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EXHIBIT 4.5
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Form of Opinion of Special Counsel for the
Company and the Guarantors
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RUBY TUESDAY,
INC.
150 WEST CHURCH
AVENUE
MARYVILLE, TENNESSEE 37801
8
.19 % Amended and Restated Senior
Secured Notes, Series A, due April 1, 2010
8.92% Amended and Restated Senior Secured Notes,
Series B, due April 1, 2013
Dated as of May 21, 2008
TO THE PURCHASERS
LISTED IN
THE ATTACHED SCHEDULE
A:
Ladies and Gentlemen:
Reference is hereby made to that certain Note
Purchase Agreement dated as of April 1, 2003 (the
“Original Note Purchase
Agreement” ) between Ruby Tuesday,
Inc., a Georgia corporation (the “Company” ), and each of
the institutional investors named in Schedule A attached thereto,
under and pursuant to which the Company issued (a) $85,000,000
original aggregate principal amount of its 4.69% Senior Notes,
Series A, due April 1, 2010 (the “Original Series A Notes” ) and (b) $65,000,000 original aggregate principal amount
of its 5.42% Senior Notes, Series B, due April 1, 2013
(the “Original Series
B
Notes” ). The Original
Series A Notes and the Original Series B Notes are
collectively referred to herein as the “Original Notes.” Certain
capitalized terms used in this Agreement are defined in Schedule B;
references to a “Schedule” or an “Exhibit”
are, unless otherwise specified, to a Schedule or an Exhibit
attached to this Agreement.
The Company agrees with the holders of Notes listed
in the attached Schedule A (the “Purchasers” ) as
follows:
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SECTION 1.
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AMENDMENT
AND RESTATEMENT.
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Section 1.1. Amendment and Restatement . The
Company now desires to amend and restate (a) the Original Note
Purchase Agreement to be in the form of this Agreement and (b)(i)
the Original Series A Notes to be the $85,000,000 aggregate
principal amount of its 8.19% Senior Notes, Series A, due
April 1, 2010 (the “Series A
Notes” ) and (ii) the Original
Series B Notes to be the $65,000,000 aggregate principal amount of
its 8.92% Senior Notes, Series B, due April 1, 2013
(the “Series B Notes”
). The Series A Notes and the Series B
Notes are collectively referred to herein as the
“Notes,” such term to include any such notes issued in substitution
therefor pursuant to Section 13 of this Agreement. The
Series A Notes and the Series B Notes shall be
substantially in the form set out in Exhibit 1(a) and
Exhibit 1(b), respectively, with such changes therefrom, if
any, as may be approved by the Purchasers and the
Company.
Section 1.2. Agreement of Purchasers. In
consideration of the premises and other good and valuable
consideration the receipt and sufficiency of which is hereby
acknowledged, the Purchasers have agreed to the amendment and
restatement described in this Section 1. Accordingly, subject to
the terms and conditions hereof and on the basis of the
representations
and warranties herein contained or incorporated
herein by reference, the parties hereto hereby agree that, from and
after the fulfillment of the conditions set forth in Section 4, the
Original Note Purchase Agreement shall be deemed to be amended and
restated in the form of this Agreement.
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SECTION 2.
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GUARANTY
AGREEMENT; SECURITY
FOR NOTES.
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Section 2.1. Guaranty Agreement . The obligations
of the Company hereunder, under the Collateral Documents and under
the Notes are absolutely, unconditionally and irrevocably
guaranteed by each Guarantor and each other Subsidiary from time to
time required to guaranty the Notes pursuant to Section 9.6
pursuant to that certain Amended and Restated Subsidiary Guaranty
Agreement dated as of May 21, 2008 (as the same may be
amended, supplemented, restated or otherwise modified from time to
time, the “Guaranty
Agreement” ) substantially in the
form of Exhibit 2.
Section 2.2. Security for the Notes. To secure the
full and complete payment and performance of the obligations of the
Company hereunder, the Company will enter into the Collateral
Documents.
Section 2.3. Tax
Classification of Notes. The Company will
treat the Notes as indebtedness of the Company for all income tax
purposes.
The closing of the amendment and restatement
contemplated by Section 1 shall occur at the offices of Schiff
Hardin LLP, 6600 Sears Tower, Chicago, Illinois 60606, at 10:00
a.m., Chicago, Illinois time, on May 21, 2008 (the
“Effective Date”
) or on such other Business Day thereafter as may be
agreed upon by the Company and the Purchasers.
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SECTION 4.
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CONDITIONS
PRECEDENT.
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This Agreement and the amendment and restatement of
the Original Note Purchase Agreement provided for herein shall only
become effective at such time as all of the following conditions
precedent shall have been satisfied:
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Section
4.1.
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Representations and
Warranties.
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(a) The
representations and warranties of the Company in this Agreement and
in the Pledge Agreement shall be correct when made and on the
Effective Date.
(b) The
representations and warranties of each Guarantor in the Guaranty
Agreement shall be correct when made and on the Effective
Date.
Section 4.2. Performance; No Default. The Company
shall have performed and complied with all agreements and
conditions contained in this Agreement required to be performed or
complied with by it prior to or on the Effective Date, and no
Default or Event of Default shall have occurred and be
continuing.
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Section
4.3.
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Certificates.
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(a)
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Officer’s
Certificate .
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(1) The
Company shall have delivered to the Purchasers an Officer’s
Certificate, dated the Effective Date, certifying that the
conditions specified in Sections 4.1(a) and 4.2 have been
fulfilled.
(2) Each
Guarantor shall have delivered to the Purchasers an Officer’s
Certificate, dated the Effective Date, certifying that the
conditions specified in Section 4.1(b) have been
fulfilled.
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(b)
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Secretary’s
Certificate.
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(1) The
Company shall have delivered to the Purchasers a certificate
certifying as to the resolutions attached thereto and other
corporate proceedings relating to the authorization, execution and
delivery of the Notes, the Pledge Agreement and this
Agreement.
(2) Each
Guarantor shall have delivered to the Purchasers a certificate
certifying as to the resolutions attached thereto and other
corporate or similar proceedings relating to the authorization,
execution and delivery of the Guaranty Agreement.
Section 4.4. Guaranty Agreement; Pledge Agreement; Intercreditor
Agreement.
(a) The
Guaranty Agreement shall have been duly authorized, executed and
delivered by each Guarantor and shall be in full force and effect
and the Purchasers shall have received a duly executed copy
thereof.
(b) The
Pledge Agreement shall have been duly authorized, executed and
delivered by the Company and shall be in full force and effect and
the Purchasers shall have received a duly executed copy thereof.
The Collateral Agent shall have received all certificates
evidencing any certificated equity interests pledged to the
Collateral Agent pursuant to the Pledge Agreement together with
duly executed stock powers attached thereto. Each Purchaser shall
have received UCC financing statements for the Company and each
Guarantor for each appropriate jurisdiction as is necessary, in the
Required Holders’ reasonable judgment, to perfect the
Collateral Agent’s security interest in the Pledged
Collateral (as defined in the Pledge Agreement).
(c) The
Intercreditor Agreement shall have been duly authorized, executed
and delivered by each Person party thereto and shall be in full
force and effect and the Purchasers shall have received a duly
executed copy thereof.
Section 4.5. Opinion
of Counsel . The Purchasers shall have
received an opinion in form and substance satisfactory to the
Required Holders, dated the Effective Date from Hunton &
Williams LLP, special counsel for the Company and the Guarantors,
covering the matters set forth in Exhibit 4.5 and covering
such other matters incident to the transactions
contemplated
hereby as the Required Holders or special counsel to
the Purchasers may reasonably request (and the Company hereby
instructs its counsel to deliver such opinion to each
Purchaser).
