<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
AMENDMENT NO. 1 TO REPORT ON FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of
the Securities Act of 1934
Date of Report (Date of earliest event reported): March 29, 1996
DENAMERICA CORP.
-----------------
(Exact name of registrant as specified in its charter)
GEORGIA 1-13226 58-1861457
- ---------------------------- --------------------- ---------------------
(State or other jurisdiction (Commission File No.) (IRS Employer ID No.)
of incorporation)
7373 N. Scottsdale Road, Suite D-120, Scottsdale, Arizona 85253
---------------------------------------------------------------
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code: (602) 483-7055
American Family Restaurants, Inc.
3000 Northwoods Parkway, Suite 235
Norcross, Georgia 30071
-------------------------------------------------------------
(Former name or former address, if changed since last report)
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DENAMERICA CORP.
FORM 8-K/A
CURRENT REPORT
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
THE MERGER
Pursuant to the Amended and Restated Agreement and Plan of Merger dated
as of August 9, 1995 (the "Merger Agreement") between American Family
Restaurants, Inc. ("AFR") and Denwest Restaurant Corp. ("DRC"), on March 29,
1996 DRC merged with and into AFR, with AFR as the surviving corporation (the
"Merger"). In connection with the Merger, the name of AFR was changed to
DenAmerica Corp. (the "Company").
Prior to the merger, DRC operated 102 family-oriented, full-service
restaurants in 21 states in the western and midwestern United States. Of the 102
restaurants, 82 are Denny's restaurants and 20 currently are operated under the
"Kettle" trade name. The Company intends to continue operating the restaurants
previously operated by DRC.
ACCOUNTING TREATMENT
As a result of the Merger, the former shareholders of DRC currently own
an aggregate of approximately 53.0% of the Company's outstanding Common Stock.
Accordingly, the Merger has been accounted for as a reverse purchase under
generally accepted accounting principals, pursuant to which DRC is considered
the acquiring company for accounting purposes, even though the Company is the
surviving legal entity. As a result, the historical financial statements of DRC
will be the continuing historical financial statements of the Company.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION, AND
EXHIBITS.
(A) FINANCIAL STATEMENTS OF DENWEST RESTAURANT CORP.(1)
Independent Auditors' Report
Consolidated Balance Sheets as of December 28, 1994 and
December 27, 1995
Consolidated Statements of Operations for the Years
Ended December 30, 1993, December 28, 1994, and December 27, 1995
Consolidated Statements of Shareholders' Equity for the Years
Ended December 30, 1993, December 28, 1994, and December 27, 1995
Consolidated Statements of Cash Flows for the Years Ended
December 30, 1993, December 28, 1994, and December 27, 1995
Notes to Financial Statements
(1) Incorporated by reference to the Registrant's Transition
Report on Form 10-K as filed on June 12, 1996.
(B) PRO FORMA FINANCIAL STATEMENTS.
Introduction
Unaudited Condensed Consolidated Pro Forma Statement of
Operations For the Year Ended December 27, 1995
Unaudited Condensed Consolidated Statement of Operations For
the Three Months Ended March 27, 1996
Notes to Unaudited Condensed Consolidated Pro Forma Statements
of Operations
2
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DENAMERICA CORP.
UNAUDITED CONDENSED CONSOLIDATED
PRO FORMA STATEMENTS OF OPERATIONS
INTRODUCTION
The following unaudited condensed consolidated pro forma statements of
operations of DenAmerica Corp. for the year ended December 27, 1995 and the
three months ended March 27, 1996, give effect to (i) the issuance of securities
as contemplated by the Merger; (ii) the reverse purchase accounting for the
acquisition of AFR by DRC; and (iii) a net reduction in operating expenses after
the Merger. The AFR financial statements for the fiscal year ended December 27,
1995 represent AFR's financial statements for the fiscal year ended September
27, 1995. The unaudited condensed consolidated pro forma statements of
operations presented herein do not purport to represent what the Company's
actual results of operations would have been had the Merger occurred on those
dates or to project the Company's results of operations for any future period.
3
<PAGE> 4
DENAMERICA CORP.
UNAUDITED CONDENSED CONSOLIDATED
PRO FORMA STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 27, 1995
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<TABLE>
<CAPTION>
HISTORICAL
----------------------------- PRO FORMA PRO
AFR DRC ADJUSTMENTS FORMA
--- --- ----------- -----
<S> <C> <C> <C> <C>
Restaurant sales:
Denny's restaurants $ 74,679 $ 70,429 $ - $ 145,108
Non-Denny's restaurants 32,218 4,254 - 36,472
------------ ------------ ---------- -----------
Total restaurant sales 106,897 74,683 - 181,580
Restaurant operating expenses:
Cost of food and beverage 30,529 20,343 (328)(a) 50,544
Payroll and payroll related costs 36,329 25,025 (164)(b) 61,190
Charge for impaired assets - 523 - 523
Depreciation and amortization 3,462 2,936 (212)(c) 6,186
Other restaurant operating costs 27,654 19,213 (239)(d) 46,628
------------ ------------ ---------- -----------
Total restaurant costs and expenses 97,974 68,040 (943) 165,071
------------ ------------ ---------- -----------
Restaurant operating income 8,923 6,643 943 16,509
Administrative expenses 5,166 3,380 (1,869)(e) 6,677
------------ ------------ ---------- -----------
Operating income 3,757 3,263 2,812 9,832
Other income 156 - - 156
Interest expense, net (1,714) (2,467) (3,640)(f) (8,356)
- - (535)(g) -
------------ ------------ ---------- -----------
Income (loss) before minority interest
in joint ventures and income taxes 2,199 796 (1,363) 1,632
Minority interest in joint ventures 85 (291) - (206)
------------ ------------ ---------- -----------
Income (loss) before income taxes 2,284 505 (1,363) 1,426
Income taxes 578 305 (341)(h) 542
------------ ------------ ---------- -----------
Net income (loss) $ 1,706 $ 200 $ (1,022) $ 884
============ ============ ========== ===========
Income per common and common
equivalent share $ 0.28 $ 0.07
============ ===========
Weighted average number of common and
common equivalent shares outstanding(i) 6,171,444 13,108,944
============ ===========
</TABLE>
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DENAMERICA CORP.
UNAUDITED CONDENSED CONSOLIDATED
PRO FORMA STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 27, 1996
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<TABLE>
<CAPTION>
HISTORICAL
----------------------------- PRO FORMA PRO
AFR DRC ADJUSTMENTS FORMA
--- --- ----------- -----
<S> <C> <C> <C> <C>
Restaurant sales:
Denny's restaurants $ 20,417 $ 18,156 $ - $ 38,573
Non-Denny's restaurants 8,047 2,005 - 10,052
------------ ------------ ------------ -----------
Total restaurant sales 28,464 20,161 - 48,625
Restaurant operating expenses:
Cost of food and beverage 8,628 5,632 (79)(a) 14,181
Payroll and payroll related costs 11,686 7,260 - (b) 18,946
Depreciation and amortization 1,134 916 (322)(c) 1,728
Other restaurant operating costs 8,726 5,484 - (d) 14,210
------------ ------------ ------------ -----------
Total restaurant costs and expenses 30,174 19,292 (401) 49,065
------------ ------------ ------------ -----------
Restaurant operating income (1,710) 869 401 (440)
Administrative expenses 1,687 1,047 (467)(e) 2,267
------------ ------------ --------- -----------
Operating income (3,397) (178) 868 (2,707)
Other income 31 - - 31
Interest expense, net (593) (860) (910)(f) (2,497)
- - (134) -
------------ ------------ ------------ -----------
Income (loss) before minority interest
in joint ventures and income taxes (3,959) (1,038) (176) (5,173)
Minority interest in joint ventures 95 2 - 97
------------ ------------ ------------ -----------
Income (loss) before income taxes (3,864) (1,036) (176) (5,076)
Income taxes (1,546) (359) (14)(h) (1,919)
------------ ------------ ------------ -----------
Income (loss) from continuing operations $ (2,318) $ (677) $ (162) $ (3,157)
============ ============ ============ ===========
Income (loss) from continuing operations
per common and common equivalent share $ (0.38) $ (0.24)
============ ===========
Weighted average number of common and
common equivalent shares outstanding(i) 6,171,444 13,108,944
============ ===========
</TABLE>
5
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DENAMERICA CORP.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
PRO FORMA STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS)
The following explanations serve to describe the assumptions used in
determining the pro forma adjustments necessary to present the pro forma results
of operations of AFR and DRC for the year ended December 27, 1995 and the three
months ended March 27, 1996:
<TABLE>
<CAPTION>
FISCAL THREE
YEAR ENDED MONTHS ENDED
DEC. 27, 1995 MAR. 27, 1996
------------- -------------
<S> <C> <C>
(a) Adjust food costs for discounts not taken by AFR $ (328) $ (79)
============ =============
(b) Adjustment for inclusion of DRC employees under
the new workers' compensation costs $ (164) $ -
============ ============
(c) Adjustment for new depreciation and amortization for AFR
Property and equipment 1,700 425
Goodwill 1,550 387
------------ -------------
3,250 812
Amount recorded in financial statements 3,462 1,134
------------ -------------
Pro forma adjustment $ (212) $ (322)
============ =============
(d) Adjustment for inclusion of DRC under the new insurance $ (239) $ -
============ =============
(e) Adjustment for consolidation of administrative expenses $ (1,869) $ (467)
============ =============
(f) Adjustment for additional interest on subordinated notes
Interest expense at 13% 3,153 788
Amortization of discount 487 122
------------ -------------
$ 3,640 $ 910
============ =============
(g) Adjustment for additional interest expense
Additional borrowings of $5,096 for Merger-related
expenses at an effective rate of 10.5% $ 535 $ 134
============ =============
(h) Adjustment for income taxes for above adjustments
at an effective rate of 38% $ (341) $ (14)
============ =============
(i) The weighted average number of common shares
outstanding includes the number of common shares of AFR
outstanding as of the Merger increased by the number of
shares issued to the former shareholders of DRC in
connection with the Merger
</TABLE>
6
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(C) EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION OF EXHIBIT
- ----------- ----------------------
<S> <C>
2.1 Amended and Restated Agreement and Plan of Merger, dated as of
August 9, 1995, between American Family Restaurants, Inc. and
Denwest Restaurant Corp.(1)
3.3 Certificate of Merger of Denwest Restaurant Corp. into American
Family Restaurants, Inc.(2)
4.1 Form of Indenture between DenAmerica Corp. and State Street Bank
and Trust Company, as trustee, relating to the Series A Notes
(including the Form of Series A Note).(2)
4.2 Form of Indenture between DenAmerica Corp. and State Street Bank
and Trust Company, as trustee, relating to the Series B Notes
(including the Form of Series B Note).
4.3 Form of Series A Common Stock Purchase Warrant.(1)
4.4 Form of Series B Common Stock Purchase Warrant.(1)
4.5 Common Stock Purchase Warrant dated March 29, 1996, issued to
Banque Paribas.(2)
10.90 Intercreditor Agreement among DenAmerica Corp., certain holders
of DenAmerica's Series B Notes, and State Street Bank and Trust
Company.(2)
10.92 Credit Agreement dated as of February 29, 1996, among DenAmerica
Corp., the Banks named therein, and Banque Paribas, as Agent
(including the Form of Term Note, Form of Revolving Note, and
Form of Delayed Draw Term Note).(2)
10.93 Security Agreement dated as of February 29, 1996, between
DenAmerica Corp. and Banque Paribas, as Agent.(2)
10.94 Form of Senior Intercreditor Agreement among Banque Paribas, as
Agent, the holders of Series A Notes, and State Street Bank and
Trust Company.(2)
10.95 Stock Option Agreement dated March 29, 1996, between DenAmerica
Corp. and William G. Cox.
23.1 Consent of Deloitte & Touche LLP.
</TABLE>
- ----------
(1) Incorporated by reference to the Exhibits to the Registrant's
Registration Statement on Form S-4, File No. 33-00216, and
Amendment No. 1 thereto, as filed on January 10, 1996 and
February 1, 1996, respectively.
(2) Incorporated by reference to the Registrant's Report on Form 8-K
as filed on April 15, 1996.
7
<PAGE> 8
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 hereunto duly authorized.
June 11, 1996 DENAMERICA CORP.
By: /s/ Todd S. Brown
------------------------------------------
Todd S. Brown
Vice President and Chief Financial Officer
8
<PAGE> 1
EXHIBIT 4.2
INDENTURE (SERIES B NOTES)
between
DENAMERICA CORP.,
a Georgia corporation
and
STATE STREET BANK AND TRUST COMPANY,
as Trustee
MARCH 29, 1996
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I DEFINITIONS AND INCORPORATION BY REFERENCE........................... 1
Section 1.1 Definitions.................................................... 1
Section 1.2 Incorporation by Reference of TIA.............................. 11
Section 1.3 Rules of Construction.......................................... 11
ARTICLE II THE SERIES B NOTES.................................................. 12
Section 2.1 Form and Dating................................................ 12
Section 2.2 Execution and Authentication................................... 12
Section 2.3 Registrar and Paying Agent..................................... 12
Section 2.4 Paying Agent to Hold Property in Trust......................... 13
Section 2.5 Holder Lists................................................... 13
Section 2.6 Transfer and Exchange.......................................... 14
Section 2.7 Replacement Series B Notes..................................... 14
Section 2.8 Outstanding Series B Notes..................................... 15
Section 2.9 Treasury Series B Notes........................................ 15
Section 2.10 Cancellation.................................................. 15
Section 2.11 Defaulted Interest............................................ 16
Section 2.12 Record Date................................................... 16
Section 2.13 CUSIP Number.................................................. 16
ARTICLE III REDEMPTIONS AND OFFERS TO REDEEM................................... 16
Section 3.1 Notices to Trustee............................................. 16
Section 3.2 Selection of Series B Notes to be Redeemed..................... 17
Section 3.3 Notice of Redemption........................................... 17
Section 3.4 Effect of Notice of Redemption................................. 18
Section 3.5 Deposit of Redemption Price.................................... 19
Section 3.6 Series B Notes Redeemed in Part................................ 19
Section 3.7 Optional Redemption............................................ 19
Section 3.8 Mandatory Offers............................................... 20
Section 3.9 Certain Acknowledgements....................................... 22
ARTICLE IV COVENANTS........................................................... 22
Section 4.1 Payment of Series B Notes...................................... 22
Section 4.2 Financial and Other Reports; Compliance Certificate;
Notice of Default.............................................. 23
Section 4.3 Limitation on Restricted Payments.............................. 24
Section 4.4 Corporate Existence............................................ 24
Section 4.5 Payment of Taxes and Other Claims.............................. 25
Section 4.6 Maintenance of Properties and Insurance........................ 25
Section 4.7 Compliance with Laws, Contracts, Licenses and Permits.......... 25
Section 4.8 Waiver of Stay, Extension or Usury Laws........................ 26
Section 4.9 Limitation on Additional Indebtedness.......................... 26
</TABLE>
i
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<TABLE>
<S> <C>
Section 4.10 Limitation on Investments..................................... 27
Section 4.11 Limitation on Mergers, Sales, etc............................. 28
Section 4.12 Subsidiary Payment Restrictions; Conflicting Agreements....... 29
Section 4.13 Issuance of Equity Securities................................. 29
Section 4.14 Transactions with Affiliates.................................. 30
Section 4.15 Financial Covenants........................................... 31
Section 4.16 Amendments to Certain Documents............................... 32
ARTICLE V DEFAULTS AND REMEDIES................................................ 32
Section 5.1 Events of Default.............................................. 32
Section 5.2 Acceleration of Maturity Date.................................. 34
Section 5.3 Other Remedies................................................. 34
Section 5.4 Waiver of Past Default......................................... 34
Section 5.5 Control by a Majority.......................................... 35
Section 5.6 Limitation on Suits............................................ 35
Section 5.7 Rights of Holders to Receive Payment........................... 36
Section 5.8 Collection Suit by Trustee..................................... 36
Section 5.9 Trustee May File Proofs of Claim............................... 36
Section 5.10 Priorities.................................................... 37
ARTICLE VI TRUSTEE............................................................. 37
Section 6.1 Duties of Trustee.............................................. 37
Section 6.2 Rights of Trustee.............................................. 38
Section 6.3 Individual Rights of Trustee................................... 39
Section 6.4 Trustee's Disclaimer........................................... 39
Section 6.5 Notice of Defaults............................................. 39
Section 6.6 Reports by Trustee to Holders.................................. 39
Section 6.7 Compensation and Indemnity..................................... 40
Section 6.8 Replacement of Trustee......................................... 41
Section 6.9 Successor Trustee by Merger, etc............................... 41
Section 6.10 Eligibility: Disqualifications................................ 42
Section 6.11 Preferential Collection of Claims Against Company............. 42
Section 6.12 Intercreditor Agreements.
ARTICLE VII AMENDMENTS......................................................... 42
Section 7.1 Amendments and Supplements..................................... 42
Section 7.2 Compliance with TIA............................................ 44
Section 7.3 Revocation and Effect of Consents.............................. 44
Section 7.4 Notation on or Exchange of Series B Notes...................... 44
Section 7.5 Trustee Protected.............................................. 44
ARTICLE VIII SUBORDINATION..................................................... 45
Section 8.1 Series B Notes Subordinated to Senior Indebtedness............. 45
Section 8.2 No Payment on the Series B Notes in Certain Circumstances...... 45
Section 8.3 Series B Notes Subordinated to Prior Payment of All Senior
Indebtedness on Dissolution, Liquidation or Reorganization
of the Company................................................. 46
</TABLE>
ii
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<TABLE>
<S> <C>
Section 8.4 Holders to be Subrogated to Rights of Holders of
Senior Indebtedness........................................... 47
Section 8.5 Obligations of the Company Unconditional....................... 47
Section 8.6 Subordination Rights Not Impaired by Acts or Omissions......... 48
Section 8.7 Article VIII Not to Prevent Events of Default.................. 48
Section 8.8 Notice......................................................... 49
Section 8.9 Rights of Trustee and Paying Agent............................. 49
Section 8.10 Agreement to Effectuate Subordination......................... 50
Section 8.11 Prohibited Payments Held in Trust............................. 50
Section 8.12 No Waiver of Subordination Provisions......................... 51
ARTICLE IX MISCELLANEOUS....................................................... 51
Section 9.1 Trust Indenture Act Controls................................... 51
Section 9.2 Successors and Assigns......................................... 51
Section 9.3 Governing Law.................................................. 51
Section 9.4 Titles and Subtitles........................................... 51
Section 9.5 Notices........................................................ 51
Section 9.6 Severability................................................... 52
Section 9.7 Expenses....................................................... 52
Section 9.8 Waiver of Demand for Payment. etc.............................. 52
Section 9.9 Communication by Holders with Other Holders.................... 52
Section 9.10 Certificate and Opinion as to Conditions Precedent............ 53
Section 9.11 Statements Required in Certificate or Opinion................. 53
Section 9.12 Rules by Trustee and Agents................................... 53
Section 9.13 Initial Appointments, Compliance Certificates................. 53
Section 9.14 Third Party Beneficiaries..................................... 53
Section 9.15 Series B Notes Not Readily Tradable........................... 53
</TABLE>
iii
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CROSS-REFERENCE TABLE
<TABLE>
<CAPTION>
TIA SECTION INDENTURE SECTION
- ----------- -----------------
<C> <C>
310(a)(1).......................................... 6.10
(a)(2)..................................... 6.10
(a)(3)..................................... N.A.
(a)(4)..................................... N.A.
(a)(5)..................................... 6.10
(b)........................................ 6.10
(c)........................................ N.A.
311(a) ........................................... 6.11
(b)........................................ 6.11
(c)........................................ N.A.
312(a) ........................................... 1.2
(b)........................................ 9.10
(c)........................................ 9.10
313(a) ........................................... 6.6
(b)(1)..................................... N.A.
(b)(2)..................................... 6.6
(c)........................................ 6.6
(d)........................................ 6.6
314(a) ........................................... 4.2
(b)........................................ N.A.
(c)(1)..................................... 4.2, 7.11
(c)(2)..................................... 9.11
(c)(3)..................................... N.A.
(d)........................................ N.A.
(e)........................................ 4.2
(f)........................................ N.A.
315(a) ........................................... 6.1(b)
(b)........................................ 6.5
(c)........................................ 6.1
(d)........................................ 6.1
(e)........................................ N.A.
316(a) ........................................... 2.8
(a)(1)(A).................................. 5.5
(a)(1)(B).................................. 5.4
(a)(2)..................................... N.A.
(b)........................................ 5.7
(c)........................................ 7.8
317(a)(1).......................................... 5.8
(a)(2)..................................... 5.9
(b)........................................ 2.4
318(a) ........................................... 9.1
(c)........................................ 9.1
</TABLE>
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-1-
INDENTURE, dated as of March 29, 1996, between DenAmerica Corp., a
Georgia corporation (the "Company"), and State Street Bank and Trust Company, as
trustee (the "Trustee").
