stated amount of
$1,000,000.00, dated June 15, 1995, between Connecticut Mutual
LifeInsurance Company and the Company (filed as Exhibit 10
(c)(3) to the Company's Quarterly Report on Form 10-Q for the
quarter ended June 30,1995, and incorporated herein by
reference).
10(j)(1)
10.02% Series A Senior Note Due 2001, in the stated amount of
$1,000,000.00, dated June 15, 1995, between C M Life Insurance
Company and the Company (filed as Exhibit 10 (d)(1) to the
Company's Quarterly Report on Form 10-Q for the quarter ended
June 30, 1995, and incorporated herein by reference).
10(j)(2)
10.02% Series A Senior Note Due 2001, in the stated amount of
$1,000,000.00, dated June 15, 1995, between C M Life Insurance
Company and the Company (filed as Exhibit 10 (d)(2) to the
Company's Quarterly Report on Form 10-Q for the quarter ended
June 30, 1995, and incorporated herein by reference).
PAGE 39
10(k)(1)
Floating Rate Series B Senior Note Due 2000, in the stated
amount of $2,000,000.00, dated June 15, 1995, between
Massachusetts Mutual Life Insurance Company and the Company
(filed as Exhibit 10 (e)(1) to the Company's Quarterly Report
on Form 10-Q for the quarter ended June 30,1995, and
incorporated herein by reference).
10(k)(2)
Floating Rate Series B Senior Note Due 2000, in the stated
amount of $2,000,000.00, dated June 15, 1995, between
Massachusetts Mutual Life Insurance Company and the Company
(filed as Exhibit 10 (e)(2) to the Company's Quarterly Report
on Form 10-Q for the quarter ended June 30,1995, and
incorporated herein by reference).
10(k)(3)
Floating Rate Series B Senior Note Due 2000, in the stated
amount of $2,000,000.00, dated June 15, 1995, between
Massachusetts Mutual Life Insurance Company and the
Company (filed as Exhibit 10 (e)(3) to the Company's
Quarterly Report on Form 10-Q for the quarter ended June
30,1995, and incorporated herein by reference).
10(l)
Floating Rate Series B Senior Note Due 2000, in the stated
amount of $4,000,000.00, dated June 15, 1995, between
MassMutual Corporate Value Partners Limited (I/N/O Webell &
Co.) and the Company (filed as Exhibit 10(f)(1) to the
Company's Quarterly Report on Form 10-Q for the quarter ended
June 30, 1995, and incorporated herein by reference).
10(m)
Floating Rate Series A Senior Note Due 2001, in the stated
amount of $3,000,000.00, dated June 15, 1995, between Modern
Woodmen of America and the Company (filed as Exhibit 10
(g)(1) to the Company's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1995, and incorporated herein by
reference).
10(n)(1)
Loan Agreement in the stated amount of $5,000,000.00, dated
June 27, 1995, between Bank One, Texas, N.A. and the Company
(filed as Exhibit 10 (h)(1)to the Company's Quarterly Report
on Form 10-Q for the quarter ended June 30, 1995, and
incorporated herein by reference).
10(n)(2)
Revolving Credit Note in the stated amount of $5,000,000.00,
dated June 27,1995, between Bank One, Texas, N.A. and the
Company (filed as Exhibit 10(h)(2) to the Company's Quarterly
Report on Form 10-Q for the quarter ended June 30, 1995, and
incorporated herein by reference).
10(o)
Non-Statutory Stock Option Plan (filed as Exhibit A to the
Company's Proxy Statement for Annual Meeting of Stockholders
to be held on June 8, 1995, and incorporated herein by
reference).
10(p)
Non-Employee Directors Stock Option Plan (filed as Exhibit B
to the Company's Proxy Statement for Annual Meeting of
Stockholders to be held on June 8, 1995, and incorporated
herein by reference).
PAGE 40
10(q)(1)
Specimen form of the Company's current Franchise Agreement
(filed as Exhibit10(d)(1) to the Company's Annual Report on
Form 10-K for the year ended December 27, 1991, and
incorporated herein by reference).
10(q)(2)
Specimen form of the Company's current Development
Agreement (filed as Exhibit 10(d)(2) to the Company's Annual
Report on Form 10-K for the year ended December 31, 1993, and
incorporated herein by reference).
10(r)(1)
Note Purchase Agreement dated October 10, 1995, between BFC
Bank (Cayman) Ltd. and the Company.
10(r)(2)
Modification and Waiver to Note Purchase Agreement, in the
stated amount of $2,500,000.00, dated October 12, 1995,
between BFC Bank (Cayman) Ltd.and the Company.
10(r)(3)
Floating Rate Series C Senior Note Due 1997, in the stated
amount of $2,500,000.00, dated October 12, 1995, between BFC
Bank (Cayman) Ltd.and the Company.
10(s)(1)
Note Purchase Agreement dated October 10, 1995, between Neue
Bank, AG and the Company.
10(s)(2)
Modification and Waiver to Note Purchase Agreement, in the
stated amount of $2,500,000.00, dated October 24, 1995,
between Neue Bank, AG and the Company.
10(s)(3)
Floating Rate Series C Senior Note Due 1997, in the stated
amount of $2,500,000.00, dated November 2, 1995, between Neue
Bank, AG and the Company.
10(t)(1)
Entertainment Operating Fund Line of Credit, in the stated
amount of $1,000,000.00, dated November 15, 1995, between
International Association of ShowBiz Pizza Time Restaurants,
Inc. and the Company.
10(t)(2)
Entertainment Operating Fund Promissory Note, in the stated
amount of $1,000,000.00, dated November 15, 1995, between
International Association of ShowBiz Pizza Time Restaurants,
Inc. and the Company.
10(u)(1)
National Advertising Production Line of Credit, in the stated
amount of $750,000.00, dated November 15, 1995, between
International Association of ShowBiz Pizza Time Restaurants,
Inc. and the Company.
10(u)(2)
National Advertising Production Promissory Note, in the stated
amount of $750,000.00, dated November 15, 1995, between
International Association of ShowBiz Pizza Time Restaurants,
Inc. and the Company.
PAGE 41
10(v)(1)
National Media Fund Line of Credit, in the stated amount of
$2,000,000.00,dated November 15, 1995, between International
Association of ShowBizPizza Time Restaurants, Inc. and the
Company.
10(v)(2)
National Media Fund Promissory Note, in the stated amount of
$2,000,000.00, dated November 15, 1995, between International
Association of ShowBiz Pizza Time Restaurants, Inc. and the
Company.
21 -- List of Shareholders
23 -- Independent Auditor's Consent
- --------------
(b) Reports on Form 8-k:
No reports on Form 8-k were fied in the fourth quarter of 1995.
(c) Exhibits pursuant to Item 601 of Regulation S-K:
Pursuant to Item 601(b)(4) of Regulation S-K, there have been excluded
from the exhibits filed pursuant to this report instruments defining the
rights of holders of long-term debt of the Company where the total amount
of the securities authorized under each instrument does not exceed 10% of
the total assets of the Company. The Company hereby agrees to gurnish a
copy of any such instruments to the Commission upon request.
(d) Financial Statements excluded from the annual report to shaerholders
by Rule 14a-3(b):
No financial statements are excluded from the annual report to the Company's
shareholders by Rule 14a-3(b).
SIGNATURES
----------
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
Dated: March 27, 1996 SHOWBIZ PIZZA TIME, INC.
By:------------------------
Richard M. Frank
Chairman of the Board and
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on
behalf of the registrant and in the capacities and on the dates
indicated.
Signature Title Date
--------- ----- ----
Chairman of the Board, March 27, 1996
Richard M. Frank Chief Executive Officer,
and Director (Principal
Executive Officer)
President and Director March 27, 1996
Michael H. Magusiak
Executive Vice President, March 27, 1996
Larry G. Page Treasurer, (Principal Financial
Officer and Principal Accounting
Officer)
Director March 27, 1996
Charles A. Crocco, Jr.
Director March 27, 1996
Anthony J. Gumbiner
Director March 27, 1996
Robert L. Lynch
Director March 27, 1996
J. Thomas Talbot
Director March 27, 1996
Louis P. Neeb
Director March 27, 1996
Cynthia I. Pharr
PAGE
EXHIBIT INDEX
--------------
Exhibit
Number Description Page No.
- ------ ----------- --------
10(r)(1) Note Purchase Agreement dated
October 10, 1995, between BFC
Bank (Cayman) Ltd. and the
Company
10(r)(2) Modification and Waiver to
Note Purchase Agreement, in
the stated amount of
$2,500,000.00, dated October
12, 1995, between BFC Bank
(Cayman) Ltd. and the Company
10(r)(3) Floating Rate Series C Senior
Note Due 1997, in the stated
amount of $2,500,000.00,
dated October 12, 1995,
between BFC Bank (Cayman)
Ltd. and the Company
10(s)(1) Note Purchase Agreement dated
October 10, 1995, between
Neue Bank, AG and the Company
10(s)(2) Modification and Waiver to
Note Purchase Agreement, in
the stated amount of
$2,500,000.00, dated October
24, 1995, between Neue Bank
AG and the Company
10(s)(3) Floating Rate Series C Senior
Note Due 1997, in the stated
amount of $2,500,000.00,
dated November 2, 1995,
between Neue Bank, AG and the
Company.
10(t)(1) Entertainment Operating Fund
Line of Credit, in the stated
amount of $1,000,000.00,
dated November 15, 1995,
between International
Association of ShowBiz Pizza
Time, Restaurants, Inc. and
the Company.
10(t)(2) Entertainment Operating Fund
Promissory Note, in the
stated amount of $1,000,000,
dated November 15, 1995,
between International
Association of ShowBiz Pizza
Time Restaurants, Inc. and
the Company.
10(u)(1) National Advertising
Production Line of Credit, in
the stated amount of
$750,000.00, dated November
15, 1995, between
Inernational Assocation of
ShowBiz Pizza Time
Restaurants, Inc. and the
Company.
10(u)(2) National Advertising
Production Promissory Note,
in the stated amount of
$750,000.00, dated November
15, 1995, between
International Association of
ShowBiz Pizza Time
Restaurants, Inc. and the
Company.
10(v)(1) National Media Fund Line of
Credit, in the stated amount
of $2,000,000.00, dated
November 15, 1995, between
International Association of
ShowBiz Pizza Time
Restaurants, Inc. and the
Company.
10(v)(2) National Media Fund
Promissory Note, in the
stated amount of
$2,000,000.00, dated November
15, 1995, between
International Association of
ShowBiz Pizza Time
Restaurants, Inc. and the
Company.
21 -- List of Subsidiaries
23 -- Independent Auditor's Consent
EXHIBIT (r)(1)
SHOWBIZ PIZZA TIME, INC.
-----------------------
Floating Rate Series C Senior Notes due 1997
____________________
NOTE PURCHASE AGREEMENT
____________________
Dated as of October 10, 1995
Table of Contents
-----------------------
Page
1. THE NOTES. . . . . . . . 1
1.1. Authorization of Notes 1
1.2. Interest Rates on the Notes;
Reset Procedures for Series C
Notes. . . . . . . . 1
1.3. Extension. . . . . . 4
1.4. Optional Redemption. 4
1.5. Withholding Taxes. 5
1.6. Withholding Tax Exemption for Obligations
Targeted to Foreign Markets. . . . . . . 5
SALE AND PURCHASE OF NOTES 6
3. CLOSING . . . . . . . . 6
4. CONDITIONS TO CLOSING . . . . 7
4.1. Representations and Warranties. . . . 7
4.2. Performance; No Default. . . . . . 7
4.3. Compliance Certificates. . . . . . 7
4.4. Opinions of Counsel . . . . . . 7
4.5. Purchase Permitted By Applicable Law, etc. 8
4.6. Sale of Notes to Other Purchasers. . . . 8
4.7. Changes in Corporate Structure. . . . . 8
4.8. Proceedings and Documents. . . . . . 8
5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY 8
5.1. Organization; Power and Authority. . . 9
5.2. Authorization, etc. . . . .. 9
5.3. Disclosure. . . 9
5.4. Organization and Ownership of Shares of
Subsidiaries; Affiliates.. . . . . 10
5.5. Financial Statements. . . . . . 10
5.6. Compliance with Laws, Other Instruments, etc . .11
5.7. Governmental Authorizations, etc. . . 11
5.8. Litigation; Observance of Agreements,
Statutes and Orders. . . . . 11
5.9. Taxes . . . . 11
5.10.Title to Property; Leases.. . . . 12
5.11.Licenses, Permits, etc. . . . . . 12
5.12.Compliance with ERISA . . . . . . . 13
5.13.Private Offering by the Company . . . . 13
5.14.Use of Proceeds; Margin Regulations. . . . . 14
5.15.Existing Indebtedness; Future Liens. . . . . 14
5.16.Foreign Assets Control Regulations, etc. . . 14
5.17.Status under Certain Statutes. . . . 15
5.18.Environmental Matters . . . . . 15
5.19.Status under the Internal Revenue Code of 1986 15
6. REPRESENTATIONS OF THE PURCHASER . . 16
6.1. Purchase of Notes. . . . . 16
6.2. Source of Funds. . . . 16
6.3. Independent Analysis. . . . 16
6.4. Brokers and Finders. . . . 16
6.5. Representations Relating to U.S.
Tax Withholding Obligations. . . . . 16
7. INFORMATION AS TO COMPANY.. . . . 17
7.1. Financial and Business Information. 17
7.2. Officer's Certificate. 20
7.3. Inspection. . . 21
8. PREPAYMENT OF THE NOTES. . . . 21
8.1. Prepayment in Connection with a
Change of Control . . . . 21
8.2. Allocation of Partial Prepayments . . . . 22
8.3. Maturity; Surrender, etc. 22
8.4. Purchase or Optional Redemption of Notes . . 22
9. AFFIRMATIVE COVENANTS . . . 23
9.1. Compliance with Law . . . . 23
9.2. Insurance . . . 23
9.3. Maintenance of Properties . . . 23
9.4. Payment of Taxes and Claims . . 24
9.5. Corporate Existence, etc. . . . 24
9.6. Lines of Business. . . . 24
10. NEGATIVE COVENANTS . . . . . 24
10.1. Liens . . . . . . . 24
10.2. Maintenance of Financial Conditions 26
10.3. Asset Sales . . . . 27
10.4. Merger, Consolidation, etc. 28
10.5. Subsidiary Indebtedness . . . 29
10.6. Transactions with Affiliates . . . 30
11. EVENTS OF DEFAULT. . . . . . 30
12. REMEDIES ON DEFAULT, ETC.. . . . 31
12.1. Acceleration. . . . 31
12.2. Other Remedies. . . 31
12.3. Rescission. . . . . 32
12.4. No Waivers or Election of Remedies,
Expenses, etc. 32
13. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES 32
13.1. Registration of Notes 32
13.2. Transfer and Exchange of Notes 33
13.3. Replacement of Notes 33
14. PAYMENTS ON NOTES. . . . . . 34
14.1. Place of Payment. . 34
14.2. Home Office Payment 34
15. EXPENSES, ETC. . . . . . . 34
15.1. Transaction Expenses 34
15.2. LIBOR Funding Losses 35
15.3. Survival. . . . . . 35
16. SURVIVAL OF REPRESENTATIONS
AND WARRANTIES; ENTIRE
AGREEMENT . . . . . . . . 35
17. AMENDMENT AND WAIVER. . . . . 36
17.1. Requirements. . . . 36
17.2. Solicitation of Holders of Notes 36
17.3. Binding Effect, etc. 36
17.4. Notes held by Company, etc. 37
18. NOTICES. . . . . . . . . 37
19. REPRODUCTION OF DOCUMENTS. . . . 37
20. CONFIDENTIAL INFORMATION. 38
21. SUBSTITUTION OF PURCHASER. . . . 39
22. MISCELLANEOUS. . . . . . . 39
22.1. Successors and Assigns 39
22.2. Construction. . . . 39
22.3. Jurisdiction and Process. 39
22.4. Indemnification. . . 40
22.5. Accounting Terms. . 41
22.6. Payments Due on Non-Business Days 41
22.7. Severability. . . . 41
22.8. Counterparts. . . . 41
22.9. Governing Law . . . 42
Schedule A - - Names and Addresses of Purchasers
Schedule B - - Defined Terms
Exhibit 1.1(a) - - Form of Floating Rate Series C Senior
Note due 1997
Exhibit 1.6 - - Form of Certificate in Lieu of Form W-8
Exhibit 4.4(a) - - Form of Opinion of Counsel for the
Company
Exhibit 4.4(b) - - Form of Opinion of Special Counsel for
the Company
Schedule 5.3 - - Disclosure Documents
Schedule 5.4 - - Subsidiaries
Schedule 5.5 - - Financial Statements
Schedule 5.8 - - Litigation
Schedule 5.11 - - Licenses, Etc.
Schedule 5.15 - - Existing Indebtedness
SHOWBIZ PIZZA TIME, INC.
4441 West Airport Freeway
Irving, TX 75015
Floating Rate Series C Senior Notes due 1997
As of October 10, 1995
TO BFC Bank (Cayman) Ltd.
Ladies and Gentlemen:
SHOWBIZ PIZZA TIME, INC., a Kansas corporation (the
"Company"), agrees with you as follows:
(1) THE NOTES.
(a) Authorization of Notes.
The Company has duly authorized the issue and sale of up to
$5,000,000 aggregate principal amount of its Floating Rate Series C
Senior Notes due 1997 (the "Series C Notes"), substantially in the
respective forms set out in Exhibit 1.1(a). As used herein, the
term "Notes" shall mean all notes originally delivered pursuant to
this Agreement and the Other Agreements referred to below and all
notes delivered in substitution or exchange for any such note and,
where applicable, shall include the singular number as well as the
plural. Certain capitalized terms used in this Agreement are
defined in Schedule B; references to a "Schedule" or an "Exhibit"
are, unless otherwise specified, to a Schedule or an Exhibit
attached to this Agreement. The terms "Note", and "Series C Note"
shall mean one of the Notes, and Series C Notes, respectively.
Interest Rates on the Notes; Reset Procedures for Series C
Notes.
(b) Series C Notes. Each Series C Note shall bear interest,
payable quarterly on each Interest Payment Date in each year, at a
rate per annum (computed on the basis of actual days elapsed and a
year of 360 days) equal to 3.5% plus the LIBOR Rate for the
Interest Period commencing on the date of the Closing (which shall
be a period of six months), and from time to time thereafter at a
rate per annum (so computed) equal to 3.5% plus the LIBOR Rate as
in effect from time to time for the applicable Interest Period
until the principal thereof shall become due and payable and shall
bear interest on demand on any overdue principal or premium, if
any, and on any overdue installment of interest at the default rate
specified therein. If you are purchasing Series C Notes under this
Agreement, at least one Business Day before the date of the
Closing, the Company will give notice to you, specifying the
initial LIBOR Rate, which shall be determined with respect to the
date of the Closing as if that date were a Reset Date, and the
resulting applicable interest rate on the Series C Notes for the
Interest Period commencing on the date of the Closing.
The Company will give written notice to each Holder of a
Series C Note at least three Business Days prior to each Reset Date
(a "Reset Notice") specifying the duration of the Interest Period
commencing on that Reset Date. If for any reason the Company fails
to give a Reset Notice with respect to any Reset Date, the Interest
Period commencing on such Reset Date shall be deemed a six-month
period (or a three-month period in the case of the final Interest
Period if the Reset Date is three months prior to the final
maturity of the Series C Notes). On each Reset Date the Company
shall determine the LIBOR Rate for the Interest Period then
commencing and will give notice (by telephone or facsimile) to the
Calculation Holder (by telephone or facsimile to such person as the
Calculation Holder may from time to time specify for such purpose)
specifying the LIBOR Rate as so determined. If for any reason the
Calculation Holder, by notice to the Company (which notice shall be
given within two Business Days after the Reset Date), objects to
such determination, the LIBOR Rate as determined by the Calculation
Holder shall be final and binding upon the Company absent manifest
error. Forthwith and in any event within two Business Days after
each Reset Date the Company will give written notice to the Holders
of the Series C Notes specifying the LIBOR Rate and the resulting
applicable interest rate on the Series C Notes for the Interest
Period commencing on that Reset Date and stating whether the
Calculation Holder determined (or confirmed the Company's
determination of) the LIBOR Rate for that Interest Period. If for
any reason neither the Company nor the Calculation Holder
determines the LIBOR Rate for any Interest Period, the
determination of the LIBOR Rate by any other Institutional Investor
Holder of a Series C Note (acting in place of the Calculation
Holder if necessary) and specified in a written notice to the
Company shall be final and binding upon the Company and the Holders
of the Series C Notes absent manifest error, provided that in case
more than one such Institutional Investor Holder gives such a
written notice and the LIBOR Rate in such notices is not the same
rate, the LIBOR Rate shall be the rate agreed upon by such other
Institutional Investor Holders as specified in a subsequent notice
to the Company, which rate shall be final and binding as aforesaid.
(b) Certain Defined Terms and Procedures. For purposes of
determining the applicable interest rate on the Series C Notes, the
following terms have the following meanings (and certain matters
will be determined in accordance with procedures as specified
below):
"Calculation Holder" means the Institutional Investor
holding the highest unpaid principal amount of Series C Notes
at the time outstanding and willing to serve in such
capacity.
"Designated Maturity" means for any Reset Date a period
of three or six months, as the case may be, corresponding to
the Interest Period commencing on such Reset Date.
"Interest Period" means a period commencing on and
including the date of the Closing or a Reset Date, as the
case may be, and ending on the Interest Payment Date that is
three or six months thereafter, as set forth in respect of
the Interest Period commencing on the date of the Closing in
Section 1.2(a) and as set forth in respect of each Reset Date
in the Reset Notice for such period. Notwithstanding the
foregoing if the Interest Payment Date in the appropriate
month is not a Business Day such Interest Period shall be
extended to the next day that is a Business Day and if there
is no numerically corresponding date in the appropriate
month, such Interest Period shall end on the last Business
Day of such month.
"LIBOR Rate" means for the Interest Period commencing on
the date of the Closing, the rate specified in notice from
the Company given pursuant to Section 1.2(a); and means for
any Reset Date the rate for deposits in U.S. Dollars for a
period of the Designated Maturity which appears on the
display designated as "Page 3750" on Telerate Access Service
(or such other display as may replace Page 3750 on Telerate
Access Service) as of 11:00 a.m., London time, on the date
that is two London Banking Days preceding that Reset Date;
and if such rate does not appear on Telerate Page 3750 (or
such other display), the rate for that Reset Date will be
determined on the basis of rates on which deposits in U.S.
dollars are offered by the Reference Banks at approximately
11:00 a.m., London time, on the day that is two London
Banking Days preceding that Reset Date to prime banks in the
London interbank market for a period of the Designated
Maturity commencing on that Reset Date and in a
Representative Amount. The Company will cause the
Calculation Holder to request the principal London office of
each of the Reference Banks to provide a quotation of its
rate. If at least two such quotations are provided, the rate
for that Reset Date will be the arithmetic means of the
quotations. If fewer than two quotations are provided as
requested, the rate for that Reset Date will be the
arithmetic mean of the rates quoted by major banks in New
York City, selected by the Calculation Holder, at
approximately 11:00 a.m., New York City time, on that Reset
Date for loans in U.S. dollars to leading European banks for
a period of the Designated Maturity commencing on that Reset
Date and in a Representative Amount.
"London Banking Day" means any day other than Saturday or
Sunday or a day on which commercial banks are required or
authorized by law to be closed in London, England.
"Reference Banks" means four major banks in the London
interbank market.
"Representative Amount" means an amount that is
comparable to the unpaid principal amount of the Series C
Notes at the relevant time.
"Reset Date" means any Interest Payment Date
corresponding to the first day of an Interest Period.
"Reset Notice" is defined in Section 1.2(a).
(c) Extension.
Upon notice to the Company by the Holder of any Note, given
not less than ninety (90) nor more than one hundred twenty (120)
days prior to each annual anniversary date of the Notes, the Holder
may, at its sole and absolute discretion, elect to extend the
maturity date on a Note for an additional year. If a Holder
extends the maturity date of a Note, the Company shall, upon
surrender of any such Note at the principal executive office of the
Company, execute and deliver a new Note reflecting the extended
maturity date in exchange therefor. Notwithstanding anything
herein, no extension of the maturity of the Notes under this
Section 1.3 shall extend the maturity of any of the Notes beyond
October 10, 2000.
(d) Optional Redemption.
(A) The Company shall have the right, at its option, to redeem
the Notes in whole or in part at any time and from time to time, as
provided herein and in the Notes. At least 30 days but not more
than 60 days before a Redemption Date, the Company shall mail a
notice of redemption by first class mail to the Holder at such
Holder's registered address. Each notice for redemption shall
identify the principal amount of the Note to be redeemed and shall
state:
1. the Redemption Date;
2. the Redemption Price;
3. the name and address of the Paying Agent;
4. that the Note called for redemption must be
surrendered to the Paying Agent to collect the Redemption
Price;
5. that, unless the Company defaults in making the
redemption payment, interest on the principal amount of the
Notes called for redemption ceases to accrue on and after the
Redemption Date, and the only remaining right of the Holders
of such Notes is to receive payment of the Redemption Price
upon surrender to the Paying Agent of the Notes redeemed;
6. if any Note is being redeemed in part, the portion
of the principal amount of such Note to be redeemed and that,
after the Redemption Date, and upon surrender of such Note,
a new Note or Notes in aggregate principal amount equal to
the unredeemed portion thereof will be issued; and
7. if fewer than all the Notes are to be redeemed, the
identification of the particular Notes (or portion thereof)
to be redeemed, as well as the aggregate principal amount of
Notes to be redeemed and the aggregate principal amount of
Notes to be outstanding after such partial redemption.
(b) Once notice of redemption is mailed in accordance with
Section 1.4(a), Notes (or any part thereof) called for redemption
become due and payable on the Redemption Date and at the Redemption
Price. Upon surrender to the Paying Agent, such Notes (or any part
thereof) called for redemption shall be paid at the Redemption
Price.
(c) On or before the Redemption Date, the Company shall deposit
with the Paying Agent United States dollars sufficient to pay the
Redemption Price of all Notes (or part thereof) to be redeemed on
that date (other than Notes or any part thereof called for
redemption on that date which have been delivered to the Paying
Agent for cancellation). The Paying Agent shall promptly return to
the Company any United States dollars so deposited which are not
required for that purpose upon the written request of the Company.
(d) If the Company complies with the preceding paragraph, then,
unless the Company defaults in the payment of such Redemption
Price, interest on the Notes (or any part thereof) to be redeemed
will cease to accrue on and after the applicable Redemption Date,
whether or not such Notes are presented for payment.
(e) Upon surrender of a Note that is to be redeemed in part, the
Company shall issue to the Holder, at the expense of the Company,
a new Note or Notes equal in principal amount to the unredeemed
portion of the Note surrendered.
(e) Withholding Taxes.
All payments by the Company of principal of and interest on
the Notes are payable without deduction for or on account of any
present or future taxes, duties or other charges levied or imposed
by the United States of America or by the government of any
jurisdiction outside the United States of America or by any
political subdivision or taxing authority of or in any of the
foregoing through withholding or deduction with respect to any such
payments. If any such taxes, duties or other charges are so levied
or imposed, the Company will pay additional interest or will make
additional payments in such amounts so that every net payment of
principal of and interest on the Notes, after withholding or
deduction for or on account of any such present or future taxes,
duties or other charges, will not be less than the amount provided
for herein or therein, provided that the Company shall have no
obligation to pay such additional amounts to any Holder to the
extent that such taxes, duties, or other charges are levied or
imposed by reason of the failure of such Holder to comply with the
provisions of Section 1.6. The Company shall furnish promptly to
each Holder official receipts evidencing any such withholding or
reduction.
(f) Withholding Tax Exemption for Obligations Targeted to Foreign
Markets.
Each Holder agrees that it will deliver to the Company a
certificate not more than 90 days prior to the first Interest
Payment Date, and annually thereafter on January 15 of each year
signed under oath (subject to penalty for perjury) by such Holder
and certifying that (A) the beneficial owners of the Notes are
foreign (non-U.S.) persons and have not been U.S. persons on any
Interest Payment Date, (B) during all periods while the Holder
holds the Notes, the beneficial owners of the Notes on each
Interest Payment Date will not be a U.S. person, and (C) the Holder
will provide a statement to the Company if the Notes are
transferred to a U.S. Person, notifying the Company of such event.
Such certificate shall be substantially in the form attached hereto
as Exhibit 1.6, which form complies with the requirements of
Treasury Regulation S 35a.999-5(b) (question and answer 14).
(2) SALE AND PURCHASE OF NOTES.
Subject to the terms and conditions of this Agreement, the
Company will issue and sell to you, as record holder on behalf of
the Beneficial Owner, and you, as record holder on behalf of the
Beneficial Owner, will purchase from the Company, at the Closing
provided for in Section 3, Series C Notes in the principal amount
or amounts specified opposite your name in Schedule A at the
purchase price of 100% of the principal amount thereof, and in the
aggregate principal amount of not more than Five Million Dollars
($5,000,000). Contemporaneously with entering into this Agreement,
the Company is entering into separate Note Purchase Agreements (the
"Other Agreements") identical with this Agreement (except for the
principal amounts of Notes to be purchased) with each of the other
purchasers named in Schedule A (the "Other Purchasers"), providing
for the sale at such Closing to each of the Other Purchasers of
Notes in the principal amount or amounts specified opposite its
name in Schedule A. Your obligation hereunder and the obligations
of the Other Purchasers under the Other Agreements are several and
not joint obligations and you shall have no obligation under any
Other Agreement and no liability to any Person for the performance
or non-performance by any Other Purchaser thereunder. The
aggregate principal amount of Notes issued and sold by the Company
under this Agreement and the Other Agreements shall not exceed U.S.
$5,000,000.
(3) CLOSING.
The sale and purchase of the Notes to be purchased by you and
the Other Purchasers shall occur at the offices of Banque
Financiere de la Cite, at 9:00 a.m., Dallas, Texas time, at a
closing (the "Closing") on October 10, 1995 or on such other
Business Day thereafter on or prior to October 24, 1995 as may be
agreed upon by the Company and you and the Other Purchasers. At
the Closing the Company will deliver to you the Notes to be
purchased by you, as record holder on behalf of the Beneficial
Owner, in the form of a single Note so to be purchased (or such
greater number of Notes in denominations of at least U.S. $100,000
as you may request) dated the date of the Closing and registered in
your name (or in the name of your nominee), against delivery by you
to the Company or its order of immediately available funds in the
amount of the purchase price therefor by wire transfer of
immediately available funds (in U.S. Legal Tender) for the account
of the Company to account number 501-33529 at Bank of Boston,
Boston, Massachusetts, ABA# 011000390 (Attention: Frank D'Ulisse
at 617-434-7996).
If at the Closing the Company shall fail to tender such Notes
to you as provided above in this Section 3, or any of the
conditions specified in Section 4 shall not have been fulfilled to
your satisfaction, you shall, at your election, be relieved of all
further obligations under this Agreement, without thereby waiving
any rights you may have by reason of such failure or such
nonfulfillment.
(4) CONDITIONS TO CLOSING.
Your obligation to purchase and pay for the Notes to be sold
to you at the Closing is subject to the fulfillment to your
satisfaction, prior to or at the Closing, of the following
conditions:
(a) Representations and Warranties.
The representations and warranties of the Company in this
Agreement shall be correct when made and at the time of the
Closing.
(b) Performance; No Default.
The Company shall have performed and complied with all
agreements and conditions contained in this Agreement required to
be performed or complied with by it prior to or at the Closing and
after giving effect to the issue and sale of the Notes (and the
application of the proceeds thereof) no Default or Event of Default
shall have occurred and be continuing.
(c) Compliance Certificates.
(a) Officer's Certificate. The Company shall have delivered
to you an Officer's Certificate, dated the date of the Closing,
certifying that the conditions specified in Sections 4.1, 4.2 and
4.9 have been fulfilled.
(b) Secretary's Certificate. The Company shall have
delivered to you a certificate of the Secretary or an Assistant
Secretary of the Company certifying as to the resolutions attached
thereto and other corporate proceedings relating to the
authorization, execution and delivery of the Notes and this
Agreement and the Other Agreements.
(d) Opinions of Counsel.
You shall have received opinions in form and substance
satisfactory to you, dated the date of the Closing and addressed to
you and the Beneficial Owner from Marshall Fisco, Esq., Counsel of
the Company, and Winstead Sechrest & Minick P.C., special counsel
for the Company, substantially in the respective forms set forth in
Exhibits 4.4(a) and 4.4(b) and covering such other matters incident
to the transactions contemplated hereby as you or your counsel may
reasonably request.
(e) Purchase Permitted By Applicable Law, etc.
On the date of the Closing your purchase of Notes as record
holder on behalf of the Beneficial Owner shall (a) be permitted by
the laws and regulations of each jurisdiction to which you and the
Beneficial Owner are subject, (b) not violate any applicable law or
regulation (including without limitation Regulation G, T, U or X of
the Board of Governors of the Federal Reserve System) and (c) not
subject you to any tax, penalty or liability under or pursuant to
any applicable law or regulation, which law or regulation was not
in effect on the date hereof. If requested by you, you shall have
received an Officer's Certificate certifying as to such matters of
fact as you may reasonably specify to enable you to determine
whether such purchase is so permitted.
(f) Sale of Notes to Other Purchasers.
The Company shall sell to the Other Purchasers and the Other
Purchasers shall purchase the Notes to be purchased by them at the
Closing as specified in Schedule A.
(g) Changes in Corporate Structure.
The Company shall not have changed its jurisdiction of
incorporation or been a party to any merger or consolidation and
shall not have succeeded to all or any substantial part of the
liabilities of any other entity at any time following the date of
the most recent financial statements referred to in Schedule 5.5.
There has been no event, condition, or occurrence since
December 31, 1994 which, individually or in the aggregate, has had
a Material Adverse Effect and no condition exists or event has
occurred, individually or in the aggregate, that could reasonably
be expected to have a Material Adverse Effect.
(h) Proceedings and Documents.
All corporate and other proceedings in connection with the
transactions contemplated by this Agreement and all documents and
instruments incident to such transactions shall be satisfactory to
you and your special counsel, and you and your special counsel
shall have received all such counterpart originals or certified or
other copies of such documents as you or they may reasonably
request.
(5) REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to you that the following
are true and correct as of the date hereof and will be true and
correct through the date of the Closing as if made on such date.
(a) Organization; Power and Authority.
The Company is a corporation duly organized, validly existing
and in good standing under the laws of its jurisdiction of
incorporation, and is duly qualified as a foreign corporation and
is in good standing in each jurisdiction in which such
qualification is required by law, other than those jurisdictions as
to which the failure to be so qualified or in good standing could
not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect. The Company has the corporate
power and authority to own or hold under lease the properties it
purports to own or hold under lease, to transact the business it
transacts and proposes to transact, to execute and deliver this
Agreement and the Other Agreements and the Notes and to perform the
provisions hereof and thereof.
(b) Authorization, etc.
This Agreement and the Other Agreements and the Notes have
been duly authorized by all necessary corporate action on the part
of the Company, and this Agreement constitutes, and upon execution
and delivery thereof each Note will constitute, a legal, valid and
binding obligation of the Company, enforceable against the Company
in accordance with its terms, except as such enforceability may be
limited by (a) applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of
creditors' rights generally and (b) general principles of equity
(regardless of whether such enforceability is considered in a
proceeding in equity or at law).
(c) Disclosure.
This Agreement, the documents, certificates or other writings
delivered to you by or on behalf of the Company in connection with
the transactions contemplated hereby and described in Schedule 5.3
(the "Disclosure Documents"), and the financial statements listed
in Schedule 5.5, taken as a whole, do not contain any untrue
statement of a material fact or omit to state any material fact
necessary to make the statements therein not misleading in light of
the circumstances under which they were made. Since December 31,
1994, there has been no change in the financial condition,
operations, business, properties or prospects of the Company or any
Subsidiary except as disclosed in the Disclosure Documents or in
the financial statements listed in Schedule 5.5 and other changes
that individually or in the aggregate could not reasonably be
expected to have a Material Adverse Effect. There is no fact known
to the Company that could reasonably be expected to have a Material
Adverse Effect that has not been set forth herein or in the
Disclosure Documents. Any projections provided by the Company in
the Disclosure Documents are based on assumptions which management
of the Company believes to be reasonable.
(d) Organization and Ownership of Shares of Subsidiaries;
Affiliates.
(a) Schedule 5.4 contains (except as noted therein) complete
and correct lists of the Company's (i) Subsidiaries, showing, as to
each Subsidiary, the correct name thereof, the jurisdiction of its
organization, and the percentage of shares of each class of its
capital stock or similar equity interests outstanding owned by the
Company and each other Subsidiary, (ii) Affiliates, other than
Subsidiaries, and (iii) directors and senior officers.
(B) All of the outstanding shares of capital stock or
similar equity interests of each Subsidiary shown in Schedule 5.4
as being owned by the Company and its Subsidiaries have been
validly issued, are fully paid and nonassessable and are owned by
the Company or another Subsidiary free and clear of any Lien
(except as otherwise disclosed in Schedule 5.4).
(c) Each Subsidiary identified in Schedule 5.4 is a
corporation duly organized, validly existing and in good standing
under the laws of its jurisdiction of organization, and is duly
qualified as a foreign corporation or other legal entity and is in
good standing in each jurisdiction in which such qualification is
required by law, other than those jurisdictions as to which the
failure to be so qualified or in good standing could not,
individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect. Each such Subsidiary has the corporate or
other power and authority to own or hold under lease the properties
it purports to own or hold under lease and to transact the business
it transacts and proposes to transact.
(d) No Subsidiary is a party to, or otherwise subject to any
legal restriction or any agreement (other than this Agreement, the
agreements listed in Schedule 5.4 and customary limitations imposed
by corporate law statutes) restricting the ability of such
Subsidiary to pay dividends out of profits or make any other
similar distributions of profits to the Company or any of its
Subsidiaries that owns outstanding shares of capital stock or
similar equity interests of such Subsidiary.
(e) Financial Statements.
The Company has delivered to you copies of the financial
statements of the Company and its Subsidiaries listed in Schedule
5.5. All of said financial statements (including in each case the
related schedules and notes) fairly present in all material
respects the consolidated financial position of the Company and its
Subsidiaries as of the respective dates specified in such Schedule
and the consolidated results of their operations and cash flows for
the respective periods so specified and have been prepared in
accordance with GAAP consistently applied throughout the periods
involved except as set forth in the notes thereto (subject, in the
case of any interim financial statements, to normal year-end
adjustments made in accordance with GAAP).
(f) Compliance with Laws, Other Instruments, etc.
The execution, delivery and performance by the Company of
this Agreement and the Notes will not (i) contravene, result in any
breach of, or constitute a default under, or result in the creation
of any Lien in respect of any property of the Company or any
Subsidiary under, any indenture, mortgage, deed of trust, loan,
purchase or credit agreement, lease, corporate charter or by-laws,
or any other agreement or instrument to which the Company or any
Subsidiary is bound or by which the Company or any Subsidiary or
any of their respective properties may be bound or affected, (ii)
conflict with or result in a breach of any of the terms, conditions
or provisions of any order, judgment, decree, or ruling of any
court, arbitrator or Governmental Authority applicable to the
Company or any Subsidiary or (iii) violate any provision of any
statute or other rule or regulation of any Governmental Authority
applicable to the Company or any Subsidiary.
(g) Governmental Authorizations, etc.
No consent, approval or authorization of, or registration,
filing or declaration with, any Governmental Authority is required
for the validity of the execution, delivery or performance by the
Company of this Agreement or the Notes. Specifically, and without
limitation of the foregoing, no registration of the Notes is
required under the Securities Act, the Securities Exchange Act, or
the Texas Securities Act, and no indenture with respect to the
Notes is required to be qualified under the Trust Indenture Act of
1939.
(h) Litigation; Observance of Agreements, Statutes and Orders.
(a) Except as disclosed in Schedule 5.8, there are no
actions, suits or proceedings pending or, to the knowledge of the
Company, threatened against or affecting the Company or any
Subsidiary or any property of the Company or any Subsidiary in any
court or before any arbitrator of any kind or before or by any
Governmental Authority that, individually or in the aggregate,
could reasonably be expected to have a Material Adverse Effect.
(b) Neither the Company nor any Subsidiary is in default
under any term of any agreement or instrument to which it is a
party or by which it is bound, or any order, judgment, decree or
ruling of any court, arbitrator or Governmental Authority or is in
violation of any applicable law, ordinance, rule or regulation
(including without limitation Environmental Laws) of any
Governmental Authority, which default or violation, individually or
in the aggregate, could reasonably be expected to have a Material
Adverse Effect.
(i) Taxes
The Company and its Subsidiaries have filed all tax returns
that are required to have been filed in any jurisdiction, and have
paid all taxes shown to be due and payable on such returns and all
other taxes and assessments levied upon them or their properties,
assets, income or franchises, to the extent such taxes and
assessments have become due and payable and before they have become
delinquent, except for any taxes and assessments (a) currently
payable without penalty or interest, (b) the amount of which is not
individually or in the aggregate Material or (c) the amount,
applicability or validity of which is currently being contested in
good faith by appropriate proceedings and with respect to which the
Company or a Subsidiary, as the case may be, has established
adequate reserves in accordance with GAAP. The Company knows of no
basis for any other tax or assessment that individually or in the
aggregate might be Material. The charges, accruals and reserves on
the books of the Company and its Subsidiaries in respect of
Federal, state or other taxes for all fiscal periods are adequate.
The Federal income tax liabilities of the Company and its
Subsidiaries have been determined by the Internal Revenue Service
and paid for all fiscal years up to and including the fiscal year
ended December 31, 1993.
(j) Title to Property; Leases.
The Company and its Subsidiaries have good and marketable
title to their respective real properties and good and sufficient
title to their respective other properties that individually or in
the aggregate are Material, including all such properties reflected
in the most recent audited balance sheet listed on Schedule 5.5 or
purported to have been acquired by the Company or any Subsidiary
after said date (except as sold or otherwise disposed of in the
ordinary course of business), in each case free and clear of Liens
other than the Liens disclosed on Schedule 5.15. All leases that
individually or in the aggregate are Material are valid and
subsisting and are in full force and effect in all material
respects.
(k) Licenses, Permits, etc.
Except as disclosed in Schedule 5.11,
(a) the Company and its Subsidiaries own or possess all
licenses, permits, franchises, authorizations, patents,
copyrights, service marks, trademarks and trade names, or
rights thereto, that individually or in the aggregate are
Material, without known conflict with the rights of others;
(b) to the best knowledge of the Company, no product of
the Company infringes in any material respect any license,
permit, franchise, authorization, patent, copyright, service
mark, trademark, trade name or other right owned by any other
Person; and
(c) to the best knowledge of the Company, there is no
Material violation by any Person of any right of the Company
or any of its Subsidiaries with respect to any patent,
copyright, service mark, trademark, trade name or other right
owned or used by the Company or any of its Subsidiaries.
(l) Compliance with ERISA.
(a) The Company and each ERISA Affiliate have operated
and administered each Plan in compliance with all applicable
laws except for such instances of noncompliance as have not
resulted in and could not reasonably be expected to result
in a Material Adverse Effect. Neither the Company nor any
ERISA Affiliate has incurred any liability pursuant to Title
I or IV of ERISA or the penalty or excise tax provisions of
the Code relating to employee benefit plans (as defined in
Section 3 of ERISA), and no event, transaction or condition
has occurred or exists that could reasonably be expected to
result in the incurrence of any such liability by the Company
or any ERISA Affiliate, or in the imposition of any Lien on
any of the rights, properties or assets of the Company or any
ERISA Affiliate, in either case pursuant to Title I or IV of
ERISA or to such penalty or excise tax provisions or to
Section 401(a)(29) or 412 of the Code, other than such
liabilities or Liens as would not be individually or in the
aggregate Material.
(b) The present value of the aggregate benefit
liabilities under each of the Plans (other than Multiemployer
Plans), determined as of the end of such Plan's most recently
ended plan year on the basis of the actuarial assumptions
specified for funding purposes in such Plan's most recent
actuarial valuation report, did not exceed the aggregate
current value of the assets of such Plan allocable to such
benefit liabilities. The term "benefit liabilities" has the
meaning specified in section 4001 of ERISA and the terms
"current value" and "present value" have the meaning
specified in section 3 of ERISA.
(c) The Company and its ERISA Affiliates have not
incurred withdrawal liabilities (and are not subject to
contingent withdrawal liabilities) under section 4201 or 4204
of ERISA in respect of Multiemployer Plans that individually
or in the aggregate are Material.
(d) The expected postretirement benefit obligation
(determined as of the last day of the Company's most recently
ended fiscal year in accordance with Financial Accounting
Standards Board Statement No. 106, without regard to
liabilities attributable to continuation coverage mandated
by section 4980B of the Code) of the Company and its
Subsidiaries is not Material.
(m) Private Offering by the Company.