Section 4.6. Amendment Fee. The Company shall have
paid each Purchaser an amendment fee equal to 0.25% of the
aggregate principal amount of Notes held by such Purchaser as set
forth on Schedule A hereto.
Section 4.7. Payment
of Special Counsel Fees. Without limiting
the provisions of Section 15.1, the Company shall have paid on
or before the Effective Date the reasonable fees, charges and
disbursements of Schiff Hardin LLP, special counsel to the
Purchasers, to the extent reflected in a statement of such counsel
rendered to the Company at least one Business Day prior to the
Effective Date.
Section 4.8. Private
Placement Number . A Private Placement
Number issued by Standard & Poor’s CUSIP Service Bureau
(in cooperation with the Securities Valuation Office of the
National Association of Insurance Commissioners) shall have been
obtained for each series of the Notes.
Section 4.9. Notes. The Company will deliver to
each Purchaser the Notes of each series to be delivered to such
Purchaser as set forth on Schedule A attached hereto dated the
Effective Date and registered in such Purchaser’s name (or in
the name of its nominee).
Section 4.10. Accrued Interest on
Original Notes. The Company shall have
paid all accrued and unpaid interest on the Original Notes to and
including the Effective Date to each holder of Notes.
Section 4.11. Effective Date
Prepayments. The Company shall have
prepaid the Original Notes held by the Purchasers set forth in
Schedule 4.11 in the amounts set forth each such Purchaser’s
name in such Schedule.
Section 4.12. Bank Amendment;
Franchise Facility Amendment. Each
Purchaser shall have received a certified copy of (a) the fully
executed amendment agreement to the Bank Credit Agreement of even
date herewith and (b) the fully executed amendment agreement to the
Franchise Facility Credit Agreement of even date herewith, each in
form and substance satisfactory to the Required
Holder(s).
Section 4.13. Proceedings and
Documents . All corporate and other
proceedings in connection with the transactions contemplated by
this Agreement and all documents and instruments incident to such
transactions shall be satisfactory to the Required Holder(s) and
special counsel to the Purchasers, and such Purchaser and special
counsel to the Purchasers shall have received all such counterpart
originals or certified or other copies of such documents as such
Purchaser or special counsel to the Purchasers may reasonably
request.
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SECTION 5.
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REPRESENTATIONS
AND WARRANTIES OF
THE COMPANY.
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The Company represents and warrants to each
Purchaser that:
Section 5.1. Organization; Power and Authority .
The Company is a corporation duly organized, validly existing and
in good standing under the laws of its jurisdiction of
incorporation, and is duly qualified as a foreign corporation and
is in good standing in each jurisdiction in which such
qualification is required by law, other than those jurisdictions as
to which the failure to be so qualified or in good standing could
not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect. The Company has the corporate power
and authority to own or hold under lease the properties it purports
to own or hold under lease, to transact the business it transacts
and proposes to transact, to execute and deliver this Agreement,
the Notes and the other Note Documents and to perform the
provisions hereof and thereof.
Section 5.2. Authorization, Etc . This Agreement,
the Notes and the other Note Documents have been duly authorized by
all necessary corporate action on the part of the Company, and this
Agreement and the other Note Documents constitute, and upon
execution and delivery thereof each Note will constitute, a legal,
valid and binding obligation of the Company enforceable against the
Company in accordance with its terms, except as such enforceability
may be limited by (a) applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the
enforcement of creditors’ rights generally and
(b) general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at
law).
Section 5.3. Disclosure . This Agreement, the
other Note Documents, the documents, certificates or other writings
identified in Schedule 5.3 and the financial statements listed in
Schedule 5.5, taken as a whole, do not contain any untrue
statement of a material fact or omit to state any material fact
necessary to make the statements therein not misleading in light of
the circumstances under which they were made. Except as expressly
described in Schedule 5.3, or in one of the documents,
certificates or other writings identified therein, or in the
financial statements listed in Schedule 5.5, since
June 5, 2007, there has been no change in the financial
condition, operations, business or properties of the Company or any
Subsidiary except changes that, individually or in the aggregate,
could not reasonably be expected to have a Material Adverse Effect.
There is no fact known to the Company that could reasonably be
expected to have a Material Adverse Effect that has not been set
forth herein or in the other documents, certificates and other
writings delivered to the Purchasers by or on behalf of the Company
specifically for use in connection with the transactions
contemplated hereby.
Section 5.4. Organization and Ownership of Shares of Subsidiaries;
Affiliates . (a) Schedule 5.4
contains (except as noted therein) complete and correct lists
(1) of the Company’s Subsidiaries, showing, as to each
Subsidiary, the correct name thereof, the jurisdiction of its
organization, and the percentage of shares of each class of its
capital stock or similar equity interests outstanding owned by the
Company and each other Subsidiary, and if such Subsidiary is, on
the Effective Date, a Restricted Subsidiary and/or Significant
Subsidiary, (2) of the Company’s Affiliates known to it,
other than Subsidiaries and (3) of the Company’s
directors and senior officers.
(b) All of
the outstanding shares of capital stock or similar equity interests
of each Subsidiary shown in Schedule 5.4 as being owned by the
Company and its Subsidiaries have been validly issued, are fully
paid and nonassessable and are owned by
the Company or another Subsidiary free and clear of
any Lien (except as otherwise disclosed in
Schedule 5.4).
(c) Each
Restricted Subsidiary identified in Schedule 5.4 is a
corporation or other legal entity duly organized, validly existing
and in good standing under the laws of its jurisdiction of
organization, and is duly qualified as a foreign corporation or
other legal entity and is in good standing in each jurisdiction in
which such qualification is required by law, other than those
jurisdictions as to which the failure to be so qualified or in good
standing could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect. Each such Restricted
Subsidiary has the corporate or other power and authority to own or
hold under lease the properties it purports to own or hold under
lease and to transact the business it transacts and proposes to
transact.
(d) No
Restricted Subsidiary is a party to, or otherwise subject to any
legal restriction or any agreement (other than this Agreement, the
agreements listed on Schedule 5.4 and customary limitations
imposed by corporate law statutes) restricting the ability of such
Restricted Subsidiary to pay dividends out of profits or make any
other similar distributions of profits to the Company or any of its
Restricted Subsidiaries that owns outstanding shares of capital
stock or similar equity interests of such Restricted
Subsidiary.
Section 5.5. Financial Statements . The Company
has delivered to each Purchaser copies of the consolidated
financial statements of the Company and its Subsidiaries listed on
Schedule 5.5. All of said financial statements (including in
each case the related schedules and notes) fairly present in all
material respects the consolidated financial position of the
Company and its Subsidiaries as of the respective dates specified
in such Schedule and the consolidated results of their operations
and cash flows for the respective periods so specified and have
been prepared in accordance with GAAP consistently applied
throughout the periods involved except as set forth in the notes
thereto (subject, in the case of any interim financial statements,
to normal year-end adjustments).
Section 5.6. Compliance with Laws, Other Instruments, Etc
. The execution, delivery and performance by the
Company of this Agreement, the Notes and the other Note Documents
will not (a) contravene, result in any breach of, or
constitute a default under, or result in the creation of any Lien
in respect of any property of the Company or any Subsidiary under,
any indenture, mortgage, deed of trust, loan, purchase or credit
agreement, lease, corporate charter or by-laws, or any other
Material agreement or instrument to which the Company or any
Subsidiary is bound or by which the Company or any Subsidiary or
any of their respective properties may be bound or affected,
(b) conflict with or result in a breach of any of the terms,
conditions or provisions of any order, judgment, decree, or ruling
of any court, arbitrator or Governmental Authority applicable to
the Company or any Subsidiary or (c) violate any provision of
any statute or other rule or regulation of any Governmental
Authority applicable to the Company or any Subsidiary.
