SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of Earliest
Event Reported): February 19, 1997
CHECKERS DRIVE-IN RESTAURANTS, INC.
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(Exact name of registrant as specified in its charter)
Delaware 0-19649 58-1654960
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
600 Cleveland Street, 8th Floor
Clearwater, Florida 34615
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 813-441-3500
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Item 5. Other Events.
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In November 1996, Checkers Drive-In Restaurants, Inc. (the "Company")
renegotiated its primary credit facility with a group of new lenders led by CKE
Restaurants, Inc. In order to obtain additional working capital without
increasing the Company's debt, the Company and the new lenders agreed that the
Company would proceed with a $10 million rights offering to be made to the
holders of the Company's common stock and the lenders, as holders of warrants to
acquire 20 million shares of the Company's common stock, on a pro rata basis as
if the lenders' warrants had been exercised for common stock prior to the rights
offering. Pursuant to the rights offering, Checkers was to have distributed to
its stockholders and the lenders rights to acquire shares of Checkers common
stock for $10 million upon terms to be determined by the Board of Directors. The
new lender group agreed to purchase whatever shares were not purchased by
Checkers' stockholders.
In December 1996, the Board of Directors determined that the rights
offering likely could not be completed until May 1997. Due to the Company's need
for significant working capital before such time, the Company reached an
agreement with certain members of the new lender group on December 17, 1996, for
the purchase in a private placement of $20 million of stock of the Company. The
Board of Directors of the Company determined that the private placement could be
accomplished in a more timely manner than the rights offering, consistent with
the needs and best interests of the Company. A committee of the board of
directors of the Company, comprised of three disinterested directors (the
"Committee"), was appointed to negotiate the terms of the private placement.
Due to the large number of shares that would have to be issued to raise
$20 million, the Committee requested, and the purchasers agreed, that none of
the stock would be sold into the public markets for one year. Based upon this
restriction on transferability, it was agreed that the purchase price for the
common stock would be discounted 15% from the closing price of the common stock
on December 16, 1996.
The private placement was closed on February 19, 1997, with the Company
receiving $20.0 million for 8,771,929 shares of common stock, $.001 par value,
and 87,719 shares of Series A preferred stock, $.001 par value. The per share
purchase prices were $1.14 for the common stock and $114.00 for the preferred
stock. CKE Restaurants, Inc. which led the qualified investor group, purchased
6,162,299 of Checkers common stock and 61,636 shares of Checkers Series A
preferred stock in the private placement.
Shares of both common and preferred stock were issued in the private
placement due to limitations imposed by the Nasdaq Stock Market on the number of
shares of common stock that can be issued in such a transaction without
stockholder approval. The Series A preferred stock provides that it will be
converted into common stock upon approval by the Company's stockholders at the
1997 annual stockholders' meeting (currently scheduled to be held on May 21,
1997) at a ratio of 100 shares of common stock for each share of preferred
stock. If the stockholders fail to approve the conversion of the preferred stock
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into common stock at the annual meeting, the Company will be required to pay a
dividend on the preferred stock at an annual rate of 14.5% on the liquidation
preference of $114.00 per share, and the Company will have to redeem the
preferred stock on or before February 12, 1999, for $114.00 per share plus
accrued but unpaid dividends, if any. The preferred stock also must be redeemed
upon (i) the merger or consolidation of the Company with another entity as a
result of which Checkers' common stock is to be exchanged for or changed into
other stock or securities, cash or other property, (ii) the completion of a
tender or exchange offer for at least 25% of the outstanding shares of Checkers'
common stock, (iii) the sale by the Company of all or substantially all of its
assets, or (iv) the occurrence of any other event after the upcoming
stockholders' meeting which results in a change in control of the Company. Upon
any liquidation of the Company, the holders of the preferred stock would be
entitled to receive an amount equal to $114.00 per share plus all accrued but
unpaid dividends thereon before any distributions could be made to holders of
the common stock.
If the conversion of the preferred stock into common stock at the annual
meeting is not approved and the preferred stock is not redeemed prior to
February 12, 1999, then the dividend on the preferred stock will increase to an
annual rate of 18.0% on the liquidation preference of $114.00 per share.
Further, in such event, or if the Company fails to pay any two dividends, the
number of seats on the Company's board of directors will be increased by two and
the holders of the preferred stock will be entitled to elect two directors to
fill such seats.
The foregoing summary of the Series A preferred stock is qualified by
reference to the Certificate of Designation of Series A Preferred Stock attached
to this report as Exhibit 3.1, which sets forth the rights, preferences,
qualifications, limitations and other terms of the preferred stock in their
entirety.
The Company is required to register for resale under the federal and state
securities laws the shares of common stock issued in the private placement, as
well as the shares issuable upon the conversion of the preferred stock; however,
the purchasers have agreed not to sell any of such shares into the public
markets until after February 19, 1998. The foregoing summary of the registration
rights granted with respect to the common stock issued in the private placement
and issuable upon conversion of the preferred stock are qualified by reference
to the form of Purchase Agreement attached to this report as Exhibit 10.1, which
sets forth the terms of the purchase and sale of the common and preferred stock
in their entirety.
The necessary percentage in interest of the Company's lender group under
its primary credit facility consented to the sale of the common and preferred
stock and waived the requirement that the Company proceed with the rights
offering. The lenders also waived the Company's compliance with a minimum EBITDA
covenant contained in the Credit Agreement until the seventh period of 1997. An
investment advisor retained by the Committee issued its opinion on the fairness
of the terms of the private placement to the Company's stockholders from a
financial point of view prior to the closing of the private placement.
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The Company plans to use the proceeds from the private placement to
immediately pay the following:
- $8.0 million to reduce the primary credit facility debt carrying a
13% interest rate; - $2.5 million outstanding under a revolving line
of credit carrying a 13% interest rate;
- $2.3 million to pay key food and paper distributors; and
- the remaining amount to be used primarily to pay certain other
existing vendors.
Item 7. Financial Statements and Exhibits.
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(a) Financial Statements of Businesses Acquired.
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None.
(b) Pro Forma Financial Information.
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None.
(c) Exhibits.
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Exhibit
Number Exhibit Description
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3.1 Certificate of Designation of Series A Preferred Stock
10.1 Form of Purchase Agreement
99.1 Press Release of the Registrant dated February 21, 1997
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this Report to be signed on its behalf
by the undersigned thereunto duly authorized.
CHECKERS DRIVE-IN RESTAURANTS, INC.
By: /s/ James T. Holder
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James T. Holder
Senior Vice President and General Counsel
Dated: March 5, 1997
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EXHIBIT INDEX
Exhibit
Number Exhibit Description
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3.1 Certificate of Designation of Series A Preferred Stock
10.1 Form of Purchase Agreement
99.1 Press Release of the Registrant dated February 21, 1997
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Exhibit 3.1
CERTIFICATE OF DESIGNATION
of
SERIES A PREFERRED STOCK
of
CHECKERS DRIVE-IN RESTAURANTS, INC.
Pursuant to Section 151 of the General Corporation Law
of the State of Delaware
CHECKERS DRIVE-IN RESTAURANTS, INC., a corporation organized and existing
under the General Corporation Law of the State of Delaware (the "Corporation"),
in accordance with the provisions of Section 103 thereof, DOES HEREBY CERTIFY:
That pursuant to the authority vested in the Board of Directors in
accordance with the provisions of the Corporation's Restated Certificate of
Incorporation, as amended (the "Restated Certificate of Incorporation"), the
said Board of Directors on February 12, 1997, adopted the following resolution
creating a series of 87,719 shares of Preferred Stock designated as "Series A
Preferred Stock":
RESOLVED, that pursuant to the authority vested in the Board
of Directors of this Corporation in accordance with the provisions
of the Certificate of Incorporation, Series A of Preferred Stock,
par value $.001 per share, of the Corporation be and hereby is
created, and that the designation and number of shares thereof and
the voting and other powers, preferences and relative,
participating, optional or other rights of the shares of such series
and the qualifications, limitations and restrictions thereof are as
follows: Series A Preferred Stock
1. DESIGNATION AND AMOUNT. There shall be a series of Preferred Stock
that shall be designated as "Series A Preferred Stock" (hereinafter referred to
as the "Series A Preferred"), and the number of shares constituting such series
shall be 87,719. Such number of shares may be decreased by resolution of the
Board of Directors; provided, however, that no decrease shall reduce the number
of shares of Series A Preferred to less than the number of shares then issued
and outstanding.
2. DIVIDENDS AND DISTRIBUTIONS.
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(A) Subject to the prior and superior rights of the holders of any
shares of any series of Preferred Stock ranking prior and superior to the shares
of Series A Preferred with respect to dividends and distributions (other than
payments on liquidation, dissolution or winding up to which Section 6 hereof is
applicable) (hereinafter "Dividends"), each share of Series A Preferred at that
time issued and outstanding, in preference to shares of any class or series of
stock of the Corporation ranking junior to the Series A Preferred with respect
to Dividends, shall be entitled to receive, out of funds or property legally
available for the purpose, a Dividend accruing from the date hereof and equal,
on a per share basis, to $16.53 per annum; provided, that such Dividends shall
accrue from the closing date for the sale of the Series A Preferred only if
either (i) the conversion of the Series A Preferred pursuant to Section 9 hereof
and any change in the number of authorized or outstanding shares of Common Stock
needed to enable the Corporation to fulfill its obligations hereunder are not
approved at the first action by the Corporation's stockholders occurring after
the date hereof (the "Stockholder Approval") or (ii) the Series A Preferred is
not converted into Common Stock prior to June 30, 1997. Such Dividends shall be
payable in arrears in cash commencing on August 19, 1997 and quarterly
thereafter, on the 19th day of November, February, May and August, to holders of
record of the Series A Preferred on such dates as the Board of Directors (or any
authorized Committee thereof) may from time to time determine, but only when and
as declared by the Board of Directors (or such Committee). Such Dividends shall
be payable before any Dividends shall be declared or paid upon, or set apart
for, the issued and outstanding Common Stock or such other stock of the
Corporation into which the Common Stock may be converted (the "Common Stock"),
and shall be cumulative, so that if at any time any Dividends upon the
outstanding shares of Series A Preferred shall have not been paid thereon, or
declared and set apart therefor, with respect to all preceding dividend periods,
the amount of the deficiency shall be fully paid, or declared and funds or
property set apart for payment, but without interest, before any Dividend shall
be paid upon, or declared and funds or property set apart for, the Common Stock.