Neither the Company nor anyone acting on its behalf has
offered the Notes or any similar securities for sale to, or
solicited any offer to buy any of the same from, or otherwise
approached or negotiated in respect thereof with, any person other
than you and the Other Purchasers, each of which has been offered
the Notes at a private sale for investment. Neither the Company
nor anyone acting on its behalf has taken, or will take, any action
that would subject the issuance or sale of the Notes to the
registration requirements of Section 5 of the Securities Act or the
Texas Securities Act, or require registration under the Exchange
Act, or the qualification of an indenture with respect to the Notes
under the Trust Indenture Act of 1939.
(n) Use of Proceeds; Margin Regulations.
The Company will apply the proceeds of the sale of the Notes
for general corporate purposes. No part of the proceeds from the
sale of the Notes hereunder will be used, directly or indirectly,
for the purpose of buying or carrying any margin stock within the
meaning of Regulation G or Regulation U of the Board of Governors
of the Federal Reserve System, or for the purpose of buying or
carrying or trading in any securities under such circumstances as
to involve the Company in a violation of Regulation X of said Board
or to involve any broker or dealer in a violation of Regulation T
of said Board. Margin stock does not constitute more than 5% of
the value of the consolidated assets of the Company and its
Subsidiaries and the Company does not have any present intention
that margin stock will constitute more than 5% of the value of such
assets. As used in this Section, the terms "margin stock" and
"purpose of buying or carrying" shall have the meanings assigned to
them in said Regulation U.
(o) Existing Indebtedness; Future Liens
(a) Schedule 5.15 sets forth a complete and correct list
of all outstanding Indebtedness of the Company and its
Subsidiaries as of March 31, 1995, since which date there has
been no Material change in the amounts, interest rates,
sinking funds, instalment payments or maturities of the
Indebtedness of the Company or its Subsidiaries. Neither the
Company nor any Subsidiary is in default, and no waiver of
default is currently in effect, in the payment of any
principal or interest on any Indebtedness of the Company or
such Subsidiary and no event or condition exists with respect
to any Indebtedness of the Company or any Subsidiary that
would permit (or that with notice or the lapse of time, or
both, would permit) one or more Persons to cause such
Indebtedness to become due and payable before its stated
maturity or before its regularly scheduled dates of payment.
(b) Except as disclosed in Schedule 5.15, neither the
Company nor any Subsidiary has agreed or consented to cause
or permit in the future (upon the happening of a contingency
or otherwise) any of its property, whether now owned or
hereafter acquired, to be subject to a Lien not permitted by
Section 10.1.
(p) Foreign Assets Control Regulations, etc.
Neither the sale of the Notes by the Company hereunder nor
its use of the proceeds thereof will violate the Trading with the
Enemy Act, as amended, or any of the foreign assets control
regulations of the United States Treasury Department (31 CFR,
Subtitle B, Chapter V, as amended) or any enabling legislation or
executive order relating thereto.
(q) Status under Certain Statutes.
Neither the Company nor any Subsidiary is subject to
regulation under the Investment Company Act of 1940, as amended,
the Public Utility Holding Company Act of 1935, as amended, the
Interstate Commerce Act, as amended, or the Federal Power Act, as
amended.
(r) Environmental Matters.
Neither the Company nor any Subsidiary has knowledge of any
claim or has received any notice of any claim, and no proceeding
has been instituted raising any claim against the Company or any of
its Subsidiaries or any of their respective real properties now or
formerly owned, leased or operated by any of them or other assets,
alleging any damage to the environment or violation of any
Environmental Laws, except, in each case, such as could not
reasonably be expected to result in a Material Adverse Effect.
Except as otherwise disclosed to you in writing prior to your
execution and delivery of this Agreement,
(a) neither the Company nor any Subsidiary has knowledge
of any facts which would give rise to any claim, public or
private, of violation of Environmental Laws or damage to the
environment emanating from, occurring on or in any way
related to real properties now or formerly owned, leased or
operated by any of them or to other assets or their use,
except, in each case, such as could not reasonably be
expected to result in a Material Adverse Effect;
(b) neither the Company nor any of its Subsidiaries has
stored any Hazardous Materials on real properties now or
formerly owned, leased or operated by any of them and has not
disposed of any Hazardous Materials in a manner contrary to
any Environmental Laws in each case in any manner that could
reasonably be expected to result in a Material Adverse
Effect; and
(C) all buildings on all real properties now owned,
leased or operated by the Company or any of its Subsidiaries
are in compliance with applicable Environmental Laws, except
where failure to comply could not reasonably be expected to
result in a Material Adverse Effect.
(s) Status under the Internal Revenue Code of 1986.
Assuming the accuracy of the representations and warranties,
and compliance with the covenants made by or on behalf of the
Purchaser and the Beneficial Owner under this Agreement and the
Notes, (i) each of the Notes meets the requirements of
Section 871(h)(2)(B) or 881(c)(2)(B) of the Internal Revenue Code
of 1986, as amended (the "Code"), (ii) in the case of Notes
beneficially owned by a nonresident alien individual, interest paid
on the Notes will constitute "portfolio interest" as such term is
defined in Section 871(h)(2) of the Code, and (iii) in the case of
Notes beneficially owned by a foreign corporation, interest paid on
the Notes will constitute "portfolio interest" as such term is
defined in Section 881(c)(2) of the Code.
(6) REPRESENTATIONS OF THE PURCHASER.
You represent and warrant to the Company that the following
are true and correct as of the date hereof and will be true and
correct through the date of the Closing as if made on such date.
(a) Purchase of Notes.
You represent that you are purchasing the Notes for the
account of one or more investors who to your knowledge are
"accredited investors" as such term is defined in Rule 501
promulgated under the Securities Act or to whom the sale of the
Notes would otherwise be permitted without registration under the
Securities Act pursuant to Regulation S, and not with a view to the
distribution thereof, provided that the disposition of their
property shall at all times be within their control. You
understand that the Notes have not been registered under the
Securities Act and may be resold only if registered pursuant to the
provisions of the Securities Act or if an exemption from
registration is available, except under circumstances where neither
such registration nor such an exemption is required by law, and
that the Company is not required to register the Notes.
(b) Source of Funds.
You represent that to your knowledge the funds to be used by
the Beneficial Owner to pay the purchase price of the Notes to be
purchased hereunder are funds from sources legally available for
such purchase in accordance with applicable law.
(c) Independent Analysis.
You represent that to your knowledge, the Beneficial Owner
or its agent has performed its own independent analysis of the
Company and its business, financial condition, and prospects.
Brokers and Finders.
(d) You represent that there are no agent's, broker's or finder's
fees or commissions payable to you by the Company in connection
with the Notes purchased hereunder.
(e) Representations Relating to U.S. Tax Withholding Obligations.
(a) You represent that you are a bank not incorporated under
the laws of the United States of America or any State thereof.
(b) You represent that you are a securities clearing
organization, a bank, or another financial institution that holds
customers' securities in the ordinary course of your trade or
business.
(c) So long as you are the record holder of the Notes
purchased hereunder, you will promptly notify the Company of any
change, of which you have knowledge, in beneficial ownership of the
Notes purchased hereunder, and will state whether to your knowledge
any such change results in a U.S. person, firm, or corporation
becoming a beneficial owner of the Notes purchased hereunder or any
portion thereof.
(d) You represent that you have informed the Beneficial
Owner that the Notes may not be sold or transferred, except as
follows: (i) record ownership may be transferred only to another
non-U.S. bank or other entity which complies with 6.5(b) above; and
(ii) beneficial ownership may be transferred only to foreign
(non-U.S.) persons.
(e) You understand that the Notes must bear a legend
restricting ownership and transfer to only foreign (non-U.S.)
persons.
(7) INFORMATION AS TO COMPANY.
(a) Financial and Business Information.
The Company shall deliver to each Holder of Notes that is an
Institutional Investor:
(a) Quarterly Statements -- within two (2) Business Days
after the day that is 45 days after the end of each quarterly
fiscal period in each fiscal year of the Company (other than
the last quarterly fiscal period of each such fiscal year),
duplicate copies of,
(1) a consolidated balance sheet of the Company and
its Subsidiaries as at the end of such quarter, and
(ii) consolidated statements of income, changes in
shareholders' equity and cash flows of the Company and
its Subsidiaries, for such quarter and (in the case of
the second and third quarters) for the portion of the
fiscal year ending with such quarter,
setting forth in each case in comparative form the figures
for the corresponding periods in the previous fiscal year,
all in reasonable detail, prepared in accordance with GAAP
applicable to quarterly financial statements generally, and
certified by a Senior Financial Officer as fairly presenting,
in all material respects, the financial position of the
companies being reported on and their results of operations
and cash flows, subject to changes resulting from year-end
adjustments, provided that delivery within the time period
specified above of copies of the Company's Quarterly Report
on Form 10-Q prepared in compliance with the requirements
therefor and filed with the Securities and Exchange
Commission shall be deemed to satisfy the requirements of
this Section 7.1(a);
(b) Annual Statements -- within two (2) Business Days
after the day that is 90 days after the end of each fiscal
year of the Company, duplicate copies of,
(i) a consolidated balance sheet of the Company and
its Subsidiaries as at the end of such year, and
(ii) consolidated statements of income, changes in
shareholders, equity and cash flows of the Company and
its Subsidiaries for such year,
setting forth in each case in comparative form the figures
for the previous fiscal year, all in reasonable detail,
prepared in accordance with GAAP, and accompanied
(A) by an opinion thereon of independent public
accountants of recognized national standing, which
opinion shall state that such financial statements
present fairly, in all material respects, the financial
position of the companies being reported upon and their
results of operations and cash flows and have been
prepared in conformity with GAAP, and that the
examination of such accountants in connection with such
financial statements has been made in accordance with
generally accepted auditing standards, and that such
audit provides a reasonable basis for such opinion in the
circumstances, and
(B) a certificate of such accountants stating that
they have reviewed Sections 10.2, 10.3, and 10.5 of this
Agreement and stating further whether, in making their
audit, they have become aware of any condition or event
that then constitutes a Default or an Event of Default
under said Sections, and, if they are aware that any such
condition or event then exists, specifying the nature and
period of the existence thereof (it being understood that
such accountants shall not be liable, directly or
indirectly, for any failure to obtain knowledge of any
Default or Event of Default unless such accountants
should have obtained knowledge thereof in making an audit
in accordance with generally accepted auditing standards
or did not make such an audit),
provided that the delivery within the time period specified
above of the Company's Annual Report on Form 10-K for such
fiscal year (together with the Company's annual report to
shareholders, if any, prepared pursuant to Rule 14a-3 under
the Exchange Act) prepared in accordance with the
requirements therefor and filed with the Securities and
Exchange Commission, together with the accountant's
certificate described in clause (B) above, shall be deemed
to satisfy the requirements of this Section 7.1(b);
(c) SEC and Other Reports -- promptly upon their
becoming available, one copy of (i) each financial statement,
report, notice or proxy statement sent by the Company or any
Subsidiary generally to its shareholders or to its creditors
(other than the Company or another Subsidiary), and (ii) each
regular or periodic report, each registration statement
(without exhibits except as expressly requested by such
Holder), and each prospectus and all amendments thereto filed
by the Company or any Subsidiary with the Securities and
Exchange Commission and of each press release and other
statement made available generally by the Company or any
Subsidiary to the public concerning developments that are
Material;
(d) Notice of Default or Event of Default -- promptly,
and in any event within five days after a Responsible Officer
becoming aware of the existence of any Default or Event of
Default, a written notice specifying the nature and period
of existence thereof and what action the Company is taking
or proposes to take with respect thereto;
(e) ERISA Matters -- promptly, and in any event within
five days after a Responsible Officer becoming aware of any
of the following, a written notice setting forth the nature
thereof and the action, if any, that the Company or an ERISA
Affiliate proposes to take with respect thereto:
(i) with respect to any Plan, any reportable event,
as defined in section 4043(b) of ERISA and the
regulations thereunder, for which notice thereof has not
been waived pursuant to such regulations as in effect on
the date hereof; or
(ii) the taking by the PBGC of steps to institute,
or the threatening by the PBGC of the institution of,
proceedings under section 4042 of ERISA for the
termination of, or the appointment of a trustee to
administer, any Plan, or the receipt by the Company or
any ERISA Affiliate of a notice from a Multiemployer Plan
that such action has been taken by the PBGC with respect
to such Multiemployer Plan; or
(iii) any event, transaction or condition that could
result in the incurrence of any liability by the Company
or any ERISA Affiliate pursuant to Title I or IV of ERISA
or the penalty or excise tax provisions of the Code
relating to employee benefit plans, or in the imposition
of any Lien on any of the rights, properties or assets of
the Company or any ERISA Affiliate pursuant to Title I or
IV of ERISA or such penalty or excise tax provisions, if
such liability or Lien, taken together with any other
such liabilities or Liens then existing, could reasonably
be expected to have a Material Adverse Effect;
(f) Accountants Reports -- promptly, and in any event
within 30 days of receipt thereof by a Responsible Officer
of the Company, copies of any report as to material
inadequacies in accounting controls submitted by independent
accountants in connection with any audit of the Company or
any Subsidiary;
(g) Material Litigation -- promptly, and in any event
within 30 days after a Responsible Officer of the Company
becomes aware of any litigation, arbitration or
administrative proceedings, whether instituted or, to the
knowledge of the Company, threatened, affecting the Company
or any of its Subsidiaries and which, if adversely
determined, could be reasonably expected to have a Material
Adverse Effect, a written statement of a Responsible Officer
describing the nature and status of such matters and what
action the Company or a Subsidiary has taken, is taking or
proposes to take with respect thereto;
(h) Notices from Governmental Authority -- promptly, and
in any event within 30 days of receipt thereof, copies of any
notice to the Company or any Subsidiary from any Federal or
state Governmental Authority relating to any order, ruling,
statute or other law or regulation that could reasonably be
expected to have a Material Adverse Effect;
(i) Requested Information -- with reasonable promptness,
such other data and information relating to the business,
operations, affairs, financial condition, assets or
properties of the Company or any of its Subsidiaries or
relating to the ability of the Company to perform its
obligations hereunder and under the Notes as from time to
time may be reasonably requested by any such Holder of Notes.
(b) Officer's Certificate.
Each set of financial statements delivered to a Holder of
Notes pursuant to Section 7.1(a) or Section 7.1(b) shall be
accompanied by a certificate of a Senior Financial Officer setting
forth:
(a) Covenant Compliance -- the information (including
detailed calculations) required in order to establish whether
the Company was in compliance with the requirements of
Sections 10.2 and 10.3 during the quarterly or annual period
covered by the statements then being furnished (including
with respect to each such Section, where applicable, the
calculations of the maximum or minimum amount, ratio or
percentage, as the case may be, permissible under the terms
of such Sections, and the calculation of the amount, ratio
or percentage then in existence); and
(b) Default -- a statement that such Senior Financial
Officer has reviewed the relevant terms hereof and has made,
or caused to be made, under his or her supervision, a review
of the transactions and conditions of the Company and its
Subsidiaries from the beginning of the quarterly or annual
period covered by the statements then being furnished to the
date of the certificate and that such review shall not have
disclosed the existence during such period of any condition
or event that constitutes a Default or an Event of Default
or, if any such condition or event existed or exists
(including, without limitation, any such event or condition
resulting from the failure of the Company or any Subsidiary
to comply with any Environmental Law), specifying the nature
and period of existence thereof and what action the Company
shall have taken or proposes to take with respect thereto.
(c) Inspection
The Company shall permit the representatives of each Holder
of Notes that is an Institutional Investor:
(a) No Default -- if no Default or Event of Default then
exists, at the expense of such Holder and upon reasonable
prior notice to the Company, to visit the principal executive
office of the Company, to discuss the affairs, finances and
accounts of the Company and its Subsidiaries with the
Company's officers, and (with the consent of the Company,
which consent will not be unreasonably withheld) its
independent public accountants, and (with the consent of the
Company, which consent will not be unreasonably withheld) to
visit the other offices and properties of the Company and
each Subsidiary, all at such reasonable times and as often
as may be reasonably requested in writing; and
(b) Default -- if a Default or Event of Default then
exists, at the expense of the Company, to visit and inspect
any of the offices or properties of the Company or any
Subsidiary, to examine all their respective books of account,
records, reports and other papers, to make copies and
extracts therefrom, and to discuss their respective affairs,
finances and accounts with their respective officers,
employees and independent public accountants (and by this
provision the Company authorizes said accountants to discuss
the affairs, finances and accounts of the Company and its
Subsidiaries), all at such times and as often as may be
requested.
(8) PREPAYMENT OF THE NOTES
In addition to the payment of the entire unpaid principal
amount of the Notes at the final maturity thereof, the Company will
make required prepayments in respect of the Notes, and under
certain circumstances may be required to offer to prepay all Notes,
as hereinafter provided.
(a) Prepayment in Connection with a Change of Control.
Promptly and in any event within five Business Days after the
occurrence of a Change of Control, the Company will give written
notice thereof to the Holders of all outstanding Notes, which
notice shall (a) refer specifically to this Section 8.1, (b)
describe the Change of Control in reasonable detail and specify the
Change of Control Prepayment Date and the Response Date (as
respectively defined below) in respect thereof, and (c) offer to
prepay all Notes at the Redemption Price on the date therein
specified (the "Change of Control Prepayment Date"), which shall be
not less than 10 nor more than 30 days after the date of such
notice is given. In the event that the Company shall fail to give
any notice required above within five Business Days after being
requested to do so by the Holder of any Note, such Holder may give
such notice (with a copy thereof to the Company), which notice
shall have the same effect as if given by the Company. Each Holder
of a Note will notify the Company of such Holder's acceptance or
rejection of such offer by giving written notice of such acceptance
or rejection to the Company at least five days prior to the Change
of Control Prepayment Date (the "Response Date"), except that the
failure by any such Holder to respond in writing to such offer on
or before the Response Date shall be deemed to be an acceptance of
such offer by such Holder in respect of such Change of Control.
The Company shall prepay on the Change of Control Prepayment Date
all of the Notes held by the Holders as to which such offer has
been so accepted, at the Redemption Price. If any Holder shall
reject such offer, such Holder shall be deemed to have waived its
rights under this Section 8.1 to require prepayment of all Notes
held by such Holder in respect of such Change of Control but not in
respect of any subsequent Change of Control.
If the Change of Control Prepayment Date does not occur on
the last day of an Interest Period, the Company shall also pay each
Holder of a Series C Note then being prepaid an amount equal to the
LIBOR Funding Loss Amount with respect to such Series C Note, as
specified by written notice given by the Holder of such Series C
Note at least two Business Days prior to the Change of Control
Prepayment Date (or, if such notice is subsequently given by such
Holder, within two Business Days after receipt of such notice by
the Company). The obligation of the Company to pay such LIBOR
Funding Loss Amount with respect to the prepayment of any Series C
Note pursuant to this Section 8.1 shall survive the prepayment of
such Series C Note and the termination of this Agreement.
(b) Allocation of Partial Prepayments.
In the case of each partial prepayment of the Notes, the
principal amount of the Notes to be prepaid shall be allocated
among all of the Notes at the time outstanding in proportion, as
nearly as practicable, to the respective unpaid principal amounts
thereof.
(c) Maturity; Surrender, etc.
In the case of each prepayment of Notes pursuant to this
Section 8, the principal amount of each Note to be prepaid shall
mature and become due and payable on the date fixed for such
prepayment, together with interest on such principal amount accrued
to such date. From and after such date, unless the Company shall
fail to pay such principal amount when so due and payable, together
with the interest, if any, as aforesaid, interest on such principal
amount shall cease to accrue. Any Note paid or prepaid in full
shall be surrendered to the Company and cancelled and shall not be
reissued, and no Note shall be issued in lieu of any prepaid
principal amount of any Note.
(d) Purchase or Optional Redemption of Notes.
The Company will not and will not permit any Affiliate to
purchase, redeem, prepay or otherwise acquire, directly or
indirectly, any of the outstanding Notes except (a) upon the
payment or prepayment of the Notes in accordance with the terms of
this Agreement and the Notes or (b) pursuant to a notice of
optional redemption pursuant to Section 1.4 hereof made by the
Company or any such Affiliate to the Holders of all Notes at the
time outstanding to redeem Notes on the same terms and conditions,
pro rata among all Notes tendered.
Any Notes so repurchased or redeemed shall immediately upon
acquisition thereof be cancelled and no Notes shall be issued in
substitution or exchange therefor, except as provided in
Section 1.4.
Promptly and in any event within five Business Days after
each such purchase or redemption of Notes, the Company will furnish
each Holder of the Notes with a certificate of a Senior Financial
Officer describing such purchase (including the aggregate principal
amount of Notes so purchased and the purchase price therefor) and
certifying that such purchase was made in compliance with the
requirements of this Section.
(9) AFFIRMATIVE COVENANTS.
The Company covenants that so long as any of the Notes are
outstanding:
(a) Compliance with Law.
The Company will and will cause each of its Subsidiaries to
comply with all laws, ordinances or governmental rules or
regulations to which each of them is subject, including without
limitation Environmental Laws, and will obtain and maintain in
effect all licenses, certificates, permits, franchises and other
governmental authorizations necessary to the ownership of their
respective properties or to the conduct of their respective
businesses, in each case to the extent necessary to ensure that
non-compliance with such laws, ordinances or governmental rules or
regulations or failures to obtain or maintain in effect such
licenses, certificates, permits, franchises and other governmental
authorizations could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.
(b) Insurance
The Company will and will cause each of its Subsidiaries to
maintain, with financially sound and reputable insurers rated "A"
or better by A.M. Best Company, Inc., insurance with respect to
their respective properties and businesses against such casualties
and contingencies, of such types, on such terms and in such amounts
(including deductibles and co-insurance) as is customary in the
case of entities of established reputations engaged in the same or
a similar business and similarly situated.
(c) Maintenance of Properties.
The Company will and will cause each of its Subsidiaries to
maintain and keep, or cause to be maintained and kept, their
respective properties in good repair, working order and condition
(other than ordinary wear and tear), so that the business carried
on in connection therewith may be properly conducted at all times,
provided that this Section shall not prevent the Company or any
Subsidiary from discontinuing the operation and the maintenance of
any of its properties if such discontinuance is desirable in the
conduct of its business and the Company has concluded that such
discontinuance could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.
(d) Payment of Taxes and Claims.
The Company will and will cause each of its Subsidiaries to
file all tax returns required to be filed in any jurisdiction and
to pay and discharge all taxes shown to be due and payable on such
returns and all other taxes, assessments, governmental charges, or
levies imposed on them or any of their properties, assets, income
or franchises, to the extent such taxes and assessments have become
due and payable and before they have become delinquent and all
claims for which sums have become due and payable that have or
might become a Lien on properties or assets of the Company or any
Subsidiary, provided that neither the Company nor any Subsidiary
need pay any such tax or assessment or claim if (i) the amount,
applicability or validity thereof is contested by the Company or
such Subsidiary on a timely basis in good faith and in appropriate
proceedings, and the Company or a Subsidiary has established
adequate reserves therefor in accordance with GAAP on the books of
the Company or such Subsidiary or (ii) the nonpayment of all such
taxes and assessments in the aggregate could not reasonably be
expected to have a Material Adverse Effect.
(e) Corporate Existence, etc.
The Company will at all times preserve and keep in full force
and effect its corporate existence. Subject to Sections 10.5 and
10.6, the Company will at all times preserve and keep in full force
and effect the corporate existence of each of its Subsidiaries
(unless merged into the Company or a Subsidiary) and all rights and
franchises (as franchises) of the Company and its Subsidiaries
unless, in the good faith judgment of the Company, the termination
of or failure to preserve and keep in full force and effect such
corporate existence, right or franchise could not, individually or
in the aggregate, have a Material Adverse Effect.
(f) Lines of Business.
The Company and its Subsidiaries will remain engaged solely
in the business of owning and operating family
restaurant/entertainment centers, and other businesses directly
related thereto.
(10) NEGATIVE COVENANTS.
The Company covenants that so long as any of the Notes are
outstanding:
(a) Liens. The Company will not, and will not permit any
Subsidiary to create, assume, incur or suffer to exist any Lien
upon or with respect to any property or assets, whether now owned
or hereafter acquired, securing any Indebtedness, provided that
nothing in this Section 10.1 shall prohibit
(i) Liens in respect of property of the Company or a
Subsidiary existing on the date of the Closing and described
in Schedule 5.15, and Liens relating to any extension,
renewal or replacement of Indebtedness secured by any such
Lien as described in Schedule 5.15, provided that the
principal amount of Indebtedness secured by any such Lien is
not increased and such Lien does not extend to or cover any
property of the Company or such Subsidiary, as the case may
be, other than the property covered by such Lien on the date
of Closing;
(ii) Liens in respect of property acquired by the Company
or a Subsidiary after the date of Closing, (A) existing on
such property at the time of acquisition thereof (and not
incurred in anticipation thereof), whether or not
Indebtedness secured thereby is assumed by the Company or a
Subsidiary, or (B) created within 180 days after acquisition
or completion of construction of improvements on such
property, to secure Indebtedness assumed or incurred to
finance all or any part of the purchase price or cost of
construction of improvements on such property, or (C) in the
case of any Person that hereafter becomes a Subsidiary or is
consolidated with or merged with or into the Company or a
Subsidiary or sells, leases or otherwise disposes of all or
substantially all of its property to the Company or a
Subsidiary, existing at the time such Person becomes a
Subsidiary or is so consolidated or merged or effects such
sale, lease or other disposition of property (and not
incurred in anticipation thereof), provided that in any such
case
(x) no such Lien shall extend to or cover any
other property of the Company or such Subsidiary,
as the case may be,
(y) the aggregate principal amount of
Indebtedness secured by all such Liens in respect
of any such property shall not exceed the cost of
such property at the time of such acquisition or,
in the case of a Lien in respect of property
existing at the time of such Person becoming a
Subsidiary or being so consolidated or merged or
effecting such sale, lease or other disposition,
the fair market value of such property at such
time, and
(z) no Lien may be created pursuant to
subclause (B) above prior to December 31, 1996;
(iii) Liens securing Indebtedness owed by a Subsidiary
to the Company or to a Wholly-Owned Subsidiary; and
(iv) Liens securing reimbursement obligations in
connection with letters of credit obtained by the Company
or a Subsidiary, provided that the aggregate unpaid
principal amount of Indebtedness in respect of such
letters of credit secured by such Liens permitted by this
Section 10.1(a)(iv) does not at any time exceed
$5,000,000.
For purposes of this Section 10.1(a) any Lien existing in respect
of property at the time such property is acquired or in respect of
property of a Person at the time such Person is acquired,
consolidated or merged with or into the Company or a Subsidiary
shall be deemed to have been created at that time.
(b) In case any property is subjected to a Lien in
violation of Section 10.1(a), the Company will make or cause
to be made effective provision whereby the Notes will be
secured equally and ratably with all Indebtedness and other
obligations secured by such Lien, and in any case the Notes
shall have the benefit, to the full extent that, and with
such priority as, the Holders may be entitled thereto under
applicable law, of an equitable lien on such property
securing the Notes. Such violation of Section 10.1(a) shall
constitute an Event of Default hereunder, whether or not any
such provision is made pursuant to this Section 10.1(b).
(b) Maintenance of Financial Conditions.
(a) The Company will not at any time prior to the last day
of the fiscal year ending on or about December 31, 1995
permit Consolidated Net Worth to be less than $115,000,000
and thereafter the Company will not at any time permit
Consolidated Net Worth to be less than the sum of (i)
$115,000,000 plus (ii) 75% of Consolidated Net Income for
each fiscal year ending after the date of the Closing (but
without any deduction for any consolidated net loss in any
fiscal year) plus (iii) 100% of the net cash proceeds of all
sales of equity securities by the Company after the date of
the Closing.
(b) The Company will not permit the sum of EBITDA plus
Consolidated Operating Lease Rentals for the periods of two
and three consecutive quarterly accounting periods
respectively ending on or about June 30 and September 30,
1995 to be less than 150% of Consolidated Interest Expense
plus Consolidated Operating Lease Rentals for such periods,
and thereafter the Company will not permit the sum of EBITDA
plus Consolidated Operating Lease Rentals for any period of
four consecutive quarterly accounting periods to be less than
the applicable percentage of the sum of Consolidated Interest
Expense plus Consolidated Operating Lease Rentals for such
period specified below:
Four Quarterly
Accounting Periods Applicable
Ending on or About Percentage
------------------ ----------
June 30, 1995 to September 30, 1996 150%
thereafter to September 30, 1997 175%
thereafter 200%
(c) The Company will not permit Consolidated
Indebtedness as of the last of any quarterly accounting
period (commencing with such accounting period ending on or
about June 30, 1995) to exceed 175% of EBITDA for the four
consecutive quarterly accounting periods then ended.
(c) Asset Sales.
The Company will not and will not permit any Subsidiary to,
directly or indirectly, make any sale, transfer, lease (as lessor),
loan or other disposition of any property or assets (an "Asset
Sale") other than
(a) Asset Sales in the ordinary course of business,
(b) Asset Sales of property or assets by a Subsidiary to
the Company or a Wholly-Owned Subsidiary or a Person then
becoming a Wholly-Owned Subsidiary,
(c) Asset Sales consisting of the Company's investment
as of the date of this Agreement in shares or Indebtedness
issued by the owner of Monterey Tex-Mex Restaurants, and
(d) other Asset Sales, provided that
(i) immediately before and after giving effect to
each such Asset Sale, no Default or Event of Default
shall have occurred and be continuing, and
(ii) the aggregate net book value of property or
assets disposed of in each such Asset Sale and all other
Asset Sales by the Company and its Subsidiaries (A)
during the immediately preceding twelve months does not
exceed 5% of Consolidated Capitalization and (B) during
the period from the date of the Closing to and including
the effective date of such proposed Asset Sale does not
exceed 10% of Consolidated Capitalization (in each case
determined as of the last day of the quarterly accounting
period ending on or most recently prior to the effective
date of such proposed Asset Sale), and
(iii) such Asset Sales in the aggregate shall not
involve a substantial number of Chuck E. Cheese's
restaurants (except in connection with closings in the
ordinary course of business) or any intangible assets
related to Chuck E. Cheese's restaurants generally,
and provided further that for purposes of clause (ii) above
there shall be excluded the net book value of property or
assets disposed of in an Asset Sale if and to the extent such
Asset Sale is made for cash, payable in full upon the
completion of such Asset Sale, and an amount equal to the net
proceeds realized upon such Asset Sale is applied by the
Company or such Subsidiary, as the case may be, within one
year after the effective date of such Asset Sale (x) to
reinvest in similar categories of property or assets for use
in the business of the Company and its Subsidiaries (but not
in a transaction Permitted by Section 10.1(a)(ii)) or (y) to
repay Indebtedness (which may, at the sole option of the
Company, include the purchase of Notes pursuant to an offer
to purchase Notes pursuant to Section 8.4).
For purposes of this Section 10.3 any shares of Voting Stock
of a Subsidiary that are the subject of an Asset Sale shall be
valued at the greater of (1) the fair market value of such shares
as determined in good faith by the Board of Directors of the
Company and (2) the aggregate net book value of the assets of such
Subsidiary multiplied by a fraction of which the numerator is the
aggregate number of shares of Voting Stock of such Subsidiary
disposed of in such Asset Sale and the denominator is the aggregate
number of shares of Voting Stock of such Subsidiary outstanding
immediately prior to such Asset Sale.
(d) Merger, Consolidation, etc.
The Company will not and will not permit any Subsidiary to
consolidate with or merge with any other corporation or convey,
transfer or lease all or substantially all of its assets in a
single transaction or series of transactions to any Person except:
(a) a Subsidiary may consolidate with or merge with,
convey or transfer all or substantially all of its assets to
(i) the Company (provided that the Company shall be
the continuing or surviving corporation) or a then
existing Wholly-Owned Subsidiary, or
(ii) any Person in an Asset Sale involving all of
the outstanding stock or all or substantially all of the
assets of such Subsidiary, in either case subject to the
limitations of Section 10.3 and to the further
requirement that such Subsidiary does not at the time of
such Asset Sale own, directly or indirectly, any shares
of capital stock or any Indebtedness of any other
Subsidiary not simultaneously being sold as part of such
Asset Sale; and
(b) the Company may consolidate with or merge with any
other corporation or convey or transfer all or substantially
all of its assets to a solvent corporation organized and
existing under the laws of the United States or any state
thereof, provided that
(i) if the Company is not the continuing, surviving
or acquiring corporation (the "surviving corporation"),
the surviving corporation shall have (A) executed and
delivered to each Holder of a Note its assumption
(pursuant to documentation in form and substance
reasonably satisfactory to the Required Holders) of the
due and punctual performance and observance of all
obligations of the Company under this Agreement, the
Other Agreements and the Notes and (B) caused to be
delivered to each Holder of a Note an opinion of counsel
reasonably satisfactory to the Required Holders to the
effect that all agreements or instruments effecting such
assumption are enforceable in accordance with their terms
and comply with the terms hereof, and
(2) immediately after giving effect to such
transaction, no Default or Event of Default shall have
occurred and be continuing and, if applicable, the
Company shall have given any notice required in
connection with such transaction under Section 8.1.
No such conveyance, transfer or lease of substantially all of the
assets of the Company shall have the effect of releasing the
Company or any successor corporation that shall theretofore have
become such in the manner prescribed in this Section 10.4 from its
liability under this Agreement or the Notes.
(e) Subsidiary Indebtedness.
The Company will not permit any Subsidiary to create, assume
incur, guarantee or otherwise become liable in respect of any
Indebtedness except
(a) Indebtedness securing Liens permitted by clause (i),
(ii) or (iii) of Section 10.1(a), and
(b) Indebtedness of a Wholly-Owned Subsidiary owing to
the Company or another Wholly-Owned Subsidiary.
For purposes of this Section 10.5, a Subsidiary shall be deemed to
have incurred Indebtedness in respect of any obligation previously
owed to the Company or to a Wholly-Owned Subsidiary on the date the
obligee ceases for any reason to be the Company or a Wholly-Owned
Subsidiary and a Person that hereafter becomes a Subsidiary shall
be deemed at that time to have incurred all of its outstanding
Indebtedness.
(f) Transactions with Affiliates.
The Company will not and will not permit any Subsidiary to
enter into directly or indirectly any transaction or Material group
of related transactions (including without limitation the purchase,
lease, sale or exchange of properties of any kind or the rendering
of any service) with any Affiliate (other than the Company or
another Subsidiary), except in the ordinary course and pursuant to
the reasonable requirements of the Company's or such Subsidiary's
business and upon fair and reasonable terms no less favorable to
the Company or such Subsidiary than would be obtainable in a
comparable arm's-length transaction with a Person not an Affiliate.
(11) EVENTS OF DEFAULT.
An "Event of Default" shall exist if any of the following
conditions or events shall occur and be continuing:
(a) the Company defaults in the payment of any principal
or premium on any Note when the same becomes due and payable,
whether at maturity or at a date fixed for prepayment or by
declaration or otherwise; or
(b) the Company defaults in the payment of any interest
on any Note for more than five Business Days after the same
becomes due and payable; or
(c) the Company defaults in the performance of or
compliance with any term contained in Section 7.1(d),
Section 8.1 or Section 10.1 to 10.5, inclusive; or
(d) the Company defaults in the performance of or
compliance with any term contained herein (other than those
referred to in paragraphs (a), (b) and (c) of this Section
11) and such default is not remedied within 30 days after a
Responsible Officer obtaining actual knowledge of such
default; or
(e) any representation or warranty made in writing by or
on behalf of the Company or by any officer of the Company in
this Agreement or in any writing furnished in connection with
the transactions contemplated hereby proves to have been
false or incorrect in any material respect on the date as of
which made; or
(f) the Company or any Subsidiary (i) is generally not
paying, or admits in writing its inability to pay, its debts
as they become due, (ii) files, or consents by answer or
otherwise to the filing against it of, a petition for relief
or reorganization or arrangement or any other petition in
bankruptcy, for liquidation or to take advantage of any
bankruptcy, insolvency, reorganization, moratorium or other
similar law of any jurisdiction, (iii) makes an assignment
for the benefit of its creditors, (iv) consents to the
appointment of a custodian, receiver, trustee or other
officer with similar powers with respect to it or with
respect to any substantial part of its property, (v) is
adjudicated as insolvent or to be liquidated, or (vi) takes
corporate action for the purpose of any of the foregoing; or
(g) a court or governmental authority of competent
jurisdiction enters an order appointing, without consent by
the Company or any Subsidiary, a custodian, receiver, trustee
or other officer with similar powers with respect to it or
with respect to any substantial part of its property, or
constituting an order for relief or approving a petition for
relief or reorganization or any other petition in bankruptcy
or for liquidation or to take advantage of any bankruptcy or
insolvency law of any jurisdiction, or ordering the
dissolution, winding-up or liquidation of the Company or any
Subsidiary, or any such petition shall be filed against the
Company or any Subsidiary and such petition shall not be
dismissed within 60 days; or
(h) a final judgment or judgments for the payment of
money aggregating in excess of $500,000 are rendered against
one or more of the Company and its Subsidiaries which
judgments are not, within 60 days after entry thereof,
bonded, paid, discharged or stayed pending appeal, or are not
discharged within 60 days after the expiration of such stay;
or
(12) REMEDIES ON DEFAULT, ETC.
(a) Acceleration.
If any Event of Default has occurred and is continuing, the
Required Holders of the Notes may at any time at its or their
option, by notice or notices to the Company, declare all the Notes
at the time outstanding to be immediately due and payable.
Upon any Notes becoming due and payable under this
Section 12.1, whether automatically or by declaration, such Notes
will forthwith mature and the entire unpaid principal amount of
such Notes, plus (x) all accrued and unpaid interest thereon and
the LIBOR Funding Loss Amount for each Series C Note (in each case
to the full extent permitted by applicable law), shall all be
immediately due and payable, in each and every case without
presentment, demand, protest or further notice, all of which are
hereby waived.
(b) Other Remedies.
If any Default or Event of Default has occurred and is
continuing, and irrespective of whether any Notes have become or
have been declared immediately due and payable under Section 12.1,
the Holder of any Note at the time outstanding may proceed to
protect and enforce the rights of such Holder by an action at law,
suit in equity or other appropriate proceeding, whether for the
specific performance of any agreement contained herein or in any
Note, or for an injunction against a violation of any of the terms
hereof or thereof, or in aid of the exercise of any power granted
hereby or thereby or by law or otherwise.
(c) Rescission.
At any time after any Notes have been declared due and
payable pursuant to Section 12.1, the Required Holders by written
notice to the Company, may rescind and annul any such declaration
and its consequences if (a) the Company has paid all overdue
interest on the Notes, all principal of any Notes that are due and
payable and are unpaid other than by reason of such declaration,
and all interest on such overdue principal and (to the extent
permitted by applicable law) any overdue interest in respect of the
Notes, at the respective default rates specified in the Notes, (b)
all Events of Default and Defaults, other than non-payment of
amounts that have become due solely by reason of such declaration,
have been cured or have been waived pursuant to Section 17, and (c)
no judgment or decree has been entered for the payment of any
monies due pursuant hereto or to the Notes. No rescission and
annulment under this Section 12.3 will extend to or affect any
subsequent Event of Default or Default or impair any right
consequent thereon.
(d) No Waivers or Election of Remedies, Expenses, etc.
No course of dealing and no delay on the part of any Holder
of any Note in exercising any right, power or remedy shall operate
as a waiver thereof or otherwise prejudice such Holder's rights,
powers or remedies. No right, power or remedy conferred by this
Agreement or by any Note upon any Holder thereof shall be exclusive
of any other right, power or remedy referred to herein or therein
or now or hereafter available at law, in equity, by statute or
otherwise. Without limiting the obligations of the Company under
Section 15, the Company will pay to the Holder of each Note on
demand such further amount as shall be sufficient to cover all
costs and expenses of such Holder incurred in any enforcement or
collection under this Section 12, including without limitation
reasonable attorneys' fees, expenses and disbursements.
(13) REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES.
(a) Registration of Notes.
The Company shall keep at its principal executive office a
register for the registration and registration of transfers of
Notes. The name and address of each Holder of one or more Notes,
each transfer thereof and the name and address of each transferee
of one or more Notes shall be registered in such register. Prior
to due presentment for registration of transfer, the Person in
whose name any Note shall be registered shall be deemed and treated
as the owner and Holder thereof for all purposes hereof, and the
Company shall not be affected by any notice or knowledge to the
contrary. The Company shall give to any Holder of a Note that is
an Institutional Investor promptly upon request therefor, a
complete and correct copy of the names and addresses of all
registered Holders of Notes.
(b) Transfer and Exchange of Notes.
Upon surrender of any Note at the principal executive office
of the Company for registration of transfer or exchange (and in the
case of a surrender for registration of transfer, duly endorsed or
accompanied by a written instrument of transfer duly executed by
the registered Holder of such Note or his attorney duly authorized
in writing and accompanied by the address for notices of each
transferee of such Note or part thereof), the Company shall execute
and deliver, at the Company's expense (except as provided below),
one or more new Notes (as requested by the Holder thereof) in
exchange therefor, in an aggregate principal amount equal to the
unpaid principal amount of the surrendered Note. Each such new
Note shall be payable to such Person as such Holder may request.
Each such new Note shall be dated and bear interest from the date
to which interest shall have been paid on the surrendered Note or
dated the date of the surrendered Note if no interest shall have
been paid thereon. The Company may require payment of a sum
sufficient to cover any stamp tax or governmental charge imposed in
respect of any such transfer of Notes. Notes shall not be
transferred in denominations of less than $100,000, provided that
if necessary to enable the registration of transfer by a Holder of
its entire holding of Notes, one Note may be in a denomination of
less than $100,000.
You agree that the Company shall not be required to register
the transfer of any Note to any Person (other than your nominee) or
to any separate account maintained by you unless the Company
receives from the transferee a representation to the Company (and
appropriate information as to any separate accounts or other
matters) to the same or similar effect with respect to the
transferee as is contained in Section 6.2. You shall not be liable
for any damages in connection with any such representations or
assurances provided to the Company by any transferee.
(c) Replacement of Notes.
Upon receipt by the Company of evidence reasonably
satisfactory to it of the ownership of and the loss, theft,
destruction or mutilation of any Note (which evidence shall be, in
the case of an Institutional Investor, notice from such
Institutional Investor of such ownership and such loss, theft,
destruction or mutilation), and
(a) in the case of loss, theft or destruction, of
indemnity reasonably satisfactory to it (provided that if the
Holder of such Note is, or is a nominee for, an original
Purchaser or any other Institutional Investor, such Person's
own unsecured agreement of indemnity shall be deemed to be
satisfactory), or
(b) in the case of mutilation, upon surrender and
cancellation thereof,
the Company at its own expense shall execute and deliver, in lieu
thereof, a new Note of the same series, dated and bearing interest
from the date to which interest shall have been paid on such lost,
stolen, destroyed or mutilated Note or dated the date of such lost,
stolen, destroyed or mutilated Note if no interest shall have been
paid thereon.
(14) PAYMENTS ON NOTES.
(a) Place of Payment.
Subject to Section 14.2, payments of principal, premium, if
any, and interest becoming due and payable on the Notes shall be
made in the State of Texas at the principal office of the Company
in such jurisdiction. The Company may at any time, by notice to
each Holder of a Note, change the place of payment of the Notes so
long as such place of payment shall be either the principal office
of the Company in such jurisdiction or the principal office of a
bank or trust company in such jurisdiction.
(b) Home Office Payment.
So long as you or your nominee shall be the Holder of any
Note, and notwithstanding anything contained in Section 14.1 or in
such Note to the contrary, the Company will pay all sums becoming
due on such Note for principal and interest by the method and at
the address specified for such purpose below your name in Schedule
A, or by such other method or at such other address as you shall
have from time to time specified to the Company in writing for such
purpose, without the presentation or surrender of such Note or the
making of any notation thereon, except that upon written request of
the Company made concurrently with or reasonably promptly after
payment or prepayment in full of any Note, you shall surrender such
Note for cancellation, reasonably promptly after any such request,
to the Company at its principal executive office or at the place of
payment most recently designated by the Company pursuant to
Section 14.1. Prior to any sale or other disposition of any Note
held by you or your nominee you will, at your election, either
endorse thereon the amount of principal paid thereon and the last
date to which interest has been paid thereon or surrender such Note
to the Company in exchange for a new Note or Notes pursuant to
Section 13.2. The Company will afford the benefits of this
Section 14.2 to any Institutional Investor that is the direct or
indirect transferee of any Note purchased by you under this
Agreement and that has made the same agreement relating to such
Note as you have made in this Section 14.2.
(15) EXPENSES, ETC.
(a) Transaction Expenses.
Whether or not the transactions contemplated hereby are
consummated, the Company will pay all costs and expenses (including
reasonable attorneys and, if reasonably required, local or other
counsel) incurred by you and each Other Purchaser or Holder of a
Note in connection with such transactions and in connection with
any amendments, waivers or consents under or in respect of this
Agreement or the Notes (whether or not such amendment, waiver or
consent becomes effective), including without limitation: (a) the
costs and expenses incurred in enforcing or defending (or
determining whether or how to enforce or defend) any rights under
this Agreement or the Notes or in responding to any subpoena or
other legal process or informal investigative demand issued in
connection with this Agreement or the Notes, or by reason of being
a Holder of any Note, and (b) the costs and expenses, including
financial advisors' fees, incurred in connection with the
insolvency or bankruptcy of the Company or any Subsidiary or in
connection with any work-out or restructuring of the transactions
contemplated hereby and by the Notes. The Company will pay, and
will save you and each other Holder of a Note harmless from, all
claims in respect of any fees, costs or expenses if any, of brokers
and finders (other than those retained by you).