The Company and the Trustee agree as follows for the benefit of the
other party and for the equal and ratable benefit of the Holders of the Series B
13% Subordinated Notes of the Company due 2003 ("Series B Notes").
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.1 Definitions.
"Acceleration Notice" shall have the meaning specified in Section 5.2.
"Adjusted Consolidated EBITDA" shall have the meaning given to such
terms in the Credit Agreement, as in effect on the Issue Date.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. A Person shall be deemed to "control"
(including with correlative meanings, the terms "controlling," "controlled by,"
and "under common control with") another Person if the controlling Person (a) is
an executive officer or a member of the Board of Directors of the controlled
Person, (b) is the direct or indirect beneficial holder of at least 10% of the
then outstanding capital stock (or other shares of beneficial interest) of such
Person, or (c) otherwise possesses, directly or indirectly, the power to direct
or cause the direction of the management or policies of the controlled Person,
whether through ownership of voting securities, by agreement or otherwise.
"Affiliate Transaction" shall have the meaning specified in Section
4.14.
"Agent" means any Registrar, Paying Agent or co-registrar of the Series
B Notes.
"BancBoston" means BancBoston Ventures Inc., a Massachusetts
corporation.
"Bankruptcy Law" means Title 11, U.S. Code or any similar Federal,
state or foreign law for the relief of debtors.
<PAGE> 7
-2-
"Board of Directors" means, with respect to any Person, the Board of
Directors of such Person or any committee of the Board of Directors of such
Person authorized, with respect to any particular matter, to exercise the power
of the Board of Directors of such Person.
"Board Resolution" means, with respect to any Person, a duly adopted
resolution of the Board of Directors of such Person.
"Business Day" means a day that is not a Legal Holiday.
"Capitalized Lease" shall mean, with respect to any Person, (i) any
lease of property, real or personal, the obligations under which are capitalized
on the balance sheet of such Person, and (ii) any other such lease to the extent
that the then present value of the minimum rental commitment thereunder should,
in accordance with GAAP, be capitalized on a balance sheet of the lessee.
"Capitalized Lease Obligations" of any Person means, at the time any
determination thereof is to be made, all obligations in respect of a Capitalized
Lease of such Person.
"Capital Stock" means any and all shares of, or interests or
participations in, corporate stock.
"Company" shall have the meaning specified in the preamble.
"Company Intercreditor Agreement" means the Intercreditor Agreement,
dated as of the Issue Date, among the Company, certain Holders, and the Trustee.
"Consolidated", when used with reference to any term, means that term
as applied to the accounts of the Company and its Subsidiaries, consolidated or
combined in accordance with GAAP.
"Consolidated Amortization Expense" means, for any period and without
duplication, the aggregate amount of scheduled payments due in such period for
principal of Indebtedness (including Capitalized Lease Obligations) of the
Company and its Subsidiaries.
"Consolidated Capital Expenditures" shall mean, for any period, the sum
of expenditures (whether paid in cash or accrued as a liability, excluding the
portion of Capitalized Lease Obligations originally incurred during such period
that is capitalized on the consolidated balance sheet of the Company and its
Subsidiaries), by the Company and its Subsidiaries during such period that, in
conformity with GAAP, are included in "capital expenditures", "additions to
property, plant or equipment" or comparable items in the consolidated financial
statements of the Company and its Subsidiaries; provided that Capital
Expenditures shall not include any such expenditures (i) made in connection with
any Restaurant Acquisition, or (ii) financed with Indebtedness permitted by
Section 4.9(f).
<PAGE> 8
-3-
"Consolidated Depreciation Expense" means, for any period, the
depreciation expense of the Company and its Subsidiaries, determined on a
consolidated basis for such period in accordance with GAAP.
"Consolidated EBITDA" shall mean, for any period, the sum of (i)
Consolidated Net Income for such period, plus (ii) to the extent deducted in the
calculation of Consolidated Net Income for such period, Consolidated Interest
Expense for such period, plus (iii) to the extent deducted in the calculation of
Consolidated Net Income for such period, federal and state income taxes for such
period, plus (iv) to the extent deducted in the calculation of Consolidated Net
Income for such period, depreciation and amortization expense (excluding any
amortization of Opening Store Costs to the extent included in amortization
expense), all determined on a consolidated basis for such Person and its
Subsidiaries in accordance with GAAP.
"Consolidated Interest Expense" means, for any period, the sum, without
duplication, of (a) the cash interest expense of the Company and its
Subsidiaries for such period, determined on a consolidated basis in accordance
with GAAP; and (b) the interest component of Capitalized Lease Obligations of
the Company and its Subsidiaries for such period, determined on a consolidated
basis in accordance with GAAP.
"Consolidated Net Income" means, for any period, the aggregate net
income (or loss) of the Company and its Subsidiaries for such period, determined
on a consolidated basis in accordance with GAAP, provided that there shall be
excluded from Consolidated Net Income (a) any net gains or losses in respect of
dispositions of property other than in the ordinary course of business; (b) any
gains or losses realized upon the refinancing of any Indebtedness; (c) any gains
or losses arising from the destruction of property due to fire or other
casualty; (d) any gains or losses from the revaluation of assets; (e) the net
income (or loss) of any other Person (other than a Subsidiary of the Company)
except to the extent of cash dividends or distributions paid to the Company by
such other Person in such period; (f) the net income (or loss) of any Subsidiary
of the Company except to the extent of the interest of the Company in such
Subsidiary; and (g) the net income (or loss) of any Subsidiary of the Company
that is subject to any restriction or limitation on the payment of dividends,
distributions, loans or advances by operation of the terms of its governing
documents or by any contractual obligation or applicable law, to the extent of
such restriction or limitation in such period; and (h) any gains or losses
arising from the implementation of accounting changes.
"Consolidated Net Worth" means, at any time, the sum of the amount by
which the total consolidated assets of the Company and its Subsidiaries exceeds
the total consolidated liabilities of the Company and its Subsidiaries at such
time, minus all amounts included in stockholder's equity with respect to any
common stock purchase warrants of the Company issued to the holders of Series A
Notes, Series B Notes or Senior Credit Agreement Debt, as determined in
accordance with GAAP.
<PAGE> 9
-4-
"Consolidated Total Debt" means, at any time, without duplication, all
Indebtedness of the Company and its Subsidiaries, determined on a consolidated
basis in accordance with GAAP, plus all amounts included in stockholders equity
with respect to the common stock purchase warrants of the Company issued to the
holders of the Series A Notes, the Series B Notes or the agent under the Credit
Agreement, in accordance with GAAP.
"Credit Agreement" means (a) the Credit Agreement, dated as of February
29, 1996, by and among the Company, Banque Paribas, as agent, and the lenders
from time to time party thereto, as modified, amended, restated or supplemented
from time to time, and (b) each agreement or instrument pursuant to which
obligations under the Credit Agreement described in clause (a) above, or any
subsequent Credit Agreement, are amended, deferred, extended, renewed, replaced,
refunded, increased or refinanced, in whole or part, in each case, as modified,
amended, restated or supplemented from time to time.
"Custodian" means any receiver, trustee, assignee, liquidator,
sequestrator or similar official under any Bankruptcy Law.
"Default" means any event which constitutes, or after notice or passage
of time or both would constitute, an Event of Default.
"Denny's Restaurant" means a Denny's restaurant owned and operated by
the Company or any of its Subsidiaries under the terms of a Franchise Agreement.
"Dollars" and "$" mean lawful currency of the United States of America.
"Equity Interests" means Capital Stock and warrants, options or other
rights to acquire Capital Stock.
"Equity Issuance" shall have the meaning specified in Section 4.13(a).
"Equity Issuance Trigger Date" shall have the meaning specified in
Section 4.13(c).
"Event of Default" shall have the meaning specified in Section 5.1.
"Excess Securities Proceeds" means, with respect to any Equity
Issuance, the aggregate cash proceeds received by the Company or any Subsidiary
from such Equity Issuance, less the amount of all brokerage commissions and
other reasonable costs and expenses (including fees and expenses of counsel and
investment bankers) incurred by the Company or any Subsidiary in connection with
such Equity Issuance.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated by the SEC thereunder.
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"Existing Indebtedness" means Indebtedness of the Company and its
Subsidiaries described in Schedule 1 hereto.
"Expansion Transaction" means, with respect to any restaurant owned and
operated by the Company on the Issue Date or acquired by the Company in
compliance with this Agreement at any time after the Issue Date, the acquisition
of equipment by the Company in connection with new store development of a
Denny's Restaurant or the remodeling of a Denny's Restaurant, or the conversion
by the Company of a restaurant (other than a Denny's restaurant) to a Denny's
Restaurant (including all Opening Store Costs incurred in connection therewith),
excluding, however, any investment in or acquisition (by lease or otherwise) of
any interest in real property in connection therewith.
"Extension of Credit" means any loan, letter of credit or other
extension of credit of any kind or character.
"Fixed Charges" shall mean, without duplication, for any period, the
sum of (i) Consolidated Interest Expense, plus (ii) Consolidated Amortization
Expense, plus (iii) Consolidated Capital Expenditures (other than capital
expenditures made in connection with Expansion Transactions).
"Franchise Agreement" shall mean any franchise agreement to which the
Company or any of its Subsidiaries is party relating to the operation of any
restaurant by the Company or such Subsidiary.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board which are in effect in the United
States at the time and for the period as to which such accounting principles are
to be applied; provided, however, that for purposes of determining compliance
with covenants in this Indenture, "GAAP" means such generally accepted
accounting principles as in effect as of the Issue Date.
"Holder" means a Person in whose name a Series B Note is registered on
the books of the Registrar.
"Indebtedness" means, with respect to any Person, (a) all indebtedness
of such Person for borrowed money, whether current or funded, secured or
unsecured, (b) all indebtedness of such Person for the deferred purchase price
of property or services, other than trade payables and accrued liabilities
arising in the ordinary course of business and payable in accordance with
customary trade terms, (c) all indebtedness of such Person created or arising
under any conditional sale or other title retention agreement with respect to
property acquired by such Person (even if the rights and remedies of the seller
or lender under such agreement in the event of default are limited to
repossession or sale of such property), (d) all indebtedness of such Person
secured by a Lien to secure all or part of the purchase price
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of the property subject to such Lien, (e) all Capitalized Lease Obligations of
such Person, (f) any liability of such Person in respect of banker's acceptances
or letters of credit, and (g) all indebtedness referred to in clause (a), (b),
(c), (d), (e) or (f) above which is guaranteed by such Person or which such
Person has agreed (contingently or otherwise) to purchase or otherwise acquire
or in respect of which it has otherwise assured a creditor against loss.
"Indenture" means this instrument as originally executed or as it may
from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions hereof,
including, for all purposes of this instrument and any such supplemental
indenture, the provisions of the TIA that are deemed to be a part of and govern
this instrument and any such supplemental indenture, respectively.
"Insolvency or Liquidation Proceeding" means, with respect to any
Person, (a) any insolvency or bankruptcy or similar case or proceeding, or any
reorganization, receivership, liquidation, dissolution or winding up of such
Person, whether voluntary or involuntary, or (b) any assignment for the benefit
of creditors or any other marshalling of assets and liabilities of such Person.
"Intercreditor Agreements" means the Company Intercreditor Agreement
and the Senior Subordinated Intercreditor Agreement.
"Interest Payment Date" means the stated due date of an installment of
interest on the Series B Notes.
"Interest Rate Agreement" means the obligation of any Person pursuant
to any interest rate swap agreement, interest rate collar agreement or other
similar agreement or arrangement designed to protect such Person or any of its
Subsidiaries against fluctuations in interest rates.
"Investment" of any Person means (a) any share of capital stock,
evidence of indebtedness or other security issued by any other Person, (b) any
loan, advance, or extension of credit to, or contribution to the capital of, any
other Person, (c) any purchase of the securities or business or an integral part
of the business of any other Person (including any purchase of all or any
substantial portion of the assets of such Person), or any commitment to make any
such purchase, and (d) any other investment in any other Person; provided,
however, that the term "Investment" shall not include (i) trade and customer
accounts receivable for services rendered in the ordinary course of business and
payable in accordance with customary trade terms, and letters of credit or other
instruments securing the same, or (ii) advances to officers or employees, but
only to the extent that the aggregate amount of all advances to officers and
employees outstanding at any particular time does not exceed $500,000 at any
time prior to the first anniversary of the Issue Date, or $350,000 at any time
from or after the first anniversary of the Issue Date.
"Issue Date" means the date of first issuance of the Series B Notes.
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"Legal Holiday" means any date on which banks are not open for business
generally in Boston, Massachusetts or Scottsdale, Arizona.
"Lien" means any mortgage, lien, pledge, charge, security interest, or
other encumbrance of any kind, whether or not filed, recorded or otherwise
perfected under applicable law (including any conditional sale or other title
retention agreement and any lease deemed to constitute a security interest, and
any option or other agreement to give any security interest).
"Offer" means an offer by the Company to redeem Series B Notes after
any Equity Issuance Trigger Date, as required by this Indenture.
"Officer" means, with respect to the Company, the Chairman of the
Board, the President, any Vice President, the Chief Financial Officer, the
Treasurer, the Controller, or the Secretary of the Company.
"Officers' Certificate" means a certificate signed by two Officers or
by an Officer and an Assistant Secretary of the Company.
"Opening Store Costs" shall mean costs incurred by the Company in
connection with opening new restaurants or remodeling a Denny's Restaurant or
converting a restaurant (other than a Denny's Restaurant) to a Denny's
Restaurant, in each case which are capitalized in accordance with GAAP.
"Opinion of Counsel" means a written opinion from legal counsel
reasonably acceptable to the Trustee. The legal counsel may be an employee of or
counsel to the Company or the Trustee.
"Paying Agent" shall have the meaning specified in Section 2.3.
"Person" means any individual, corporation, partnership, limited
liability company, joint venture, association, joint-stock company, trust,
unincorporated organization or government or other agency or political
subdivision thereof.
"Plan of Merger" means the Amended and Restated Agreement and Plan of
Merger, dated as of August 9, 1995, between Denwest Restaurant Corp. and the
Company (formerly known as American Family Restaurants, Inc.).
"Post-Petition Interest" means, with respect to any Indebtedness of any
Person, all interest accrued or accruing on such Indebtedness after the
commencement of any Insolvency or Liquidation Proceeding against such Person in
accordance with and at the contract rate (including, without limitation, any
rate applicable upon default) specified in the agreement or instrument creating,
evidencing or governing such Indebtedness, whether or
<PAGE> 13
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not, pursuant to applicable law or otherwise, the claim for such interest is
allowed as a claim in such Insolvency or Liquidation Proceeding.
"principal" of any Indebtedness (including the Series B Notes) means
the principal of such Indebtedness plus any applicable premium on such
Indebtedness.
"property" means any right or interest in or to property or assets of
any kind whatsoever, whether real, personal or mixed and whether tangible or
intangible.
"Redeemable Stock" means any Equity Interest which, by its terms, or
upon the happening of any event, matures, is mandatorily redeemable or
repurchasable (other than for Capital Stock not constituting Redeemable Stock),
in whole or in part, prior to 180 days after the final maturity date of the
Series B Notes, or is, by its terms or upon the happening of any event, required
to be redeemed or repurchased, redeemable or repurchasable at the option of the
holder thereof, in whole or in part, at any time prior to 180 days after the
maturity date of the Series B Notes.
"Redemption Date" when used with respect to any Series B Note to be
redeemed, means the date fixed for such redemption pursuant to this Indenture
and the Series B Notes.
"Redemption Price" when used with respect to any Series B Note to be
redeemed at any Redemption Date, means the price at which the Company would be
permitted to redeem such Series B Notes on such Redemption Date pursuant to
Section 3.7.
"Reference Period" means each period of four (4) consecutive fiscal
quarters of the Company.
"Registrar" shall have the meaning specified in Section 2.3.
"Reorganization Securities" means securities issued by the Company in
exchange for Indebtedness of the Company under or in respect of the Series B
Notes upon the effectiveness of a plan of reorganization in bankruptcy of the
Company that are either Equity Interests or debt securities of the Company, the
payment of which is subordinated, at least to the extent provided herein and in
the Intercreditor Agreements with respect to Indebtedness under the Series B
Notes, to the prior payment in full of all Senior Indebtedness.
"Restaurant Acquisition" shall mean the acquisition by the Company
after the Issue Date of any restaurant which was previously developed and
operating as a restaurant (whether or not operated as a restaurant on the date
of such acquisition), whether through the acquisition of shares of a
corporation, or by purchase of assets.
"Restaurant Business" shall have the meaning specified in Section 4.4.
<PAGE> 14
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"Restricted Payment" shall have the meaning specified in Section 4.3.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations of the SEC promulgated thereunder.
"Senior Credit Agreement Debt" means all amounts payable (including,
without limitation, any Indebtedness) by the Company under or with respect to
Extensions of Credit under the Credit Agreement, plus all other amounts payable
under the Credit Agreement or any other Loan Document (as defined in the Credit
Agreement).
"Senior Indebtedness" means the Senior Credit Agreement Debt and the
Series A Debt.
"Senior Non-payment Default" means any event of default under any
instrument governing any Senior Indebtedness (which shall have continued beyond
the expiration of any applicable grace period) permitting any holders (or any
required percentage thereof) to accelerate the maturity thereof or demand
payment thereof, excluding, however, any Senior Payment Default.
"Senior Payment Default" means any default by the Company in payment of
any obligations owing in respect of Senior Indebtedness.
"Senior Series A Intercreditor Agreement" means the Intercreditor
Agreement, dated as of the date hereof, among the Trustee, the Holders of Series
A Notes and the Agent under the Credit Agreement.
"Senior Subordinated Intercreditor Agreement" means the Intercreditor
Agreement, dated as of the date hereof, among the Trustee, certain Holders and
the Agent under the Credit Agreement.
"Series A Debt" means all Indebtedness of the Company or any of its
Subsidiaries, contingent or otherwise, now or hereafter existing, under or with
respect to: (a) the Series A Documents in an aggregate outstanding principal
amount not exceeding the sum of (i) $6,000,000, plus (ii) the aggregate
principal amount of Indebtedness evidenced by securities issued in payment of
accrued interest on any Series A Debt, plus (iii) the amount of any premiums
payable on or in respect of Series A Debt in connection with the refinancing or
refunding of such Series A Debt, less (iv) the amount of all permanent payments
of principal made under the Series A Documents from time to time after the date
hereof (it being understood that payments of principal under the Series A
Documents with the proceeds of financings under subsequent Series A Documents
shall not be deemed permanent payments of Series A Debt); and (b) interest
(including interest accruing at the contract rate after the commencement of any
Insolvency or Liquidation Proceeding, whether or not such interest
<PAGE> 15
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is an allowed claim in such Insolvency or Liquidation Proceeding) accrued on the
outstanding principal described in clause (a) and other amounts owing under the
Series A Documents, and premiums, fees, costs, expenses, indemnities,
reimbursements and other amounts owing under the Series A Documents.
"Series A Documents" means, collectively, (a) the Series A Indenture,
(b) the Series A Notes, whether outstanding on the date hereof or issued from
time to time after the date hereof in accordance with the Series A Indenture,
(c) each instrument or agreement pursuant to which obligations under the Series
A Indenture or Series A Notes or any subsequent Series A Document are deferred,
extended, renewed, replaced, refunded or refinanced, in whole or in part, and
without limitation as to parties, maturities, principal amount, interest rates
or other provisions, and (d) each other instrument or agreement executed in
connection with or evidencing, governing, guarantying or securing any
Indebtedness or other obligations under any instrument or agreement referred to
in the foregoing clauses (a), (b) or (c); in each case (with respect to any
instrument or agreement referred to in the foregoing clauses (a), (b), (c) or
(d)), as modified, amended or supplemented from time to time.
"Series A Indenture" means the Indenture, dated as of March 29, 1996,
between the Company and the Trustee, as trustee, governing the terms of the
Series A Notes.
"Series A Notes" means the Series A 13% Subordinated Notes, due 2003,
issued by the Company pursuant to the Series A Indenture.
"Series B Notes" shall have the meaning specified in the preamble.
"Special Default Period" means any period commencing on the date any
Event of Default under the Credit Agreement occurs and ending on the date on
which such Event of Default is cured or waived.
"Subordinated Obligations" means all Indebtedness of the Company which
is subordinate or junior in right of payment to the Series B Notes.
"Subsidiary" with respect to any Person, means (a) any corporation of
which the outstanding Capital Stock having at least a majority of the votes
entitled to be cast in the election of directors under ordinary circumstances
shall at the time be owned, directly or indirectly, by such Person or (b) any
other Person of which at least a majority of the voting interest under ordinary
circumstances is at such time, directly or indirectly, owned by such Person.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. Sections 77
aaa-77bbb) as in effect on the Issue Date and the rules and regulations of the
SEC thereunder.
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"Trustee" shall mean the party identified in the preamble hereto as the
Trustee hereunder, and any Person succeeding to the position of Trustee
hereunder in accordance with the terms of this Indenture.