Section 5.7. Governmental Authorizations, Etc .
Assuming the accuracy of the representations and warranties of the
Purchasers set forth in Section 6.1, no consent, approval or
authorization of, or registration, filing or declaration with, any
Governmental Authority is
required in connection with the execution, delivery
or performance by the Company of this Agreement, the Notes or the
other Note Documents.
Section 5.8. Litigation; Observance of Agreements, Statutes and
Orders. (a) There are no actions, suits
or proceedings pending or, to the knowledge of the Company,
threatened against or affecting the Company or any Restricted
Subsidiary or any property of the Company or any Restricted
Subsidiary in any court or before any arbitrator of any kind or
before or by any Governmental Authority that, individually or in
the aggregate, could reasonably be expected to have a Material
Adverse Effect.
(b) Neither
the Company nor any Subsidiary is in default under any term of any
agreement or instrument to which it is a party or by which it is
bound, or any order, judgment, decree or ruling of any court,
arbitrator or Governmental Authority or is in violation of any
applicable law, ordinance, rule or regulation (including, without
limitation, Environmental Laws) of any Governmental Authority,
which default or violation, individually or in the aggregate, could
reasonably be expected to have a Material Adverse
Effect.
Section 5.9. Taxes . The Company and its
Subsidiaries have filed all tax returns that are required to have
been filed in any jurisdiction, and have paid all taxes shown to be
due and payable on such returns and all other taxes and assessments
levied upon them or their properties, assets, income or franchises,
to the extent such taxes and assessments have become due and
payable and before they have become delinquent, except for any
taxes and assessments (a) the amount of which is not,
individually or in the aggregate, Material or (b) the amount,
applicability or validity of which is currently being contested in
good faith by appropriate proceedings and with respect to which the
Company or a Subsidiary, as the case may be, has established
adequate reserves in accordance with GAAP. No Senior Financial
Officer of the Company knows of any basis for any other tax or
assessment that could reasonably be expected to have a Material
Adverse Effect. The charges, accruals and reserves on the books of
the Company and its Subsidiaries in respect of Federal, state or
other taxes for all fiscal periods are adequate in accordance with
GAAP. The Federal income tax liabilities of the Company and its
Subsidiaries have been determined by the Internal Revenue Service
and paid for all fiscal years up to and including the fiscal year
ended June 6, 2006.
Section 5.10. Title to Property;
Leases . The Company and its Restricted
Subsidiaries have good and sufficient title to their respective
properties, including all such properties reflected in the most
recent audited balance sheet referred to in Section 5.5 or
purported to have been acquired by the Company or any Restricted
Subsidiary after said date (except as sold or otherwise disposed of
in the ordinary course of business), in each case free and clear of
Liens prohibited by this Agreement other than those properties as
to which the failure to have good and sufficient title could not,
individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect. All leases to which the Company or any of
Restricted Subsidiary is a party to are valid and subsisting and
are in full force and effect in all material respects, other than
those leases as to which the failure to be valid, subsisting or in
full force and effect in all material respects could not,
individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.
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Section
5.11.
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Licenses, Permits,
Etc . Except as disclosed in Schedule
5.11,
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(a) the
Company and its Restricted Subsidiaries own or possess all
licenses, permits, franchises, authorizations, patents, copyrights,
service marks, trademarks, trade names and domain names or rights
thereto necessary for the performance of their business, taken as a
whole, without known conflict with the rights of others, except
where the failure to so own or possess such rights could not,
individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect;
(b) to the
best knowledge of the Company, no product of the Company infringes
in any material respect any license, permit, franchise,
authorization, patent, copyright, service mark, trademark, trade
name, domain name or other right owned by any other Person;
and
(c) to the
best knowledge of the Company, there is no violation by any Person
of any right of the Company or any of its Restricted Subsidiaries
with respect to any patent, copyright, service mark, trademark,
trade name, domain name or other right owned or used by the Company
or any of its Restricted Subsidiaries, except for such violations
that could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
Section 5.12. Compliance with
ERISA . (a) The Company and each ERISA
Affiliate have operated and administered each Plan in compliance
with all applicable laws except for such instances of noncompliance
as have not resulted in and could not reasonably be expected to
result in a Material Adverse Effect. Neither the Company nor any
ERISA Affiliate has incurred any liability pursuant to Title I or
IV of ERISA or the penalty or excise tax provisions of the Code
relating to employee benefit plans (as defined in Section 3 of
ERISA), and no event, transaction or condition has occurred or
exists that could reasonably be expected to result in the
incurrence of any such liability by the Company or any ERISA
Affiliate, or in the imposition of any Lien on any of the rights,
properties or assets of the Company or any ERISA Affiliate, in
either case pursuant to Title I or IV of ERISA or to such penalty
or excise tax provisions or to Section 401(a)(29) or 412 of
the Code, other than such liabilities or Liens as would not result,
individually or in the aggregate, in a Material Adverse
Effect.
(b) The
present value of the aggregate benefit liabilities under each of
the Plans (other than Multiemployer Plans), determined as of the
end of such Plan’s most recently ended plan year on the basis
of the actuarial assumptions specified for funding purposes in such
Plan’s most recent actuarial valuation report, did not exceed
the aggregate current value of the assets of such Plan allocable to
such benefit liabilities by more than $10,000,000 in the aggregate
for all Plans. The term “benefit liabilities” has the
meaning specified in Section 4001 of ERISA and the terms
“current value” and “present value” have
the meanings specified in Section 3 of ERISA.
(c) The
Company and its ERISA Affiliates have not incurred withdrawal
liabilities (or, to the knowledge of the Company, are not subject
to contingent withdrawal liabilities) under Section 4201 or
4204 of ERISA in respect of Multiemployer Plans that, individually
or in the aggregate, would result in a Material Adverse
Effect.
(d) The
expected post-retirement benefit obligation (determined as of the
last day of the Company’s most recently ended fiscal year in
accordance with Financial Accounting Standards Board Statement No.
106, without regard to liabilities attributable to continuation
coverage mandated by Section 4980B of the Code) of the Company
and its ERISA Affiliates could not reasonably be expected to result
in a Material Adverse Effect.
(e) The
execution and delivery of this Agreement and the issuance and sale
of the Notes hereunder will not involve any transaction that is
subject to the prohibitions of Section 406 of ERISA or in
connection with which a tax could be imposed pursuant to
Section 4975(c)(1)(A)-(D) of the Code. The representation by
the Company in the first sentence of this Section 5.12(e) is
made in reliance upon and subject to the accuracy of each
Purchaser’s representation in Section 6.2 as to the
sources of the funds used to pay the purchase price of the Notes to
be purchased by such Purchaser.
Section 5.13. Private Offering by
the Company . Neither the Company nor
anyone acting on its behalf has offered the Notes, the Guaranty
Agreement or any similar securities for sale to, or solicited any
offer to buy any of the same from, or otherwise approached or
negotiated in respect thereof with, any Person other than the
Purchasers and not more than 50 other Institutional Investors of
the type described in clause (c) of the definition thereof, each of
which has been offered the Notes and the Guaranty Agreement at a
private sale for investment. Assuming the accuracy of the
representations and warranties of the Purchasers set forth in
Section 6.1, neither the Company nor anyone acting on its
behalf has taken, or will take, any action that would subject the
issuance or sale of the Notes or the delivery of the Guaranty
Agreement to the registration requirements of Section 5 of the
Securities Act.