(b) LIBOR Funding Losses.
The Company will pay each Holder of a Series C Note, within
two Business Days after demand therefor, such amount (the "LIBOR
Funding Loss Amount") as in the good faith determination by such
Holder will compensate such Holder for any loss or reasonable
expense such Holder may sustain as a consequence of the receipt or
recovery for any reason (including without limitation a prepayment
pursuant to Section 8.1 or acceleration pursuant to Section 12.1)
of all or any part of payment on account of such Series C Note
prior to the last day of the applicable Interest Period therefor,
including without limitation any loss or expense sustained or
incurred in liquidating a Swap or any loss of margin on
reemployment of the funds so received or recovered.
(c) Survival.
The obligations of the Company under this Section 15 will
survive the payment or transfer of any Note, the enforcement,
amendment or waiver of any provision of this Agreement or the
Notes, and the termination of this Agreement.
(16) SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT.
All representations and warranties contained herein shall
survive the execution and delivery of this Agreement and the Notes,
the purchase or transfer by you of any Note or portion thereof or
interest therein and the payment of any Note, and may be relied
upon by any subsequent Holder of a Note, regardless of any
investigation made at any time by or on behalf of you or any other
Holder of a Note. All statements contained in any certificate or
other instrument delivered by or on behalf of the Company pursuant
to this Agreement shall be deemed representations and warranties of
the Company under this Agreement. Subject to the preceding
sentence, this Agreement and the Notes embody the entire agreement
and understanding between you and the Company and supersede all
prior agreements and understandings relating to the subject matter
hereof.
17. AMENDMENT AND WAIVER.
(a) Requirements.
This Agreement and the Notes may be amended, and the
observance of any term hereof or of the Notes may be waived (either
retroactively or prospectively), with (and only with) the written
consent of the Company and the Required Holders, except that (a) no
amendment or waiver of any of the provisions of Section 1, 2, 3, 4,
5, 6 or 21, or any defined term (as it is used therein), will be
effective as to you unless consented to by you in writing, and (b)
no such amendment or waiver may, without the written consent of the
Holder of each Note at the time outstanding affected thereby, (i)
subject to the provisions of Section 12 relating to acceleration or
rescission, change the amount or time of any prepayment or payment
of principal of, or change the rate or the time of payment or
method of computation of interest on, the Notes, (ii) change the
percentage of the principal amount of the Notes the Holders of
which are required to consent to any such amendment or waiver, or
(iii) amend any of Sections 8, 11(a), 11(b), 12, 17 or 20.
(b) Solicitation of Holders of Notes.
(a) Solicitation. The Company will provide each Holder
of the Notes (irrespective of the amount of Notes then owned
by it) with sufficient information, sufficiently far in
advance of the date a decision is required, to enable such
Holder to make an informed and considered decision with
respect to any proposed amendment, waiver or consent in
respect of any of the provisions hereof or of the Notes. The
Company will deliver executed or true and correct copies of
each amendment, waiver or consent effected pursuant to the
provisions of this Section 17 to each Holder of outstanding
Notes promptly following the date on which it is executed and
delivered by, or receives the consent or approval of, the
requisite Holders of Notes.
(b) Payment. The Company will not directly or indirectly
pay or cause to be paid any remuneration, whether by way of
supplemental or additional interest, fee or otherwise, or
grant any security, to any Holder of Notes as consideration
for or as an inducement to the entering into by any Holder
of Notes or any waiver or amendment of any of the terms and
provisions hereof unless such remuneration is concurrently
paid, or security is concurrently granted, on the same terms
(or no less favorable terms taking into account differences
in the terms of the Notes), ratably to each Holder of Notes
then outstanding even if such Holder did not consent to such
waiver or amendment.
(c) Binding Effect, etc.
Any amendment or waiver consented to as provided in this
Section 17 applies equally to all Holders of Notes and is binding
upon them and upon each future Holder of any Note and upon the
Company without regard to whether such Note has been marked to
indicate such amendment or waiver. No such amendment or waiver
will extend to or affect any obligation, covenant, agreement,
Default or Event of Default not expressly amended or waived or
impair any right consequent thereon. No course of dealing between
the Company and the Holder of any Note nor any delay in exercising
any rights hereunder or under any Note shall operate as a waiver of
any rights of any Holder of such Note. As used herein, the term
"this Agreement" and references thereto shall mean this Agreement
as it may from time to time be amended or supplemented.
(d) Notes held by Company, etc.
Solely for the purpose of determining whether the Holders of
the requisite percentage of the aggregate principal amount of Notes
then outstanding approved or consented to any amendment, waiver or
consent to be given under this Agreement or the Notes, or have
directed the taking of any action provided herein or in the Notes
to be taken upon the direction of the Holders of a specified
percentage of the aggregate principal amount of Notes then
outstanding, Notes directly or indirectly owned by the Company or
any of its Affiliates shall be deemed not to be outstanding.
(18) NOTICES.
All notices and communications provided for hereunder shall
be in writing and sent (a) by telecopy if the sender on the same
day sends a confirming copy of such notice by a recognized
overnight delivery service (charges prepaid), or (b) by registered
or certified mail with return receipt requested (postage prepaid),
or (c) by a recognized overnight delivery service (with charges
prepaid). Any such notice must be sent:
(i) if to you or your nominee, to you or it at the
address specified for such communications in Schedule A, or
at such other address as you or it shall have specified to
the Company in writing,
(ii) if to any other Holder of any Note, to such Holder
at such address as such other Holder shall have specified to
the Company in writing, or
(iii) if to the Company, to the Company at its address set
forth at the beginning hereof to the attention of the Chief
Financial officer, or at such other address as the Company
shall have specified to the Holder Of each Note in writing.
Notices under this Section 18 will be deemed given only when
actually received.
(19) REPRODUCTION OF DOCUMENTS.
This Agreement and all documents relating thereto, including,
without limitation, (a) consents, waivers and modifications that
may hereafter be executed, (b) documents received by you at the
Closing (except the Notes themselves), and (c) financial
statements, certificates and other information previously or
hereafter furnished to you, may be reproduced by you by any
photographic, photostatic, microfilm, microcard, miniature
photographic or other similar process and you may destroy any
original document so reproduced. The Company agrees and stipulates
that, to the extent permitted by applicable law, any such
reproduction shall be admissible in evidence as the original itself
in any judicial or administrative proceeding (whether or not the
original is in existence and whether or not such reproduction was
made by you in the regular course of business) and any enlargement,
facsimile or further reproduction of such reproduction shall
likewise be admissible in evidence. This Section 19 shall not
prohibit the Company or any other Holder of Notes from contesting
any such reproduction to the same extent that it could contest the
original, or from introducing evidence to demonstrate the
inaccuracy of any such reproduction.
(20) CONFIDENTIAL INFORMATION.
For the purposes of this Section 20, "Confidential
Information" means information delivered to you by or on behalf of
the Company or any Subsidiary in connection with the transactions
contemplated by or otherwise pursuant to this Agreement that is
proprietary in nature and that was clearly marked or labeled or
otherwise adequately identified when received by you as being
confidential information of the Company or such Subsidiary,
provided that such term does not include information that (a) was
publicly known or otherwise known to you prior to the time of such
disclosure, (b) subsequently becomes publicly known through no act
or omission by you or any person acting on your behalf, (c)
otherwise becomes known to you other than through disclosure by the
Company or any Subsidiary or (d) constitutes financial statements
delivered to you under Section 7.1 that are otherwise publicly
available. You will maintain the confidentiality of such
Confidential Information in accordance with procedures adopted by
you in good faith to protect confidential information of third
parties delivered to you, provided that you may deliver or disclose
Confidential Information to (i) your directors, officers, trustees,
employees, agents, attorneys and affiliates (to the extent such
disclosure reasonably relates to the administration of the
investment represented by your Notes), (ii) your financial advisors
and other professional advisors whose duties require them to hold
confidential the Confidential Information substantially in
accordance with the terms of this Section 20, (iii) any other
Holder of any Note, (iv) any Institutional Investor to which you
sell or offer to sell such Note or any part thereof or any
participation therein (if such Person has agreed in writing prior
to its receipt of such Confidential Information to be bound by the
provisions of this Section 20), (v) any Person from which you offer
to purchase any security of the Company (if such Person has agreed
in writing prior to its receipt of such Confidential Information to
be bound by the provisions of this Section 20), (vi) any federal or
state regulatory authority having jurisdiction over you, (vii) any
nationally recognized rating agency that requires access to
information about your investment portfolio or (viii) any other
Person to which such delivery or disclosure may be necessary or
appropriate (w) to effect compliance with any law, rule, regulation
or order applicable to you, (x) in response to any subpoena or
other legal process, (y) in connection with any litigation to which
you are a party or (z) if an Event of Default has occurred and is
continuing, to the extent you may reasonably determine such
delivery and disclosure to be necessary or appropriate in the
enforcement or for the protection of the rights and remedies under
your Notes and this Agreement. Each Holder of a Note, by its
acceptance of a Note, will be deemed to have agreed to be bound by
and to be entitled to the benefits of this Section 20 as though it
were a party to this Agreement. On reasonable request by the
Company in connection with the delivery to any Holder of a Note of
information required to be delivered to such Holder under this
Agreement or requested by such Holder (other than a Holder that is
a party to this Agreement or its nominee), such Holder will enter
into an agreement with the Company embodying the provisions of this
Section 20.
(21) SUBSTITUTION OF PURCHASER.
You shall have the right to substitute any one of your
non-United States Affiliates as the purchaser of the Notes that you
have agreed to purchase as record holder on behalf of the
Beneficial Owner hereunder, by written notice to the Company, which
notice shall be signed by both you and such Affiliate, shall
contain such Affiliate's agreement to be bound by this Agreement
and shall contain a confirmation by such Affiliate of the accuracy
with respect to it of the representations set forth in Section 6.
Upon receipt of such notice, wherever the word "you" is used in
this Agreement (other than in this Section 21), such word shall be
deemed to refer to such Affiliate in lieu of you. In the event
that such Affiliate is so substituted as a purchaser hereunder and
such Affiliate thereafter transfers to you all of the Notes then
held by such Affiliate, upon receipt by the Company of notice of
such transfer, wherever the word "you" is used in this Agreement
(other than in this Section 21), such word shall no longer be
deemed to refer to such Affiliate, but shall refer to you, and you
shall have all the rights of an original Holder of the Notes under
this Agreement.
(22) MISCELLANEOUS.
(a) Successors and Assigns.
All covenants and other agreements contained in this
Agreement by or on behalf of any of the parties hereto bind and
inure to the benefit of their respective successors and assigns
(including without limitation any subsequent Holder of a Note)
whether so expressed or not.
(b) Construction.
Each covenant contained herein shall be construed (absent
express provision to the contrary) as being independent of each
other covenant contained herein, so that compliance with any one
covenant shall not (absent such an express contrary provision) be
deemed to excuse compliance with any other covenant. Where any
provision herein refers to action to be taken by any Person, or
which such Person is prohibited from taking, such provision shall
be applicable whether such action is taken directly or indirectly
by such Person.
(c) Jurisdiction and Process.
(a) The Company irrevocably submits to the non-exclusive in
personal jurisdiction of any New York State or federal court
sitting in the Borough of Manhattan, The City of New York,
over any suit, action or proceeding arising out of or
relating to this Agreement or the Notes. To the fullest
extent permitted by applicable law, the Company irrevocably
waives and agrees not to assert, by way of motion, as a
defense or otherwise, any claim that it is not subject to the
in personam jurisdiction of any such court, any objection
that it may now or hereafter have to the laying of the venue
of any such suit, action or proceeding brought in any such
court and any claim that any such suit, action or proceeding
brought in any such court has been brought in an inconvenient
forum.
(b) The Company agrees, to the fullest extent permitted
by applicable law, that a final judgment in any suit, action
or proceeding of the nature referred to in Section 22.3(a)
brought in any such court shall be conclusive and binding
upon the Company subject to rights of appeal, as the case may
be, and may be enforced in the courts of the United States
of America or the State of New York (or any other courts to
the jurisdiction of which the Company is or may be subject)
by a suit upon such judgment.
(c) The Company consents to process being served in any
suit, action or proceeding of the nature referred to in
Section 22.3(a) by mailing a copy thereof by registered or
certified mail, postage prepaid, return receipt requested,
to the Company at its address specified in Section 18 or at
such other address of which you shall then have been notified
pursuant to said Section. The Company agrees that such
service upon receipt (i) shall be deemed in every respect
effective service of process upon it in any such suit, action
or proceeding and (ii) shall, to the fullest extent permitted
by applicable law, be taken and held to be valid personal
service upon and personal delivery to the Company. Notices
hereunder shall be conclusively presumed received as
evidenced by a delivery receipt furnished by the United
States Postal Service or any reputable commercial delivery
service.
(d) Nothing in this Section 22.3 shall affect the right
of any holder of a Note to serve process in any manner
permitted by law, or limit any right that the holders of any
of the Notes may have to bring proceedings against the
Company in the courts of any appropriate jurisdiction or to
enforce in any lawful manner a judgment obtained in one
jurisdiction in any other jurisdiction.
(d) Indemnification.
The Company agrees, to the extent permitted by applicable
law, to indemnify, exonerate, defend and hold you and each of your
officers, directors, trustees, employees and agents (collectively
the "Indemnitees" and individually an "Indemnitee") free and
harmless from and against any and all actions, causes of action,
suits, losses, liabilities and damages, and expenses in connection
therewith, including without limitation reasonable fees and
disbursements of a single firm to act as special counsel for all
Indemnitees or, if there shall exist a legitimate conflict in the
interests of the Indemnitees, the reasonable fees and disbursements
of more than one special counsel (collectively the "Indemnified
Liabilities") incurred by the Indemnitees or any of them as a
result of, or arising out of, or relating to, the execution,
delivery, performance or enforcement of this Agreement, the Notes
or any other instrument contemplated hereby by any of the
Indemnitees, or any transaction financed or to be financed in whole
or in part directly or indirectly with proceeds from the sale of
any of the Notes, or any action taken or omitted by an Indemnitee
in the capacity of Calculation Holder (or acting in place of the
Calculation Holder as contemplated by Section 1.1(b)), except as to
any Indemnitee for any such Indemnified Liabilities arising on
account of such Indemnitee's gross negligence or willful
misconduct; and if and to the extent the foregoing undertaking may
be unenforceable for any reason, the Company agrees to make the
maximum contribution to the payment and satisfaction of each of the
Indemnified Liabilities which is permissible under applicable law.
The obligations of the Company under this Section shall survive the
payment of the Notes.
(e) Accounting Terms.
All accounting terms used herein which are not expressly
defined in this Agreement have the meanings respectively given to
them in accordance with GAAP. Except as otherwise specifically
provided herein, all computations made pursuant to this Agreement
shall be made in accordance with GAAP and all balance sheets and
other financial statements with respect thereto shall be prepared
in accordance with GAAP. Except as otherwise expressly provided,
any consolidated financial statement or financial computation shall
be done in accordance with GAAP; and, if at the time that any such
statement or computation is required to be made the Company shall
not have any Subsidiary, such terms shall mean a financial
statement or a financial computation, as the case may be, with
respect to the Company only.
(f) Payments Due on Non-Business Days.
Anything in this Agreement or the Notes to the contrary
notwithstanding, any payment of principal of or interest on any
Note that is due on a date other than a Business Day shall be made
on the next succeeding Business Day without including the
additional days elapsed in the computation of the interest payable
on such next succeeding Business Day.
(g) Severability.
Any provision of this Agreement that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions
hereof, and any such prohibition or unenforceability in any
jurisdiction shall (to the full extent permitted by law) not
invalidate or render unenforceable such provision in any other
jurisdiction.
(h) Counterparts.
This Agreement may be executed in any number of counterparts,
each of which shall be an original but all of which together shall
constitute one instrument. Each counterpart may consist of a
number of copies hereof, each signed by less than all, but together
signed by all, of the parties hereto.
(i) Governing Law.
THIS AGREEMENT AND THE NOTES SHALL BE CONSTRUED AND ENFORCED
IN ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED
BY, THE LAWS OF THE STATE OF TEXAS EXCLUDING CHOICE-OF-LAW
PRINCIPLES OF THE LAW OF SUCH STATE THAT WOULD REQUIRE THE
APPLICATION OF THE LAWS OF A JURISDICTION OTHER THAN SUCH STATE.
If you are in agreement with the foregoing, please sign the
form of agreement in the space below provided on a counterpart of
this Agreement and return it to the Company, whereupon the
foregoing shall become a binding agreement between you and the
Company.
Very truly yours,
SHOWBIZ PIZZA TIME, INC.
By:
Title:
The foregoing is hereby agreed to
as of the date thereof.
BFC BANK (CAYMAN) LTD.
By:
SCHEDULE A
This Schedule A shows the names and addresses of the
Purchasers under the foregoing Note Purchase Agreement and the
other Agreements referred to therein and the respective principal
amounts of the Series C Notes to be purchased by each.
Name and Address of Purchaser Principal Amount of Series C
Notes to be Purchased
- --------------------------------------------------------------
BFC Bank (Cayman) Ltd. $2,500,000
(1) All payments by Fedwire
transfer of immediately
available funds, identifying
the name of the Issuer (and
the Credit, if any), and the
payment as principal,
interest or premium, in the
format as follows:
Bank: Credit Suisse
1 Liberty Plaza
New York, New York
10005
ABA Routing No.: 026009179
For Credit To: BFC Bank
(Cayman) Ltd.
Account No.: 32151601
For further
Credit to: Relle, Account
Number 14600-5<PAGE>
<PAGE>
(2) Address for all
correspondence and notices:
BFC Bank (Cayman) Ltd.
c/o Banque Financiere de la
Cite
Courier or Hand Delivery:
1, rue des Moulins, en L'Ile
1204 Geneva
Switzerland
Mail:
C.P. 5030
1211 Geneva 11
Switzerland
Telephone: (4122) 818-2525
Facsimile: (4122) 818-2600
Attention: Mr. Claude
Ruscheweyh or
Mr. Pierre
Baumgartner
[___________ ] Neue Bank $2,500,000
(1) All payments on account of
the Notes shall be made by
crediting in the form of bank
wire transfer of Federal or
other immediately available
funds (identifying each
payment as ShowBiz Pizza
Time, Inc. Floating Rate
Series C Senior Notes due
1997 interest and principal
to:
_____________________
_____________________
_____________________
_____________________
For credit as follows:
With telephone advice of
payment to:
(2) All notices and
communications to be
addressed to:
(3) Notices with respect to
payments and corporate
actions to be addressed as
provided in clause (2)
above:
___________________
___________________
(4) Tax Identification Number
SCHEDULE B
DEFINED TERMS
--------------
As used herein, the following terms have the respective
meanings set forth below or set forth in the Section hereof
following such term:
"Affiliate" means, at any time, and with respect to any
Person, (a) any other Person that at such time directly or
indirectly through one or more intermediaries Controls, or is
Controlled by, or is under common Control with, such first Person,
and (b) any Person beneficially owning or holding, directly or
indirectly, 10% or more of any class of voting or equity interests
of the Company or any Subsidiary or any corporation of which the
Company and its Subsidiaries beneficially own or hold, in the
aggregate, directly or indirectly, 10% or more of any class of
voting or equity interests. As used in this definition, "Control"
means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of a
Person, whether through the ownership of voting securities, by
contract or otherwise. Unless the context otherwise clearly
requires, any reference to an "Affiliate" is a reference to an
Affiliate of the Company.
"Beneficial Owner" means the beneficial owner of the Notes
purchased hereunder.
"Business Day" means any day other than a Saturday, a Sunday
or a day on which commercial banks in London, England, Dallas,
Texas, Cayman Islands, Geneva, Switzerland, or Liechtenstein are
required or authorized to be closed.
"Capital Lease" means, at any time, a lease with respect to
which the lessee is required concurrently to recognize the
acquisition of an asset and the incurrence of a liability in
accordance with GAAP.
"Capitalized Lease Obligations" means with respect to any
Person, all outstanding obligations of such Person in respect of
Capital Leases, taken at the capitalized amount thereof accounted
for as indebtedness in accordance with GAAP.
"Change of Control" means (a) the acquisition through purchase
or otherwise (including the agreement to act in concert without
more), by any Person or "group" (within the meaning of Section
13(d) or 14(d) of the Exchange Act) directly or indirectly, in one
or more transactions, of the beneficial ownership or control of
securities representing more than 25% of the combined voting power
of the Company's Voting Stock or (b) the acquisition by any Person,
entity or "group" (within the meaning of Section 13(d) or 14(d) of
the Exchange Act), of the power (whether or not exercised) to elect
a majority of the Board of Directors of the Company. For purposes
of this definition "beneficial ownership" shall have the meaning
set forth in Rule 13d-3 of the Securities and Exchange Commission
adopted pursuant to the Exchange Act.
"Closing" is defined in Section 3.
"Code" means the Internal Revenue Code of 1986, as amended
from time to time, and the rules and regulations promulgated
thereunder from time to time.
"Company" means ShowBiz Pizza Time, Inc., a Kansas
corporation.
"Confidential Information" is defined in Section 20.
"Consolidated Capitalization" means, at any date, the sum of
(a) Consolidated Indebtedness plus (b) Consolidated Net Worth plus
(c) deferred tax liabilities (if any), all as determined on a
consolidated basis for the Company and its Subsidiaries in
accordance with GAAP.
"Consolidated Indebtedness" means, at any date, all
Indebtedness of the Company and its Subsidiaries determined on a
consolidated basis in accordance with GAAP.
"Consolidated Interest Expense" for any period means the sum
for the Company and its Subsidiaries, determined on a consolidated
basis in accordance with GAAP, of all amounts which would be
deducted in computing Consolidated Net Income on account of
interest on Indebtedness (including imputed interest in respect of
Capitalized Lease Obligations and amortization of debt discount and
expense).
"Consolidated Net Income" for any period means the net income
of the Company and its Subsidiaries for such period, determined on
a consolidated basis in accordance with GAAP, excluding
(a) the proceeds of any life insurance policy,
(b) any gains arising from (i) the sale or other
disposition of any assets (other than current assets) to the
extent that the aggregate amount of the gains during such
period exceeds the aggregate amount of the losses during such
period from the sale, abandonment or other disposition of
assets (other than current assets), (ii) any write-up of
assets or (iii) the acquisition of outstanding securities of
the Company or any Subsidiary,
(c) any amount representing any interest in the
undistributed earnings of any other Person (other than a
Subsidiary),
(d) any earnings, prior to the date of acquisition, of
any Person acquired in any manner, and any earnings of any
Subsidiary acquired prior to its becoming a Subsidiary,
(e) any earnings of a successor to or transferee of the
assets of the Company prior to its becoming such successor or
transferee,
(f) any deferred credit (or amortization of a deferred
charge or credit) arising from the acquisition of any Person,
and
(g) any extraordinary gains not covered by clause (b)
above.
"Consolidated Net Worth" means, at any date, on a consolidated
basis for the Company and its Subsidiaries, (a) the sum of (i)
capital stock taken at par or stated value plus (ii) capital in
excess of par or stated value relating to capital stock plus (iii)
retained earnings (or minus any retained earning deficit) minus (b)
the sum of treasury stock, capital stock subscribed for and
unissued, deferred compensation and other contra-equity accounts,
all determined in accordance with GAAP.
"Consolidated Operating Lease Rentals" for any period means
the sum of the rental and other obligations required to be paid by
the Company and its Subsidiaries as lessee under all leases of real
or personal property (other than Capital Leases), excluding any
amounts required to be paid by the lessee (whether or not therein
designated as rental or additional rental) on account of
maintenance and repairs, insurance, taxes, assessments, water rates
and similar charges, all determined on a consolidated basis in
accordance with GAAP.
"Default" means an event or condition the occurrence or
existence of which would, with the lapse of time or the giving of
notice or both, become an Event of Default.
"EBITDA" for any period means Consolidated Net Income plus all
amounts deducted in the computation thereof on account of (a)
Consolidated Interest Expense, (b) depreciation and amortization
expenses (including amortization of deferred compensation) and
other non-cash charges, (c) income and profits taxes and (d)
extraordinary losses (if any) of the type described in clauses (b)
through (g) of the definition of "Consolidated Net Income" that are
deducted in determining Consolidated Net Income for such period.
"Environmental Laws" means any and all Federal, state, local,
and foreign statutes, laws, regulations, ordinances, rules,
judgments, orders, decrees, permits, concessions, grants,
franchises, licenses, agreements or governmental restrictions
relating to pollution and the protection of the environment or the
release of any materials into the environment, including but not
limited to those related to hazardous substances or wastes, air
emissions and discharges to waste or public systems.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and the rules and regulations
promulgated thereunder from time to time in effect.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) that is treated as a single employer together with
the Company under section 414 of the Code.
"Event of Default" is defined in Section 11.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time.
"GAAP" means generally accepted accounting principles as in
effect from time to time in the United States of America.
"Governmental Authority" means
(a) the government of
(i) the United States of America or any State or
other political subdivision thereof, or
(ii) any jurisdiction in which the Company or any
Subsidiary conducts all or any part of its business, or
which asserts jurisdiction over any properties of the
Company or any Subsidiary, or
(b) any entity exercising executive, legislative,
judicial, regulatory or administrative functions of, or
pertaining to, any such government.
"Guaranty" means, with respect to any Person, any obligation
(except the endorsement in the ordinary course of business of
negotiable instruments for deposit or collection) of such Person
guaranteeing or in effect guaranteeing any Indebtedness, dividend
or other obligation of any other Person in any manner, whether
directly or indirectly, including without limitation obligations
incurred through an agreement, contingent or otherwise, by such
Person:
(a) to purchase such Indebtedness or obligation or any
property constituting security therefor;
(b) to advance or supply funds (i) for the purchase or
payment of such indebtedness or obligation, or (ii) to
maintain any working capital or other balance sheet condition
or any income statement condition of any other Person or
otherwise to advance or make available funds for the purchase
or payment of such Indebtedness or obligation;
(c) to lease properties or to purchase properties or
services primarily for the purpose of assuring the owner of
such Indebtedness or obligation of the ability of any other
Person to make payment of the indebtedness or obligation; or
(d) otherwise to assure the owner of such Indebtedness
or obligation against loss in respect thereof.
In any computation of the Indebtedness or other liabilities of the
obligor under any Guaranty, the Indebtedness or other obligations
that are the subject of such Guaranty shall be assumed to be direct
obligations of such obligor.
"Hazardous Material" means any and all pollutants, toxic or
hazardous wastes or any other substances that might pose a hazard
to health or safety, the removal of which may be required or the
generation, manufacture, refining, production, processing,
treatment, storage, handling, transportation, transfer, use,
disposal, release, discharge, spillage, seepage, or filtration of
which is or shall be restricted, prohibited or penalized by any
applicable law (including without limitation asbestos, urea
formaldehyde foam insulation and polycholorinated biphenyls).
"Holder" means, with respect to any Note, the Person in whose
name such Note is registered in the register maintained by the
Company pursuant to Section 13.1.
"Indebtedness" with respect to any Person means, at any time,
without duplication,
(a) its liabilities for borrowed money,
(b) its liabilities for the deferred purchase price of
property acquired by such Person (excluding accounts payable
arising in the ordinary course of business and not overdue but
including all liabilities created or arising under any
conditional sale or other title retention agreement with
respect to any such property),
(c) its Capitalized Lease Obligations,
(d) all liabilities for borrowed money secured by any
Lien with respect to any property owned by such Person
(whether or not it has assumed or otherwise become liable for
such liabilities),
(e) all its liabilities in respect of letters of credit
or instruments serving a similar function issued or accepted
for its account by banks and other financial institutions
(whether or not representing obligations for borrowed money),
(f) Swaps of such Person, and
(g) any Guaranty of Such Person with respect to
liabilities of a type described in any of clauses (a) through
(f) above.
Indebtedness of any Person shall include all obligations of such
Person of the character described in clauses (a) through (g) above
to the extent such Person remains legally liable in respect thereof
notwithstanding that any such obligation is deemed to be
extinguished under GAAP. Indebtedness shall not include any
obligations under operating lease agreements.
"Institutional Investor" means (a) any original purchaser of
a Note, (b) any holder of a Note holding more than 1% of the
aggregate principal amount of the Notes then outstanding, and (c)
any bank, trust company, savings and loan association or other
financial institution, any pension plan, any investment company,
any insurance company, any broker or dealer, or any other similar
financial institution or entity, regardless of legal form.
"Interest Payment Date" means each March 31, June 30,
September 30 and December 31.
"Interest Period" is defined in Section 1.1(c).
"LIBOR Funding Loss Amount" is defined in Section 15.2.
"LIBOR Rate" is defined in Section 1.1(c).
"Lien" means, with respect to any Person, any mortgage, lien,
pledge, charge, security interest or other encumbrance, or any
interest or title of any vendor, lessor, lender or other secured
party to or of such Person under any conditional sale or other
title retention agreement or Capital Lease, upon or with respect to
any property or asset of such Person (including in the case of
stock, stockholder agreements, voting trust agreements and all
similar arrangements).
"Material" means material in relation to the business,
operations, affairs, financial condition, profits, assets,
properties or prospects of the Company and its Subsidiaries taken
as a whole.
"Material Adverse Effect" means a material adverse effect on
(a) the business, operations, affairs, financial condition,
profits, assets, properties or prospects of the Company and its
Subsidiaries taken as a whole, (b) the ability of the Company to
perform its obligations under this Agreement and the Notes or (c)
the validity or enforceability of this Agreement or the Notes.
"Multiemployer Plan" means any Plan that is a "multiemployer
plan" (as such term is defined in section 4001(a)(3) of ERISA).
"Notes" is defined in Section 1.1.
"Officer's Certificate" means a certificate of a Senior
Financial Officer or of any other officer of the Company whose
responsibilities extend to the subject matter of such certificate.
"Other Agreements" is defined in Section 2.
"Other Purchasers" is defined in Section 2.
"PBGC" means the Pension Benefit Guaranty Corporation referred
to and defined in ERISA or any successor thereto.
"Paying Agent" shall be a bank, trust company, or other
financial institution, at which this Note may be surrendered for
payment. At its option, the Company may act as its own Paying
Agent.
"Person" means an individual, partnership, corporation,
limited liability company, association, trust, unincorporated
organization, or a government or agency or political subdivision
thereof.
"Plan" means an "employee benefit plan" (as defined in section
3(3) of ERISA) that is or, within the preceding five years, has
been established or maintained, or to which contributions are or,
within the preceding five years, have been made or required to be
made, by the Company or any ERISA Affiliate or with respect to
which the Company or any ERISA Affiliate may have any liability.
"Property" or "properties" means, unless otherwise
specifically limited, real or personal property of any kind,
tangible or intangible, choate or inchoate.
"QPAM Exemption" means Prohibited Transaction Class Exemption
84-14 issued on March 13, 1984 by the United States Department of
Labor.
"Redemption Date" means the date fixed for redemption of any
principal amount of the Notes, pursuant to the terms of this
Agreement and the Notes.
"Redemption Price" means, with respect to any purchase,
redemption, or prepayment of all or any part of the Notes, the
price fixed for redemption in accordance with the terms of the
Notes.
"Required Holders" means, at any time, the holders of at least
a majority in unpaid principal amount of the Notes at the time
outstanding.
"Reset Date" is defined in Section 1.2(c).
"Responsible Officer" means any Senior Financial Officer and
any other officer of the Company with responsibility for the
administration of the relevant portion of this Agreement.
"Securities Act" means the Securities Act of 1933, as amended
from time to time.
"Senior Financial Officer" means the chief financial officer,
principal accounting officer, treasurer or comptroller of the
Company.
"Series C Notes" is defined in Section 1.1.
"Subsidiary" means, as to any Person, any corporation or other
business entity a majority of the combined voting power of all
Voting Stock of which is owned by such Person or one or more of its
Subsidiaries or such Person and one or more of its Subsidiaries.
Unless the context otherwise clearly requires, any reference to a
"Subsidiary" is a reference to a Subsidiary of the Company.
"Swaps" means, with respect to any Person, payment obligations
with respect to interest rate swaps, currency swaps and similar
obligations obligating such Person to make payments, whether
periodically or upon the happening of a contingency. For the
purposes of this Agreement, the amount of the obligation under any
Swap shall be the amount determined in respect thereof as of the
end of the then most recently ended fiscal quarter of such Person,
based on the assumption that such Swap had terminated at the end of
such fiscal quarter, and in making such determination, if any
agreement relating to such Swap provides for the netting of amounts
payable by and to such Person thereunder or if any such agreement
provides for the simultaneous payment of amounts by and to such
Person, then in each such case, the amount of such obligation shall
be the net amount so determined.
"U.S. Legal Tender" means United States dollars or such coin
or currency of the United States of America as at the time of
payment shall be legal tender for the payment of public and private
debts in the United States of America.
"Voting Stock" means, with respect to any Person, any shares
of stock or other equity interests of any class or classes of such
Person whose holders are entitled under ordinary circumstances
(irrespective of whether at the time stock or other equity
interests of any other class or classes shall have or might have
voting power by reason of the happening of any contingency) to vote
for the election of a majority of the directors, managers, trustees
or other governing body of such Person.
"Wholly-Owned Subsidiary" means, at any time, any Subsidiary
all of the equity interests (except directors' qualifying shares)
and voting interests of which are owned by any one or more of the
Company and the Company's other Wholly-Owned Subsidiaries at such
time.
[FORM OF SERIES C NOTE]
SHOWBIZ PIZZA TIME, INC.
FLOATING RATE SERIES C SENIOR NOTE DUE 1997
No. [ ] [ ]
$ [ ] [Date]
PPN [ ]
BENEFICIAL OWNERSHIP OF THIS NOTE MAY ONLY BE TRANSFERRED TO A
PERSON WHO IS NOT A RESIDENT OR CITIZEN OF THE UNITED STATES OF
AMERICA, OR TO A BANK, OR OTHER INSTITUTION OR ENTITY WHICH IS NOT
INCORPORATED OR ORGANIZED UNDER THE LAWS OF THE UNITED STATES OF
AMERICA OR ANY STATE THEREOF. THIS NOTE WAS OFFERED FOR SALE IN
CONNECTION WITH ITS ORIGINAL ISSUANCE ONLY OUTSIDE THE UNITED
STATES AND HAS BEEN DELIVERED TO THE HOLDER OUTSIDE THE UNITED
STATES.
FOR VALUE RECEIVED, the undersigned, SHOWBIZ PIZZA TIME, INC.
(the "Company"), a Kansas corporation, hereby promises to pay to
[____________________], or registered assigns, the principal amount
of [____________________________________________] DOLLARS on
July 31, 1997, with interest (computed on the basis of actual days
elapsed and a year of 360 days) (a) from the date hereof on the
unpaid balance thereof, payable quarterly on each Interest Payment
Date (as below defined), at a rate per annum for each Interest
Period (as defined in the Note Purchase Agreements referred to
below) equal to 3.5% plus the LIBOR Rate (as so defined) as
determined in respect of such Interest Period pursuant to said Note
Purchase Agreements, until the principal hereof shall have become
due and payable, and (b) on any overdue payment of principal or (to
the extent permitted by applicable law) interest, payable quarterly
as aforesaid (or, at the option of the registered holder hereof, on
demand) at a rate per annum from time to time equal to 2% above the
interest rate then applicable to this Note, from the date of such
default to and including the last day of the Interest Period during
which such default occurs and thereafter at a rate per annum equal
to 5.5% above said LIBOR Rate (as so determined from time to time
on the basis of three-month Interest Periods).
[The LIBOR Rate for the [six]-month Interest Period commencing
on the date of this Note is ____%.]
As used herein the term "Interest Payment Date" means each
March 31, June 30, September 30 and December 31, beginning
December 31, 1995.
Payments of principal of, interest on and any premium with
respect to this Note are to be made in lawful money of the United
States of America at the principal office of [__________] in
[__________] or at such other place outside the United States as
the Company shall have designated by written notice to the holder
of this Note as provided in the Note Purchase Agreements referred
to below.
This Note is one of a series of Senior Notes issued pursuant
to separate Note Purchase Agreements dated as of _______ __, 1995
(as from time to time amended, the "Note Purchase Agreements")
between the Company and the respective Purchasers named therein and
is entitled to the benefits thereof. Each holder of this Note will
be deemed, by its acceptance hereof, to have agreed to the
confidentiality provisions set forth in Section 20 of the Note
Purchase Agreements.
Pursuant to the Note Purchase Agreements the Company is
required to give written notice to the holder of this Note of the
duration of each Interest Period for this Note, and of the
applicable interest rate for such Interest Period as determined on
the Reset Date (as defined in the Note Purchase Agreement) for such
Interest Period. The applicable LIBOR Rate and interest rate and
duration of such Interest Period for this Note shall be endorsed by
the holder of this Note on the schedule attached hereto or any
continuation thereof prior to any transfer of this Note.
This Note is a registered Note and, as provided in the Note
Purchase Agreements, upon surrender of this Note for registration
of transfer duly endorsed, or accompanied by a written instrument
of transfer duly executed, by the registered holder hereof or such
holder's attorney duly authorized in writing, a new note for a like
principal amount will be issued to, and registered in the name of,
the transferee, provided that record ownership may only be
transferred to a bank or other entity which meets the requirements
of Section 6.5 of the Note Purchase Agreement. Prior to due
presentment for registration of transfer, the Company may treat the
person in whose name this Note is registered as the owner hereof
for the purpose of receiving payment and for all other purposes,
and the Company will not be affected by any notice to the contrary.
This Note may be redeemed at the option of the Company, at any
time in whole or from time to time in part, for an amount equal to
the then unpaid principal amount of this Note, plus accrued and
unpaid interest (if any) to the date of redemption (subject to the
rights of holders of record on the relevant record date to receive
interest due on the relevant interest payment date). Notice of
redemption will be mailed at least 30 days but not more than 60
days before the redemption date to the holder of this Note at such
holder's registered address. Except as set forth in the Note
Purchase Agreements, from and after any redemption date, if monies
for the redemption shall have been deposited with the Paying Agent
for redemption on such redemption date, then, unless the Company
defaults in the payment of such redemption price, principal amount
called for redemption will cease to bear interest and the only
right of the holders as to such principal amount will be to receive
payment of the redemption price.
The Company is also required under circumstances described in
the Note Purchase Agreements to offer to prepay all Notes on the
terms specified in the Note Purchase Agreements.
If an Event of Default, as defined in the Note Purchase
Agreements, occurs and is continuing, the principal of this Note
may be declared or otherwise become due and payable in the manner,
at the price and with the effect provided in the Note Purchase
Agreements.
This Note shall be construed and enforced in accordance with,
and the rights of the Company and the holder hereof shall be
governed by, the laws of the State of [Texas], excluding
choice-of-law principles of such law.
SHOWBIZ PIZZA TIME, INC.
By
Title:
Schedule of Interest Rate and Duration of Interest Period
--------------------------------------------------------
Reset Date Duration of
Interest Period
(LIBOR Rate 3.5%)
Notation
Made By
EXHIBIT 1.6
CERTIFICATE IN LIEU OF FORM W-8
[Please print or type]
Name:______________________________________________________________
Address:__________________________________________________________
___________________________________________________________________
Type of Entity (Please check appropriate box):
_ Non-U.S. Bank _ Foreign branch of a U.S. Bank
_ Other (please describe)_____________________________________
(i) The undersigned is a record holder of the Floating Rate Series
C Senior Notes due 1997 (the "Notes") issued by ShowBiz Pizza
Time, Inc., a Kansas corporation (the "Company").
(ii) The outstanding principal amount of the Notes of which the
undersigned is record holder is: U.S. $
(iii The beneficial owners of the Notes are foreign (non-U.S.)
persons and have not been U.S. persons on any Interest Payment
Date (as that term is defined in the Note Purchase Agreement
dated October _____, 1995).
(iv) During all periods that the undersigned is a record holder of
the Notes, the beneficial owners of the Notes will not be U.S.
persons on any Interest Payment Date.
(v) The undersigned will provide a U.S. beneficial ownership
notification to the Company in the event this certification is
or becomes untrue.
(vi) This certification is signed on this _____ day of
_____________, 1995.
Under penalties of perjury, the undersigned certifies that all of
the forgoing is true and correct in every respect.
Name of Record Holder:_________________________________
Signature:_____________________________________________
Printed Name of Person signing:_________________________
Title of Person Signing:
EXHIBIT 4.4(a)
October 10, 1995
Re: ShowBiz Pizza Time, Inc.; Floating Rate Series C
Senior Notes due 1997.
To the several Purchases listed in Schedule A to Note purchase
Agreement and the Benficial Owners
Ladies and Gentlemen:
I have acted as in-house counsel to ShowBiz Pizza Time, Inc.,
a Kansas Corporation (the "Company"), in connection with the the
issuance by the Company of its Floating Rate Series C Senior Notes
due 1997 in an aggregate principal amount of $5,000,000 (the
"Notes") and purchase by you pursuant to the several Note Purchase
Agreement made by you to the Company under the date of October 10,
1995 (the "Note Purchase Agreement") of Notes in the respective
aggregate principal amounts and series specified in Schedule A to
the Note Purchase Agreement. All capitalized terms used herein
without definition shall have the meanings ascribed thereto in the
Note Purchase Agreement.
In my capacity as in-house counsel to the Company and its
subsidiaries, I have participated in the preparation of the
Agreement and the exhibits and other documents referred to therein.
I have examined such corporate documents and records of the Company
and its subsidiaries, certificates of public officials and other
certificates, opinions and instruments and have made such other
investigations as I have deemed necessary or advisable as a basis
for the opinions hereinafter expressed.
In my examination I have assumed the authenticity of all
documents submitted to me as originals, the conformity to original
documents of all documents submitted to me as certified or
photostatic copies and the authenticity of the originals of such
latter documents. In addition, I have assumed the genuineness of
all signatures except signatures of representatives of the Company,
the due authorization, execution and delivery of all documents
referred to herein by parties thereto other than the Company and
the due authority of all persons executing such documents except
persons executing such documents on behalf of the Company.
Based upon the foregoing and having regard for the legal
consideration that I deem relevant, I render my opinion to you
pursuant to Section 4.4(a) of the Note Purchase Agreement as
follows:
1. The Company is a corporation duly organized and validly
existing under the laws of the State of Kansas and has all
requisite power and authority to own or hold under lease the
property its purports to own or hold under lease, to carry on its
business as now being conducted.
Letter to Beneficial Owners
October 10, 1995
Page 2 of 3
2. The Company has duly qualified and is authorized to do
business in each jurisdiction where such qualification and
authorization in necessary, except where the failure to be so
qualified and authorized, individually or in the aggregate, could
not have a Material Adverse Effect.
3. The Company has the corporate power and authority to
execute and deliver the Note Purchase Agreement and the Notes and
to perform the provisions thereof. The Note Purchase Agreement
have been duly authorized, executed and delivered by the Company
and constitutes a legal, valid and binding obligation of the
Company and is enforceable against the Company in accordance with
their respective terms.
4. The Notes have been duly authorized, executed and
delivered by the Company and constitutes a legal, valid and binding
obligation of the Company and is enforceable against the Company in
accordance with their respective terms.
5. The execution and delivery by the Company of the Note
Purchase Agreement and the performance by the Company of the
transactions to be consummated by the Company described therein
including the issuance of the Note do not conflict with or
constitute on the part of the Company a breach or a violation of
any of the terms and provisions of, or constitute (with due notice
or lapse of time or both) a default under the Articles of the
Company or Bylaws of the Company or of any indenture, agreement,
order, writ, judgment or decree known to me to which the Company is
a party or by which it or any of its properties are bound.
6. To the best of my knowledge there is no action, suit,
proceeding, inquiry or investigation at law or in equity by or
before any court or any Government Authority or public board or
body pending or threatened against or affecting the Company or any
subsidiary or any of its properties wherein an unfavorable
decision, ruling or finding (a) would adversely affect the validity
or enforceability of the Note Purchase Agreement or the Notes, (b)
might result in any materially adverse change in the operations,
properties, assets, liabilities or financial condition of the
Company, or (c) would otherwise adversely affect the capability of
the Company to comply with its obligations under the Note Purchase
Agreement.
7. Each Subsidiary is a corporation or other legal entity
duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation or organization.
Each Subsidiary has all requisite power and authority to own or
hold under lease the property it purports to own or hold under
lease and to transact the business it transacts.
Letter to Beneficial Owners
October 10, 1995
Page 3 of 3
8. Each Subsidiary has duly qualified and is authorized to
do business in each jurisdiction where such qualification and
authorization in necessary, except where the failure to be so
qualified and authorized, individually or in the aggregate, could
not have a Material Adverse Effect.
