<PAGE> 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------------
FORM 10-Q
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 25, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
------------ -------------
American Restaurant Group Holdings, Inc.
----------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 33-74012 33-0592148
- - ------------------------------- ---------------- -------------------
(State or other jurisdiction of (Commission File (I.R.S. employer
incorporation or organization) Number) identification no.)
450 Newport Center Drive
Newport Beach, CA 92660
(714) 721-8000
-------------------------------------------------------------
(Address and telephone number of principal executive offices)
--------------------------------------------------
Former name, former address and former fiscal year
if changed since last report.
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
------ ------
The number of outstanding shares of the Company's Common Stock (one cent par
value) as of April 29, 1996 was 504,505.
<PAGE> 2
AMERICAN RESTAURANT GROUP HOLDINGS, INC.
INDEX
<TABLE>
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PAGE
<S> <C> <C>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS:
Consolidated Condensed Balance Sheets . . . . . . . . . . . . . . . . . . . . . . . . 1
Consolidated Statements of Income . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Consolidated Statements of Cash Flows . . . . . . . . . . . . . . . . . . . . . . . . 4
Notes to Consolidated Condensed Financial Statements . . . . . . . . . . . . . . . . . 5
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS . . . . . . . . . . . . . . . . . . . . 6
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
</TABLE>
i
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS:
AMERICAN RESTAURANT GROUP HOLDINGS, INC. AND SUBSIDIARIES
---------------------------------------------------------
CONSOLIDATED CONDENSED BALANCE SHEETS
-------------------------------------
DECEMBER 25, 1995 AND MARCH 25, 1996
------------------------------------
<TABLE>
<CAPTION>
ASSETS December 25, March 25,
1995 1996
------------ ------------
(unaudited)
<S> <C> <C>
CURRENT ASSETS:
Cash $ 10,385,000 $ 3,956,000
Accounts receivable, net of reserve of
$777,000 and $781,000 at December 25, 1995
and March 25, 1996, respectively 7,734,000 7,901,000
Inventories 6,597,000 6,419,000
Prepaid expenses 4,607,000 2,836,000
------------ ------------
Total current assets 29,323,000 21,112,000
------------ ------------
PROPERTY AND EQUIPMENT:
Land and land improvements 52,991,000 52,991,000
Buildings and leasehold improvements 141,382,000 141,623,000
Fixtures and equipment 90,520,000 90,557,000
Property held under capital leases 13,067,000 13,067,000
Construction in progress 3,749,000 5,448,000
------------ ------------
301,709,000 303,686,000
Less -- Accumulated depreciation 130,679,000 134,111,000
------------ ------------
171,030,000 169,575,000
------------ ------------
OTHER ASSETS -- NET 54,138,000 56,081,000
------------ ------------
Total Assets $254,491,000 $246,768,000
============ ============
</TABLE>
The accompanying notes are an integral part of these consolidated condensed
statements.
(consolidated condensed balance sheets continued on the following page)
1
<PAGE> 4
<TABLE>
<CAPTION>
LIABILITIES AND COMMON STOCKHOLDERS' December 25, March 25,
EQUITY 1995 1996
------------ -------------
(unaudited)
<S> <C> <C>
CURRENT LIABILITIES:
Accounts payable $ 29,239,000 $ 23,182,000
Accrued liabilities 14,226,000 11,035,000
Accrued insurance 16,694,000 18,306,000
Accrued interest 5,855,000 825,000
Accrued payroll costs 10,171,000 10,681,000
Current portion of obligations
under capital leases 858,000 870,000
Current portion of long-term debt 7,850,000 22,224,000
------------ -------------
Total current liabilities 84,893,000 87,123,000
------------ -------------
LONG-TERM LIABILITIES, net of current portion:
Obligations under capital leases 9,344,000 9,127,000
Long-term debt 273,935,000 269,323,000
------------ -------------
Total long-term liabilities 283,279,000 278,450,000
------------ -------------
COMMITMENTS AND CONTINGENCIES
PREFERRED STOCK, $0.01 par value;
10,000 shares authorized, no shares
issued or outstanding
at December 25, 1995 or
March 25, 1996 - -
COMMON STOCKHOLDERS' EQUITY:
Common stock, $0.01 par value; 1,000,000
shares authorized; 504,505 shares issued
and outstanding at December 25, 1995 and
March 25, 1996 2,000 2,000
Treasury stock (50,000) (50,000)
Paid-in capital 17,539,000 17,539,000
Accumulated deficit (131,172,000) (136,296,000)
------------- -------------
Total common stockholders' deficit (113,681,000) (118,805,000)
------------- -------------
Total liabilities and common
stockholders' equity $ 254,491,000 $ 246,768,000
============= =============
</TABLE>
The accompanying notes are an integral part of these consolidated condensed
statements.
2
<PAGE> 5
AMERICAN RESTAURANT GROUP HOLDINGS, INC. AND SUBSIDIARIES
---------------------------------------------------------
CONSOLIDATED STATEMENTS OF INCOME
---------------------------------
FOR THE THIRTEEN WEEKS ENDED MARCH 27, 1995 AND MARCH 25, 1996
--------------------------------------------------------------
(UNAUDITED)
-----------
<TABLE>
<CAPTION>
Thirteen Weeks Ended
--------------------------------------
March 27, March 25,
1995 1996
------------- --------------
<S> <C> <C>
REVENUES $ 114,715,000 $ 114,598,000
RESTAURANT COSTS:
Food and beverage 35,642,000 36,850,000
Payroll 34,602,000 34,365,000
Direct operating 26,784,000 27,451,000
Depreciation and amortization 6,147,000 5,221,000
GENERAL AND ADMINISTRATIVE EXPENSES 7,746,000 6,678,000
------------- -------------
Operating profit 3,794,000 4,033,000
INTEREST EXPENSE, net 8,678,000 9,144,000
------------- -------------
Loss before provision for income taxes (4,884,000) (5,111,000)
PROVISION FOR INCOME TAXES 9,000 13,000
------------- -------------
Net loss $ (4,893,000) $ (5,124,000)
============= =============
</TABLE>
The accompanying notes are an integral part of these consolidated condensed
statements.
3
<PAGE> 6
AMERICAN RESTAURANT GROUP HOLDINGS, INC. AND SUBSIDIARIES
---------------------------------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS
-------------------------------------
FOR THE THIRTEEN WEEKS ENDED MARCH 27, 1995 AND MARCH 25, 1996
--------------------------------------------------------------
(UNAUDITED)
-----------
<TABLE>
<CAPTION>
March 27, March 25,
1995 1996
------------- --------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Cash received from customers $ 114,886,000 $ 114,431,000
Cash paid to suppliers and employees (105,110,000) (110,769,000)
Interest paid, net (11,864,000) (12,095,000)
Income taxes paid (9,000) (13,000)
------------- -------------
Net cash used in operating activities (2,097,000) (8,446,000)
------------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (4,271,000) (2,078,000)
Net (increase) decrease in other assets 418,000 (151,000)
Proceeds from disposition of assets 25,000 -
------------- -------------
Net cash used in investing activities (3,828,000) (2,229,000)
------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on indebtedness (78,000) (2,603,000)
Borrowings on indebtedness - 7,115,000
Net increase in deferred debt costs (4,000) (61,000)
Payments on capital lease obligations (195,000) (205,000)
------------- -------------
Net cash provided by (used in)
financing activities (277,000) 4,246,000
------------- -------------
NET DECREASE IN CASH (6,202,000) (6,429,000)
CASH, at beginning of period 15,032,000 10,385,000
------------- -------------
CASH, at end of period $ 8,830,000 $ 3,956,000
============= =============
RECONCILIATION OF NET LOSS TO NET CASH
USED IN OPERATING ACTIVITIES:
Net loss $ (4,893,000) $ (5,124,000)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 6,147,000 5,221,000
Loss on disposition of assets 158,000 33,000
Accretion on indebtness 1,825,000 2,079,000
Loss on value of interest rate swap 59,000 -
(Increase) decrease in current assets:
Accounts receivable, net 171,000 (167,000)
Inventories 201,000 178,000
Prepaid expenses 486,000 1,523,000
Increase (decrease) in current liabilities:
Accounts payable 2,277,000 (6,057,000)
Accrued liabilities (4,800,000) (3,224,000)
Accrued insurance 1,853,000 1,612,000
Accrued interest (5,070,000) (5,030,000)
Accrued payroll (511,000) 510,000
------------- -------------
Net cash used in operating activities $ (2,097,000) $ (8,446,000)
============= ==============
</TABLE>
The accompanying notes are an integral part of these consolidated condensed
statements.
4
<PAGE> 7
AMERICAN RESTAURANT GROUP HOLDINGS, INC. AND SUBSIDIARIES
---------------------------------------------------------
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
----------------------------------------------------
1. MANAGEMENT OPINION
The Consolidated Condensed Financial Statements included herein have
been prepared by the Company, without audit, in accordance with
Securities and Exchange Commission Regulation S-X. In the opinion of
management of the Company, these Consolidated Condensed Financial
Statements contain all adjustments (all of which are of a normal
recurring nature) necessary to present fairly the Company's financial
position as of December 25, 1995 and March 25, 1996, and the results
of its operations and its cash flows for the thirteen weeks ended
March 27, 1995 and March 25, 1996. The Company's results for an
interim period are not necessarily indicative of the results that may
be expected for the year.
Although the Company believes that all adjustments necessary for a
fair presentation of the interim periods presented are included and
that the disclosures are adequate to make the information presented
not misleading, it is suggested that these Consolidated Condensed
Financial Statements be read in conjunction with the Consolidated
Financial Statements and notes thereto included in the Company's
annual report on Form 10-K, File No. 33-74012, for the year ended
December 25, 1995.
5
<PAGE> 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion and analysis of American Restaurant Group Holdings,
Inc.'s financial condition and results of operations should be read in
conjunction with the historical financial information included in the
Consolidated Condensed Financial Statements.
RESULTS OF OPERATIONS
Thirteen weeks ended March 27, 1995 and March 25, 1996:
Revenues. Total revenues decreased from $114.7 million in the first quarter of
1995 to $114.6 million in the first quarter of 1996 reflecting a decrease in
comparable restaurant revenues of 2.0%. During the twelve months ended March
25, 1996, the Company opened three new restaurants and closed one poor
performing restaurant. There were 246 restaurants operating as of March 27,
1995 and 248 operating as of March 25, 1996.