Section 5.14. Use of Proceeds;
Margin Regulations . The Company will
apply the proceeds of the sale of the Notes as set forth in
Schedule 5.14. No part of the proceeds from the sale of the
Notes hereunder will be used, directly or indirectly, for the
purpose of buying or carrying any margin stock within the meaning
of Regulation U of the Board of Governors of the Federal Reserve
System (12 CFR 221), or for the purpose of buying or carrying or
trading in any securities under such circumstances as to involve
the Company in a violation of Regulation X of said Board (12 CFR
224) or to involve any broker or dealer in a violation of
Regulation T of said Board (12 CFR 220). Margin stock does not
constitute more than 10% of the value of the consolidated total
assets of the Company and its Subsidiaries and the Company does not
have any present intention that margin stock will constitute more
than 10% of the value of such assets. As used in this Section, the
terms “margin stock” and “purpose of buying or
carrying” shall have the meanings assigned to them in said
Regulation U.
Section 5.15. Existing Debt;
Future Liens . (a) Except as described
therein, Schedule 5.15 sets forth a complete and correct list
of all outstanding Debt of the Company and its Restricted
Subsidiaries as of May 1, 2008, since which date there has been no
Material change in the amounts, interest rates, sinking funds,
installment payments or maturities of the Debt of the Company or
its Restricted Subsidiaries. Neither the Company nor any Restricted
Subsidiary is in default and no waiver of default is currently in
effect, in the payment of any principal or interest on any Debt of
the Company or such Restricted Subsidiary and no event or condition
exists with respect to any Debt of the Company or any Restricted
Subsidiary that would permit
(or that with notice or the lapse of time, or both,
would permit) one or more Persons to cause such Debt to become due
and payable before its stated maturity or before its regularly
scheduled dates of payment.
(b) Except
as disclosed in Schedule 5.15, neither the Company nor any
Restricted Subsidiary has agreed or consented to cause or permit in
the future (upon the happening of a contingency or otherwise) any
of its property, whether now owned or hereafter acquired, to be
subject to a Lien arising after the Effective Date not permitted by
Section 10.5.
Section 5.16. Existing
Investments . Schedule 5.16 sets forth a
complete list of all outstanding Investments of the Company and its
Restricted Subsidiaries as of May 1, 2008, since which date there
has been no Material change in the aggregate amount of such
Investments.
Section 5.17. Foreign Assets
Control Regulations, Etc . Neither the
sale of the Notes by the Company hereunder nor its use of the
proceeds thereof will violate the Anti-Terrorism Order, the Patriot
Act, the Trading with the Enemy Act, as amended, or any of the
foreign assets control regulations of the United States Treasury
Department (31 CFR, Subtitle B, Chapter V, as amended) or any
enabling legislation or executive order relating
thereto.
Section 5.18. Status under
Certain Statutes . Neither the Company
nor any Restricted Subsidiary is subject to regulation under the
Investment Company Act of 1940, as amended, the Public Utility
Holding Company Act of 1935, as amended, the ICC Termination Act of
1995, as amended, or the Federal Power Act, as amended.
Section 5.19. Environmental
Matters . Neither the Company nor any
Restricted Subsidiary has received any notice of any Environmental
Liability, and no proceeding has been instituted raising any
Environmental Liability against the Company or any of its
Restricted Subsidiaries, except, in each case, such as could not
reasonably be expected to result in a Material Adverse Effect.
Except as otherwise disclosed to the Purchasers in
writing:
(a) neither
the Company nor any Restricted Subsidiary has knowledge of any
basis or facts which would give rise to any Environmental
Liability, except, in each case, such as could not reasonably be
expected to result in a Material Adverse Effect;
(b) neither
the Company nor any of its Restricted Subsidiaries has failed to
comply with any Environmental Law, including any requirement to
obtain, maintain or comply with any permit, license or other
approval required under any Environmental Law in each case in any
manner that could reasonably be expected to result in a Material
Adverse Effect; and
(c) neither
the Company or any of its Restricted Subsidiaries has become
subject to any Environmental Liability except, in each case, such
as could not reasonably be expected to result in a Material Adverse
Effect.
Section 5.20. Notes Rank Pari
Passu . The obligations of the Company
under this Agreement and the Notes rank at least
pari passu in right of
payment with all obligations under the Bank Credit
Agreement.
Section 5.21. Perfection of
Security Interest . The Pledge Agreement
creates in favor of the Collateral Agent (for the benefit of the
holders of Senior Secured Obligations) a valid security interest
in, and Lien on, the Pledged Collateral, which security interests
and Liens are currently perfected security interests and Liens,
prior to all other Liens.
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SECTION 6.
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REPRESENTATIONS
OF THE PURCHASERS.
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Section 6.1. Purchase for Investment . Each
Purchaser represents that it is (i) an “accredited
investor” as defined in Rule 501(a) of Regulation D of the
Securities Act and (ii) purchasing the Notes and Guaranty
Agreement for its own account or for one or more separate accounts
maintained by it or for the account of one or more pension or trust
funds and not with a view to the distribution thereof
provided that the
disposition of such Purchaser’s or their property shall at
all times be within its or their control. Each Purchaser
understands that neither the Notes nor the Guaranty Agreement have
been registered under the Securities Act and may be resold only if
registered pursuant to the provisions of the Securities Act or if
an exemption from registration is available, except under
circumstances where neither such registration nor such an exemption
is required by law, and that the Company is not required to
register the Notes or the Guaranty Agreement.
Section 6.2. Source
of Funds . Each Purchaser represents that
at the time of its purchase of Notes presently held by it at least
one of the following statements was an accurate representation as
to each source of funds (a “Source” ) used by such
Purchaser to pay the purchase price of the Notes purchased by such
Purchaser:
(a) the
Source is an “insurance company general account” within
the meaning of, and in compliance with, Department of Labor
Prohibited Transaction Exemption ( “PTE” ) 95-60 (issued
July 12, 1995) and there is no employee benefit plan, treating
as a single plan, all plans maintained by the same employer or
employee organization, with respect to which the amount of the
general account reserves and liabilities for all contracts held by
or on behalf of such plan, exceeds 10% of the total reserves and
liabilities of such general account (exclusive of separate account
liabilities) plus surplus, as set forth in the National Association
of Insurance Commissioners’ Annual Statement filed with such
Purchaser’s state of domicile; or
(b) the
Source is either (1) an insurance company pooled separate
account, within the meaning of PTE 90-1 (issued January 29, 1990)
or (2) a bank collective investment fund, within the meaning
of the PTE 91-38 (issued July 12, 1991) and, except as such
Purchaser has disclosed to the Company in writing pursuant to this
paragraph (b), no employee benefit plan or group of plans
maintained by the same employer or employee organization
beneficially owns more than 10% of all assets allocated to such
pooled separate account or collective investment fund;
or
(c) the
Source constitutes assets of an “investment fund”
(within the meaning of Part V of the QPAM Exemption) managed by a
“qualified professional asset manager” or
“QPAM” (within the meaning of Part V of the QPAM Exemption), no
employee benefit plan’s assets that are included in such
investment fund, when combined with the assets of all other
employee benefit plans established or maintained by the
same
employer or by an affiliate (within the meaning of
Section V(c)(1) of the QPAM Exemption) of such employer or by
the same employee organization and managed by such QPAM, exceed 20%
of the total client assets managed by such QPAM, the conditions of
Part I(c) and (g) of the QPAM Exemption are satisfied, neither
the QPAM nor a Person controlling or controlled by the QPAM
(applying the definition of “control” in
Section V(e) of the QPAM Exemption) owns a 5% or more interest
in the Company and (1) the identity of such QPAM and
(2) the names of all employee benefit plans whose assets are
included in such investment fund have been disclosed to the Company
in writing pursuant to this paragraph (c); or
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(d)
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the Source is a
governmental plan; or
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(e) the
Source is one or more employee benefit plans, or a separate account
or trust fund comprised of one or more employee benefit plans, each
of which has been identified to the Company in writing pursuant to
this paragraph (e); or
(f) the Source
does not include assets of any employee benefit plan, other than a
plan exempt from the coverage of ERISA.