(B) If at any time any cash Dividend on any other class or series of
Preferred Stock of the Corporation having cumulative Dividend rights shall be in
default, in whole or in part, no cash Dividend shall be paid, or declared and
set apart for payment, on the Series A Preferred unless concurrently therewith,
there shall be paid, or declared and set apart for payment, without interest,
all Dividends for all prior dividend periods on any other class or series of
cumulative Preferred Stock of the Corporation which may hereafter be created
having with respect to Dividend rights priority over or parity with the Series A
Preferred; provided, however, in the event such default in Dividend payments is
with respect only to the Series A. Preferred and any other class or any series
of cumulative Preferred Stock of the Corporation which may hereafter be created
having with respect to Dividend rights parity with the Series A Preferred,
Dividends may be paid or declared and set apart for payment, without interest,
on the Series A Preferred and such other class or series of cumulative Preferred
Stock in amount proportional to the amounts by which such Dividends are in
default for the Series A Preferred and such other class or series of cumulative
Preferred Stock.
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(C) Dividends paid on the Series A Preferred in an amount less than
the total amount of Dividends at the time accrued and payable shall be allocated
pro rata on a share-by- share basis among all such shares at the time
outstanding. The Board of Directors may fix a record date for the determination
of holders of shares of Series A Preferred entitled to receive payment of a
Dividend declared thereon, which record date shall be no more than 60 days prior
to the date fixed for the payment thereof.
(D) Any reference to "Dividends" contained herein shall not be
deemed to include any Dividend payable in capital stock of the Corporation, or
in rights or warrants to acquire capital stock of the Corporation, nor shall any
such reference to "Dividends" in relation to issued and outstanding shares be
deemed to limit, curtail, or divest the authority of the Board of Directors to
make any proper distributions, including distributions of authorized but
unissued Common Stock, if any.
3. VOTING RIGHTS. The holders of shares of Series A Preferred shall
have only the following voting rights:
(A) If the Corporation fails to declare and pay two Dividends, which
holders of Series A Preferred are entitled to receive pursuant to Section 2
hereof, whether or not such failure is for consecutive periods, then and in such
event, the number of directors constituting the Corporation's Board of Directors
shall be increased by two, and the holders of the Series A Preferred (voting as
a separate class) shall be entitled at any annual meeting of the stockholders to
elect two directors of the Corporation; provided, however, that the holders of
Series A Preferred may, through the written consent of holders of Series A
Preferred representing a majority of the issued and outstanding shares thereof,
elect two directors to serve as directors of the Corporation until their
successors are elected at the next annual meeting of stockholders. The presence
in person or by proxy of the persons entitled to vote a majority of the shares
of the Series A Preferred at any such meeting shall constitute a quorum for the
purpose of electing directors as hereinabove provided. Such right of the holders
of the Series A Preferred to elect directors may be exercised until the
stockholders of the Corporation approve the conversion of the Series A Preferred
into Common Stock pursuant to Section 9 hereof, and when such conversion is so
approved, the right of the holders of Series A Preferred to elect any directors
shall cease. The directors so elected shall serve until their respective
successors shall be elected and qualified; provided, however, that whenever the
holders of the Series A Preferred shall cease to have the special rights to
elect directors as above provided, the terms of office of all persons elected as
directors by the holders of the Series A Preferred, or elected to fill any
vacancies or directors so elected by the holders of the Series A Preferred,
shall thereupon automatically terminate.
If, during any interval between annual meetings of stockholders for the
election of directors, and while the holders of the Series A Preferred shall be
entitled to elect directors pursuant to this Paragraph (A) of Section 3, the
number of directors who have been elected by the holders of the Series A
Preferred shall, by reason of death, resignation or removal, be less than two,
the vacancy or vacancies in the directors elected by the holders of the Series A
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Preferred may be filled by the written consent of holders of Series A Preferred
representing a majority of the issued and outstanding shares thereof.
(B) The approval of the holders of two-thirds (2/3) of the
outstanding shares of Series A Preferred (voting as a separate class) shall be
required for an amendment of the Restated Certificate of Incorporation which
would materially alter or change the powers, preferences or special rights of
the Series A Preferred so as to affect them adversely.
(C) Except as required by law, holders of the Series A Preferred
shall have no other voting rights and their consent shall not be required for
taking any corporate action.
4. CERTAIN RESTRICTIONS.
(A) Whenever Dividends payable on the Series A Preferred as provided
in Section 2 are in arrears, thereafter and until all accrued and unpaid
Dividends, whether or not declared, on shares of Series A Preferred outstanding
shall have been paid in full, the Corporation shall not:
(i) declare or pay Dividends on, or redeem or purchase or
otherwise acquire for consideration any shares of stock ranking with respect to
Dividends junior (either as to Dividends or upon liquidation, dissolution or
winding up) to the Series A Preferred;
(ii) declare or pay any Dividends on any shares of stock
ranking with respect to Dividends on a parity (either as to Dividends or upon
liquidation, dissolution or winding up) with the Series A Preferred and all such
parity stock on which Dividends are payable or in arrears in proportion to the
total amounts to which the holders of all such shares are then entitled; or
(iii) purchase or otherwise acquire for consideration any
shares of Series A Preferred, or any shares ranking with respect to Dividends on
a parity with the Series A Preferred, except in accordance with a purchase offer
made in writing or by publication (as determined by the Board of Directors) to
all holders of Series A Preferred, or to such holders and holders of any such
shares ranking on a parity therewith, upon such terms as the Board of Directors,
after consideration of the respective annual dividend rates and other relative
rights and preferences of the respective series and classes, shall determine in
good faith will result in fair and equitable treatment among the respective
series or classes.
(B) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any shares of the
Corporation unless the Corporation could, under Paragraph (A) of this Section 4,
purchase or otherwise acquire such shares at such time and in such manner.
5. REACQUIRED SHARES. Any shares of Series A Preferred purchased or
otherwise acquired by the Corporation in any manner whatsoever shall be retired
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promptly after the acquisition thereof. All such shares shall upon their
retirement become authorized but unissued shares of Preferred Stock and may be
reissued as part of a new series of Preferred Stock to be created by resolution
or resolutions of the Board of Directors, subject to any conditions and
restrictions on issuance set forth herein.
6. LIQUIDATION, DISSOLUTION OR WINDING UP.
(A) Upon any liquidation (voluntary or otherwise), dissolution or
winding up of the Corporation, no distribution shall be made to the holders of
shares of stock ranking junior (upon liquidation, dissolution or winding up) to
the Series A Preferred unless, prior thereto, the holders of shares of Series A
Preferred shall have received an amount per share equal to $114.00 plus accrued
unpaid Dividends, based upon the number of days elapsed and a 360-day year (the
"Liquidation Preference").
(B) In the event, however, that there are not sufficient assets
available to permit payment in full of the Liquidation Preference and the
liquidation preferences of all other series of Preferred Stock, if any, ranking
(upon liquidation, dissolution or winding up) on a parity with the Series A
Preferred, then such remaining assets shall be distributed ratably to the
holders of such parity shares in proportion to their respective liquidation
preferences.
(C) Neither the merger or consolidation of the Corporation into or
with another corporation nor the merger or consolidation of any other
corporation into or with the Corporation shall be deemed to be a liquidation,
dissolution or winding up of the Corporation within the meaning of this Section
6.
7. CONSOLIDATION, MERGER, ETC. In case (i) the Corporation shall enter
into any consolidation, merger, combination or other transaction in which the
Common Stock is to be exchanged for or changed into other stock or securities,
cash and/or any other property, (ii) a tender or exchange offer for 25% of the
outstanding shares of Common Stock is successfully completed, (iii) the
Corporation shall sell all or substantially all of the Corporation's assets, or
(iv) any other event, occurring after a failure by the Company to obtain the
Stockholder Approval at the first action by the Corporation's stockholders
occurring after the date hereof, which results in a change of control of the
Corporation, then in any such case each share of Series A Preferred shall at the
same time be automatically redeemed for the then current Liquidation Preference.
8. REDEMPTION. The Series A Preferred shall be redeemed for the then
current Liquidation Preference on or prior to the second anniversary of the date
hereof. If the Corporation does not redeem the Series A Preferred as required by
this Section 8, then: (i) the Dividend which holders of the Series A Preferred
are entitled to receive hereunder shall increase to $20.52 per share per annum;
and (ii) if the holders of the Series A Preferred are not otherwise entitled to
elect two directors, the number of directors constituting the Board of Directors
shall be increased by two, and the holders of the Series A Preferred (voting as
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a separate class) shall be entitled to elect two directors of the Corporation in
accordance with the terms and procedures set forth in Section 3 hereof.
9. CONVERSION
(A) The provisions of this Section 9 are subject to, and shall not
take effect until, approval by the Corporation's stockholders.
(B) Upon the date of the Stockholder Approval (the "Conversion
Date"), the Series A Preferred shall be automatically converted into the Common
Stock and such other capital stock of the Corporation as hereinafter provided.
The Corporation shall cause a notice of such stockholder approval to be mailed,
as soon as practicable thereafter, to the holders of record of the outstanding
Series A Preferred on the date of such approval, and to the transfer agent, if
any, for the Series A Preferred. Upon the Conversion Date, the holders of the
Series A Preferred shall be deemed to be holders of the number of shares of the
Common Stock into which their shares of Series A Preferred have been converted,
and shall have no rights with respect to the Series A Preferred except to
exchange the certificate(s) representing the holder's shares of Series A
Preferred for certificates representing Common Stock.
(C) Each share of Series A Preferred shall be convertible at the
office of the transfer agent for the Series A Preferred, if any, or at such
other office or offices, as the Board of Directors of the Corporation may
designate, into the number of fully paid and nonassessable shares of Common
Stock of the Corporation (calculated as to each conversion to the nearest
1/100th of a share) obtained by dividing the then current Liquidation Preference
attributable to a share of Series A Preferred by $1.14, subject to adjustment as
provided in Paragraph (F) of this Section 9 (the "Conversion Rate").