My opinion expressed in paragraph 4 above is qualified to the
extent that (a) the enforceability of the Note Purchase Agreement
and the Notes may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws of general application
from time to time affecting the rights of creditors, landlords,
and secured parties generally and providing for relief of debtors,
(b) a particular court may refuse to grant certain equitable
remedies, including, without limiting the generality of the
foregoing, specific performance, with respect to the enforcement of
any provisions of the Note Purchase Agreement or the Notes, (c)
certain provisions of the Note Purchase Agreement are or may be
unenforceable in whole or in part under the laws of the State of
Texas, but the inclusion of such provisions does not affect the
validity of the Note Purchase Agreement, and the Note Purchase
Agreement contains adequate provisions for enforcing payment of the
obligations thereunder (including payment of the Notes) and for the
practical realization of the rights and benefits afforded thereby,
and (d) the enforceability of the indemnity provisions contained in
the Note Purchase Agreement may be limited by federal securities
laws and is subject to the qualification that a state court, in
determining whether any party to an agreement is entitled to
indemnification under the terms of the agreement, will limit any
such indemnification arising from such party's sole or contributory
negligence to the express terms and conditions as set forth in the
agreement.
My opinion is limited solely to the laws of the State of Texas
and the Kansas General Corporation Code, and the laws of the United
States of America in effect on the date hereof, and no opinion is
expressed herein as to any matters governed by the laws of any
other jurisdictions.
This opinion is furnished to you solely in connection with the
transactions being consummated today pursuant to the Note Purchase
Agreement and may not be relied upon or described or quoted from by
any other person, firm or entity without, in each instance, my
prior written consent.
Very truly yours,
Marshall R. Fisco, Jr.
Counsel
EXHIBIT 4.4(a)
October 10, 1995
Re: ShowBiz Pizza Time, Inc.
Floating Rate Series C Senior Notes due 1997
To the several Purchasers listed in
Schedule A to the within-mentioned
Note Purchase Agreement and
the Beneficial Owner
Ladies and Gentlemen:
We have acted as special counsel to ShowBiz Pizza Time, Inc. (the
"Company") in connection with the issuance by the Company of its
Floating Rate Series C Senior Notes due 1997 in an aggregate
principal amount of $5,000,000 (the "Series C Notes" or the
"Notes") and the purchases by you pursuant to the Note Purchase
Agreement made by Purchaser with the Company under date of
October 10, 1995 (the "Note Purchase Agreement") of Notes in the
respective aggregate principal amounts specified in Schedule A to
the Note Purchase Agreement. All capitalized terms used herein
without definition shall have the meanings ascribed thereto in the
Note Purchase Agreement.
We have examined such corporate records of the Company and its
Subsidiaries, agreements and other instruments, certificates of
officers and representatives of the Company and its Subsidiaries,
certificates of public officials, and such other documents, as we
have deemed necessary in connection with the opinions hereinafter
expressed. In such examination we have assumed the genuineness of
all signatures, the authenticity of documents submitted to us as
originals and the conformity with the authentic originals of all
documents submitted to us as copies. As to questions of fact
material to such opinions we have, when relevant facts were not
independently established, relied upon the representations set
forth in the Note Purchase Agreement and upon certifications by
officers or other representatives of the Company and its
Subsidiaries.
Based upon the foregoing and having regard for legal
considerations that we deem relevant, we render our opinion to you
pursuant to Section 4.4 of the Note Purchase Agreement as follows:
1. The Company is a corporation duly organized and validly
existing under the laws of the State of Kansas and has all
requisite power to execute and deliver the Note Purchase Agreement
and the Notes and to perform its obligations thereunder.
2. The Note Purchase Agreement has been duly authorized, executed
and delivered by the Company and constitute legal, valid and
binding agreements of the Company, enforceable against the Company
in accordance with their terms. The Company is duly qualified and
is authorized to do business in each jurisdiction where such
qualification and authorization is necessary, except where the
failure to be so qualified could not have a Material Adverse
Effect.
3. The Notes being purchased by you today have been duly
authorized, executed and delivered by the Company and constitute
legal, valid and binding obligations of the Company, enforceable
against the Company in accordance with their terms.
4. No consent, approval or authorization of, or declaration,
registration or filing with, any Kansas, Texas or Federal
Governmental Authority is required to be obtained or made as a
condition to the validity of the execution and delivery by the
Company of the Note Purchase Agreement or the Notes.
5. It was not necessary in connection with the offering, sale and
delivery of the Notes, under the circumstances contemplated by the
Note Purchase Agreement, to register the Notes under the Securities
Act of 1933, or the Texas Securities Act or to qualify an
indenture in respect of the Notes under the Trust Indenture Act of
1939, as amended or to register the Notes under the Securities
Exchange Act of 1934.
6. Each Subsidiary listed in Schedule 5.4 to the Note Purchase
Agreement is a corporation or other entity duly organized, validly
existing and in good standing under the laws of the jurisdiction of
its incorporation or organization and is duly qualified as a
foreign corporation or other legal entity and is in good standing
in each jurisdiction in which such qualification is required by
law, except where the failure to be so qualified, individually or
in the aggregate, could not have a Material Adverse Effect.
7. Neither the Company nor any Subsidiary is subject to
regulation under the Investment Company Act of 1940, as amended,
the Public Utility Holding Company Act of 1935, as amended, or the
Federal Power Act, as amended.
8. None of the transactions contemplated by the Note Purchase
Agreement (including without limitation the use of the proceeds
from the sale of the Notes) will violate or result in a violation
of Section 7 of the Exchange Act, or any regulations issued
pursuant thereto, including without limitation Regulations G, T, U
and X of the Board of Governors of the Federal Reserve System (12
CFR, Part 207, Part 220 and Part 224, respectively).
9. There are no actions, suits or proceedings pending, or to our
knowledge threatened, against or affecting the Company or any
Subsidiary or any property of the Company or any Subsidiary in any
court or before any arbitrator of any kind or before or by any
Governmental Authority, except actions, suits or proceedings which
(a) individually do not in any manner draw into question the
validity of the Note Purchase Agreement or the Notes and (b) in the
aggregate could not reasonably be expected to have a Material
Adverse Effect.
10. Assuming the accuracy of the representations and warranties,
and compliance with the covenants made by or on behalf of the
Purchaser and the Beneficial Owner under the Note Purchase
Agreement and the Notes, (i) each of the Notes meets the
requirements of Section 871(h)(2)(B) or 881(c)(2)(B) of the
Internal Revenue Code of 1986, as amended (the "Code"), (ii) in the
case of Notes beneficially owned by a nonresident alien individual,
interest paid on the Notes will constitute "portfolio interest" as
such term is defined in Section 871(h)(2) of the Code, and (iii) in
the case of Notes beneficially owned by a foreign corporation,
interest paid on the Notes will constitute "portfolio interest" as
such term is defined in Section 881(c)(2) of the Code.
The opinions expressed above as to the enforceability of any
agreement or instrument in accordance with its terms are subject to
the exceptions that (a) such enforceability may be limited by (i)
applicable bankruptcy, insolvency, reorganization, moratorium and
similar laws affecting the enforcement of creditors' rights
generally and (ii) general equitable principles (regardless of
whether such enforceability is considered in a proceeding in equity
or at law), (b) the enforceability of indemnity provisions
contained in the Note Purchase Agreement may be subject to
limitations based upon public policy considerations.
We express no opinion as to Section 22.3 of the Note Purchase
Agreement insofar as said Section relates to (a) the subject matter
jurisdiction of any New York State or federal court sitting in the
Bourough of Manhattan, the City of New York, to adjudicate any
controversy relating to the Note Purchase Agreement, the Notes or
any other document related thereto, or (b) the waiver of
inconvenient forum with respect to proceedings in such court.
Our opinions are limited in all respects to the substantive law
of the State of Texas and the Kansas General Corporation Code, and
the federal law of the United States, and we assume no
responsibility as to the applicability thereto, or the effect
thereon, of the laws of any other jurisdiction.
This opinion is given solely for your benefit, in connection with
the closing held today of the transactions contemplated by the Note
Purchase Agreement, and may not be relied upon by any other person
for any purpose without our prior written consent.
Very truly yours,
WINSTEAD SECHREST & MINICK P.C.
By:_______________________________
Darrel A. Rice
SCHEDULE 5.3
Disclosure Documents
Form 10K -Annual Report for Fiscal year ended December 30, 1994.
Form 10Q -Quarterly Report for quarterly period ended March 31,
1995.
Form 8K - Current Report for May 5, 1995.
Proxy Statement - Notice of Annual Meeting of Shareholders to be
held June 8, 1995.
Proxy Supplement - Supplemental Information of Annual Meeting of
Shareholders to be held on June 8, 1995.
Form 10Q - Quarterly Report for quarterly period ended June 30,
1995.
SCHEDULE 5.4
Subsidiaries
--------------
BHC Acquisition Corporation
State of Incorporation: Texas
Shares/Equity Owned by Company: 100%
Directors:
Richard M. Frank
Michael H. Magusiak
Richard T. Huston
Officers:
Richard M. Frank CEO, President, COO
Alice Winters Vice President, Secretary
Michael H. Magusiak Vice President, Controller, Treasurer
Odom Sherman Assistant Treasurer
Richard T. Huston Vice President
Gene Cramm Vice President
ShowBiz of Laurel, Inc.
State of Incorporation: Maryland
Shares/Equity Owned by Company: 73%
Directors:
Vivian K. Oram
Gene Cramm
Carol E. Neal
Officers:
Vivian K. Oram President, Treasurer
Gene Cramm Secretary, Vice President
Carol Elkins Neal Assistant Secretary
Chuck E. Cheese of Waldorf, Inc.
State of Incorporation: Maryland
Shares/Equity Owned by Company: 100%
Directors:
Richard M. Frank
Michael H. Magusiak
Lorie Martinsen
Officers:
Lorie Martinsen President
Alice Winters Secretary, Treasurer
Sandra Schiranko Vice President
Chuck E. Cheese of Gaithersburg, Inc.
State of Incorporation: Maryland
Shares/Equity Owned by Company: 80%
Directors:
Lois Perry
Lorie Martinsen
Leslie Cherkis
Officers:
Lois Perry President
Lorie Martinsen Secretary/Treasurer
Leslie Cherkis Vice President
Chuck E. Cheese of Glen Burnie, Inc.
State of Incorporation: Maryland
Shares/Equity Owned by Company: 97%
Directors:
Richard M. Frank
Michael H. Magusiak
Alice M. Winters
Officers:
Alice M. Winters President
Lorie Martinsen Vice President, Secretary,
Treasurer
Ruth Ann Raup Assistant Secretary
ShowBiz of Madison, Inc.
State of Incorporation: Wisconsin
Shares/Equity Owned by Company: 100%
Directors:
Richard M. Frank
Officers:
Richard M. Frank President
Alice Winters Vice President, Secretary
Michael H. Magusiak Treasurer
Chuck E. Cheese of Diamond Point, Inc.
State of Incorporation: Maryland
Shares/Equity Owned by Company: 97%
Directors:
Richard M. Frank
Michael H. Magusiak
Alice Winters
Officers:
Alice Winters President
Karessa Rollwage Secretary, Treasure
Chuck E. Cheese of Westview, Inc.
State of Incorporation: Maryland
Shares/Equity Owned by Company: 98%
Directors:
Lorie Martinsen
Richard M. Frank
Michael H. Magusiak
Officers:
Lorie Martinsen President
Alice Winters Secretary, Treasurer
Hospitality Distribution Incorporated
State of Incorporation: Texas
Shares/Equity Owned by Company: 0%
Directors:
Michael H. Magusiak
Richard M. Frank
Lorie Martinsen
Officers:
Richard M. Frank President
Lorie Martinsen Secretary
Michael H. Magusiak Vice President, Treasurer
Odom Sherman, Jr. Assistant Treasurer
Chuck E. Cheese of Silver Springs, Inc.
State of Incorporation: Maryland
Shares/Equity Owned by Company: 0%
Directors:
Richard T. Huston
Alice Winters
Susan Velasquez
Officers:
Richard T. Huston President
Alice Winters Secretary, Treasurer
Susan Velasquez Vice President
ShowBiz of La Crosse, Inc.
State of Incorporation: Wisconsin
Shares/Equity Owned by Company: 100%
Directors:
Richard M. Frank
Officers:
Richard M. Frank President
Alice Winters Vice President, Secretary
Michael H. Magusiak Treasurer
ShowBiz of Ashwaubenon, Inc.
State of Incorporation: Wisconsin
Shares/Equity Owned by Company: 100%
Directors:
Richard M. Frank
Officers:
Richard M. Frank President
Alice Winters Vice President, Secretary
Michael H. Magusiak Treasurer
SB Hospitality Corporation
State of Incorporation: Texas
Shares/Equity Owned by Company: 49 %
Directors:
Richard T. Huston
Alice Winters
Odom Sherman, Jr.
Officers:
Richard T. Huston President
Alice Winters Secretary, Vice President
Odom Sherman, Jr. Treasurer
ShowBiz of Arkansas, Inc.
State of Incorporation: Arkansas
Shares/Equity Owned by Company: 50%
Directors:
Richard M. Frank
Officers:
Richard M. Frank President
Alice Winters Vice President, Secretary
Michael H. Magusiak Treasurer
Odom Sherman Assistant Treasurer
Affiliates
-----------
International Association of ShowBiz Pizza Time Restaurants, Inc.
State of Incorporation: Texas
Shares/Equity Owned by Company: Non-Profit
Directors:
Jim Rudolph
R.C. Schmidt
Bryon Schlosser
Michael H. Magusiak
Michael A. Hilton
Ronald Hake
Officers:
Michael A. Hilton President
Michael Magusiak Secretary, Treasurer
R.C. Schmidt Vice President
B - SB Joint Venture Agreement
An Oklahoma joint venture including Harold W. Burlingame, Barbara Jean
Burlingame and ShowBiz Pizza Time, Inc.
Shares/Equity Owned by Company: 50%
MCBIZ/SHOWBIZ Joint Venture Agreement
A Kansas joint venture including MCBIZ Limited Partnership, a Kansas
limited partnership and ShowBiz Pizza Time, Inc.
Shares/Equity Owned by Company: 51%
Mid-South Joint Venture Agreement
A South Carolina joint venture including Mid-South Food Management,
Inc., a South Carolina corporation and ShowBiz Pizza Time, Inc.
Shares/Equity Owned by Company: 30%.
ShowBiz White Settlement Club, Inc.
State of Incorporation: Texas
Shares/Equity Owned by Company: Non-Profit
Directors:
Richard T. Huston
Alice M. Winters
John E. Artope
Officers:
Richard T. Huston President
Alice Winters Secretary, Treasurer
John E. Artope Vice President
ShowBiz Richardson Club, Inc.
State of Incorporation: Texas
Shares/Equity Owned by Company: Non-Profit
Directors:
Richard T. Huston
Alice M. Winters
John E. Artope
Officers:
Richard T. Huston President
Alice Winters Secretary, Treasurer
John E. Artope Vice President
ShowBiz Redbird Club, Inc.
State of Incorporation: Texas
Shares/Equity Owned by Company: Non-Profit
Directors:
Richard T. Huston
Alice M. Winters
John E. Artope
Officers:
Richard T. Huston President
Alice Winters Secretary, Treasurer
John E. Artope Vice President
ShowBiz Montfort Club, Inc.
State of Incorporation: Texas
Shares/Equity Owned by Company: Non-Profit
Directors:
Richard T. Huston
Alice M. Winters
John E. Artope
Officers:
Richard T. Huston President
Alice Winters Secretary, Treasurer
John E. Artope Vice President
2500 South Coulter Street Club
State of Incorporation: Texas
Shares/Equity Owned by Company: Non-Profit
Directors:
Richard T. Huston
Alice M. Winters
John E. Artope
Officers:
Richard T. Huston President
Alice Winters Secretary, Treasurer
John E. Artope Vice President
2402 South Stemmons Freeway Club
State of Incorporation: Texas
Shares/Equity Owned by Company: Non-Profit
Directors:
Richard T. Huston
Alice M. Winters
John E. Artope
Officers:
Richard T. Huston President
Alice Winters Secretary, Treasurer
Directors and Senior Officers of ShowBiz Pizza Time, Inc.
----------------------------------------------------------
OFFICERS
Richard M. Frank
Chairman of the Board and Chief Executive Officer
Michael H. Magusiak
President
Richard T. Huston
Executive Vice President -- Marketing and Entertainment
Larry Page
Executive Vice President -- Chief Financial Officer and Treasurer
Gene Cramm
Senior Vice President -- Construction and Entertainment
Attractions Catherine Kreston Senior Vice President -- Human Resources
Bernard J. Yanelli
Senior Vice President -- Strategic Planning and Franchise Operations
BOARD OF DIRECTORS
Charles A. Crocco, Jr.
Partner -- Crocco & DeMaio, P.C.
Richard M. Frank
Chairman of the Board, and Chief Executive Officer
Anthony J. Gumbiner
Chairman and Chief Executive Officer
The Hallwood Group Incorporated
Robert L. Lynch
Vice Chairman
The Hallwood Group Incorporated
Louis P. Neeb
President, Neeb Enterprises, Inc.
Cynthia I. Pharr
President, C. Pharr & Company, Inc.
J. Thomas Talbot
The Talbot Company
Brian M. Troup
President and Chief Operating Officer
The Hallwood Group Incorporated
Joshua Friedman
Caynon Partners Incorporated
SCHEDULE 5.5
Financial Statements
10K Annual Report for Fiscal year ended December 28, 1990.
10K Annual Report for Fiscal year ended December 27, 1991.
10K Annual Report for Fiscal year ended January 1, 1993.
10K Annual Report for Fiscal year ended December 31, 1993.
10K Annual Report for Fiscal year ended December 30, 1994.
10Q Quarterly Report for quarterly period ended March 31, 1995.
10Q Quarterly Report for quarterly period ended June 30, 1995.
SCHEDULE 5.8
Litigation
None.
SCHEDULE 5.1
Licenses, Etc.
CHICO CHEESES PIZZA, Brazilian Trademark, Registration No. 817043209 in
Class 28.10 ("games, toys and pastimes")
CHICO CHEESES PIZZA, Brazilian Trademark, Registration No. 817043217 in
Class 32.10 ("doughs, pastries in general")
SCHEDULE 5.15
Existing Indebtedness
Liens on personal property securing Standby Letters of Credit Nos.
50060624 and 50072426, as of March 31, 1995, issued by the Bank of
Boston in the respective face amounts of $58,600 and $1,500,000, paid
off from the proceeds under the Loan Agreement, dated June 27, 1995.
$29,200,000 owed to the Bank of Boston as of March 31, 1995, excluding
the Letters of Credit, paid off from the proceeds under the Note
Purchase Agreement, dated June 15, 1995.
On June 15, 1995, the Company issued Series A Senior Notes and Series B
Senior Notes, totaling $28,000,000.
On June 27, 1995, the Company entered into a Loan Agreement with Bank
One, Texas, N.A., with a revolving credit commitment in an amount equal
to $5,000,000.
Other existing indebtedness on the date of closing which would be
permitted under Section 8.1 (a) of the Loan Agreement, consisting of
capital lease obligations totaling $1,193,915 and other indebtedness
that does not exceed in the aggregate $500,000.
The Company has guaranteed certain obligations related to restaurant
building and equipment leases. The underlying assets are collateral for
the leases and the makers or assignees of all of the obligations are
required to perform thereunder before the Company is required to fulfill
its guarantee. In the event of default by the maker or assignee, the
Company, in almost all cases, may make payment under the guarantees in
accordance with the original payment schedule and has the right to
locate potential buyers or subtenants for the assets. As of March 31,
1995, such guarantees aggregated approximately $989,000.
The Company has a limited recourse guaranty of Monterey Acquisition
Corp.'s obligation to repay a $4,700,000 term loan to Greyhound
Financial Corporation. This guaranty is limited in recourse to the
Company's pledge of its interest in 143,250 shares of common stock of
Monterey Acquisition Corp. valued at $437,500 in the aggregate.
EXHIBIT 10 (r)(2)
MODIFICATION AND WAIVER
TO
NOTE PURCHASE AGREEMENT
This Modification and Waiver is entered into as of the 12th day of
October, 1995, by and between ShowBiz Pizza Time, Inc., a Kansas
corporation (the "Company"), and BFC Bank (Cayman) Ltd. ("BFC").
RECITALS:
(23) The Company and BFC have entered into a Note Purchase Agreement,
dated as of October 10, 1995 (the "Note Purchase Agreement"), for the
purchase of $2,500,000 of the Company's Floating Rate Series C Notes by
BFC.
(24) The Note Purchase Agreement contemplates the execution of Other
Agreements, the purchase of other Notes, and the simultaneous closing of
the Other Agreements and purchase of such other Notes.
(25) The Company and BFC desire to close the transactions contemplated
by the Note Purchase Agreement regardless of whether any Other Purchaser
executes the Other Agreements or purchases any Notes.
AGREEMENTS:
1. WAIVER. The Company and BFC each hereby waive any and all
requirements, explicit or implicit, that (i) the Other Agreements be
executed, and (ii) the Other Purchasers purchase the Notes listed on
Schedule A.
2. FULL PERFORMANCE. Except with respect to the Other Agreements and
the Other Purchasers, the Company and BFC each hereby agree to perform
each covenant and requirement to be performed by such party to the other
party under the Note Purchase Agreement under the same terms and
conditions as if the Other Purchasers had executed the Other Agreements
and purchased such other Notes, whether or not such Other Purchasers
execute the Other Agreements or purchase such other Notes.
3. SALE OF OTHER NOTES. Nothing in this Modification and Waiver or the
Note Purchase Agreement shall prevent or require the Company to sell any
Notes to any person or entity other than BFC; provided, however, that if
the Company sells any other Notes, it will only sell such other Notes
upon terms and conditions substantially similar as those contained in
the Note Purchase Agreement, except the initial LIBOR Rate may be
different and continue to be different until the next Reset Date after
the issuance and sale of such Notes; provided further that the aggregate
principal amount of the Notes issued and sold by the Company under the
Note Purchase Agreement and the Other Agreements shall not exceed U.S.
$5,000,000.
4. DEFINED TERMS. Unless the context indicates otherwise, all
capitalized terms used herein without definition shall have the meaning
ascribed thereto in the Note Purchase Agreement.
5. COUNTERPARTS. This Modification and Waiver may be executed in any
number of counterparts, each of which shall be an original but all of
which together shall constitute one instrument. Each counterpart may
consist of a number of copies hereof, each signed by less than all, but
together signed by all, of the parties hereto.
6. NO OTHER MODIFICATIONS. This Modification and Waiver has been
entered into solely for purposes of modifying the terms and conditions
of the Note Purchase Agreement with respect to executing and performing
the Other Agreements and the sale of the Notes thereunder, and not
amending or modifying any other provision of the Note Purchase Agreement
in any respect. Except as expressly provided herein, the Note Purchase
Agreement is not amended or modified and no provision have been waived
in any respect, and it remains in full force and effect in accordance
with its terms. All of the terms and provisions of the Note Purchase
Agreement and all the terms and provisions incorporated therein are
hereby incorporated herein by this reference.
EXECUTED as of the date first written above.
BFC BANK (CAYMAN) LTD.
By:____________________________
Its:____________________________
"BFC"
SHOWBIZ PIZZA TIME, INC.
By:______________________________
Its: ______________________________
"Company"
EXHIBIT 10 (r)(3)
SHOWBIZ PIZZA TIME, INC.
FLOATING RATE SERIES C SENIOR NOTE DUE 1997
No. R-C1
$2,500,000 October 12, 1995
BENEFICIAL OWNERSHIP OF THIS NOTE MAY ONLY BE TRANSFERRED TO A PERSON
WHO IS NOT A RESIDENT OR CITIZEN OF THE UNITED STATES OF AMERICA, OR TO
A BANK, OR OTHER INSTITUTION OR ENTITY WHICH IS NOT INCORPORATED OR
ORGANIZED UNDER THE LAWS OF THE UNITED STATES OF AMERICA OR ANY STATE
THEREOF. THIS NOTE WAS OFFERED FOR SALE IN CONNECTION WITH ITS ORIGINAL
ISSUANCE ONLY OUTSIDE THE UNITED STATES AND HAS BEEN DELIVERED TO THE
HOLDER OUTSIDE THE UNITED STATES.
FOR VALUE RECEIVED, the undersigned, SHOWBIZ PIZZA TIME, INC. (the
"Company"), a Kansas corporation, hereby promises to pay to BFC BANK
(CAYMAN) LTD. or registered assigns, the principal amount of TWO MILLION
FIVE HUNDRED THOUSAND DOLLARS on October 12, 1997, with interest
(computed on the basis of actual days elapsed and a year of 360 days)
(a) from the date hereof on the unpaid balance thereof, payable
quarterly on each Interest Payment Date (as below defined), at a rate
per annum for each Interest Period (as defined in the Note Purchase
Agreements referred to below) equal to 3.5% plus the LIBOR Rate (as so
defined) as determined in respect of such Interest Period pursuant to
said Note Purchase Agreements, until the principal hereof shall have
become due and payable, and (b) on any overdue payment of principal or
(to the extent permitted by applicable law) interest, payable quarterly
as aforesaid (or, at the option of the registered holder hereof, on
demand) at a rate per annum from time to time equal to 2% above the
interest rate then applicable to this Note, from the date of such
default to and including the last day of the Interest Period during
which such default occurs and thereafter at a rate per annum equal to
5.5% above said LIBOR Rate (as so determined from time to time on the
basis of three-month Interest Periods).
The LIBOR Rate for the six-month Interest Period commencing on the
date of this Note is 5.9375%.
As used herein the term "Interest Payment Date" means each March 31,
June 30, September 30 and December 31, beginning December 31, 1995.
Payments of principal of, interest on and any premium with respect to
this Note are to be made in lawful money of the United States of America
at the principal office of Banque Financiere de la Cite in Geneva,
Switzerland or at such other place outside the United States as the
Company shall have designated by written notice to the holder of this
Note as provided in the Note Purchase Agreements referred to below.
This Note is one of a series of Senior Notes issued pursuant to
separate Note Purchase Agreements dated as of October 10, 1995 (as from
time to time amended, the "Note Purchase Agreements") between the
Company and the respective Purchasers named therein and is entitled to
the benefits thereof. Each holder of this Note will be deemed, by its
acceptance hereof, to have agreed to the confidentiality provisions set
forth in Section 20 of the Note Purchase Agreements.
Pursuant to the Note Purchase Agreements the Company is required to
give written notice to the holder of this Note of the duration of each
Interest Period for this Note, and of the applicable interest rate for
such Interest Period as determined on the Reset Date (as defined in the
Note Purchase Agreement) for such Interest Period. The applicable LIBOR
Rate and interest rate and duration of such Interest Period for this
Note shall be endorsed by the holder of this Note on the schedule
attached hereto or any continuation thereof prior to any transfer of
this Note.
This Note is a registered Note and, as provided in the Note Purchase
Agreements, upon surrender of this Note for registration of transfer
duly endorsed, or accompanied by a written instrument of transfer duly
executed, by the registered holder hereof or such holder's attorney duly
authorized in writing, a new note for a like principal amount will be
issued to, and registered in the name of, the transferee, provided that
record ownership may only be transferred to a bank or other entity which
meets the requirements of Section 6.5 of the Note Purchase Agreement.
Prior to due presentment for registration of transfer, the Company may
treat the person in whose name this Note is registered as the owner
hereof for the purpose of receiving payment and for all other purposes,
and the Company will not be affected by any notice to the contrary.
This Note may be redeemed at the option of the Company, at any time in
whole or from time to time in part, for an amount equal to the then
unpaid principal amount of this Note, plus accrued and unpaid interest
(if any) to the date of redemption (subject to the rights of holders of
record on the relevant record date to receive interest due on the
relevant interest payment date). Notice of redemption will be mailed at
least 30 days but not more than 60 days before the redemption date to
the holder of this Note at such holder's registered address. Except as
set forth in the Note Purchase Agreements, from and after any redemption
date, if monies for the redemption shall have been deposited with the
Paying Agent for redemption on such redemption date, then, unless the
Company defaults in the payment of such redemption price, principal
amount called for redemption will cease to bear interest and the only
right of the holders as to such principal amount will be to receive
payment of the redemption price.
The Company is also required under circumstances described in the Note
Purchase Agreements to offer to prepay all Notes on the terms specified
in the Note Purchase Agreements.
If an Event of Default, as defined in the Note Purchase Agreements,
occurs and is continuing, the principal of this Note may be declared or
otherwise become due and payable in the manner, at the price and with
the effect provided in the Note Purchase Agreements.
This Note shall be construed and enforced in accordance with, and the
rights of the Company and the holder hereof shall be governed by, the
laws of the State of Texas, excluding choice-of-law principles of such
law.
SHOWBIZ PIZZA TIME, INC.
By___________________________
Title:
Schedule of Interest Rate and Duration of Interest Period
---------------------------------------------------------
Reset Date
Duration of
Interest
Period
LIBOR Rate
Interest
Rate
(LIBOR Rate
plus 3.5%)
Notation
Made By
EXHIBIT (s)(1)
SHOWBIZ PIZZA TIME, INC.
Floating Rate Series C Senior Notes due 1997
____________________
NOTE PURCHASE AGREEMENT
____________________
Dated as of October 10, 1995
Table of Contents
-------------------
Page
-----
1. THE NOTES........................................ 1
1.1. Authorization of Notes....................... 1
1.2. Interest Rates on the Notes; Reset Procedures
for Series C Notes........................... 1
1.3. Extension.................................... 4
1.4. Optional Redemption.......................... 4
1.5. Withholding Taxes............................ 5
1.6. Withholding Tax Exemption for Obligations
Targeted to Foreign Markets................. 5
2. SALE AND PURCHASE OF NOTES........................ 6
3. CLOSING........................................... 6
4. CONDITIONS TO CLOSING............................. 7
4.1. Representations and Warranties............... 7
4.2. Performance; No Default...................... 7
4.3. Compliance Certificates...................... 7
4.4. Opinions of Counsel.......................... 7
4.5. Purchase Permitted By Applicable Law, etc.... 8
4.6. Sale of Notes to Other Purchasers............ 8
4.7. Changes in Corporate Structure............... 8
4.8. Proceedings and Documents.................... 8
5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY..... 8
5.1. Organization; Power and Authority............ 9
5.2. Authorization, etc........................... 9
5.3. Disclosure................................... 9
5.4. Organization and Ownership of Shares of
Subsidiaries; Affiliates................... 10
5.5. Financial Statements......................... 10
5.6. Compliance with Laws, Other Instruments, etc. 11
5.7. Governmental Authorizations, etc............. 11
5.8. Litigation; Observance of Agreements,
Statutes and Orders........................ 11
5.9. Taxes........................................ 11
5.10. Title to Property; Leases...................... 12
5.11. Licenses, Permits, etc......................... 12
5.12. Compliance with ERISA.......................... 13
5.13. Private Offering by the Company................ 13
5.14. Use of Proceeds; Margin Regulations............ 14
5.15. Existing Indebtedness; Future Liens............ 14
5.16. Foreign Assets Control Regulations, etc........ 14
5.17. Status under Certain Statutes.................. 15
5.18. Environmental Matters.......................... 15
5.19. Status under the Internal Revenue Code of 1986. 15
6. REPRESENTATIONS OF THE PURCHASER................... 16
6.1. Purchase of Notes............................. 16
6.2. Source of Funds............................... 16
6.3. Independent Analysis.......................... 16
6.4. Brokers and Finders........................... 16
6.5. Representations Relating to U.S. Tax Withholding
Obligations.................................. 16
7. INFORMATION AS TO COMPANY.......................... 17
7.1. Financial and Business Information............ 17
7.2. Officer's Certificate......................... 20
7.3. Inspection.................................... 21
8. PREPAYMENT OF THE NOTES............................ 21
8.1. Prepayment in Connection with a Change of
Control...................................... 21
8.2. Allocation of Partial Prepayments............. 22
8.3. Maturity; Surrender, etc...................... 22
8.4. Purchase or Optional Redemption of Notes...... 22
9. AFFIRMATIVE COVENANTS.............................. 23
9.1. Compliance with Law........................... 23
9.2. Insurance..................................... 23
9.3. Maintenance of Properties..................... 23
9.4. Payment of Taxes and Claims................... 24
9.5. Corporate Existence, etc...................... 24
9.6. Lines of Business............................. 24
10. NEGATIVE COVENANTS................................. 24
10.1. Liens........................................... 24
10.2. Maintenance of Financial Conditions............. 26
10.3. Asset Sales..................................... 27
10.4. Merger, Consolidation, etc...................... 28
10.5. Subsidiary Indebtedness......................... 29
10.6. Transactions with Affiliates.................... 30
11. EVENTS OF DEFAULT.................................. 30
12. REMEDIES ON DEFAULT, ETC........................... 31
12.1. Acceleration.................................... 31
12.2. Other Remedies.................................. 31
12.3. Rescission...................................... 32
12.4. No Waivers or Election of Remedies, Expenses,
etc........................................... 32
13. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES...... 32
13.1. Registration of Notes........................... 32
13.2. Transfer and Exchange of Notes.................. 33
13.3. Replacement of Notes............................ 33
14. PAYMENTS ON NOTES.................................. 34
14.1. Place of Payment................................ 34
14.2. Home Office Payment............................. 34
15. EXPENSES, ETC...................................... 34
15.1. Transaction Expenses............................ 34
15.2. LIBOR Funding Losses............................ 35
15.3. Survival........................................ 35
16. SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
ENTIRE AGREEMENT................................... 35
17. AMENDMENT AND WAIVER............................... 36
17.1. Requirements.................................... 36
17.2. Solicitation of Holders of Notes................ 36
17.3. Binding Effect, etc............................. 36
17.4. Notes held by Company, etc...................... 37
18. NOTICES............................................ 37
19. REPRODUCTION OF DOCUMENTS.......................... 37
20. CONFIDENTIAL INFORMATION........................... 38
21. SUBSTITUTION OF PURCHASER.......................... 39
22. MISCELLANEOUS...................................... 39
22.1. Successors and Assigns.......................... 39
22.2. Construction.................................... 39
22.3. Jurisdiction and Process........................ 39
22.4. Indemnification................................. 40
22.5. Accounting Terms................................ 41
22.6. Payments Due on Non-Business Days............... 41
22.7. Severability.................................... 41
22.8. Counterparts.................................... 41
22.9.Governing Law.................................... 42
Schedule A - - Names and Addresses of Purchasers
Schedule B - - Defined Terms
Exhibit 1.1(a) - - Form of Floating Rate Series C Senior
Note due 1997
Exhibit 1.6-- Form of Certificate in Lieu of Form W-8
Exhibit 4.4(a) - - Form of Opinion of Counsel for the Company
Exhibit 4.4(b) - - Form of Opinion of Special Counsel
for the Company
Schedule 5.3 - - Disclosure Documents
Schedule 5.4 - - Subsidiaries
Schedule 5.5 - - Financial Statements
Schedule 5.8 - - Litigation
Schedule 5.11 - - Licenses, Etc.
Schedule 5.15 - - Existing Indebtedness
SHOWBIZ PIZZA TIME, INC.
4441 West Airport Freeway
Irving, TX 75015
Floating Rate Series C Senior Notes due 1997
As of October 10, 1995
TO Neue Bank AG
Ladies and Gentlemen:
SHOWBIZ PIZZA TIME, INC., a Kansas corporation (the "Company"),
agrees with you as follows:
(7) THE NOTES
(8) Authorization of Notes.
The Company has duly authorized the issue and sale of up to
$5,000,000 aggregate principal amount of its Floating Rate Series C
Senior Notes due 1997 (the "Series C Notes"), substantially in the
respective forms set out in Exhibit 1.1(a). As used herein, the term
"Notes" shall mean all notes originally delivered pursuant to this
Agreement and the Other Agreements referred to below and all notes
delivered in substitution or exchange for any such note and, where
applicable, shall include the singular number as well as the plural.
Certain capitalized terms used in this Agreement are defined in Schedule
B; references to a "Schedule" or an "Exhibit" are, unless otherwise
specified, to a Schedule or an Exhibit attached to this Agreement. The
terms "Note", and "Series C Note" shall mean one of the Notes, and
Series C Notes, respectively.
(b) Interest Rates on the Notes; Reset Procedures for Series C Notes.
(a) Series C Notes. Each Series C Note shall bear interest,
payable quarterly on each Interest Payment Date in each year, at a rate
per annum (computed on the basis of actual days elapsed and a year of
360 days) equal to 3.5% plus the LIBOR Rate for the Interest Period
commencing on the date of the Closing (which shall be a period of six
months), and from time to time thereafter at a rate per annum (so
computed) equal to 3.5% plus the LIBOR Rate as in effect from time to
time for the applicable Interest Period until the principal thereof
shall become due and payable and shall bear interest on demand on any
overdue principal or premium, if any, and on any overdue installment of
interest at the default rate specified therein. If you are purchasing
Series C Notes under this Agreement, at least one Business Day before
the date of the Closing, the Company will give notice to you, specifying
the initial LIBOR Rate, which shall be determined with respect to the
date of the Closing as if that date were a Reset Date, and the resulting
applicable interest rate on the Series C Notes for the Interest Period
commencing on the date of the Closing.
The Company will give written notice to each Holder of a Series C
Note at least three Business Days prior to each Reset Date (a "Reset
Notice") specifying the duration of the Interest Period commencing on
that Reset Date. If for any reason the Company fails to give a Reset
Notice with respect to any Reset Date, the Interest Period commencing on
such Reset Date shall be deemed a six-month period (or a three-month
period in the case of the final Interest Period if the Reset Date is
three months prior to the final maturity of the Series C Notes). On
each Reset Date the Company shall determine the LIBOR Rate for the
Interest Period then commencing and will give notice (by telephone or
facsimile) to the Calculation Holder (by telephone or facsimile to such
person as the Calculation Holder may from time to time specify for such
purpose) specifying the LIBOR Rate as so determined. If for any reason
the Calculation Holder, by notice to the Company (which notice shall be
given within two Business Days after the Reset Date), objects to such
determination, the LIBOR Rate as determined by the Calculation Holder
shall be final and binding upon the Company absent manifest error.
Forthwith and in any event within two Business Days after each Reset
Date the Company will give written notice to the Holders of the Series C
Notes specifying the LIBOR Rate and the resulting applicable interest
rate on the Series C Notes for the Interest Period commencing on that
Reset Date and stating whether the Calculation Holder determined (or
confirmed the Company's determination of) the LIBOR Rate for that
Interest Period. If for any reason neither the Company nor the
Calculation Holder determines the LIBOR Rate for any Interest Period,
the determination of the LIBOR Rate by any other Institutional Investor
Holder of a Series C Note (acting in place of the Calculation Holder if
necessary) and specified in a written notice to the Company shall be
final and binding upon the Company and the Holders of the Series C Notes
absent manifest error, provided that in case more than one such
Institutional Investor Holder gives such a written notice and the LIBOR
Rate in such notices is not the same rate, the LIBOR Rate shall be the
rate agreed upon by such other Institutional Investor Holders as
specified in a subsequent notice to the Company, which rate shall be
final and binding as aforesaid.
(b) Certain Defined Terms and Procedures. For purposes of
determining the applicable interest rate on the Series C Notes, the
following terms have the following meanings (and certain matters will be
determined in accordance with procedures as specified below):
"Calculation Holder" means the Institutional Investor holding
the highest unpaid principal amount of Series C Notes at the time
outstanding and willing to serve in such capacity.
"Designated Maturity" means for any Reset Date a period of
three or six months, as the case may be, corresponding to the
Interest Period commencing on such Reset Date.
"Interest Period" means a period commencing on and including
the date of the Closing or a Reset Date, as the case may be, and
ending on the Interest Payment Date that is three or six months
thereafter, as set forth in respect of the Interest Period
commencing on the date of the Closing in Section 1.2(a) and as set
forth in respect of each Reset Date in the Reset Notice for such
period. Notwithstanding the foregoing if the Interest Payment
Date in the appropriate month is not a Business Day such Interest
Period shall be extended to the next day that is a Business Day
and if there is no numerically corresponding date in the
appropriate month, such Interest Period shall end on the last
Business Day of such month.
"LIBOR Rate" means for the Interest Period commencing on the
date of the Closing, the rate specified in notice from the Company
given pursuant to Section 1.2(a); and means for any Reset Date the
rate for deposits in U.S. Dollars for a period of the Designated
Maturity which appears on the display designated as "Page 3750"
on Telerate Access Service (or such other display as may replace
Page 3750 on Telerate Access Service) as of 11:00 a.m., London
time, on the date that is two London Banking Days preceding that
Reset Date; and if such rate does not appear on Telerate Page 3750
(or such other display), the rate for that Reset Date will be
determined on the basis of rates on which deposits in U.S. dollars
are offered by the Reference Banks at approximately 11:00 a.m.,
London time, on the day that is two London Banking Days preceding
that Reset Date to prime banks in the London interbank market for
a period of the Designated Maturity commencing on that Reset Date
and in a Representative Amount. The Company will cause the
Calculation Holder to request the principal London office of each
of the Reference Banks to provide a quotation of its rate. If at
least two such quotations are provided, the rate for that Reset
Date will be the arithmetic means of the quotations. If fewer
than two quotations are provided as requested, the rate for that
Reset Date will be the arithmetic mean of the rates quoted by
major banks in New York City, selected by the Calculation Holder,
at approximately 11:00 a.m., New York City time, on that Reset
Date for loans in U.S. dollars to leading European banks for a
period of the Designated Maturity commencing on that Reset Date
and in a Representative Amount.
"London Banking Day" means any day other than Saturday or
Sunday or a day on which commercial banks are required or
authorized by law to be closed in London, England.
"Reference Banks" means four major banks in the London
interbank market.
"Representative Amount" means an amount that is comparable to
the unpaid principal amount of the Series C Notes at the relevant
time.
"Reset Date" means any Interest Payment Date corresponding to
the first day of an Interest Period.
"Reset Notice" is defined in Section 1.2(a).
(c) Extension.
Upon notice to the Company by the Holder of any Note, given not
less than ninety (90) nor more than one hundred twenty (120) days prior
to each annual anniversary date of the Notes, the Holder may, at its
sole and absolute discretion, elect to extend the maturity date on a
Note for an additional year. If a Holder extends the maturity date of
a Note, the Company shall, upon surrender of any such Note at the
principal executive office of the Company, execute and deliver a new
Note reflecting the extended maturity date in exchange therefor.
Notwithstanding anything herein, no extension of the maturity of the
Notes under this Section 1.3 shall extend the maturity of any of the
Notes beyond October 10, 2000.
(d) Optional Redemption.
(a) The Company shall have the right, at its option, to redeem the
Notes in whole or in part at any time and from time to time, as provided
herein and in the Notes. At least 30 days but not more than 60 days
before a Redemption Date, the Company shall mail a notice of redemption
by first class mail to the Holder at such Holder's registered address.
Each notice for redemption shall identify the principal amount of the
Note to be redeemed and shall state:
1. the Redemption Date;
2. the Redemption Price;
3. the name and address of the Paying Agent;
4. that the Note called for redemption must be surrendered
to the Paying Agent to collect the Redemption Price;
5. that, unless the Company defaults in making the
redemption payment, interest on the principal amount of the Notes
called for redemption ceases to accrue on and after the Redemption
Date, and the only remaining right of the Holders of such Notes
is to receive payment of the Redemption Price upon surrender to
the Paying Agent of the Notes redeemed;
6. if any Note is being redeemed in part, the portion of the
principal amount of such Note to be redeemed and that, after the
Redemption Date, and upon surrender of such Note, a new Note or
Notes in aggregate principal amount equal to the unredeemed
portion thereof will be issued; and
7. if fewer than all the Notes are to be redeemed, the
identification of the particular Notes (or portion thereof) to be
redeemed, as well as the aggregate principal amount of Notes to
be redeemed and the aggregate principal amount of Notes to be
outstanding after such partial redemption.
(b) Once notice of redemption is mailed in accordance with Section
1.4(a), Notes (or any part thereof) called for redemption become due and
payable on the Redemption Date and at the Redemption Price. Upon
surrender to the Paying Agent, such Notes (or any part thereof) called
for redemption shall be paid at the Redemption Price.
(c) On or before the Redemption Date, the Company shall deposit with
the Paying Agent United States dollars sufficient to pay the Redemption
Price of all Notes (or part thereof) to be redeemed on that date (other
than Notes or any part thereof called for redemption on that date which
have been delivered to the Paying Agent for cancellation). The Paying
Agent shall promptly return to the Company any United States dollars so
deposited which are not required for that purpose upon the written
request of the Company.
(d) If the Company complies with the preceding paragraph, then, unless
the Company defaults in the payment of such Redemption Price, interest
on the Notes (or any part thereof) to be redeemed will cease to accrue
on and after the applicable Redemption Date, whether or not such Notes
are presented for payment.
(d) Upon surrender of a Note that is to be redeemed in part, the
Company shall issue to the Holder, at the expense of the Company, a new
Note or Notes equal in principal amount to the unredeemed portion of the
Note surrendered.
(e) Withholding Taxes.
All payments by the Company of principal of and interest on the
Notes are payable without deduction for or on account of any present or
future taxes, duties or other charges levied or imposed by the United
States of America or by the government of any jurisdiction outside the
United States of America or by any political subdivision or taxing
authority of or in any of the foregoing through withholding or deduction
with respect to any such payments. If any such taxes, duties or other
charges are so levied or imposed, the Company will pay additional
interest or will make additional payments in such amounts so that every
net payment of principal of and interest on the Notes, after withholding
or deduction for or on account of any such present or future taxes,
duties or other charges, will not be less than the amount provided for
herein or therein, provided that the Company shall have no obligation to
pay such additional amounts to any Holder to the extent that such taxes,
duties, or other charges are levied or imposed by reason of the failure
of such Holder to comply with the provisions of Section 1.6. The
Company shall furnish promptly to each Holder official receipts
evidencing any such withholding or reduction.