"Trustee Expenses" shall have the meaning specified in Section 5.8.
"Trust Officer" means any officer in the corporate trust department or
similar group of the Trustee authorized by the Trustee to administer the trusts
hereunder or any other officer of the Trustee to whom a particular matter is
referred by the Trustee because of such officer's knowledge and familiarity with
the particular subject.
"Unit Purchase Options" means the unit purchase options of the Company
described on Schedule 4.13 hereto.
"Warrants" means the common stock purchase warrants of the Company
described on Schedule 4.13 hereto.
Section 1.2 Incorporation by Reference of TIA.
Whenever this Indenture refers to a provision of the TIA, the provision
is incorporated by reference in, and made a part of, this Indenture. Any terms
incorporated by reference in this Indenture that are defined by the TIA or by
TIA reference to another statute have the meanings so assigned to such terms in
the TIA or in such other statute.
Section 1.3 Rules of Construction. Unless the context otherwise
requires:
(a) a term has the meaning assigned to it;
(b) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
(c) words in the singular include the plural, and words in the
plural include the singular;
(d) "herein," "hereof" and other words of similar import refer
to this Indenture as a whole and not to any particular Article, Section or other
subdivision;
(e) references to Sections or Articles refer to such Section
or Article in this Indenture, unless stated otherwise;
(f) references to any agreement or instrument refer to such
agreement or instrument as originally executed or, if amended or supplemented at
any time in compliance herewith, if applicable, as so amended or supplemented
and in effect at the relevant time; and
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(g) "including" means "including, without limitation".
ARTICLE II
THE SERIES B NOTES
Section 2.1 Form and Dating. The Series B Notes and the related
Trustee's certificate of authentication shall be substantially in the form of
Exhibit A, which constitutes, and is hereby expressly made, a part of this
Indenture. The Series B Notes may have notations, legends or endorsements
required by law, stock exchange rule or usage. The Company and the Trustee shall
approve the form of the Series B Notes and any notation, legend or endorsement
thereon. Each Series B Note shall be dated the date of its authentication. The
Series B Notes initially shall be in denominations of $1,000 and integral
multiples thereof.
The terms and provisions contained in the Series B Notes shall
constitute, and are hereby expressly made, a part of this Indenture and to the
extent applicable, the Company and the Trustee, by their execution and delivery
of this Indenture, expressly agree to such terms and provisions and agree to be
bound thereby.
Section 2.2 Execution and Authentication. Two Officers of the Company
(each of whom shall have been duly authorized by all requisite corporate
actions) shall sign each Series B Note for the Company by manual or facsimile
signature. If an Officer whose signature is on a Series B Note no longer holds
that office at the time the Series B Note is authenticated, the Series B Note
shall nevertheless be valid.
No Series B Note shall be valid until authenticated by the manual
signature of the Trustee, and the Trustee's signature shall be conclusive
evidence that the Series B Note has been authenticated under this Indenture. The
Trustee may appoint an authenticating agent acceptable to the Company to
authenticate Series B Notes. Unless limited by the terms of such appointment, an
authenticating agent may authenticate Series B Notes whenever the Trustee may do
so. Each reference in this Indenture to authentication by the Trustee includes
authentication by such agent.
The Trustee shall, upon receipt of a written order signed by two
Officers of the Company, authenticate Series B Notes in an aggregate principal
amount up to $18,250,000 for issuance on the Issue Date.
Section 2.3 Registrar and Paying Agent. The Company shall maintain an
office or agency (the "Registrar") in the continental United States (which
office may be the Company's principal executive office) where Series B Notes may
be presented or surrendered for registration of transfer or for exchange and an
office or agency (the "Paying Agent") in the continental United States where
Series B Notes may be presented or surrendered for
<PAGE> 18
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payment and an office or agency in the continental United States where notices
and demands to or upon the Company in respect of the Series B Notes may be made.
The Registrar shall keep a register of the Series B Notes and of their transfer
and exchange. The Company may appoint one or more co-registrars and one or more
additional paying agents reasonably acceptable to the Trustee. The term "Paying
Agent" includes any additional paying agent. The Company may change the Paying
Agent, any additional paying agent, the Registrar or any co-registrar without
prior notice to any Holder. The Company shall promptly notify the Trustee and
the Trustee shall promptly notify the Holders of the name and address of any
Agent not a party to this Indenture. The Company shall enter into an appropriate
agency agreement with any Agent not a party to this Indenture, and such
agreement shall incorporate the provisions of the TIA and implement the
provisions of this Indenture that relate to such Agent.
The Company or any of its Affiliates may act as Paying Agent, Registrar
or co-registrar. The Company initially appoints the Trustee as Registrar and
Paying Agent and initially appoints itself as agent for service of notices and
demands in connection with the Series B Notes.
Section 2.4 Paying Agent to Hold Property in Trust. The Company shall
require each Paying Agent other than the Trustee to agree in writing that the
Paying Agent will hold in trust for the Holders' benefit all property the Paying
Agent holds for the redemption of the Series B Notes or for the payment of
principal of, or premium, if any, or interest on, the Series B Notes, and will
notify the Trustee of any default by the Company in providing the Paying Agent
with sufficient funds to redeem Series B Notes or to make any payment on the
Series B Notes, in each case, as and to the extent required to be redeemed or
paid under the terms of this Indenture. While any such default continues, the
Trustee may require the Paying Agent to pay over all property it holds to the
Trustee and to account for any property distributed. The Company at any time may
require the Paying Agent to pay all money it holds to the Trustee and to account
for any assets distributed. Upon payment of such money to the Trustee, the
Paying Agent (if other than the Company or any of its Affiliates) shall have no
further liability for such money. If the Company or any of its Affiliates acts
as Paying Agent, it shall segregate and hold in a separate trust fund for the
Holders' benefit all property it holds as Paying Agent.
Section 2.5 Holder Lists. The Trustee shall preserve in as current a
form as is reasonably practicable the most recent list available to it of the
names and addresses of Holders and shall otherwise comply with Section 312(a) of
the TIA. If the Trustee is not the Registrar, the Company shall furnish to the
Trustee, at least seven (7) Business Days before each Interest Payment Date and
at such other times as the Trustee may request in writing, a list in such form
and as of such date as the Trustee may reasonably require that sets forth the
names and addresses of, and the aggregate principal amount of Series B Notes
held by, each Holder, and the Company shall otherwise comply with Section 312(a)
of the TIA.
<PAGE> 19
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Section 2.6 Transfer and Exchange. When Series B Notes are presented to
the Registrar or a co-registrar with a request to register a transfer or to
exchange such Series B Notes for an equal principal amount of Series B Notes of
other authorized denominations, the Registrar or co-registrar shall register the
transfer or make the exchange if its requirements for such transaction are met;
provided, however, that any Series B Note presented or surrendered for
registration of transfer or exchange shall be duly endorsed or accompanied by a
written instruction of transfer in form satisfactory to the Registrar or
co-registrar and the Trustee, duly executed by the Holder of such Series B Note
or by its attorney duly authorized in writing. To permit registrations of
transfers and exchanges, the Company shall issue, and the Trustee shall
authenticate, Series B Notes at the Registrar's request.
Neither the Company nor the Registrar shall be required to issue,
register the transfer of or exchange any Series B Note (a) during any period
beginning at the opening of business on the day that the Trustee receives notice
of any redemption from the Company pursuant to Section 3.3 and ending at the
close of business on the date the notice of redemption is sent to Holders, (b)
selected for redemption, in whole or in part, except that the unredeemed portion
of any Series B Note being redeemed in part may be transferred or exchanged, (c)
during an Offer if such Series B Note is tendered pursuant to such Offer and not
withdrawn and (d) during any period beginning fifteen (15) Business Days before
the mailing of a notice of an Offer and ending at the close of business on the
date of such mailing.
No service charge shall be made for any registration of transfer or
exchange (except as otherwise expressly permitted herein), but the Company may
require payment of a sum sufficient to cover any transfer tax, assessment or
similar governmental charge payable in connection therewith (other than any such
transfer tax, assessment or similar governmental charge payable upon exchanges
pursuant to Section 2.10, 3.6 or 7.4, which the Company shall pay).
Prior to due presentment for registration of transfer of any Series B
Note, the Trustee, any Agent and the Company may deem and treat the Person in
whose name any Series B Note is registered as the absolute owner of such Series
B Note (whether or not such Series B Note shall be overdue and notwithstanding
any notation of ownership or other writing on such Series B Note made by anyone
other than the Company, the Registrar or any co-registrar) for the purpose of
receiving payment of principal of, and premium, if any, and interest on, such
Series B Note and for all other purposes, and notice to the contrary shall not
affect the Trustee, any Agent or the Company.
Section 2.7 Replacement Series B Notes. If any mutilated Series B Note
is surrendered to the Trustee, or if the Company and the Trustee receive
evidence to their satisfaction of the destruction, loss or theft of any Series B
Note, the Company shall issue and the Trustee shall authenticate a replacement
Series B Note if the Trustee's requirements are met, and each such replacement
Series B Note shall be an additional obligation of the
<PAGE> 20
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Company. If the Trustee or the Company requires, the Holder must supply an
indemnity bond or other indemnity that is sufficient in the judgment of the
Trustee and the Company (which, in the case of any institutional Holder, may be
an unsecured indemnity agreement) to protect the Company, the Trustee or any
Agent from any loss that any of them may suffer as a result of the replacement
of such Series B Note.
Section 2.8 Outstanding Series B Notes. The Series B Notes outstanding
at any time are all the Series B Notes the Trustee has authenticated except for
those it has cancelled, those delivered to it for cancellation, and those
described in this Section 2.8 as not outstanding. If a Series B Note is replaced
pursuant to Section 2.7 (other than a mutilated Series B Note surrendered for
replacement), it ceases to be outstanding unless the Trustee receives proof
satisfactory to it that a bona fide purchaser holds the replaced Series B Note.
A mutilated Series B Note ceases to be outstanding upon surrender of such Series
B Note and replacement thereof pursuant to Section 2.7 hereof. If the entire
principal of, and premium, if any, and accrued interest on, any Series B Note is
considered paid under Section 4.1, it ceases to be outstanding and interest on
it ceases to accrue. Subject to Section 2.9, a Series B Note does not cease to
be outstanding because the Company or any Affiliate of the Company holds such
Series B Note.
Section 2.9 Treasury Series B Notes. In determining whether the Holders
of the required principal amount of Series B Notes have concurred in any
direction, waiver or consent, Series B Notes owned by the Company shall be
deemed not to be outstanding; provided, however, that for purposes of
determining whether the Trustee shall be protected in relying on any such
direction, waiver or consent, only Series B Notes for which the Trustee has
actual knowledge are so owned shall be so disregarded. Notwithstanding the
foregoing, Series B Notes that the Company offers to purchase or acquires
pursuant to an exchange offer, tender offer or otherwise shall not be deemed to
be owned by the Company until legal title to such Series B Notes passes to the
Company.
Section 2.10 Cancellation. The Company at any time may deliver Series B
Notes to the Trustee for cancellation. The Registrar, any co-registrar, the
Paying Agent, the Company and its Affiliates shall forward to the Trustee any
Series B Notes surrendered to them for registration of transfer, exchange,
replacement, payment (including all Series B Notes called for redemption and all
Series B Notes accepted for payment pursuant to an Offer) or cancellation, and
the Trustee shall cancel all such Series B Notes and shall destroy all cancelled
Series B Notes (subject to the record retention requirements of the TIA and the
Exchange Act) and deliver a certificate of destruction of such Series B Notes to
the Company unless, by written order signed by two Officers of the Company, the
Company shall direct that cancelled Series B Notes be returned to it. The
Company may not issue new Series B Notes to replace any Series B Notes that have
been cancelled by the Trustee or that have been delivered to the Trustee for
cancellation. If the Company or any Affiliate of the Company acquires any Series
B Notes (other than by redemption pursuant to Section 3.7 or an Offer pursuant
to Section 4.13), such acquisition shall not operate as a redemption or
<PAGE> 21
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satisfaction of the Indebtedness represented by such Series B Notes unless and
until such Series B Notes are delivered to the Trustee for cancellation pursuant
to this Section 2.10.
Section 2.11 Defaulted Interest. If the Company defaults in a payment
of interest on the Series B Notes, it shall pay the defaulted interest in any
lawful manner plus, to the extent lawful, interest payable on the defaulted
interest, to Holders on a subsequent special record date, in each case at the
rate provided in the Series B Notes and Section 4.1. The Company shall, with the
Trustee's consent, fix or cause to be fixed each such special record date and
payment date. At least 15 days before the special record date, the Company (or,
at the request of the Company, the Trustee in the name of, and at the expense
of, the Company) shall mail a notice that states the special record date, the
related payment date and the amount of interest (including interest, if any, on
the defaulted interest) to be paid.
Section 2.12 Record Date. The record date for purposes of determining
the identity of Holders of Series B Notes entitled to vote or consent to any
action shall be the later of (a) 10 days prior to the first solicitation of such
consent and (b) the date of the most recent list of Holders furnished to the
Trustee prior to such solicitation.
Section 2.13 CUSIP Number. A "CUSIP" number will be printed on the
Series B Notes, and the Trustee shall use the CUSIP number in notices of
redemption, purchase or exchange as a convenience to Holders. No representation
is made as to the correctness or accuracy of the CUSIP number printed in the
notice or on the Series B Notes and that reliance may be placed only on the
other identification numbers printed on the Series B Notes. The Company will
promptly notify the Trustee of any change in the CUSIP number.
ARTICLE III
REDEMPTIONS AND OFFERS TO REDEEM
Section 3.1 Notices to Trustee. If the Company elects to redeem Series
B Notes pursuant to Section 3.7, it shall furnish to the Trustee, at least 10
but not more than 15 days before notice of such redemption is to be mailed to
Holders (or such shorter time as may be satisfactory to the Trustee), an
Officers' Certificate stating (a) that the Company has elected to redeem Series
B Notes pursuant to Section 3.7, (b) the date on which notice of redemption is
to be mailed to Holders, (c) the Redemption Date, (d) the aggregate principal
amount of Series B Notes to be redeemed, (e) the Redemption Price for such
Series B Notes, (f) the amount of accrued and unpaid interest on such Series B
Notes as of the Redemption Date, and (g) the manner in which Series B Notes are
to be selected for redemption if less than all outstanding Series B Notes are to
be redeemed. If the Trustee is not the Registrar, the Company shall,
concurrently with delivery of such notice to the Trustee, cause the Registrar to
deliver to the Trustee a certificate (upon which the Trustee may rely) setting
forth the names of, and the aggregate principal amount of Series B Notes held
by, each of the Holders.
<PAGE> 22
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If the Company is required to offer to redeem Series B Notes pursuant
to Section 4.13, it shall furnish to the Trustee, at least five (5) Business
Days before notice of the Offer is to be mailed to Holders, an Officers'
Certificate stating (a) that the Offer is being made pursuant to Section 4.13,
as the case may be, (b) the Redemption Date, (c) the maximum principal amount of
Series B Notes the Company is offering to redeem pursuant to the Offer, (d) the
Redemption Price for such Series B Notes, and (e) the amount of accrued and
unpaid interest on such Series B Notes as of the Redemption Date.
The Company will also provide the Trustee with any additional
information that the Trustee reasonably requests in connection with any
redemption or Offer.
Section 3.2 Selection of Series B Notes to be Redeemed. If less than
all outstanding Series B Notes are to be redeemed pursuant to Section 3.7, the
Company shall select the outstanding Series B Notes to be redeemed in compliance
with the requirements of the principal national securities exchange or over the
counter market, if any, on which the Series B Notes are listed or, if the Series
B Notes are not listed on a securities exchange or over the counter market, on a
pro rata basis. If the Company elects to mail notice of a redemption to Holders,
the Trustee shall, at least five (5) days prior to the date notice of redemption
is to be mailed, (a) select the Series B Notes to be redeemed from Series B
Notes outstanding not previously called for redemption, and (b) promptly notify
the Company of the name of each Holder of Series B Notes selected for
redemption, the principal amount of Series B Notes held by each such Holder and
the principal amount of such Holder's Series B Notes that are to be redeemed. If
less than all Series B Notes tendered pursuant to an Offer are to be redeemed,
the Trustee shall select, on or prior to the Redemption Date for such Offer, the
Series B Notes to be redeemed. Series B Notes in denominations of $1,000 or less
may be redeemed only in whole. Series B Notes in denominations larger than
$1,000 may be redeemed only in principal amounts of $1,000 or integral multiples
of $1,000; except that if all of the Series B Notes of a Holder are selected for
redemption, the aggregate principal amount of the Series B Notes held by such
Holder, even if not an integral multiple of $1,000, may be redeemed. Except as
provided in the preceding sentence, provisions of this Indenture that apply to
Series B Notes called for redemption or tendered pursuant to an Offer also apply
to portions of Series B Notes called for redemption or tendered pursuant to an
Offer.
Section 3.3 Notice of Redemption.
(a) At least 30 days but not more than 60 days prior to any Redemption
Date for any redemption pursuant to Section 3.7, the Company shall mail, postage
prepaid, by first class mail a notice of redemption to each Holder of Series B
Notes or portions thereof that are to be redeemed. With respect to any
redemption of Series B Notes, the notice shall identify the Series B Notes or
portions thereof to be redeemed and shall state: (i) the Redemption Date; (ii)
the Redemption Price for the Series B Notes and the amount of unpaid and accrued
interest on such Series B Notes as of the Redemption Date; (iii) if any Series B
Note is being redeemed in part, the portion of the principal amount of such
Series
<PAGE> 23
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B Note to be redeemed and that, after the Redemption Date, upon surrender of
such Series B Note, a new Series B Note or Series B Notes in principal amount
equal to the unredeemed portion will be issued; (iv) the name, address and
telephone number of the Paying Agent; (v) that Series B Notes called for
redemption must be surrendered to the Paying Agent at the address specified in
such notice to collect the Redemption Price for, and any accrued and unpaid
interest on, such Series B Notes; (vi) that, unless the Company defaults in
making such redemption payment, interest on Series B Notes called for redemption
will cease to accrue on and after the Redemption Date and the only remaining
right of the Holders of such Series B Notes is to receive payment of the
Redemption Price upon surrender to the Paying Agent of the Series B Notes
redeemed; (vii) if fewer than all the Series B Notes are to be redeemed, the
identification of the particular Series B Notes (or portion thereof) to be
redeemed, as well as the aggregate principal amount of Series B Notes to be
redeemed and the aggregate principal amount of Series B Notes to be outstanding
after such partial redemption; and (viii) that such notice is being sent
pursuant to this Section 3.3.
(b) At the Company's request, the Trustee shall (at the Company's
expense) give the notice of redemption to Holders; provided, however, that the
Company shall deliver to the Trustee, at least 10 days prior to the date that
notice of the redemption is to be mailed to Holders, an Officers' Certificate
that (i) requests the Trustee to give the notice of redemption to Holders, (ii)
sets forth the information to be provided to the Holders in the notice of
redemption, as set forth in the preceding paragraph, and (iii) sets forth the
aggregate principal amount of Series B Notes to be redeemed and the amount of
accrued and unpaid interest thereon as of the Redemption Date. If the Trustee is
not the Registrar, the Company shall, concurrently with any such request, cause
the Registrar to deliver to the Trustee a certificate (upon which the Trustee
may rely) setting forth the name of, the address of, and the aggregate principal
amount of Series B Notes held by, each Holder; provided further, that any such
Officers' Certificate may be delivered to the Trustee on a date later than
permitted under this Section 3.3(b) if such later date is acceptable to the
Trustee.
Section 3.4 Effect of Notice of Redemption. Upon mailing of a notice of
redemption to the Holders in accordance with Section 3.3, Series B Notes (or
portions thereof) called for redemption become due and payable on the Redemption
Date at the Redemption Price together with accrued and unpaid interest. Upon
surrender of Series B Notes called for redemption to the Trustee or the Paying
Agent, such Series B Notes shall be paid at the Redemption Price plus interest,
if any, accrued and unpaid to the Redemption Date; provided that if the
Redemption Date is on or after a record date but on or prior to the related
Interest Payment Date, the accrued and unpaid interest shall be payable to the
Holder of the redeemed Series B Note registered on such record date; and
provided, further, that if a Redemption Date is a Legal Holiday, payment shall
be made on the next succeeding Business Day and interest shall continue to
accrue for the period from such Redemption Date to such next succeeding Business
Day.
<PAGE> 24
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Section 3.5 Deposit of Redemption Price.
(a) At least one Business Day prior to the applicable Redemption Date,
the Company shall deposit with the Trustee or with the Paying Agent money
sufficient to pay the Redemption Price of, and unpaid and accrued interest on,
all Series B Notes (or portions thereof) to be redeemed on the Redemption Date.
After any Redemption Date, the Trustee or the Paying Agent shall promptly return
to the Company upon its written request, any money that the Company deposited
with the Trustee or the Paying Agent in excess of the amounts necessary to pay
the Redemption Price of, and unpaid and accrued interest on, all Series B Notes
(or portions thereof) to be redeemed on such Redemption Date.