Notwithstanding any other provision of this Section 9, no change in the
Conversion Rate shall actually be made until the cumulative effect of the
adjustments called for by this Section 9 since the date of the last change in
the Conversion Rate would change the Conversion Rate by more than two percent
(2%). However, once the cumulative effect would result in a two percent (2%)
change, then the conversion rate shall be changed to reflect all adjustments
called for by this paragraph and not previously made.
(D) No fractional shares of Common Stock shall be issued upon
conversion of Series A Preferred but, in lieu of any fraction of a share of
Common Stock which would otherwise be issuable in respect of the aggregate
number of shares surrendered for conversion at one time by the same holder, the
Corporation shall pay in cash an amount equal to the sum of the current market
price of the Corporation's Common Stock multiplied by a number equal to the
fraction of a share.
(E) For the purposes of any computation pursuant to this Section 9,
the current market price of the Corporation's Common Stock shall be deemed to be
the average of the daily closing prices of the Corporation's Common Stock for
the thirty (30) consecutive business days commencing forty-five (45) business
days before the date on which such shares are duly converted. For purposes of
this Section 9, the closing price for each day shall be the last sale price of
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the Corporation's Common Stock on the NASDAQ National Market, or if the
Corporation's Common Stock is not traded on the NASDAQ National Market, the
average of the bid and asked prices as furnished by any New York Stock Exchange
member firm selected from time to time by the Corporation for such purpose, or
if no such bid and asked prices can be obtained from any such firm, the fair
market value of one share of the Common Stock on such day as determined in good
faith by the Board of Directors of the Corporation.
(F) The Conversion Rate shall be subject to adjustment from time to
time in certain cases as follows:
(i) In case the Corporation shall (a) pay a dividend on its
Common Stock in shares of its capital stock, (b) subdivide its outstanding
Common Stock into a greater number of shares, (c) combine the shares of its
outstanding Common Stock into a smaller number of shares, or (d) issue by
reclassification of its Common Stock (including any such reclassification in
connection with a consolidation or merger in which the Corporation is the
continuing corporation) any shares of its capital stock, the Conversion Rate in
effect immediately prior thereto shall be proportionately adjusted so that the
holder of any Series A Preferred thereafter surrendered for conversion shall be
entitled to receive, to the extent permitted by applicable law, the number and
kind of shares of capital stock of the Corporation which he would have owned or
have been entitled to receive after the happening of such event had such Series
A Preferred been converted immediately prior to the happening of such event.
Such adjustment shall be made whenever any of such events shall occur. An
adjustment made pursuant to this Paragraph (F)(i) of Section 9 shall become
effective, retroactively, immediately after the record date in the case of a
stock dividend and shall become effective immediately after the effective date
in the in case of subdivision, combination or reclassification.
(ii) In case the Corporation shall issue rights or warrants to
all holders of its Common Stock entitling them (for a period expiring within
forty-five (45) days after the record date mentioned below) to subscribe for or
purchase Common Stock at a price per share less than the current market price
per share of the Common Stock (as defined above) at the record date mentioned
below, the Conversion Rate then in effect shall be adjusted by multiplying it by
the ratio which (a) the number of shares of Common Stock outstanding on the date
of issuance of such rights or warrants plus the number of shares which the
aggregate offering price of the total number of shares so offered would purchase
at such current market price bears to (b) the number of shares of Common Stock
outstanding on the date of issuance of such rights or warrants plus the number
of additional Common Shares offered for subscription or purchase. Such
adjustment shall be made whenever such rights or warrants are issued, and shall
become effective, retroactively, immediately after the record date for the
determination of shareholders entitled to receive such rights or warrants.
(iii) In case the Corporation shall distribute to all holders
of its Common Stock (including any such distribution made in connection with a
consolidation or merger in which the Corporation is the continuing corporation)
evidences of its indebtedness or assets, then in such case the Conversion Rate
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then in effect shall be adjusted by multiplying it by the ratio which (a) the
current market price per share of the Common Stock (as defined above) less the
fair market value (as determined in good faith by the Board of Directors of the
Corporation, (based upon the opinion of an independent investment banking firm),
whose determination shall be conclusive) of the portion of such evidences of
indebtedness so distributed applicable to one share of Common Stock bears to (b)
such current market price per share of the Common Stock at the date of such
distribution. Such adjustment shall be made whenever any such distribution is
made, and shall become effective, retroactively, immediately after the record
date for the determination of shareholders entitled to receive such
distribution.
(iv) All calculations hereunder shall be made to the nearest
cent or to the nearest one-hundredth (1/100) of a share, as the case may be.
(v) In the event that at any time, as a result of an
adjustment made pursuant to Paragraph (F)(i) above, the holder of any Series A
Preferred thereafter converted shall become entitled to receive any shares of
capital stock of the Corporation other than its Common Stock, thereafter the
number of such other shares so receivable upon conversion shall be subject to
adjustment from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to the Common Stock contained in
Paragraphs (F)(i) to (iv), inclusive, above.
Except as otherwise provided for in this Paragraph (F) of Section 9, no
adjustment shall be made on any conversion for share distributions, dividends,
including, without limitation, dividends in property distributions, theretofore
declared and paid or payable on the Common Stock.
Whenever the Conversion Rate is adjusted as herein provided, the
Corporation shall send to the transfer agent, if any, for the Series A Preferred
and to the record holders of the Series A Preferred a statement executed by the
President as to the new Conversion Rate.
(G) Upon obtaining the Stockholder Approval, the Corporation shall
at all times reserve and keep available, out of its authorized and unissued
stock, solely for the purpose of effecting the conversion of the Series A
Preferred, such number of shares of Common Stock as shall from time to time be
sufficient to effect the conversion of all shares of Series A Preferred from
time to time outstanding.
IN WITNESS WHEREOF, the undersigned has executed this Certificate this 14
day of February , 1997. --
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CHECKERS DRIVE-IN RESTAURANTS, INC.
By: /s/ James T. Holder
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Senior Vice President and General Counsel
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Exhibit 10.1
PURCHASE AGREEMENT
THIS PURCHASE AGREEMENT, dated as of February 19, 1997, is made by and
between CHECKERS DRIVE-IN RESTAURANTS, INC., a Delaware corporation (the
"Company"), and the Buyer named on Exhibit A attached hereto ("Buyer"), with
reference to the following facts:
RECITALS
A. The Company, specified Lenders (including Buyer) and CKE
RESTAURANTS, INC., a Delaware corporation, as Agent (the "Agent"), have
heretofore entered into that certain Amended and Restated Credit Agreement dated
as of November 22, 1996 (the "Credit Agreement"), which provided for
restructuring of certain loans made to the Company and other transactions
specified therein.
B. Pursuant to the Credit Agreement, the Company issued Warrants to
Purchase Common Stock to Lenders and agreed to register a rights offering (the
"Rights Offering") pursuant to which all holders of the Company's Common Stock
and Warrants would receive rights to purchase additional Common Stock of the
Company at a specified purchase price.
C. Lenders and the Agent desire and intend to waive the Company's
obligation to register the Rights Offering and to substitute in lieu thereof a
right of specified Lenders (including Buyer) (collectively, "Purchasers") to
purchase newly issued shares of the Company's Common Stock, par value $0.001
(the "Common Stock), and Series A Preferred Stock, par value $0.001 per share
(the "Series A Stock"), having the rights, preferences, privileges and
restrictions set forth in the Company's Certificate of Designation of Rights,
Privileges and Preferences, substantially in the form attached hereto as Exhibit
B (the "Certificate") and incorporated herein by reference. The Common Stock and
the Series A Stock are referred to collectively herein as the "Stock."
D. At a meeting held on December 17, 1996, the Board of Directors
of the Company approved acceptance of an offer from the Agent with respect to
the transaction, subject to the conditions that (i) the purchase price for the
Common Stock be no less than the closing sales price of the Company's Common
Stock on December 16, 1996, as reported on the NASDAQ National Market ($1.34 per
share), discounted to reflect that the Common Stock will be "restricted shares"
within the meaning of the Securities Act of 1933, as amended (the "Securities
Act"), (ii) the transaction be approved by a committee of the Board of Directors
of the Company, comprised of disinterested directors (the "Special Committee"),
(iii) the Special Committee receives a fairness opinion with respect to the
transaction from a nationally recognized investment banking firm, (iv) the
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transaction complies with all applicable laws, rules and regulations, including
those governing securities transactions, and (v) the Purchasers and the Special
Committee negotiate and approve definitive documentation relating to the
transaction.
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E. The Company believes that waiver of the obligation to conduct
the Rights Offering, sale of the Stock to be purchased hereunder to Purchasers
and consummation of the other transactions described herein are in the best
interests of the Company.
AGREEMENT
NOW, THEREFORE, the parties agree as follows:
1. PURCHASE AND SALE.
1.1 PURCHASE AND SALE. Subject to the provisions of this
Agreement, on the Closing Date (as defined herein) the Company will sell to
Buyer, and Buyer will purchase from the Company the number of shares of Common
Stock (at a purchase price of $1.14 per share) and the number of shares of
Series A Stock (at a purchase price of $114.00 per share) specified on Exhibit A
attached hereto (collectively, the "Shares").
1.2 PAYMENT OF PURCHASE PRICE. The Purchase Price shall be paid
by Buyer to the Company on the Closing Date (as defined herein) by wire transfer
of immediately available funds in accordance with the wire instructions set
forth on Exhibit C attached hereto.
2. CLOSING OF PURCHASE AND SALE.
2.1 CLOSING; CLOSING DATE. The purchase and sale of the Shares
pursuant to Section 1 (the "Closing") shall take place at the offices of
Christensen, Miller, Fink, Jacobs, Glaser, Weil & Shapiro, LLP, 2121 Avenue of
the Stars, 18th Floor, Los Angeles, CA 90067, or at such other place as may be
agreed upon by the Company and Buyer, at 10:00 a.m. Pacific time on February 21,
1997 or at such other time as may be agreed upon by both the Company and Buyer
(the "Closing Date").