(f) Withholding Tax Exemption for Obligations Targeted to Foreign
Markets.
Each Holder agrees that it will deliver to the Company a
certificate not more than 90 days prior to the first Interest Payment
Date, and annually thereafter on January 15 of each year signed under
oath (subject to penalty for perjury) by such Holder and certifying that
(A) the beneficial owners of the Notes are foreign (non-U.S.) persons
and have not been U.S. persons on any Interest Payment Date, (B) during
all periods while the Holder holds the Notes, the beneficial owners of
the Notes on each Interest Payment Date will not be a U.S. person, and
(C) the Holder will provide a statement to the Company if the Notes are
transferred to a U.S. Person, notifying the Company of such event. Such
certificate shall be substantially in the form attached hereto as
Exhibit 1.6, which form complies with the requirements of Treasury
Regulation S 35a.999-5(b) (question and answer 14).
(8) SALE AND PURCHASE OF NOTES.
Subject to the terms and conditions of this Agreement, the Company
will issue and sell to you, as record holder on behalf of the Beneficial
Owner, and you, as record holder on behalf of the Beneficial Owner, will
purchase from the Company, at the Closing provided for in Section 3,
Series C Notes in the principal amount or amounts specified opposite
your name in Schedule A at the purchase price of 100% of the principal
amount thereof, and in the aggregate principal amount of not more than
Five Million Dollars ($5,000,000). Contemporaneously with entering into
this Agreement, the Company is entering into separate Note Purchase
Agreements (the "Other Agreements") identical with this Agreement
(except for the principal amounts of Notes to be purchased) with each of
the other purchasers named in Schedule A (the "Other Purchasers"),
providing for the sale at such Closing to each of the Other Purchasers
of Notes in the principal amount or amounts specified opposite its name
in Schedule A. Your obligation hereunder and the obligations of the
Other Purchasers under the Other Agreements are several and not joint
obligations and you shall have no obligation under any Other Agreement
and no liability to any Person for the performance or non-performance by
any Other Purchaser thereunder. The aggregate principal amount of Notes
issued and sold by the Company under this Agreement and the Other
Agreements shall not exceed U.S. $5,000,000.
(9) CLOSING.
The sale and purchase of the Notes to be purchased by you and the
Other Purchasers shall occur at the offices of Banque Financiere de la
Cite, at 9:00 a.m., Dallas, Texas time, at a closing (the "Closing") on
October 10, 1995 or on such other Business Day thereafter on or prior to
October 24, 1995 as may be agreed upon by the Company and you and the
Other Purchasers. At the Closing the Company will deliver to you the
Notes to be purchased by you, as record holder on behalf of the
Beneficial Owner, in the form of a single Note so to be purchased (or
such greater number of Notes in denominations of at least U.S. $100,000
as you may request) dated the date of the Closing and registered in your
name (or in the name of your nominee), against delivery by you to the
Company or its order of immediately available funds in the amount of the
purchase price therefor by wire transfer of immediately available funds
(in U.S. Legal Tender) for the account of the Company to account number
501-33529 at Bank of Boston, Boston, Massachusetts, ABA# 011000390
(Attention: Frank D'Ulisse at 617-434-7996).
If at the Closing the Company shall fail to tender such Notes to
you as provided above in this Section 3, or any of the conditions
specified in Section 4 shall not have been fulfilled to your
satisfaction, you shall, at your election, be relieved of all further
obligations under this Agreement, without thereby waiving any rights you
may have by reason of such failure or such nonfulfillment.
(10) CONDITIONS TO CLOSING.
Your obligation to purchase and pay for the Notes to be sold to
you at the Closing is subject to the fulfillment to your satisfaction,
prior to or at the Closing, of the following conditions:
(a) Representations and Warranties.
The representations and warranties of the Company in this
Agreement shall be correct when made and at the time of the Closing.
(b) Performance; No Default.
The Company shall have performed and complied with all agreements
and conditions contained in this Agreement required to be performed or
complied with by it prior to or at the Closing and after giving effect
to the issue and sale of the Notes (and the application of the proceeds
thereof) no Default or Event of Default shall have occurred and be
continuing.
(c) Compliance Certificates.
(a) Officer's Certificate. The Company shall have delivered to
you an Officer's Certificate, dated the date of the Closing, certifying
that the conditions specified in Sections 4.1, 4.2 and 4.9 have been
fulfilled.
(b) Secretary's Certificate. The Company shall have delivered
to you a certificate of the Secretary or an Assistant Secretary of the
Company certifying as to the resolutions attached thereto and other
corporate proceedings relating to the authorization, execution and
delivery of the Notes and this Agreement and the Other Agreements.
(d) Opinions of Counsel.
You shall have received opinions in form and substance
satisfactory to you, dated the date of the Closing and addressed to you
and the Beneficial Owner from Marshall Fisco, Esq., Counsel of the
Company, and Winstead Sechrest & Minick P.C., special counsel for the
Company, substantially in the respective forms set forth in Exhibits
4.4(a) and 4.4(b) and covering such other matters incident to the
transactions contemplated hereby as you or your counsel may reasonably
request.
(e) Purchase Permitted By Applicable Law, etc.
On the date of the Closing your purchase of Notes as record holder
on behalf of the Beneficial Owner shall (a) be permitted by the laws and
regulations of each jurisdiction to which you and the Beneficial Owner
are subject, (b) not violate any applicable law or regulation (including
without limitation Regulation G, T, U or X of the Board of Governors of
the Federal Reserve System) and (c) not subject you to any tax, penalty
or liability under or pursuant to any applicable law or regulation,
which law or regulation was not in effect on the date hereof. If
requested by you, you shall have received an Officer's Certificate
certifying as to such matters of fact as you may reasonably specify to
enable you to determine whether such purchase is so permitted.
(f) Sale of Notes to Other Purchasers.
The Company shall sell to the Other Purchasers and the Other
Purchasers shall purchase the Notes to be purchased by them at the
Closing as specified in Schedule A.
(g) Changes in Corporate Structure.
The Company shall not have changed its jurisdiction of
incorporation or been a party to any merger or consolidation and shall
not have succeeded to all or any substantial part of the liabilities of
any other entity at any time following the date of the most recent
financial statements referred to in Schedule 5.5. There has been no
event, condition, or occurrence since December 31, 1994 which,
individually or in the aggregate, has had a Material Adverse Effect and
no condition exists or event has occurred, individually or in the
aggregate, that could reasonably be expected to have a Material Adverse
Effect.
(h) Proceedings and Documents.
All corporate and other proceedings in connection with the
transactions contemplated by this Agreement and all documents and
instruments incident to such transactions shall be satisfactory to you
and your special counsel, and you and your special counsel shall have
received all such counterpart originals or certified or other copies of
such documents as you or they may reasonably request.
(11) REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to you that the following are
true and correct as of the date hereof and will be true and correct
through the date of the Closing as if made on such date.
(a) Organization; Power and Authority.
The Company is a corporation duly organized, validly existing and
in good standing under the laws of its jurisdiction of incorporation,
and is duly qualified as a foreign corporation and is in good standing
in each jurisdiction in which such qualification is required by law,
other than those jurisdictions as to which the failure to be so
qualified or in good standing could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.
The Company has the corporate power and authority to own or hold under
lease the properties it purports to own or hold under lease, to transact
the business it transacts and proposes to transact, to execute and
deliver this Agreement and the Other Agreements and the Notes and to
perform the provisions hereof and thereof.
(b) Authorization, etc.
This Agreement and the Other Agreements and the Notes have been
duly authorized by all necessary corporate action on the part of the
Company, and this Agreement constitutes, and upon execution and delivery
thereof each Note will constitute, a legal, valid and binding obligation
of the Company, enforceable against the Company in accordance with its
terms, except as such enforceability may be limited by (a) applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the enforcement of creditors' rights generally and (b) general
principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
(c) Disclosure.
This Agreement, the documents, certificates or other writings
delivered to you by or on behalf of the Company in connection with the
transactions contemplated hereby and described in Schedule 5.3 (the
"Disclosure Documents"), and the financial statements listed in Schedule
5.5, taken as a whole, do not contain any untrue statement of a material
fact or omit to state any material fact necessary to make the statements
therein not misleading in light of the circumstances under which they
were made. Since December 31, 1994, there has been no change in the
financial condition, operations, business, properties or prospects of
the Company or any Subsidiary except as disclosed in the Disclosure
Documents or in the financial statements listed in Schedule 5.5 and
other changes that individually or in the aggregate could not reasonably
be expected to have a Material Adverse Effect. There is no fact known
to the Company that could reasonably be expected to have a Material
Adverse Effect that has not been set forth herein or in the Disclosure
Documents. Any projections provided by the Company in the Disclosure
Documents are based on assumptions which management of the Company
believes to be reasonable.
(d) Organization and Ownership of Shares of Subsidiaries; Affiliates.
(a) Schedule 5.4 contains (except as noted therein) complete and
correct lists of the Company's (i) Subsidiaries, showing, as to each
Subsidiary, the correct name thereof, the jurisdiction of its
organization, and the percentage of shares of each class of its capital
stock or similar equity interests outstanding owned by the Company and
each other Subsidiary, (ii) Affiliates, other than Subsidiaries, and
(iii) directors and senior officers.
(b) All of the outstanding shares of capital stock or similar
equity interests of each Subsidiary shown in Schedule 5.4 as being owned
by the Company and its Subsidiaries have been validly issued, are fully
paid and nonassessable and are owned by the Company or another
Subsidiary free and clear of any Lien (except as otherwise disclosed in
Schedule 5.4).
(c) Each Subsidiary identified in Schedule 5.4 is a corporation
duly organized, validly existing and in good standing under the laws of
its jurisdiction of organization, and is duly qualified as a foreign
corporation or other legal entity and is in good standing in each
jurisdiction in which such qualification is required by law, other than
those jurisdictions as to which the failure to be so qualified or in
good standing could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect. Each such Subsidiary has
the corporate or other power and authority to own or hold under lease
the properties it purports to own or hold under lease and to transact
the business it transacts and proposes to transact.
(d) No Subsidiary is a party to, or otherwise subject to any
legal restriction or any agreement (other than this Agreement, the
agreements listed in Schedule 5.4 and customary limitations imposed by
corporate law statutes) restricting the ability of such Subsidiary to
pay dividends out of profits or make any other similar distributions of
profits to the Company or any of its Subsidiaries that owns outstanding
shares of capital stock or similar equity interests of such Subsidiary.
(e) Financial Statements.
The Company has delivered to you copies of the financial
statements of the Company and its Subsidiaries listed in Schedule 5.5.
All of said financial statements (including in each case the related
schedules and notes) fairly present in all material respects the
consolidated financial position of the Company and its Subsidiaries as
of the respective dates specified in such Schedule and the consolidated
results of their operations and cash flows for the respective periods so
specified and have been prepared in accordance with GAAP consistently
applied throughout the periods involved except as set forth in the notes
thereto (subject, in the case of any interim financial statements, to
normal year-end adjustments made in accordance with GAAP).
(f) Compliance with Laws, Other Instruments, etc.
The execution, delivery and performance by the Company of this
Agreement and the Notes will not (i) contravene, result in any breach
of, or constitute a default under, or result in the creation of any Lien
in respect of any property of the Company or any Subsidiary under, any
indenture, mortgage, deed of trust, loan, purchase or credit agreement,
lease, corporate charter or by-laws, or any other agreement or
instrument to which the Company or any Subsidiary is bound or by which
the Company or any Subsidiary or any of their respective properties may
be bound or affected, (ii) conflict with or result in a breach of any of
the terms, conditions or provisions of any order, judgment, decree, or
ruling of any court, arbitrator or Governmental Authority applicable to
the Company or any Subsidiary or (iii) violate any provision of any
statute or other rule or regulation of any Governmental Authority
applicable to the Company or any Subsidiary.
(g) Governmental Authorizations, etc.
No consent, approval or authorization of, or registration, filing
or declaration with, any Governmental Authority is required for the
validity of the execution, delivery or performance by the Company of
this Agreement or the Notes. Specifically, and without limitation of
the foregoing, no registration of the Notes is required under the
Securities Act, the Securities Exchange Act, or the Texas Securities
Act, and no indenture with respect to the Notes is required to be
qualified under the Trust Indenture Act of 1939.
(h) Litigation; Observance of Agreements, Statutes and Orders.
(a) Except as disclosed in Schedule 5.8, there are no actions,
suits or proceedings pending or, to the knowledge of the Company,
threatened against or affecting the Company or any Subsidiary or any
property of the Company or any Subsidiary in any court or before any
arbitrator of any kind or before or by any Governmental Authority that,
individually or in the aggregate, could reasonably be expected to have
a Material Adverse Effect.
(b) Neither the Company nor any Subsidiary is in default under
any term of any agreement or instrument to which it is a party or by
which it is bound, or any order, judgment, decree or ruling of any
court, arbitrator or Governmental Authority or is in violation of any
applicable law, ordinance, rule or regulation (including without
limitation Environmental Laws) of any Governmental Authority, which
default or violation, individually or in the aggregate, could reasonably
be expected to have a Material Adverse Effect.
(i) Taxes
The Company and its Subsidiaries have filed all tax returns that
are required to have been filed in any jurisdiction, and have paid all
taxes shown to be due and payable on such returns and all other taxes
and assessments levied upon them or their properties, assets, income or
franchises, to the extent such taxes and assessments have become due and
payable and before they have become delinquent, except for any taxes and
assessments (a) currently payable without penalty or interest, (b) the
amount of which is not individually or in the aggregate Material or (c)
the amount, applicability or validity of which is currently being
contested in good faith by appropriate proceedings and with respect to
which the Company or a Subsidiary, as the case may be, has established
adequate reserves in accordance with GAAP. The Company knows of no
basis for any other tax or assessment that individually or in the
aggregate might be Material. The charges, accruals and reserves on the
books of the Company and its Subsidiaries in respect of Federal, state
or other taxes for all fiscal periods are adequate. The Federal income
tax liabilities of the Company and its Subsidiaries have been determined
by the Internal Revenue Service and paid for all fiscal years up to and
including the fiscal year ended December 31, 1993.
(j) Title to Property; Leases.
The Company and its Subsidiaries have good and marketable title
to their respective real properties and good and sufficient title to
their respective other properties that individually or in the aggregate
are Material, including all such properties reflected in the most recent
audited balance sheet listed on Schedule 5.5 or purported to have been
acquired by the Company or any Subsidiary after said date (except as
sold or otherwise disposed of in the ordinary course of business), in
each case free and clear of Liens other than the Liens disclosed on
Schedule 5.15. All leases that individually or in the aggregate are
Material are valid and subsisting and are in full force and effect in
all material respects.
(k) Licenses, Permits, etc.
Except as disclosed in Schedule 5.11,
(a) the Company and its Subsidiaries own or possess all
licenses, permits, franchises, authorizations, patents,
copyrights, service marks, trademarks and trade names, or rights
thereto, that individually or in the aggregate are Material,
without known conflict with the rights of others;
(b) to the best knowledge of the Company, no product of the
Company infringes in any material respect any license, permit,
franchise, authorization, patent, copyright, service mark,
trademark, trade name or other right owned by any other Person;
and
(c) to the best knowledge of the Company, there is no
Material violation by any Person of any right of the Company or
any of its Subsidiaries with respect to any patent, copyright,
service mark, trademark, trade name or other right owned or used
by the Company or any of its Subsidiaries.
(l) Compliance with ERISA.
(a) The Company and each ERISA Affiliate have operated and
administered each Plan in compliance with all applicable laws
except for such instances of noncompliance as have not resulted
in and could not reasonably be expected to result in a Material
Adverse Effect. Neither the Company nor any ERISA Affiliate has
incurred any liability pursuant to Title I or IV of ERISA or the
penalty or excise tax provisions of the Code relating to employee
benefit plans (as defined in Section 3 of ERISA), and no event,
transaction or condition has occurred or exists that could
reasonably be expected to result in the incurrence of any such
liability by the Company or any ERISA Affiliate, or in the
imposition of any Lien on any of the rights, properties or assets
of the Company or any ERISA Affiliate, in either case pursuant to
Title I or IV of ERISA or to such penalty or excise tax provisions
or to Section 401(a)(29) or 412 of the Code, other than such
liabilities or Liens as would not be individually or in the
aggregate Material.
(b) The present value of the aggregate benefit liabilities
under each of the Plans (other than Multiemployer Plans),
determined as of the end of such Plan's most recently ended plan
year on the basis of the actuarial assumptions specified for
funding purposes in such Plan's most recent actuarial valuation
report, did not exceed the aggregate current value of the assets
of such Plan allocable to such benefit liabilities. The term
"benefit liabilities" has the meaning specified in section 4001
of ERISA and the terms "current value" and "present value" have
the meaning specified in section 3 of ERISA.
(c) The Company and its ERISA Affiliates have not incurred
withdrawal liabilities (and are not subject to contingent
withdrawal liabilities) under section 4201 or 4204 of ERISA in
respect of Multiemployer Plans that individually or in the
aggregate are Material.
(d) The expected postretirement benefit obligation
(determined as of the last day of the Company's most recently
ended fiscal year in accordance with Financial Accounting
Standards Board Statement No. 106, without regard to liabilities
attributable to continuation coverage mandated by section 4980B
of the Code) of the Company and its Subsidiaries is not Material.
(m) Private Offering by the Company.
Neither the Company nor anyone acting on its behalf has offered
the Notes or any similar securities for sale to, or solicited any offer
to buy any of the same from, or otherwise approached or negotiated in
respect thereof with, any person other than you and the Other
Purchasers, each of which has been offered the Notes at a private sale
for investment. Neither the Company nor anyone acting on its behalf has
taken, or will take, any action that would subject the issuance or sale
of the Notes to the registration requirements of Section 5 of the
Securities Act or the Texas Securities Act, or require registration
under the Exchange Act, or the qualification of an indenture with
respect to the Notes under the Trust Indenture Act of 1939.
(n) Use of Proceeds; Margin Regulations.
The Company will apply the proceeds of the sale of the Notes for
general corporate purposes. No part of the proceeds from the sale of
the Notes hereunder will be used, directly or indirectly, for the
purpose of buying or carrying any margin stock within the meaning of
Regulation G or Regulation U of the Board of Governors of the Federal
Reserve System, or for the purpose of buying or carrying or trading in
any securities under such circumstances as to involve the Company in a
violation of Regulation X of said Board or to involve any broker or
dealer in a violation of Regulation T of said Board. Margin stock does
not constitute more than 5% of the value of the consolidated assets of
the Company and its Subsidiaries and the Company does not have any
present intention that margin stock will constitute more than 5% of the
value of such assets. As used in this Section, the terms "margin stock"
and "purpose of buying or carrying" shall have the meanings assigned to
them in said Regulation U.
(o) Existing Indebtedness; Future Liens.
(a) Schedule 5.15 sets forth a complete and correct list of
all outstanding Indebtedness of the Company and its Subsidiaries
as of March 31, 1995, since which date there has been no Material
change in the amounts, interest rates, sinking funds, instalment
payments or maturities of the Indebtedness of the Company or its
Subsidiaries. Neither the Company nor any Subsidiary is in
default, and no waiver of default is currently in effect, in the
payment of any principal or interest on any Indebtedness of the
Company or such Subsidiary and no event or condition exists with
respect to any Indebtedness of the Company or any Subsidiary that
would permit (or that with notice or the lapse of time, or both,
would permit) one or more Persons to cause such Indebtedness to
become due and payable before its stated maturity or before its
regularly scheduled dates of payment.
(b) Except as disclosed in Schedule 5.15, neither the Company
nor any Subsidiary has agreed or consented to cause or permit in
the future (upon the happening of a contingency or otherwise) any
of its property, whether now owned or hereafter acquired, to be
subject to a Lien not permitted by Section 10.1.
(p) Foreign Assets Control Regulations, etc.
Neither the sale of the Notes by the Company hereunder nor its use
of the proceeds thereof will violate the Trading with the Enemy Act, as
amended, or any of the foreign assets control regulations of the United
States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended)
or any enabling legislation or executive order relating thereto.
(q) Status under Certain Statutes.
Neither the Company nor any Subsidiary is subject to regulation
under the Investment Company Act of 1940, as amended, the Public Utility
Holding Company Act of 1935, as amended, the Interstate Commerce Act, as
amended, or the Federal Power Act, as amended.
(r) Environmental Matters.
Neither the Company nor any Subsidiary has knowledge of any claim
or has received any notice of any claim, and no proceeding has been
instituted raising any claim against the Company or any of its
Subsidiaries or any of their respective real properties now or formerly
owned, leased or operated by any of them or other assets, alleging any
damage to the environment or violation of any Environmental Laws,
except, in each case, such as could not reasonably be expected to result
in a Material Adverse Effect. Except as otherwise disclosed to you in
writing prior to your execution and delivery of this Agreement,
(a) neither the Company nor any Subsidiary has knowledge of
any facts which would give rise to any claim, public or private,
of violation of Environmental Laws or damage to the environment
emanating from, occurring on or in any way related to real
properties now or formerly owned, leased or operated by any of
them or to other assets or their use, except, in each case, such
as could not reasonably be expected to result in a Material
Adverse Effect;
(b) neither the Company nor any of its Subsidiaries has
stored any Hazardous Materials on real properties now or formerly
owned, leased or operated by any of them and has not disposed of
any Hazardous Materials in a manner contrary to any Environmental
Laws in each case in any manner that could reasonably be expected
to result in a Material Adverse Effect; and
(c) all buildings on all real properties now owned, leased or
operated by the Company or any of its Subsidiaries are in
compliance with applicable Environmental Laws, except where
failure to comply could not reasonably be expected to result in
a Material Adverse Effect.
(s) Status under the Internal Revenue Code of 1986.
Assuming the accuracy of the representations and warranties, and
compliance with the covenants made by or on behalf of the Purchaser and
the Beneficial Owner under this Agreement and the Notes, (i) each of the
Notes meets the requirements of Section 871(h)(2)(B) or 881(c)(2)(B) of
the Internal Revenue Code of 1986, as amended (the "Code"), (ii) in the
case of Notes beneficially owned by a nonresident alien individual,
interest paid on the Notes will constitute "portfolio interest" as such
term is defined in Section 871(h)(2) of the Code, and (iii) in the case
of Notes beneficially owned by a foreign corporation, interest paid on
the Notes will constitute "portfolio interest" as such term is defined
in Section 881(c)(2) of the Code.
(12) REPRESENTATIONS OF THE PURCHASER.
You represent and warrant to the Company that the following are
true and correct as of the date hereof and will be true and correct
through the date of the Closing as if made on such date.
(a) Purchase of Notes.
You represent that you are purchasing the Notes for the account
of one or more investors who to your knowledge are "accredited
investors" as such term is defined in Rule 501 promulgated under the
Securities Act or to whom the sale of the Notes would otherwise be
permitted without registration under the Securities Act pursuant to
Regulation S, and not with a view to the distribution thereof, provided
that the disposition of their property shall at all times be within
their control. You understand that the Notes have not been registered
under the Securities Act and may be resold only if registered pursuant
to the provisions of the Securities Act or if an exemption from
registration is available, except under circumstances where neither such
registration nor such an exemption is required by law, and that the
Company is not required to register the Notes.
(b) Source of Funds.
You represent that to your knowledge the funds to be used by the
Beneficial Owner to pay the purchase price of the Notes to be purchased
hereunder are funds from sources legally available for such purchase in
accordance with applicable law.
(c) Independent Analysis.
You represent that to your knowledge, the Beneficial Owner or its
agent has performed its own independent analysis of the Company and its
business, financial condition, and prospects.
(d) Brokers and Finders.
You represent that there are no agent's, broker's or finder's fees
or commissions payable to you by the Company in connection with the
Notes purchased hereunder.
(e) Representations Relating to U.S. Tax Withholding Obligations.
(a) You represent that you are a bank not incorporated under the
laws of the United States of America or any State thereof.
(b) You represent that you are a securities clearing organization,
a bank, or another financial institution that holds customers'
securities in the ordinary course of your trade or business.
(c) So long as you are the record holder of the Notes purchased
hereunder, you will promptly notify the Company of any change, of which
you have knowledge, in beneficial ownership of the Notes purchased
hereunder, and will state whether to your knowledge any such change
results in a U.S. person, firm, or corporation becoming a beneficial
owner of the Notes purchased hereunder or any portion thereof.
(d) You represent that you have informed the Beneficial Owner
that the Notes may not be sold or transferred, except as follows: (i)
record ownership may be transferred only to another non-U.S. bank or
other entity which complies with 6.5(b) above; and (ii) beneficial
ownership may be transferred only to foreign (non-U.S.) persons.
(e) You understand that the Notes must bear a legend restricting
ownership and transfer to only foreign (non-U.S.) persons.
(13) INFORMATION AS TO COMPANY.
(a) Financial and Business Information.
The Company shall deliver to each Holder of Notes that is an
Institutional Investor:
Quarterly Statements -- within two (2) Business Days
after the day that is 45 days after the end of each quarterly
fiscal period in each fiscal year of the Company (other than the
last quarterly fiscal period of each such fiscal year), duplicate
copies of,
(i) a consolidated balance sheet of the Company and its
Subsidiaries as at the end of such quarter, and
(ii) consolidated statements of income, changes in
shareholders' equity and cash flows of the Company and its
Subsidiaries, for such quarter and (in the case of the second
and third quarters) for the portion of the fiscal year ending
with such quarter,
setting forth in each case in comparative form the figures for the
corresponding periods in the previous fiscal year, all in
reasonable detail, prepared in accordance with GAAP applicable to
quarterly financial statements generally, and certified by a
Senior Financial Officer as fairly presenting, in all material
respects, the financial position of the companies being reported
on and their results of operations and cash flows, subject to
changes resulting from year-end adjustments, provided that
delivery within the time period specified above of copies of the
Company's Quarterly Report on Form 10-Q prepared in compliance
with the requirements therefor and filed with the Securities and
Exchange Commission shall be deemed to satisfy the requirements
of this Section 7.1(a);
(b) Annual Statements -- within two (2) Business Days after
the day that is 90 days after the end of each fiscal year of the
Company, duplicate copies of,
(i) a consolidated balance sheet of the Company and its
Subsidiaries as at the end of such year, and
(ii) consolidated statements of income, changes in
shareholders, equity and cash flows of the Company and its
Subsidiaries for such year,
setting forth in each case in comparative form the figures for the
previous fiscal year, all in reasonable detail, prepared in
accordance with GAAP, and accompanied
(A) by an opinion thereon of independent public
accountants of recognized national standing, which opinion
shall state that such financial statements present fairly, in
all material respects, the financial position of the companies
being reported upon and their results of operations and cash
flows and have been prepared in conformity with GAAP, and that
the examination of such accountants in connection with such
financial statements has been made in accordance with
generally accepted auditing standards, and that such audit
provides a reasonable basis for such opinion in the
circumstances, and
(B) a certificate of such accountants stating that they
have reviewed Sections 10.2, 10.3, and 10.5 of this Agreement
and stating further whether, in making their audit, they have
become aware of any condition or event that then constitutes
a Default or an Event of Default under said Sections, and, if
they are aware that any such condition or event then exists,
specifying the nature and period of the existence thereof (it
being understood that such accountants shall not be liable,
directly or indirectly, for any failure to obtain knowledge of
any Default or Event of Default unless such accountants should
have obtained knowledge thereof in making an audit in
accordance with generally accepted auditing standards or did
not make such an audit),
provided that the delivery within the time period specified above
of the Company's Annual Report on Form 10-K for such fiscal year
(together with the Company's annual report to shareholders, if
any, prepared pursuant to Rule 14a-3 under the Exchange Act)
prepared in accordance with the requirements therefor and filed
with the Securities and Exchange Commission, together with the
accountant's certificate described in clause (B) above, shall be
deemed to satisfy the requirements of this Section 7.1(b);
(c) SEC and Other Reports -- promptly upon their becoming
available, one copy of (i) each financial statement, report,
notice or proxy statement sent by the Company or any Subsidiary
generally to its shareholders or to its creditors (other than the
Company or another Subsidiary), and (ii) each regular or periodic
report, each registration statement (without exhibits except as
expressly requested by such Holder), and each prospectus and all
amendments thereto filed by the Company or any Subsidiary with the
Securities and Exchange Commission and of each press release and
other statement made available generally by the Company or any
Subsidiary to the public concerning developments that are
Material;
(d) Notice of Default or Event of Default -- promptly, and in
any event within five days after a Responsible Officer becoming
aware of the existence of any Default or Event of Default, a
written notice specifying the nature and period of existence
thereof and what action the Company is taking or proposes to take
with respect thereto;
(e) ERISA Matters -- promptly, and in any event within five
days after a Responsible Officer becoming aware of any of the
following, a written notice setting forth the nature thereof and
the action, if any, that the Company or an ERISA Affiliate
proposes to take with respect thereto:
(i) with respect to any Plan, any reportable event, as defined
in section 4043(b) of ERISA and the regulations thereunder,
for which notice thereof has not been waived pursuant to such
regulations as in effect on the date hereof; or
(ii) the taking by the PBGC of steps to institute, or the
threatening by the PBGC of the institution of, proceedings
under section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any Plan, or the
receipt by the Company or any ERISA Affiliate of a notice from
a Multiemployer Plan that such action has been taken by the
PBGC with respect to such Multiemployer Plan; or
(iii) any event, transaction or condition that could result in
the incurrence of any liability by the Company or any ERISA
Affiliate pursuant to Title I or IV of ERISA or the penalty or
excise tax provisions of the Code relating to employee benefit
plans, or in the imposition of any Lien on any of the rights,
properties or assets of the Company or any ERISA Affiliate
pursuant to Title I or IV of ERISA or such penalty or excise
tax provisions, if such liability or Lien, taken together with
any other such liabilities or Liens then existing, could
reasonably be expected to have a Material Adverse Effect;
(f) Accountants Reports -- promptly, and in any event within
30 days of receipt thereof by a Responsible Officer of the
Company, copies of any report as to material inadequacies in
accounting controls submitted by independent accountants in
connection with any audit of the Company or any Subsidiary;
(g) Material Litigation -- promptly, and in any event within
30 days after a Responsible Officer of the Company becomes aware
of any litigation, arbitration or administrative proceedings,
whether instituted or, to the knowledge of the Company,
threatened, affecting the Company or any of its Subsidiaries and
which, if adversely determined, could be reasonably expected to
have a Material Adverse Effect, a written statement of a
Responsible Officer describing the nature and status of such
matters and what action the Company or a Subsidiary has taken, is
taking or proposes to take with respect thereto;
(h) Notices from Governmental Authority -- promptly, and in
any event within 30 days of receipt thereof, copies of any notice
to the Company or any Subsidiary from any Federal or state
Governmental Authority relating to any order, ruling, statute or
other law or regulation that could reasonably be expected to have
a Material Adverse Effect;
(i) Requested Information -- with reasonable promptness, such
other data and information relating to the business, operations,
affairs, financial condition, assets or properties of the Company
or any of its Subsidiaries or relating to the ability of the
Company to perform its obligations hereunder and under the Notes
as from time to time may be reasonably requested by any such
Holder of Notes.
(b) Officer's Certificate.
Each set of financial statements delivered to a Holder of Notes
pursuant to Section 7.1(a) or Section 7.1(b) shall be accompanied by a
certificate of a Senior Financial Officer setting forth:
(a) Covenant Compliance -- the information (including
detailed calculations) required in order to establish whether the
Company was in compliance with the requirements of Sections 10.2
and 10.3 during the quarterly or annual period covered by the
statements then being furnished (including with respect to each
such Section, where applicable, the calculations of the maximum
or minimum amount, ratio or percentage, as the case may be,
permissible under the terms of such Sections, and the calculation
of the amount, ratio or percentage then in existence); and
(b) Default -- a statement that such Senior Financial Officer
has reviewed the relevant terms hereof and has made, or caused to
be made, under his or her supervision, a review of the
transactions and conditions of the Company and its Subsidiaries
from the beginning of the quarterly or annual period covered by
the statements then being furnished to the date of the certificate
and that such review shall not have disclosed the existence during
such period of any condition or event that constitutes a Default
or an Event of Default or, if any such condition or event existed
or exists (including, without limitation, any such event or
condition resulting from the failure of the Company or any
Subsidiary to comply with any Environmental Law), specifying the
nature and period of existence thereof and what action the Company
shall have taken or proposes to take with respect thereto.
(c) Inspection.
The Company shall permit the representatives of each Holder of
Notes that is an Institutional Investor:
(a) No Default -- if no Default or Event of Default then
exists, at the expense of such Holder and upon reasonable prior
notice to the Company, to visit the principal executive office of
the Company, to discuss the affairs, finances and accounts of the
Company and its Subsidiaries with the Company's officers, and
(with the consent of the Company, which consent will not be
unreasonably withheld) its independent public accountants, and
(with the consent of the Company, which consent will not be
unreasonably withheld) to visit the other offices and properties
of the Company and each Subsidiary, all at such reasonable times
and as often as may be reasonably requested in writing; and
(b) Default -- if a Default or Event of Default then exists,
at the expense of the Company, to visit and inspect any of the
offices or properties of the Company or any Subsidiary, to examine
all their respective books of account, records, reports and other
papers, to make copies and extracts therefrom, and to discuss
their respective affairs, finances and accounts with their
respective officers, employees and independent public accountants
(and by this provision the Company authorizes said accountants to
discuss the affairs, finances and accounts of the Company and its
Subsidiaries), all at such times and as often as may be requested.
(14) PREPAYMENT OF THE NOTES.
In addition to the payment of the entire unpaid principal amount
of the Notes at the final maturity thereof, the Company will make
required prepayments in respect of the Notes, and under certain
circumstances may be required to offer to prepay all Notes, as
hereinafter provided.
(a) Prepayment in Connection with a Change of Control.
Promptly and in any event within five Business Days after the
occurrence of a Change of Control, the Company will give written notice
thereof to the Holders of all outstanding Notes, which notice shall (a)
refer specifically to this Section 8.1, (b) describe the Change of
Control in reasonable detail and specify the Change of Control
Prepayment Date and the Response Date (as respectively defined below) in
respect thereof, and (c) offer to prepay all Notes at the Redemption
Price on the date therein specified (the "Change of Control Prepayment
Date"), which shall be not less than 10 nor more than 30 days after the
date of such notice is given. In the event that the Company shall fail
to give any notice required above within five Business Days after being
requested to do so by the Holder of any Note, such Holder may give such
notice (with a copy thereof to the Company), which notice shall have the
same effect as if given by the Company. Each Holder of a Note will
notify the Company of such Holder's acceptance or rejection of such
offer by giving written notice of such acceptance or rejection to the
Company at least five days prior to the Change of Control Prepayment
Date (the "Response Date"), except that the failure by any such Holder
to respond in writing to such offer on or before the Response Date shall
be deemed to be an acceptance of such offer by such Holder in respect of
such Change of Control. The Company shall prepay on the Change of
Control Prepayment Date all of the Notes held by the Holders as to which
such offer has been so accepted, at the Redemption Price. If any Holder
shall reject such offer, such Holder shall be deemed to have waived its
rights under this Section 8.1 to require prepayment of all Notes held by
such Holder in respect of such Change of Control but not in respect of
any subsequent Change of Control.
If the Change of Control Prepayment Date does not occur on the
last day of an Interest Period, the Company shall also pay each Holder
of a Series C Note then being prepaid an amount equal to the LIBOR
Funding Loss Amount with respect to such Series C Note, as specified by
written notice given by the Holder of such Series C Note at least two
Business Days prior to the Change of Control Prepayment Date (or, if
such notice is subsequently given by such Holder, within two Business
Days after receipt of such notice by the Company). The obligation of
the Company to pay such LIBOR Funding Loss Amount with respect to the
prepayment of any Series C Note pursuant to this Section 8.1 shall
survive the prepayment of such Series C Note and the termination of this
Agreement.
(b) Allocation of Partial Prepayments.
In the case of each partial prepayment of the Notes, the principal
amount of the Notes to be prepaid shall be allocated among all of the
Notes at the time outstanding in proportion, as nearly as practicable,
to the respective unpaid principal amounts thereof.
(c) Maturity; Surrender, etc.
In the case of each prepayment of Notes pursuant to this
Section 8, the principal amount of each Note to be prepaid shall mature
and become due and payable on the date fixed for such prepayment,
together with interest on such principal amount accrued to such date.
From and after such date, unless the Company shall fail to pay such
principal amount when so due and payable, together with the interest, if
any, as aforesaid, interest on such principal amount shall cease to
accrue. Any Note paid or prepaid in full shall be surrendered to the
Company and cancelled and shall not be reissued, and no Note shall be
issued in lieu of any prepaid principal amount of any Note.
(d) Purchase or Optional Redemption of Notes.
The Company will not and will not permit any Affiliate to
purchase, redeem, prepay or otherwise acquire, directly or indirectly,
any of the outstanding Notes except (a) upon the payment or prepayment
of the Notes in accordance with the terms of this Agreement and the
Notes or (b) pursuant to a notice of optional redemption pursuant to
Section 1.4 hereof made by the Company or any such Affiliate to the
Holders of all Notes at the time outstanding to redeem Notes on the same
terms and conditions, pro rata among all Notes tendered.
Any Notes so repurchased or redeemed shall immediately upon
acquisition thereof be cancelled and no Notes shall be issued in
substitution or exchange therefor, except as provided in Section 1.4.
Promptly and in any event within five Business Days after each
such purchase or redemption of Notes, the Company will furnish each
Holder of the Notes with a certificate of a Senior Financial Officer
describing such purchase (including the aggregate principal amount of
Notes so purchased and the purchase price therefor) and certifying that
such purchase was made in compliance with the requirements of this
Section.
(15) AFFIRMATIVE COVENANTS.
The Company covenants that so long as any of the Notes are
outstanding:
(a) Compliance with Law.
The Company will and will cause each of its Subsidiaries to comply
with all laws, ordinances or governmental rules or regulations to which
each of them is subject, including without limitation Environmental
Laws, and will obtain and maintain in effect all licenses, certificates,
permits, franchises and other governmental authorizations necessary to
the ownership of their respective properties or to the conduct of their
respective businesses, in each case to the extent necessary to ensure
that non-compliance with such laws, ordinances or governmental rules or
regulations or failures to obtain or maintain in effect such licenses,
certificates, permits, franchises and other governmental authorizations
could not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect.
(b) Insurance.
The Company will and will cause each of its Subsidiaries to
maintain, with financially sound and reputable insurers rated "A" or
better by A.M. Best Company, Inc., insurance with respect to their
respective properties and businesses against such casualties and
contingencies, of such types, on such terms and in such amounts
(including deductibles and co-insurance) as is customary in the case of
entities of established reputations engaged in the same or a similar
business and similarly situated.
(c) Maintenance of Properties.
The Company will and will cause each of its Subsidiaries to
maintain and keep, or cause to be maintained and kept, their respective
properties in good repair, working order and condition (other than
ordinary wear and tear), so that the business carried on in connection
therewith may be properly conducted at all times, provided that this
Section shall not prevent the Company or any Subsidiary from
discontinuing the operation and the maintenance of any of its properties
if such discontinuance is desirable in the conduct of its business and
the Company has concluded that such discontinuance could not,
individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.
(d) Payment of Taxes and Claims.
The Company will and will cause each of its Subsidiaries to file
all tax returns required to be filed in any jurisdiction and to pay and
discharge all taxes shown to be due and payable on such returns and all
other taxes, assessments, governmental charges, or levies imposed on
them or any of their properties, assets, income or franchises, to the
extent such taxes and assessments have become due and payable and before
they have become delinquent and all claims for which sums have become
due and payable that have or might become a Lien on properties or assets
of the Company or any Subsidiary, provided that neither the Company nor
any Subsidiary need pay any such tax or assessment or claim if (i) the
amount, applicability or validity thereof is contested by the Company or
such Subsidiary on a timely basis in good faith and in appropriate
proceedings, and the Company or a Subsidiary has established adequate
reserves therefor in accordance with GAAP on the books of the Company or
such Subsidiary or (ii) the nonpayment of all such taxes and assessments
in the aggregate could not reasonably be expected to have a Material
Adverse Effect.
(e) Corporate Existence, etc.
The Company will at all times preserve and keep in full force and
effect its corporate existence. Subject to Sections 10.5 and 10.6, the
Company will at all times preserve and keep in full force and effect the
corporate existence of each of its Subsidiaries (unless merged into the
Company or a Subsidiary) and all rights and franchises (as franchises)
of the Company and its Subsidiaries unless, in the good faith judgment
of the Company, the termination of or failure to preserve and keep in
full force and effect such corporate existence, right or franchise could
not, individually or in the aggregate, have a Material Adverse Effect.
(f) Lines of Business.
The Company and its Subsidiaries will remain engaged solely in the
business of owning and operating family restaurant/entertainment
centers, and other businesses directly related thereto.
(16) NEGATIVE COVENANTS.
The Company covenants that so long as any of the Notes are
outstanding:
(a) Liens.
(a) The Company will not, and will not permit any Subsidiary
to create, assume, incur or suffer to exist any Lien upon or with
respect to any property or assets, whether now owned or hereafter
acquired, securing any Indebtedness, provided that nothing in this
Section 10.1 shall prohibit
(i) Liens in respect of property of the Company or a
Subsidiary existing on the date of the Closing and described
in Schedule 5.15, and Liens relating to any extension, renewal
or replacement of Indebtedness secured by any such Lien as
described in Schedule 5.15, provided that the principal amount
of Indebtedness secured by any such Lien is not increased and
such Lien does not extend to or cover any property of the
Company or such Subsidiary, as the case may be, other than the
property covered by such Lien on the date of Closing;
(ii) Liens in respect of property acquired by the Company
or a Subsidiary after the date of Closing, (A) existing on
such property at the time of acquisition thereof (and not
incurred in anticipation thereof), whether or not Indebtedness
secured thereby is assumed by the Company or a Subsidiary, or
(B) created within 180 days after acquisition or completion of
construction of improvements on such property, to secure
Indebtedness assumed or incurred to finance all or any part of
the purchase price or cost of construction of improvements on
such property, or (C) in the case of any Person that hereafter
becomes a Subsidiary or is consolidated with or merged with or
into the Company or a Subsidiary or sells, leases or otherwise
disposes of all or substantially all of its property to the
Company or a Subsidiary, existing at the time such Person
becomes a Subsidiary or is so consolidated or merged or
effects such sale, lease or other disposition of property (and
not incurred in anticipation thereof), provided that in any
such case
(x) no such Lien shall extend to or cover any other
property of the Company or such Subsidiary, as the case
may be,
(y) the aggregate principal amount of Indebtedness
secured by all such Liens in respect of any such property
shall not exceed the cost of such property at the time of
such acquisition or, in the case of a Lien in respect of
property existing at the time of such Person becoming a
Subsidiary or being so consolidated or merged or
effecting such sale, lease or other disposition, the fair
market value of such property at such time, and
(z) no Lien may be created pursuant to subclause (B)
above prior to December 31, 1996;
(iii) Liens securing Indebtedness owed by a Subsidiary to
the Company or to a Wholly-Owned Subsidiary; and
(iv) Liens securing reimbursement obligations in
connection with letters of credit obtained by the Company or
a Subsidiary, provided that the aggregate unpaid principal
amount of Indebtedness in respect of such letters of credit
secured by such Liens permitted by this Section 10.1(a)(iv)
does not at any time exceed $5,000,000.
For purposes of this Section 10.1(a) any Lien existing in respect of
property at the time such property is acquired or in respect of property
of a Person at the time such Person is acquired, consolidated or merged
with or into the Company or a Subsidiary shall be deemed to have been
created at that time.
(b) In case any property is subjected to a Lien in violation
of Section 10.1(a), the Company will make or cause to be made
effective provision whereby the Notes will be secured equally and
ratably with all Indebtedness and other obligations secured by
such Lien, and in any case the Notes shall have the benefit, to
the full extent that, and with such priority as, the Holders may
be entitled thereto under applicable law, of an equitable lien on
such property securing the Notes. Such violation of
Section 10.1(a) shall constitute an Event of Default hereunder,
whether or not any such provision is made pursuant to this
Section 10.1(b).
(b) Maintenance of Financial Conditions.
(a) The Company will not at any time prior to the last day of
the fiscal year ending on or about December 31, 1995 permit
Consolidated Net Worth to be less than $115,000,000 and thereafter
the Company will not at any time permit Consolidated Net Worth to
be less than the sum of (i) $115,000,000 plus (ii) 75% of
Consolidated Net Income for each fiscal year ending after the date
of the Closing (but without any deduction for any consolidated net
loss in any fiscal year) plus (iii) 100% of the net cash proceeds
of all sales of equity securities by the Company after the date
of the Closing.