Black Angus revenues increased 4.3% to $67.8 million in the first quarter of
1996 as compared to the same period in 1995. The increase was due to the
addition of three new restaurants in California (one of which opened late in
the first quarter of 1995) and increased television advertising. Comparable
restaurant revenues increased 1.6% as compared to the prior year.
Grandy's revenues decreased 11.3% to $22.7 million in the first quarter of 1996
as compared to the same period in 1995. Comparable restaurant revenues in the
first quarter of 1996 were 11.6% lower than the same period in 1995, in part
due to less use of discounting to stimulate sales and less effective
advertising and promotion. Franchise revenues were $0.5 million in the first
quarter of 1995 and 1996.
Other revenues decreased from $24.2 million in the first quarter of 1995 to
$24.1 million in the same period of 1996. The Company opened one new
restaurant and closed one poor performing restaurant during the twelve months
ended March 25, 1996. Comparable restaurant revenues decreased 1.8%.
Food and Beverage Costs. As a percentage of revenues, food and beverage costs
increased from 31.1% in the first quarter of 1995 to 32.2% in the first quarter
of 1996. The increase was primarily due to higher seafood costs at Black
Angus.
Payroll Costs. As a percentage of revenues, labor costs decreased from 30.2%
in the first quarter of 1995 to 30.0% in the first quarter of 1996. The
decrease was partially due to reduced health insurance costs.
Direct Operating Costs. Direct operating costs consist of occupancy,
advertising and other expenses incurred by individual restaurants. As a
percentage of revenues, these costs increased in the first quarter from 23.3%
in 1995 to 24.0% in 1996. The increase was due primarily to higher advertising
expenses.
Depreciation and Amortization. Depreciation and amortization consists of
depreciation of fixed assets used by individual restaurants, divisions and
corporate offices, as well as amortization of intangible assets. As a
percentage of revenues, depreciation and amortization decreased from 5.4% in
the first quarter of 1995 to 4.5% in the same period of 1996. The decrease was
due primarily to the furniture, fixtures and equipment
6
<PAGE> 9
purchased in the 1987 acquisition which became fully depreciated in February
1995 and the non-cash reduction of the historical cost of certain long-lived
assets in December 1995.
General and Administrative Expenses. General and administrative expenses
decreased 13.8% from $7.7 million in the first quarter of 1995 to $6.7 million
in the first quarter of 1996. The decrease was due primarily to the December
1995 restructuring of administrative personnel which resulted in a reduction of
payroll costs. General and administrative expenses as a percentage of revenues
decreased from 6.8% to 5.8%.
Operating Profit. Due to the above items, operating profit increased from $3.8
million in the first quarter of 1995 to $4.0 million in the first quarter of
1996. As a percentage of revenues, operating profit increased 0.2% from 3.3%
to 3.5%.
Interest Expense - Net. Interest expense increased from $8.7 million in the
first quarter of 1995 to $9.1 million in the first quarter of 1996. The
increase was primarily due to higher interest income in the first quarter of
1995 and a higher average debt balance in the first quarter of 1996. The
Company's average stated interest rate remained equal at 11.9% in the first
quarter of 1995 and 1996. The weighted average debt balance (excluding
capitalized lease obligations) increased from $268.0 million in the first
quarter of 1995 to $280.7 million in the first quarter of 1996.
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary sources of liquidity are cash flow from operations and
borrowings under its credit facilities. The Company requires capital
principally for the acquisition and construction of new restaurants, the
remodeling of existing restaurants and the purchase of new equipment and
leasehold improvements.
In general, restaurant businesses do not have significant accounts receivable
because sales are made for cash or by credit card vouchers which are ordinarily
paid within a few days, and do not maintain substantial inventory as a result
of the relatively brief shelf life and frequent turnover of food products.
Additionally, restaurants generally are able to obtain trade credit in
purchasing food and restaurant supplies. As a result, restaurants are
frequently able to operate with working capital deficits, i.e., current
liabilities exceed current assets. At March 25, 1996, the Company had a
working capital deficit of $66.0 million.
The Company estimates that capital expenditures of $10.0 million to $13.0
million are required annually to maintain and refurbish its existing
restaurants. In addition, the Company spends approximately $10.0 million to
$13.0 million annually for repairs and maintenance which are expensed as
incurred. Other capital expenditures, which are generally discretionary, are
primarily for the construction of new restaurants and for expanding,
reformatting and extending the capabilities of existing restaurants and for
general corporate purposes. The Company expects to spend approximately $3.0
million to $6.0 million on new restaurants in 1996, primarily during the second
half of 1996, and depending on market conditions, to increase its capital
expenditures for new restaurants thereafter. Total capital expenditures year
to date were $4.3 million in 1995 and $2.1 million in 1996. The Company's
credit agreement contains limitations on the amount of capital expenditures
that the Company may incur.
American Restaurant Group, Inc. ("ARG"), a wholly owned subsidiary of the
Company, has amended its credit facilities to provide for a working capital
facility of $5.0 million until June 30, 1996 and a letter of credit facility of
$13.5 million until September 30, 1996. Each of such facilities was fully
utilized as of March 25, 1996. In conjunction with these extensions, ARG
agreed to make certain asset sales. Prior to its scheduled
7
<PAGE> 10
expiration, ARG will seek to replace or further extend its letter of credit
facility.
In March 1996, the Company completed a private placement of its 14% senior
discount debentures due 2005 at an aggregate offering price of approximately
$7.1 million. Substantially all of the net proceeds of the offering were
contributed by the Company to ARG. The net proceeds were used by ARG for
general corporate purposes.
The Company is currently in negotiation for a sale/leaseback of 24 Black Angus
restaurants and, separately, for a sale and agreement to manage 38 Grandy's
restaurants, for total gross proceeds of $88.0 million. If these transactions
are consummated, all but $10.0 million of the net proceeds of these
transactions will be used to repay ARG's senior debt. These transactions are
expected to close in June 1996. The Company also intends to negotiate an
extension of the maturities of its debt. Thus, although the Company is highly
leveraged, based upon current and projected levels of operations and
anticipated growth, the Company expects that cash flow generated from
operations together with its other available sources of liquidity, including
the transactions discussed above, will be adequate to make required payments of
principal and interest on its indebtedness, to make anticipated capital
expenditures and to finance working capital requirements.
A covenant in ARG's senior secured notes specifies that, if at the end of any
two consecutive fiscal quarters ARG's net worth falls below a minimum amount,
ARG is obligated to make an offer to purchase ten percent of the principal
amount of its senior secured notes ($17.0 million) plus accrued interest.
ARG's net worth was less than this minimum at December 25, 1995 and at March
25, 1996 and, accordingly, the Company has classified this $17.0 million in the
current portion of long-term debt. ARG is required to notify the senior
secured note holders ("Note Holders") by May 25, 1996 of these circumstances
and the Note Holders have until June 24, 1996 to accept such offer. Once the
notification is made, each Note Holder has the right to either accept or
decline the offer. With respect to the senior secured notes of any Note Holder
who does not accept such offer, ARG has no further purchase requirement and the
portion of the $17.0 million offer not so accepted remains payable in the
ordinary course along with the balance of the senior secured notes. If the
Note Holders do not waive their rights to such purchase and ARG is unable to
meet the payment demand, the Note Holders would have the right to accelerate
the entire face amount of the senior secured notes ($170.0 million). If such
right is exercised, the holders of the Company's other debt would have the
right to accelerate such debt.
In addition, ARG is currently in default under a net worth maintenance covenant
in its senior credit agreement.
Management believes that such purchase of the $17.0 million of senior secured
notes will not be required because ARG intends to seek a waiver of this
purchase obligation prior to May 25, 1996, in conjunction with the negotiations
discussed above involving the repayment of a portion of its debt, together with
an extension of maturities for its remaining debt. ARG also intends to seek a
waiver of the net worth maintenance covenant in its senior credit agreement.
There can be no assurance, however, that the Company will be able to complete
any of the above noted transactions or obtain any of the above noted waivers or
extensions on acceptable terms.
8
<PAGE> 11
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) List of Exhibits
<TABLE>
<CAPTION>
Sequentially
Numbered
Exhibit No. Description Page
----------- ----------- ------------
<S> <C>
4.1 Registration Rights Agreement, dated as of March 13, 1996, between the
Company and certain purchasers referred to therein.
4.2 First Supplemental Indenture, dated as of March 13, 1996, between the
Company and United States Trust Company of New York.
27.1 Financial Data Schedule, which is submitted electronically to the
Securities and Exchange Commission for information only and not filed.
</TABLE>
9
<PAGE> 12
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
AMERICAN RESTAURANT GROUP HOLDINGS, INC.
----------------------------------------
(Registrant)
Date: May 8, 1996 By: /s/ WILLIAM J. McCAFFREY, JR.
-------------------- -----------------------------
William J. McCaffrey, Jr.
Vice President, Chief
Financial Officer
10
<PAGE> 1
EXHIBIT 4.1
- - --------------------------------------------------------------------------------
REGISTRATION RIGHTS AGREEMENT
Dated as of March 13, 1996
made by
AMERICAN RESTAURANT GROUP HOLDINGS, INC.
in favor of
THE PURCHASERS REFERRED TO HEREIN
- - --------------------------------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
Page
----
1. Definitions...................................................... 1
2. Exchange Offer................................................... 3
3. Shelf Registration............................................... 5
4. Additional Interest.............................................. 6
5. Registration Procedures.......................................... 8
6. Registration Expenses............................................ 15
7. Indemnification.................................................. 16
8. Rules 144 and 144A............................................... 18
9. Underwritten Registrations....................................... 18
10. Miscellaneous.................................................... 19
(a) Remedies................................................ 19
(b) No Inconsistent Agreements.............................. 19
(c) Adjustments Affecting Registrable Securities............ 19
(d) Amendments and Waivers.................................. 19
(e) Notices................................................. 20
(f) Successors and Assigns.................................. 20
(g) Counterparts............................................ 20
(h) Headings................................................ 20
(i) Governing Law........................................... 20
(j) Severability............................................ 21
(k) Entire Agreement........................................ 21
(l) Securities Held by the Company or Its Affiliates........ 21
-i-
<PAGE> 3
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement"), dated as
of March 13, 1996, is made by AMERICAN RESTAURANT GROUP HOLDINGS, INC., a
Delaware corporation (the "Company"), in favor of the Purchasers referred to
below.