(b) If the Company complies with the preceding paragraph, interest on
the Series B Notes (or portions thereof) to be redeemed will cease to accrue on
the applicable Redemption Date, whether or not such Series B Notes are presented
for payment. If a Series B Note is redeemed on or after a record date but on or
prior to the related Interest Payment Date, then any accrued and unpaid interest
shall be paid to the Person in whose name such Series B Note was registered at
the close of business on such record date. If any Series B Note called for
redemption shall not be so paid upon surrender for redemption because of the
failure of the Company to comply with the preceding paragraph, interest will be
paid on the unpaid principal, premium, if any, and interest from the Redemption
Date until such principal, premium and interest are paid, at the rate of
interest for overdue amounts provided in the Series B Notes and Section 4.1.
Section 3.6 Series B Notes Redeemed in Part. Upon surrender of a Series
B Note that is redeemed in part, the Company shall issue and the Trustee shall
authenticate for the Holder at the Company's expense a new Series B Note equal
in principal amount to the unredeemed portion of the Series B Note surrendered.
Section 3.7 Optional Redemption. Subject to the restrictions on
redemption set forth in the Credit Agreement, the Series A Indenture and the
Intercreditor Agreements, the Series B Notes will be subject to redemption at
the option of the Company, in whole or in part, at the Redemption Prices
(expressed as percentages of the then outstanding principal amount of the Series
B Notes) set forth below, plus any accrued and unpaid interest to the Redemption
Date, if redeemed during the twelve-month period beginning on the dates
indicated in the table below.
<TABLE>
<CAPTION>
Date Percentage
- ---- ----------
<S> <C>
March 29, 1999 103%
</TABLE>
<PAGE> 25
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<TABLE>
<S> <C>
March 29, 2000 102%
March 29, 2001 101%
March 29, 2002 100%
- ---------------------------------------------------------------------
and thereafter
</TABLE>
Anything contained in the foregoing to the contrary notwithstanding,
subject to the restrictions on redemption set forth in the Credit Agreement, the
Series A Indenture and the Intercreditor Agreements, at any time prior to March
29, 1999, the Company may also redeem the Series B Notes, or any portion
thereof, at a Redemption Price equal to 100% of the principal amount thereof,
plus accrued and unpaid interest thereon to the Redemption Date.
Section 3.8 Mandatory Offers.
(a) Subject to the terms and conditions set forth herein, within 10
Business Days after any Equity Issuance Trigger Date, but only if no Series A
Notes are outstanding on such date, the Company shall mail a written offer to
each Holder (with a copy to the Trustee) to redeem Series B Notes ("Offer"),
which Offer shall contain all instructions and materials necessary to enable
such Holders to tender Series B Notes for redemption pursuant to the Offer and
stating: (i) that an Offer is being made pursuant to Section 4.13, as the case
may be, the length of time the Offer shall remain open, and the maximum
aggregate principal amount of Series B Notes that the Company is required to
redeem pursuant to such Offer; (ii) the Redemption Price for the Series B Notes
(as set forth in Section 4.13, as the case may be), the amount of accrued and
unpaid interest on such Series B Notes as of the Redemption Date, and the
Redemption Date (which date shall be not less than 30 days nor more than 40 days
after the date the Offer is mailed); (iii) that any Series B Note not tendered
for redemption will continue to accrue interest if interest is then accruing;
(iv) that, unless the Company fails to deposit with the Paying Agent on the
Redemption Date an amount sufficient to purchase all Series B Notes tendered for
redemption, interest shall cease to accrue after the Redemption Date on Series B
Notes tendered for redemption; (v) that Holders electing to tender any Series B
Note or portion thereof for redemption will be required to surrender such Series
B Note, with a form entitled "Option of Holder to Elect Redemption" completed,
to the Paying Agent at the address specified in the Offer prior to the close of
business on the Business Day preceding the Redemption Date, provided that
Holders electing to tender only a portion of any Series B Note for redemption
must tender a principal amount of $1,000 or integral multiples
<PAGE> 26
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thereof; (vi) that Holders will be entitled to withdraw their election to tender
Series B Notes for redemption if the Paying Agent receives, not later than the
close of business on the second Business Day preceding the Redemption Date, a
telegram, telex, facsimile transmission or letter setting forth the name of the
Holder, the principal amount of Series B Notes tendered for redemption, and a
statement that such Holder is withdrawing his election to have such Series B
Notes (or portions thereof) redeemed; and (vii) that Holders whose Series B
Notes are tendered for redemption in part will be issued new Series B Notes
equal in principal amount to the unredeemed portion of Series B Notes
surrendered.
(b) Subject to the provisions of Article VIII and the restrictions on
redemption set forth in the Credit Agreement, and provided that no Series A
Notes are outstanding, on the Redemption Date for any Offer, the Company will
(i) in the case of an Offer resulting from one or more Equity Issuances, redeem
the maximum principal amount of Series B Notes or portions thereof tendered
pursuant to such Offer that can be redeemed out of Excess Securities Proceeds
from such Equity Issuances, (ii) deposit with the Paying Agent the aggregate
Redemption Price of all Series B Notes or portions thereof to be redeemed and
any accrued and unpaid interest on such Series B Notes as of the Redemption
Date, and (iii) deliver or cause to be delivered to the Trustee all Series B
Notes tendered pursuant to the Offer, together with an Officers' Certificate
setting forth the name of each Holder of such Series B Notes and the principal
amount of such Series B Notes or portions thereof tendered by each such Holder.
For purposes of this Section 3.8, the Trustee shall act as the Paying Agent.
(c) With respect to any Offer, (i) if less than all of the Series B
Notes tendered pursuant to an Offer are to be redeemed by the Company for any
reason, the Company and the Trustee shall select on or prior to the Redemption
Date the Series B Notes or portions thereof to be redeemed pursuant to Section
3.2, and (ii) if the Company deposits with the Paying Agent on or prior to the
Redemption Date an amount sufficient to redeem all Series B Notes that have been
tendered, interest shall cease to accrue on such Series B Notes as of the
Redemption Date; provided, however, that if the Company fails to deposit an
amount sufficient to redeem all Series B Notes that have been tendered, the
deposited funds shall be used to redeem on a pro rata basis the Series B Notes
tendered for redemption and interest shall continue to accrue on all Series B
Notes, or the portion thereof, as applicable, not redeemed.
(d) Subject to the provisions of Article VIII and the restrictions on
redemption set forth in the Credit Agreement, promptly after consummation of an
Offer, (i) the Paying Agent shall mail to each Holder of Series B Notes or
portions thereof accepted for redemption, an amount equal to the Redemption
Price for, plus any accrued and unpaid interest on, such Series B Notes, (ii)
with respect to any tendered Series B Note not accepted for redemption, in whole
or in part, the Trustee shall return such Series B Note to the Holder thereof,
and (iii) with respect to any Series B Note accepted for redemption, in part,
the Trustee shall authenticate and mail to each such Holder a new Series B Note
equal in principal amount to the unredeemed portion of the tendered Series B
Note.
<PAGE> 27
-22-
(e) The Company will (i) publicly announce the results of the Offer on
or as soon as practicable after the Redemption Date, and (ii) comply with Rule
14e-1 under the Exchange Act and any other securities laws and regulations to
the extent such laws and regulations are applicable to any Offer.
Section 3.9 Certain Acknowledgements. The Holders acknowledge that (a)
the Series A Indenture prohibits the redemption of Series B Notes by the Company
at any time while any Series A Notes are outstanding, and (b) that the Company
shall not be permitted by the Series A Indenture, and shall have no obligation
hereunder, to redeem or make any offer to redeem any Series B Notes at any time
that any Series A Notes remain outstanding.
ARTICLE IV
COVENANTS
Section 4.1 Payment of Series B Notes. Subject to the provisions of
Article VIII, the Series A Indenture and the Intercreditor Agreements and the
restrictions set forth in the Credit Agreement, the Company shall pay the
principal of, and premium, if any, and interest on, the Series B Notes on the
dates and in the manner provided in the Series B Notes and in this Indenture.
Principal, premium, or interest shall be considered paid on the date due if, by
the close of business on the day immediately preceding the date due, the Company
has deposited with the Paying Agent money in immediately available funds
designated for and sufficient to pay such principal, premium or interest;
provided, however, that principal, premium or interest shall not be considered
paid within the meaning of this Section 4.1 if money intended to pay such
principal, premium or interest is held by the Paying Agent for the benefit of
holders of Senior Indebtedness pursuant to the provisions of Article VIII. The
Paying Agent shall return to the Company, upon its written request, and no later
than five days following the date of payment, any money (including accrued
interest) that exceeds the amount then due and payable on the Series B Notes.
To the extent lawful, the Company shall pay interest (including
Post-Petition Interest) on overdue principal (whether such principal became due
by scheduled payment, pursuant to Article III, by acceleration pursuant to
Article V or otherwise), premium and interest (without regard to any applicable
grace period) at a rate equal to 15% per annum, compounded quarterly.
Subject to the rights of the Holders and the Trustee to accelerate
maturity of the Series B Notes as provided in the Series B Notes and in this
Indenture, the entire principal amount of the Series B Notes shall be absolutely
and unconditionally due and payable on March 29, 2003.
Section 4.2. Financial and Other Reports; Compliance Certificate;
Notice of Default.
<PAGE> 28
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(a) To the extent required by applicable law or regulation, including
the requirements of Section 13 or 15(d) of the Exchange Act, the Company shall
file with the SEC all quarterly and annual reports and such other information,
documents or other reports (or copies of such portions of any of the foregoing
as the SEC may by rules and regulations prescribe) required to be filed pursuant
to such provisions of the Exchange Act. The Company shall file with the Trustee,
within 5 days after it files the same with the SEC, copies of the quarterly and
annual reports and the information, documents, and other reports (or copies of
such portions of any of the foregoing as the SEC may by rules and regulations
prescribe) that it files with the SEC. The Company shall also comply with the
other provisions of TIA Section314(a). To the extent that the Company is not
subject to the requirements of Section 13 or 15(d) of the Exchange Act, the
Company nonetheless shall file with the Trustee, the information described in
Sections 13 and 15(d) of the Exchange Act within the time periods provided in
Sections 13 and 15(d) for filing with the SEC if the Company were subject to
Section 13 or 15(d) of the Exchange Act.
(b) The Company will deliver to each Holder:
(i) copies of all reports, financial statements, compliance
certificates and other notices and information required to be delivered to the
lender or lenders (or any agent therefor) under any Credit Agreement or to the
holders of the Series A Notes or to the trustee under the Series A Indenture,
promptly upon delivery thereof to such lender or lenders, holders or the
trustee, (or agent therefor), and copies of all notices of default delivered to
the Company by any such lender or lenders, holders or trustee, (or agent),
promptly upon receipt thereof by the Company; provided, that upon receipt by the
Company of a written request from any Holder to stop delivering such notices and
information to such Holder, the Company shall stop delivering such notices and
information to such Holder until such Holder delivers a written request to the
Company requesting that the Company recommence delivery of such notices and
information to such Holder; and
(ii) the Company's annual report to stockholders, promptly
upon delivery thereof to the stockholders.
(c) The Company shall deliver to the Trustee and mail to each Holder
within 60 days after the end of each of the first three fiscal quarters in each
fiscal year, and within 120 days after the end of each fiscal year, an Officers'
Certificate stating that a review of its activities and the activities of its
Subsidiaries during the preceding fiscal quarter or fiscal year has been made
under the supervision of the signing Officers with a view to determining whether
the Company has kept, observed, performed and fulfilled its obligations under
this Indenture and the Series B Notes and further stating, as to each such
Officer signing such certificate, whether or not the signer knows of any failure
by the Company or any Subsidiary of the Company to comply with any conditions or
covenants in this Indenture or the Series B Notes and, if such signer does know
of such a failure to comply, the certificate shall describe such failure with
particularity, and (iii) setting forth, in reasonable detail,
<PAGE> 29
-24-
calculations showing compliance (or failure to comply) by the Company, as at the
end of such fiscal quarter or fiscal year, with the covenants set forth in
Section 4.15 hereof.
(d) The Company shall, so long as any Series B Note is outstanding,
deliver to the Trustee and mail to each Holder, promptly upon becoming aware of
any Default or Event of Default under this Indenture or any Series B Note, an
Officers' Certificate specifying such Default or Event of Default and what
action the Company is taking or proposes to take with respect thereto.
Section 4.3 Limitation on Restricted Payments. The Company shall not,
and shall not permit any of its Subsidiaries to, directly or indirectly, (a)
declare or pay any dividend or make any distribution on account of, or purchase,
redeem or otherwise acquire for value, any Capital Stock or other Equity
Interests of the Company or any such Subsidiary (other than (i) dividends or
distributions payable by the Company in Capital Stock (other than Redeemable
Stock) of the Company, or (ii) dividends or distributions payable by a
Subsidiary of the Company in cash or Capital Stock (other than Redeemable Stock)
of such Subsidiary so long as, in the case of any dividend or distribution
payable on any class or series of any Capital Stock or Equity Interest of any
such Subsidiary, the Company or the Subsidiaries of the Company receive at least
their pro rata share of such dividend or distribution in accordance with their
Equity Interest in such class or series), or (b) purchase, redeem, or otherwise
acquire or retire for value, or make any payment or prepayment of principal,
interest or other amounts on or in respect of, any Subordinated Obligations,
directly or indirectly, (the foregoing actions set forth in clauses (a) and (b)
being referred to as "Restricted Payments").
Section 4.4 Corporate Existence. The Company shall do or cause to be
done all things necessary to preserve and keep in full force and effect its
corporate existence and the corporate or other existence of each of its
Subsidiaries in accordance with the respective organizational documents of each
of them and the rights (charter and statutory) and corporate franchises of the
Company and each of its Subsidiaries; provided, however, that the Company shall
not be required to preserve, with respect to itself, any right or franchise, and
with respect to any of its Subsidiaries, any such existence, right or franchise,
if (a) the Board of Directors of the Company shall determine (as evidenced by a
Board Resolution) that the preservation thereof is no longer desirable in the
conduct of the business of the Company and (b) the loss thereof is not
disadvantageous in any material respect to the business and operations of the
Company. The Company will not, and will not permit any of its Subsidiaries to,
engage in any business other than the business of owning, leasing, operating,
developing, re-imaging and acquiring restaurants and restaurant franchises (the
"Restaurant Business").
Section 4.5 Payment of Taxes and Other Claims. The Company shall, and
shall cause each of its Subsidiaries to, pay or discharge, or cause to be paid
or discharged, before the same shall become delinquent, (a) all material taxes,
assessments and governmental charges (including withholding taxes and any
penalties, interest and additions to taxes) levied
<PAGE> 30
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or imposed upon the Company or any of its Subsidiaries or upon any properties of
the Company or any of its Subsidiaries, and (b) all material claims, whether for
labor, materials, supplies, services or anything else, which become due and
payable and which by law have or may become a Lien upon the property of the
Company or any of its Subsidiaries; provided, however, that the Company and its
Subsidiaries shall not be required to pay or discharge or cause to be paid or
discharged any such tax, assessment, charge or claim whose amount, applicability
or validity is being contested in good faith by appropriate proceedings and for
which adequate reserves have been established in accordance with GAAP.
Section 4.6 Maintenance of Properties and Insurance. The Company shall
cause all properties used or useful to the conduct of its business and the
business of each of its Subsidiaries to be maintained and kept in good
condition, repair and working order (reasonable wear and tear excepted) and
supplied with all necessary equipment and shall cause to be made all necessary
repairs, renewals, replacements, betterments and improvements thereof, all as in
its reasonable judgment may be necessary, so that the business carried on in
connection therewith may be properly and advantageously conducted at all times;
provided, however, that nothing in this Section 4.6 shall prevent the Company or
any of its Subsidiaries from discontinuing any operation or maintenance of any
of such properties (including, but not limited to, the closing of any of the
restaurants it operates), or disposing of any of them, if such discontinuance or
disposal is (a) in the judgment of the Board of Directors of the Company (as
evidenced by a Board Resolution), desirable in the conduct of the business of
the Company or its Subsidiaries, (b) not prohibited by Section 4.11 hereof, and
(c) not disadvantageous in any material respect to the business and operations
of the Company.
The Company shall provide, or cause to be provided, for itself and each
of its Subsidiaries, insurance (including appropriate self-insurance) against
loss or damage of the kinds that, in the reasonable, good faith opinion of the
Company are adequate and appropriate for the conduct of the business of the
Company and its Subsidiaries in a prudent manner, with reputable insurers or
with the government of the United States of America or an agency or
instrumentality thereof, in such amounts, with such deductibles, and by such
methods as shall be customary, in the reasonable, good faith opinion of the
Company, and adequate and appropriate for the conduct of the business of the
Company and its Subsidiaries in a prudent manner for Persons similarly situated
in the restaurant industry.
Section 4.7 Compliance with Laws, Contracts, Licenses and Permits. The
Company will, and will cause each of its Subsidiaries to, comply in all material
respects with (a) all applicable laws and regulations wherever its business is
conducted, (b) the provisions of its charter documents and bylaws, (c) all
material agreements and instruments by which it or any of its properties may be
bound, and (d) all applicable decrees, orders, and judgments. If any
authorization, consent, approval, operating right, permit or license from any
officer, agency or instrumentality of any government shall become necessary or
required in order that the Company or any of its Subsidiaries may fulfill any of
its obligations hereunder or under the Series B Notes, the Company or such
Subsidiary will promptly take or cause to
<PAGE> 31
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be taken all reasonable steps within its power to obtain such authorization,
consent, approval, operating right, permit or license, and, upon written request
of any Holder, furnish to such Holder evidence thereof.
Section 4.8 Waiver of Stay, Extension or Usury Laws. The Company
covenants (to the extent that it may lawfully do so) that it will not at any
time insist upon, plead, or in any manner whatsoever claim or take the benefit
or advantage of, any usury law or other law which would prohibit or forgive the
Company from paying all or any portion of the principal of or interest on or
other amounts payable under this Indenture and the Series B Notes as
contemplated herein and therein, wherever enacted, now or at any time hereafter
in force, or which may affect the covenants or the performance of this Indenture
or the Series B Notes; and (to the extent that it may lawfully do so) the
Company hereby expressly waives all benefit or advantage of any such law insofar
as such law applies to this Indenture and the Series B Notes.
Section 4.9 Limitation on Additional Indebtedness. The Company will
not, and will not permit any of its Subsidiaries to, directly or indirectly,
create, incur, issue, assume, guarantee or otherwise become directly or
indirectly liable with respect to any Indebtedness or Redeemable Stock, except:
(a) Indebtedness of the Company under or in respect of the
Series A Indenture and the Series A Notes, as in effect on the Issue
Date or as amended, in an aggregate principal amount not to exceed
$6,000,000, less the amount of any repayment, prepayment or redemption
of the Series A Notes;
(b) Senior Credit Agreement Debt of the Company and its
Subsidiaries incurred from time to time;
(c) Indebtedness of the Company under or in respect of this
Indenture and the Series B Notes;
(d) Indebtedness of the Company and its Subsidiaries under
Interest Rate Agreements relating to Indebtedness permitted hereby;
(e) Existing Indebtedness, less the amount of any repayment,
prepayment, or redemption of Existing Indebtedness;
(f) Capitalized Lease Obligations and Indebtedness
constituting purchase money obligations for property acquired in the
ordinary course of business, provided, that the creation, incurrence,
or assumption of any such Indebtedness shall not cause any Default
under Section 4.15;
(g) other Indebtedness that is expressly permitted under
Section 7.2(g) or (h) of the Credit Agreement, as in effect on the
Issue Date;
<PAGE> 32
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(h) additional unsecured Indebtedness of the Company not
otherwise permitted by any of clauses (a) through (g) above, provided
that the aggregate outstanding principal amount of such additional
Indebtedness shall not at any time exceed $5,000,000; and
(i) Indebtedness of the Company incurred to refinance the
Series A Notes.