As used in this Section 6.2, the terms
“employee benefit plan,” “governmental
plan,” “party in interest” and “separate
account” shall have the respective meanings assigned to such
terms in Section 3 of ERISA.
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SECTION 7.
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INFORMATION
AS TO COMPANY.
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Section 7.1. Financial and Business Information .
The Company shall deliver to each holder of Notes that is an
Institutional Investor:
(a)
Quarterly Statements — within 45 days after the end of each quarterly fiscal
period in each fiscal year of the Company (other than the last
quarterly fiscal period of each such fiscal year), duplicate copies
of:
(1) an
unaudited consolidated balance sheet of the Company and its
Subsidiaries as at the end of such quarter, and
(2) unaudited
consolidated statements of income, changes in shareholders’
equity and cash flows of the Company and its Subsidiaries for such
quarter and (in the case of the second and third quarters) for the
portion of the fiscal year ending with such quarter,
setting forth in each case in comparative form the
figures for the corresponding periods in the previous fiscal year,
all in reasonable detail, prepared in accordance with GAAP
applicable to quarterly financial statements generally, and
certified by a Senior Financial Officer as fairly presenting, in
all material respects, the financial position of the companies
being reported on and their results of operations and cash flows,
subject to changes resulting from year-end adjustments,
provided that delivery
within the time period specified above of copies of the
Company’s Quarterly Report on Form 10-Q
prepared in compliance with the requirements
therefor and filed with the Securities and Exchange Commission
shall be deemed to satisfy the requirements of this
Section 7.1(a);
(b)
Annual Statements — within 90 days after the end of each fiscal year of the
Company, duplicate copies of:
(1) an
audited consolidated balance sheet of the Company and its
Subsidiaries, as at the end of such year, and
(2) audited
consolidated statements of income, changes in shareholders’
equity and cash flows of the Company and its Subsidiaries, for such
year,
setting forth in each case in comparative form the
figures for the previous fiscal year, all in reasonable detail,
prepared in accordance with GAAP, and accompanied by an opinion
thereon of independent certified public accountants of recognized
national standing, which opinion shall state that such financial
statements present fairly, in all material respects, the financial
position of the companies being reported upon and their results of
operations and cash flows and have been prepared in conformity with
GAAP, and that the examination of such accountants in connection
with such financial statements has been made in accordance with
generally accepted auditing standards, and that such audit provides
a reasonable basis for such opinion in the circumstances,
provided that the
delivery (i) within the time period specified above of the
Company’s Annual Report on Form 10-K for such fiscal year
prepared in accordance with the requirements therefor and filed
with the Securities and Exchange Commission and (ii) within
120 days after the end of such fiscal year of the Company’s
annual report to shareholders, if any, prepared pursuant to Rule
14a-3 under the Exchange Act, shall be deemed to satisfy the
requirements of this Section 7.1(b);
(c)
Consolidating Statements relating to Required
Consolidation — commencing with the
Company’s first fiscal quarter for which the Company is
required, and continuing for so long as the Company is required,
pursuant to FASB Interpretation 46(R) ( “FIN 46” ) or any other
authoritative accounting guidance (collectively,
“Authoritative Guidance”
), to consolidate its Franchise Partners or any
other less than 100% owned entity not previously required, under
GAAP as in effect on December 31, 2002, to be so consolidated
(collectively, the “Consolidated
Entities” ), each set of financial
statements delivered pursuant to paragraphs (a) and (b) above shall
be accompanied by unaudited financial statements of the character
and for the dates and periods as in said paragraphs (a) and (b)
covering each of the following:
(i) the Company
and its Subsidiaries on a consolidated basis, before giving effect
to any consolidation of the Consolidated Entities;
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(ii)
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the Consolidated
Entities on a consolidated basis; and
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(iii) consolidating
statements reflecting eliminations or adjustments required in order
to reconcile the consolidated statements referred to in
subclauses
(i) and (ii) above with the consolidated financial
statements of the Company and its Subsidiaries delivered pursuant
to paragraphs (a) and (b) above,
setting forth in each case (commencing, in the case
of the consolidation of any Consolidated Entity pursuant to
Authoritative Guidance, with the Company’s fiscal quarter
that is four fiscal quarters following such consolidation) in
comparative form the figures for the corresponding periods in the
previous fiscal year.
(d)
Unrestricted Subsidiaries — at such time as either (1) the aggregate amount of the
total assets of all Unrestricted Subsidiaries exceeds an amount
equal to 20% of the consolidated total assets of the Company and
its Subsidiaries determined in accordance with GAAP or (2) one or
more Unrestricted Subsidiaries account for more than 20% of the
consolidated revenues of the Company and its Subsidiaries
determined in accordance with GAAP, within the respective periods
provided in paragraphs (a) and (b) above, then each set of
financial statements delivered pursuant to paragraphs (a) and (b)
above shall be accompanied by unaudited financial statements of the
character and for the dates and periods as in said paragraphs (a)
and (b) covering the Unrestricted Subsidiaries on a consolidated
basis together with unaudited consolidating statements reflecting
eliminations or adjustments required in order to reconcile such
financial statements to the corresponding consolidated financial
statements of the Company and its Subsidiaries delivered pursuant
to paragraphs (a) and (b) above;
(e)
SEC and Other Reports — promptly upon their becoming available, one copy of
(1) each financial statement, report, notice or proxy
statement sent by the Company or any Restricted Subsidiary to
public securities holders generally and (2) each regular or
periodic report, each registration statement (without exhibits
except as expressly requested by such holder), and each prospectus
and all amendments thereto filed by the Company or any Restricted
Subsidiary with the Securities and Exchange Commission and of all
press releases and other statements made available generally by the
Company or any Restricted Subsidiary to the public concerning
developments that are Material;
(f)
Notice of Default or Event of Default
— promptly, and in any event within five
Business Days after a Responsible Officer becoming aware
(1) of the existence of any Default or Event of Default,
(2) that any Person has given any written notice or taken any
affirmative action with respect to a claimed default hereunder or
(3) that any Person has given any written notice or taken any
affirmative action with respect to a claimed default of the type
referred to in Section 11(f), a written notice specifying the
nature and period of existence thereof and what action the Company
is taking or proposes to take with respect thereto;
(g)
ERISA Matters —
promptly, and in any event within five Business Days after a
Responsible Officer becoming aware of any of the following, a
written notice setting forth the nature thereof and the action, if
any, that the Company or an ERISA Affiliate proposes to take with
respect thereto:
(1) with
respect to any Plan, any reportable event, as defined in
Section 4043(b) of ERISA and the regulations thereunder, for
which notice thereof has not been waived pursuant to such
regulations as in effect on the Effective Date; or
(2) the
taking by the PBGC of steps to institute, or the threatening by the
PBGC of the institution of, proceedings under Section 4042 of
ERISA for the termination of, or the appointment of a trustee to
administer, any Plan, or the receipt by the Company or any ERISA
Affiliate of a notice from a Multiemployer Plan that such action
has been taken by the PBGC with respect to such Multiemployer Plan;
or
(3) any
event, transaction or condition that could result in the incurrence
of any liability by the Company or any ERISA Affiliate pursuant to
Title I or IV of ERISA or the penalty or excise tax provisions of
the Code relating to employee benefit plans, or in the imposition
of any Lien on any of the rights, properties or assets of the
Company or any ERISA Affiliate pursuant to Title I or IV of ERISA
or such penalty or excise tax provisions, if such liability or
Lien, taken together with any other such liabilities or Liens then
existing, could reasonably be expected to have a Material Adverse
Effect;
(h)
Notices from Governmental Authority
— promptly, and in any event within 30 days
after a Responsible Officer becoming aware thereof, written notice
of any action, suit or proceeding by or before any arbitrator or
Governmental Authority against or, to the knowledge of the Company,
affecting the Company or any Subsidiary which, if adversely
determined, could reasonably be expected to result in a Material
Adverse Effect; and
(i)
Requested Information — with reasonable promptness, such other data and
information relating to the business, operations, affairs,
financial condition, assets or properties of the Company or any of
its Subsidiaries or relating to the ability of the Company to
perform its obligations hereunder and under the Notes as from time
to time may be reasonably requested by any such holder of
Notes.