2.2 TRANSACTIONS AT CLOSING. At the Closing,
(a) The Company shall deliver to Buyer:
(i) An opinion of Shumaker, Loop & Kendrick, LLP,
substantially in the form of EXHIBIT D hereto;
(ii) A duly executed Compliance Certificate,
substantially in the form of EXHIBIT E hereto;
(iii) Certificates representing the Shares being
purchased hereunder and delivered pursuant to Section 1.1 hereof;
(iv) Evidence of filing of the Certificate of
Designation with the Delaware Secretary of State;
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(v) Evidence that the Notification of Listing of
Additional Shares with respect to the Common Stock to be purchased
pursuant hereto has been received by the NASDAQ National Market; and
(vi) Such other documents and instruments as
Buyer may reasonably request relating to the existence, status and
capacity of the Company and the corporate authority for, and the
validity, force and effect of this Agreement.
(b) Buyer shall deliver to the Company: (i) a wire
transfer of immediately available funds in the amount of the purchase price
specified on EXHIBIT A attached hereto; (ii) evidence that waiver of the Rights
Offering has been approved by the Required Lenders (as defined in the Credit
Agreement); and (iii) evidence that the Required Lenders have approved the
execution, delivery and performance of this Agreement by the Company.
(c) The other conditions set forth in Sections 6 and 7
hereof shall have been satisfied.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants that:
3.1 ORGANIZATION, STANDING AND QUALIFICATION. The Company is
a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware and has full corporate power and authority to own,
lease and operate its property and assets and to conduct its business as
presently and proposed to be conducted by it. The Company has all requisite
corporate power and authority to enter into and perform its obligations under
this Agreement and to carry out the transactions contemplated by this Agreement.
3.2 CREDIT AGREEMENT REPRESENTATIONS AND WARRANTIES. Except
as set forth on SCHEDULE 3.2 hereto, the representations and warranties of the
Company set forth in the Credit Agreement are true and correct on and as of the
date hereof as if made on such date.
3.3 CAPITALIZATION.
(a) AUTHORIZED CAPITAL STOCK. Immediately prior to the
Closing, the authorized capital stock of the Company will consist of:
(i) COMMON STOCK. 100,000,000 shares of Common
Stock, par value $0.001 per share (the "Common Stock"), of which (i)
51,768,480 shares are issued and outstanding as of the date of this
Agreement; (ii) 29,300,000 shares are initially reserved for issuance
upon exercise of the warrants and options listed in SCHEDULE 3.3 hereof;
and (iii) 209,524 shares are initially reserved for issuance pursuant to
certain contracts to issue Common Stock, as listed in SCHEDULE 3.3
hereto. The Company has a sufficient number of shares of unissued and
unreserved Common Stock to enable it to issue the Common Stock being
sold pursuant hereto, and, upon approval of the Company's stockholders
of the proposal referred to in Section 8.1 hereof, the Company will have
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a sufficient number of shares of unissued and unreserved Common Stock to
enable it to issue the Common Stock issuable upon conversion of the
Series A Stock to be purchased by Buyer and the other Purchasers on the
Closing Date.
(ii) PREFERRED STOCK. 2,000,000 shares of
Preferred Stock, $0.001 par value per share (the "Preferred Stock"), of
which 87,719 shares have been designated as Series A Stock and none of
which will be issued and outstanding prior to the Closing Date.
(b) WARRANTS, OPTIONS AND OTHER SUBSCRIPTION RIGHTS.
Except as set forth in SCHEDULE 3.3 hereto and as contemplated herein, there are
(i) no outstanding warrants, options, convertible securities or rights to
subscribe for or purchase any capital stock or other securities from the
Company, (ii) to the best knowledge of the Company, no voting trusts or voting
agreements among, or irrevocable proxies executed by, shareholders of the
Company, (iii) no existing rights of stockholders to require the Company to
register any securities of the Company or to participate with the Company in any
registration by the Company of its securities, (iv) to the best knowledge of the
Company, no agreements among stockholders providing for the purchase or sale of
the Company's capital stock and (v) no obligations (contingent or otherwise) of
the Company to purchase, redeem or otherwise acquire any shares of its capital
stock or any interest therein or to pay any dividend or make any other
distribution in respect thereof.
(c) VALIDITY OF SECURITIES. All outstanding securities
of the Company are duly authorized and validly issued in accordance with
applicable law (including federal and state securities laws), fully paid and
non-assessable. Subject only to approval by the Company's stockholders of the
matters set forth in Section 8.1 hereof, the Shares, when issued, sold and
delivered in accordance with the terms of this Agreement, and the Common Stock
issuable upon conversion of the Series A Stock, when issued and delivered in
accordance with the Certificate of Designation, will be duly authorized, validly
issued, fully paid and non-assessable, and will be free and clear of all liens
and restrictions, other than liens resulting from the actions of Buyer and
restrictions on transfer imposed by the Securities Act, applicable state
securities laws or this Agreement. Subject only to approval by the Company's
shareholders of the matters set forth in Section 8.1 hereof, the Series A Stock,
when issued, sold and delivered in accordance with the terms of this Agreement,
will have the rights, preferences and privileges specified in the Certificate of
Designation. Holders of shares of the Company's capital stock have no preemptive
rights.
3.4 AUTHORIZATION; ENFORCEABILITY. Except as set forth in
SCHEDULE 3.4 hereto, all corporate action on the part of the Company necessary
for the authorization, execution, delivery, and performance of all its
obligations under this Agreement, including the authorization, issuance, and
delivery of the Shares being sold under this Agreement and of the Common Stock
issuable upon conversion of the Series A Stock has been taken. This Agreement,
when executed and delivered by or on behalf of the Company, shall constitute the
valid and legally binding obligation of the Company, enforceable against the
Company in accordance with its terms, except as the enforcement hereof may be
limited by bankruptcy, insolvency or other laws affecting the enforcement of
creditors' rights generally.
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3.5 PRIVATE OFFERING. Neither the Company nor anyone acting on
its behalf, other than the persons set forth on Schedule 3.5 hereto, has offered
any of the Shares for sale to, or solicited offers to buy any securities of the
Company from, or otherwise approached or negotiated with respect thereto with
any prospective purchaser other than Buyer and the other Lenders under the
Credit Agreement. The Company agrees that neither the Company nor anyone acting
on its behalf, other than the persons set forth on Schedule 3.5 hereto, has
offered or will offer the Shares or any part thereof or any similar securities
for issuance or sale to, or solicit any offer to acquire any of the same from,
anyone so as to make the issuance and sale hereunder of the Shares not exempt
from the registration requirements of Section 5 of the Securities Act. None of
the shares of the Company's capital stock issued without registration under the
Securities Act prior to the date hereof and presently outstanding has been
offered or sold in such a manner as to make the issuance and sale of such shares
not exempt from such registration requirements, and all such shares of capital
stock have been offered and sold in compliance with all applicable federal and
state securities laws.
3.6 FILING OF SEC REPORTS. The Company has filed with the
Securities and Exchange Commission (the "Commission") all reports (the "SEC
Reports") required under the Securities Act and the Securities Exchange Act of
1934, as amended (the "Exchange Act"), and the rules and regulations promulgated
thereunder. As of their respective dates, the SEC Reports did not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements made therein not
misleading.
3.7 CONSENTS AND APPROVALS. Except as set forth on SCHEDULE 3.7
hereto and for consents that will obtained prior to Closing, the execution and
delivery by the Company of this Agreement and the related documents and
instruments, the offer, issuance and delivery of the Shares, and the performance
by the Company of its obligations under this Agreement and the related documents
and instruments do not require the consent of any person or entity under any
material agreement to which the Company is a party or otherwise binding on the
Company.
3.8 NO CONFLICT WITH DOCUMENTS AND INSTRUMENTS. Except as set
forth on SCHEDULE 3.8 hereto, the execution and delivery by the Company of this
Agreement and any related documents and instruments, the offer, issuance and
delivery of the Shares, and the performance by the Company of its obligations
under this Agreement and the related documents and instruments do not contravene
or constitute a default under (a) the charter or by-laws of the Company, (b) any
applicable law or regulation or (c) any agreement, judgment, injunction, order,
decree or other instrument to which the Company is a party or by which the
Company and its assets are otherwise bound.
3.9 FULL DISCLOSURE. Neither this Agreement, nor any certificates
delivered in connection herewith contains any untrue statement of a material
fact or omits to state a material fact necessary to make the statements herein
or therein not misleading, in view of the circumstances in which they were made.
3.10 BROKERS AND FINDERS. Except for certain fees payable to
Raymond James & Associates under that certain letter agreement dated February 4,
1997 with the Company and that certain letter agreement dated January 28, 1997
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with the Company, no person or entity has or will have any valid claim against
the Company or any Purchaser as a result of the transactions contemplated herein
for any commission, fee or other compensation as a broker or finder or in any
similar capacity.
4. REPRESENTATIONS, WARRANTIES AND COVENANTS OF BUYER. Buyer
represents and warrants that:
4.1 AUTHORIZATION. Buyer has full [corporate] power and
authority to enter into and to perform this Agreement in accordance with its
terms. This Agreement has been duly executed and delivered by it and constitutes
the valid and legally binding obligation of Buyer, except as the enforcement
hereof may be limited by bankruptcy, insolvency or other laws affecting the
enforcement of creditors' rights generally.
4.2 INVESTMENT REPRESENTATIONS. Buyer is acquiring the
Shares for its own account, for investment purposes and not with a view to, or
for sale in connection with, any distribution of the Shares in violation of the
Securities Act, or any applicable state securities law.