WHEREAS, on the date hereof, the Company has issued an
additional $17,000,000 aggregate principal amount of its 14% Senior Discount
Debentures due 2005, Series A (such additional securities, the "Securities");
and
WHEREAS, this Agreement is made by the Company in favor of
each Person which has purchased Securities on the date hereof (the "Purchasers")
in order to induce such Purchasers to purchase the Securities;
NOW, THEREFORE, the Company hereby agrees with the Purchasers
as follows:
1. Definitions
As used in this Agreement, the following terms shall have the
following meanings:
Additional Interest: See Section 4.
Advice: See Section 5.
Applicable Period: See Section 2.
Closing Date: The date of this Agreement.
Company: See the introductory paragraph to this
Agreement.
Effectiveness Date: The 90th day after the Filing
Date.
Effectiveness Period: See Section 3.
Event Date: See Section 4.
Exchange Act: The Securities Exchange Act of 1934, as
amended, and the rules and regulations of the SEC promulgated
thereunder.
Exchange Offer: See Section 2.
Exchange Registration Statement: See Section 2.
Exchange Securities: See Section 2.
<PAGE> 4
2
Filing Date: The 30th day after the Closing Date.
Holder: Any holder of Registrable Securities.
Indenture: The Indenture, dated as of December 1, 1993,
between the Company and United States Trust Company of New York, as trustee, as
amended by a First Supplemental Indenture dated as of the date hereof, pursuant
to which the Securities are being issued, as further amended or supplemented
from time to time in accordance with the terms thereof.
Initial Shelf Registration: See Section 3.
Issuer: The Company.
Participating Broker-Dealer: See Section 2.
Person: An individual, trustee, corporation, partnership,
joint stock company, trust, unincorporated association, union, business
association, firm or other legal entity.
Prospectus: The prospectus included in any Registration
Statement (including, without limitation, any prospectus subject to completion
and a prospectus that includes any information previously omitted from a
prospectus filed as part of an effective registration statement in reliance upon
Rule 430A promulgated under the Securities Act), as amended or supplemented by
any prospectus supplement, with respect to the terms of the offering of any
portion of the Registrable Securities covered by such Registration Statement,
and all other amendments and supplements to the Prospectus, including
post-effective amendments, and all material incorporated by reference or deemed
to be incorporated by reference in such Prospectus.
Purchasers: See the recitals to this Agreement.
Registrable Securities: The Securities upon original issuance
of the Securities and at all times subsequent thereto, until in the case of any
such Securities, (i) a Registration Statement covering such Securities has been
declared effective by the SEC and such Securities have been disposed of in
accordance with such effective Registration Statement, (ii) such Securities are
sold in compliance with Rule 144, or (iii) such Securities cease to be
outstanding.
Registration Statement: Any registration statement of the
Issuer, including, but not limited to, the Exchange Registration Statement, that
covers any of the Registrable Securities pursuant to the provisions of this
Agreement, including the Prospectus, amendments and supplements to such
registration statement, including post-effective amendments, all exhibits, and
all material incorporated by reference or deemed to be incorporated by reference
in such registration statement.
<PAGE> 5
3
Rule 144: Rule 144 under the Securities Act, as such Rule may
be amended from time to time, or any similar rule (other than Rule 144A) or
regulation hereafter adopted by the SEC providing for offers and sales of
securities made in compliance therewith resulting in offers and sales by
subsequent holders that are not affiliates of an issuer of such securities being
free of the registration and prospectus delivery requirements of the Securities
Act.
Rule 144A: Rule 144A under the Securities Act, as such Rule
may be amended from time to time, or any similar rule (other than Rule 144) or
regulation hereafter adopted by the SEC providing for offers and sales of
securities made in compliance therewith resulting in offers and sales by
subsequent holders that are not affiliates of an issuer of such securities being
free of the registration and prospectus delivery requirements of the Securities
Act.
Rule 415: Rule 415 under the Securities Act, as such Rule may
be amended from time to time, or any similar rule or regulation hereafter
adopted by the SEC.
SEC: The Securities and Exchange Commission.
Securities: See the recitals to this Agreement.
Securities Act: The Securities Act of 1933, as
amended, and the rules and regulations of the SEC promulgated
thereunder.
Shelf Notice: See Section 2.
Shelf Registration: See Section 3.
Subsequent Shelf Registration: See Section 3.
TIA: The Trust Indenture Act of 1939, as amended.
Trustee: The trustee under the Indenture and, if
existent, the trustee under any indenture governing the Exchange
Securities.
Underwritten registration or underwritten offering: A
registration in which securities of the Issuer or a Holder are sold to an
underwriter for reoffering to the public.
2. Exchange Offer
(a) The Issuer agrees to use its best efforts to file with the
SEC as soon as practicable after the Closing Date, but in no event later than
the Filing Date, an offer to exchange (the "Exchange Offer") any and all of the
Registrable Securities for a like aggregate principal amount of debt securities
of the Company which are substantially identical to the Securities (the
"Exchange Securities") (and which are entitled to the benefits of the Indenture
or a trust indenture which is identical to the Indenture (other than such
changes to the
<PAGE> 6
4
Indenture or any such identical trust indenture as are necessary to comply with
any requirements of the SEC to effect or maintain the qualification thereof
under the TIA) and which, in either case, has been qualified under the TIA),
except that the Exchange Securities shall have been registered pursuant to an
effective Registration Statement under the Securities Act. The Exchange Offer
will be registered under the Securities Act on the appropriate form (the
"Exchange Registration Statement") and will comply with all applicable tender
offer rules and regulations under the Exchange Act. The Issuer agrees to use its
best efforts to (x) cause the Exchange Registration Statement to become
effective under the Securities Act on or before the Effectiveness Date; (y) keep
the Exchange Offer open for at least 30 days (or longer if required by
applicable law) after the date that notice of the Exchange Offer is mailed to
Holders; and (z) consummate the Exchange Offer on or prior to the 60th day
following the date on which the Exchange Registration Statement is declared
effective. Each Holder who participates in the Exchange Offer will be required
to represent that any Exchange Securities received by it will be acquired in the
ordinary course of its business, that at the time of the consummation of the
Exchange Offer such Holder will have no arrangement or understanding with any
person to participate in the distribution of the Exchange Securities, and that
such Holder is not an affiliate of the Issuer within the meaning of the
Securities Act.
(b) If requested by any Purchaser, the Issuer shall include
within the Prospectus contained in the Exchange Registration Statement a section
entitled "Plan of Distribution," reasonably acceptable to such Purchaser, which
shall contain a summary statement of the positions taken or policies made by the
Staff of the SEC with respect to the potential "underwriter" status of any
broker-dealer that is the beneficial owner (as defined in Rule 13d-3 under the
Exchange Act) of Exchange Securities received by such broker-dealer in the
Exchange Offer (a "Participating Broker-Dealer"). Such "Plan of Distribution"
section shall also allow the use of the prospectus by all persons subject to the
prospectus delivery requirements of the Securities Act, including all
Participating Broker-Dealers, and include a statement describing the means by
which Participating Broker- Dealers may resell the Exchange Securities.
If requested by any Purchaser, the Issuer shall use its best
efforts to keep the Exchange Registration Statement effective and to amend and
supplement the Prospectus contained therein, in order to permit such Prospectus
to be lawfully delivered by all persons subject to the prospectus delivery
requirements of the Securities Act for such period of time as such persons must
comply with such requirements in order to resell the Exchange Securities,
provided that such period shall not exceed 180 days after consummation of the
Exchange Offer (or such longer period if extended pursuant to the last paragraph
of Section 5) (the "Applicable Period").
Interest on the Exchange Securities will accrue from the last
interest payment date on which interest was paid on the Securities surrendered
in exchange therefor or, if no interest has been paid on the Securities, from
the date of original issue.
In connection with the Exchange Offer, the Issuer shall:
<PAGE> 7
5
(a) mail to each Holder a copy of the prospectus forming part
of the Exchange Offer Registration Statement, together with an
appropriate letter of transmittal and related documents;
(b) utilize the services of a Depositary for the Exchange
Offer with an address in the Borough of Manhattan, The City of New
York; and
(c) permit Holders to withdraw tendered Securities at any time
prior to the close of business, New York time, on the last business day
on which the Exchange Offer shall remain open.
As soon as practicable after the close of the Exchange Offer,
the Issuer shall:
(i) accept for exchange all Securities tendered and not
validly withdrawn pursuant to the Exchange Offer;
(ii) deliver to the Trustee for cancellation all
Securities so accepted for exchange; and
(iii) cause the Trustee to authenticate and deliver
promptly to each Holder of Securities, Exchange Securities equal in
principal amount to the Securities of such Holder so accepted for
exchange.
(c) If (1) prior to the consummation of the Exchange Offer,
the Issuer or Holders of at least a majority in aggregate principal amount of
the Registrable Securities reasonably determine in good faith that (i) the
Exchange Securities would not, upon receipt, be tradeable by such Holders which
are not affiliates of the Issuer without restriction under the Securities Act
and without restrictions under applicable blue sky or state securities laws or
(ii) after conferring with counsel, the SEC is unlikely to permit the
consummation of the Exchange Offer prior to the Effectiveness Date or (2) the
Exchange Offer is commenced and not consummated within 180 days of the date
hereof for any reason, then the Issuer shall promptly deliver to the Holders and
the Trustee written notice thereof (the "Shelf Notice") and shall file an
Initial Shelf Registration pursuant to Section 3. Following the delivery of a
Shelf Notice to the Holders of Registrable Securities (in the circumstances
contemplated by clauses (1) and (3) of the preceding sentence), the Issuer shall
not have any further obligation to conduct the Exchange Offer under this Section
2.
3. Shelf Registration
If a Shelf Notice is delivered as contemplated by Section
2(c), then:
(a) Initial Shelf Registration. The Issuer shall carefully
prepare and file with the SEC a Registration Statement for an offering to be
made on a continuous basis pursuant to Rule 415 covering all of the Registrable
Securities (the "Initial Shelf Registration"). If the Issuer shall have not yet
filed an Exchange Offer, the Issuer shall use its best efforts to file with the
SEC the Initial Shelf Registration on or prior to the Filing
<PAGE> 8
6
Date. Otherwise, the Issuer shall use its best efforts to file with the SEC the
Initial Shelf Registration within 20 days of the delivery of the Shelf Notice.