(b) The Company will not permit the sum of EBITDA plus
Consolidated Operating Lease Rentals for the periods of two and
three consecutive quarterly accounting periods respectively ending
on or about June 30 and September 30, 1995 to be less than 150%
of Consolidated Interest Expense plus Consolidated Operating Lease
Rentals for such periods, and thereafter the Company will not
permit the sum of EBITDA plus Consolidated Operating Lease Rentals
for any period of four consecutive quarterly accounting periods
to be less than the applicable percentage of the sum of
Consolidated Interest Expense plus Consolidated Operating Lease
Rentals for such period specified below:
Four Quarterly
Accounting Periods Applicable
Ending on or About Percentage
------------------ -----------
June 30, 1995 to September 30, 1996 150%
thereafter to September 30, 1997 175%
thereafter 200%
(c) The Company will not permit Consolidated Indebtedness as
of the last of any quarterly accounting period (commencing with
such accounting period ending on or about June 30, 1995) to exceed
175% of EBITDA for the four consecutive quarterly accounting
periods then ended.
(c) Asset Sales.
The Company will not and will not permit any Subsidiary to,
directly or indirectly, make any sale, transfer, lease (as lessor), loan
or other disposition of any property or assets (an "Asset Sale") other
than
(a) Asset Sales in the ordinary course of business,
(b) Asset Sales of property or assets by a Subsidiary to the
Company or a Wholly-Owned Subsidiary or a Person then becoming a
Wholly-Owned Subsidiary,
(c) Asset Sales consisting of the Company's investment as of the
date of this Agreement in shares or Indebtedness issued by the
owner of Monterey Tex-Mex Restaurants, and
(d) other Asset Sales, provided that
(i) immediately before and after giving effect to each such
Asset Sale, no Default or Event of Default shall have occurred and
be continuing, and
(ii) the aggregate net book value of property or assets
disposed of in each such Asset Sale and all other Asset Sales by
the Company and its Subsidiaries (A) during the immediately
preceding twelve months does not exceed 5% of Consolidated
Capitalization and (B) during the period from the date of the
Closing to and including the effective date of such proposed Asset
Sale does not exceed 10% of Consolidated Capitalization (in each
case determined as of the last day of the quarterly accounting
period ending on or most recently prior to the effective date of
such proposed Asset Sale), and
such Asset Sales in the aggregate shall not involve a substantial
number of Chuck E. Cheese's restaurants (except in connection with
closings in the ordinary course of business) or any intangible
assets related to Chuck E. Cheese's restaurants generally,
and provided further that for purposes of clause (ii) above there
shall be excluded the net book value of property or assets disposed
of in an Asset Sale if and to the extent such Asset Sale is made
for cash, payable in full upon the completion of such Asset Sale,
and an amount equal to the net proceeds realized upon such Asset
Sale is applied by the Company or such Subsidiary, as the case may
be, within one year after the effective date of such Asset Sale (x)
to reinvest in similar categories of property or assets for use in
the business of the Company and its Subsidiaries (but not in a
transaction Permitted by Section 10.1(a)(ii)) or (y) to repay
Indebtedness (which may, at the sole option of the Company, include
the purchase of Notes pursuant to an offer to purchase Notes
pursuant to Section 8.4).
For purposes of this Section 10.3 any shares of Voting Stock of a
Subsidiary that are the subject of an Asset Sale shall be valued at the
greater of (1) the fair market value of such shares as determined in
good faith by the Board of Directors of the Company and (2) the
aggregate net book value of the assets of such Subsidiary multiplied by
a fraction of which the numerator is the aggregate number of shares of
Voting Stock of such Subsidiary disposed of in such Asset Sale and the
denominator is the aggregate number of shares of Voting Stock of such
Subsidiary outstanding immediately prior to such Asset Sale.
(d) Merger, Consolidation, etc.
The Company will not and will not permit any Subsidiary to
consolidate with or merge with any other corporation or convey, transfer
or lease all or substantially all of its assets in a single transaction
or series of transactions to any Person except:
(a) a Subsidiary may consolidate with or merge with, convey
or transfer all or substantially all of its assets to
the Company (provided that the Company shall be the
continuing or surviving corporation) or a then existing
Wholly-Owned Subsidiary, or
any Person in an Asset Sale involving all of the outstanding
stock or all or substantially all of the assets of such Subsidiary,
in either case subject to the limitations of Section 10.3 and to
the further requirement that such Subsidiary does not at the time
of such Asset Sale own, directly or indirectly, any shares of
capital stock or any Indebtedness of any other Subsidiary not
simultaneously being sold as part of such Asset Sale; and
(b) the Company may consolidate with or merge with any other
corporation or convey or transfer all or substantially all of its
assets to a solvent corporation organized and existing under the
laws of the United States or any state thereof, provided that
(c) if the Company is not the continuing, surviving or
acquiring corporation (the "surviving corporation"), the surviving
corporation shall have (A) executed and delivered to each Holder of
a Note its assumption (pursuant to documentation in form and
substance reasonably satisfactory to the Required Holders) of the
due and punctual performance and observance of all obligations of
the Company under this Agreement, the Other Agreements and the
Notes and (B) caused to be delivered to each Holder of a Note an
opinion of counsel reasonably satisfactory to the Required Holders
to the effect that all agreements or instruments effecting such
assumption are enforceable in accordance with their terms and
comply with the terms hereof, and
immediately after giving effect to such transaction, no Default or
Event of Default shall have occurred and be continuing and, if
applicable, the Company shall have given any notice required in
connection with such transaction under Section 8.1.
No such conveyance, transfer or lease of substantially all of the assets
of the Company shall have the effect of releasing the Company or any
successor corporation that shall theretofore have become such in the
manner prescribed in this Section 10.4 from its liability under this
Agreement or the Notes.
(e) Subsidiary Indebtedness.
The Company will not permit any Subsidiary to create, assume incur,
guarantee or otherwise become liable in respect of any Indebtedness
except
(a) Indebtedness securing Liens permitted by clause (i),
(ii) or (iii) of Section 10.1(a), and
(b) Indebtedness of a Wholly-Owned Subsidiary owing to the
Company or another Wholly-Owned Subsidiary.
For purposes of this Section 10.5, a Subsidiary shall be deemed to have
incurred Indebtedness in respect of any obligation previously owed to
the Company or to a Wholly-Owned Subsidiary on the date the obligee
ceases for any reason to be the Company or a Wholly-Owned Subsidiary and
a Person that hereafter becomes a Subsidiary shall be deemed at that
time to have incurred all of its outstanding Indebtedness.
(f) Transactions with Affiliates.
The Company will not and will not permit any Subsidiary to enter
into directly or indirectly any transaction or Material group of related
transactions (including without limitation the purchase, lease, sale or
exchange of properties of any kind or the rendering of any service) with
any Affiliate (other than the Company or another Subsidiary), except in
the ordinary course and pursuant to the reasonable requirements of the
Company's or such Subsidiary's business and upon fair and reasonable
terms no less favorable to the Company or such Subsidiary than would be
obtainable in a comparable arm's-length transaction with a Person not an
Affiliate.
(17) EVENTS OF DEFAULT.
An "Event of Default" shall exist if any of the following
conditions or events shall occur and be continuing:
(a) the Company defaults in the payment of any principal or
premium on any Note when the same becomes due and payable, whether
at maturity or at a date fixed for prepayment or by declaration or
otherwise; or
(b) the Company defaults in the payment of any interest on
any Note for more than five Business Days after the same becomes
due and payable; or
(c) the Company defaults in the performance of or compliance
with any term contained in Section 7.1(d), Section 8.1 or
Section 10.1 to 10.5, inclusive; or
(d) the Company defaults in the performance of or compliance
with any term contained herein (other than those referred to in
paragraphs (a), (b) and (c) of this Section 11) and such default is
not remedied within 30 days after a Responsible Officer obtaining
actual knowledge of such default; or
(e) any representation or warranty made in writing by or on
behalf of the Company or by any officer of the Company in this
Agreement or in any writing furnished in connection with the
transactions contemplated hereby proves to have been false or
incorrect in any material respect on the date as of which made; or
(f) the Company or any Subsidiary (i) is generally not
paying, or admits in writing its inability to pay, its debts as
they become due, (ii) files, or consents by answer or otherwise to
the filing against it of, a petition for relief or reorganization
or arrangement or any other petition in bankruptcy, for liquidation
or to take advantage of any bankruptcy, insolvency, reorganization,
moratorium or other similar law of any jurisdiction, (iii) makes an
assignment for the benefit of its creditors, (iv) consents to the
appointment of a custodian, receiver, trustee or other officer with
similar powers with respect to it or with respect to any
substantial part of its property, (v) is adjudicated as insolvent
or to be liquidated, or (vi) takes corporate action for the purpose
of any of the foregoing; or
(g) a court or governmental authority of competent
jurisdiction enters an order appointing, without consent by the
Company or any Subsidiary, a custodian, receiver, trustee or other
officer with similar powers with respect to it or with respect to
any substantial part of its property, or constituting an order for
relief or approving a petition for relief or reorganization or any
other petition in bankruptcy or for liquidation or to take
advantage of any bankruptcy or insolvency law of any jurisdiction,
or ordering the dissolution, winding-up or liquidation of the
Company or any Subsidiary, or any such petition shall be filed
against the Company or any Subsidiary and such petition shall not
be dismissed within 60 days; or
(h) a final judgment or judgments for the payment of money
aggregating in excess of $500,000 are rendered against one or more
of the Company and its Subsidiaries which judgments are not, within
60 days after entry thereof, bonded, paid, discharged or stayed
pending appeal, or are not discharged within 60 days after the
expiration of such stay; or
(18) REMEDIES ON DEFAULT, ETC.
(a) Acceleration.
If any Event of Default has occurred and is continuing, the
Required Holders of the Notes may at any time at its or their option, by
notice or notices to the Company, declare all the Notes at the time
outstanding to be immediately due and payable.
Upon any Notes becoming due and payable under this Section 12.1,
whether automatically or by declaration, such Notes will forthwith
mature and the entire unpaid principal amount of such Notes, plus (x)
all accrued and unpaid interest thereon and the LIBOR Funding Loss
Amount for each Series C Note (in each case to the full extent permitted
by applicable law), shall all be immediately due and payable, in each
and every case without presentment, demand, protest or further notice,
all of which are hereby waived.
(b) Other Remedies.
If any Default or Event of Default has occurred and is continuing,
and irrespective of whether any Notes have become or have been declared
immediately due and payable under Section 12.1, the Holder of any Note
at the time outstanding may proceed to protect and enforce the rights of
such Holder by an action at law, suit in equity or other appropriate
proceeding, whether for the specific performance of any agreement
contained herein or in any Note, or for an injunction against a
violation of any of the terms hereof or thereof, or in aid of the
exercise of any power granted hereby or thereby or by law or otherwise.
(c) Rescission.
At any time after any Notes have been declared due and payable
pursuant to Section 12.1, the Required Holders by written notice to the
Company, may rescind and annul any such declaration and its consequences
if (a) the Company has paid all overdue interest on the Notes, all
principal of any Notes that are due and payable and are unpaid other
than by reason of such declaration, and all interest on such overdue
principal and (to the extent permitted by applicable law) any overdue
interest in respect of the Notes, at the respective default rates
specified in the Notes, (b) all Events of Default and Defaults, other
than non-payment of amounts that have become due solely by reason of
such declaration, have been cured or have been waived pursuant to
Section 17, and (c) no judgment or decree has been entered for the
payment of any monies due pursuant hereto or to the Notes. No
rescission and annulment under this Section 12.3 will extend to or
affect any subsequent Event of Default or Default or impair any right
consequent thereon.
(d) No Waivers or Election of Remedies, Expenses, etc.
No course of dealing and no delay on the part of any Holder of any
Note in exercising any right, power or remedy shall operate as a waiver
thereof or otherwise prejudice such Holder's rights, powers or remedies.
No right, power or remedy conferred by this Agreement or by any Note
upon any Holder thereof shall be exclusive of any other right, power or
remedy referred to herein or therein or now or hereafter available at
law, in equity, by statute or otherwise. Without limiting the
obligations of the Company under Section 15, the Company will pay to the
Holder of each Note on demand such further amount as shall be sufficient
to cover all costs and expenses of such Holder incurred in any
enforcement or collection under this Section 12, including without
limitation reasonable attorneys' fees, expenses and disbursements.
(19) REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES.
(a) Registration of Notes.
The Company shall keep at its principal executive office a register
for the registration and registration of transfers of Notes. The name
and address of each Holder of one or more Notes, each transfer thereof
and the name and address of each transferee of one or more Notes shall
be registered in such register. Prior to due presentment for
registration of transfer, the Person in whose name any Note shall be
registered shall be deemed and treated as the owner and Holder thereof
for all purposes hereof, and the Company shall not be affected by any
notice or knowledge to the contrary. The Company shall give to any
Holder of a Note that is an Institutional Investor promptly upon request
therefor, a complete and correct copy of the names and addresses of all
registered Holders of Notes.
(b) Transfer and Exchange of Notes.
Upon surrender of any Note at the principal executive office of the
Company for registration of transfer or exchange (and in the case of a
surrender for registration of transfer, duly endorsed or accompanied by
a written instrument of transfer duly executed by the registered Holder
of such Note or his attorney duly authorized in writing and accompanied
by the address for notices of each transferee of such Note or part
thereof), the Company shall execute and deliver, at the Company's
expense (except as provided below), one or more new Notes (as requested
by the Holder thereof) in exchange therefor, in an aggregate principal
amount equal to the unpaid principal amount of the surrendered Note.
Each such new Note shall be payable to such Person as such Holder may
request. Each such new Note shall be dated and bear interest from the
date to which interest shall have been paid on the surrendered Note or
dated the date of the surrendered Note if no interest shall have been
paid thereon. The Company may require payment of a sum sufficient to
cover any stamp tax or governmental charge imposed in respect of any
such transfer of Notes. Notes shall not be transferred in denominations
of less than $100,000, provided that if necessary to enable the
registration of transfer by a Holder of its entire holding of Notes, one
Note may be in a denomination of less than $100,000.
You agree that the Company shall not be required to register the
transfer of any Note to any Person (other than your nominee) or to any
separate account maintained by you unless the Company receives from the
transferee a representation to the Company (and appropriate information
as to any separate accounts or other matters) to the same or similar
effect with respect to the transferee as is contained in Section 6.2.
You shall not be liable for any damages in connection with any such
representations or assurances provided to the Company by any transferee.
(c) Replacement of Notes.
Upon receipt by the Company of evidence reasonably satisfactory to
it of the ownership of and the loss, theft, destruction or mutilation of
any Note (which evidence shall be, in the case of an Institutional
Investor, notice from such Institutional Investor of such ownership and
such loss, theft, destruction or mutilation), and
(a) in the case of loss, theft or destruction, of indemnity
reasonably satisfactory to it (provided that if the Holder of such
Note is, or is a nominee for, an original Purchaser or any other
Institutional Investor, such Person's own unsecured agreement of
indemnity shall be deemed to be satisfactory), or
(b) in the case of mutilation, upon surrender and
cancellation thereof,
the Company at its own expense shall execute and deliver, in lieu
thereof, a new Note of the same series, dated and bearing interest from
the date to which interest shall have been paid on such lost, stolen,
destroyed or mutilated Note or dated the date of such lost, stolen,
destroyed or mutilated Note if no interest shall have been paid thereon.
(20) PAYMENTS ON NOTES.
(a) Place of Payment.
Subject to Section 14.2, payments of principal, premium, if any,
and interest becoming due and payable on the Notes shall be made in the
State of Texas at the principal office of the Company in such
jurisdiction. The Company may at any time, by notice to each Holder of
a Note, change the place of payment of the Notes so long as such place
of payment shall be either the principal office of the Company in such
jurisdiction or the principal office of a bank or trust company in such
jurisdiction.
(b) Home Office Payment.
So long as you or your nominee shall be the Holder of any Note, and
notwithstanding anything contained in Section 14.1 or in such Note to
the contrary, the Company will pay all sums becoming due on such Note
for principal and interest by the method and at the address specified
for such purpose below your name in Schedule A, or by such other method
or at such other address as you shall have from time to time specified
to the Company in writing for such purpose, without the presentation or
surrender of such Note or the making of any notation thereon, except
that upon written request of the Company made concurrently with or
reasonably promptly after payment or prepayment in full of any Note, you
shall surrender such Note for cancellation, reasonably promptly after
any such request, to the Company at its principal executive office or at
the place of payment most recently designated by the Company pursuant to
Section 14.1. Prior to any sale or other disposition of any Note held
by you or your nominee you will, at your election, either endorse
thereon the amount of principal paid thereon and the last date to which
interest has been paid thereon or surrender such Note to the Company in
exchange for a new Note or Notes pursuant to Section 13.2. The Company
will afford the benefits of this Section 14.2 to any Institutional
Investor that is the direct or indirect transferee of any Note purchased
by you under this Agreement and that has made the same agreement
relating to such Note as you have made in this Section 14.2.
(21) EXPENSES, ETC.
(a) Transaction Expenses.
Whether or not the transactions contemplated hereby are
consummated, the Company will pay all costs and expenses (including
reasonable attorneys and, if reasonably required, local or other
counsel) incurred by you and each Other Purchaser or Holder of a Note in
connection with such transactions and in connection with any amendments,
waivers or consents under or in respect of this Agreement or the Notes
(whether or not such amendment, waiver or consent becomes effective),
including without limitation: (a) the costs and expenses incurred in
enforcing or defending (or determining whether or how to enforce or
defend) any rights under this Agreement or the Notes or in responding to
any subpoena or other legal process or informal investigative demand
issued in connection with this Agreement or the Notes, or by reason of
being a Holder of any Note, and (b) the costs and expenses, including
financial advisors' fees, incurred in connection with the insolvency or
bankruptcy of the Company or any Subsidiary or in connection with any
work-out or restructuring of the transactions contemplated hereby and by
the Notes. The Company will pay, and will save you and each other
Holder of a Note harmless from, all claims in respect of any fees, costs
or expenses if any, of brokers and finders (other than those retained by
you).
(b) LIBOR Funding Losses.
The Company will pay each Holder of a Series C Note, within two
Business Days after demand therefor, such amount (the "LIBOR Funding
Loss Amount") as in the good faith determination by such Holder will
compensate such Holder for any loss or reasonable expense such Holder
may sustain as a consequence of the receipt or recovery for any reason
(including without limitation a prepayment pursuant to Section 8.1 or
acceleration pursuant to Section 12.1) of all or any part of payment on
account of such Series C Note prior to the last day of the applicable
Interest Period therefor, including without limitation any loss or
expense sustained or incurred in liquidating a Swap or any loss of
margin on reemployment of the funds so received or recovered.
(c) Survival.
The obligations of the Company under this Section 15 will survive
the payment or transfer of any Note, the enforcement, amendment or
waiver of any provision of this Agreement or the Notes, and the
termination of this Agreement.
(22) SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT.
All representations and warranties contained herein shall survive
the execution and delivery of this Agreement and the Notes, the purchase
or transfer by you of any Note or portion thereof or interest therein
and the payment of any Note, and may be relied upon by any subsequent
Holder of a Note, regardless of any investigation made at any time by or
on behalf of you or any other Holder of a Note. All statements
contained in any certificate or other instrument delivered by or on
behalf of the Company pursuant to this Agreement shall be deemed
representations and warranties of the Company under this Agreement.
Subject to the preceding sentence, this Agreement and the Notes embody
the entire agreement and understanding between you and the Company and
supersede all prior agreements and understandings relating to the
subject matter hereof.
(23) AMENDMENT AND WAIVER.
(a) Requirements.
This Agreement and the Notes may be amended, and the observance of
any term hereof or of the Notes may be waived (either retroactively or
prospectively), with (and only with) the written consent of the Company
and the Required Holders, except that (a) no amendment or waiver of any
of the provisions of Section 1, 2, 3, 4, 5, 6 or 21, or any defined term
(as it is used therein), will be effective as to you unless consented to
by you in writing, and (b) no such amendment or waiver may, without the
written consent of the Holder of each Note at the time outstanding
affected thereby, (i) subject to the provisions of Section 12 relating
to acceleration or rescission, change the amount or time of any
prepayment or payment of principal of, or change the rate or the time of
payment or method of computation of interest on, the Notes, (ii) change
the percentage of the principal amount of the Notes the Holders of which
are required to consent to any such amendment or waiver, or (iii) amend
any of Sections 8, 11(a), 11(b), 12, 17 or 20.
(b) Solicitation of Holders of Notes.
(a) Solicitation. The Company will provide each Holder of the
Notes (irrespective of the amount of Notes then owned by it) with
sufficient information, sufficiently far in advance of the date a
decision is required, to enable such Holder to make an informed and
considered decision with respect to any proposed amendment, waiver
or consent in respect of any of the provisions hereof or of the
Notes. The Company will deliver executed or true and correct
copies of each amendment, waiver or consent effected pursuant to
the provisions of this Section 17 to each Holder of outstanding
Notes promptly following the date on which it is executed and
delivered by, or receives the consent or approval of, the requisite
Holders of Notes.
(b)Payment. The Company will not directly or indirectly pay
or cause to be paid any remuneration, whether by way of
supplemental or additional interest, fee or otherwise, or grant any
security, to any Holder of Notes as consideration for or as an
inducement to the entering into by any Holder of Notes or any
waiver or amendment of any of the terms and provisions hereof
unless such remuneration is concurrently paid, or security is
concurrently granted, on the same terms (or no less favorable terms
taking into account differences in the terms of the Notes), ratably
to each Holder of Notes then outstanding even if such Holder did
not consent to such waiver or amendment.
(c) Binding Effect, etc.
Any amendment or waiver consented to as provided in this Section 17
applies equally to all Holders of Notes and is binding upon them and
upon each future Holder of any Note and upon the Company without regard
to whether such Note has been marked to indicate such amendment or
waiver. No such amendment or waiver will extend to or affect any
obligation, covenant, agreement, Default or Event of Default not
expressly amended or waived or impair any right consequent thereon. No
course of dealing between the Company and the Holder of any Note nor any
delay in exercising any rights hereunder or under any Note shall operate
as a waiver of any rights of any Holder of such Note. As used herein,
the term "this Agreement" and references thereto shall mean this
Agreement as it may from time to time be amended or supplemented.
(d) Notes held by Company, etc.
Solely for the purpose of determining whether the Holders of the
requisite percentage of the aggregate principal amount of Notes then
outstanding approved or consented to any amendment, waiver or consent to
be given under this Agreement or the Notes, or have directed the taking
of any action provided herein or in the Notes to be taken upon the
direction of the Holders of a specified percentage of the aggregate
principal amount of Notes then outstanding, Notes directly or indirectly
owned by the Company or any of its Affiliates shall be deemed not to be
outstanding.
(24) NOTICES.
All notices and communications provided for hereunder shall be in
writing and sent (a) by telecopy if the sender on the same day sends a
confirming copy of such notice by a recognized overnight delivery
service (charges prepaid), or (b) by registered or certified mail with
return receipt requested (postage prepaid), or (c) by a recognized
overnight delivery service (with charges prepaid). Any such notice must
be sent:
if to you or your nominee, to you or it at the address
specified for such communications in Schedule A, or at such other
address as you or it shall have specified to the Company in
writing,
if to any other Holder of any Note, to such Holder at such
address as such other Holder shall have specified to the Company in
writing, or
if to the Company, to the Company at its address set forth
at the beginning hereof to the attention of the Chief Financial
officer, or at such other address as the Company shall have
specified to the Holder Of each Note in writing.
Notices under this Section 18 will be deemed given only when actually
received.
(25) REPRODUCTION OF DOCUMENTS.
This Agreement and all documents relating thereto, including,
without limitation, (a) consents, waivers and modifications that may
hereafter be executed, (b) documents received by you at the Closing
(except the Notes themselves), and (c) financial statements,
certificates and other information previously or hereafter furnished to
you, may be reproduced by you by any photographic, photostatic,
microfilm, microcard, miniature photographic or other similar process
and you may destroy any original document so reproduced. The Company
agrees and stipulates that, to the extent permitted by applicable law,
any such reproduction shall be admissible in evidence as the original
itself in any judicial or administrative proceeding (whether or not the
original is in existence and whether or not such reproduction was made
by you in the regular course of business) and any enlargement, facsimile
or further reproduction of such reproduction shall likewise be
admissible in evidence. This Section 19 shall not prohibit the Company
or any other Holder of Notes from contesting any such reproduction to
the same extent that it could contest the original, or from introducing
evidence to demonstrate the inaccuracy of any such reproduction.
(26) CONFIDENTIAL INFORMATION.
For the purposes of this Section 20, "Confidential Information"
means information delivered to you by or on behalf of the Company or any
Subsidiary in connection with the transactions contemplated by or
otherwise pursuant to this Agreement that is proprietary in nature and
that was clearly marked or labeled or otherwise adequately identified
when received by you as being confidential information of the Company or
such Subsidiary, provided that such term does not include information
that (a) was publicly known or otherwise known to you prior to the time
of such disclosure, (b) subsequently becomes publicly known through no
act or omission by you or any person acting on your behalf, (c)
otherwise becomes known to you other than through disclosure by the
Company or any Subsidiary or (d) constitutes financial statements
delivered to you under Section 7.1 that are otherwise publicly
available. You will maintain the confidentiality of such Confidential
Information in accordance with procedures adopted by you in good faith
to protect confidential information of third parties delivered to you,
provided that you may deliver or disclose Confidential Information to
(i) your directors, officers, trustees, employees, agents, attorneys and
affiliates (to the extent such disclosure reasonably relates to the
administration of the investment represented by your Notes), (ii) your
financial advisors and other professional advisors whose duties require
them to hold confidential the Confidential Information substantially in
accordance with the terms of this Section 20, (iii) any other Holder of
any Note, (iv) any Institutional Investor to which you sell or offer to
sell such Note or any part thereof or any participation therein (if such
Person has agreed in writing prior to its receipt of such Confidential
Information to be bound by the provisions of this Section 20), (v) any
Person from which you offer to purchase any security of the Company (if
such Person has agreed in writing prior to its receipt of such
Confidential Information to be bound by the provisions of this
Section 20), (vi) any federal or state regulatory authority having
jurisdiction over you, (vii) any nationally recognized rating agency
that requires access to information about your investment portfolio or
(viii) any other Person to which such delivery or disclosure may be
necessary or appropriate (w) to effect compliance with any law, rule,
regulation or order applicable to you, (x) in response to any subpoena
or other legal process, (y) in connection with any litigation to which
you are a party or (z) if an Event of Default has occurred and is
continuing, to the extent you may reasonably determine such delivery and
disclosure to be necessary or appropriate in the enforcement or for the
protection of the rights and remedies under your Notes and this
Agreement. Each Holder of a Note, by its acceptance of a Note, will be
deemed to have agreed to be bound by and to be entitled to the benefits
of this Section 20 as though it were a party to this Agreement. On
reasonable request by the Company in connection with the delivery to any
Holder of a Note of information required to be delivered to such Holder
under this Agreement or requested by such Holder (other than a Holder
that is a party to this Agreement or its nominee), such Holder will
enter into an agreement with the Company embodying the provisions of
this Section 20.
(27) SUBSTITUTION OF PURCHASER.
You shall have the right to substitute any one of your non-United
States Affiliates as the purchaser of the Notes that you have agreed to
purchase as record holder on behalf of the Beneficial Owner hereunder,
by written notice to the Company, which notice shall be signed by both
you and such Affiliate, shall contain such Affiliate's agreement to be
bound by this Agreement and shall contain a confirmation by such
Affiliate of the accuracy with respect to it of the representations set
forth in Section 6. Upon receipt of such notice, wherever the word "you"
is used in this Agreement (other than in this Section 21), such word
shall be deemed to refer to such Affiliate in lieu of you. In the event
that such Affiliate is so substituted as a purchaser hereunder and such
Affiliate thereafter transfers to you all of the Notes then held by such
Affiliate, upon receipt by the Company of notice of such transfer,
wherever the word "you" is used in this Agreement (other than in this
Section 21), such word shall no longer be deemed to refer to such
Affiliate, but shall refer to you, and you shall have all the rights of
an original Holder of the Notes under this Agreement.
(28) MISCELLANEOUS.
(a) Successors and Assigns.
All covenants and other agreements contained in this Agreement by
or on behalf of any of the parties hereto bind and inure to the benefit
of their respective successors and assigns (including without limitation
any subsequent Holder of a Note) whether so expressed or not.
(b) Construction.
Each covenant contained herein shall be construed (absent express
provision to the contrary) as being independent of each other covenant
contained herein, so that compliance with any one covenant shall not
(absent such an express contrary provision) be deemed to excuse
compliance with any other covenant. Where any provision herein refers
to action to be taken by any Person, or which such Person is prohibited
from taking, such provision shall be applicable whether such action is
taken directly or indirectly by such Person.
Jurisdiction and Process.
(a) The Company irrevocably submits to the non-exclusive in
personam jurisdiction of any New York State or federal court
sitting in the Borough of Manhattan, The City of New York, over any
suit, action or proceeding arising out of or relating to this
Agreement or the Notes. To the fullest extent permitted by
applicable law, the Company irrevocably waives and agrees not to
assert, by way of motion, as a defense or otherwise, any claim that
it is not subject to the in personam jurisdiction of any such
court, any objection that it may now or hereafter have to the
laying of the venue of any such suit, action or proceeding brought
in any such court and any claim that any such suit, action or
proceeding brought in any such court has been brought in an
inconvenient forum.
(b) The Company agrees, to the fullest extent permitted by
applicable law, that a final judgment in any suit, action or
proceeding of the nature referred to in Section 22.3(a) brought in
any such court shall be conclusive and binding upon the Company
subject to rights of appeal, as the case may be, and may be
enforced in the courts of the United States of America or the State
of New York (or any other courts to the jurisdiction of which the
Company is or may be subject) by a suit upon such judgment.
(c) The Company consents to process being served in any suit,
action or proceeding of the nature referred to in Section 22.3(a)
by mailing a copy thereof by registered or certified mail, postage
prepaid, return receipt requested, to the Company at its address
specified in Section 18 or at such other address of which you shall
then have been notified pursuant to said Section. The Company
agrees that such service upon receipt (i) shall be deemed in every
respect effective service of process upon it in any such suit,
action or proceeding and (ii) shall, to the fullest extent
permitted by applicable law, be taken and held to be valid personal
service upon and personal delivery to the Company. Notices
hereunder shall be conclusively presumed received as evidenced by
a delivery receipt furnished by the United States Postal Service or
any reputable commercial delivery service.
(d) Nothing in this Section 22.3 shall affect the right of
any holder of a Note to serve process in any manner permitted by
law, or limit any right that the holders of any of the Notes may
have to bring proceedings against the Company in the courts of any
appropriate jurisdiction or to enforce in any lawful manner a
judgment obtained in one jurisdiction in any other jurisdiction.
(d) Indemnification.
The Company agrees, to the extent permitted by applicable law, to
indemnify, exonerate, defend and hold you and each of your officers,
directors, trustees, employees and agents (collectively the
"Indemnitees" and individually an "Indemnitee") free and harmless from
and against any and all actions, causes of action, suits, losses,
liabilities and damages, and expenses in connection therewith, including
without limitation reasonable fees and disbursements of a single firm to
act as special counsel for all Indemnitees or, if there shall exist a
legitimate conflict in the interests of the Indemnitees, the reasonable
fees and disbursements of more than one special counsel (collectively
the "Indemnified Liabilities") incurred by the Indemnitees or any of
them as a result of, or arising out of, or relating to, the execution,
delivery, performance or enforcement of this Agreement, the Notes or any
other instrument contemplated hereby by any of the Indemnitees, or any
transaction financed or to be financed in whole or in part directly or
indirectly with proceeds from the sale of any of the Notes, or any
action taken or omitted by an Indemnitee in the capacity of Calculation
Holder (or acting in place of the Calculation Holder as contemplated by
Section 1.1(b)), except as to any Indemnitee for any such Indemnified
Liabilities arising on account of such Indemnitee's gross negligence or
willful misconduct; and if and to the extent the foregoing undertaking
may be unenforceable for any reason, the Company agrees to make the
maximum contribution to the payment and satisfaction of each of the
Indemnified Liabilities which is permissible under applicable law. The
obligations of the Company under this Section shall survive the payment
of the Notes.
(e) Accounting Terms.
All accounting terms used herein which are not expressly defined in
this Agreement have the meanings respectively given to them in
accordance with GAAP. Except as otherwise specifically provided herein,
all computations made pursuant to this Agreement shall be made in
accordance with GAAP and all balance sheets and other financial
statements with respect thereto shall be prepared in accordance with
GAAP. Except as otherwise expressly provided, any consolidated
financial statement or financial computation shall be done in accordance
with GAAP; and, if at the time that any such statement or computation is
required to be made the Company shall not have any Subsidiary, such
terms shall mean a financial statement or a financial computation, as
the case may be, with respect to the Company only.
(f) Payments Due on Non-Business Days.
Anything in this Agreement or the Notes to the contrary
notwithstanding, any payment of principal of or interest on any Note
that is due on a date other than a Business Day shall be made on the
next succeeding Business Day without including the additional days
elapsed in the computation of the interest payable on such next
succeeding Business Day.
(g) Severability.
Any provision of this Agreement that is prohibited or unenforceable
in any jurisdiction shall, as to such jurisdiction, be ineffective to
the extent of such prohibition or unenforceability without invalidating
the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall (to the full extent permitted
by law) not invalidate or render unenforceable such provision in any
other jurisdiction.
(h) Counterparts.
This Agreement may be executed in any number of counterparts, each
of which shall be an original but all of which together shall constitute
one instrument. Each counterpart may consist of a number of copies
hereof, each signed by less than all, but together signed by all, of the
parties hereto.
(i) Governing Law.
THIS AGREEMENT AND THE NOTES SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE
LAWS OF THE STATE OF TEXAS EXCLUDING CHOICE-OF-LAW PRINCIPLES OF THE LAW
OF SUCH STATE THAT WOULD REQUIRE THE APPLICATION OF THE LAWS OF A
JURISDICTION OTHER THAN SUCH STATE.
If you are in agreement with the foregoing, please sign the form of
agreement in the space below provided on a counterpart of this Agreement
and return it to the Company, whereupon the foregoing shall become a
binding agreement between you and the Company.
Very truly yours,
SHOWBIZ PIZZA TIME, INC.
By:__________________________
Title:_______________________
The foregoing is hereby agreed to
as of the date thereof.
NEUE BANK AG
By:_______________________
SCHEDULE A
This Schedule A shows the names and addresses of the
Purchasers under the foregoing Note Purchase Agreement and the
other Agreements referred to therein and the respective principal
amounts of the Series C Notes to be purchased by each.
Name and Address of Purchaser Principal Amount of Series C
Notes to be Purchased
- ----------------------------- -----------------------------
NEUE BANK AG
Kirchstrasse 8
Postfach
FL-9490 Vaduz
$2,500,000
(1) All payments on account of
the Notes shall be made by
crediting in the form of bank
wire transfer of Federal or
other immediately available
funds (identifying each
payment as ShowBiz Pizza
Time, Inc. Floating Rate
Series C Senior Notes due
1997 interest and principal
to:
Swiss Bank Corporation
--------------------------
Zurich
-------------------------- -----------------------------
--------------------------
For credit as follows:
With telephone advice of
payment to:
(2) All notices and
communications to be
addressed to:
Neue Bank AG
---------------------
att. U. Eggenberger
---------------------
Address see above
---------------------
Tel. (075) 236 08 08
---------------------
Fax (075) 232 92 60
---------------------
(3) Notices with respect to
payments and corporate
actions to be addressed as
provided in clause (2)
above:
(4) Tax Identification Number:
N.A.
SCHEDULE B
DEFINED TERMS
-------------
As used herein, the following terms have the respective meanings set
forth below or set forth in the Section hereof following such term:
"Affiliate" means, at any time, and with respect to any
Person, (a) any other Person that at such time directly or
indirectly through one or more intermediaries Controls, or is
Controlled by, or is under common Control with, such first Person,
and (b) any Person beneficially owning or holding, directly or
indirectly, 10% or more of any class of voting or equity interests
of the Company or any Subsidiary or any corporation of which the
Company and its Subsidiaries beneficially own or hold, in the
aggregate, directly or indirectly, 10% or more of any class of
voting or equity interests. As used in this definition, "Control"
means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of a
Person, whether through the ownership of voting securities, by
contract or otherwise. Unless the context otherwise clearly
requires, any reference to an "Affiliate" is a reference to an
Affiliate of the Company.
"Beneficial Owner" means the beneficial owner of the Notes
purchased hereunder.
"Business Day" means any day other than a Saturday, a Sunday
or a day on which commercial banks in London, England, Dallas,
Texas, Cayman Islands, Geneva, Switzerland, or Liechtenstein are
required or authorized to be closed.
"Capital Lease" means, at any time, a lease with respect to
which the lessee is required concurrently to recognize the
acquisition of an asset and the incurrence of a liability in
accordance with GAAP.
"Capitalized Lease Obligations" means with respect to any
Person, all outstanding obligations of such Person in respect of
Capital Leases, taken at the capitalized amount thereof accounted
for as indebtedness in accordance with GAAP.
"Change of Control" means (a) the acquisition through purchase
or otherwise (including the agreement to act in concert without
more), by any Person or "group" (within the meaning of Section
13(d) or 14(d) of the Exchange Act) directly or indirectly, in one
or more transactions, of the beneficial ownership or control of
securities representing more than 25% of the combined voting power
of the Company's Voting Stock or (b) the acquisition by any Person,
entity or "group" (within the meaning of Section 13(d) or 14(d) of
the Exchange Act), of the power (whether or not exercised) to elect
a majority of the Board of Directors of the Company. For purposes
of this definition "beneficial ownership" shall have the meaning
set forth in Rule 13d-3 of the Securities and Exchange Commission
adopted pursuant to the Exchange Act.
"Closing" is defined in Section 3.
"Code" means the Internal Revenue Code of 1986, as amended
from time to time, and the rules and regulations promulgated
thereunder from time to time.
"Company" means ShowBiz Pizza Time, Inc., a Kansas
corporation.
"Confidential Information" is defined in Section 20.
"Consolidated Capitalization" means, at any date, the sum of
(a) Consolidated Indebtedness plus (b) Consolidated Net Worth plus
(c) deferred tax liabilities (if any), all as determined on a
consolidated basis for the Company and its Subsidiaries in
accordance with GAAP.
"Consolidated Indebtedness" means, at any date, all
Indebtedness of the Company and its Subsidiaries determined on a
consolidated basis in accordance with GAAP.
"Consolidated Interest Expense" for any period means the sum
for the Company and its Subsidiaries, determined on a consolidated
basis in accordance with GAAP, of all amounts which would be
deducted in computing Consolidated Net Income on account of
interest on Indebtedness (including imputed interest in respect of
Capitalized Lease Obligations and amortization of debt discount and
expense).
"Consolidated Net Income" for any period means the net income
of the Company and its Subsidiaries for such period, determined on
a consolidated basis in accordance with GAAP, excluding
(a) the proceeds of any life insurance policy,
(b) any gains arising from (i) the sale or other
disposition of any assets (other than current assets) to the
extent that the aggregate amount of the gains during such
period exceeds the aggregate amount of the losses during such
period from the sale, abandonment or other disposition of
assets (other than current assets), (ii) any write-up of
assets or (iii) the acquisition of outstanding securities of
the Company or any Subsidiary,
(c) any amount representing any interest in the
undistributed earnings of any other Person (other than a
Subsidiary),
(d) any earnings, prior to the date of acquisition, of
any Person acquired in any manner, and any earnings of any
Subsidiary acquired prior to its becoming a Subsidiary,
(e) any earnings of a successor to or transferee of the
assets of the Company prior to its becoming such successor or
transferee,
(f) any deferred credit (or amortization of a deferred
charge or credit) arising from the acquisition of any Person,
and
(g) any extraordinary gains not covered by clause (b)
above.
"Consolidated Net Worth" means, at any date, on a consolidated
basis for the Company and its Subsidiaries, (a) the sum of (i)
capital stock taken at par or stated value plus (ii) capital in
excess of par or stated value relating to capital stock plus (iii)
retained earnings (or minus any retained earning deficit) minus (b)
the sum of treasury stock, capital stock subscribed for and
unissued, deferred compensation and other contra-equity accounts,
all determined in accordance with GAAP.
"Consolidated Operating Lease Rentals" for any period means
the sum of the rental and other obligations required to be paid by
the Company and its Subsidiaries as lessee under all leases of real
or personal property (other than Capital Leases), excluding any
amounts required to be paid by the lessee (whether or not therein
designated as rental or additional rental) on account of
maintenance and repairs, insurance, taxes, assessments, water rates
and similar charges, all determined on a consolidated basis in
accordance with GAAP.
"Default" means an event or condition the occurrence or
existence of which would, with the lapse of time or the giving of
notice or both, become an Event of Default.
"EBITDA" for any period means Consolidated Net Income plus all
amounts deducted in the computation thereof on account of (a)
Consolidated Interest Expense, (b) depreciation and amortization
expenses (including amortization of deferred compensation) and
other non-cash charges, (c) income and profits taxes and (d)
extraordinary losses (if any) of the type described in clauses (b)
through (g) of the definition of "Consolidated Net Income" that are
deducted in determining Consolidated Net Income for such period.
"Environmental Laws" means any and all Federal, state, local,
and foreign statutes, laws, regulations, ordinances, rules,
judgments, orders, decrees, permits, concessions, grants,
franchises, licenses, agreements or governmental restrictions
relating to pollution and the protection of the environment or the
release of any materials into the environment, including but not
limited to those related to hazardous substances or wastes, air
emissions and discharges to waste or public systems.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and the rules and regulations
promulgated thereunder from time to time in effect.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) that is treated as a single employer together with
the Company under section 414 of the Code.
"Event of Default" is defined in Section 11.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time.
"GAAP" means generally accepted accounting principles as in
effect from time to time in the United States of America.
"Governmental Authority" means
(a) the government of
(i) the United States of America or any State or
other political subdivision thereof, or
(ii) any jurisdiction in which the Company or any
Subsidiary conducts all or any part of its business, or
which asserts jurisdiction over any properties of the
Company or any Subsidiary, or
(b) any entity exercising executive, legislative,
judicial, regulatory or administrative functions of, or
pertaining to, any such government.
"Guaranty" means, with respect to any Person, any obligation
(except the endorsement in the ordinary course of business of
negotiable instruments for deposit or collection) of such Person
guaranteeing or in effect guaranteeing any Indebtedness, dividend
or other obligation of any other Person in any manner, whether
directly or indirectly, including without limitation obligations
incurred through an agreement, contingent or otherwise, by such
Person:
(a) to purchase such Indebtedness or obligation or any
property constituting security therefor;
(b) to advance or supply funds (i) for the purchase or
payment of such indebtedness or obligation, or (ii) to
maintain any working capital or other balance sheet condition
or any income statement condition of any other Person or
otherwise to advance or make available funds for the purchase
or payment of such Indebtedness or obligation;
(c) to lease properties or to purchase properties or
services primarily for the purpose of assuring the owner of
such Indebtedness or obligation of the ability of any other
Person to make payment of the indebtedness or obligation; or
(d) otherwise to assure the owner of such Indebtedness
or obligation against loss in respect thereof.
In any computation of the Indebtedness or other liabilities of the
obligor under any Guaranty, the Indebtedness or other obligations
that are the subject of such Guaranty shall be assumed to be direct
obligations of such obligor.
"Hazardous Material" means any and all pollutants, toxic or
hazardous wastes or any other substances that might pose a hazard
to health or safety, the removal of which may be required or the
generation, manufacture, refining, production, processing,
treatment, storage, handling, transportation, transfer, use,
disposal, release, discharge, spillage, seepage, or filtration of
which is or shall be restricted, prohibited or penalized by any
applicable law (including without limitation asbestos, urea
formaldehyde foam insulation and polycholorinated biphenyls).
"Holder" means, with respect to any Note, the Person in whose
name such Note is registered in the register maintained by the
Company pursuant to Section 13.1.
"Indebtedness" with respect to any Person means, at any time,
without duplication,
(a) its liabilities for borrowed money,
(b) its liabilities for the deferred purchase price of
property acquired by such Person (excluding accounts payable
arising in the ordinary course of business and not overdue but
including all liabilities created or arising under any
conditional sale or other title retention agreement with
respect to any such property),
(c) its Capitalized Lease Obligations,
(d) all liabilities for borrowed money secured by any
Lien with respect to any property owned by such Person
(whether or not it has assumed or otherwise become liable for
such liabilities),
(e) all its liabilities in respect of letters of credit
or instruments serving a similar function issued or accepted
for its account by banks and other financial institutions
(whether or not representing obligations for borrowed money),
(f) Swaps of such Person, and
(g) any Guaranty of Such Person with respect to
liabilities of a type described in any of clauses (a) through
(f) above.
Indebtedness of any Person shall include all obligations of such
Person of the character described in clauses (a) through (g) above
to the extent such Person remains legally liable in respect thereof
notwithstanding that any such obligation is deemed to be
extinguished under GAAP. Indebtedness shall not include any
obligations under operating lease agreements.
"Institutional Investor" means (a) any original purchaser of
a Note, (b) any holder of a Note holding more than 1% of the
aggregate principal amount of the Notes then outstanding, and (c)
any bank, trust company, savings and loan association or other
financial institution, any pension plan, any investment company,
any insurance company, any broker or dealer, or any other similar
financial institution or entity, regardless of legal form.
"Interest Payment Date" means each March 31, June 30,
September 30 and December 31.
"Interest Period" is defined in Section 1.1(c).
"LIBOR Funding Loss Amount" is defined in Section 15.2.