Section 4.10 Limitation on Investments. The Company shall not, and
shall not permit any of its Subsidiaries to, have outstanding or acquire or
commit itself to acquire or hold any Investment, except:
(a) Investments existing on the Issue Date and described on
Schedule 4.10 hereto;
(b) Investments by the Company and any of its Subsidiaries in
the Company or in any wholly-owned Subsidiary of the Company;
(c) Investments in: (i) cash, (ii) marketable obligations
issued or guaranteed by the United States of America which mature
within one (1) year after the date of acquisition thereof or which are
required to be repurchased, within ninety (90) days after the date of
acquisition thereof, by any commercial bank or trust company
incorporated under the laws of the United States of America or any
State thereof or the District of Columbia, (iii) commercial paper
maturing within one (1) year from the date of acquisition thereof and
having, at the date of acquisition thereof, the highest rating
obtainable from Moody's Investors Service, Inc. or Standard & Poor's
Corporation, (iv) bankers' acceptances eligible for rediscount under
Federal Reserve Board requirements accepted by any commercial bank or
trust company referred to in clause (ii) hereof, (v) certificates of
deposit maturing within one (1) year from the date of acquisition
thereof issued by any commercial bank or trust company referred to in
clause (ii) hereof, having capital and surplus of at least $100,000,000
and having at least an "A" rating or better, and (vi) certificates of
deposit issued by any bank organized under the laws of any other
jurisdiction and having combined capital and surplus of not less than
$100,000,000 and having at least an "A" rating or better;
(d) Investments expressly permitted under Section 7.10(a), (d)
and (g) of the Credit Agreement, as in effect on the Issue Date;
(e) Investments constituting Restaurant Acquisitions with (i)
Excess Sale Proceeds, (ii) Excess Securities Proceeds remaining after
the redemption of Series A Notes tendered pursuant to an Offer by the
Company under Section 4.13(b) of the Series A Indenture and if there
are no Series A Notes outstanding, Excess Securities Proceeds remaining
after the redemption of Series B Notes tendered pursuant to an
<PAGE> 33
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Offer by the Company under Section 4.12(b), or (iii) common stock of
the Company, provided, that the aggregate value of all common stock issued from
and after the Issue Date to acquire such assets shall not exceed $10,000,000.
For purposes of this paragraph (e), the value of common stock of the Company
issued in connection with any Investment shall be the average trading price for
common stock of the Company on a national securities exchange as of the close of
trading for the ten (10) trading days immediately preceding the date of such
Investment; and
(f) Investments constituting Restaurant Acquisitions not otherwise
permitted by clause (e) above, provided that the aggregate purchase price for
all such Restaurant Acquisitions by the Company and its Subsidiaries after the
Issue Date shall not exceed $1,000,000.
Section 4.11 Limitation on Mergers, Sales, etc.
(a) The Company will not, and will not permit any of its Subsidiaries
to (i) sell, lease, sublease or otherwise transfer or dispose of any property
(an "Asset Sale") or (ii) become a party to any merger or consolidation, except:
(A) Asset Sales consisting of sales of inventory in the
ordinary course of business, sales of obsolete equipment, or sales of
equipment which is uneconomic or no longer used by the Company or any
Subsidiary;
(B) mergers of any wholly-owned Subsidiary of the Company with
any other wholly-owned Subsidiary of the Company or with the Company,
provided, that in any such merger involving the Company, the Company
shall be the surviving corporation;
(C) Asset Sales from and after the Issue Date, provided, that
the consideration received by the Company or such Subsidiary on the
closing date of such Asset Sale shall be equal to the fair market value
of the assets sold and at least 80% of the consideration shall consist
of immediately available funds and provided, further, that Asset Sales
consummated during any Special Default Period shall be permitted to the
extent the aggregate proceeds from all such Asset Sales consummated
during all Special Default Periods does not exceed $25,000,000;
(D) Asset Sales in connection with sale/leaseback
transactions;
(E) Asset Sales by any wholly-owned Subsidiary of the Company
to the Company or to any other wholly-owned Subsidiary of the Company;
and
(F) Asset Sales expressly permitted by Section 7.5(e) of the
Credit Agreement, as in effect on the Issue Date.
<PAGE> 34
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Section 4.12 Subsidiary Payment Restrictions; Conflicting Agreements.
(a) The Company shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to
exist or become effective any encumbrance or restriction on the ability of any
Subsidiary to (i) pay dividends or make any other distributions on its Capital
Stock, or pay any Indebtedness owed to the Company or any of its Subsidiaries,
(ii) make loans or advances to the Company or any of its Subsidiaries or (iii)
transfer any of its properties to the Company or any of its Subsidiaries, except
for such encumbrances or restrictions existing under or by reason of (A) the
Credit Agreement, provided that such encumbrances or restrictions are no more
burdensome than those in effect under the Credit Agreement on the Issue Date,
(B) this Indenture or the Series B Notes, (C) the Series A Indenture or the
Series A Notes, provided that such encumbrances or restrictions are no more
burdensome than those in effect under the Series A Indenture or the Series A
Notes on the Issue Date, (D) applicable law, (E) customary non-assignment
provisions in leases and franchise agreements entered into in the ordinary
course of business and consistent with past practices, and (F) the instruments
governing purchase money obligations for property acquired in the ordinary
course of business that impose restrictions of the nature described in clause
(iii) above on the property so acquired.
(b) The Company will not enter into or become bound by any
agreement or instrument that directly restricts the Company from making any
payment on or in respect of the Series B Notes, except for the Credit Agreement,
the Series A Indenture, the Series A Notes, the Intercreditor Agreements and the
documents governing any refinancing of the Series A Notes, provided, that such
restrictions are not more restrictive than the restrictions provided in of the
Credit Agreement, the Series A Indenture, the Series A Notes and the
Intercreditor Agreements as in effect on the Issue Date.
Section 4.13 Issuance of Equity Securities.
(a) The Company shall not, and shall not permit any of its Subsidiaries
to, issue, sell, give away, transfer or assign any Equity Interests, except:
(i) the issuance of common stock or warrants to acquire common
stock to (A) the holders of Warrants upon exercise thereof in accordance with
the terms thereof as in effect on the Issue Date, and (B) holders of the Unit
Purchase Options upon exercise thereof in accordance with the terms thereof as
in effect on the Issue Date;
(ii) the issuance of employee stock options to employees or
directors of the Company or any of its Subsidiaries pursuant to an employee
stock option plan approved by the Board of Directors of the Company, and the
issuance of shares of common stock of the Company upon exercise of such options
in accordance with the terms thereof;
(iii) the issuance of Capital Stock of the Company
constituting a Restaurant Acquisition in compliance with Section 4.10(e)(iii);
<PAGE> 35
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(iv) the issuance and sale by the Company of Capital Stock of
the Company (other than Redeemable Stock) in one or more underwritten public
offerings or private placements (an "Equity Issuance"); provided that (A) the
consideration received by the Company from such Equity Issuance consists solely
of cash, and (B) all of the Excess Securities Proceeds of such Equity Issuance
are used by the Company as set forth in paragraphs (b) and (c) below; and
(v) any pledge of Capital Stock of any Subsidiary of the
Company to secure Senior Credit Agreement Indebtedness.
(b) If any Series A Notes are outstanding on the closing date of such
Equity Issuance, the Excess Securities Proceeds shall be applied in accordance
with Section 4.13(b) of the Series A Indenture, subject to the terms of the
Credit Agreement.
(c) If no Series A Notes are outstanding on the closing date of such
Equity Issuance or after giving effect to any redemption of Series A Notes
pursuant to Section 4.13(b) of the Series A Indenture with the Excess Securities
Proceeds of such Equity Issuance, within 10 days after the closing date of any
Equity Issuance or such longer period as required to first redeem the Series A
Notes, (an "Equity Issuance Trigger Date"), the Company shall, if and to the
extent permitted by the Credit Agreement, and subject to the provisions of
Article VIII, commence an Offer to redeem the maximum principal amount of Series
B Notes that may be redeemed with such Excess Securities Proceeds (as permitted
by the Credit Agreement), at the Redemption Price therefor, plus accrued and
unpaid interest thereon to the Redemption Date. The Offer shall be effected in
accordance with Section 3.8 and Article III (to the extent applicable) and the
provisions of this Section 4.13. To the extent that any Excess Securities
Proceeds remain after redemption of all Series B Notes tendered for redemption
pursuant to such Offer, the Company may use the remaining amount for any purpose
not prohibited by this Indenture.
Section 4.14 Transactions with Affiliates. The Company shall not, and
shall not permit any of its Subsidiaries to, directly or indirectly, enter into
any transaction with any Affiliate (an "Affiliate Transaction"), except for
transactions (including any investments, loans or advances by or to any
Affiliate) the terms of which in good faith are fair and reasonable to the
Company or such Subsidiary, as the case may be, and are at least as favorable as
the terms that could be obtained by the Company or such Subsidiary, as the case
may be, in a comparable transaction made on an arms' length basis between
unaffiliated parties; provided that with respect to any Affiliate Transaction
resulting in consideration to either party in excess of $250,000, a majority of
the Board of Directors of the Company that are not affiliated with the other
party to such Affiliate Transaction shall have approved such Affiliate
Transaction, as evidenced by a Board Resolution. Notwithstanding the foregoing,
the following transactions shall not be deemed to be Affiliate Transactions for
purposes of this covenant: (a) any Restricted Payment not otherwise prohibited
pursuant to Section 4.3, and (b) transactions between or among any of the
Company and its wholly-owned Subsidiaries.
<PAGE> 36
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Section 4.15 Financial Covenants. The Company will not:
(a) Consolidated Total Debt to Adjusted Consolidated EBITDA
Ratio. Permit the Consolidated Total Debt to Adjusted Consolidated
EBITDA Ratio (as hereinafter defined) for any Reference Period ending
in any period identified below to be greater than the ratio specified
below opposite such period:
<TABLE>
<CAPTION>
Maximum Consolidated
Total Debt to Consolidated
Period EBITDA Ratio
------ --------------------------
<S> <C>
June 30, 1996 6.92
September 30, 1996 6.71
December 31, 1996 6.37
March 31, 1997 6.09
June 30, 1997 5.88
September 30, 1997 and the end of each
quarterly Reference Period thereafter 5.54
</TABLE>
"Consolidated Total Debt to Adjusted Consolidated EBITDA Ratio" means,
in relation to any Reference Period, the ratio of (i) Consolidated
Total Debt at the end of such Reference Period, to (ii) Adjusted
Consolidated EBITDA for such Reference Period.
(b) Consolidated EBITDA to Consolidated Interest Expense
Ratio. Permit the Consolidated EBITDA to Consolidated Interest Expense
Ratio (as hereinafter defined) for any Reference Period ending in any
period identified below (provided that for the first three Reference
Periods ending after the Issue Date, the applicable Reference Period
shall be the period commencing April 1, 1996 and ending on the last day
of such Reference Period) to be less than the ratio specified below
opposite such period:
<TABLE>
<CAPTION>
Minimum Consolidated
EBITDA to Consolidated
Period Interest Expense Ratio
------ ----------------------
<S> <C>
March 31, 1996 and the end of each
quarterly Reference Period thereafter 1.00
</TABLE>
"Consolidated EBITDA to Consolidated Interest Expense Ratio" means, in
relation to any Reference Period, the ratio of (i) Consolidated EBITDA
for such Reference Period, to (ii) Consolidated Interest Expense for
such Reference Period.
<PAGE> 37
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Section 4.16 Amendments to Certain Documents.
(a) The Company will not, and will not permit any of its
Subsidiaries to, amend, modify, supplement or restate its articles or
certificate of incorporation or by-laws in any manner (unless required by
amendments after the date hereof to applicable corporate laws) that would
individually or in the aggregate materially adversely affect the rights or
interests of any Holder.
(b) The Company will not, and will not permit any of its
Subsidiaries to, amend, modify, supplement or restate any instrument or
agreement governing any Existing Indebtedness, the Series A Notes or the Series
A Indenture in any manner that would (i) increase the principal amount thereof
(except to the extent that the principal amount is increased as contemplated by
clauses (a)(ii) and (a)(iii) of the definition of Series A Debt), or (ii) make
the mandatory prepayment, repayment, redemption, repurchase or sinking fund
obligations thereunder more burdensome on the Company or any of its
Subsidiaries.
ARTICLE V
DEFAULTS AND REMEDIES
Section 5.1 Events of Default. "Event of Default," wherever used
herein, means the occurrence and continuance of any one of the following events
(whatever the reason for such Event of Default and whether it shall be caused
voluntarily or involuntarily or effected, without limitation, by operation of
law or pursuant to any judgment, decree or order of any court or any order, rule
or regulation of any administrative or governmental body):
(a) default in the payment of any interest upon any Series B Note as
and when the same becomes due and payable, and the continuance of such default
for a period of 10 Business Days;
(b) default in the payment of all or any part of the principal of any
of the Series B Notes when and as the same becomes due and payable at maturity
or otherwise, including default in the payment of the Redemption Price in
accordance with Article III;
(c) default in the performance of, or breach of, any covenant or
agreement of the Company set forth in Section 4.15 hereof;
(d) default in the observance or performance of, or breach of, any
covenant, agreement or warranty of the Company contained in this Indenture or
any Series B Notes (other than a default in the performance of any covenant,
agreement or warranty which is specifically addressed elsewhere in this Section
5.1), and continuance of such default or breach for a period of 30 days after
there has been delivered, by registered or certified mail, to the Company by the
Trustee or the Holders of at least 25% in aggregate principal amount
<PAGE> 38
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of the outstanding Series B Notes, a written notice specifying such default or
breach, requiring it to be remedied and stating that such notice is a "Notice of
Default" hereunder;
(e) any Indebtedness of the Company or any of its Subsidiaries in
excess of $1,000,000 shall be accelerated prior to its stated maturity date by
the holder or holders thereof;
(f) one or more judgments or decrees in an aggregate amount of
$1,000,000 or more shall be entered by a court or courts of competent
jurisdiction against the Company or any of its Subsidiaries (other than any
judgment as to which, and only to the extent that a reputable insurance company
has acknowledged coverage of such claim in writing), if, within 60 days after
entry thereof, any such judgments or decrees shall not have been satisfied and
discharged, bonded or stayed pending appeal, or within 60 days after expiration
of such stay any such judgments or decrees shall not have been discharged;
(g) a decree, judgment, or order by a court of competent jurisdiction
shall have been entered adjudging the Company as bankrupt or insolvent, or
approving as properly filed a petition seeking reorganization of the Company
under any Bankruptcy Law, and such decree or order shall have continued
undischarged and unstayed for a period of 60 days; or a decree or order of a
court of competent jurisdiction ordering the appointment of a Custodian for the
Company, or for the winding up or liquidation of the affairs of the Company,
shall have been entered, and such decree, judgment, or order shall have remained
in force undischarged and unstayed for a period of 60 days; or
(h) the Company shall institute proceedings to be adjudicated a
voluntary bankrupt, or shall consent to the filing of a bankruptcy proceeding
against it, or shall file a petition or answer or consent seeking reorganization
under any bankruptcy or similar law or similar statute, or shall consent to the
filing of any such petition, or shall consent to the appointment of a Custodian
of it or any of its material assets or property, or shall make a general
assignment for the benefit of creditors, or shall admit in writing its inability
to pay its debts generally as they become due.
Section 5.2 Acceleration of Maturity Date. If an Event of Default
(other than an Event of Default described in Section 5.1(g) or (h)) occurs and
is continuing, then, and in every such case, unless the principal of all of the
Series B Notes shall have already become due and payable, the Trustee or the
Holders of not less than 25% in aggregate principal amount of then outstanding
Series B Notes, by a notice in writing to the Company (an "Acceleration
Notice"), may declare all of the principal of the Series B Notes, together with
accrued interest thereon, to be due and payable immediately. If an Event of
Default specified in Section 5.1(g) or (h) occurs, all principal of and accrued
interest on the Series B Notes shall automatically be immediately due and
payable on all outstanding Series B Notes without any declaration or other act
on the part of the Trustee or the Holders.
<PAGE> 39
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Section 5.3 Other Remedies. Subject to the provisions of Article VIII,
if an Event of Default occurs and is continuing, the Trustee may pursue any
available remedy to collect the payment of principal or interest on the Series B
Notes or to enforce the performance of any provision of the Series B Notes or
this Indenture.
The Trustee may maintain a proceeding even if it does not possess any
of the Series B Notes or does not produce any of them in the proceeding. No
delay or omission by the Trustee or any Holder in exercising any right or remedy
accruing upon an Event of Default shall impair such right or remedy or
constitute a waiver of or acquiescence in the Event of Default. Every right and
remedy given by this Article V or by law to the Trustee and the Holders may be
exercised from time to time, and as often as may be deemed expedient, by the
Trustee or the Holders, as the case may be.
No right or remedy herein conferred upon or reserved to the Trustee or
the Holders is intended to be exclusive of any other right or remedy, and every
right and remedy shall, to the extent permitted by law, be cumulative and in
addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
Section 5.4 Waiver of Past Default. The Holder or Holders of not less
than a majority in aggregate principal amount of the outstanding Series B Notes
may, on behalf of all Holders, waive any past default hereunder and its
consequences, except any default:
(a) in the payment of the principal of or interest on any Series B Note
as specified in clauses (a) and (b) of Section 5.1, or
(b) in respect of a covenant or provision hereof which, under Article
VII, cannot be modified or amended without the consent of the Holder of each
outstanding Series B Note affected.
Upon any such waiver, such default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured, for every purpose
of this Indenture and the Series B Notes; but no such waiver shall extend to any
subsequent or other default or impair the exercise of any right arising
therefrom.
Section 5.5 Control by a Majority. Subject to Section 6.1(e), the
Holders of a majority in outstanding principal amount of Series B Notes may
direct the time, method and place of conducting any proceeding for any remedy
available to the Trustee or exercising any trust or power conferred on the
Trustee. However, the Trustee may refuse to follow any direction that conflicts
with applicable law or this Indenture, is unduly prejudicial to the rights of
other Holders, or would involve the Trustee in personal liability; provided that
the Trustee may take other action deemed proper by the Trustee which is not
inconsistent with such direction.
<PAGE> 40
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Section 5.6 Limitation on Suits. A Holder may, subject to the
subordination provisions set forth in Article VIII hereof and the provisions of
the Senior Subordinated Intercreditor Agreement binding on any Holder, pursue
any remedy with respect to this Indenture or the Series B Notes only if:
(a) the Holder gives to the Trustee written notice of a
continuing Default or Event of Default;
(b) the Holder or Holders of at least 25% in principal
amount of the Series B Notes make a written request
to the Trustee to pursue the remedy;
(c) such Holder or Holders offer to the Trustee indemnity
satisfactory to the Trustee against any loss,
liability or expense to be incurred in compliance
with such request;
(d) the Trustee does not comply with the request within
30 days after receipt of the request and the offer of
indemnity; and
(e) during such 30-day period the Holders of a majority
in principal amount of the Series B Notes do not give
the Trustee a direction inconsistent with the
request.
A Holder may not use this Indenture to prejudice the rights of another
Holder or to obtain a preference or priority over any other Holder. Holders of
the Series B Notes may not enforce this Indenture except as provided herein.
Section 5.7 Rights of Holders to Receive Payment. Notwithstanding any
other provision of this Indenture, but subject to Article VIII, the right of any
Holder of a Series B Note to receive payment of principal and interest on such
Series B Note on or after the respective dates expressed in such Series B Note,
or to bring suit for the enforcement of any such payment on or after such dates,
shall not be impaired or affected without the consent of such Holder.
Section 5.8 Collection Suit by Trustee. Subject to Article VIII, if an
Event of Default specified in Section 5.1(a) or (b) occurs and is continuing,
the Trustee is authorized to recover judgment in its own name and as trustee of
an express trust against the Company for (a) the principal, premium, if any, and
interest remaining unpaid on the Series B Notes, (b) interest on overdue
principal and premium, if any, and, to the extent lawful, interest, in each case
at the rate per annum expressly stated in the Series B Notes, and (c) such
further amount as shall be sufficient to compensate the Trustee for all unpaid
fees and expenses incurred in accordance with Section 6.7 hereof, and to cover
the costs and expenses of collection, including the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel
("Trustee Expenses").
<PAGE> 41
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Section 5.9 Trustee May File Proofs of Claim. Subject to the
subordination provisions set forth in Article VIII hereof and the provisions of
the Senior Subordinated Intercreditor Agreement binding on any Holder, the
Trustee may file such proofs of claim and other papers or documents and take
such other actions (including participating as a member, voting or otherwise, of
any committee of creditors appointed in the matter) as may be necessary or
advisable to have the claims of the Trustee (including any claim for Trustee
Expenses and for amounts due under Section 6.7) and the Holders allowed in any
Insolvency or Liquidation Proceeding or other judicial proceeding relative to
the Company, its creditors or its property and shall be entitled and empowered
to collect, receive and distribute to Holders any money or other property
payable or deliverable on any such claims and each Holder authorizes any
Custodian in any such Insolvency or Liquidation Proceeding or other judicial
proceeding to make such payments to the Trustee, and if the Trustee shall
consent to the making of such payments directly to the Holders, any such
Custodian is hereby authorized to make such payments directly to the Holders,
and to pay to the Trustee any amount due to it hereunder for Trustee Expenses,
and any other amounts due the Trustee under Section 6.7; provided, however, that
the Trustee shall not be authorized to (a) consent to, accept or adopt on behalf
of any Holder any plan of reorganization, arrangement, adjustment or composition
affecting the Series B Notes or the rights of any Holder, or (b) vote in respect
of the claim of any Holder in any such Insolvency or Liquidation Proceeding. To
the extent that the payment of any such Trustee Expenses, and any other amounts
due the Trustee under Section 6.7 out of the estate in any such proceeding,
shall be denied for any reason, payment of the same shall be secured by a Lien
on, and shall be paid out of, any and all distributions, dividends, money,
securities and other properties which the Holders may be entitled to receive in
such proceeding, whether in liquidation or under any plan of reorganization or
arrangement or otherwise.