The Initial Shelf Registration shall be on Form S-1 or another appropriate form
permitting registration of such Registrable Securities for resale by the Holders
in the manner or manners designated by them (including, without limitation, one
or more underwritten offerings). The Issuer shall not permit any securities
other than the Registrable Securities to be included in the Initial Shelf
Registration or any Subsequent Shelf Registration. The Issuer shall use its best
efforts, as described in Section 5(b), to cause the Initial Shelf Registration
to be declared effective under the Securities Act on or prior to the
Effectiveness Date and to keep the Initial Shelf Registration continuously
effective under the Securities Act until the date which is 36 months from the
Effectiveness Date (subject to extension pursuant to the last paragraph of
Section 5 hereof) (the "Effectiveness Period"), or such shorter period ending
when (i) all Registrable Securities covered by the Initial Shelf Registration
have been sold in the manner set forth and as contemplated in the Initial Shelf
Registration or (ii) a Subsequent Shelf Registration covering all of the
Registrable Securities has been declared effective under the Securities Act.
(b) Subsequent Shelf Registrations. If the Initial Shelf
Registration or any Subsequent Shelf Registration ceases to be effective for any
reason at any time during the Effectiveness Period (other than because of the
sale of all of the Securities registered thereunder), the Issuer shall use its
best efforts to obtain the prompt withdrawal of any order suspending the
effectiveness thereof, and in any event shall within 45 days of such cessation
of effectiveness amend the Shelf Registration in a manner reasonably expected to
obtain the withdrawal of the order suspending the effectiveness thereof, or file
an additional "shelf" Registration Statement pursuant to Rule 415 covering all
of the Registrable Securities (a "Subsequent Shelf Registration"). If a
Subsequent Shelf Registration is filed, the Issuer shall use its best efforts to
cause the Subsequent Shelf Registration to be declared effective as soon as
practicable after such filing and to keep such Registration Statement
continuously effective for a period equal to the number of days in the
Effectiveness Period less the aggregate number of days during which the Initial
Shelf Registration or any Subsequent Shelf Registration was previously
continuously effective. As used herein the term "Shelf Registration" means the
Initial Shelf Registration and any Subsequent Shelf Registration.
(c) Supplements and Amendments. The Issuer shall promptly
supplement and amend the Shelf Registration if required by the rules,
regulations or instructions applicable to the registration form used for such
Shelf Registration, if required by the Securities Act, or if requested by the
holders of a majority in aggregate principal amount of the Registrable
Securities covered by such Registration Statement or by any underwriter of such
Registrable Securities.
4. Additional Interest
(a) The Issuer agrees with the Purchasers that the Holders of
Registrable Securities will suffer damages if the Issuer fails to fulfill its
obligations under Section 2 or Section 3 hereof and that it would not be
feasible to ascertain the extent of such damages with precision. Accordingly,
the Issuer agrees to pay additional interest on the Securities ("Additional
Interest") under the circumstances and to the extent set forth below:
<PAGE> 9
7
(i) if the Exchange Registration Statement or the
Initial Shelf Registration has not been filed on or prior to the Filing
Date, then commencing on the day after the Filing Date, Additional
Interest shall be accrued on the Securities over and above the
accretion of original issue discount at a rate of .50% per annum;
(ii) if an Exchange Registration Statement or the
Initial Shelf Registration is filed on or prior to the Filing Date and
is not declared effective on or prior to the Effectiveness Date, then
commencing on the day after the Effectiveness Date, Additional Interest
shall be accrued on the Securities over and above the accretion of
original issue discount at a rate of .50% per annum; and
(iii) if (A) the Company has not exchanged Exchange
Securities for all Securities validly tendered in accordance with the
terms of the Exchange Offer on or prior to 60 days after the date on
which the Exchange Registration Statement was declared effective or (B)
the Exchange Registration Statement ceases to be effective at any time
prior to the time that the Exchange Offer is consummated or (C) the
Initial Shelf Registration or any Subsequent Shelf Registration has
been declared effective and such Shelf Registration ceases to be
effective at any time during the Effectiveness Period or (D) a notice
under Section 5(c)(v) with respect to a Shelf Registration Statement is
effective or required to be effective at a time when the aggregate
number of days in any 365 day period for which all such notices issued
or required to be issued pursuant to Section 5(c)(v) have been or were
required to be, in effect exceeds 60 days, whether or not consecutive,
then Additional Interest shall be accrued on the Securities over and
above the accretion of original issue discount at a rate of .50% per
annum immediately following the (w) 61st day after such effective date,
in the case of (A) above, or (x) the day the Exchange Registration
Statement ceases to be effective in the case of (B) above, (y) the day
such Shelf Registration ceases to be effective in the case of (C) above
or (z) the date on which the 60-day limit is exceeded in the case of
(D) above;
provided, however, that (1) upon the filing of the Exchange Registration
Statement or the Initial Shelf Registration (in the case of (i) above), (2) upon
the effectiveness of the Exchange Registration Statement or a Shelf Registration
(in the case of (ii) above), or (3) upon the exchange of Exchange Securities for
all Securities tendered (in the case of (iii)(A) above), or upon the
effectiveness of the Exchange Registration Statement which had ceased to remain
effective (in the case of (iii)(B) above), or upon the effectiveness of the
Shelf Registration which had ceased to remain effective (in the case of (iii)(C)
above) or, on the date on which a notice is issued, or required to be issued,
pursuant to Section 5(c)(v) is no longer effective or required to be effective
(in the case of (iii)(D) above), Additional Interest on the Securities as a
result of such clause (i), (ii) or (iii) (or the relevant subclause thereof), as
the case may be, shall cease to accrue.
<PAGE> 10
8
(b) The Issuer shall notify the Trustee within one business
day after each and every date on which an event occurs in respect of which
Additional Interest is required to be paid (an "Event Date"). Additional
Interest shall be paid by depositing with the Trustee, in trust, for the benefit
of the Holders thereof, on or before the semi-annual interest payment date
provided in the Indenture (whether or not any interest other than Additional
Interest is then payable on the Securities), immediately available funds in sums
sufficient to pay the Additional Interest then due to Holders of Securities with
respect to which the Trustee serves. The Additional Interest due shall be
payable on each interest payment date to the record Holders of Securities who
would be entitled to receive the interest payment to be made on such date as set
forth in the Indenture. Each obligation to pay Additional Interest shall be
deemed to accrue on the applicable Event Date.
5. Registration Procedures
In connection with the registration of any Registrable
Securities pursuant to Sections 2 or 3 hereof, the Issuer shall effect such
registrations to permit the sale of such Registrable Securities in accordance
with the intended method or methods of disposition thereof, and pursuant thereto
the Issuer shall:
(a) Prepare and file with the SEC, as soon as practicable
after the date hereof but in any event prior to the Filing Date, a Registration
Statement or Registration Statements as prescribed by Section 2 or 3, and to use
its best efforts to cause each such Registration Statement to become effective
and remain effective as provided herein, provided that, if (1) such filing is
pursuant to Section 3, or (2) a Prospectus contained in an Exchange Registration
Statement filed pursuant to Section 2 is required to be delivered under the
Securities Act by any Participating Broker-Dealer who seeks to sell Exchange
Securities during the Applicable Period, before filing any Registration
Statement or Prospectus or any amendments or supplements thereto, the Issuer
shall, if requested, furnish to and afford the Holders of the Registrable
Securities and each such Participating Broker- Dealer, as the case may be,
covered by such Registration Statement, their counsel and the managing
underwriters, if any, a reasonable opportunity to review copies of all such
documents (including copies of any documents to be incorporated by reference
therein and all exhibits thereto) proposed to be filed (at least 5 business days
prior to such filing). The Issuer shall not file any Registration Statement or
Prospectus or any amendments or supplements thereto in respect of which the
Holders must be afforded an opportunity to review prior to the filing of such
document, if the Holders of a majority in aggregate principal amount of the
Registrable Securities covered by such Registration Statement, or such
Participating Broker-Dealer, as the case may be, their counsel, or the managing
underwriters, if any, shall reasonably object.
(b) Prepare and file with the SEC such amendments and
post-effective amendments to each Shelf Registration or Exchange Registration
Statement, as the case may be, as may be necessary to keep such Registration
Statement continuously effective for the Effectiveness Period or the Applicable
Period, as the case may be; cause the related Prospectus to be supplemented by
any required Prospectus supplement, and as so supplemented to be filed pursuant
to Rule 424 (or any similar provisions then in force) under the Securities Act;
and comply with the provisions of the Securities Act, the Exchange Act
<PAGE> 11
9
and the rules and regulations of the SEC promulgated thereunder applicable to it
with respect to the disposition of all securities covered by such Registration
Statement as so amended or in such Prospectus as so supplemented and with
respect to the subsequent resale of any securities being sold by a Participating
Broker-Dealer covered by any such Prospectus; the Issuer shall be deemed not to
have used its best efforts to keep a Registration Statement effective during the
Applicable Period if it voluntarily takes any action that would result in
selling Holders of the Registrable Securities covered thereby or Participating
Broker-Dealers seeking to sell Exchange Securities not being able to sell such
Registrable Securities or such Exchange Securities during that period unless (i)
such action is required by applicable law, or (ii) such action is taken by the
Issuer in good faith and for valid business reasons (not including avoidance of
the Issuer's obligations hereunder), including the acquisition or divestiture of
assets.