"LIBOR Rate" is defined in Section 1.1(c).
"Lien" means, with respect to any Person, any mortgage, lien,
pledge, charge, security interest or other encumbrance, or any
interest or title of any vendor, lessor, lender or other secured
party to or of such Person under any conditional sale or other
title retention agreement or Capital Lease, upon or with respect to
any property or asset of such Person (including in the case of
stock, stockholder agreements, voting trust agreements and all
similar arrangements).
"Material" means material in relation to the business,
operations, affairs, financial condition, profits, assets,
properties or prospects of the Company and its Subsidiaries taken
as a whole.
"Material Adverse Effect" means a material adverse effect on
(a) the business, operations, affairs, financial condition,
profits, assets, properties or prospects of the Company and its
Subsidiaries taken as a whole, (b) the ability of the Company to
perform its obligations under this Agreement and the Notes or (c)
the validity or enforceability of this Agreement or the Notes.
"Multiemployer Plan" means any Plan that is a "multiemployer
plan" (as such term is defined in section 4001(a)(3) of ERISA).
"Notes" is defined in Section 1.1.
"Officer's Certificate" means a certificate of a Senior
Financial Officer or of any other officer of the Company whose
responsibilities extend to the subject matter of such certificate.
"Other Agreements" is defined in Section 2.
"Other Purchasers" is defined in Section 2.
"PBGC" means the Pension Benefit Guaranty Corporation referred
to and defined in ERISA or any successor thereto.
"Paying Agent" shall be a bank, trust company, or other
financial institution, at which this Note may be surrendered for
payment. At its option, the Company may act as its own Paying
Agent.
"Person" means an individual, partnership, corporation,
limited liability company, association, trust, unincorporated
organization, or a government or agency or political subdivision
thereof.
"Plan" means an "employee benefit plan" (as defined in section
3(3) of ERISA) that is or, within the preceding five years, has
been established or maintained, or to which contributions are or,
within the preceding five years, have been made or required to be
made, by the Company or any ERISA Affiliate or with respect to
which the Company or any ERISA Affiliate may have any liability.
"Property" or "properties" means, unless otherwise
specifically limited, real or personal property of any kind,
tangible or intangible, choate or inchoate.
"QPAM Exemption" means Prohibited Transaction Class Exemption
84-14 issued on March 13, 1984 by the United States Department of
Labor.
"Redemption Date" means the date fixed for redemption of any
principal amount of the Notes, pursuant to the terms of this
Agreement and the Notes.
"Redemption Price" means, with respect to any purchase,
redemption, or prepayment of all or any part of the Notes, the
price fixed for redemption in accordance with the terms of the
Notes.
"Required Holders" means, at any time, the holders of at least
a majority in unpaid principal amount of the Notes at the time
outstanding.
"Reset Date" is defined in Section 1.2(c).
"Responsible Officer" means any Senior Financial Officer and
any other officer of the Company with responsibility for the
administration of the relevant portion of this Agreement.
"Securities Act" means the Securities Act of 1933, as amended
from time to time.
"Senior Financial Officer" means the chief financial officer,
principal accounting officer, treasurer or comptroller of the
Company.
"Series C Notes" is defined in Section 1.1.
"Subsidiary" means, as to any Person, any corporation or other
business entity a majority of the combined voting power of all
Voting Stock of which is owned by such Person or one or more of its
Subsidiaries or such Person and one or more of its Subsidiaries.
Unless the context otherwise clearly requires, any reference to a
"Subsidiary" is a reference to a Subsidiary of the Company.
"Swaps" means, with respect to any Person, payment obligations
with respect to interest rate swaps, currency swaps and similar
obligations obligating such Person to make payments, whether
periodically or upon the happening of a contingency. For the
purposes of this Agreement, the amount of the obligation under any
Swap shall be the amount determined in respect thereof as of the
end of the then most recently ended fiscal quarter of such Person,
based on the assumption that such Swap had terminated at the end of
such fiscal quarter, and in making such determination, if any
agreement relating to such Swap provides for the netting of amounts
payable by and to such Person thereunder or if any such agreement
provides for the simultaneous payment of amounts by and to such
Person, then in each such case, the amount of such obligation shall
be the net amount so determined.
"U.S. Legal Tender" means United States dollars or such coin
or currency of the United States of America as at the time of
payment shall be legal tender for the payment of public and private
debts in the United States of America.
"Voting Stock" means, with respect to any Person, any shares
of stock or other equity interests of any class or classes of such
Person whose holders are entitled under ordinary circumstances
(irrespective of whether at the time stock or other equity
interests of any other class or classes shall have or might have
voting power by reason of the happening of any contingency) to vote
for the election of a majority of the directors, managers, trustees
or other governing body of such Person.
"Wholly-Owned Subsidiary" means, at any time, any Subsidiary
all of the equity interests (except directors' qualifying shares)
and voting interests of which are owned by any one or more of the
Company and the Company's other Wholly-Owned Subsidiaries at such
time.
EXHIBIT 1.1(a)
[FORM OF SERIES C NOTE]
SHOWBIZ PIZZA TIME, INC.
FLOATING RATE SERIES C SENIOR NOTE DUE 1997
No. [___________] [__________]
$ [___________] [Date]
PPN [___________]
BENEFICIAL OWNERSHIP OF THIS NOTE MAY ONLY BE TRANSFERRED TO A
PERSON WHO IS NOT A RESIDENT OR CITIZEN OF THE UNITED STATES OF
AMERICA, OR TO A BANK, OR OTHER INSTITUTION OR ENTITY WHICH IS NOT
INCORPORATED OR ORGANIZED UNDER THE LAWS OF THE UNITED STATES OF
AMERICA OR ANY STATE THEREOF. THIS NOTE WAS OFFERED FOR SALE IN
CONNECTION WITH ITS ORIGINAL ISSUANCE ONLY OUTSIDE THE UNITED
STATES AND HAS BEEN DELIVERED TO THE HOLDER OUTSIDE THE UNITED
STATES.
FOR VALUE RECEIVED, the undersigned, SHOWBIZ PIZZA TIME, INC.
(the "Company"), a Kansas corporation, hereby promises to pay to
[_____________________], or registered assigns, the principal
amount of [____________________________________________] DOLLARS on
July 31, 1997, with interest (computed on the basis of actual days
elapsed and a year of 360 days) (a) from the date hereof on the
unpaid balance thereof, payable quarterly on each Interest Payment
Date (as below defined), at a rate per annum for each Interest
Period (as defined in the Note Purchase Agreements referred to
below) equal to 3.5% plus the LIBOR Rate (as so defined) as
determined in respect of such Interest Period pursuant to said Note
Purchase Agreements, until the principal hereof shall have become
due and payable, and (b) on any overdue payment of principal or (to
the extent permitted by applicable law) interest, payable quarterly
as aforesaid (or, at the option of the registered holder hereof, on
demand) at a rate per annum from time to time equal to 2% above the
interest rate then applicable to this Note, from the date of such
default to and including the last day of the Interest Period during
which such default occurs and thereafter at a rate per annum equal
to 5.5% above said LIBOR Rate (as so determined from time to time
on the basis of three-month Interest Periods).
[The LIBOR Rate for the [six]-month Interest Period commencing
on the date of this Note is ____%.]
As used herein the term "Interest Payment Date" means each
March 31, June 30, September 30 and December 31, beginning
December 31, 1995.
Payments of principal of, interest on and any premium with
respect to this Note are to be made in lawful money of the United
States of America at the principal office of [__________] in
[__________] or at such other place outside the United States as
the Company shall have designated by written notice to the holder
of this Note as provided in the Note Purchase Agreements referred
to below.
This Note is one of a series of Senior Notes issued pursuant
to separate Note Purchase Agreements dated as of _______ __, 1995
(as from time to time amended, the "Note Purchase Agreements")
between the Company and the respective Purchasers named therein and
is entitled to the benefits thereof. Each holder of this Note will
be deemed, by its acceptance hereof, to have agreed to the
confidentiality provisions set forth in Section 20 of the Note
Purchase Agreements.
Pursuant to the Note Purchase Agreements the Company is
required to give written notice to the holder of this Note of the
duration of each Interest Period for this Note, and of the
applicable interest rate for such Interest Period as determined on
the Reset Date (as defined in the Note Purchase Agreement) for such
Interest Period. The applicable LIBOR Rate and interest rate and
duration of such Interest Period for this Note shall be endorsed by
the holder of this Note on the schedule attached hereto or any
continuation thereof prior to any transfer of this Note.
This Note is a registered Note and, as provided in the Note
Purchase Agreements, upon surrender of this Note for registration
of transfer duly endorsed, or accompanied by a written instrument
of transfer duly executed, by the registered holder hereof or such
holder's attorney duly authorized in writing, a new note for a like
principal amount will be issued to, and registered in the name of,
the transferee, provided that record ownership may only be
transferred to a bank or other entity which meets the requirements
of Section 6.5 of the Note Purchase Agreement. Prior to due
presentment for registration of transfer, the Company may treat the
person in whose name this Note is registered as the owner hereof
for the purpose of receiving payment and for all other purposes,
and the Company will not be affected by any notice to the contrary.
This Note may be redeemed at the option of the Company, at any
time in whole or from time to time in part, for an amount equal to
the then unpaid principal amount of this Note, plus accrued and
unpaid interest (if any) to the date of redemption (subject to the
rights of holders of record on the relevant record date to receive
interest due on the relevant interest payment date). Notice of
redemption will be mailed at least 30 days but not more than 60
days before the redemption date to the holder of this Note at such
holder's registered address. Except as set forth in the Note
Purchase Agreements, from and after any redemption date, if monies
for the redemption shall have been deposited with the Paying Agent
for redemption on such redemption date, then, unless the Company
defaults in the payment of such redemption price, principal amount
called for redemption will cease to bear interest and the only
right of the holders as to such principal amount will be to receive
payment of the redemption price.
The Company is also required under circumstances described in
the Note Purchase Agreements to offer to prepay all Notes on the
terms specified in the Note Purchase Agreements.
If an Event of Default, as defined in the Note Purchase
Agreements, occurs and is continuing, the principal of this Note
may be declared or otherwise become due and payable in the manner,
at the price and with the effect provided in the Note Purchase
Agreements.
This Note shall be construed and enforced in accordance with,
and the rights of the Company and the holder hereof shall be
governed by, the laws of the State of [Texas], excluding
choice-of-law principles of such law.
SHOWBIZ PIZZA TIME, INC.
By_________________________
Title:
Schedule of Interest Rate and Duration of Interest Period
----------------------------------------------------------
Interest Rate
Duration of LIBOR Rate
Reset Date Interest Period LIBOR Rate plus 3.5%
EXHIBIT 1.6
CERTIFICATE IN LIEU OF FORM W-8
[Please print or type]
Name:___________________________________________________
Address:________________________________________________
Type of Entity (Please check appropriate box):
_ Non-U.S. Bank _ Foreign branch of a U.S. Bank
_ Other (please describe)_____________________________________
(I) The undersigned is a record holder of the Floating Rate Series
C Senior Notes due 1997 (the "Notes") issued by ShowBiz Pizza
Time, Inc., a Kansas corporation (the "Company").
(ii) The outstanding principal amount of the Notes of which the
undersigned is record holder is: U.S. $
(iii The beneficial owners of the Notes are foreign (non-U.S.)
persons and have not been U.S. persons on any Interest Payment
Date (as that term is defined in the Note Purchase Agreement
dated October _____, 1995).
(iv) During all periods that the undersigned is a record holder of
the Notes, the beneficial owners of the Notes will not be U.S.
persons on any Interest Payment Date.
(v) The undersigned will provide a U.S. beneficial ownership
notification to the Company in the event this certification is
or becomes untrue.
(vi) This certification is signed on this _____ day of
_____________, 1995.
Under penalties of perjury, the undersigned certifies that all of
the forgoing is true and correct in every respect.
Name of Record Holder: _______________________
Signature: ________________________
Printed Name of Person signing:_______________________
Title of Person Signing: ________________________
EXHIBIT 4.4(a)
October 10, 1995
Re: ShowBiz Pizza Time, Inc.; Floating Rate Series C
Senior Notes due 1997.
To the several Purchases listed in
Schedule A to Note purchase Agreement and
the Benficial Owners
Ladies and Gentlemen:
I have acted as in-house counsel to ShowBiz Pizza Time, Inc.,
a Kansas Corporation (the "Company"), in connection with the the
issuance by the Company of its Floating Rate Series C Senior Notes
due 1997 in an aggregate principal amount of $5,000,000 (the
"Notes") and purchase by you pursuant to the several Note Purchase
Agreement made by you to the Company under the date of October 10,
1995 (the "Note Purchase Agreement") of Notes in the respective
aggregate principal amounts and series specified in Schedule A to
the Note Purchase Agreement. All capitalized terms used herein
without definition shall have the meanings ascribed thereto in the
Note Purchase Agreement.
In my capacity as in-house counsel to the Company and its
subsidiaries, I have participated in the preparation of the
Agreement and the exhibits and other documents referred to therein.
I have examined such corporate documents and records of the Company
and its subsidiaries, certificates of public officials and other
certificates, opinions and instruments and have made such other
investigations as I have deemed necessary or advisable as a basis
for the opinions hereinafter expressed.
In my examination I have assumed the authenticity of all
documents submitted to me as originals, the conformity to original
documents of all documents submitted to me as certified or
photostatic copies and the authenticity of the originals of such
latter documents. In addition, I have assumed the genuineness of
all signatures except signatures of representatives of the Company,
the due authorization, execution and delivery of all documents
referred to herein by parties thereto other than the Company and
the due authority of all persons executing such documents except
persons executing such documents on behalf of the Company.
Based upon the foregoing and having regard for the legal
consideration that I deem relevant, I render my opinion to you
pursuant to Section 4.4(a) of the Note Purchase Agreement as
follows:
1. The Company is a corporation duly organized and validly
existing under the laws of the State of Kansas and has all
requisite power and authority to own or hold under lease the
property its purports to own or hold under lease, to carry on its
business as now being conducted.
Letter to Beneficial Owners
October 10, 1995
Page 2 of 3
2. The Company has duly qualified and is authorized to do
business in each jurisdiction where such qualification and
authorization in necessary, except where the failure to be so
qualified and authorized, individually or in the aggregate, could
not have a Material Adverse Effect.
3. The Company has the corporate power and authority to
execute and deliver the Note Purchase Agreement and the Notes and
to perform the provisions thereof. The Note Purchase Agreement
have been duly authorized, executed and delivered by the Company
and constitutes a legal, valid and binding obligation of the
Company and is enforceable against the Company in accordance with
their respective terms.
4. The Notes have been duly authorized, executed and
delivered by the Company and constitutes a legal, valid and binding
obligation of the Company and is enforceable against the Company in
accordance with their respective terms.
5. The execution and delivery by the Company of the Note
Purchase Agreement and the performance by the Company of the
transactions to be consummated by the Company described therein
including the issuance of the Note do not conflict with or
constitute on the part of the Company a breach or a violation of
any of the terms and provisions of, or constitute (with due notice
or lapse of time or both) a default under the Articles of the
Company or Bylaws of the Company or of any indenture, agreement,
order, writ, judgment or decree known to me to which the Company is
a party or by which it or any of its properties are bound.
6. To the best of my knowledge there is no action, suit,
proceeding, inquiry or investigation at law or in equity by or
before any court or any Government Authority or public board or
body pending or threatened against or affecting the Company or any
subsidiary or any of its properties wherein an unfavorable
decision, ruling or finding (a) would adversely affect the validity
or enforceability of the Note Purchase Agreement or the Notes, (b)
might result in any materially adverse change in the operations,
properties, assets, liabilities or financial condition of the
Company, or (c) would otherwise adversely affect the capability of
the Company to comply with its obligations under the Note Purchase
Agreement.
7. Each Subsidiary is a corporation or other legal entity
duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation or organization.
Each Subsidiary has all requisite power and authority to own or
hold under lease the property it purports to own or hold under
lease and to transact the business it transacts.
Letter to Beneficial Owners
October 10, 1995
Page 3 of 3
8. Each Subsidiary has duly qualified and is authorized to
do business in each jurisdiction where such qualification and
authorization in necessary, except where the failure to be so
qualified and authorized, individually or in the aggregate, could
not have a Material Adverse Effect.
My opinion expressed in paragraph 4 above is qualified to the
extent that (a) the enforceability of the Note Purchase Agreement
and the Notes may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws of general application
from time to time affecting the rights of creditors, landlords,
and secured parties generally and providing for relief of debtors,
(b) a particular court may refuse to grant certain equitable
remedies, including, without limiting the generality of the
foregoing, specific performance, with respect to the enforcement of
any provisions of the Note Purchase Agreement or the Notes, (c)
certain provisions of the Note Purchase Agreement are or may be
unenforceable in whole or in part under the laws of the State of
Texas, but the inclusion of such provisions does not affect the
validity of the Note Purchase Agreement, and the Note Purchase
Agreement contains adequate provisions for enforcing payment of the
obligations thereunder (including payment of the Notes) and for the
practical realization of the rights and benefits afforded thereby,
and (d) the enforceability of the indemnity provisions contained in
the Note Purchase Agreement may be limited by federal securities
laws and is subject to the qualification that a state court, in
determining whether any party to an agreement is entitled to
indemnification under the terms of the agreement, will limit any
such indemnification arising from such party's sole or contributory
negligence to the express terms and conditions as set forth in the
agreement.
My opinion is limited solely to the laws of the State of Texas
and the Kansas General Corporation Code, and the laws of the United
States of America in effect on the date hereof, and no opinion is
expressed herein as to any matters governed by the laws of any
other jurisdictions.
This opinion is furnished to you solely in connection with the
transactions being consummated today pursuant to the Note Purchase
Agreement and may not be relied upon or described or quoted from by
any other person, firm or entity without, in each instance, my
prior written consent.
Very truly yours,
Marshall R. Fisco, Jr.
Counsel
EXHIBIT 4.4(a)
October 10, 1995
Re: ShowBiz Pizza Time, Inc.
Floating Rate Series C Senior Notes due 1997
To the several Purchasers listed in
Schedule A to the within-mentioned
Note Purchase Agreement and
the Beneficial Owner
Ladies and Gentlemen:
We have acted as special counsel to ShowBiz Pizza Time, Inc. (the
"Company") in connection with the issuance by the Company of its
Floating Rate Series C Senior Notes due 1997 in an aggregate
principal amount of $5,000,000 (the "Series C Notes" or the
"Notes") and the purchases by you pursuant to the Note Purchase
Agreement made by Purchaser with the Company under date of
October 10, 1995 (the "Note Purchase Agreement") of Notes in the
respective aggregate principal amounts specified in Schedule A to
the Note Purchase Agreement. All capitalized terms used herein
without definition shall have the meanings ascribed thereto in the
Note Purchase Agreement.
We have examined such corporate records of the Company and its
Subsidiaries, agreements and other instruments, certificates of
officers and representatives of the Company and its Subsidiaries,
certificates of public officials, and such other documents, as we
have deemed necessary in connection with the opinions hereinafter
expressed. In such examination we have assumed the genuineness of
all signatures, the authenticity of documents submitted to us as
originals and the conformity with the authentic originals of all
documents submitted to us as copies. As to questions of fact
material to such opinions we have, when relevant facts were not
independently established, relied upon the representations set
forth in the Note Purchase Agreement and upon certifications by
officers or other representatives of the Company and its
Subsidiaries.
Based upon the foregoing and having regard for legal
considerations that we deem relevant, we render our opinion to you
pursuant to Section 4.4 of the Note Purchase Agreement as follows:
1. The Company is a corporation duly organized and validly
existing under the laws of the State of Kansas and has all
requisite power to execute and deliver the Note Purchase Agreement
and the Notes and to perform its obligations thereunder.
2. The Note Purchase Agreement has been duly authorized, executed
and delivered by the Company and constitute legal, valid and
binding agreements of the Company, enforceable against the Company
in accordance with their terms. The Company is duly qualified and
is authorized to do business in each jurisdiction where such
qualification and authorization is necessary, except where the
failure to be so qualified could not have a Material Adverse
Effect.
3. The Notes being purchased by you today have been duly
authorized, executed and delivered by the Company and constitute
legal, valid and binding obligations of the Company, enforceable
against the Company in accordance with their terms.
4. No consent, approval or authorization of, or declaration,
registration or filing with, any Kansas, Texas or Federal
Governmental Authority is required to be obtained or made as a
condition to the validity of the execution and delivery by the
Company of the Note Purchase Agreement or the Notes.
5. It was not necessary in connection with the offering, sale and
delivery of the Notes, under the circumstances contemplated by the
Note Purchase Agreement, to register the Notes under the Securities
Act of 1933, or the Texas Securities Act or to qualify an
indenture in respect of the Notes under the Trust Indenture Act of
1939, as amended or to register the Notes under the Securities
Exchange Act of 1934.
6. Each Subsidiary listed in Schedule 5.4 to the Note Purchase
Agreement is a corporation or other entity duly organized, validly
existing and in good standing under the laws of the jurisdiction of
its incorporation or organization and is duly qualified as a
foreign corporation or other legal entity and is in good standing
in each jurisdiction in which such qualification is required by
law, except where the failure to be so qualified, individually or
in the aggregate, could not have a Material Adverse Effect.
7. Neither the Company nor any Subsidiary is subject to
regulation under the Investment Company Act of 1940, as amended,
the Public Utility Holding Company Act of 1935, as amended, or the
Federal Power Act, as amended.
8. None of the transactions contemplated by the Note Purchase
Agreement (including without limitation the use of the proceeds
from the sale of the Notes) will violate or result in a violation
of Section 7 of the Exchange Act, or any regulations issued
pursuant thereto, including without limitation Regulations G, T, U
and X of the Board of Governors of the Federal Reserve System (12
CFR, Part 207, Part 220 and Part 224, respectively).
9. There are no actions, suits or proceedings pending, or to our
knowledge threatened, against or affecting the Company or any
Subsidiary or any property of the Company or any Subsidiary in any
court or before any arbitrator of any kind or before or by any
Governmental Authority, except actions, suits or proceedings which
(a) individually do not in any manner draw into question the
validity of the Note Purchase Agreement or the Notes and (b) in the
aggregate could not reasonably be expected to have a Material
Adverse Effect.
10. Assuming the accuracy of the representations and
warranties, and compliance with the covenants made by or on behalf
of the Purchaser and the Beneficial Owner under the Note Purchase
Agreement and the Notes, (i) each of the Notes meets the
requirements of Section 871(h)(2)(B) or 881(c)(2)(B) of the
Internal Revenue Code of 1986, as amended (the "Code"), (ii) in the
case of Notes beneficially owned by a nonresident alien individual,
interest paid on the Notes will constitute "portfolio interest" as
such term is defined in Section 871(h)(2) of the Code, and (iii) in
the case of Notes beneficially owned by a foreign corporation,
interest paid on the Notes will constitute "portfolio interest" as
such term is defined in Section 881(c)(2) of the Code.
The opinions expressed above as to the enforceability of any
agreement or instrument in accordance with its terms are subject to
the exceptions that (a) such enforceability may be limited by (i)
applicable bankruptcy, insolvency, reorganization, moratorium and
similar laws affecting the enforcement of creditors' rights
generally and (ii) general equitable principles (regardless of
whether such enforceability is considered in a proceeding in equity
or at law), (b) the enforceability of indemnity provisions
contained in the Note Purchase Agreement may be subject to
limitations based upon public policy considerations.
We express no opinion as to Section 22.3 of the Note Purchase
Agreement insofar as said Section relates to (a) the subject matter
jurisdiction of any New York State or federal court sitting in the
Bourough of Manhattan, the City of New York, to adjudicate any
controversy relating to the Note Purchase Agreement, the Notes or
any other document related thereto, or (b) the waiver of
inconvenient forum with respect to proceedings in such court.
Our opinions are limited in all respects to the substantive law
of the State of Texas and the Kansas General Corporation Code, and
the federal law of the United States, and we assume no
responsibility as to the applicability thereto, or the effect
thereon, of the laws of any other jurisdiction.
This opinion is given solely for your benefit, in connection with
the closing held today of the transactions contemplated by the Note
Purchase Agreement, and may not be relied upon by any other person
for any purpose without our prior written consent.
Very truly yours,
WINSTEAD SECHREST & MINICK P.C.
By:________________________________
Darrel A. Rice
SCHEDULE 5.3
Disclosure Documents
Form 10K - Annual Report for Fiscal year ended December 30, 1994.
Form 10Q - Quarterly Report for quarterly period ended March 31,
1995.
Form 8K - Current Report for May 5, 1995.
Proxy Statement - Notice of Annual Meeting of Shareholders to be
held June 8, 1995.
Proxy Supplement - Supplemental Information of Annual Meeting of
Shareholders to be held on June 8, 1995.
Form 10Q - Quarterly Report for quarterly period ended June 30,
1995.
SCHEDULE 5.4
Subsidiaries
-------------
BHC Acquisition Corporation
State of Incorporation: Texas
Shares/Equity Owned by Company: 100%
Directors:
Richard M. Frank
Michael H. Magusiak
Richard T. Huston
Officers:
Richard M. Frank CEO, President, COO
Alice Winters Vice President, Secretary
Michael H. Magusiak Vice President, Controller,
Treasurer
Odom Sherman Assistant Treasurer
Richard T. Huston Vice President
Gene Cramm Vice President
ShowBiz of Laurel, Inc.
State of Incorporation: Maryland
Shares/Equity Owned by Company: 73%
Directors:
Vivian K. Oram
Gene Cramm
Carol E. Neal
Officers:
Vivian K. Oram President, Treasurer
Gene Cramm Secretary, Vice President
Carol Elkins Neal Assistant Secretary
Chuck E. Cheese of Waldorf, Inc.
State of Incorporation: Maryland
Shares/Equity Owned by Company: 100%
Directors:
Richard M. Frank
Michael H. Magusiak
Lorie Martinsen
Officers:
Lorie Martinsen President
Alice Winters Secretary, Treasurer
Sandra Schiranko Vice President
Chuck E. Cheese of Gaithersburg, Inc.
State of Incorporation: Maryland
Shares/Equity Owned by Company: 80%
Directors:
Lois Perry
Lorie Martinsen
Leslie Cherkis
Officers:
Lois Perry President
Lorie Martinsen Secretary/Treasurer
Leslie Cherkis Vice President
Chuck E. Cheese of Glen Burnie, Inc.
State of Incorporation: Maryland
Shares/Equity Owned by Company: 97%
Directors:
Richard M. Frank
Michael H. Magusiak
Alice M. Winters
Officers:
Alice M. Winters President
Lorie Martinsen Vice President, Secretary,
Treasurer
Ruth Ann Raup Assistant Secretary
ShowBiz of Madison, Inc.
State of Incorporation: Wisconsin
Shares/Equity Owned by Company: 100%
Directors:
Richard M. Frank
Officers:
Richard M. Frank President
Alice Winters Vice President, Secretary
Michael H. Magusiak Treasurer
Chuck E. Cheese of Diamond Point, Inc.
State of Incorporation: Maryland
Shares/Equity Owned by Company: 97%
Directors:
Richard M. Frank
Michael H. Magusiak
Alice Winters
Officers:
Alice Winters President
Karessa Rollwage Secretary, Treasure
Chuck E. Cheese of Westview, Inc.
State of Incorporation: Maryland
Shares/Equity Owned by Company: 98%
Directors:
Lorie Martinsen
Richard M. Frank
Michael H. Magusiak
Officers:
Lorie Martinsen President
Alice Winters Secretary, Treasurer
Hospitality Distribution Incorporated
State of Incorporation: Texas
Shares/Equity Owned by Company: 0%
Directors:
Michael H. Magusiak
Richard M. Frank
Lorie Martinsen
Officers:
Richard M. Frank President
Lorie Martinsen Secretary
Michael H. Magusiak Vice President, Treasurer
Odom Sherman, Jr. Assistant Treasurer
Chuck E. Cheese of Silver Springs, Inc.
State of Incorporation: Maryland
Shares/Equity Owned by Company: 0%
Directors:
Richard T. Huston
Alice Winters
Susan Velasquez
Officers:
Richard T. Huston President
Alice Winters Secretary, Treasurer
Susan Velasquez Vice President
ShowBiz of La Crosse, Inc.
State of Incorporation: Wisconsin
Shares/Equity Owned by Company: 100%
Directors:
Richard M. Frank
Officers:
Richard M. Frank President
Alice Winters Vice President, Secretary
Michael H. Magusiak Treasurer
ShowBiz of Ashwaubenon, Inc.
State of Incorporation: Wisconsin
Shares/Equity Owned by Company: 100%
Directors:
Richard M. Frank
Officers:
Richard M. Frank President
Alice Winters Vice President, Secretary
Michael H. Magusiak Treasurer
SB Hospitality Corporation
State of Incorporation: Texas
Shares/Equity Owned by Company: 49 %
Directors:
Richard T. Huston
Alice Winters
Odom Sherman, Jr.
Officers:
Richard T. Huston President
Alice Winters Secretary, Vice President
Odom Sherman, Jr. Treasurer
ShowBiz of Arkansas, Inc.
State of Incorporation: Arkansas
Shares/Equity Owned by Company: 50%
Directors:
Richard M. Frank
Officers:
Richard M. Frank President
Alice Winters Vice President, Secretary
Michael H. Magusiak Treasurer
Odom Sherman Assistant Treasurer
Affiliates
----------
International Association of ShowBiz Pizza Time Restaurants, Inc.
State of Incorporation: Texas
Shares/Equity Owned by Company: Non-Profit
Directors:
Jim Rudolph
R.C. Schmidt
Bryon Schlosser
Michael H. Magusiak
Michael A. Hilton
Ronald Hake
Officers:
Michael A. Hilton President
Michael Magusiak Secretary, Treasurer
R.C. Schmidt Vice President
B - SB Joint Venture Agreement
An Oklahoma joint venture including Harold W. Burlingame, Barbara
Jean Burlingame and ShowBiz Pizza Time, Inc.
Shares/Equity Owned by Company: 50%
MCBIZ/SHOWBIZ Joint Venture Agreement
A Kansas joint venture including MCBIZ Limited Partnership, a
Kansas limited partnership and ShowBiz Pizza Time, Inc.
Shares/Equity Owned by Company: 51%
Mid-South Joint Venture Agreement
A South Carolina joint venture including Mid-South Food
Management, Inc., a South Carolina corporation and ShowBiz Pizza
Time, Inc.
Shares/Equity Owned by Company: 30%.
ShowBiz White Settlement Club, Inc.
State of Incorporation: Texas
Shares/Equity Owned by Company: Non-Profit
Directors:
Richard T. Huston
Alice M. Winters
John E. Artope
Officers:
Richard T. Huston President
Alice Winters Secretary, Treasurer
John E. Artope Vice President
ShowBiz Richardson Club, Inc.
State of Incorporation: Texas
Shares/Equity Owned by Company: Non-Profit
Directors:
Richard T. Huston
Alice M. Winters
John E. Artope
Officers:
Richard T. Huston President
Alice Winters Secretary, Treasurer
John E. Artope Vice President
ShowBiz Redbird Club, Inc.
State of Incorporation: Texas
Shares/Equity Owned by Company: Non-Profit
Directors:
Richard T. Huston
Alice M. Winters
John E. Artope
Officers:
Richard T. Huston President
Alice Winters Secretary, Treasurer
John E. Artope Vice President
ShowBiz Montfort Club, Inc.
State of Incorporation: Texas
Shares/Equity Owned by Company: Non-Profit
Directors:
Richard T. Huston
Alice M. Winters
John E. Artope
Officers:
Richard T. Huston President
Alice Winters Secretary, Treasurer
John E. Artope Vice President
2500 South Coulter Street Club
State of Incorporation: Texas
Shares/Equity Owned by Company: Non-Profit
Directors:
Richard T. Huston
Alice M. Winters
John E. Artope
Officers:
Richard T. Huston President
Alice Winters Secretary, Treasurer
John E. Artope Vice President
2402 South Stemmons Freeway Club
State of Incorporation: Texas
Shares/Equity Owned by Company: Non-Profit
Directors:
Richard T. Huston
Alice M. Winters
John E. Artope
Officers:
Richard T. Huston President
Alice Winters Secretary, Treasurer
Directors and Senior Officers of ShowBiz Pizza Time, Inc.
- ---------------------------------------------------------
OFFICERS
Richard M. Frank
Chairman of the Board and Chief Executive Officer
Michael H. Magusiak
President
Richard T. Huston
Executive Vice President -- Marketing and Entertainment
Larry Page
Executive Vice President -- Chief Financial Officer and Treasurer
Gene Cramm
Senior Vice President -- Construction and Entertainment Attractions
Catherine Kreston
Senior Vice President -- Human Resources
Bernard J. Yanelli
Senior Vice President -- Strategic Planning and Franchise
Operations
BOARD OF DIRECTORS
Charles A. Crocco, Jr.
Partner -- Crocco & DeMaio, P.C.
Richard M. Frank
Chairman of the Board, and Chief Executive Officer
Anthony J. Gumbiner
Chairman and Chief Executive Officer
The Hallwood Group Incorporated
Robert L. Lynch
Vice Chairman
The Hallwood Group Incorporated
Louis P. Neeb
President, Neeb Enterprises, Inc.
Cynthia I. Pharr
President, C. Pharr & Company, Inc.
J. Thomas Talbot
The Talbot Company
Brian M. Troup
President and Chief Operating Officer
The Hallwood Group Incorporated
Joshua Friedman
Caynon Partners Incorporated
SCHEDULE 5.5
Financial Statements
10K Annual Report for Fiscal year ended December 28, 1990.
10K Annual Report for Fiscal year ended December 27, 1991.
10K Annual Report for Fiscal year ended January 1, 1993.
10K Annual Report for Fiscal year ended December 31, 1993.
10K Annual Report for Fiscal year ended December 30, 1994.
10Q Quarterly Report for quarterly period ended March 31, 1995.
10Q Quarterly Report for quarterly period ended June 30, 1995.
- ------
SCHEDULE 5.8
Litigation
None.
- --------
SCHEDULE 5.11
Licenses, Etc.
CHICO CHEESES PIZZA, Brazilian Trademark, Registration No.
817043209 in Class 28.10 ("games, toys and pastimes")
CHICO CHEESES PIZZA, Brazilian Trademark, Registration No.
817043217 in Class 32.10 ("doughs, pastries in general")
SCHEDULE 5.15
Existing Indebtedness
Liens on personal property securing Standby Letters of Credit Nos.
50060624 and 50072426, as of March 31, 1995, issued by the Bank of
Boston in the respective face amounts of $58,600 and $1,500,000,
paid off from the proceeds under the Loan Agreement, dated June 27,
1995.
$29,200,000 owed to the Bank of Boston as of March 31, 1995,
excluding the Letters of Credit, paid off from the proceeds under
the Note Purchase Agreement, dated June 15, 1995.
On June 15, 1995, the Company issued Series A Senior Notes and
Series B Senior Notes, totaling $28,000,000.
On June 27, 1995, the Company entered into a Loan Agreement with
Bank One, Texas, N.A., with a revolving credit commitment in an
amount equal to $5,000,000.
Other existing indebtedness on the date of closing which would be
permitted under Section 8.1 (a) of the Loan Agreement, consisting
of capital lease obligations totaling $1,193,915 and other
indebtedness that does not exceed in the aggregate $500,000.
The Company has guaranteed certain obligations related to
restaurant building and equipment leases. The underlying assets
are collateral for the leases and the makers or assignees of all of
the obligations are required to perform thereunder before the
Company is required to fulfill its guarantee. In the event of
default by the maker or assignee, the Company, in almost all cases,
may make payment under the guarantees in accordance with the
original payment schedule and has the right to locate potential
buyers or subtenants for the assets. As of March 31, 1995, such
guarantees aggregated approximately $989,000.
The Company has a limited recourse guaranty of Monterey Acquisition
Corp.'s obligation to repay a $4,700,000 term loan to Greyhound
Financial Corporation. This guaranty is limited in recourse to the
Company's pledge of its interest in 143,250 shares of common stock
of Monterey Acquisition Corp. valued at $437,500 in the aggregate.
EXHIBIT (s)(2)
MODIFICATION AND WAIVER
TO
NOTE PURCHASE AGREEMENT
This Modification and Waiver is entered into as of the 24th day
of October, 1995, by and between ShowBiz Pizza Time, Inc., a Kansas
corporation (the "Company"), and Neue Bank AG ("Neue").
RECITALS:
---------
(1) The Company and Neue have entered into a Note Purchase
Agreement, dated as of October 10, 1995 (the "Note Purchase
Agreement"), for the purchase of $2,500,000 of the Company's
Floating Rate Series C Notes by Neue.
(2) The Note Purchase Agreement contemplates the execution of
Other Agreements, the purchase of other Notes, and the simultaneous
closing of the Other Agreements and purchase of such other Notes.
(3) The Company and Neue desire to close the transactions
contemplated by the Note Purchase Agreement regardless of whether
any Other Purchaser executes the Other Agreements or purchases any
Notes.
AGREEMENTS:
------------
1. WAIVER. The Company and Neue each hereby waive any and all
requirements, explicit or implicit, that (i) the Other Agreements
be executed, and (ii) the Other Purchasers purchase the Notes
listed on Schedule A.
2. FULL PERFORMANCE. Except with respect to the Other Agreements
and the Other Purchasers, the Company and Neue each hereby agree to
perform each covenant and requirement to be performed by such party
to the other party under the Note Purchase Agreement under the same
terms and conditions as if the Other Purchasers had executed the
Other Agreements and purchased such other Notes, whether or not
such Other Purchasers execute the Other Agreements or purchase such
other Notes.
3. SALE OF OTHER NOTES. Nothing in this Modification and Waiver
or the Note Purchase Agreement shall prevent or require the Company
to sell any Notes to any person or entity other than Neue;
provided, however, that if the Company sells any other Notes, it
will only sell such other Notes upon terms and conditions
substantially similar as those contained in the Note Purchase
Agreement, except the initial LIBOR Rate may be different and
continue to be different until the next Reset Date after the
issuance and sale of such Notes; provided further that the
aggregate principal amount of the Notes issued and sold by the
Company under the Note Purchase Agreement and the Other Agreements
shall not exceed U.S. $5,000,000.
4. DEFINED TERMS. Unless the context indicates otherwise, all
capitalized terms used herein without definition shall have the
meaning ascribed thereto in the Note Purchase Agreement.
5. COUNTERPARTS. This Modification and Waiver may be executed in
any number of counterparts, each of which shall be an original but
all of which together shall constitute one instrument. Each
counterpart may consist of a number of copies hereof, each signed
by less than all, but together signed by all, of the parties
hereto.
6. NO OTHER MODIFICATIONS. This Modification and Waiver has
been entered into solely for purposes of modifying the terms and
conditions of the Note Purchase Agreement with respect to executing
and performing the Other Agreements and the sale of the Notes
thereunder, and not amending or modifying any other provision of
the Note Purchase Agreement in any respect. Except as expressly
provided herein, the Note Purchase Agreement is not amended or
modified and no provision have been waived in any respect, and it
remains in full force and effect in accordance with its terms. All
of the terms and provisions of the Note Purchase Agreement and all
the terms and provisions incorporated therein are hereby
incorporated herein by this reference.
EXECUTED as of the date first written above.
NEUE BANK AG
By:____________________________
Its: ____________________________
"Neue"
SHOWBIZ PIZZA TIME, INC.
By:____________________________
Its: ____________________________
"Company"
EXHIBIT (s)(3)
SHOWBIZ PIZZA TIME, INC.
FLOATING RATE SERIES C SENIOR NOTE DUE 1997
No. R-C2
$2,500,000 November 2, 1995
BENEFICIAL OWNERSHIP OF THIS NOTE MAY ONLY BE TRANSFERRED TO A
PERSON WHO IS NOT A RESIDENT OR CITIZEN OF THE UNITED STATES OF
AMERICA, OR TO A BANK, OR OTHER INSTITUTION OR ENTITY WHICH IS NOT
INCORPORATED OR ORGANIZED UNDER THE LAWS OF THE UNITED STATES OF
AMERICA OR ANY STATE THEREOF. THIS NOTE WAS OFFERED FOR SALE IN
CONNECTION WITH ITS ORIGINAL ISSUANCE ONLY OUTSIDE THE UNITED
STATES AND HAS BEEN DELIVERED TO THE HOLDER OUTSIDE THE UNITED
STATES.
FOR VALUE RECEIVED, the undersigned, SHOWBIZ PIZZA TIME, INC.
(the "Company"), a Kansas corporation, hereby promises to pay to
NEUE BANK, AG, or registered assigns, the principal amount of TWO
MILLION FIVE HUNDRED THOUSAND DOLLARS on October 12, 1997, with
interest (computed on the basis of actual days elapsed and a year
of 360 days) (a) from the date hereof on the unpaid balance
thereof, payable quarterly on each Interest Payment Date (as below
defined), at a rate per annum for each Interest Period (as defined
in the Note Purchase Agreements referred to below) equal to 3.5%
plus the LIBOR Rate (as so defined) as determined in respect of
such Interest Period pursuant to said Note Purchase Agreements,
until the principal hereof shall have become due and payable, and
(b) on any overdue payment of principal or (to the extent permitted
by applicable law) interest, payable quarterly as aforesaid (or, at
the option of the registered holder hereof, on demand) at a rate
per annum from time to time equal to 2% above the interest rate
then applicable to this Note, from the date of such default to and
including the last day of the Interest Period during which such
default occurs and thereafter at a rate per annum equal to 5.5%
above said LIBOR Rate (as so determined from time to time on the
basis of three-month Interest Periods).
The LIBOR Rate for the six-month Interest Period commencing on
the date of this Note is 5.9375%.
As used herein the term "Interest Payment Date" means each
March 31, June 30, September 30 and December 31, beginning
December 31, 1995.
Payments of principal of, interest on and any premium with
respect to this Note are to be made in lawful money of the United
States of America at the principal office of Neue Bank, AG in
Liechtenstein, or at such other place outside the United States as
the Company shall have designated by written notice to the holder
of this Note as provided in the Note Purchase Agreements referred
to below.
This Note is one of a series of Senior Notes issued pursuant to
separate Note Purchase Agreements dated as of October 10, 1995 (as
from time to time amended, the "Note Purchase Agreements") between
the Company and the respective Purchasers named therein and is
entitled to the benefits thereof. Each holder of this Note will be
deemed, by its acceptance hereof, to have agreed to the
confidentiality provisions set forth in Section 20 of the Note
Purchase Agreements.
Pursuant to the Note Purchase Agreements the Company is required
to give written notice to the holder of this Note of the duration
of each Interest Period for this Note, and of the applicable
interest rate for such Interest Period as determined on the Reset
Date (as defined in the Note Purchase Agreement) for such Interest
Period. The applicable LIBOR Rate and interest rate and duration
of such Interest Period for this Note shall be endorsed by the
holder of this Note on the schedule attached hereto or any
continuation thereof prior to any transfer of this Note.
This Note is a registered Note and, as provided in the Note
Purchase Agreements, upon surrender of this Note for registration
of transfer duly endorsed, or accompanied by a written instrument
of transfer duly executed, by the registered holder hereof or such
holder's attorney duly authorized in writing, a new note for a like
principal amount will be issued to, and registered in the name of,
the transferee, provided that record ownership may only be
transferred to a bank or other entity which meets the requirements
of Section 6.5 of the Note Purchase Agreement. Prior to due
presentment for registration of transfer, the Company may treat the
person in whose name this Note is registered as the owner hereof
for the purpose of receiving payment and for all other purposes,
and the Company will not be affected by any notice to the contrary.
This Note may be redeemed at the option of the Company, at any
time in whole or from time to time in part, for an amount equal to
the then unpaid principal amount of this Note, plus accrued and
unpaid interest (if any) to the date of redemption (subject to the
rights of holders of record on the relevant record date to receive
interest due on the relevant interest payment date). Notice of
redemption will be mailed at least 30 days but not more than 60
days before the redemption date to the holder of this Note at such
holder's registered address. Except as set forth in the Note
Purchase Agreements, from and after any redemption date, if monies
for the redemption shall have been deposited with the Paying Agent
for redemption on such redemption date, then, unless the Company
defaults in the payment of such redemption price, principal amount
called for redemption will cease to bear interest and the only
right of the holders as to such principal amount will be to receive
payment of the redemption price.
The Company is also required under circumstances described in the
Note Purchase Agreements to offer to prepay all Notes on the terms
specified in the Note Purchase Agreements.
If an Event of Default, as defined in the Note Purchase
Agreements, occurs and is continuing, the principal of this Note
may be declared or otherwise become due and payable in the manner,
at the price and with the effect provided in the Note Purchase
Agreements.
This Note shall be construed and enforced in accordance with, and
the rights of the Company and the holder hereof shall be governed
by, the laws of the State of Texas, excluding choice-of-law
principles of such law.
SHOWBIZ PIZZA TIME, INC.