Section 5.10 Priorities. If the Trustee collects any money pursuant to
this Article, it shall pay out the money in the following order:
First: to the Trustee for amounts due under Section 6.7;
Second: to the holders of Senior Indebtedness to the extent
required or permitted by Article VIII (subject to any
contractual arrangements among the holders of the
Senior Indebtedness, including Article VIII of the
Series A Indenture and the Senior Series A
Intercreditor Agreement);
Third: if, in accordance with Section 5.6, the Holders
proceed against the Company directly, without the
Trustee, to the Holders for their collection costs;
Fourth: to Holders for amounts due and unpaid on the Series B
Notes for principal and interest, ratably, without
preference or priority of any kind, according to the
amounts due and payable on the Series B
<PAGE> 42
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Notes for principal and interest, respectively, and
for all other amounts due under this Indenture or the
Series B Notes; and
Fifth: to the Company.
The Trustee may fix a record date and payment date for any payment to
Holders.
ARTICLE VI
TRUSTEE
Section 6.1 Duties of Trustee.
(a) If an Event of Default has occurred and is continuing, the
Trustee shall exercise such of the rights and powers vested in
it by this Indenture, and, subject to Section 5.5, use the
same degree of care and skill in their exercise, as a prudent
man would exercise or use under the circumstances in the
conduct of his own affairs.
(b) Except during the continuance of an Event of Default:
(1) The Trustee need perform only those duties that are
specifically set forth in this Indenture and no
others.
(2) In the absence of bad faith on its part, the Trustee
may conclusively rely, as to the truth of the
statements and the correctness of the opinions
expressed therein, upon certificates or opinions
furnished to the Trustee and conforming to the
requirements of this Indenture. However, the Trustee
shall examine the certificates and opinions to
determine whether they conform to this Indenture.
(c) The Trustee shall not be relieved from liability for its own
negligent action, its own negligent failure to act, or its own
willful misconduct, except that:
(1) this paragraph does not limit the effect of paragraph
(b) of this Section;
(2) the Trustee shall not be liable for any error of
judgment made in good faith by a Trust Officer,
unless it is proved that the Trustee was negligent in
ascertaining the pertinent facts; and
<PAGE> 43
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(3) the Trustee shall not be liable with respect to any
action it takes or omits to take in good faith in
accordance with a direction received by it pursuant
to Section 5.5.
(d) Every provision of this Indenture that in any way relates to
the Trustee shall be subject to paragraphs (a), (b) and (c) of
this Section.
(e) No provision of this Indenture shall require the Trustee to
expend or risk its own funds or incur any liability. The
Trustee may refuse to perform any duty or exercise any right
or power unless it receives indemnity reasonably satisfactory
to it against any loss, liability or expense.
(f) The Trustee shall not be liable for interest on any money
received by it except as otherwise agreed in writing with the
Company. Money held in trust by the Trustee need not be
segregated from other funds except to the extent required by
law.
Section 6.2 Rights of Trustee.
(a) The Trustee may rely on any document believed to be genuine
and to have been signed or presented by the proper Person. The
Trustee need not investigate any fact or matter stated in the
document.
(b) Before the Trustee acts or refrains from acting, it may
consult with counsel and may require an Officers' Certificate
or an Opinion of Counsel. The Trustee shall not be liable for
any action it takes or omits to take in good faith in reliance
on the Officer's Certificate or Opinion of Counsel.
(c) The Trustee may act through agents and shall not be
responsible for the misconduct or negligence of any agent
appointed with due care.
(d) The Trustee shall not be liable for any action it takes or
omits to take in good faith that it believes to be authorized
or within its rights or powers.
(e) the Trustee shall not be obligated to monitor or confirm, on a
continuing basis or otherwise, the Company's compliance with
the covenants contained in this Indenture nor shall it be
required to examine financial and other reports delivered to
the Trustee by the Company hereunder.
Section 6.3 Individual Rights of Trustee. The Trustee in its individual
or any other capacity may become the owner or pledgee of Series B Notes and may
otherwise deal with the Company with the same rights it would have if it were
not Trustee. Any Agent or an Affiliate may do the same with like rights.
However, the Trustee shall be subject to Sections 6.10 and 6.11.
<PAGE> 44
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Section 6.4 Trustee's Disclaimer. The Trustee makes no representation
as to the validity or adequacy of this Indenture or the Series B Notes, it shall
not be accountable for the Company's use of the proceeds from the Series B Notes
and it shall not be responsible for any statement in any Series B Note other
than its authentication.
Section 6.5 Notice of Defaults. If a Default occurs and is continuing
and if it is actually known to a Trust Officer of the Trustee, the Trustee shall
mail to each Holder notice of the Default as soon as practicable and in any
event within five (5) days of obtaining actual knowledge of such Default. Except
in the case of a Default in payment of the principal of or interest on any
Series B Note, the Trustee may withhold the notice if and so long as a committee
of its Trust Officers in good faith determines that withholding the notice is in
the interest of the Holders. The Trustee will not be deemed to have actual
knowledge of an event or circumstance or breach upon the occurrence of which the
Trustee may be required to act for purposes of this Indenture unless (a) it
shall have received written notice thereof from the Company or a Holder, (b) it
shall have been acting as Paying Agent when a default under Sections 5.1(a) or
(b) shall have occurred or (iii) a Trust Officer shall have actual knowledge
thereof.
Section 6.6 Reports by Trustee to Holders. After the Company qualifies
the Indenture under the TIA, the Trustee shall mail to each Holder a brief
report dated within 60 days after the reporting date that complies with TIA
Section 313(a) if required thereby. The Trustee also shall comply with TIA
Section 313(b)(2). The Trustee shall also transmit by mail all reports required
by TIA Section 313(c).
Commencing at the time this Indenture is qualified under the TIA, a
copy of each report at the time of its mailing to Holders shall be filed with
the SEC and each stock exchange on which the Series B Notes are listed. The
Company shall notify the Trustee when the Series B Notes are listed on any stock
exchange.
Section 6.7 Compensation and Indemnity. The Company shall pay to the
Trustee from time to time reasonable compensation for its services. The
Trustee's compensation shall not be limited by any law on compensation of a
trustee of an express trust. The Company shall reimburse the Trustee upon
request for all reasonable disbursements, expenses and advances incurred or made
by it. Such expenses shall include the reasonable compensation and disbursements
and expenses of the Trustee's agents and counsel.
The Company shall indemnify the Trustee and its officers, directors and
employees, against, and hold the Trustee and such persons harmless against, any
loss or liability incurred by it. The Trustee shall notify the Company promptly
of any claim for which it may seek indemnity. The Trustee may have separate
counsel and the Company shall pay the reasonable fees and expenses of such
counsel. The Company need not pay for any settlement made without its consent.
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Notwithstanding the foregoing, the Company need not reimburse any
expense or indemnify against any loss or liability incurred by the Trustee or
any such persons through their negligence or bad faith.
To secure the Company's payment obligations in this Section, the
Trustee shall have a Lien prior to the Series B Notes on all money or property
held or collected by the Trustee, except to the extent held in trust to pay
principal and interest on particular Series B Notes.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Sections 5.1(g) or (h) occurs, the expenses and the
compensation for the services are intended to constitute expenses of
administration under any Bankruptcy Law. If and to the extent that the Trustee
and its counsel and other persons not regularly in its employ do not receive
compensation for services rendered, reimbursement of its or their advances,
expenses and disbursements, or indemnity, as provided in this Section 6.7, as
the result of allowances made in any reorganization, bankruptcy, or readjustment
of obligations of the Company, the Trustee shall be entitled, prior to the
Holders, to receive any distribution of any securities, dividends or other
disbursements which would otherwise be made to the Holders in any such
proceeding or proceedings and the Trustee is hereby constituted and appointed,
irrevocably the attorney-in-fact for the Holders and each of them to collect and
receive, in their name, place and stead, such distributions, dividends or other
disbursements to deduct therefrom the amounts due to the Trustee, its counsel
and other persons not regularly in its employ on account of services rendered,
advances, expenses and disbursements made or incurred, or indemnity, and to pay
and distribute the balance, pro rata to the Holders. The Trustee shall have a
lien upon any securities or any other consideration to which the Holders may
become entitled pursuant to any such plan of reorganization or readjustment of
obligations, or in any such proceeding or proceedings.
Section 6.8 Replacement of Trustee. A resignation or removal of the
Trustee and appointment of a successor Trustee shall become effective only upon
the successor Trustee's acceptance of appointment as provided in this Section.
The Trustee may resign by so notifying the Company. The Holders of a
majority in principal amount of the Series B Notes may remove the Trustee by so
notifying the Trustee and the Company. The Company may remove the Trustee if:
(a) the Trustee fails to comply with Section 6.10;
(b) the Trustee is adjudged a bankrupt or an insolvent;
(c) a receiver or public officer takes charge of the Trustee or
its property; or
(d) the Trustee becomes incapable of acting.
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If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Company shall promptly appoint a successor
Trustee. Within one year after the successor Trustee takes office, the Holders
of a majority in principal amount of the Series B Notes may appoint a successor
Trustee to replace the successor Trustee appointed by the Company.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company or the
Holders of at least 10% in principal amount of the Series B Notes may petition
any court of competent jurisdiction for the appointment of a successor Trustee.
If the Trustee fails to comply with Section 6.10, any Holder may
petition any court of competent jurisdiction for the removal of the Trustee and
the appointment of a successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee or the Company, with the consent of
the successor Trustee, shall mail a notice of its succession to Holders. The
retiring Trustee shall promptly transfer all Property held by it as Trustee to
the successor Trustee, subject to the Lien provided for in Section 6.7.
Notwithstanding replacement of the Trustee pursuant to this Section 6.8, the
Company's obligations under Section 6.7 shall continue for the benefit of the
retiring Trustee.
Section 6.9 Successor Trustee by Merger, etc. If the Trustee
consolidates with, merges or converts with or into, or transfers all or
substantially all of its corporate trust business to, another Person, the
successor Person without any further act shall, if such resulting, surviving or
transferee Person is otherwise eligible hereunder, be the successor Trustee.
Section 6.10 Eligibility: Disqualifications. At all times this
Indenture shall have a Trustee which satisfies the requirements of TIA Section
310(a)(1) and (5), and the Trustee shall have a combined capital and surplus of
at least Fifty Million and 00/100 Dollars ($50,000,000.00). After such
qualification, the Trustee shall comply with TIA Section 310(b), including the
optional provision permitted by the second sentence of TIA Section 310(b)(9).
Section 6.11 Preferential Collection of Claims Against Company. After
the Company qualifies this Indenture under the TIA, the Trustee shall be subject
to TIA Section 311(a), excluding any creditor relationship listed in TIA Section
311(b). After such qualification, a Trustee which has resigned or been removed
shall be subject to TIA Section 311(a) to the extent indicated.
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Section 6.12 Intercreditor Agreements. With the consent of the Holders
of a majority in aggregate principal amount of the then outstanding Series B
Notes, by written consent of said Holders delivered to the Trustee, the Trustee
shall execute and deliver the Intercreditor Agreements and, subject to Section
7.1(d) below, any amendments to the Intercreditor Agreements and is hereby
authorized to perform in accordance thereto and in so doing shall have all of
the protections and immunities which it has hereunder.
ARTICLE VII
AMENDMENTS
Section 7.1 Amendments and Supplements.
(a) Except as set forth in paragraph (d) below, with the consent of the
Holders of a majority in aggregate principal amount of the then outstanding
Series B Notes, by written act of said Holders delivered to the Company and the
Trustee, the Company, when authorized by Board Resolutions, and the Trustee may
amend this Indenture, the Series B Notes or the Intercreditor Agreements for any
purpose. Except for such changes (i) as would require the consent of each Holder
pursuant to Section 7.2(d) below or (ii) as would violate the TIA as then in
effect, the Indenture and the Series B Notes may also be amended in accordance
with the Intercreditor Agreements.
(b) Upon the Company's request and after receipt by the Trustee of a
resolution of the Board of Directors authorizing the execution of any
supplemental indenture, or if any amendment required by the Intercreditor
Agreement requires the execution of a supplemental indenture, and upon receipt
of evidence of the Holders' consent, and the documents described in Section 7.5,
the Trustee shall join with the Company in the execution of such amended or
supplemental indenture unless such amended or supplemental indenture affects the
Trustee's own rights, duties or immunities under this Indenture or otherwise, in
which case the Trustee may in its discretion, but shall not be obligated to,
enter into such amended or supplemental indenture.
(c) Holders of a majority in aggregate principal amount of then
outstanding Series B Notes may waive any existing Default or Event of Default,
or compliance by the Company with any provision of this Indenture or the Series
B Notes.
(d) Notwithstanding any of the above, however, no amendment,
supplement, or waiver of any provision of this Indenture, the Series B Notes or
the Intercreditor Agreements shall, without the consent of the Holder of each
outstanding Series B Note affected thereby:
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(i) change the percentage of principal amount of Series B
Notes whose Holders must consent to an amendment or waiver of any
provision of this Indenture or the Series B Notes;
(ii) reduce the rate or extend the time for payment of
interest on any Series B Note;
(iii) reduce the principal amount of any Series B Note, or
reduce any Redemption Price;
(iv) change the stated maturity of any Series B Note or any
Redemption Date of any Series B Note;
(v) alter the redemption provisions of Article III or the
redemption provisions of Sections 4.11 or 4.13, in any case, in a
manner adverse to any Holder;
(vi) make any changes in the provisions concerning waivers of
Default or Events of Default by Holders of the Series B Notes or the
rights of Holders to recover the principal or interest on, or any
redemption payment with respect to, any Series B Note; or
(vii) make the principal of, or the interest on, any Series B
Note payable with anything or in any manner other than as provided for
in this Indenture and the Series B Notes as in effect on the date
hereof.
(e) It shall not be necessary for the consent of the Holders under this
Section 7.1 to approve the particular form of any proposed amendment or waiver,
but it shall be sufficient if such consent approves the substance thereof. After
an amendment, supplement or waiver under this Section 7.1 becomes effective, the
Company shall mail, or cause the Trustee to mail, to each Holder affected
thereby a notice briefly describing the amendment, supplement or waiver. Any
failure of the Company to mail such notice, or any defect therein, shall not,
however, in any way impair or affect the validity of any such amended or
supplemental indenture or waiver.
Section 7.2 Compliance with TIA. Every amendment or supplement to this
Indenture or the Series B Notes shall be set forth in an amended supplemental
indenture that complies with the TIA as then in effect.
Section 7.3 Revocation and Effect of Consents.
(a) Until an amendment, supplement or waiver becomes effective, a
consent to it by a Holder of a Series B Note is a continuing consent by the
Holder and every subsequent holder of a Series B Note or portion of a Series B
Note that evidences the same Indebtedness as the consenting Holder's Series B
Note, even if notation of the consent is not
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made on such Series B Note. However, any such Holder or subsequent holder may
revoke the consent as to his or her Series B Note or portion of a Series B Note
if the Trustee receives the notice of revocation before the date on which the
Trustee receives an Officers' Certificate certifying that the Holders of the
requisite principal amount of Series B Notes have consented (and not theretofore
revoked such consent) to the amendment or waiver.
(b) The Company may, but shall not be obligated to, fix a record date
for the purpose of determining the Holders of Series B Notes entitled to consent
to any amendment or waiver. If a record date is fixed, then notwithstanding the
provisions of the immediately preceding paragraph, those Persons who were
holders of Series B Notes at such record date (or their duly designated
proxies), and only those Persons, shall be entitled to consent to such amendment
or waiver or to revoke any consent previously given, whether or not such Persons
continue to be holders of Series B Notes after such record date. No consent
shall be valid or effective for more than 90 days after such record date.
(c) After an amendment or waiver becomes effective it shall bind every
Holder.
Section 7.4 Notation on or Exchange of Series B Notes. The Trustee may
place an appropriate notation about an amendment, supplement or waiver on any
Series B Note thereafter authenticated. The Company, in exchange for all Series
B Notes, may issue, and the Trustee shall authenticate, new Series B Notes that
reflect the amendment, supplement or waiver. Failure to make the appropriate
notation or issue a new Series B Note shall not affect the validity and effect
of such amendment, supplement or waiver.
Section 7.5 Trustee Protected. The Trustee shall sign any amendment or
supplemental indenture authorized pursuant to this Article VII if the amendment
does not adversely affect the rights, duties, liabilities or immunities of the
Trustee. If it does, the Trustee may, but need not, sign it. In signing such
amendment or supplemental indenture, the Trustee shall be entitled to receive
and, subject to Section 6.1, shall be fully protected in relying upon, an
Officers' Certificate and Opinion of Counsel pursuant to Sections 9.11 and 9.12
as conclusive evidence that such amendment or supplemental indenture is
authorized or permitted by this Indenture, that it is not inconsistent herewith,
and that it will be valid and binding upon the Company in accordance with its
terms. The Company may not sign an amendment or supplemental indenture until the
Board of Directors of the Company approves it.
ARTICLE VIII
SUBORDINATION
Section 8.1 Series B Notes Subordinated to Senior Indebtedness. The
Company agrees, and each Holder by his or her acceptance of his or her Series B
Note agrees, that
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the payment of the principal of and interest on, and all premiums, fees, costs,
expenses and liabilities arising under and in connection with, the Series B
Notes is expressly made and shall be subordinated and subject in right of
payment, to the extent and in the manner provided in this Article VIII, to the
prior payment in full of all Senior Indebtedness. References in this Article
VIII to the Series B Notes shall refer to all amounts arising thereunder or in
connection therewith.
This Article VIII shall constitute a continuing offer to all Persons
who, in reliance upon such provisions, become holders of, or continue to hold,
Senior Indebtedness, and such provisions are made for the benefit of the holders
of Senior Indebtedness, and such holders are made obligees hereunder and any one
or more of them may enforce such provisions.
Section 8.2 No Payment on the Series B Notes in Certain Circumstances.
(a) No payment shall be made on account of principal of or interest on
any Series B Note or to redeem (or make a deposit in redemption of) or acquire
any Series B Note (i) upon the final maturity of all Senior Indebtedness by
lapse of time, acceleration, demand or otherwise, unless and until all principal
thereof and interest thereon shall first be paid in full, or (ii) upon the
happening of any default in payment of any obligations owing in respect of any
Senior Indebtedness when the same becomes due and payable, unless and until such
default shall have been cured or waived or shall have ceased to exist; (iii)
upon the happening of an event of default with respect to any Senior
Indebtedness, as such event of default is defined in the instrument under which
it is outstanding, permitting any holders (or any requisite percentage thereof)
to accelerate the maturity thereof or demand payment (other than a default in
payment of the obligations owing in respect of such Senior Indebtedness); and
(iv) in the event of and during the continuance of any Insolvency or Liquidation
Proceeding.
(b) In furtherance of the provisions of Section 8.1, in the event that,
notwithstanding the foregoing provisions of this Section 8.2, any payment or
other distribution of any kind or character on account of any Series B Note or
to redeem (or make a deposit in redemption of) or acquire any Series B Note
shall be made by or on behalf of the Company and received by any Holder, the
Trustee or by any Paying Agent at a time when such payment was prohibited by the
provisions of this Section 8.2, then, unless and until such payment is no longer
prohibited by this Section 8.2, such payment shall be received and held in trust
by the Holder, the Trustee or the Paying Agent for the benefit of the holders of
Senior Indebtedness or their representative, ratably according to the respective
amounts of the Senior Indebtedness held or represented by each, to the extent
necessary to enable payment in full to the holders of Senior Indebtedness of all
Senior Indebtedness remaining unpaid, after giving effect to all concurrent
payments and distributions to or for the holders of Senior Indebtedness, and all
such payments shall promptly be paid over to the holders of Senior Indebtedness
or their agent or representative (subject to any contractual arrangements among
the holders of the Senior Indebtedness,
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including Article VIII of the Series A Indenture and the Senior Series A
Intercreditor Agreement).