4.3 INVESTMENT EXPERIENCE; ACCESS TO INFORMATION. Buyer (a)
is an "accredited investor," as that term is defined in Rule 501(a) promulgated
under the Securities Act, (b) is an investor experienced in the evaluation of
businesses similar to the Company, (c) is able to fend for itself in the
transactions contemplated by this Agreement, (d) has such knowledge and
experience in financial, business and investment matters as to be capable of
evaluating the merits and risks of this investment, (e) has the ability to bear
the economic risks of this investment, (f) was not organized or reorganized for
the specific purpose of acquiring the Shares purchased by it, and (g) has been
afforded prior to the Closing Date the opportunity to ask questions of, and to
receive answers from, the Company and to obtain any additional information, to
the extent the Company has such information or could have acquired it without
unreasonable effort or expense, all as necessary for Buyer to make an informed
investment decision with respect to the purchase of the Shares.
4.4 ABSENCE OF REGISTRATION. Buyer acknowledges and agrees
that:
(a) The Shares to be issued and sold hereunder are
unregistered and may be required to be held indefinitely unless they are
subsequently registered under the Securities Act, or an exemption from such
registration is available.
Except as provided in Section 9 hereof, the Company is under no
obligation to file a registration statement with the Commission with respect to
the Shares.
4.5 RESTRICTIONS ON TRANSFER.
(a) Buyer will not offer, sell, pledge, hypothecate, or
otherwise dispose of the Shares unless such offer, sale, pledge, hypothecation
or other disposition (i) is registered under the Securities Act or (ii) does not
violate the Securities Act or any applicable state securities laws.
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(b) The certificates representing the Shares shall bear
a legend stating in substance:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES
LAWS AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR
HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER SAID ACT AND LAWS OR, IN
THE OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER
OF THESE SECURITIES, SUCH OFFER, SALE OR TRANSFER, PLEDGE OR
HYPOTHECATION DOES NOT VIOLATE THE PROVISIONS THEREOF.
Upon request of a holder of the Shares, the Company shall remove the legend set
forth above from the certificates evidencing such Shares, or issue to such
holder new certificates therefor free of such legend, if with such request the
Company shall have received an opinion of counsel selected by the holder and
reasonably satisfactory to the Company, in form and substance reasonably
satisfactory to the Company, to the effect that such Shares are not required by
the Securities Act to continue to bear the legend.
4.6 TRANSFER INSTRUCTIONS. Buyer agrees that the Company may
provide for appropriate transfer instructions to implement the provisions of
Section 4.5 hereof.
4.7 ECONOMIC RISK. Buyer understands that it must bear the
economic risk of the investment represented by the purchase of Shares for an
indefinite period.
5. PRE-CLOSING COVENANTS.
Each of the parties hereby covenants and agrees that it will
take all action reasonably within its power and authority to duly and timely
carry out all of its obligations hereunder, to perform and comply with all of
the covenants, agreements, representations and warranties hereunder applicable
to it and to cause all conditions to the obligations of the other parties to
close the purchase and sale of the Shares pursuant hereto to be satisfied as
promptly as possible.
6. CONDITIONS TO CLOSING OF BUYER. The obligation of Buyer on the
Closing Date to purchase the Shares under this Agreement shall be subject to
each of the following conditions precedent, any one or more of which may be
waived by Buyer:
6.1 FAIRNESS OPINION. The Special Committee shall have
received a fairness opinion from Raymond James & Associates, satisfactory in
form and substance to the Special Committee, to the effect that the transactions
provided for herein and in the agreements of even date herewith with the other
Purchasers are fair to the stockholders of the Company, from a financial point
of view (the "Fairness Opinion").
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6.2 REPRESENTATIONS AND WARRANTIES. The representations and
warranties made by the Company herein and, except as provided in SCHEDULE 3.2,
in the Credit Agreement shall be true and accurate on and as of the Closing Date
as if made on such Closing Date.
6.3 PERFORMANCE. The Company shall have performed and
complied with all agreements and conditions contained herein or in other
ancillary documents incident to the transactions contemplated by this Agreement
required to be performed or complied with by it prior to or at the Closing.
6.4 CONSENTS, ETC. The Company shall have secured all
permits, consents and authorizations that shall be necessary or required
lawfully to consummate this Agreement and to issue the Shares to be purchased by
Buyer at the Closing, and the Certificate of Designation shall have been duly
filed with the Secretary of State of the State of Delaware.
6.5 MINIMUM SALE. Concurrently with the Closing hereof, the
Company shall close agreements with Purchasers, in substantially the form of
this Agreement, to purchase an aggregate of $19,999,965.06 in Shares, including
an aggregate of 8,771,929 shares of Common Stock at $1.14 per share and 87,719
shares of Series A Stock at $114.00 per share.
6.6 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
reasonably satisfactory in substance and form to Buyer and its counsel, and
Buyer and its counsel shall have received all such counterpart originals or
certified or other copies of such documents as Buyer or its counsel may
reasonably request.
7. CONDITIONS TO CLOSING OF COMPANY. The obligation of the Company
on the Closing Date to issue and sell the Shares to be purchased under this
Agreement shall be subject each of the following conditions precedent, any one
or more of which may be waived by the Company:
7.1 FAIRNESS OPINION. The Special Committee shall have received the
Fairness Opinion, satisfactory in form and substance to it.
7.2 REPRESENTATIONS AND WARRANTIES. The representations and
warranties made by Buyer herein being true and accurate on and as of the Closing
Date as if made on such Closing Date.
7.3 PERFORMANCE. Buyer shall have performed and complied with all
agreements and conditions contained herein or in other ancillary documents
incident to the transactions contemplated by this Agreement required to be
performed or complied with by it prior to or at the Closing.
7.4 MINIMUM SALE. Concurrently with the Closing hereof, the Company
shall close agreements with Purchasers, in substantially the form of this
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Agreement, to purchase an aggregate of $19,999,965.06 in Shares, including an
aggregate of 8,771,929 shares of Common Stock at $1.14 per share and 87,719
shares of Series A Stock at $114.00 per share.
7.5 REQUIRED LENDERS' APPROVAL AND WAIVER. The Company shall
have received approval of the execution, delivery and performance of this
Agreement from the Required Lenders and a waiver from the Required Lenders of
the requirements of Section 2.03(d) and Section 5.03 of the Credit Agreement, in
the form of EXHIBIT F hereto.
7.6 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
reasonably satisfactory in substance and form to the Company and its counsel,
and the Company and its counsel shall have received all such counterpart
originals or certified or other copies of such documents as Buyer or its counsel
may reasonably request.
8. POST CLOSING COVENANTS.
8.1 PROXY STATEMENT. As soon as practicable after Closing
hereof and in any event no later than at its next annual stockholders meeting,
the Company shall include a proposal in its proxy statement to (i) amend its
Certificate of Incorporation either (a) to reduce the number of outstanding
shares through a reverse stock split so as to ensure that a sufficient number of
shares of Common Stock are available for conversion of all of the Series A
Stock, or (b) to authorize a sufficient number of additional shares of Common
Stock so as to provide for conversion of all of the Series A Stock and (ii)
approve conversion of the Series A Stock to Common Stock in accordance with the
terms of the Certificate. The date of the stockholder approval of such proposal
is referred to as the "Approval Date."
8.2 RESERVATION OF COMMON STOCK. From and after the Approval
Date, the Company shall continuously maintain in reserve a number of shares of
Common Stock equal to the Common Stock issuable upon conversion of the Series A
Preferred Stock.
9. REGISTRATION RIGHTS. The following provisions govern the
registration of the Company's Common Stock being purchased hereunder and Common
Stock issuable upon conversion of the Series A Stock being purchased hereunder:
9.1 DEFINITIONS. As used herein, the following terms have
the following meanings:
FORMS S-1, S-2 AND S-3: The forms so designated, promulgated by
the Commission for registration of securities under the
Securities Act, and any forms succeeding to the functions of
such forms, whether or not bearing the same designation.
HOLDER: A holder of Registrable Securities, PROVIDED that anyone
who acquires any Registrable Securities in a distribution
pursuant to a registration statement filed by the Company under
the Securities Act shall not thereby be deemed to be a "Holder."
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"REGISTER," "REGISTERED" and "REGISTRATION": A registration
effected by filing a registration statement in compliance with
the Securities Act and the declaration or ordering by the
Commission of effectiveness of such registration statement.
REGISTRABLE SECURITIES: All shares of Common Stock sold hereunder
or issuable upon conversion of the Series A Stock and held by
Buyer or by a person to whom registration rights have been
transferred pursuant to the provisions of this Section 9; and all
shares of Common Stock issued by the Company in respect of such
shares.
REQUIRED DEMAND AMOUNT: The number of Registrable Securities
equal to the lesser of (i) 1% of the total number of shares of
Common Stock then outstanding and (ii) $2,000,000 divided by the
average per share closing price of the Common Stock for the five
trading days prior to the date of the calculation of the Required
Demand Amount.
9.2 SHELF REGISTRATION.
(a) FILING; EFFECTIVENESS. If, at any time after the
one-year anniversary of the Closing Date, the Company receives a written demand
from the Holders of the Required Demand Amount of the Registrable Securities,
the Company shall prepare and file with the Commission a "shelf" registration
statement (the "Shelf Registration Statement") on the appropriate form for an
offering to be made on a continuous or extended basis pursuant to Rule 415 under
the Securities Act (or such successor rule or similar provision then in effect)
covering all of the Registrable Securities. The Company shall use its
commercially reasonable efforts to have the shelf registration filed within 60
days after the demand is made (the "Target Filing Date") and to have the Shelf
Registration Statement declared effective within 60 days after the filing is
made (the "Target Effective Date") and to keep such Shelf Registration
continuously effective for the period beginning on such date and ending on the
earlier of (i) the date on which the Holders no longer hold any Registrable
Securities and (ii) the first date on which all of the Holders would be entitled
to transfer Shares pursuant to Rule 144(k) under the Securities Act.
(b) EFFECTIVE REGISTRATION. A registration will not be
deemed to have been effective as a Shelf Registration Statement unless a Shelf
Registration Statement with respect thereto has been declared effective by the
Commission and the Company has complied in all material respects with its
obligations under this Agreement with respect thereto; provided, however, that
if after it has been declared effective, the offering of Registrable Securities
pursuant to a Shelf Registration Statement is interfered with by any stop order,
injunction or other order or requirement of the Commission or any other
governmental agency or court, such Shelf Registration Statement will be deemed
not to have become effective during the period of such interference until the
offering of Registrable Securities pursuant to such Shelf Registration Statement
may legally resume. If a registration requested pursuant to this Section 9.2 is
deemed not to have been effected, then the Company shall continue to be
obligated to effect a registration pursuant to this Section 9.2.