Section 7.2. Officer’s Certificate . Each
set of financial statements delivered to a holder of Notes pursuant
to Section 7.1(a) or Section 7.1(b) hereof shall be
accompanied by a certificate of a Senior Financial Officer setting
forth:
(a)
Covenant Compliance — the information (including detailed calculations)
required in order to establish whether the Company was in
compliance with the requirements of Section 10.1 through
Section 10.7 hereof, inclusive, during the quarterly or annual
period covered by the statements then being furnished (including
with respect to each such Section, where applicable, the
calculations of the maximum or minimum amount, ratio or percentage,
as the case may be, permissible under the terms of such Sections,
and the calculation of the amount, ratio or percentage then in
existence and, in the case of Section 10.7, (1) the then
current amount of Debt permitted to be outstanding under each
revolving credit facility that, pursuant to clause (ii)(B) of the
second
paragraph of Section 10.7, has been paid or prepaid
during the immediately preceding period of 365 days and
(2) the then current amount of Debt outstanding under such
revolving credit facility); and
(b)
Event of Default — a statement that such officer has reviewed the relevant
terms hereof and has made, or caused to be made, under his or her
supervision, a review of the transactions and conditions of the
Company and its Subsidiaries from the beginning of the quarterly or
annual period covered by the statements then being furnished to the
date of the certificate and that such review shall not have
disclosed the existence during such period of any condition or
event that constitutes a Default or an Event of Default or, if any
such condition or event existed or exists (including, without
limitation, any such event or condition resulting from the failure
of the Company or any Subsidiary to comply with any Environmental
Law), specifying the nature and period of existence thereof and
what action the Company shall have taken or proposes to take with
respect thereto.
Section 7.3. Inspection . The Company shall permit
the representatives of each holder of Notes that is an
Institutional Investor:
(a)
No Default — if
no Default or Event of Default then exists, at the expense of such
holder and upon reasonable prior notice to the Company, to visit
the principal executive office of the Company, to discuss the
affairs, finances and accounts of the Company and its Restricted
Subsidiaries with the Company’s officers, and (with the
consent of the Company, which consent will not be unreasonably
withheld) its independent public accountants, and (with the consent
of the Company, which consent will not be unreasonably withheld) to
visit the other offices and properties of the Company and each
Restricted Subsidiary, all at such reasonable times and as often as
may be reasonably requested in writing; and
(b)
Default — if a
Default or Event of Default then exists, at the expense of the
Company to visit and inspect any of the offices or properties of
the Company or any Restricted Subsidiary, to examine all their
respective books of account, records, reports and other papers, to
make copies and extracts therefrom, and to discuss their respective
affairs, finances and accounts with their respective officers and
independent public accountants (and by this provision the Company
authorizes said accountants to discuss the affairs, finances and
accounts of the Company and its Restricted Subsidiaries), all at
such times and as often as may be requested.
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SECTION 8.
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PREPAYMENT
OF THE NOTES.
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(a) The
Company will pay the entire outstanding principal amount of the
Series A Notes on April 1, 2010.
(b) The
Company will pay the entire outstanding principal amount of the
Series B Notes on April 1, 2013.
Section 8.2. Optional Prepayments with Make-Whole Amount
. The Company may, at its option, upon notice as
provided below, prepay at any time all, or from time to time any
part of, the Notes, in an amount not less than $1,000,000 of the
aggregate principal amount of the Notes then outstanding in the
case of a partial prepayment, at 100% of the principal amount so
prepaid, together with interest accrued thereon to the date of such
prepayment, plus the Make-Whole Amount, if any, determined for the
prepayment date with respect to such principal amount. The Company
will give each holder of Notes written notice of each optional
prepayment under this Section 8.2 not less than 30 days and
not more than 60 days prior to the date fixed for such prepayment.
Each such notice shall specify such date, the aggregate principal
amount of the Notes to be prepaid on such date, the principal
amount of each Note held by such holder to be prepaid (determined
in accordance with Section 8.3), and the interest to be paid
on the prepayment date with respect to such principal amount being
prepaid, and shall be accompanied by a certificate of a Senior
Financial Officer as to the estimated Make-Whole Amount due in
connection with such prepayment (calculated as if the date of such
notice were the date of the prepayment), setting forth the details
of such computation. Two Business Days prior to such prepayment,
the Company shall deliver to each holder of Notes a certificate of
a Senior Financial Officer specifying the calculation of such
Make-Whole Amount as of the specified prepayment date.
Section 8.3. Allocation of Partial Prepayments .
In the case of each partial prepayment of the Notes pursuant to
Section 8.2, the principal amount of the Notes to be prepaid shall
be allocated among all of the Notes at the time outstanding in
proportion, as nearly as practicable, to the respective unpaid
principal amounts thereof not theretofore called for
prepayment.
Section 8.4. Maturity; Surrender, Etc . In the
case of each prepayment of Notes pursuant to this Section 8,
the principal amount of each Note to be prepaid shall mature and
become due and payable on the date fixed for such prepayment,
together with interest on such principal amount accrued to such
date and the Make-Whole Amount, if any. From and after such date,
unless the Company shall fail to pay such principal amount when so
due and payable, together with the interest and Make-Whole Amount,
if any, as aforesaid, interest on such principal amount shall cease
to accrue. Any Note paid or prepaid in full shall be surrendered to
the Company and cancelled and shall not be reissued, and no Note
shall be issued in lieu of any prepaid principal amount of any
Note.
Section 8.5. Purchase of Notes . The Company will
not, and will not permit any Affiliate to, purchase, redeem, prepay
or otherwise acquire, directly or indirectly, any of the
outstanding Notes except (a) upon the payment or prepayment of
the Notes in accordance with the terms of this Agreement and the
Notes or (b) pursuant to a written offer to purchase any
outstanding Notes made by the Company or an Affiliate pro rata to
the holders of all Notes at the time outstanding upon the same
terms and conditions. Any such offer shall provide each holder with
sufficient information to enable it to make an informed decision
with respect to such offer, and shall remain open for at least
fifteen (15) Business Days. If the holders of more than 50% of the
principal amount of the Notes then outstanding accept such offer,
the Company shall promptly notify the remaining holders of such
fact and the expiration date for the acceptance by holders of Notes
of such offer shall be extended by the number of days necessary to
give each such remaining holder at least ten (10) Business Days
from its receipt of such notice to accept such offer. The Company
will promptly cancel all Notes acquired by it or any Affiliate
pursuant
to any payment, prepayment or purchase of Notes
pursuant to any provision of this Agreement and no Notes may be
issued in substitution or exchange for any such Notes.