Section 8.3 Series B Notes Subordinated to Prior Payment of All Senior
Indebtedness on Dissolution, Liquidation or Reorganization of the Company. Upon
any distribution of assets of the Company upon any dissolution, winding-up,
liquidation or reorganization of the Company (including, without limitation, in
bankruptcy, insolvency, or receivership proceedings or upon any assignment for
the benefit of creditors or any other marshaling of assets and liabilities of
the Company):
(a) the holders of all Senior Indebtedness shall first be entitled to
receive payment in full of the amounts thereof and interest thereon, before any
Holder is entitled to receive any payment on account of the principal of or
interest on any Series B Note (other than distributions of Reorganization
Securities);
(b) any payment or distribution of assets of the Company of any kind or
character, whether in cash, property or securities (other than Reorganization
Securities), to which any Holder would be entitled except for the provisions of
this Article VIII, shall be paid by the liquidating trustee or agent or other
Person making such a payment or distribution, directly to the holders of Senior
Indebtedness or their representative, ratably according to the respective
amounts of Senior Indebtedness held or represented by each (subject to any
contractual arrangements among the holders of the Senior Indebtedness, including
Article VIII of the Series A Indenture and the Senior Series A Intercreditor
Agreement), to the extent necessary to make payment in full of all Senior
Indebtedness remaining unpaid after giving effect to all concurrent payments and
distributions to or for the holders of such Senior Indebtedness; and
(c) in the event that, notwithstanding the foregoing, any payment or
distribution of assets of the Company of any kind or character, whether in cash,
property or securities (other than Reorganization Securities), shall be received
by any Holder, the Trustee or any Paying Agent (or, if the Company is acting as
its own Paying Agent, money for any such payment or distribution shall be
segregated or held in trust) on account of principal of or interest on any
Series B Note before all Senior Indebtedness is paid in full, such payment or
distribution shall be received and held in trust by the Holder, the Trustee or
Paying Agent for the benefit of the holders of the Senior Indebtedness or their
respective representative, ratably according to the respective amounts of Senior
Indebtedness held or represented by each, to the extent necessary to make
payment in full of all Senior Indebtedness remaining unpaid after giving effect
to all concurrent payments and distributions to or for the holders of such
Senior Indebtedness, and all such payments shall promptly be paid to the holders
of Senior Indebtedness or their representative (subject to any contractual
arrangements among the holders of the Senior Indebtedness, including Article
VIII of the Series A Indenture and the Senior Series A Intercreditor Agreement).
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Section 8.4 Holders to be Subrogated to Rights of Holders of Senior
Indebtedness. Subject to the payment in full of all Senior Indebtedness, each
Holder shall be subrogated to the rights of the holders of Senior Indebtedness
to receive payments or distributions of assets of the Company applicable to the
Senior Indebtedness until all amounts owing on the Series B Notes shall be paid
in full, and for the purpose of such subrogation no such payments or
distributions to the holders of Senior Indebtedness by or on behalf of the
Company, or by or on behalf of any Holder by virtue of this Article VIII, which
otherwise would have been made to any Holder shall, as between the Company, the
Holders and the holders of Senior Indebtedness, be deemed to be payment by the
Company on or on account of the Senior Indebtedness, it being understood that
the provisions of this Article VIII are and are intended solely for the purpose
of defining the relative rights of the Holders, on the one hand, and the holders
of Senior Indebtedness, on the other hand.
If any payment or distribution to which any Holder would otherwise have
been entitled but for the provisions of this Article VIII shall have been
applied, pursuant to the provisions of this Article VIII, to the payment of
amounts payable under the Senior Indebtedness, then such Holder shall be
entitled to receive from the holders of such Senior Indebtedness any payments or
distributions received by such holders of Senior Indebtedness in excess of the
amount sufficient to pay all amounts payable under or in respect of the Senior
Indebtedness in full.
Section 8.5 Obligations of the Company Unconditional. Nothing contained
in this Article VIII or elsewhere in this Indenture or the Series B Notes is
intended to or shall impair, as between the Company and the Holders, the
obligation of the Company, which is absolute and unconditional, to pay to the
Holders the principal of, redemption premium, if any, and interest on the Series
B Notes as and when the same shall become due and payable in accordance with the
terms hereof and thereof or is intended to or shall affect the relative rights
of the Holders and creditors of the Company other than the holders of the Senior
Indebtedness, nor shall anything herein or therein (except pursuant to the
Senior Subordinated Intercreditor Agreement binding on any Holder) prevent any
Holder from exercising all remedies otherwise permitted by applicable law upon
default hereunder or under the Series B Notes, subject to the rights, if any,
under this Article VIII, (including, without limitation, the rights of the
holders of Senior Indebtedness in respect of cash, property or securities of the
Company received upon the exercise of any such remedy). Notwithstanding anything
to the contrary in this Article VIII or elsewhere in this Indenture or the
Series B Notes, but subject to the subordination provisions of this Article
VIII, upon any distribution of assets of the Company referred to in this Article
VIII, each Holder shall be entitled to rely upon any order or decree made by any
court of competent jurisdiction in which such Insolvency or Liquidation
Proceeding is pending, or a certificate of the liquidating trustee or agent or
other Person making any distribution to such Holder for the purpose of
ascertaining the Persons entitled to participate in such distribution, the
holders of the Senior Indebtedness and other Indebtedness of the Company, the
amount thereof or payable thereon, the amount or amounts paid or distributed
thereon and all other facts pertinent thereto or to this Article VIII.
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Section 8.6 Subordination Rights Not Impaired by Acts or Omissions.
(a) No right of any present or future holders of any Senior
Indebtedness to enforce subordination provisions contained in this Article VIII
shall at any time in any way be prejudiced or impaired by any act or failure to
act on the part of the Company or by any act or failure to act, in good faith,
by any such holder, or by any noncompliance by the Company with the terms of
this Indenture or the Series B Notes, regardless of any knowledge thereof which
any such holder may have or be otherwise charged with.
(b) Subject to the limitations set forth in this Indenture and the
Series B Notes, without in any way limiting the generality of the foregoing
paragraph, the holders of Senior Indebtedness may, at any time and from time to
time, without the consent of or notice to the holders of any Indebtedness of the
Company (including any Holder), without incurring responsibility to the holders
of any Indebtedness of the Company (including any Holder), and without impairing
or releasing the subordination provisions contained in this Article VIII, or the
obligations hereunder of the holders of the Indebtedness of the Company, do any
one or more of the following: (a) change the manner, place or terms of payment
or extend the time of payment of, or renew or alter, all or any of the Senior
Indebtedness or any instrument evidencing the same or any agreement under which
Senior Indebtedness is outstanding: (b) sell, exchange, release or otherwise
deal with any property pledged, mortgaged or otherwise securing Senior
Indebtedness or fail to perfect or delay the perfection of any such Lien; (c)
release any Person liable in any manner for the collection of Senior
Indebtedness; and (d) exercise or refrain from exercising any rights against the
Company and any other Person.
Section 8.7 Article VIII Not to Prevent Events of Default. The failure
to make a payment on account of principal of or interest on the Series B Notes
by reason of any provision of this Article VIII shall not be construed as
preventing the occurrence of a Default or an Event of Default under Section 5.1,
or the exercise by the Trustee or any Holder of any rights or remedies (but
subject to the provisions of the Senior Subordinated Intercreditor Agreement
binding on any Holder) under this Indenture or the Series B Notes or available
at law or in equity, subject only to the obligations (if any) of the Trustee and
the Holders to hold property received upon exercise of such rights or remedies
in trust for the benefit of holders of Senior Indebtedness pursuant to Sections
8.2 and 8.3 hereof.
Section 8.8 Notice.
(a) Neither the Trustee nor any Paying Agent shall at any time be
charged with knowledge of the existence of any facts that would prohibit the
making of any payment to or by the Trustee or Paying Agent under this Article
VIII, unless and until the Trustee or Paying Agent shall have received written
notice thereof from the Company, one or more holders of Senior Indebtedness or a
representative of any holders of Senior Indebtedness; and, prior to the receipt
of any such written notice, the Trustee or Paying Agent shall be entitled to
assume conclusively that no such facts exist. The Trustee shall be entitled to
rely
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upon the delivery to it of written notice by a Person representing itself to be
a holder of Senior Indebtedness (or a representative thereof) to establish that
such notice has been given. In the event that the Trustee or Paying Agent
determines in good faith that further evidence is required with respect to the
right of any Person as a holder of Senior Indebtedness to participate in any
payment or distribution pursuant to this Article VIII, the Trustee or Paying
Agent may request such Person to furnish evidence to the reasonable satisfaction
of the Trustee or Paying Agent as to the amount of Senior Indebtedness held by
such Person, the extent to which such Person is entitled to participate in such
payment or distribution and any other facts pertinent to the rights of such
Person under this Article VIII, and if such evidence is not furnished, the
Trustee or Paying Agent may defer any payment to such Person pending judicial
determination as to the right of such Person to receive such payment.
(b) The Company shall promptly notify the Trustee and the Paying Agent
in writing of any facts it knows that would cause a payment of principal of or
interest on the Series B Notes or any other amount in respect of this Indenture
or the Series B Notes to violate this Article VIII, but failure to give such
notice shall not affect the subordination of the Series B Notes to the Senior
Indebtedness as provided in this Article VIII or the rights of holders of such
Senior Indebtedness under this Article VIII.
Section 8.9 Rights of Trustee and Paying Agent. The Trustee or Paying
Agent may continue to make payments on the Series B Notes unless at least 2
Business Days prior to any payment date it has received written notice of facts
that would cause a payment or distribution on account of the Series B Notes to
violate this Article VIII. Only the Company, a representative of Senior
Indebtedness, or a holder of Senior Indebtedness that has no representative may
give such notice.
To the extent permitted by the TIA, the Trustee in its individual or
any other capacity may hold Indebtedness of the Company (including Senior
Indebtedness) with the same rights it would have if it were not Trustee. Any
Agent may do the same with like rights.
Section 8.10 Agreement to Effectuate Subordination.
(a) Each holder of a Series B Note by its acceptance thereof agrees to
take such action as may be reasonably necessary or appropriate to effectuate, as
between the holders of Senior Indebtedness and such holder of a Series B Note,
the subordination provided for in this Article VIII. All actual out-of-pocket
expenses (including, without limitation, reasonable attorneys' fees) incurred by
any holder of a Series B Note in connection with the taking of any such action
or otherwise complying with this Section 8.10 shall be paid by the Company.
(b) The provisions of Article VIII (including, without limitation, this
paragraph 8.11) may not be amended, modified or waived without the prior written
consent of the holders
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of a majority of the outstanding Senior Indebtedness. The provisions set forth
in Article VIII constitute a continuing agreement and shall:
(i) be and remain in full force and effect at any time, and
from time to time, during which any Senior Indebtedness shall remain
outstanding;
(ii) be binding upon the holders of Series B Notes and the
Company and its successors, transferees and assigns; and
(iii) inure to the benefit of, and be enforceable in
accordance with the terms hereof directly by, the holders of Senior Indebtedness
(subject to the limitations set forth herein) and their respective successors,
transferees and assigns, against the holders of Series B Notes and the Company.
No amendment, modification or waiver of any provision of this Article VIII that
materially adversely affects the rights of the holders of one particular Class
(as defined below) of Senior Indebtedness (as compared to the rights of such
holders immediately prior to such amendment, modification or waiver) shall be
effective unless the holders of a majority of the outstanding Senior
Indebtedness in such Class shall have consented to such amendment, modification
or waiver. As used herein, a "Class" of Senior Indebtedness shall mean any one
of the following: (A) the Senior Credit Agreement Debt, or (B) the Series A
Debt.
Section 8.11 Prohibited Payments Held in Trust. If the Company shall
make, or any Holder shall receive or retain, in contravention of this Article
VIII any payment or distribution of the Company's assets of any kind or
character, whether in cash, securities or other property, to which such Holder
shall not be entitled, then such payment or distribution shall be received and
held by such Holder in trust for the benefit of the holders of Senior
Indebtedness and promptly shall be paid over or delivered to the holders of
Senior Indebtedness (or to the agent for such holders of Senior Indebtedness)
for application to the payment or prepayment of Senior Indebtedness.
Section 8.12 No Waiver of Subordination Provisions. No right of any
holder of any Senior Indebtedness to enforce its rights under this Agreement
shall at any time in any way be prejudiced or impaired by any act or failure to
act on the part of the Company or by any act or failure to act by any such
holder, or by any non-compliance by the Company with the terms, provisions and
covenants of this Agreement, regardless of any knowledge thereof which any such
holder may have or with which such holder may be charged.
<PAGE> 56
-51-
ARTICLE IX
MISCELLANEOUS
Section 9.1 Trust Indenture Act Controls. If any provision of this
Indenture limits, qualifies, or conflicts with the duties imposed by operation
of Section 318(c) of the TIA, the imposed duties shall control.
Section 9.2 Successors and Assigns. The terms and conditions of this
Indenture shall inure to the benefit of and be binding upon the respective
heirs, personal representatives, successors and permitted assigns of the
parties. Nothing in this Indenture, express or implied, is intended to confer
upon any party other than the parties hereto or their respective heirs, personal
representatives, successors and permitted assigns any rights, remedies,
obligations, or liabilities under or by reason of this Indenture, except as
expressly provided in Section 9.15. Each Holder, by its acceptance of its Series
B Note, agrees that it may not transfer or assign such Series B Note or any of
its rights and interests hereunder or thereunder, unless the Holder transfers or
assigns its rights and interests to outstanding principal with such Series B
Note in an amount equal to at least $250,000, provided, however, no Holder may
transfer or assign after the Issue Date its rights and interests to outstanding
principal of such Series B Notes in an amount greater than 21.92% of the
aggregate principal amount of Series B Notes held by such Holder on the Issue
Date.
Section 9.3 Governing Law. This Indenture shall be governed by and
construed under the internal substantive laws of the State of Arizona.
Section 9.4 Titles and Subtitles. The titles and subtitles used in this
Indenture are used for convenience only and are not to be considered in
construing or interpreting this Indenture.
Section 9.5 Notices. Any notice, authorization, request or demand
required or permitted to be given hereunder shall be in writing and shall be
deemed to have been duly given when received by an overnight delivery service or
when sent by facsimile addressed as follows:
TO THE COMPANY:
DenAmerica Corp.
7373 No. Scottsdale Road, Suite D120
Scottsdale, Arizona 85253
Attn: Todd S. Brown
Tel: (602) 483-7055
Fax: (602) 483-9592
TO THE TRUSTEE:
<PAGE> 57
-52-
State Street Bank and Trust Company
22 Franklin Street
Boston, Massachusetts 02110
Attention: Corporate Trust Department
Any notice or communication to a Holder shall be mailed by first-class
mail, postage prepaid, to his or her address shown on the register maintained by
the Registrar. Failure to mail a notice or communication to a Holder or any
defect in it shall not affect its sufficiency with respect to other Holders. If
a notice or communication is mailed in the manner provided above within the time
prescribed, it is duly given, effective 48 hours after the date of mailing,
whether or not the addressee receives it. If the Company mails a notice or
communication to any Holder, it shall mail a copy to the Trustee and each Agent
at the same time.
Section 9.6 Severability. If one or more provisions of this Indenture
are held to be unenforceable under applicable law, such provision shall be
excluded from this Indenture and the balance of this Indenture shall be
interpreted as if such provision were so excluded and shall be enforceable in
accordance with its terms.
Section 9.7 Expenses. The Company shall pay on demand all reasonable
out-of-pocket costs and expenses (including reasonable attorneys' fees) incurred
by any Holder in connection with any amendments or waivers of any of the terms
hereof, or any enforcement by any Holder of any of the covenants of the Company
hereunder.
Section 9.8 Waiver of Demand for Payment. etc. Except for notices
expressly required by his Indenture, the Company waives demand for payment,
presentment for payment, protest, notice of protest, notice of dishonor, notice
of nonpayment, notice of acceleration of maturity and diligence in taking any
action to collect sums owing hereunder.
Section 9.9 Communication by Holders with Other Holders. Holders may
communicate pursuant to Section 312(b) of the TIA with other Holders with
respect to their rights under this Indenture or the Series B Notes. The Company,
the Trustee, the Registrar and any other Person shall have the protection of
Section 312(c) of the TIA.
Section 9.10 Certificate and Opinion as to Conditions Precedent. Upon
any request or application by the Company to the Trustee to take any action
under this Indenture, the Company shall furnish to the Trustee: (a) an Officers'
Certificate (which shall include the statements set forth in Section 9.11)
stating that, in the opinion of the signers, all conditions precedent and
covenants, if any, provided for in this Indenture relating to the proposed
action have been complied with; and (b) an Opinion of Counsel (which shall
include the statements set forth in Section 9.11) stating that, in the opinion
of such counsel, all such covenants and conditions precedent provided for in
this Indenture relating to the proposed action have been complied with.
<PAGE> 58
-53-
Section 9.11 Statements Required in Certificate or Opinion. Each
certificate or opinion with respect to compliance with a condition or covenant
provided for in this Indenture (other than a certificate provided pursuant to
Section 314(a)(4) of the TIA) shall include: (a) a statement that the Person
making such certificate or opinion has read such covenant or condition; (b) a
brief statement as to the nature and scope of the examination or investigation
upon which the statements or opinions contained in such certificate or opinion
are based; (c) a statement that, in the opinion of such Person, he has made such
examination or investigation as is necessary to enable him to express an
informed opinion as to whether or not such covenant or condition has been
compiled with; and (d) a statement as to whether, in such Person's opinion, such
condition or covenant has been complied with.
Section 9.12 Rules by Trustee and Agents. The Trustee may make
reasonable rules for action by or at a meeting of Holders. The Registrar or
Paying Agent may make reasonable rules and set reasonable requirements for its
functions.
Section 9.13 Initial Appointments, Compliance Certificates. The Company
initially appoints the Trustee as authenticating agent. The first compliance
certificate to be delivered by the Company to the Trustee pursuant to Section
4.2 shall be for the Reference Period ending on March 31, 1996.
Section 9.14 Third Party Beneficiaries. Holders of Senior Indebtedness
are third party beneficiaries of, and any of them (or their representative)
shall have the right to enforce the provisions of this Indenture that benefit
such Holders.
Section 9.15 Series B Notes Not Readily Tradable. The Series B Notes
are not intended to be readily tradable on an established securities market.
Neither the Holder, nor the Company, shall take any steps or agree to take steps
to allow or create a market for such Series B Notes, including allowing the
Series B Notes to become part of an issue that is traded in an established
securities market or regularly quoted by brokers or dealers making a market in
such obligations.
<PAGE> 59
-54-
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly
executed, and their respective corporate seals to be hereunto affixed and
attested, all as at the date first written above.
THE COMPANY:
DENAMERICA CORP., a Georgia corporation
By:_____________________________________
Name:________________________________
Title:_______________________________
THE TRUSTEE:
STATE STREET BANK AND TRUST COMPANY
By:_____________________________________
Name:________________________________
Title:_______________________________
<PAGE> 60
Form of DenAmerica Series B Note
--------------------------------
(Face of Series B Note)
DENAMERICA CORP.
Series B 13% Subordinated Note due March 29, 2003
CUSIP # 248 225 AB 0 Issue Date: March 29, 1996
No. B-___ $_____________
DenAmerica Corp., a Georgia corporation (the "Company"), which term
includes any successor entity under the Indenture hereinafter referred to, for
value received, hereby promises to pay to
_________________________________________________________________ ____, or
its/his registered assigns, the principal sum of _________________________ and
no/100ths Dollars on March 29, 2003.
Interest Payments Dates: March 29 and September 29, commencing
September 29, 1996.
Record Dates: September 19 and March 19.
Reference is hereby made to the further provisions of this Note set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
IN WITNESS WHEREOF, the Company has caused this Note to be signed
manually or by facsimile by its duly authorized officers.
DENAMERICA CORP.,
a Georgia corporation
By:
------------------------------
Its:
By:
------------------------------
Its:
CERTIFICATE OF AUTHENTICATION
This is one of the Series B Notes referred to in the within mentioned Indenture.
________________________, as Trustee, OR________________________,
as Authenticating Agent,
By: By:
--------------------- ------------------------
Authorized Officer Authorized Signature
<PAGE> 61
(Reverse Side of Series B Note)
Series B 13% Subordinated Note due March 29, 2003
1. Interest. The Company promises to pay interest on the principal
amount of this Note at the rate and in the manner specified below. Interest on
this Note will accrue at 13% per annum from the date this Note is issued until
maturity and will be payable semiannually in immediately available funds on
March 29 and September 29 of each year, or if any such day is not a Business
Day, on the next succeeding Business Day (each an "Interest Payment Date").
Interest on this Note will accrue from the most recent date on which interest
has been paid or, if no interest has been paid, from March 29, 1996, provided
that the first Interest Payment Date shall be September 29, 1996. To the
extent lawful, the Company shall pay interest (including Post-Petition
Interest) on overdue principal (whether such principal became due by scheduled
payment, pursuant to Article III of the Indenture, by acceleration pursuant to
Article V of the Indenture or otherwise), and premium, if any, from time to
time on demand at the rate of 15% per annum, compounded quarterly, and shall
pay interest on overdue installments of interest (without regard to any
applicable grace period) from time to time on demand at the same rate,
compounded quarterly. Interest will be computed on the basis of a 360-day year
of twelve 30-day months.
2. Method of Payment. The Company will pay interest on this Note
(except defaulted interest) to the Person who is the registered Holder of this
Note at the close of business on the record date for the next Interest Payment
Date even if such Note is cancelled after such record date and on or before
such Interest Payment Date. The Company will pay principal, premium, if any,
and interest in money of the United States that at the time of payment is legal
tender for payment of public and private debts. However, the Company may pay
principal, premium, if any, and interest by wire transfer of Federal funds, or
interest by check payable in such money, and any such check may be mailed to a
Holder's registered address.