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(c) FORM USED FOR REGISTRATION. In the event that Form
S-3 is not available for use by the Company for a Shelf Registration Statement
pursuant to this Section 9.2, the Company shall prepare and file a Shelf
Registration Statement on such form as shall be available for use by the Company
at the time the Company is obliged to prepare and file a registration statement
hereunder. If the event that Form S-3 thereafter becomes available for use by
the Company, the Company may prepare and file such Form S-3 in order to comply
with its obligations hereunder.
9.3 DEMAND REGISTRATION.
(a) REQUEST FOR REGISTRATION. Subject to Section 9.7
hereof, from time to time after the Shelf Registration Statement ceases to be
effective, or at any time after the first anniversary of the Closing Date if the
Holders elect to use the form of an underwritten offering, the Holders of the
Required Demand Amount of the Registrable Securities may make written demand
that the Company file a registration statement under the Securities Act with the
Commission to register such number of shares of Registrable Securities as each
such Holder may request (which request shall specify the number of Registrable
Securities intended to be disposed of by such Holder and the intended method of
distribution thereof (a "Demand Registration Statement"). Within 10 days after
receipt of such request, the Company shall give written notice of such
registration request to all other Holders and thereupon the Company shall effect
the filing of such Demand Registration Statement and shall include therein all
Registrable Securities with respect to which the Company has received written
requests for inclusion therein (which request shall specify the number of
Registrable Securities intended to be disposed of by such Holder and the
intended method of distribution thereof) within 15 business days after the
receipt by the applicable Holders of the notice from the Company of a request
for Demand Registration Statement. The Company shall use commercially reasonable
efforts to have the Demand Registration Statement declared effective on or
before the date which is 90 days after receipt by the Company of the applicable
request for filing of a Demand Registration Statement (a "Demand Registration
Filing Date").
(b) EFFECTIVE REGISTRATION. The Company's obligations
with respect to a Demand Registration Statement will not be deemed to have been
satisfied unless the applicable Demand Registration Statement has been declared
effective by the Commission and the Company has complied in all material
respects with its obligations under this Agreement with respect thereto;
provided, however, that if after it has been declared effective, the offering of
Registrable Securities pursuant to a Demand Registration Statement is interfered
with by any stop order, injunction or other order or requirement of the
Commission or any other governmental agency or court, such Demand Registration
Statement will be deemed not to have become effective during the period of such
interference until the offering of Registrable Securities pursuant to such
Demand Registration Statement may legally resume. If a registration requested
pursuant to this Section 9.3 is deemed not to have been effected, then the
Company shall continue to be obligated to effect a registration pursuant to this
Section 9.3.
(c) SELECTION OF UNDERWRITER. If the Holders elect to
conduct an offering pursuant to a Demand Registration Statement in the form of
an underwritten offering, a majority in interest of the requesting the Holders
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participating in such Demand Registration Statement shall have the right to
designate and to select one or more nationally recognized firms of investment
bankers reasonably acceptable to the Company to act as the book-running managing
underwriter or underwriters in connection with such offering and shall select
any additional investment bankers and managers reasonably acceptable to the
Company to be used in connection with the offering.
9.4 PIGGY-BACK REGISTRATION.
(a) REQUEST FOR REGISTRATION. At any time from and
after the Closing Date, each time the Company proposes to file a registration
statement under the Securities Act with respect to an offering by the Company
for its own account or for the account of its security holders of any class of
equity security (other than (A) a registration statement on Form S-4 or S-8 (or
any substitute form that is adopted by the Commission) or (B) a registration
statement filed in connection with an exchange offer or offering of securities
solely to the Company's existing security holders), the Company shall give
written notice of such proposed filing to the Holders of Registrable Securities
as soon as practicable (but in no event less than ten business days before the
anticipated filing date), and such notice shall offer such Holders the
opportunity to register such number of shares of Registrable Securities as each
such Holder may request (which request shall specify the Registrable Securities
intended to be disposed of by such Holder and the intended method of
distribution thereof) (a "Piggy-Back Registration"). The Company shall use
reasonable efforts to cause the managing underwriter or underwriters of a
proposed underwritten offering to permit the Registrable Securities requested to
be included in a Piggy-Back Registration to be included on the same terms and
conditions as any other similar securities of the Company or any other security
holder included therein and to permit the sale or other disposition of such
Registrable Securities in accordance with the intended method of distribution
thereof. Any Holder shall have the right to withdraw its request for inclusion
of its Registrable Securities in any registration statement pursuant to this
Section 9.4(a) by giving written notice to the Company of such withdrawal. The
Company may withdraw a Piggy-Back Registration at any time prior to the time it
becomes effective, provided that the Company shall give immediate notice of such
withdrawal to the Holders of Registrable Securities requested to be included in
such Piggy-Back Registration.
(b) REDUCTION OF OFFERING. In connection with an under-
written offering where Piggy-Back Registration has been requested as provided in
Section 9.4(a), the Company shall use commercially reasonable efforts to cause
all Registrable Securities requested to be included in such Piggy-Back
Registration to be included as provided in Section 9.4(a). If the managing
underwriter or underwriters of any such underwritten offering have given written
notice to the Holders of Registrable Securities requesting inclusion in such
offering that it is their opinion that the total number of shares which the
Company, Holders of Registrable Securities and any other Persons participating
in such registration intend to include in such offering is such as to materially
and adversely affect the success of such offering, then (i) the number of shares
to be offered for the account of all other Persons (other than the Lenders under
the Credit Agreement and the Holders) participating in such registration other
than pursuant to demand registration rights shall be reduced or limited (to zero
if necessary) PRO RATA in proportion to the respective number of shares
requested to be registered by such Persons to the extent necessary to reduce the
total number of shares requested to be included in such offering to the number
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of shares, if any, recommended by the managing underwriter or underwriters and
(ii) if such managing underwriter or underwriters recommend a further reduction
in the number of shares in the offering, then the number of shares to be offered
for the account of the Holders shall be reduced or limited (to zero if
necessary) PRO RATA in proportion to the respective number of shares requested
to be registered by such Holders to the extent necessary to reduce the total
number of shares requested to be include in such offering to the number of
shares, if any, recommended by such managing underwriter or underwriters.
(c) In the case of any registration initiated by the
Company, the Company shall have the right to designate the managing underwriter
in any underwritten offering.
9.5 REGISTRATION PROCEDURES.
(a) In connection with the obligations of the Company to
effect or cause the registration of any Registrable Securities pursuant to the
terms and conditions of this Agreement, the Company shall use its best efforts
to effect the registration and sale of such Registrable Securities in accordance
with the intended method of distribution, and in connection therewith, the
Company will:
(i) prepare and file with the Commission a registra-
tion statement with respect to such shares and use commercially
reasonable efforts to cause such registration statement to become and
remain effective as provided herein;
(ii) prepare and file with the Commission such
amendments and supplements to such registration statement and the
prospectus used in connection therewith as may be necessary to keep such
registration statement effective and current and to comply with the
provisions of the Securities Act with respect to the disposition of all
shares covered by such registration statement, including such amendments
and supplements as may be necessary to reflect the intended method of
disposition from time to time of the prospective seller or sellers of
such shares;
(iii) furnish to each prospective seller such number of
copies of a prospectus, including a preliminary prospectus, in
conformity with the requirements of the Securities Act, and such other
documents, as such seller may reasonably request in order to facilitate
the public sale or other disposition of the shares owned by such seller;
(iv) use commercially reasonable efforts to register
or qualify the shares covered by such registration statement under such
other securities or blue sky or other applicable laws of such
jurisdiction within the United States as each prospective seller shall
reasonably request, to enable such seller to consummate the public sale
or other disposition in such jurisdictions of the shares owned by such
seller; provided, however, that in no event shall the Company be
obligated to qualify to do business in any jurisdiction where it is not
at the time so qualified or to take any action which would subject it to
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service of process in suits other than those arising out of the offer or
sale of the Registrable Securities covered by such registration
statement in any jurisdiction where it is not at the time so subject;
(v) furnish to each prospective seller a signed
counterpart, addressed to the prospective sellers, of an opinion of
counsel for the Company, dated the effective date of the registration
statement, covering substantially the same matters with respect to the
registration statement (and the prospectus included therein) as are
customarily covered (at the time of such registration) in opinions of
issuer's counsel delivered to the underwriters in underwritten public
offerings of securities;
(vi) in the event of any underwritten public offering,
enter into and perform its obligations under an underwriting agreement,
in usual and customary form, with the managing underwriter of such
offering; each Holder participating in such underwriting shall also
enter into and perform its obligations under such an agreement;
(vii) notify each Holder of Registrable Securities
covered by such registration statement at any time when a prospectus
relating thereto is required to be delivered under the Securities Act or
the happening of any event as a result of which the prospectus included
in such registration statement, as then in effect, includes an untrue
statement of a material fact or omits to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading in the light of the circumstances then existing;
(viii) apply for listing and use its best efforts to
list the Registrable Securities being registered on any national
securities exchange on which a class of the Company's equity securities
are listed or, if the Company does not have a class of equity securities
listed on a national securities exchange, apply for qualification and
use its best efforts to qualify the Registrable Securities being
registered for inclusion on the automated quotation system of the
National Association of Securities Dealers, Inc. or on a national
securities exchange; and
(ix) Provide a transfer agent and registrar for all
Registrable Securities registered hereunder and a CUSIP number for all
such Registrable Securities, in each case not later than the effective
date of such registration.