Section 8.6. Make-Whole Amount . The term
“Make-Whole Amount”
shall mean, with respect to any Note of a series, an
amount equal to the excess, if any, of the Discounted Value of the
Remaining Scheduled Payments with respect to the Called Principal
of such Note over the amount of such Called Principal,
provided that the
Make-Whole Amount may in no event be less than zero. For the
purposes of determining the Make-Whole Amount, the following terms
have the following meanings:
“Called Principal”
shall mean, with respect to any Note of a series,
the principal of such Note that is to be prepaid pursuant to
Section 8.2 or has become or is declared to be immediately due
and payable pursuant to Section 12.1, as the context
requires.
“Discounted Value”
shall mean, with respect to the Called Principal of
any Note of a series, the amount obtained by discounting all
Remaining Scheduled Payments with respect to such Called Principal
from their respective scheduled due dates to the Settlement Date
with respect to such Called Principal, in accordance with accepted
financial practice and at a discount factor (applied on the same
periodic basis as that on which interest on the Notes of such
series is payable) equal to the Reinvestment Yield with respect to
such Called Principal.
“Reinvestment Yield”
shall mean, with respect to the Called Principal of
any Note, 0.50% over the yield to maturity implied by (a) the
yields reported, as of 10:00 a.m. (New York, New York time) on the
second Business Day preceding the Settlement Date with respect to
such Called Principal, on the display designated as “Page
PX1” on the Bloomberg Financial Services Screen (or such
other display as may replace Page PX1 on the Bloomberg Financial
Services Screen) for actively traded U.S. Treasury securities
having a maturity equal to the Remaining Average Life of such
Called Principal as of such Settlement Date, or (b) if such
yields are not reported as of such time or the yields reported as
of such time are not ascertainable, the Treasury Constant Maturity
Series Yields reported, for the latest day for which such yields
have been so reported as of the second Business Day preceding the
Settlement Date with respect to such Called Principal, in Federal
Reserve Statistical Release H.15 (519) (or any comparable successor
publication) for actively traded U.S. Treasury securities having a
constant maturity equal to the Remaining Average Life of such
Called Principal as of such Settlement Date. Such implied yield
will be determined, if necessary, by (1) converting U.S.
Treasury bill quotations to bond-equivalent yields in accordance
with accepted financial practice and (2) interpolating
linearly between (i) the actively traded U.S. Treasury
security with the maturity closest to and greater than the
Remaining Average Life and (ii) the actively traded U.S.
Treasury security with the maturity closest to and less than the
Remaining Average Life.
“Remaining Average Life”
shall mean, with respect to any Called Principal,
the number of years (calculated to the nearest one-twelfth year)
obtained by dividing (a) such Called Principal into
(b) the sum of the products obtained by multiplying
(1) the principal component of each Remaining Scheduled
Payment with respect to such Called Principal
by (2) the number of years (calculated to the
nearest one-twelfth year) that will elapse between the Settlement
Date with respect to such Called Principal and the scheduled due
date of such Remaining Scheduled Payment.
“Remaining Scheduled
Payments” shall mean, with respect
to the Called Principal of any Note of a series, all payments of
such Called Principal and interest thereon that would be due after
the Settlement Date with respect to such Called Principal if no
payment of such Called Principal were made prior to its scheduled
due date, provided that if such Settlement Date is not a date on which interest
payments are due to be made under the terms of the Notes of such
series, then the amount of the next succeeding scheduled interest
payment will be reduced by the amount of interest accrued to such
Settlement Date and required to be paid on such Settlement Date
pursuant to Section 8.2 or 12.1; provided, further, that in connection
with any optional prepayment of the Notes pursuant to Section 8.2,
“Remaining Scheduled Payments” shall be calculated
using an interest rate of 4.69% for the Series A Notes and 5.42%
for the Series B Notes.
“Settlement Date”
shall mean, with respect to the Called Principal of
any Note of a series, the date on which such Called Principal is to
be prepaid pursuant to Section 8.2 or has become or is
declared to be immediately due and payable pursuant to
Section 12.1, as the context requires.
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Section
8.7.
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Offer to Prepay
Notes in the Event of a Change in Control.
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(a)
Notice of Change in Control or Control
Event. The Company will, within 10 days
after any Responsible Officer has knowledge of the occurrence of
any Change in Control or Control Event, give written notice of such
Change in Control or Control Event to each holder of Notes unless
notice in respect of such Change in Control (or the Change in
Control contemplated by such Control Event) shall have been given
pursuant to Section 8.7(b). If a Change in Control has
occurred, such notice shall contain and constitute an offer to
prepay Notes as described in Section 8.7(c) and shall be
accompanied by the certificate described in
Section 8.7(g).
(b)
Condition to Company Action.
The Company will not take any action that
consummates or finalizes a Change in Control unless (1) at least 30
days prior to such action it shall have given to each holder of
Notes written notice containing and constituting an offer to prepay
Notes as described in Section 8.7(c), accompanied by the
certificate described in Section 8.7(g), and
(2) contemporaneously with such action, the Company prepays
all Notes required to be prepaid in accordance with this
Section 8.7.
(c)
Offer to Prepay Notes. The offer to prepay Notes contemplated by Sections 8.7(a)
and (b) shall be an offer to prepay, in accordance with and subject
to this Section 8.7, all, but not less than all, Notes held by
each holder (in this case only, “holder” in respect of
any Note registered in the name of a nominee for a disclosed
beneficial owner shall mean such beneficial owner) on a date
specified in such offer (the “Proposed Prepayment Date” ). If such Proposed Prepayment Date is in connection with an
offer contemplated by Section 8.7(a), such date shall be not
less than 30 days and not more than 60 days after the date of such
offer (if the Proposed Prepayment Date shall not
be specified in such offer, the Proposed Prepayment
Date shall be the 30th day after the date of such
offer).
(d)
Rejection; Acceptance. A holder of Notes may accept or reject the offer to prepay made
pursuant to this Section 8.7 by causing a notice of such
acceptance or rejection to be delivered to the Company at least
five days prior to the Proposed Prepayment Date. A failure by a
holder of Notes to so respond to an offer to prepay made pursuant
to this Section 8.7 shall be deemed to constitute an
acceptance of such offer by such holder.
(e)
Prepayment. Prepayment
of the Notes to be prepaid pursuant to this Section 8.7 shall
be at 100% of the principal amount of such Notes, together with
accrued and unpaid interest on such Notes accrued to the date of
prepayment but without any Make-Whole Amount. The prepayment shall
be made on the Proposed Prepayment Date, except as provided by
Section 8.7(f).
(f)
Deferral Pending Change in Control.