(c) If (1) a Shelf Registration is filed pursuant to Section
3, or (2) a Prospectus contained in an Exchange Registration Statement filed
pursuant to Section 2 is required to be delivered under the Securities Act by
any Participating Broker-Dealer who seeks to sell Exchange Securities during the
Applicable Period, notify the selling Holders of Registrable Securities, or each
such Participating Broker-Dealer, as the case may be, their counsel and the
managing underwriters, if any, promptly (but in any event within two business
days), and confirm such notice in writing, (i) when a Prospectus or any
Prospectus supplement or post-effective amendment has been filed, and, with
respect to a Registration Statement or any post-effective amendment, when the
same has become effective (including in such notice a written statement that any
Holder may, upon request, obtain, without charge, one conformed copy of such
Registration Statement or post-effective amendment including financial
statements and schedules, documents incorporated or deemed to be incorporated by
reference and exhibits), (ii) of the issuance by the SEC of any stop order
suspending the effectiveness of a Registration Statement or of any order
preventing or suspending the use of any preliminary prospectus or the initiation
of any proceedings for that purpose, (iii) if at any time when a prospectus is
required by the Securities Act to be delivered in connection with sales of the
Registrable Securities the representations and warranties of the Issuer
contained in any agreement (including any underwriting agreement) contemplated
by Section 5(n) below cease to be true and correct, (iv) of the receipt by the
Issuer of any notification with respect to the suspension of the qualification
or exemption from qualification of a Registration Statement or any of the
Registrable Securities or the Exchange Securities to be sold by any
Participating Broker-Dealer for offer or sale in any jurisdiction, or the
initiation or threatening of any proceeding for such purpose, (v) of the
happening of any event or any information becoming known that makes any
statement made in such Registration Statement or related Prospectus or any
document incorporated or deemed to be incorporated therein by reference untrue
in any material respect or that requires the making of any changes in such
Registration Statement, Prospectus or documents so that, in the case of the
Registration Statement, it will not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading, and that in the case of
the Prospectus, it will not contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading, and (vi) of
<PAGE> 12
10
the Issuer's reasonable determination that a post-effective amendment to a
Registration Statement would be appropriate.
(d) If (1) a Shelf Registration is filed pursuant to Section
3, or (2) a Prospectus contained in an Exchange Registration Statement filed
pursuant to Section 2 is required to be delivered under the Securities Act by
any Participating Broker-Dealer who seeks to sell Exchange Securities during the
Applicable Period, use its best efforts to prevent the issuance of any order
suspending the effectiveness of a Registration Statement or of any order
preventing or suspending the use of a Prospectus or suspending the qualification
(or exemption from qualification) of any of the Registrable Securities or the
Exchange Securities to be sold by any Participating Broker- Dealer, for sale in
any jurisdiction, and, if any such order is issued, to use its best efforts to
obtain the withdrawal of any such order at the earliest possible moment.
(e) If a Shelf Registration is filed pursuant to Section 3 and
if requested by the managing underwriters, if any, or the Holders of a majority
in aggregate principal amount of the Registrable Securities being sold in
connection with an underwritten offering, (i) promptly incorporate in a
prospectus supplement or post-effective amendment such information as the
managing underwriters, if any, or such Holders or counsel reasonably request to
be included therein, (ii) make all required filings of such prospectus
supplement or such post-effective amendment as soon as practicable after the
Company has received notification of the matters to be incorporated in such
prospectus supplement or post-effective amendment, and (iii) supplement or make
amendments to such Registration Statement.
(f) If (1) a Shelf Registration is filed pursuant to Section
3, or (2) a Prospectus contained in an Exchange Registration Statement filed
pursuant to Section 2 is required to be delivered under the Securities Act by
any Participating Broker-Dealer who seeks to sell Exchange Securities during the
Applicable Period, furnish to each selling Holder of Registrable Securities and
to each such Participating Broker-Dealer who so requests and to counsel and each
managing underwriter, if any, without charge, one conformed copy of the
Registration Statement or Registration Statements and each post-effective
amendment thereto, including financial statements and schedules, and, if
requested, all documents incorporated or deemed to be incorporated therein by
reference and all exhibits.
(g) If (1) a Shelf Registration is filed pursuant to Section
3, or (2) a Prospectus contained in an Exchange Registration Statement filed
pursuant to Section 2 is required to be delivered under the Securities Act by
any Participating Broker-Dealer who seeks to sell Exchange Securities during the
Applicable Period, deliver to each selling Holder of Registrable Securities, or
each such Participating Broker-Dealer, as the case may be, their counsel, and
the underwriters, if any, without charge, as many copies of the Prospectus or
Prospectuses (including each form of preliminary prospectus) and each amendment
or supplement thereto and any documents incorporated by reference therein as
such Persons may reasonably request; and, subject to the last paragraph of this
Section 5, the Issuer hereby consents to the use of such Prospectus and each
amendment or supplement thereto by each of the selling Holders of Registrable
Securities or each such Participating Broker-Dealer, as the case may be, and the
underwriters or agents, if any, and dealers (if any), in connection with
<PAGE> 13
11
the offering and sale of the Registrable Securities covered by or the sale by
Participating Broker-Dealers of the Exchange Securities pursuant to such
Prospectus and any amendment or supplement thereto.
(h) Prior to any public offering of Registrable Securities or
any delivery of a Prospectus contained in the Exchange Registration Statement by
any Participating Broker- Dealer who seeks to sell Exchange Securities during
the Applicable Period, to use its best efforts to register or qualify, and to
cooperate with the selling Holders of Registrable Securities or each such
Participating Broker-Dealer, as the case may be, the underwriters, if any, and
their respective counsel in connection with the registration or qualification
(or exemption from such registration or qualification) of such Registrable
Securities for offer and sale under the securities or Blue Sky laws of such
jurisdictions within the United States as any selling Holder, Participating
Broker-Dealer, or the managing underwriters reasonably request in writing,
provided that where Exchange Securities held by Participating Broker-Dealers or
Registrable Securities are offered other than through an underwritten offering,
the Issuer agrees to cause its counsel to perform Blue Sky investigations and
file registrations and qualifications required to be filed pursuant to this
Section 5(h); keep each such registration or qualification (or exemption
therefrom) effective during the period such Registration Statement is required
to be kept effective and do any and all other acts or things reasonably
necessary or advisable to enable the disposition in such jurisdictions of the
Exchange Securities held by Participating Broker-Dealers or the Registrable
Securities covered by the applicable Registration Statement, provided that the
Issuer shall not be required to (A) qualify generally to do business in any
jurisdiction where it is not then so qualified, (B) take any action that would
subject it to general service of process in any such jurisdiction where it is
not then so subject or (C) subject itself to taxation in excess of a nominal
dollar amount in any such jurisdiction.
(i) (i) If a Shelf Registration is filed pursuant to Section
3, cooperate with the selling Holders of Registrable Securities and the managing
underwriters, if any, to facilitate the timely preparation and delivery of
certificates representing Registrable Securities to be sold, which certificates
shall not bear any restrictive legends and shall be in a form eligible for
deposit with The Depository Trust Company; and enable such Registrable
Securities to be in such denominations and registered in such names as the
managing underwriters, if any, or Holders may reasonably request.
(j) Use its best efforts to cause the Registrable Securities
covered by the Registration Statement to be registered with or approved by such
other governmental agencies or authorities as may be necessary to enable the
seller or sellers thereof or the underwriters, if any, to consummate the
disposition of such Registrable Securities, except as may be required solely as
a consequence of the nature of such selling Holder's business, in which case the
Issuer will cooperate in all reasonable respects with the filing of such
Registration Statement and the granting of such approvals.
(k) If (1) a Shelf Registration is filed pursuant to Section
3, or (2) a Prospectus contained in an Exchange Registration Statement filed
pursuant to Section 2 is required to be delivered under the Securities Act by
any Participating Broker-Dealer who
<PAGE> 14
12
seeks to sell Exchange Securities during the Applicable Period, upon the
occurrence of any event contemplated by paragraph 5(c)(v) or 5(c)(vi) above, as
promptly as practicable prepare and (subject to Section 5(a) above) file with
the SEC, at the expense of the Issuer, a supplement or post-effective amendment
to the Registration Statement or a supplement to the related Prospectus or any
document incorporated or deemed to be incorporated therein by reference, or file
any other required document so that, as thereafter delivered to the purchasers
of the Registrable Securities being sold thereunder or to the purchasers of the
Exchange Securities to whom such Prospectus will be delivered by a Participating
Broker-Dealer, any such Prospectus will not contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading.
(l) Prior to the effective date of the first Registration
Statement relating to the Registrable Securities, (i) provide the Trustee with
certificates for the Registrable Securities in a form eligible for deposit with
The Depository Trust Company and (ii) provide a CUSIP number for the Registrable
Securities.
(m) In connection with an underwritten offering of Registrable
Securities pursuant to a Shelf Registration, enter into an underwriting
agreement as is customary in underwritten offerings and take all such other
actions as are reasonably requested by the managing underwriters in order to
expedite or facilitate the registration or the disposition of such Registrable
Securities, and in such connection, (i) make such representations and warranties
to the underwriters, with respect to the business of the Issuer and its
respective subsidiaries and the Registration Statement, Prospectus and
documents, if any, incorporated or deemed to be incorporated by reference
therein, in each case, as are customarily made by issuers to underwriters in
underwritten offerings, and confirm the same if and when requested; (ii) obtain
opinions of counsel to the Issuer and updates thereof in form and substance
reasonably satisfactory to the managing underwriters, addressed to the
underwriters covering the matters customarily covered in opinions requested in
underwritten offerings and such other matters as may be reasonably requested by
underwriters; (iii) obtain "cold comfort" letters and updates thereof in form
and substance reasonably satisfactory to the managing underwriters from the
independent certified public accountants of the Issuer (and, if necessary, any
other independent certified public accountants of any subsidiary of the Issuer
or of any business acquired by the Issuer for which financial statements and
financial data are, or are required to be, included in the Registration
Statement), addressed to each of the underwriters, such letters to be in
customary form and covering matters of the type customarily covered in "cold
comfort" letters in connection with underwritten offerings and such other
matters as are reasonably requested by underwriters as permitted by Statement on
Auditing Standards No. 72; and (iv) if an underwriting agreement is entered
into, the same shall contain indemnification provisions and procedures no less
favorable than those set forth in Section 7 hereof (or such other provisions and
procedures acceptable to Holders of a majority in aggregate principal amount of
Registrable Securities covered by such Registration Statement and the managing
underwriters or agents) with respect to all parties to be indemnified pursuant
to said Section. The above shall be done at each closing under such underwriting
agreement, or as and to the extent required thereunder.