(b) Upon receipt of a notice (a "Suspension Notice") from the
Company of the happening of any event of the kind described in Section
9.5(a)(vii) hereof, each Holder shall forthwith discontinue disposition of the
Registrable Securities until such Holder's receipt of copies of a supplemented
or amended Prospectus or until it is advised in writing (the "Advice") by the
Company that the use of the Prospectus may be resumed, and has received copies
of any additional or supplemental filings which are incorporated by reference in
the Prospectus, and, if so directed by the Company, such Holder will or will
request the managing underwriter or underwriters, if any, to deliver to the
Company (at the Company's expense) all copies, other than permanent file copies
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then in such Holder's possession, of the Prospectus covering such Registrable
Shares current at the time of receipt of such notice. In the event that the
Company shall give any Suspension Notice, (A) the Company shall use commercially
reasonable efforts and take such actions as are reasonably necessary to render
the Advice and to end the Suspension Period as promptly as practicable and (B)
with respect to a Shelf Registration pursuant to Section 9.2 hereof, the time
periods for which the Shelf Registration Statement is required to be kept
effective pursuant to Section 9.2 hereof shall be extended by the number of days
of the Suspension Period unless (x) such extension would result in the Company's
inability to use the financial statements in the registration statement
initially filed pursuant to the Holder or Holders' request and (y) such
correction or update did not result from the Company's acts or failures to act.
9.6 INFORMATION BY HOLDER.
(a) Each Holder of Registrable Securities and each
underwriter designated by a majority in interest of the requesting Holders, will
furnish to the Company such information as the Company may reasonably require
from such seller or underwriter in connection with the registration statement
(and the prospectus included therein).
(b) Failure of a prospective seller of Registrable
Securities to furnish the information and agreements described in this Section
9.6 shall not affect the obligations of the Company under this Section 9 to
Holders who furnish such information and agreements unless, in the reasonable
opinion of counsel to the Company or the underwriters, such failure impairs or
may impair the viability of the offering or the legality of the registration
statement or the underlying offering.
9.7 LIMITATIONS ON REQUIRED REGISTRATIONS.
(a) The Company shall not be required to effect more
than two registrations pursuant to Section 9.3 hereof in any twelve-month period
for all Holders on a combined basis.
(b) If at the time of any demand to register Registrable
Securities pursuant to Section 9.3 hereof, the Company is engaged, or has fixed
plans to engage within 90 days of the time of the request, in a registered
public offering as to which the Holders may include such Stock pursuant to
Section 9.4 hereof or is engaged in any other activity that, in the good faith
determination of the Company's Board of Directors, would be adversely affected
by the demanded registration to the material detriment of the Company, then the
Company may at its option direct that such demand be delayed for a period not in
excess of six months from the effective date of such offering, or the date of
commencement of such other material activity, as the case may be, such right to
delay a demand to be exercised by the Company not more than once in each
12-month period while the rights set forth in Section 9.3 are in effect.
9.8 EXPENSES OF REGISTRATION. All expenses incurred in effecting
any registration pursuant to Sections 9.2, 9.3 and 9.4 including, without
limitation, all registration and filing fees, printing expenses, expenses of
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compliance with blue sky laws, fees and disbursements of counsel for the
Company, and expenses of any audits incidental to or required by any such
registration, shall be borne by the Company, except:
(a) all expenses, fees and disbursements of any counsel
retained by the Holders, and all underwriting discounts and commissions shall be
borne by the Holders of the securities registered pursuant to such registration,
pro rata according to the quantity of their securities so registered;
(b) the Company shall not be required to pay for any
expenses of any registration proceeding begun pursuant to Section 9.2 or 9.3 if
the registration request is subsequently withdrawn at the request of the Holders
of a majority of the Registrable Securities to be registered (in which case all
participating Holders shall bear such expenses); and
(c) a Holder who withdraws from an underwritten regis-
tration pursuant to Section 9.3 shall be required to pay the percentage of the
expenses of such registration which is equal to the percentage that the number
of shares such Holder requested to be registered bears to the total number of
shares to be registered.
9.9 INDEMNIFICATION.
(a) INDEMNIFICATION BY COMPANY. To the extent permitted
by law, the Company will indemnify each Holder requesting or joining in a
registration, each agent, officer and director of such Holder, each person
controlling such Holder and each underwriter and selling broker of the
securities so registered (each, an "Indemnitee" and collectively, "Indemnitees")
against all claims, losses, damages and liabilities (or actions in respect
thereof) arising out of or based on any untrue statement (or alleged untrue
statement) of a material fact contained in any prospectus, offering circular or
other document incident to any registration, qualification or compliance (or in
any related registration statement, notification or the like) or any omission
(or alleged omission) to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, or any
violation by the Company of the Securities Act, the Securities Exchange Act of
1934, as amended (the "Exchange Act"), or state securities laws or any rule or
regulation promulgated under the Securities Act, the Exchange Act or a state
securities law, in each case applicable to the Company, and will reimburse each
such Indemnitee for any legal and any other fees and expenses reasonably
incurred in connection with investigating or defending any such claim, loss,
damage, liability or action, PROVIDED, HOWEVER, that the Company will not be
liable to any Indemnitee in any such case to the extent that any such claim,
loss, damage or liability is caused by any untrue statement or omission so made
in strict conformity with written information furnished to the Company by an
instrument duly executed by such Indemnitee and stated to be specifically for
use therein and except that the foregoing indemnity agreement is subject to the
condition that, insofar as it relates to any such untrue statement (or alleged
untrue statement) or omission (or alleged omission) made in the preliminary
prospectus but eliminated or remedied in the amended prospectus on file with the
Commission at the time the registration statement becomes effective or in the
amended prospectus filed with the Commission pursuant to Rule 424(b) (the "Final
Prospectus"), such indemnity agreement shall not inure to the benefit of any
underwriter, or any Indemnitee if there is no underwriter, if a copy of the
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Final Prospectus was not furnished to the person or entity asserting the loss,
liability, claim or damage at or prior to the time such furnishing is required
by the Securities Act; PROVIDED, FURTHER, that this indemnity shall not be
deemed to relieve any underwriter of any of its due diligence obligations;
PROVIDED, FURTHER, that the indemnity agreement contained in this Section 9.9(a)
shall not apply to amounts paid in settlement of any such claim, loss, damage,
liability or action if such settlement is effected without the consent of the
Company, which consent shall not be unreasonably withheld.
(b) INDEMNIFICATION BY HOLDERS. To the extent permitted
by law, each Holder (severally and not jointly) requesting or joining in a
registration and each underwriter and selling broker of the securities so
registered will indemnify the Company and its officers and directors and each
person, if any, who controls any thereof within the meaning of Section 15 of the
Securities Act, and their respective successors against all claims, losses,
damages and liabilities (or actions in respect thereof) arising out of or based
on any untrue statement (or alleged untrue statement) of a material fact
contained in any prospectus, offering circular or other document incident to any
registration, qualification or compliance (or in any related registration
statement, notification or the like) or any omission (or alleged omission) to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading and will reimburse the Company and each
other person indemnified pursuant to this paragraph (b) for any legal and any
other fees and expenses reasonably incurred in connection with investigating or
defending any such claim, loss, damage, liability or action, PROVIDED, HOWEVER,
that this paragraph (b) shall apply only if (and only to the extent that) such
statement or omission was made in reliance upon and in strict conformity with
written information (including, without limitation, written negative responses
to inquiries) furnished to the Company by an instrument duly executed by such
Holder, underwriter or selling broker and stated to be specifically for use in
such prospectus, offering circular or other document (or related registration
statement, notification or the like) or any amendment or supplement thereto;
PROVIDED, that the indemnity agreement contained in this Section 9.9(b) shall
not apply to amounts paid in settlement of any such claim, loss, damage,
liability or action if such settlement is effected without the consent of the
Holder or underwriter, as the case may be, which consent shall not be
unreasonably withheld; and PROVIDED, FURTHER, that the obligations of such
Holders shall be limited to an amount equal to the net proceeds received by such
Holder from the sale of Subject Stock in such offering as contemplated herein,
unless such claim, loss, damage, liability or action resulted from such Holder's
fraudulent misconduct.
(c) Each party entitled to indemnification hereunder (the
"indemnified party") shall give notice to the party required to provide
indemnification (the "indemnifying party") promptly after such indemnified party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the indemnifying party (at its expense) to assume the defense of any
claim or any litigation resulting therefrom, PROVIDED that counsel for the
indemnifying party, who shall conduct the defense of such claim or litigation,
shall be reasonably satisfactory to the indemnified party, and the indemnified
party may participate in such defense at such party's expense, and PROVIDED
FURTHER that the omission by any indemnified party to give notice as provided
herein shall not relieve the indemnifying party of its obligations under this
Section 9.9 except to the extent that the omission results in a failure of
actual notice to the indemnifying party and such indemnifying party is damaged
solely as a result of the failure to give notice. No indemnifying party, in the
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defense of any such claim or litigation, shall consent, except with the consent
of each indemnified party, to entry of any judgment or enter into any settlement
which does not include as an unconditional term thereof the giving by the
claimant or plaintiff to such indemnified party of a release from all liability
in respect to such claim or litigation.
(d) If the indemnification provided for in this Section
9.9 is held by a court of competent jurisdiction to be unavailable to an
indemnified party with respect to any loss, liability, claim, damage or expense
referred to therein, then the indemnifying party, in lieu of indemnifying such
indemnified party hereunder, shall contribute to the amount paid or payable by
such indemnified party as a result of such loss, liability, claim, damage, or
expense in such proportion as is appropriate to reflect the relative fault of
the indemnifying party on the one hand and of the indemnified party on the other
in connection with the statements or omissions that resulted in such loss,
liability, claim, damage, or expense as well as any other relevant equitable
considerations. This relative fault of the indemnifying party and of the
indemnified party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission to state a material fact relates to information supplied by the
indemnifying party or by the indemnified party and the parties' relative intent,
knowledge, access to information, and opportunity to correct or prevent such
statement or omission.
(e) Notwithstanding the foregoing, to the extent that
the provisions on indemnification and contribution contained in the underwriting
agreement entered into in connection with the underwritten public offering are
in conflict with the foregoing provisions, the provisions in the underwriting
agreement shall control.
(f) The reimbursement required by this Section 9.9 shall
be made by periodic payments during the course of the investigation or defense,
as and when bills are received or expenses incurred.
(g) The obligation of the Company under this Section 9.9
shall survive the conversion, if any, of the Series A Stock, the completion of
any offering of Registrable Securities in a registration statement under this
Section 9, or otherwise.