By:__________________________________
Title:__________________________
Schedule of Interest Rate and Duration of Interest Period
----------------------------------------------------------
Reset Date Duration of LIBOR Rate Interest Rate Notation
Interest Pd. Libor + 3.5% Made by
- ---------- ----------- --------- ------------- --------
EXHIBIT(t)(1)
ENTERTAINMENT OPERATING FUND LINE OF CREDIT
By this Agreement, dated as of ______________, 1994, SHOWBIZ
PIZZA TIME, INC. ("Lender") and INTERNATIONAL ASSOCIATION OF
SHOWBIZ PIZZA TIME RESTAURANTS, INC., ("Borrower") hereby agree as
follows:
1. Revolving Commitment. Subject to the terms and conditions in
this Agreement, Lender agrees to loan to Borrower from time to time
amounts not to exceed Seven Hundred and Fifty Thousand Dollars
($750,000.00) in the aggregate outstanding at any one time. No new
advance shall be made under this Agreement after December 31, 1996.
Subject to the foregoing limitations, Borrower may borrow, repay,
prepay and reborrow amounts under this Agreement.
2. Note. Borrower's obligation to repay amounts borrowed under
this Agreement is further evidenced by an Entertainment Operating
Fund Promissory Note (the "Note") dated the same date as this
Agreement. Payment of principal and interest, and accrual of
interest, on amounts borrowed under this Agreement shall be as
provided in the Note.
3. Use of Proceeds. Borrower shall use amounts borrowed under
this Agreement only to purchase goods and services for the
production of showtapes and other entertainment-related items
(collectively, the "Project"). Upon Lender's reasonable request,
Borrower shall provide copies of invoices and other documents which
evidence Borrower's compliance with this Section 3.
4. Records and Reports. Upon Lender's reasonable request,
Borrower shall provide reports and copies of invoices, canceled
checks and other business records pertaining to the Project, this
Agreement or the Note.
5. Condition to Loans. The obligation of Lender to make loans
under this Agreement is subject to the satisfaction of each of the
following conditions:
(a) No default under this Agreement, and no event which would
constitute a default but for the giving of notice or the
passage of time thereafter, shall have occurred and be
continuing on the date of such loan;
(b) The representations and warranties of Borrower set forth
in this Agreement shall be true as of the date of such loan;
(c) Lender shall have received any documents or information
previously requested from Borrower pursuant to this Agreement;
and
(d) No material adverse change, in Lender's sole
determination, has occurred in the businesses of the ShowBiz
Pizza Time restaurants or in the financial condition of
Borrower.
6. Representation and Warranties: Borrower represents and
warrants that: (a) Borrower is a corporation duly incorporated,
validly existing and in good standing under the laws of the State
of Texas; (b) the execution, delivery and performance of this
Agreement and the Note have been duly authorized by all necessary
corporation action; and (c) this Agreement and the Note constitute
the valid and binding obligations of Borrower enforceable in
accordance with their terms.
7. Default. Borrower shall be in default under this Agreement if
one or more of the following events shall have occurred and be
continuing:
(a) The failure by Borrower to make any payment of principal
or interest on the Note within ten (10) days after the same
becomes due and payable;
(b) The failure by Borrower to perform any of its
obligations, except the payment of principal and interest,
arising under the Note, this Agreement or any other agreement
between Borrower and Lender within five (5) days after written
notice of such failure; or
(c) The filing by or against the Borrower of a voluntary or
involuntary proceeding seeking liquidation, reorganization or
other relief with respect to Borrower or its debts under any
bankruptcy, insolvency or other similar law now or hereafter
in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official for Borrower
or any substantial part of its property and, in the case of
any involuntary proceeding not consented to by Borrower, such
proceeding is not dismissed within sixty (60) days.
8. Remedies. If Borrower is in default under this Agreement: (a)
the outstanding principal and accrued interest under the Note shall
mature and become automatically due and payable, without notice or
demand; (b) Lender may terminate its commitment to make loans under
this Agreement; and (c) Lender may exercise any other remedies
permitted by law or equity.
9. Notices. Any notice under this Agreement shall be effective
upon actual receipt or upon delivery to the United States Postal
Service, with first class postage, addressed as follows (or to such
other address subsequently provided by the party hereto):
To Lender:
ShowBiz Pizza Time, Inc.
4441 West Airport Freeway
Irving, Texas 75015
Attention: General Counsel
To Borrower:
International Association of ShowBiz
Pizza Time Restaurants, Inc.
4441 West Airport Freeway
Irving, Texas 75015
Attention: Mike Hilton
10. Miscellaneous.
(a) No failure or delay by Lender in exercising any right,
power or privilege under this Agreement or the Note shall
operate as a waiver thereof, nor shall any single or partial
exercise thereof preclude any further exercise thereof or the
exercise of any other right, power or privilege.
(b) The captions used in this Agreement are for convenience
only and shall not be deemed to amplify, modify or limit the
provisions hereof.
(c) Words of any gender used in the Agreement shall be
construed to include any other gender, and words in the
singular shall include the plural and vice versa, unless the
context otherwise requires.
(d) This Agreement shall be binding upon and shall inure to
the benefit of the parties hereto and their respective heirs,
legal representatives, successors and assigns.
(e) This Agreement, together with the Note, contains the
entire agreement of the parties hereto with respect to the
subject matter hereof and can be altered, amended or modified
only by written instrument executed by both parties.
(f) This Agreement may be executed in multiple copies, each
of which shall be deemed an original, and all of such copies
shall together constitute one and the same instrument.
(g) Time is of the essence in the performance of each
obligation, covenant and condition under this Agreement.
(h) This Agreement shall be governed by the laws of the State
of Texas.
IN WITNESS HEREOF, the parties have caused this Agreement to be
executed by their duly authorized representatives as of the date
first appearing above.
SHOWBIZ PIZZA TIME, INC.
By:
Richard M. Frank
Chairman and Chief Executive Officer
INTERNATIONAL ASSOCIATION OF SHOWBIZ
PIZZA TIME RESTAURANTS, INC.
By:____________________________________
Michael A. Hilton
President
EXHIBIT (t)(2)
ENTERTAINMENT OPERATING FUND
PROMISSORY NOTE
Dated as of
$750,000.00 Irving, Texas ____________,1994
FOR VALUE RECEIVED, the undersigned INTERNATIONAL ASSOCIATION
OF SHOWBIZ PIZZA TIME RESTAURANTS, INC. ("Borrower"), a Texas
corporation, promises to pay to SHOWBIZ PIZZA TIME, INC.
("Lender"), a Kansas corporation, (hereinafter collectively
referred to as "Parties"), the principal sum of SEVEN HUNDRED AND
FIFTY THOUSAND AND NO/100 DOLLARS ($750,000.00), or so much thereof
as may from time to time be advanced, together with interest
accrued on the unpaid principal balance hereof as set forth below.
1. Interest Rate. The unpaid principal amount hereof from
time to time outstanding from the date hereof until maturity shall
bear interest at a fluctuating rate per annum equal to the Prime
Rate plus 0.5% (as herein defined), changing automatically, without
notice to the Borrower, effective as of the effective date of any
change in the Prime Rate. Interest shall be calculated at the end
of each of Lender's monthly accounting periods (which will not
correspond with calendar months due to Lender's 52 week fiscal
year) based on the average between the principal amounts
outstanding and unpaid at the beginning of the monthly accounting
period and at the end of such period, but shall be charged and
collected based on the actual number of days elapsed. The term
"Prime Rate" as used herein means the higher of (a) the annual rate
of interest announced from time to time by the First National Bank
of Boston at its head office in Boston, Massachusetts as its "base
rate" and (b) the overnight federal funds effective rate as
published by the Board of Governors of the Federal Reserve System
as in effect from time to time plus one half of one percent (1/2%).
2. Payment of Principal and Interest. Each payment by
Borrower to Lender on this Note shall be applied first to fees
and/or costs, if any, pursuant to Section 8 hereof and then applied
to any accrued interest, and then any remaining portion of the
payment after such applications shall be applied to reduction of
outstanding principal balance of this Note.
3. Revolving Note. This Note is a "revolving line of
credit" note. Principal advances may be made, from time to time,
up to the principal amount of this Note, and principal payments
may, from time to time, be made by Borrower to reduce the principal
balance owing pursuant to this Note. This Note may be prepaid in
whole or in part at any time without penalty or premium. In no
event shall any principal advance be made after December 31, 1996,
and all amounts outstanding will be due and payable at that time.
4. Line of Credit Agreement. This Note is issued pursuant
to, is entitled to the benefit of, and is subject to the provisions
of the Entertainment Operating Fund Line of Credit Agreement (the
"Agreement") between Borrower and Lender dated the same date as
this Note.
5. Events of Default. The outstanding principal and accrued
interest hereon shall mature and become automatically due and
payable, without notice or demand, upon the occurrence and during
the continuance without cure of any of the following events of
default:
(a) The failure by Borrower to make a payment of any
principal or interest on the Note within ten (10) days
after the same becomes due and payable;
(b) The failure by Borrower to perform any of its
obligations, except the payment of principal and
interest, arising under this Note, the Agreement or any
other agreement between Borrower and Lender within five
(5) days after receipt of written notice of such failure;
or
(c) The filing by or against the Borrower of a voluntary
or involuntary proceeding seeking liquidation,
reorganization or other relief with respect to Borrower
or its debts under any bankruptcy, insolvency or other
similar law now or hereafter in effect or seeking the
appointment of a trustee, receiver, liquidator, custodian
or other similar official for Borrower or any substantial
part of its property and, in the case of any involuntary
proceeding not consented to by Borrower, such proceeding
is not dismissed within sixty (60) days of its filing.
6. Remedies. If Borrower is in default under this Note: (a)
the outstanding principal and accrued interest under the Note shall
mature and become automatically due and payable, without notice or
demand; (b) Lender may terminate its commitment to advance monies
under this Note; and (c) Lender may exercise any other remedies
available to it at law or in equity.
7. Waiver. Borrower, sureties, endorsers, guarantors and
any other party now or hereafter liable for the payment of this
Note in whole or in part, hereby severally (a) waive presentment
for payment, notice of nonpayment, protest, notice of protest,
notice of intent to accelerate, notice of acceleration and all
other notices, filing of suit and diligence in collecting this Note
or enforcing any other security with respect to same, (b) agree to
any substitution, subordination, exchange or release of any such
security or the release of any parties primarily or secondarily
liable hereon, (c) agree that the Lender shall not be required
first to institute suit or exhaust its remedies hereon against the
Borrower, or other any party liable or to become liable hereon or
to enforce its rights against any or all of them or any security
with respect to same, and (d) consent to any extension or
postponement of time of payment of this Note and to any other
indulgence with respect hereto without notice hereof to any of
them.
8. Attorneys' Fees. If this Note is not paid at maturity
and is placed in the hands of an attorney for collection, or if it
is collected through a bankruptcy or any other court after
maturity, then the Lender shall be entitled to reasonable
attorneys' fees and court costs for collection.
9. Limitation of Agreements. All agreements between the
Borrower and the Lender, whether now existing or hereafter arising
and whether written or oral, are hereby expressly limited so that
in no contingency or event, whether by reason of demand or
otherwise, shall the amount paid, or agreed to be paid to the
Lender for the use, forbearance, or detention of the money to be
loaned under this Note or otherwise or for the payment or
performance of any covenant or obligation contained herein or in
any other document evidencing security or pertaining to the loan
evidenced hereby, exceed the maximum amount permissible under
applicable law, as now existing or as hereafter amended. If from
any circumstances whatsoever fulfillment of any provision hereof or
in any of such other documents at the time performance of such
provision shall be due, shall involve transcending the limit of
validity prescribed by law, then ipso facto, the obligation to be
fulfilled shall be reduced to the limit of such validity, and if
from any such circumstances the Lender shall ever receive interest
(or anything which might be deemed interest under applicable law)
which would exceed the highest rate of interest allowed by
applicable law, such amount which would be excessive interest shall
be applied to the reduction of the principal due hereunder and not
to the payment of interest, or if such excessive interest exceeds
the unpaid balance of principal of this Note, such excess shall be
refunded to the Borrower. All sums paid or agreed to be paid to
the Lender for the use, forbearance or detention of the
indebtedness of the Borrower to the Lender shall, to the extent
permitted by applicable law, be amortized, prorated, allocated and
spread throughout the full term of such indebtedness until payment
in full so that the actual rate of interest on account of such
indebtedness is uniform, or does not exceed the maximum rate
permitted by applicable law as now existing or hereafter amended,
throughout the term thereof. The terms and provisions of this
paragraph shall control and supersede every other provision of all
agreements between the Lender and the Borrower.
10. Records. Borrower hereby appoints Lender as the
authorized agent of Borrower with full authority to record on the
Grid attached hereto as Exhibit A, and incorporated herein by
reference for all purposes, the dates of each transaction, amounts
of all principal advances, as well as principal and interest
payments, made under this Note, and balance due on the Note. This
Grid (and all notations made thereto) shall be conclusive evidence
of the actual amounts of principal and accrued interest advanced
and/or outstanding under this Note.
11. Miscellaneous.
(a) No failure or delay by Lender in
exercising any right, power or privilege under
this Note or the Agreement shall operate as a
waiver thereof, nor shall any single or
partial exercise thereof preclude any further
exercise thereof or the exercise of any other
right, power or privilege.
(b) The captions used in this Note are for
convenience only and shall not be deemed to
amplify, modify or limit any provision hereof.
(c) Words of any gender used in this Note
shall be construed to include any other
gender, and words in the singular shall
include the plural and vice versa, unless the
context otherwise requires.
(d) This Note shall be binding upon and inure
to the benefit of the Parties hereto and their
respective heirs, legal representatives,
successors and assigns.
(e) This Note, together with the Agreement,
contains the entire agreement between the
Parties hereto with respect to the subject
matter hereof and can be altered, amended or
modified only by a written instrument executed
by both Parties.
(f) This Note may be executed in multiple
copies, each of which shall be deemed an
original, and all of such copies shall
together constitute one and the same
instrument.
(g) Time is of the essence in the performance
of each obligation, covenant and condition
under this Note.
(h) This Note shall be governed by the laws
of the State of Texas.
(i) This Note is performable in Dallas
County, Texas.
SHOWBIZ PIZZA TIME, INC. (Lender)
By:___________________________
Richard M. Frank
Chairman and Chief Executive Officer
- ---------------
INTERNATIONAL ASSOCIATION OF SHOWBIZ
PIZZA TIME RESTAURANTS, INC. (Borrower)
By:__________________________
Michael A. Hilton
President
- ------------------
EXHIBIT A
Payment Grid for the Promissory Note,
dated _________, 1994, between International
Association of ShowBiz Pizza Time Restaurants,
Inc. and ShowBiz Pizza Time, Inc.
Principal Interest
Date Principal Advances Payments Payments Balance Due
- ---- ------------------ --------- -------- -----------
EXHIBIT (u)(1)
NATIONAL ADVERTISING PRODUCTION LINE OF CREDIT
By this Agreement, dated as of , 1994,
SHOWBIZ PIZZA TIME, INC. ("Lender") and INTERNATIONAL ASSOCIATION
OF SHOWBIZ PIZZA TIME RESTAURANTS, INC., ("Borrower") hereby agree
as follows:
1. Revolving Commitment. Subject to the terms and
conditions in this Agreement, Lender agrees to loan to Borrower
from time to time amounts not to exceed Seven Hundred and Fifty
Thousand Dollars ($750,000.00) in the aggregate outstanding at any
one time. No new advance shall be made under this Agreement after
December 31, 1995. Subject to the foregoing limitations, Borrower
may borrow, repay, prepay and reborrow amounts under this
Agreement.
2. Note. Borrower's obligation to repay amounts borrowed
under this Agreement is further evidenced by an National
Advertising Production Promissory Note (the "Note") dated the same
date as this Agreement. Payment of principal and interest, and
accrual of interest, on amounts borrowed under this Agreement shall
be as provided in the Note.
3. Use of Proceeds. Borrower shall use amounts borrowed
under this Agreement only to pay the costs associated with the
production of advertisements for the benefit of Lender ("Production
Costs"). Upon Lender's reasonable request, Borrower shall provide
copies of invoices and other documents which evidence Borrower's
compliance with this Section 3.
4. Records and Reports. Upon Lender's reasonable request,
Borrower shall provide reports and copies of invoices, canceled
checks and other business records pertaining to the Project, this
Agreement or the Note.
5. Condition to Loans. The obligation of Lender to make
loans under this Agreement is subject to the satisfaction of each
of the following conditions:
(a) No default under this Agreement, and no event which
would constitute a default but for the giving of notice
or the passage of time thereafter, shall have occurred
and be continuing on the date of such loan;
(b) The representations and warranties of Borrower set
forth in this Agreement shall be true as of the date of
such loan;
(c) Lender shall have received any documents or
information previously requested from Borrower pursuant
to this Agreement; and
(d) No material adverse change, in Lender's sole
determination, has occurred in the businesses of the
ShowBiz Pizza Time restaurants or in the financial
condition of Borrower.
6. Representation and Warranties: Borrower represents and
warrants that: (a) Borrower is a corporation duly incorporated,
validly existing and in good standing under the laws of the State
of Texas; (b) the execution, delivery and performance of this
Agreement and the Note have been duly authorized by all necessary
corporation action; and (c) this Agreement and the Note constitute
the valid and binding obligations of Borrower enforceable in
accordance with their terms.
7. Default. Borrower shall be in default under this
Agreement if one or more of the following events shall have
occurred and be continuing:
(a) The failure by Borrower to make any payment of
principal or interest on the Note within ten (10) days
after the same becomes due and payable;
(b) The failure by Borrower to perform any of its
obligations, except the payment of principal and
interest, arising under the Note, this Agreement or any
other agreement between Borrower and Lender within five
(5) days after written notice of such failure; or
(c) The filing by or against the Borrower of a voluntary
or involuntary proceeding seeking liquidation,
reorganization or other relief with respect to Borrower
or its debts under any bankruptcy, insolvency or other
similar law now or hereafter in effect or seeking the
appointment of a trustee, receiver, liquidator, custodian
or other similar official for Borrower or any substantial
part of its property and, in the case of any involuntary
proceeding not consented to by Borrower, such proceeding
is not dismissed within sixty (60) days.
8. Remedies. If Borrower is in default under this
Agreement: (a) the outstanding principal and accrued interest under
the Note shall mature and become automatically due and payable,
without notice or demand; (b) Lender may terminate its commitment
to make loans under this Agreement; and (c) Lender may exercise any
other remedies permitted by law or equity.
9. Notices. Any notice under this Agreement shall be
effective upon actual receipt or upon delivery to the United States
Postal Service, with first class postage, addressed as follows (or
to such other address subsequently provided by the party hereto):
To Lender:
ShowBiz Pizza Time, Inc.
4441 West Airport Freeway
Irving, Texas 75015
Attention: General Counsel
To Borrower:
International Association of ShowBiz
Pizza Time Restaurants, Inc.
4441 West Airport Freeway
Irving, Texas 75015
Attention: Mike Hilton
10. Miscellaneous.
(a) No failure or delay by Lender in exercising any
right, power or privilege under this Agreement or the
Note shall operate as a waiver thereof, nor shall any
single or partial exercise thereof preclude any further
exercise thereof or the exercise of any other right,
power or privilege.
(b) The captions used in this Agreement are for
convenience only and shall not be deemed to amplify,
modify or limit the provisions hereof.
(c) Words of any gender used in the Agreement shall be
construed to include any other gender, and words in the
singular shall include the plural and vice versa, unless
the context otherwise requires.
(d) This Agreement shall be binding upon and shall inure
to the benefit of the parties hereto and their respective
heirs, legal representatives, successors and assigns.
(e) This Agreement, together with the Note, contains the
entire agreement of the parties hereto with respect to
the subject matter hereof and can be altered, amended or
modified only by written instrument executed by both
parties.
(f) This Agreement may be executed in multiple copies,
each of which shall be deemed an original, and all of
such copies shall together constitute one and the same
instrument.
(g) Time is of the essence in the performance of each
obligation, covenant and condition under this Agreement.
(h) This Agreement shall be governed by the laws of the
State of Texas.
11. Prior Agreements. This Agreement amends, supersedes, and
replaces all previous agreements related to National Advertising
Production.
IN WITNESS HEREOF, the parties have caused this Agreement to
be executed by their duly authorized representatives as of the date
first appearing above.
SHOWBIZ PIZZA TIME, INC.
By:_________________________
Richard M. Frank
Chairman and Chief Executive Officer
INTERNATIONAL ASSOCIATION OF SHOWBIZ
PIZZA TIME RESTAURANTS, INC.
By:______________________________
Michael A. Hilton
President
EXHIBIT (u)(2)
NATIONAL ADVERTISING PRODUCTION
PROMISSORY NOTE
Dated as of
$750,000.00 Irving, Texas ____________,1994
FOR VALUE RECEIVED, the undersigned INTERNATIONAL ASSOCIATION
OF SHOWBIZ PIZZA TIME RESTAURANTS, INC. ("Borrower"), a Texas
corporation, promises to pay to SHOWBIZ PIZZA TIME, INC.
("Lender"), a Kansas corporation, (hereinafter collectively
referred to as "Parties"), the principal sum of SEVEN HUNDRED AND
FIFTY THOUSAND AND NO/100 DOLLARS ($750,000.00), or so much thereof
as may from time to time be advanced, together with interest
accrued on the unpaid principal balance hereof as set forth below.
1. Interest Rate. The unpaid principal amount hereof from
time to time outstanding from the date hereof until maturity shall
bear interest at a fluctuating rate per annum equal to the Prime
Rate plus 0.5% (as herein defined), changing automatically, without
notice to the Borrower, effective as of the effective date of any
change in the Prime Rate. Interest shall be calculated at the end
of each of Lender's monthly accounting periods (which will not
correspond with calendar months due to Lender's 52 week fiscal
year) based on the average between the principal amounts
outstanding and unpaid at the beginning of the monthly accounting
period and at the end of such period, but shall be charged and
collected based on the actual number of days elapsed. The term
"Prime Rate" as used herein means the higher of (a) the annual rate
of interest announced from time to time by the First National Bank
of Boston at its head office in Boston, Massachusetts as its "base
rate" and (b) the overnight federal funds effective rate as
published by the Board of Governors of the Federal Reserve System
as in effect from time to time plus one half of one percent (1/2%).
2. Payment of Principal and Interest. Each payment by
Borrower to Lender on this Note shall be applied first to fees
and/or costs, if any, pursuant to Section 8 hereof and then applied
to any accrued interest, and then any remaining portion of the
payment after such applications shall be applied to reduction of
outstanding principal balance of this Note.
3. Revolving Note. This Note is a "revolving line of
credit" note. Principal advances may be made, from time to time,
up to the principal amount of this Note, and principal payments
may, from time to time, be made by Borrower to reduce the principal
balance owing pursuant to this Note. This Note may be prepaid in
whole or in part at any time without penalty or premium. In no
event shall any principal advance be made after December 31, 1995,
and all amounts outstanding will be due and payable at that time.
4. Line of Credit Agreement. This Note is issued pursuant
to, is entitled to the benefit of, and is subject to the provisions
of the National Advertising Production Line of Credit Agreement
(the "Agreement") between Borrower and Lender dated the same date
as this Note.
5. Events of Default. The outstanding principal and accrued
interest hereon shall mature and become automatically due and
payable, without notice or demand, upon the occurrence and during
the continuance without cure of any of the following events of
default:
(a) The failure by Borrower to make a payment
of any principal or interest on the Note
within ten (10) days after the same becomes
due and payable;
(b) The failure by Borrower to perform any of
its obligations, except the payment of
principal and interest, arising under this
Note, the Agreement or any other agreement
between Borrower and Lender within five (5)
days after receipt of written notice of such
failure; or
(c) The filing by or against the Borrower of
a voluntary or involuntary proceeding seeking
liquidation, reorganization or other relief
with respect to Borrower or its debts under
any bankruptcy, insolvency or other similar
law now or hereafter in effect or seeking the
appointment of a trustee, receiver,
liquidator, custodian or other similar
official for Borrower or any substantial part
of its property and, in the case of any
involuntary proceeding not consented to by
Borrower, such proceeding is not dismissed
within sixty (60) days of its filing.
6. Remedies. If Borrower is in default under this Note: (a)
the outstanding principal and accrued interest under the Note shall
mature and become automatically due and payable, without notice or
demand; (b) Lender may terminate its commitment to advance monies
under this Note; and (c) Lender may exercise any other remedies
available to it at law or in equity.
7. Waiver. Borrower, sureties, endorsers, guarantors and
any other party now or hereafter liable for the payment of this
Note in whole or in part, hereby severally (a) waive presentment
for payment, notice of nonpayment, protest, notice of protest,
notice of intent to accelerate, notice of acceleration and all
other notices, filing of suit and diligence in collecting this Note
or enforcing any other security with respect to same, (b) agree to
any substitution, subordination, exchange or release of any such
security or the release of any parties primarily or secondarily
liable hereon, (c) agree that the Lender shall not be required
first to institute suit or exhaust its remedies hereon against the
Borrower, or other any party liable or to become liable hereon or
to enforce its rights against any or all of them or any security
with respect to same, and (d) consent to any extension or
postponement of time of payment of this Note and to any other
indulgence with respect hereto without notice hereof to any of
them.
8. Attorneys' Fees. If this Note is not paid at maturity
and is placed in the hands of an attorney for collection, or if it
is collected through a bankruptcy or any other court after
maturity, then the Lender shall be entitled to reasonable
attorneys' fees and court costs for collection.
9. Limitation of Agreements. All agreements between the
Borrower and the Lender, whether now existing or hereafter arising
and whether written or oral, are hereby expressly limited so that
in no contingency or event, whether by reason of demand or
otherwise, shall the amount paid, or agreed to be paid to the
Lender for the use, forbearance, or detention of the money to be
loaned under this Note or otherwise or for the payment or
performance of any covenant or obligation contained herein or in
any other document evidencing security or pertaining to the loan
evidenced hereby, exceed the maximum amount permissible under
applicable law, as now existing or as hereafter amended. If from
any circumstances whatsoever fulfillment of any provision hereof or
in any of such other documents at the time performance of such
provision shall be due, shall involve transcending the limit of
validity prescribed by law, then ipso facto, the obligation to be
fulfilled shall be reduced to the limit of such validity, and if
from any such circumstances the Lender shall ever receive interest
(or anything which might be deemed interest under applicable law)
which would exceed the highest rate of interest allowed by
applicable law, such amount which would be excessive interest shall
be applied to the reduction of the principal due hereunder and not
to the payment of interest, or if such excessive interest exceeds
the unpaid balance of principal of this Note, such excess shall be
refunded to the Borrower. All sums paid or agreed to be paid to
the Lender for the use, forbearance or detention of the
indebtedness of the Borrower to the Lender shall, to the extent
permitted by applicable law, be amortized, prorated, allocated and
spread throughout the full term of such indebtedness until payment
in full so that the actual rate of interest on account of such
indebtedness is uniform, or does not exceed the maximum rate
permitted by applicable law as now existing or hereafter amended,
throughout the term thereof. The terms and provisions of this
paragraph shall control and supersede every other provision of all
agreements between the Lender and the Borrower.
10. Records. Borrower hereby appoints Lender as the
authorized agent of Borrower with full authority to record on the
Grid attached hereto as Exhibit A, and incorporated herein by
reference for all purposes, the dates of each transaction, amounts
of all principal advances, as well as principal and interest
payments, made under this Note, and balance due on the Note. This
Grid (and all notations made thereto) shall be conclusive evidence
of the actual amounts of principal and accrued interest advanced
and/or outstanding under this Note.
11. Miscellaneous.
(a) No failure or delay by Lender in
exercising any right, power or privilege under
this Note or the Agreement shall operate as a
waiver thereof, nor shall any single or
partial exercise thereof preclude any further
exercise thereof or the exercise of any other
right, power or privilege.
(b) The captions used in this Note are for
convenience only and shall not be deemed to
amplify, modify or limit any provision hereof.
(c) Words of any gender used in this Note
shall be construed to include any other
gender, and words in the singular shall
include the plural and vice versa, unless the
context otherwise requires.
(d) This Note shall be binding upon and inure
to the benefit of the Parties hereto and their
respective heirs, legal representatives,
successors and assigns.
(e) This Note, together with the Agreement,
contains the entire agreement between the
Parties hereto with respect to the subject
matter hereof and can be altered, amended or
modified only by a written instrument executed
by both Parties.
(f) This Note may be executed in multiple
copies, each of which shall be deemed an
original, and all of such copies shall
together constitute one and the same
instrument.
(g) Time is of the essence in the performance
of each obligation, covenant and condition
under this Note.
(h) This Note shall be governed by the laws
of the State of Texas.
(i) This Note is performable in Dallas
County, Texas.
SHOWBIZ PIZZA TIME, INC. (Lender)
By:______________________________
Richard M. Frank
Chairman and Chief Executive Officer
- ------------------
INTERNATIONAL ASSOCIATION OF SHOWBIZ
PIZZA TIME RESTAURANTS, INC. (Borrower)
By:_________________________________
Michael A. Hilton
President
EXHIBIT (v)(1)
NATIONAL MEDIA FUND LINE OF CREDIT
By this Agreement, dated as of _____________ 1994, SHOWBIZ
PIZZA TIME, INC. ("Lender") and INTERNATIONAL ASSOCIATION OF
SHOWBIZ PIZZA TIME RESTAURANTS, INC., ("Borrower") hereby agree as
follows:
1. Revolving Commitment. Subject to the terms and
conditions in this Agreement, Lender agrees to loan to Borrower
from time to time amounts not to exceed Four Hundred Thousand
Dollars ($400,000.00) in the aggregate outstanding at any one time.
No new advance shall be made under this Agreement after December
31, 1995. Subject to the foregoing limitations, Borrower may
borrow, repay, prepay and reborrow amounts under this Agreement.
2. Note. Borrower's obligation to repay amounts borrowed
under this Agreement is further evidenced by an National Media Fund
Promissory Note (the "Note") dated the same date as this Agreement.
Payment of principal and interest, and accrual of interest, on
amounts borrowed under this Agreement shall be as provided in the
Note.
3. Use of Proceeds. Borrower shall use amounts borrowed
under this Agreement only to purchase goods and services related to
network media buys (collectively, the "Project"). Upon Lender's
reasonable request, Borrower shall provide copies of invoices and
other documents which evidence Borrower's compliance with this
Section 3.
4. Records and Reports. Upon Lender's reasonable request,
Borrower shall provide reports and copies of invoices, canceled
checks and other business records pertaining to the Project, this
Agreement or the Note.
5. Condition to Loans. The obligation of Lender to make
loans under this Agreement is subject to the satisfaction of each
of the following conditions:
(a) No default under this Agreement, and no event which
would constitute a default but for the giving of notice
or the passage of time thereafter, shall have occurred
and be continuing on the date of such loan;
(b) The representations and warranties of Borrower set
forth in this Agreement shall be true as of the date of
such loan;
(c) Lender shall have received any documents or
information previously requested from Borrower pursuant
to this Agreement; and
(d) No material adverse change, in Lender's sole
determination, has occurred in the businesses of the
ShowBiz Pizza Time restaurants or in the financial
condition of Borrower.
6. Representation and Warranties: Borrower represents and
warrants that: (a) Borrower is a corporation duly incorporated,
validly existing and in good standing under the laws of the State
of Texas; (b) the execution, delivery and performance of this
Agreement and the Note have been duly authorized by all necessary
corporation action; and (c) this Agreement and the Note constitute
the valid and binding obligations of Borrower enforceable in
accordance with their terms.
7. Default. Borrower shall be in default under this
Agreement if one or more of the following events shall have
occurred and be continuing:
(a) The failure by Borrower to make any payment of
principal or interest on the Note within ten (10) days
after the same becomes due and payable;
(b) The failure by Borrower to perform any of its
obligations, except the payment of principal and
interest, arising under the Note, this Agreement or any
other agreement between Borrower and Lender within five
(5) days after written notice of such failure; or
(c) The filing by or against the Borrower of a voluntary
or involuntary proceeding seeking liquidation,
reorganization or other relief with respect to Borrower
or its debts under any bankruptcy, insolvency or other
similar law now or hereafter in effect or seeking the
appointment of a trustee, receiver, liquidator, custodian
or other similar official for Borrower or any substantial
part of its property and, in the case of any involuntary
proceeding not consented to by Borrower, such proceeding
is not dismissed within sixty (60) days.
8. Remedies. If Borrower is in default under this
Agreement: (a) the outstanding principal and accrued interest under
the Note shall mature and become automatically due and payable,
without notice or demand; (b) Lender may terminate its commitment
to make loans under this Agreement; and (c) Lender may exercise any
other remedies permitted by law or equity.
9. Notices. Any notice under this Agreement shall be
effective upon actual receipt or upon delivery to the United States
Postal Service, with first class postage, addressed as follows (or
to such other address subsequently provided by the party hereto):
To Lender:
ShowBiz Pizza Time, Inc.
4441 West Airport Freeway
Irving, Texas 75015
Attention: General Counsel
To Borrower:
International Association of ShowBiz
Pizza Time Restaurants, Inc.
4441 West Airport Freeway
Irving, Texas 75015
Attention: Mike Hilton
10. Miscellaneous.
(a) No failure or delay by Lender in exercising any
right, power or privilege under this Agreement or the
Note shall operate as a waiver thereof, nor shall any
single or partial exercise thereof preclude any further
exercise thereof or the exercise of any other right,
power or privilege.
(b) The captions used in this Agreement are for
convenience only and shall not be deemed to amplify,
modify or limit the provisions hereof.
(c) Words of any gender used in the Agreement shall be
construed to include any other gender, and words in the
singular shall include the plural and vice versa, unless
the context otherwise requires.
(d) This Agreement shall be binding upon and shall inure
to the benefit of the parties hereto and their respective
heirs, legal representatives, successors and assigns.
(e) This Agreement, together with the Note, contains the
entire agreement of the parties hereto with respect to
the subject matter hereof and can be altered, amended or
modified only by written instrument executed by both
parties.
(f) This Agreement may be executed in multiple copies,
each of which shall be deemed an original, and all of
such copies shall together constitute one and the same
instrument.
(g) Time is of the essence in the performance of each
obligation, covenant and condition under this Agreement.
(h) This Agreement shall be governed by the laws of the
State of Texas.
11. Prior Agreements. This Agreement amends, supersedes, and
replaces all previous agreements related to national media
production.
IN WITNESS HEREOF, the parties have caused this Agreement to
be executed by their duly authorized representatives as of the date
first appearing above.
SHOWBIZ PIZZA TIME, INC.
By:_________________________
Richard M. Frank
Chairman and Chief
Executive Officer
INTERNATIONAL ASSOCIATION OF SHOWBIZ
PIZZA TIME RESTAURANTS, INC.
By:___________________________
Michael A. Hilton
President
- ----------------
EXHIBIT A
---------
Payment Grid for the Promissory Note,
dated _________, 1994, between International
Association of ShowBiz Pizza Time Restaurants,
Inc. and ShowBiz Pizza Time, Inc.
Principal Interest
Date Principal Advances Payment Payments Balance Due
- ---- ------------------ ------- -------- ----------
EXHIBIT (v)(2)
NATIONAL MEDIA FUND
PROMISSORY NOTE
Dated as of
$400,000.00 Irving, Texas ____________,1994
FOR VALUE RECEIVED, the undersigned INTERNATIONAL ASSOCIATION
OF SHOWBIZ PIZZA TIME RESTAURANTS, INC. ("Borrower"), a Texas
corporation, promises to pay to SHOWBIZ PIZZA TIME, INC.
("Lender"), a Kansas corporation, (hereinafter collectively
referred to as "Parties"), the principal sum of FOUR HUNDRED
THOUSAND AND NO/100 DOLLARS ($400,000.00), or so much thereof as
may from time to time be advanced, together with interest accrued
on the unpaid principal balance hereof as set forth below.
1. Interest Rate. The unpaid principal amount hereof from
time to time outstanding from the date hereof until maturity shall
bear interest at a fluctuating rate per annum equal to the Prime
Rate plus 0.5% (as herein defined), changing automatically, without
notice to the Borrower, effective as of the effective date of any
change in the Prime Rate. Interest shall be calculated at the end
of each of Lender's monthly accounting periods (which will not
correspond with calendar months due to Lender's 52 week fiscal
year) based on the average between the principal amounts
outstanding and unpaid at the beginning of the monthly accounting
period and at the end of such period, but shall be charged and
collected based on the actual number of days elapsed. The term
"Prime Rate" as used herein means the higher of (a) the annual rate
of interest announced from time to time by the First National Bank
of Boston at its head office in Boston, Massachusetts as its "base
rate" and (b) the overnight federal funds effective rate as
published by the Board of Governors of the Federal Reserve System
as in effect from time to time plus one half of one percent (1/2%).
2. Payment of Principal and Interest. Each payment by
Borrower to Lender on this Note shall be applied first to fees
and/or costs, if any, pursuant to Section 8 hereof and then applied
to any accrued interest, and then any remaining portion of the
payment after such applications shall be applied to reduction of
outstanding principal balance of this Note.
3. Revolving Note. This Note is a "revolving line of
credit" note. Principal advances may be made, from time to time,
up to the principal amount of this Note, and principal payments
may, from time to time, be made by Borrower to reduce the principal
balance owing pursuant to this Note. This Note may be prepaid in
whole or in part at any time without penalty or premium. In no
event shall any principal advance be made after December 31, 1995,
and all amounts outstanding will be due and payable at that time.
4. Line of Credit Agreement. This Note is issued pursuant
to, is entitled to the benefit of, and is subject to the provisions
of the National Media Fund Line of Credit Agreement (the
"Agreement") between Borrower and Lender dated the same date as
this Note.
5. Events of Default. The outstanding principal and accrued
interest hereon shall mature and become automatically due and
payable, without notice or demand, upon the occurrence and during
the continuance without cure of any of the following events of
default:
(a) The failure by Borrower to make a payment
of any principal or interest on the Note
within ten (10) days after the same becomes
due and payable;
(b) The failure by Borrower to perform any of
its obligations, except the payment of
principal and interest, arising under this
Note, the Agreement or any other agreement
between Borrower and Lender within five (5)
days after receipt of written notice of such
failure; or
(c) The filing by or against the Borrower of
a voluntary or involuntary proceeding seeking
liquidation, reorganization or other relief
with respect to Borrower or its debts under
any bankruptcy, insolvency or other similar
law now or hereafter in effect or seeking the
appointment of a trustee, receiver,
liquidator, custodian or other similar
official for Borrower or any substantial part
of its property and, in the case of any
involuntary proceeding not consented to by
Borrower, such proceeding is not dismissed
within sixty (60) days of its filing.
6. Remedies. If Borrower is in default under this Note: (a)
the outstanding principal and accrued interest under the Note shall
mature and become automatically due and payable, without notice or
demand; (b) Lender may terminate its commitment to advance monies
under this Note; and (c) Lender may exercise any other remedies
available to it at law or in equity.
7. Waiver. Borrower, sureties, endorsers, guarantors and
any other party now or hereafter liable for the payment of this
Note in whole or in part, hereby severally (a) waive presentment
for payment, notice of nonpayment, protest, notice of protest,
notice of intent to accelerate, notice of acceleration and all
other notices, filing of suit and diligence in collecting this Note
or enforcing any other security with respect to same, (b) agree to
any substitution, subordination, exchange or release of any such
security or the release of any parties primarily or secondarily
liable hereon, (c) agree that the Lender shall not be required
first to institute suit or exhaust its remedies hereon against the
Borrower, or other any party liable or to become liable hereon or
to enforce its rights against any or all of them or any security
with respect to same, and (d) consent to any extension or
postponement of time of payment of this Note and to any other
indulgence with respect hereto without notice hereof to any of
them.
8. Attorneys' Fees. If this Note is not paid at maturity
and is placed in the hands of an attorney for collection, or if it
is collected through a bankruptcy or any other court after
maturity, then the Lender shall be entitled to reasonable
attorneys' fees and court costs for collection.
9. Limitation of Agreements. All agreements between the
Borrower and the Lender, whether now existing or hereafter arising
and whether written or oral, are hereby expressly limited so that
in no contingency or event, whether by reason of demand or
otherwise, shall the amount paid, or agreed to be paid to the
Lender for the use, forbearance, or detention of the money to be
loaned under this Note or otherwise or for the payment or
performance of any covenant or obligation contained herein or in
any other document evidencing security or pertaining to the loan
evidenced hereby, exceed the maximum amount permissible under
applicable law, as now existing or as hereafter amended. If from
any circumstances whatsoever fulfillment of any provision hereof or
in any of such other documents at the time performance of such
provision shall be due, shall involve transcending the limit of
validity prescribed by law, then ipso facto, the obligation to be
fulfilled shall be reduced to the limit of such validity, and if
from any such circumstances the Lender shall ever receive interest
(or anything which might be deemed interest under applicable law)
which would exceed the highest rate of interest allowed by
applicable law, such amount which would be excessive interest shall
be applied to the reduction of the principal due hereunder and not
to the payment of interest, or if such excessive interest exceeds
the unpaid balance of principal of this Note, such excess shall be
refunded to the Borrower. All sums paid or agreed to be paid to
the Lender for the use, forbearance or detention of the
indebtedness of the Borrower to the Lender shall, to the extent
permitted by applicable law, be amortized, prorated, allocated and
spread throughout the full term of such indebtedness until payment
in full so that the actual rate of interest on account of such
indebtedness is uniform, or does not exceed the maximum rate
permitted by applicable law as now existing or hereafter amended,
throughout the term thereof. The terms and provisions of this
paragraph shall control and supersede every other provision of all
agreements between the Lender and the Borrower.
10. Records. Borrower hereby appoints Lender as the
authorized agent of Borrower with full authority to record on the
Grid attached hereto as Exhibit A, and incorporated herein by
reference for all purposes, the dates of each transaction, amounts
of all principal advances, as well as principal and interest
payments, made under this Note, and balance due on the Note. This
Grid (and all notations made thereto) shall be conclusive evidence
of the actual amounts of principal and accrued interest advanced
and/or outstanding under this Note.
11. Miscellaneous.
(a) No failure or delay by Lender in
exercising any right, power or privilege under
this Note or the Agreement shall operate as a
waiver thereof, nor shall any single or
partial exercise thereof preclude any further
exercise thereof or the exercise of any other
right, power or privilege.
(b) The captions used in this Note are for
convenience only and shall not be deemed to
amplify, modify or limit any provision hereof.
(c) Words of any gender used in this Note
shall be construed to include any other
gender, and words in the singular shall
include the plural and vice versa, unless the
context otherwise requires.
(d) This Note shall be binding upon and inure
to the benefit of the Parties hereto and their
respective heirs, legal representatives,
successors and assigns.
(e) This Note, together with the Agreement,
contains the entire agreement between the
Parties hereto with respect to the subject
matter hereof and can be altered, amended or
modified only by a written instrument executed
by both Parties.
(f) This Note may be executed in multiple
copies, each of which shall be deemed an
original, and all of such copies shall
together constitute one and the same
instrument.
(g) Time is of the essence in the performance
of each obligation, covenant and condition
under this Note.
(h) This Note shall be governed by the laws
of the State of Texas.
(i) This Note is performable in Dallas
County, Texas.
SHOWBIZ PIZZA TIME, INC. (Lender)
By: __________________________
Richard M. Frank
Chairman and Chief Executive Officer
INTERNATIONAL ASSOCIATION OF SHOWBIZ
PIZZA TIME RESTAURANTS, INC. (Borrower)
By:___________________________
Michael A. Hilton
President
EXHIBIT A
Payment Grid for the Promissory Note,
dated _________, 1994, between International
Association of ShowBiz Pizza Time Restaurants,
Inc. and ShowBiz Pizza Time, Inc.
Principal Interest
Date Principal Advances Payments Payments Balance Due
- ---- ------------------ -------- -------- -----------
- -------------------------------------------------------------
21 -- List of Subsidiaries
SUBSIDIARIES
NAME OF SUBSIDIARY STATE OF
(AND NAMES IN WHICH ORGANIZATION
SUBSIDIARY DOES BUSINESS -------------
- ------------------------
BHC Acquisition Texas
- ------------------------------------------------------------
23 -- Independent Auditor's Consent
INDEPENDENT AUDITOR'S CONSENT
Board of Directors and Shareholders
ShowBiz Pizza Time, Inc.
Irving, Texas
We consent to the incorporation by reference in Registration Statement Nos.
33-29495, 33-36075 and 33-39650 on Form S-8 of ShowBiz Pizza Time, Inc. of
our report dated February 23, 1996, appearing in this Annual Report on Form
10-K of ShowBiz Pizza Time, Inc. for the year ended December 29, 1995.
Deloitte & Touche, LLP
Dallas, Texas
March 26, 1996
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<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-29-1995
<PERIOD-END> DEC-29-1995
<CASH> 5,589
<SECURITIES> 0
<RECEIVABLES> 3,935
<ALLOWANCES> 75
<INVENTORY> 3,589
<CURRENT-ASSETS> 20,041
<PP&E> 231,962
<DEPRECIATION> 94,781
<TOTAL-ASSETS> 199,010
<CURRENT-LIABILITIES> 29,931
<BONDS> 35,753
<COMMON> 1,429
2,005
0
<OTHER-SE> 125,058
<TOTAL-LIABILITY-AND-EQUITY> 199,010
<SALES> 259,345
<TOTAL-REVENUES> 263,783
<CGS> 136,700
<TOTAL-COSTS> 263,408
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,118
<INCOME-PRETAX> 375
<INCOME-TAX> 312
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<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 63
<EPS-PRIMARY> (.02)
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</TABLE>