<PAGE> 15
13
(n) If (1) a Shelf Registration is filed pursuant to Section
3, or (2) a Prospectus contained in an Exchange Registration Statement filed
pursuant to Section 2 is required to be delivered under the Securities Act by
any Participating Broker-Dealer who seeks to sell Exchange Securities during the
Applicable Period, make available for inspection by any selling Holder of such
Registrable Securities being sold, or each such Participating Broker-Dealer, as
the case may be, any underwriter participating in any such disposition of
Registrable Securities, if any, and any attorney, accountant or other agent
retained by any such selling Holder or each such Participating Broker-Dealer, as
the case may be, or underwriter (collectively, the "Inspectors"), at the offices
where normally kept, during reasonable business hours, all financial and other
records, pertinent corporate documents and properties of the Issuer and its
subsidiaries (collectively, the "Records") as shall be reasonably necessary to
enable them to exercise any applicable due diligence responsibilities, and cause
the officers, directors and employees of the Issuers and their respective
subsidiaries to supply all information in each case reasonably requested by any
such Inspector in connection with such Registration Statement. Records which the
Issuer determines, in good faith, to be confidential and any Records which it
notifies the Inspectors are confidential shall not be disclosed by the
Inspectors unless (i) the disclosure of such Records is necessary to avoid or
correct a misstatement or omission in such Registration Statement, (ii) the
release of such Records is ordered pursuant to a subpoena or other order from a
court of competent jurisdiction or (iii) the information in such Records has
been made generally available to the public. Each selling Holder of such
Registrable Securities and each such Participating Broker-Dealer will be
required to agree that information obtained by it as a result of such
inspections shall be deemed confidential and shall not be used by it as the
basis for any market transactions in the securities of the Issuer unless and
until such is made generally available to the public. Each selling Holder of
such Registrable Securities and each such Participating Broker-Dealer will be
required to further agree that it will, upon learning that disclosure of such
Records is sought in a court of competent jurisdiction, give notice to the
Issuer and allow the Issuer to undertake appropriate action to prevent
disclosure of the Records deemed confidential at their expense.
(o) Provide an indenture trustee for the Registrable
Securities or the Exchange Securities, as the case may be, and cause the
Indenture or the trust indenture provided for in Section 2(a), as the case may
be, to be qualified under the TIA not later than the effective date of the
Exchange Offer or the first Registration Statement relating to the Registrable
Securities; and in connection therewith, cooperate with the trustee under any
such indenture and the holders of the Registrable Securities, to effect such
changes to such indenture as may be required for such indenture to be so
qualified in accordance with the terms of the TIA; and execute, and use its best
efforts to cause such trustee to execute, all documents as may be required to
effect such changes, and all other forms and documents required to be filed with
the SEC to enable such indenture to be so qualified in a timely manner.
(p) Comply with all applicable rules and regulations of the
SEC and make generally available to its securityholders earnings statements
satisfying the provisions of Section 11(a) of the Securities Act and Rule 158
thereunder (or any similar rule promulgated under the Securities Act) no later
than 45 days after the end of any 12-month period (or 90
<PAGE> 16
14
days after the end of any 12-month period if such period is a fiscal year) (i)
commencing at the end of any fiscal quarter in which Registrable Securities are
sold to underwriters in a firm commitment or best efforts underwritten offering
and (ii) if not sold to underwriters in such an offering, commencing on the
first day of the first fiscal quarter of the Company after the effective date of
a Registration Statement, which statements shall cover said 12-month periods.
(q) If an Exchange Offer is to be consummated, upon delivery
of the Registrable Securities by Holders to the Issuer (or to such other Person
as directed by the Issuer) in exchange for the Exchange Securities, the Issuer
shall mark, or caused to be marked, on such Registrable Securities that such
Registrable Securities are being cancelled in exchange for the Exchange
Securities; in no event shall such Registrable Securities be marked as paid or
otherwise satisfied.
(r) Cooperate with each seller of Registrable Securities
covered by any Registration Statement and each underwriter, if any,
participating in the disposition of such Registrable Securities and their
respective counsel in connection with any filings required to be made with the
National Association of Securities Dealers, Inc. (the "NASD").
(s) Use its best efforts to take all other steps necessary to
effect the registration of the Registrable Securities covered by a Registration
Statement contemplated hereby.
The Issuer may require each seller of Registrable Securities
or Participating Broker-Dealer as to which any registration is being effected to
furnish to the Issuer such information regarding such seller or Participating
Broker-Dealer and the distribution of such Registrable Securities or Exchange
Securities to be sold by such Participating Broker-Dealer, as the case may be,
as the Issuer may, from time to time, reasonably request. The Issuer may exclude
from such registration the Registrable Securities of any seller or Participating
Broker- Dealer who unreasonably fails to furnish such information within a
reasonable time after receiving such request.
Each Holder of Registrable Securities and each Participating
Broker-Dealer agrees by acquisition of such Registrable Securities or Exchange
Securities to be sold by such Participating Broker-Dealer, as the case may be,
that, upon receipt of any notice from the Company of the happening of any event
of the kind described in Section 5(c)(ii), 5(c)(iv), 5(c)(v), or 5(c)(vi), such
Holder will forthwith discontinue disposition of such Registrable Securities
covered by such Registration Statement or
<PAGE> 17
15
Prospectus or Exchange Securities to be sold by such Participating
Broker-Dealer, as the case may be, until such holder's receipt of the copies of
the supplemented or amended Prospectus contemplated by Section 5(k), or until it
is advised in writing (the "Advice") by the Company that the use of the
applicable Prospectus may be resumed, and has received copies of any amendments
or supplements thereto. In the event the Company shall give any such notice,
each of the Effectiveness Period and the Applicable Period shall be extended by
the number of days during such periods from and including the date of the giving
of such notice to and including the date when each seller of Registrable
Securities covered by such Registration Statement or Exchange Securities to be
sold by such Participating Broker- Dealer, as the case may be, shall have
received (x) the copies of the supplemented or amended Prospectus contemplated
by Section 5(k) or (y) the Advice.
6. Registration Expenses
(a) All fees and expenses incident to the performance of or
compliance with this Agreement by the Issuer shall be borne by the Issuer,
whether or not the Exchange Offer or a Shelf Registration is filed or becomes
effective, including, without limitation, (i) all registration and filing fees
(including, without limitation, (A) fees with respect to filings required to be
made with the NASD in connection with an underwritten offering and (B) fees and
expenses of compliance with state securities or Blue Sky laws (including,
without limitation, reasonable fees and disbursements of counsel in connection
with Blue Sky qualifications of the Registrable Securities or Exchange
Securities and determination of the eligibility of the Registrable Securities or
Exchange Securities for investment under the laws of such jurisdictions (x)
where the Holders of Registrable Securities are located, in the case of the
Exchange Securities, or (y) as provided in Section 5(h), in the case of
Registrable Securities or Exchange Securities to be sold by a Participating
Broker-Dealer during the Applicable Period)), (ii) printing expenses (including,
without limitation, expenses of printing certificates for Registrable Securities
or Exchange Securities in a form eligible for deposit with The Depository Trust
Company and of printing prospectuses if the printing of prospectuses is
requested by the managing underwriters, if any, or, in respect of Registrable
Securities or Exchange Securities to be sold by any Participating Broker-Dealer
during the Applicable Period, by the Holders of a majority in aggregate
principal amount of the Registrable Securities included in any Registration
Statement or of such Exchange Securities, as the case may be), (iii) messenger,
telephone and delivery expenses, (iv) fees and disbursements of counsel for the
Company and fees and disbursements of special counsel for the sellers of
Registrable Securities (subject to the provisions of Section 6(b)), (v) fees and
disbursements of all independent certified public accountants referred to in
Section 5(n)(iii) (including, without limitation, the expenses of any special
audit and "cold comfort" letters required by or incident to such performance),
(vi) the fees and expenses of any "qualified independent underwriter" or other
independent appraiser participating in an offering pursuant to Section 3 of
Schedule E to the By-laws of the National Association of Securities Dealers,
Inc., but only where the need for such a "qualified independent underwriter"
arises due to a relationship with the Company, (vii) rating agency fees, (viii)
Securities Act liability insurance, if the Issuer desires such insurance, (ix)
fees and expenses of all other Persons retained by the Issuer, (x) internal
expenses of the Issuer (including, without limitation, all salaries and expenses
of officers and employees of the Issuer performing legal or accounting duties),
(xi) the expense of any annual audit, (xii) the fees and expenses incurred in
connection with the listing of the securities to be registered on any securities
exchange and (xiii) the expenses relating to printing, word processing and
distributing all Registration Statements, underwriting agreements, securities
sales agreements, indentures and any other documents necessary in order to
comply with this Agreement.
(b) In connection with any Shelf Registration hereunder, the
Issuer, jointly and severally, shall reimburse the Holders of the Registrable
Securities being registered in
<PAGE> 18
16
such registration for the reasonable fees and disbursements of not more than one
counsel (in addition to appropriate local counsel) chosen by the Holders of a
majority in aggregate principal amount of the Registrable Securities to be
included in such Registration Statement and other out-of-pocket expenses of the
Holders of Registrable Securities incurred in connection with the registration
of the Registrable Securities.
7. Indemnification
In the event of a Shelf Registration or in connection with any
delivery of a Prospectus contained in an Exchange Registration Statement filed
pursuant to Section 2 by any Participating Broker-Dealer who seeks to sell
Exchange Securities during the Applicable Period, the Issuer agrees to indemnify
and hold harmless each Holder of Registrable Securities and each Participating
Broker-Dealer selling Exchange Securities during the Applicable Period, the
officers and directors of each such person, and each person, if any, who
controls any such person within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act (each, a "Participant"), from
and against any and all losses, claims, damages and liabilities (including,
without limitation, the reasonable legal fees and other expenses actually
incurred in connection with any suit, action or proceeding or any claim
asserted) caused by, arising out of or based upon any untrue statement or
alleged untrue statement of a material fact contained in any Registration
Statement or Prospectus (as amended or supplemented if the Company shall have
furnished any amendments or supplements thereto) or any preliminary prospectus,
or caused by, arising out of or based upon any omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading, except insofar as such losses, claims, damages or
liabilities are caused by any untrue statement or omission or alleged untrue
statement or omission made in reliance upon and in conformity with information
relating to any Participant furnished to the Issuer in writing by such
Participant expressly for use therein; provided that the foregoing indemnity
with respect to any preliminary prospectus shall not inure to the benefit of any
Participant (or to the benefit of any person controlling such Participant) from
whom the person asserting any such losses, claims, damages or liabilities
purchased Registrable Securities or Exchange Securities if such untrue statement
or omission or alleged untrue statement or omission made in such preliminary
prospectus is eliminated or remedied in the related Prospectus (as amended or
supplemented if the Issuer shall have furnished any amendments or supplements
thereto) and a copy of the related Prospectus (as so amended or supplemented)
shall not have been furnished to such person at or prior to the sale of such
Registrable Securities or Exchange Securities, as the case may be.