3. Registrar and Paying Agent. The Trustee will initially act as the
Registrar and the Paying Agent. The Company may appoint one or more
co-registrars and one or more additional paying agents reasonably acceptable to
the Trustee. The Company may change the Paying Agent, any additional paying
agent, the Registrar or any co-registrar without prior notice to any Holder.
The Company or any of its Affiliates may act in any such capacity.
4. Indenture. The Company issued the Notes under an Indenture, dated
as of March 29, 1996 (the "Indenture"), by and among the Company, as issuer of
the Notes, and State Street Bank and Trust Company, as trustee (the "Trustee").
The terms of the Notes include those stated in the Indenture and those made
part of the Indenture by reference to the Trust Indenture Act of 1939, as in
effect on the date of the original issuance of the Notes (the "Trust Indenture
Act"). The Notes are subject to, and qualified by, all such terms, certain of
which are summarized herein, and Holders are referred to the Indenture and the
Trust Indenture Act for a statement of such terms. All capitalized terms not
defined herein shall have the meanings assigned them in the Indenture. The
Notes are unsecured general obligations of the Company limited to $18,250,000
in aggregate principal amount.
5. Redemption Provisions. Subject to restrictions on redemptions set
forth in the Credit Agreement, the Series A Indenture, the Indenture and the
Company Intercreditor Agreement, the Notes will be subject to redemption at the
option of the Company, in whole or in part, at the Redemption Prices (expressed
as percentages of the then outstanding principal amount of the Notes) set forth
below, plus any accrued and unpaid interest to the Redemption Date, if redeemed
during the twelve-month period beginning on March 29 of the years indicated
below:
<TABLE>
Year Percentage
<S> <C>
1999 103%
2000 102%
2001 101%
2002 and thereafter 100%
</TABLE>
<PAGE> 62
Anything contained in the foregoing to the contrary notwithstanding,
subject to the restrictions on redemption set forth in the Credit Agreement,
the Series A Indenture and the Company Intercreditor Agreement, at any time
prior to March 29, 1999, the Company may also redeem the Notes, or any portion
thereof, at a Redemption Price equal to 100% of the principal amount thereof,
plus accrued and unpaid interest to the Redemption Date.
6. Mandatory Offers. (a) Subject to restrictions set forth in the
Credit Agreement, the Series A Indenture, the Indenture and the Company
Intercreditor Agreement, within 10 Business Days after any Equity Issuance
Trigger Date, the Company shall mail a written offer to each Holder (with a
copy to the Trustee) to redeem the Notes ("Offer"), which Offer shall state a
number of items as set forth in Section 3.8 of the Indenture.
(b) Holders may tender all or, subject to Section 7 below, any portion
of their Notes, relating to an Offer by completing the form below entitled
"OPTION OF HOLDER TO ELECT REDEMPTION" and by complying with Section 3.8 of the
Indenture.
(c) Subject to the provisions of Article VIII of the Indenture,
promptly after consummation of an Offer, (i) the Paying Agent shall mail to
each Holder of Notes or portions thereof accepted for payment, an amount equal
to the Redemption Price for, plus any accrued and unpaid interest on, such
Notes, (ii) with respect to any tendered Note not accepted for payment in whole
or in part, the Trustee shall return such Note to the Holder thereof, and (iii)
with respect to any Note accepted for payment in part, the Trustee shall
authenticate and mail to each such Holder a new Note equal in principal amount
to the unredeemed portion of the tendered Note.
(d) The Company will (i) publicly announce the results of the Offer on
or as soon as practicable after the Redemption Date, and (ii) comply with Rule
14e-1 under the Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated by the SEC thereunder, and any other securities laws
and regulations to the extent such laws and regulations are applicable to any
Offer.
<PAGE> 63
7. Notes to be Redeemed. The Notes may be redeemed in part, but only
in principal amounts of $1,000 or integral multiples thereof, unless all Notes
held by a Holder are to be redeemed. As of the Redemption Date, interest shall
cease to accrue on the Notes or portions thereof redeemed.
8. Transfer and Exchange. Holders seeking to transfer or exchange
their Notes may be required, among other things, to furnish appropriate
endorsements and transfer documents and to pay any transfer tax, assessment or
similar governmental charge required by law or permitted by the Indenture.
Section 2.6 of the Indenture contains certain limitations on transfers and
exchanges.
9. Persons Deemed Owners. The registered Holder of a Note may be
treated as its owner for all purposes.
10. Amendments and Waivers. (a) Subject to certain exceptions, the
Indenture and the Notes may be amended or supplemented for any purpose with the
written consent of the Holders of a majority in aggregate principal amount of
the then outstanding Notes. Any existing Default or Event of Default or
non-compliance by the Company with any provision of the Indenture or the Notes
may be waived with the written consent of the Holders of a majority in
aggregate principal amount of the then outstanding Notes.
(b) Certain provisions of the Indenture or the Notes cannot be
amended, supplemented or waived without the consent of each Holder of the Notes
affected thereby.
11. Events of Default and Remedies. Events of Default and remedies
are described in Article V of the Indenture.
12. Subordination. All obligations owed under and in respect of the
Notes are subordinated, to the extent and in the manner provided in Article
VIII of the Indenture, to the prior payment in full of all obligations owed
under and respect of all Senior Indebtedness of the Company. The subordination
of the Notes is for the benefit of all holders of all Senior Indebtedness of
the Company, whether outstanding on the Issue Date or issued thereafter. The
Company agrees, and each Holder by accepting a Note agrees, to the
subordination.
<PAGE> 64
13. Governing Law. This Note shall be governed by and construed under
the internal laws of the State or Arizona, without regard to the conflict of
laws provisions thereof, as applied to agreements entered into and to be
performed entirely within Arizona.
14. Authentication. This Note shall not be valid until authenticated
by the manual signature of the Trustee or an authenticating agent acceptable to
the Company.
15. CUSIP Numbers. The Company has caused CUSIP numbers to be printed
on the Notes and has directed the Trustee to use CUSIP numbers in notices of
redemption, purchase or exchange, as a convenience to Holders. No
representation is made as to the correctness or accuracy of the CUSIP number
printed on the Notes or as contained in any notice of redemption, purchase or
exchange and reliance may be placed only on the other identification numbers
printed on the Notes.
16. Copy of Indenture. The Company will furnish to any Holder upon
written request and without charge a copy of the Indenture, which contains more
detailed information regarding the terms of the Notes. Requests may be made
to:
DenAmerica Corp.
7373 N. Scottsdale Road
Suite D120
Scottsdale, Arizona, 85253
Attention: Todd S. Brown
17. Conflicts/Inconsistencies. In the event of any conflicts or
inconsistencies between the terms of the Indenture and this Note, the terms of
the Indenture shall prevail.
<PAGE> 65
ASSIGNMENT FORM
To assign this Note, fill in the form below:
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto __________________________________________, whose identifying
information is listed below,
the within Note and all rights thereunder, hereby irrevocably constituting and
appointing ____________________________________ to transfer said Note on the
books of the Company. The agent may substitute another to act for such agent.
By:
----------------------------------------------
(Sign exactly as your name appears on the
other side of this Note)
Address:
------------------------------------------
City, State:
--------------------------------------
Zip:
----------------------------------------------
Social Security No.
-------------------------------
(or other identifying number of assignee)
Date:
------------------------------------------
(Note: Please print or type information above)
- -------------------------------------
Signature Guarantee
Date:
--------------------------------
<PAGE> 66
OPTION OF HOLDER TO ELECT REDEMPTION
If you elect to have this Note redeemed by the Company pursuant to
Section 3.8 of the Indenture, check the box: / /
If you elect to have only part of this Note redeemed by the Company
pursuant to Section 3.8 of the Indenture, state the amount (multiples of $1,000
only): $
------------
By:
-------------------------------------------
(Sign exactly as your name appears
on the other side of this Note)
Date:
-----------------------------------------
- ---------------------------------------
Signature Guarantee
Date:
----------------------------------
<PAGE> 1
EXHIBIT 10.95
DENAMERICA CORP.
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT ("Agreement") is made as of the
29th day of March, 1996, by and between DENAMERICA CORP., a Georgia corporation
formerly known as American Family Restaurants, Inc., ("DenAmerica"), and WILLIAM
G. COX ("Cox").
WHEREAS, Cox and DenAmerica have entered into an Employment
Agreement as of December 8, 1995 (the "Employment Agreement"), whereby Cox will
serve as the Chief Operating Officer of DenAmerica;
WHEREAS, the Employment Agreement provides that DenAmerica
will grant to Cox an option to purchase shares of the common stock of DenAmerica
(the "Stock");
WHEREAS, DenAmerica considers it desirable and its best
interest that Cox be given an inducement to acquire a proprietary interest in
DenAmerica and added incentive to advance the interest of DenAmerica by
possessing an option to purchase shares of Stock.
NOW, THEREFORE, in consideration of the promises and of the
mutual covenants herein contained, it is agreed by and between the parties as
follows:
1. GRANT OF OPTION. Subject in all respects to the terms,
conditions and provisions of this Agreement, DenAmerica grants to Cox, as of the
date of this Agreement (the "Grant Date"), the right, privilege and option (the
"Option") to purchase 300,000 shares of Stock (the "Optioned Shares").
2. OPTION PRICE. The purchase price (the "Option Price") of
the Optioned Shares is as follows:
(a) The Option Price of 60,000 of the Optioned Shares (the
"Initial Option") is $3.00 per share of Stock.
(b) The Option Price of the remaining 240,000 Optioned
Shares (the "Vesting Options") is $4.00 per share of Stock.
3. VESTING OF OPTION. Optioned Shares that have vested may be
acquired in accordance with the terms of this Agreement at any time, and from
time to time, in whole or in part, until the Option expires as provided in
Section 5 hereof. The time at which the Optioned Shares vest and the Cox or his
permitted assignee(s) (each, an "Optionholder") may thereafter exercise this
Option with respect to such Optioned Shares shall be as follows:
(a) The Initial Option shall vest and become exercisable
immediately.
<PAGE> 2
(b) The Vesting Options shall vest and become exercisable
on the following dates, provided that Cox is employed by DenAmerica pursuant to
the Employment Agreement on each such date:
<TABLE>
<CAPTION>
NUMBER OF OPTIONS
DATE VESTED AND EXERCISABLE
---- ----------------------
<S> <C>
March 29, 1997 60,000
March 29, 1998 60,000
March 29, 1999 60,000
March 29, 2000 60,000
</TABLE>
Notwithstanding the foregoing, all Vesting Options shall vest and become
exercisable immediately upon the termination of Cox's employment for any reason
other than (i) voluntary termination by Cox pursuant to the Employment
Agreement; (ii) death; (iii) disability; or (iv) "for cause," as that term is
defined in the Employment Agreement.
4. EXERCISE OF OPTION. All or any portion of the vested
Optioned Shares may be purchased by an Optionholder upon written notice to
DenAmerica, addressed to DenAmerica at its principal place of business. Such
notice shall be signed by the Optionholder and shall state the election to
exercise the Option and the number of Optioned Shares with respect to which it
is being exercised. Such notice shall be accompanied by payment in full of the
Option Price for the number of shares of Stock being purchased. Payment may be
made in cash or by check or by tendering duly endorsed certificates representing
shares of Stock then owned by the Optionholder. In the sole discretion of
DenAmerica, an Optionholder may be provided with the election to pay for the
Option Price by having DenAmerica withhold, from the Stock otherwise issuable, a
portion of those shares of Stock with an aggregate fair market value equal to
that portion of the Option Price designated by the Optionholder (not to exceed
100 percent of the Option Price). Upon the exercise of the Option, DenAmerica
shall deliver, or cause to be delivered, to the Optionholder a certificate or
certificates representing the net shares of Stock purchased upon such exercise
as soon as practicable after payment for those shares has been received by
DenAmerica. All shares that are purchased and paid for in full upon exercise of
the Option shall be fully paid and non-assessable.
5. TERMINATION OF OPTION. This Option, to the extent not
previously exercised, shall terminate upon the tenth anniversary of the Grant
Date, or as otherwise set forth in this Agreement.
6. TERMINATION OF COX. If Cox' employment with DenAmerica is
terminated pursuant to the Employment Agreement, or as a result of the death or
disability of Cox, all Optioned Shares that are vested shall be exercisable for
a period of 30 days (one year in the case of a termination as the result of the
death or disability of Cox) after the expiration of the Employment Period (as
defined in the Employment Agreement) or until the stated expiration date of the
Option, whichever occurs first, by an Optionholder in accordance with Section 4
hereof.
2
<PAGE> 3
Notwithstanding the foregoing, if Cox is terminated "for cause" (as defined in
the Employment Agreement), the Option granted hereunder shall become immediately
void and no longer exercisable.
7. NO PRIVILEGE OF STOCK OWNERSHIP. The Optionholder shall not
have any of the rights of a stockholder with respect to the Optioned Shares
until such Optionholder shall have exercised the option, paid the Option Price,
and received a stock certificate for the purchased shares of Stock.
8. COMPLIANCE WITH LAWS AND REGULATIONS. The exercise of this
Option and the issuance of the Stock upon such exercise shall be subject to
compliance by DenAmerica and each Optionholder with all applicable requirements
of law relating thereto and with all applicable regulations of any stock
exchange in which the shares of the Stock may be listed at the time of such
exercise and issuance. In connection with the exercise of an Option hereunder,
an Optionholder shall execute and deliver to DenAmerica such representations in
writing as may be requested by DenAmerica in order for it to comply with
applicable requirements of federal and state securities laws.
9. LIABILITY OF DENAMERICA. The inability of DenAmerica to
obtain approval from any regulatory body having authority deemed by DenAmerica
to be necessary to the lawful issuance and sale of any Stock pursuant to this
Agreement shall relieve DenAmerica of any liability with respect to the
nonissuance or sale of the Stock as to which such approval shall not have been
obtained. DenAmerica, however, shall use its best efforts to obtain all such
approvals.
10. CAPITAL ADJUSTMENTS. The number of Optioned Shares shall
be proportionately adjusted for any increase or decrease in the number of
outstanding shares of Stock of DenAmerica resulting from a subdivision or
consolidation of shares or any other capital adjustment or the payment of a
stock dividend or any other increase or decrease in the number of such shares
effected without DenAmerica's receipt of consideration therefor in money,
services or property.
11. MERGERS, ETC. If DenAmerica is the surviving corporation
in any merger or consolidation (not including a Corporate Transaction), the
Option granted herein shall pertain to and apply to the securities to which a
holder of the number of shares of Stock subject to the Option or Award would
have been entitled prior to the merger or consolidation.
12. CORPORATE TRANSACTION. In the event of stockholder
approval of a Corporate Transaction, as defined below, all unvested Options
shall automatically accelerate and immediately vest so that each outstanding
Option shall, one week prior to the specified effective date for the Corporate
Transaction, become fully exercisable for all of the Optioned Shares. Upon the
consummation of any Corporate Transaction, all Options shall, to the extent not
previously exercised, terminate and cease to be outstanding. "Corporate
Transaction" shall mean
3
<PAGE> 4
(a) a merger or consolidation in which DenAmerica is not the surviving entity or
(b) any reverse merger in which DenAmerica is the surviving entity.
13. ASSIGNMENT. The right to acquire Stock under this
Agreement may not be assigned, encumbered or otherwise transferred by an
Optionholder other than by will or the laws of descent and distribution or
pursuant to a qualified domestic relations order.
14. SECURITIES RESTRICTIONS
(a) LEGEND ON CERTIFICATES. All certificates representing
shares of Stock issued hereunder shall be endorsed with a legend reading as
follows:
THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND
ARE `RESTRICTED SECURITIES' AS DEFINED BY RULE 144 UNDER THAT
ACT. THE SHARES MAY NOT BE SOLD, TRANSFERRED, PLEDGED OR
HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT REGISTERING THE SHARES UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR, IN LIEU THEREOF, AN OPINION OF COUNSEL
FOR THIS COMPANY TO THE EFFECT THAT REGISTRATION IS NOT
REQUIRED UNDER THAT ACT.
(b) PRIVATE OFFERING FOR INVESTMENT ONLY. If the shares to
be issued to an Optionholder upon the exercise of any Option have not been
registered under the Securities Act of 1933, as amended (the "1933 Act"), the
Arizona Securities Act (the "Arizona Act") or the securities laws of any other
jurisdiction, those shares will be "restricted securities" within the meaning of
Rule 144 under the 1933 Act and must be held indefinitely without any transfer,
sale or other disposition unless (a) the shares are subsequently registered
under the 1933 Act, the Arizona Act and the securities laws of any other
applicable jurisdiction, or (b) the Optionholder obtains an opinion of counsel
which is satisfactory to counsel for DenAmerica that the shares may be sold in
reliance on an exemption from registration requirements. By the act of accepting
an Option, Cox agrees (i) that any shares of Stock acquired will be solely for
investment and not with any intention to resell or redistribute those shares and
(ii) such intention will be confirmed by an appropriate certificate at the time
the Stock is acquired if requested by DenAmerica. The neglect or failure to
execute such a certificate, however, shall not limit or negate the foregoing
agreement.
(c) REGISTRATION STATEMENT. If a registration statement
covering the shares of Stock issuable hereunder as filed under the Securities
Exchange Act of 1933, as amended, and as declared effective by the Securities
Exchange Commission (the "Registration"), the provisions of Sections 14(a) and
(b) shall terminate during the period of time that such registration statement,
as periodically amended, remains effective.
4
<PAGE> 5
15. TAX WITHHOLDING.
(a) GENERAL. DenAmerica's obligation to deliver Stock
under this Agreement shall be subject to Cox' satisfaction of all applicable
federal, state and local income tax withholding requirements.
(b) SHARES TO PAY FOR WITHHOLDING. DenAmerica may, in its
discretion and in accordance with the provisions of this Section 15(b) and such
supplemental rules as it may from time to time adopt (including any applicable
safe-harbor provisions of SEC Rule 16b-3), provide Cox with the right to use
shares of Stock in satisfaction of all or part of the federal, state and local
income tax liabilities incurred by Cox in connection with the receipt of Stock
("Taxes"). Such right may be provided to Cox in either or both of the following
formats:
(i) STOCK WITHHOLDING. Cox may be provided with the
election to have DenAmerica withhold, from the Stock otherwise issuable, a
portion of those shares of Stock with an aggregate fair market value equal to
the percentage of the applicable Taxes (not to exceed 100 percent) designated by
Cox.
(ii) STOCK DELIVERY. DenAmerica may, in its
discretion, provide Cox with the election to deliver to DenAmerica, at the time
the Option is exercised, one or more shares of Stock previously acquired by Cox
(other than pursuant to the transaction triggering the Taxes) with an aggregate
fair market value equal to the percentage of the taxes incurred in connection
with such Option exercise (not to exceed 100 percent) designated by Cox.
16. BINDING EFFECT. This agreement shall inure to the benefit
of and be binding upon the parties hereto and their respective heirs, executors,
administrators, successors and assigns.
17. DEFINED TERMS. All capitalized terms herein which are not
otherwise defined therein shall have the same meaning ascribed to such terms in
the Employment Agreement.
18. NOTICES. Any notice required to be given or delivered to
DenAmerica under the terms of this Agreement shall be in writing and addressed
to DenAmerica in care of the Corporate Secretary at its principal corporate
offices. Any notice required to be given or delivered to Cox at the address
indicated on the signature page hereto. Any permitted assignee hereunder shall
notify the other party hereto of the permitted assignee's address for purposes
of this notice provision. All notices shall be deemed to have been given or
delivered upon personal delivery or upon deposit in the U.S. mail, postage
prepaid return receipt requested, and properly addressed to the party to be
notified.
19. INTEGRATION AND MODIFICATION. This Agreement and the
Employment Agreement embody the full understanding of the parties with respect
to the subject matter
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hereof, superseding any and all prior agreements, and no amendment or
modification thereof shall be effective unless the same shall be in writing and
signed by both of said parties.
20. GOVERNING LAW. Except as the corporate law of the State of
Georgia expressly applies hereto, this Agreement shall be construed in
accordance with, and governed by, the laws of the State of Arizona, without
regard to application of conflicts of law principles.
21. COUNTERPARTS. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which,
taken together, shall constitute one and the same instrument.
IN WITNESS WHEREOF the parties hereto have executed this
Agreement or caused it to be executed on the day and year first above written.
DENAMERICA CORP.
By:/s/ Jack M. Lloyd
--------------------------------------
Name:Jack M. Lloyd
------------------------------------
Its:Chief Executive Officer
-------------------------------------
/s/ William G. Cox
-----------------------------------------
WILLIAM G. COX
Address:
2601 N. Val Vista
-----------------------------------------
Mesa, Arizona 85213
-----------------------------------------
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EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Form 8-K/A of DenAmerica
Corp. of our report dated March 29, 1996 (except for Note 16, as to which the
date is May 31, 1996), appearing in the Transition Report on Form 10-K of
DenAmerica Corp. for the year ended December 27, 1995.
DELOITTE & TOUCHE LLP
Phoenix, Arizona
June 12, 1996