9.10 TRANSFER OF REGISTRATION RIGHTS. The registration rights
granted to Buyer under this Section 9 may be transferred but only to (i) a
transferee who shall acquire not less than 50% of the outstanding shares of
Registrable Securities held by Buyer, and (ii) affiliates of Buyer.
9.11 "STAND-OFF" AGREEMENT. In consideration for the Company
performing its obligations under this Section 9, Buyer agrees as follows:
(a) For a period of one year from the date of this
Agreement, Buyer shall not sell or otherwise transfer any Registrable
Securities, other than in connection with a corporate reorganization, tender or
exchange offer or other similar circumstances or in a transaction exempt from
the registration requirements of the Securities Act.
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(b) For a period of time (not to exceed 120 days) from
the effective date of any registration of an underwritten public offering of
securities of the Company (upon request of the Company or of the underwriters
managing such underwritten offering) , Buyer shall not sell, make any short sale
of, loan, grant any option for the purchase of, or otherwise dispose of any
Registrable Securities or any other stock of the Company held by Buyer, other
than shares of Registrable Securities included in the registration, without the
prior written consent of the Company or such underwriters, as the case may be.
9.11 DELAY OF REGISTRATION. Buyer shall have no right to take
any action to restrain, enjoin, or otherwise delay any registration as the
result of any controversy that might arise with respect to the interpretation or
implementation of this Section 9.
9.12 REPORTS UNDER SECURITIES EXCHANGE ACT OF 1934. With a
view to making available to the Holders the benefits of Rule 144 promulgated
under the Securities Act and any other rule or regulation of the Commission that
may at any time permit a Holder to sell securities of the Company to the public
without registration or pursuant to a registration on Form S-3, the Company
agrees to file with the Commission in a timely manner all reports and other
documents required of the Company under the Securities Act and the Exchange Act.
10. MISCELLANEOUS.
10.1 EXPENSES. Each party to this Agreement shall bear its
own expenses relating to the preparation, execution, delivery and performance of
this Agreement and all transactions contemplated thereby.
10.2 SURVIVAL OF AGREEMENTS. All agreements, presentations
and warranties and covenants contained herein or made in writing by or on behalf
of the Company in connection with the transactions contemplated hereby shall
survive the execution and delivery of this Agreement (despite any investigation
at any time made by Buyer or on their behalf). All statements contained in any
certificate or other instrument executed and delivered by the Company or its
duly authorized officers or representatives pursuant hereto in connection with
the transactions contemplated hereby shall be deemed representations by the
Company hereunder.
10.3 NOTICES. All notices, requests, consents and other
communications herein shall be in writing and shall be deemed to be delivered
(i) on the date delivered, if personally delivered or transmitted via facsimile
with return confirmation of such transmission; (ii) on the business day after
the date sent, if sent by recognized overnight courier service and (iii) on the
fifth day after the date sent, if mailed by first-class certified mail, postage
prepaid and return receipt requested, as follows:
If to the Company: Checkers Drive-In Restaurants, Inc.
600 Cleveland Street, Eighth Floor
Clearwater, Florida 34617-1079
Attention: Joseph Stein
Facsimile No: (813) 298-2125
Telephone No: (813) 441-3500
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with a copy to: Shumaker, Loop & Kendrick, LLP
101 E. Kennedy Blvd., Suite 2800
Tampa, FL 33602
Attention: Darrell C. Smith, Esq.
Facsimile No: (813) 229-1660
Telephone No.: (813) 229-7600
If to Buyer: To the parties listed on EXHIBIT A attached
hereto.
with a copy to: The counsel listed on EXHIBIT A
or other such addresses as each of the parties hereto may provide from time to
time in writing to the other parties.
10.4 MODIFICATIONS; WAIVER. Neither this Agreement nor any
provision hereof may be changed, waived, discharged or terminated orally or in
writing, except that any provision of this Agreement may be amended and the
observance of any such provision may be waived (either generally or in a
particular instance and either retroactively or prospectively) with (but only
with) the written consent of the Company and Buyer.
10.5 ENTIRE AGREEMENT. This Agreement, together with the
schedules and exhibits attached hereto and made a part hereof, contains the
entire agreement between the parties with respect to the transactions
contemplated hereby, and supersedes all negations, agreements, representations,
warranties, commitments, whether in writing or oral, prior to the date hereof.
10.6 SUCCESSORS AND ASSIGNS. Except as otherwise expressly
provided in this Agreement, all of the terms of this Agreement shall be binding
upon and inure to the benefit of and be enforceable by the respective successors
and transferees of the parties hereto.
10.7 ENFORCEMENT.
(a) REMEDIES AT LAW OR IN EQUITY. If either party
hereto shall default in any of its obligations under this Agreement or if any
representation or warranty made by or on behalf of it in this Agreement or in
any certificate, report or other instrument delivered by it under or pursuant to
any term hereof shall be untrue or misleading in any material respect as of the
date of this Agreement or as of the Closing Date or as of the date it was made,
furnished or delivered, the other party may proceed to protect and enforce its
rights by suit in equity or action at law, whether for the specific performance
of any term contained in this Agreement or the Certificate of Designation,
injunction against the breach of any such term or in furtherance of the exercise
of any power granted in this Agreement or the Certificate of Designation, or to
enforce any other legal or equitable right of such party or to take any one of
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more of such actions. In the event either party brings such an action against
the other, the prevailing party in such dispute shall be entitled to recover
from the losing party all fees, costs and expenses enforcing any right of such
prevailing party under or with respect to this Agreement or the Certificate of
Designation, including without limitation such reasonable fees and expenses of
attorneys and accountants, which shall include, without limitation, all fees,
costs and expenses of appeals.
(b) REMEDIES CUMULATIVE; WAIVER. No remedy referred
to herein is intended to be exclusive, but each shall be cumulative and in
addition to any other remedy referred to above or otherwise available at law or
in equity. No express or implied waiver by Buyer of any default shall be a
waiver of any future or subsequent default. The failure or delay of Buyer in
exercising any rights granted hereunder shall not constitute a waiver of any
such right and any single or partial exercise of any particular right by Buyer
shall not exhaust the same or constitute a waiver of any other right provided
herein.
10.8 EXECUTION AND COUNTERPARTS; FACSIMILE EXECUTION. This
Agreement may be executed in any number of counterparts, each of which when so
executed and delivered shall be deemed an original, and all such counterparts
together shall constitute one instrument. In addition, to the extent that
receipt is confirmed, this Agreement may be executed and sent by telecopy with
the original to follow by a nationally recognized overnight delivery service.
Each party shall receive a duplicate original of the counterpart copy or copies
executed by it and by the Company.
10.9 GOVERNING LAW; JURISDICTION; AND SEVERABILITY. This
Agreement shall be governed by the internal laws of the State of Delaware,
without regard to principles of conflicts of law. Each party hereto consents to
the jurisdiction of any court located in the State of California, County of Los
Angeles for the purpose of any action, suit or proceeding arising out of or
based on this Agreement or any provision hereof. In the event any provision of
this agreement of the application of any such provision to any party shall be
held by a court of competent jurisdiction to be contrary to law, the remaining
provisions of this agreement shall remain in full force and effect.
10.10 HEADINGS. The descriptive headings of the Sections
hereof and the Schedules and Exhibits hereto are inserted only and do not
constitute a part of this Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement by
their duly authorized officers as of the date first written above.
THE COMPANY CHECKERS DRIVE-IN RESTAURANTS, INC.
By:__________________________
Name:________________________
Title:_______________________
BUYER ______________________________________
By:__________________________
Name:________________________
Title:_______________________
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EXHIBIT A
BUYER _____________________________________
Common Stock
Purchased _______________________________ shares
($1.14 per share or an aggregate purchase
price of $ ________________________)
Series A Preferred
Stock Purchased _______________________________ shares
($114.00 per share or an aggregate purchase
price of $ _________________________)
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Exhibit 99.1
[CHECKERS DRIVE-IN RESTAURANTS, INC. Letterhead]
NEWS RELEASE
CONTACT: Joseph N. Stein, Executive Vice President or
James T. Holder, Senior Vice President
(813) 441-3500
FOR IMMEDIATE RELEASE
CHECKERS DRIVE-IN RESTAURANTS INC. ANNOUNCES COMPLETION OF
$20.0 MILLION PRIVATE PLACEMENT OFFERING
CLEARWATER, FL--FEBRUARY 21, 1997--CHECKERS DRIVE-IN RESTAURANTS, INC.
(NASDAQ:CHKR) today announced that it has received $20.0 million in
consideration for issuing 8,771,929 shares of common stock, $.001 par value, and
87,719 shares of Series A preferred stock, $114.0 par value. CKE Restaurants,
Inc. which led a qualified investor group, purchased 6,162,299 of Checkers
common stock and 61,636 shares of Checkers Series A preferred stock in the
private placement.
The Series A preferred stock will be converted into common stock upon
shareholder approval at the annual shareholders' meeting and carries a dividend
rate of 14.5% if the shareholders fail to approve the conversion.
Checkers plans to use the proceeds from the private placement to immediately pay
the following:
- $8.0 million to reduce the primary credit facility debt carrying
a 13% interest rate;
- $2.5 million outstanding under a revolving line of credit
carrying a 13% interest rate;
- $2.3 million to pay key food and paper distributors; and
- remaining amount to be used primarily to pay certain other
existing vendors
Joe Stein, executive vice president and chief financial officer commented, "The
completion of this private placement allows us to improve our relationship with
key suppliers and move forward on certain purchasing projects that will reduce
our food and other costs. Additionally, we will use a portion of the proceeds to
reduce amounts due to our lender group, which will result in a reduction of
interest expense in excess of $1.3 million annually.
Rick Fortman, president and chief operating officer, stated, "The receipt of the
private placement funds will allow us to concentrate on improving restaurant
operations and focus on reducing costs associated with food, paper and labor."
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Checkers Drive-In Restaurants, Inc., along with its franchisees, operates
approximately 475 double drive-thru restaurants primarily located in the
Southeast.
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