Each Participant agrees, severally and not jointly, to
indemnify and hold harmless the Issuer, its directors and officers and each
person who controls the Issuer within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act to the same extent as the
foregoing indemnity from the Issuer to each Participant, but only with reference
to information relating to such Participant furnished to the Issuer in writing
by such Participant expressly for use in any Registration Statement or
Prospectus, any amendment or supplement thereto, or any preliminary prospectus.
The liability of any Participant under this paragraph shall in no event exceed
the proceeds received by such Participant from sales of
<PAGE> 19
17
Registrable Securities giving rise to such obligations. In connection with any
underwritten public offering the underwriting agreement shall include customary
indemnification of the Company by the underwriters.
If any suit, action, proceeding (including any governmental or
regulatory investigation), claim or demand shall be brought or asserted against
any person in respect of which indemnity may be sought pursuant to either of the
two preceding paragraphs, such person (the "Indemnified Person") shall promptly
notify the person against whom such indemnity may be sought (the "Indemnifying
Person") in writing, and the Indemnifying Person, upon request of the
Indemnified Person, shall retain counsel reasonably satisfactory to the
Indemnified Person to represent the Indemnified Person and any others the
Indemnifying Person may reasonably designate in such proceeding and shall pay
the reasonable fees and expenses actually incurred by such counsel related to
such proceeding. In any such proceeding, any Indemnified Person shall have the
right to retain its own counsel, but the fees and expenses of such counsel shall
be at the expense of such Indemnified Person unless (i) the Indemnifying Person
and the Indemnified Person shall have mutually agreed in writing to the
contrary, (ii) the Indemnifying Person has failed within a reasonable time to
retain counsel reasonably satisfactory to the Indemnified Person or (iii) the
named parties in any such proceeding (including any impleaded parties) include
both the Indemnifying Person and the Indemnified Person and representation of
both parties by the same counsel would be inappropriate due to actual or
potential differing interests between them. It is understood that the
Indemnifying Person shall not, in connection with any proceeding or related
proceeding in the same jurisdiction, be liable for the fees and expenses of more
than one separate firm (in addition to any local counsel) for all Indemnified
Persons, and that all such fees and expenses shall be reimbursed as they are
incurred. Any such separate firm for the Participants and such control persons
of Participants shall be designated in writing by Participants who sold a
majority in interest of Registrable Securities sold by all such Participants and
any such separate firm for the Issuer, its directors, its officers and such
control persons of the Issuer shall be designated in writing by the Issuer. The
Indemnifying Person shall not be liable for any settlement of any proceeding
effected without its written consent, but if settled with such consent or if
there be a final judgment for the plaintiff, the Indemnifying Person agrees to
indemnify any Indemnified Person from and against any loss or liability by
reason of such settlement or judgment. No Indemnifying Person shall, without the
prior written consent of the Indemnified Person, effect any settlement of any
pending or threatened proceeding in respect of which any Indemnified Person is
or could have been a party and indemnity could have been sought hereunder by
such Indemnified Person, unless such settlement includes an unconditional
release of such Indemnified Person from all liability on claims that are the
subject matter of such proceeding.
If the indemnification provided for in the first and second
paragraphs of this Section 7 is unavailable to an Indemnified Person in respect
of any losses, claims, damages or liabilities referred to therein, then each
Indemnifying Person under such paragraphs, in lieu of indemnifying such
Indemnified Person thereunder, shall contribute to the amount paid or payable by
such Indemnified Person as a result of such losses, claims, damages or
liabilities in such proportion as is appropriate to reflect the relative fault
of the Issuer on the one hand and the Participants on the other in connection
with the statements or omissions that resulted
<PAGE> 20
18
in such losses, claims, damages or liabilities, as well as any other relevant
equitable considerations. The relative fault of the Issuer on the one hand and
the Participants on the other shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Issuer or by the Participants and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
The parties agree that it would not be just and equitable if
contribution pursuant to this Section 7 were determined by pro rata allocation
(even if the Participants were treated as one entity for such purpose) or by any
other method of allocation that does not take account of the equitable
considerations referred to in the immediately preceding paragraph. The amount
paid or payable by an Indemnified Person as a result of the losses, claims,
damages and liabilities referred to in the immediately preceding paragraph shall
be deemed to include, subject to the limitations set forth above, any reasonable
legal or other expenses actually incurred by such Indemnified Person in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 7, in no event shall a
Participant be required to contribute any amount in excess of the amount by
which proceeds received by such Participant from sales of Registrable Securities
exceeds the amount of any damages that such Participant has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
The indemnity and contribution agreements contained in this
Section 7 will be in addition to any liability which the Indemnifying Persons
may otherwise have to the Indemnified Persons referred to above.
8. Rules 144 and 144A
The Issuer covenants that it will file the reports required to
be filed by it under the Securities Act and the Exchange Act and the rules and
regulations adopted by the SEC thereunder in a timely manner and, if at any time
the Issuer is not required to file such reports, it will, upon the request of
any Holder of Registrable Securities, make publicly available other information
so long as necessary to permit sales pursuant to Rule 144 and Rule 144A under
the Act. The Issuer further covenants that it will take such further action as
any Holder of Registrable Securities may reasonably request, all to the extent
required from time to time to enable such Holder to sell Registrable Securities
without registration under the Securities Act within the limitation of the
exemptions provided by (a) Rule 144 and Rule 144A under the Act, as such Rules
may be amended from time to time, or (b) any similar rule or regulation
hereafter adopted by the SEC.
9. Underwritten Registrations
<PAGE> 21
19
If any of the Registrable Securities covered by any Shelf
Registration are to be sold in an underwritten offering, the investment banker
or investment bankers and manager or managers that will manage the offering will
be selected by the Holders of a majority in aggregate principal amount of such
Registrable Securities included in such offering and reasonably acceptable to
the Issuer.
No Holder of Registrable Securities may participate in any
underwritten registration hereunder unless such Holder (a) agrees to sell such
Holder's Registrable Securities on the basis provided in any underwriting
arrangements approved by the Persons entitled hereunder to approve such
arrangements and (b) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents required
under the terms of such underwriting arrangements.
10. Miscellaneous
(a) Remedies. In the event of a breach by the Issuer of any of
its obligations under this Agreement, each Holder of Registrable Securities, in
addition to being entitled to exercise all rights provided herein or in the
Indenture, or granted by law, including recovery of damages, will be entitled to
specific performance of its rights under this Agreement. The Issuer agrees that
monetary damages would not be adequate compensation for any loss incurred by
reason of a breach by it of any of the provisions of this Agreement and hereby
further agrees that, in the event of any action for specific performance in
respect of such breach, it shall waive the defense that a remedy at law would be
adequate.
(b) No Inconsistent Agreements. The Issuer has not, as of the
date hereof, the Issuer shall not, after the date of this Agreement, enter into
any agreement with respect to any of its securities that is inconsistent with
the rights granted to the Holders of Registrable Securities in this Agreement or
otherwise conflicts with the provisions hereof. The Issuer has not entered and
will not enter into any agreement with respect to any of its securities which
will grant to any Person piggy-back rights with respect to a Registration
Statement.
(c) Adjustments Affecting Registrable Securities. The Company
shall not, directly or indirectly, take any action with respect to the
Registrable Securities as a class that would adversely affect the ability of the
Holders of Registrable Securities to include such Registrable Securities in a
registration undertaken pursuant to this Agreement.
(d) Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given, unless the Issuer has obtained the written consent of Holders
of at least a majority of the then outstanding aggregate principal amount of
Registrable Securities. Notwithstanding the foregoing, a waiver or consent to
depart from the provisions hereof with respect to a matter that relates
exclusively to the rights of Holders of Registrable Securities whose securities
are being sold pursuant to a Registration Statement and that does not directly
or indirectly affect, impair, limit or compromise the rights of other Holders of
Registrable Securities may be given by Holders of at least a majority in
aggregate principal amount of the Registrable Securities
<PAGE> 22
20
being sold by such Holders pursuant to such Registration Statement, provided
that the provisions of this sentence may not be amended, modified or
supplemented except in accordance with the provisions of the immediately
preceding sentence.
(e) Notices. All notices and other communications (including
without limitation any notices or other communications to the Trustee) provided
for or permitted hereunder shall be made in writing by hand-delivery, registered
first-class mail, next-day air courier or telecopier:
(i) if to a Holder of Registrable Securities, at the
most current address given by the Trustee to the Company; and
(ii) if to the Issuer, 450 Newport Center Drive,
Newport Beach, California 92660, Attention: William J. McCaffrey, Jr.,
with a copy to Simpson Thacher & Bartlett, 425 Lexington Avenue, New
York, New York 10017, Attention: Philip T. Ruegger III, Esq.
All such notices and communications shall be deemed to have
been duly given: when delivered by hand, if personally delivered; five business
days after being deposited in the mail, postage prepaid, if mailed; one business
day after being timely delivered to a next-day air courier; and when receipt is
acknowledged by the addressee, if telecopied.
Copies of all such notices, demands or other communications
shall be concurrently delivered by the Person giving the same to the Trustee
under the Indenture at the address specified in such Indenture.
(f) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the
parties, including without limitation and without the need for an express
assignment, subsequent Holders of Registrable Securities. The Issuer agrees that
the Purchasers and the other Holders of the Securities shall be third party
beneficiaries to the agreements made hereunder by the Issuer, and that each
Purchaser and each other Holder shall have the right to enforce such agreements
directly to the extent it deems such enforcement necessary or advisable to
protect its rights hereunder.
(g) Counterparts. This Agreement may be executed in any number
of counterparts and by the parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(h) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
(i) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO
CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO
PRINCIPLES OF
<PAGE> 23
21
CONFLICTS OF LAW. EACH OF THE PARTIES HERETO AGREES TO SUBMIT TO THE
JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK IN ANY ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT.
(j) Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction to be
invalid, illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their best efforts to find and employ an alternative means to
achieve the same or substantially the same result as that contemplated by such
term, provision, covenant or restriction. It is hereby stipulated and declared
to be the intention of the parties that they would have executed the remaining
terms, provisions, covenants and restrictions without including any of such that
may be hereafter declared invalid, illegal, void or unenforceable.
(k) Entire Agreement. This Agreement is intended by the
parties as a final expression of their agreement, and is intended to be a
complete and exclusive statement of the agreement and understanding of the
parties hereto in respect of the subject matter contained herein and therein.
(l) Securities Held by the Company or Its Affiliates. Whenever
the consent or approval of Holders of a specified percentage of Registrable
Securities is required hereunder, Registrable Securities held by the Company or
its affiliates (as such term is defined in Rule 405 under the Securities Act)
shall not be counted in determining whether such consent or approval was given
by the Holders of such required percentage.
IN WITNESS WHEREOF, the undersigned has executed this
Agreement as of the date first written above.
AMERICAN RESTAURANT GROUP HOLDINGS, INC.
By /s/ WILLIAM J. McCAFFREY, JR.
------------------------------------
Title: Vice President & Chief Financial
Officer
<PAGE> 1
EXHIBIT 4.2
----------------------------------------
AMERICAN RESTAURANT GROUP HOLDINGS, INC.
AND
UNITED STATES TRUST COMPANY OF NEW YORK,
as Trustee
-------------------------
FIRST SUPPLEMENTAL
INDENTURE
Dated as of March 13, 1996
----------------------------------------
<PAGE> 2
FIRST SUPPLEMENTAL INDENTURE, dated as of March 13, 1996,
between AMERICAN RESTAURANT GROUP HOLDINGS, INC., a Delaware corporation (the
"Issuer"), and UNITED STATES TRUST COMPANY OF NEW YORK, as trustee (the
"Trustee") under the Indenture dated as of December 1, 1993 (the "Indenture").
RECITALS
WHEREAS, pursuant to the Indenture, the Issuer has issued
$88,557,000 aggregate principal amount of its 14% Senior Discount Debentures due
2005 (the "Securities");
WHEREAS, the Issuer wishes to issue pursuant to the Indenture
additional 14% Senior Discount Debentures due 2005 in an aggregate principal
amount of $17,000,000, which Debentures shall, after giving effect to this First
Supplemental Indenture, constitute "Securities" for all purposes of the
Indenture;
WHEREAS, Section 9.02 of the Indenture provides, among other
things, that the Issuer and the Trustee may, with the consent of the Holders of
not less than a majority in aggregate principal amount of the Securities then
outstanding, amend the Indenture in certain respects;
WHEREAS, the Issuer, pursuant to the foregoing authority,
proposes in and by this First Supplemental Indenture to amend the Indenture in
certain respects as described herein; and
WHEREAS, all things necessary to make this First Supplemental
Indenture a valid agreement of the Issuer and the Trustee and a valid amendment
of and supplement to the Indenture have been done;
NOW, THEREFORE, in consideration of the premises, the Issuer
and the Trustee agree as follows:
ARTICLE ONE
AMENDMENTS TO THE INDENTURE
SECTION 1.1 Amendment to Section 1.01--New Definitions.
Section 1.01 of the Indenture is hereby amended by adding the following new
definitions in the appropriate alphabetical order:
"Additional Registered Exchange Offer" means the offer to
exchange the Additional Series B Securities for the Additional Series A
Securities in accordance with the Additional Registration Rights
Agreement.
<PAGE> 3
2
"Additional Registration Rights Agreement" means that certain
Registration Rights Agreement relating to, among other things, the
Additional Series A Securities, dated as of March 13, 1996, as amended,
modified or supplemented from time to time in accordance with the terms
thereof.
"Additional Securities" means the collective reference to the
Additional Series A Securities and the Additional Series B Securities,
as amended or supplemented from time to time.
"Additional Series A Securities" means the 14% Senior Discount
Debentures due 2005, Series A, in an aggregate principal amount of
$17,000,000, issued by the Company pursuant to this Indenture in
connection with, and on the effective date of, the First Supplemental
Indenture, dated as of March 13, 1996, to this Indenture.
"Additional Series B Securities" means the 14% Senior Discount
Debentures due 2005, Series B, to be issued in exchange for the
Additional Series A Securities pursuant to the Additional Registered
Exchange Offer and this Indenture.
SECTION 1.2 Amendment to Section 1.01--Accreted Value. The
definition of "Accreted Value" contained in Section 1.01 of the Indenture is
hereby amended by adding the following sentence to the end thereof:
"For the purposes of determining the Accreted Value of the Additional
Securities, the aggregate offering price thereof shall be $688.75 per
$1,000 principal amount of Additional Securities and the date of
issuance thereof shall be March 13, 1996."
SECTION 1.3 Amendment to Section 1.01--Securities. The
definition of "Securities" contained in Section 1.01 of the Indenture is hereby
amended by adding to the end thereof the words ", including, without limitation,
the Additional Securities".
SECTION 1.4 Amendment to Section 1.01--Series A Securities.
The definition of "Series A Securities" contained in Section 1.01 of the
Indenture is hereby amended by adding to the end thereof the words ", together
with the Additional Series A Securities".
SECTION 1.5 Amendment to Section 1.01--Series B Securities.
The definition of "Series B Securities" contained in Section 1.01 of the
Indenture is hereby amended by adding to the end thereof the words ", together
with the Additional Series B Securities".
SECTION 1.6 Amendment to Section 2.02. Section 2.02 of the
Indenture is hereby amended by deleting the last sentence of the fourth
paragraph thereof and replacing it with the following sentences:
The Trustee or an Authenticating Agent shall authenticate
Additional Series A Securities for original issue in the aggregate principal
amount of $17,000,000 upon written
<PAGE> 4
3
order of the Company signed by an Officer of the Company. In addition, on or
after the date of the Additional Registered Exchange Offer, the Trustee or an
Authenticating Agent shall authenticate Additional Series B Securities to be
issued at the completion of the Additional Registered Exchange Offer in the
aggregate principal amount of $17,000,000 upon written order of the Company
signed by an Officer of the Company. In each case, the order shall specify the
amount of the Additional Securities to be authenticated and the date on which
the original issue of the Additional Securities is to be authenticated. The
aggregate principal amount of Securities issued and outstanding at any time may
not exceed $105,557,000, except as provided in Section 2.07.
SECTION 1.7 Amendment to Section 2.16. Clause (x) of Section
2.16(a)(i) of the Indenture is hereby amended and restated in its entirety as
follows:
"(x) the requested transfer is after December 14, 1996 (or, in the case
of the Additional Securities, March 13, 1999)"
ARTICLE TWO
MISCELLANEOUS
SECTION 2.1 Conditions Precedent. This First Supplemental
Indenture shall be effective on the date on which the Trustee shall have
received a written order of the Issuer signed by an Officer of the Issuer and
requesting issuance of the Additional Series A Securities.
SECTION 2.2 Incorporation of Indenture. All the provisions of
this First Supplemental Indenture shall be deemed to be incorporated in, and
made a part of, the Indenture; and the Indenture, as supplemented and amended by
this First Supplemental Indenture, shall be read, taken and construed as one and
the same instrument.
SECTION 2.3 Headings. The headings of the Articles and
Sections of this First Supplemental Indenture are inserted for convenience of
reference and shall not be deemed to be a part thereof.
SECTION 2.4 Counterparts. This First Supplemental Indenture
may be executed in any number of counterparts, each of which so executed shall
be deemed to be an original, but all such counterparts shall together constitute
but one and the same instrument.
SECTION 2.5 Conflict with Trust Indenture Act. If any
provision hereof limits, qualifies or conflicts with another provision hereof
which is required to be included in this First Supplemental Indenture by any of
the provisions of the Trust Indenture Act of 1939, such required provision shall
control.
SECTION 2.6 Successors. All covenants and agreements in this
First Supplemental Indenture by the Issuer and the Trustee shall bind their
respective successors.
<PAGE> 5
4
SECTION 2.7 Separability Clause. In case any provision in this
First Supplemental Indenture shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.
SECTION 2.8 Benefits of First Supplemental Indenture. Nothing
in this First Supplemental Indenture, express or implied, shall give to any
person, other than the parties hereto and their successors hereunder and the
Holders, any benefit or any legal or equitable right, remedy or claim under this
First Supplemental Indenture.
SECTION 2.9 Terms Defined. All terms defined elsewhere in the
Indenture have the same meanings herein.
<PAGE> 6
5
IN WITNESS WHEREOF, the parties hereto have caused this First
Supplemental Indenture to be duly executed and attested, all as of the day and
year first above written.
AMERICAN RESTAURANT GROUP
HOLDINGS, INC.
By: /s/Anwar S. Soliman
--------------------------------
Name: Anwar S. Soliman
Title: Chairman & CEO
Attest:
By: /s/ William J. McCaffrey, Jr.
--------------------------------
Name: William J. McCaffrey, Jr.
Title: Vice President &
Chief Financial Officer
UNITED STATES TRUST COMPANY OF NEW
YORK, as Trustee
By: /s/ Sandee Parks
--------------------------------
Name: Sandee Parks
Title: Authorized Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AS OF MARCH 25, 1996 AND THE CONSOLIDATED STATEMENT
OF INCOME FOR THE THIRTEEN WEEKS ENDED MARCH 25, 1996 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH CONSOLIDATED FINANCIAL STATEMENTS ON FORM 10-Q.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-30-1996
<PERIOD-START> DEC-26-1995
<PERIOD-END> MAR-25-1996
<CASH> 3,956,000
<SECURITIES> 0
<RECEIVABLES> 8,682,000
<ALLOWANCES> 781,000
<INVENTORY> 6,419,000
<CURRENT-ASSETS> 21,112,000
<PP&E> 303,686,000
<DEPRECIATION> 134,111,000
<TOTAL-ASSETS> 243,597,000
<CURRENT-LIABILITIES> 70,154,000
<BONDS> 0
0
0
<COMMON> 2,000
<OTHER-SE> (118,807,000)
<TOTAL-LIABILITY-AND-EQUITY> 243,597,000
<SALES> 114,598,000
<TOTAL-REVENUES> 114,598,000
<CGS> 36,850,000
<TOTAL-COSTS> 103,887,000
<OTHER-EXPENSES> 6,678,000
<LOSS-PROVISION> 6,000
<INTEREST-EXPENSE> 9,144,000
<INCOME-PRETAX> (5,111,000)
<INCOME-TAX> 13,000
<INCOME-CONTINUING> (5,124,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (5,124,000)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