The obligation of the Company to prepay Notes
pursuant to the offers required by Section 8.7(c) and accepted
in accordance with Section 8.7(d) is subject to the occurrence
of the Change in Control in respect of which such offers and
acceptances shall have been made. In the event that such Change in
Control does not occur on the Proposed Prepayment Date in respect
thereof, the prepayment shall be deferred until, and shall be made
on the date on which, such Change in Control occurs. The Company
shall keep each holder of Notes reasonably and timely informed of
(1) any such deferral of the date of prepayment, (2) the date
on which such Change in Control and the prepayment are expected to
occur and (3) any determination by the Company that efforts to
effect such Change in Control have ceased or been abandoned (in
which case the offers and acceptances made pursuant to this
Section 8.7 in respect of such Change in Control automatically
shall be deemed rescinded without penalty or other
liability).
(g)
Officer’s Certificate.
Each offer to prepay the Notes pursuant to this
Section 8.7 shall be accompanied by a certificate, executed by
a Senior Financial Officer and dated the date of such offer,
specifying (1) the Proposed Prepayment Date, (2) that
such offer is made pursuant to this Section 8.7 and that the
failure by a holder to respond to such offer by the deadline
established in Section 8.7(d) shall result in such offer to such
holder being deemed accepted, (3) the principal amount of each
Note offered to be prepaid, (4) the interest that would be due on
each Note offered to be prepaid, accrued to the Proposed Prepayment
Date, (5) that the conditions of this Section 8.7 have been
fulfilled and (6) in reasonable detail, the nature and date of
the Change in Control.
(h)
“Change in Control”
shall mean the occurrence of one or more of the
following events: (1) any sale, lease, exchange or other transfer
(in a single transaction or a series of related transactions) of
all or substantially all of the assets of the Company to any Person
or “group” (within the meaning of the Exchange Act and
the rules of the SEC thereunder in effect on the date hereof); (2)
the acquisition of ownership, directly or indirectly, beneficially
or of record, by any Person or “group” (within the
meaning of the Exchange Act and the rules of the SEC thereunder as
in effect on the date hereof) of 30%
or more of the outstanding shares of the voting
stock of the Company; (3) occupation of a majority of the seats
(other than vacant seats) on the board of directors of the Company
by Persons who were neither (i) nominated by the current board of
directors nor (ii) appointed by directors so nominated; (4) the
occurrence of a “Change in Control” under and as
defined in the Bank Credit Agreement or (5) the occurrence of a
“Change in Control” under and as defined in the
Franchise Partner Master Facility.
(i)
“Control Event”
shall mean (1) the execution by the Company or any
of its Subsidiaries or Affiliates of any agreement or letter of
intent with respect to any proposed transaction or event or series
of transactions or events which, individually or in the aggregate,
may reasonably be expected to result in a Change in Control, (2)
the execution of any written agreement which, when fully performed
by the parties thereto, would result in a Change in Control or (3)
the making of any written offer by any person (as such term is used
in Section 13(d) and Section 14(d)(2) of the Exchange Act as in
effect on the date hereof) or related persons constituting a group
(as such term is used in Section 13(d)-5 under the Exchange Act as
in effect on the date hereof) to the holders of the common stock of
the Company or of any of its Affiliates, which offer, if accepted
by the requisite number of holders, would result in a Change in
Control.
|
|
Section
8.8.
|
Additional Required
Offers to Prepay.
|
|
|
(a)
|
Scheduled Offers to
Prepay.
|
(1) No
later than July 19, 2008, the Company will offer to prepay
$1,384,598 aggregate principal amount of the Notes on August 19,
2008.
(2) No
later than October 17, 2008, the Company will offer to prepay
$1,384,598 aggregate principal amount of the Notes on November 17,
2008.
(b)
Quarterly Offers to Prepay.
No later than 30 days prior to the end of each
fiscal quarter of the Company, the Company will offer to prepay
$2,000,000 aggregate principal amount (or such lesser amount as is
then outstanding) of the Notes.
(c)
Offers to Prepay with Excess Cash
Flow. Beginning with the fiscal year
ended June 3, 2008, (1) within the earlier of the date that is 90
days after the end of each fiscal year of the Company and the date
that is two days after the date the information required by Section
7.1(b) is filed with the SEC for such fiscal year and
(2) within the earlier of the date that is 45 days after the
end of the second fiscal quarter of each fiscal year of the Company
and the date that is two days after the date such information
required by Section 7.1(a) is filed with the SEC for such fiscal
quarter, the Company shall offer to prepay the Notes in an amount
equal to the Excess Cash Flow Amount for the six month period
ending as of the end of such fiscal year or such second fiscal
quarter.
(d)
Offers to Prepay in Connection with Commitment
Reductions. If the Aggregate Revolving
Commitments (as defined in the Bank Credit Agreement) or the
Aggregate Revolving Committed Amounts (as defined in the Bank
Credit Agreement) are reduced under the Bank Credit Agreement
(other than in connection with (1) a
prepayment of the Notes contemplated by clauses (a),
(b) or (c) above or (2) a refinancing or replacement of the Bank
Credit Agreement; provided
, that the aggregate commitments under the
refinancing or replacement credit agreement are at least equal to
the aggregate commitments under the Bank Credit Agreement
immediately prior to such refinancing or replacement), the Company
shall simultaneously therewith offer to prepay the Notes as
hereafter provided in an amount sufficient to provide that the
aggregate principal amount of the Notes and the Aggregate Revolving
Commitments or the Aggregate Revolving Committed Amounts, as
applicable, under the Bank Credit Agreement are reduced on a pro
rata basis.
(e)
Notice and Offer . In
connection with any required offer to prepay the Notes referred to
in paragraphs (a), (b), (c) or (d) above, the Company shall, no
later than the date specified in the applicable paragraph, give
written notice of such event (an “Offer to Prepay Event” )
to each holder of Notes. Such notice shall contain, and shall
constitute, an irrevocable offer to prepay the Notes in the
aggregate amount required pursuant to the applicable paragraph on
the date specified in such notice (the “Offered Prepayment Date ”) which date shall be 30 days after such
notice.
(f)
Acceptance and Payment. A holder of Notes may accept or reject an offer to prepay
pursuant to this Section 8.8 by causing a notice of such acceptance
or rejection to be delivered to the Company at least five days
prior to the Offered Prepayment Date. A failure by a holder of the
Notes to respond to an offer to prepay made pursuant to this
Section 8.8 shall be deemed to constitute a rejection of such offer
by such holder; provided,
that any holder of a Note may, by written notice to
the Company, elect to have such holder’s failure to respond
to any offer to prepay be deemed to be an acceptance of such offer
by such holder until such notice is rescinded by such holder in
writing. If so accepted, such offered prepayment in respect of the
Ratable Portion of the Notes of each holder that has accepted such
offer shall be due and payable on the Offered Prepayment Date. Such
offered prepayment shall be made at 100% of the aggregate Ratable
Portion of the Notes of each holder that has accepted such offer,
together with interest on that portion of the Notes then being
prepaid accrued to the Offered Prepayment Date but, in any case,
without any Make-Whole Amount. In the event no holder of Notes
accepts an offered prepayment of the Notes pursuant to this Section
8.8, the Company shall be permitted to retain such proceeds for use
in the operations of the business of the Company and its
Subsidiaries.
(g)
Officer’s Certificate.
Each offer to prepay the Notes pursuant to this
Section 8.8 shall be accompanied by a certificate, executed by a
Senior Financial Officer of the Company and dated the date of such
offer, specifying: (1) the Offered Prepayment Date; (2) that
such offer is being made pursuant to this Section 8.8 and that the
failure by a holder to respond to such offer by the deadline
established in Section 8.8(f) shall result in such offer to such
holder being deemed rejected (unless otherwise elected in a written
notice previously delivered to the Company); (3) the principal
amount of Notes being offered to be prepaid; (4) that the
conditions of this Section 8.8 have been satisfied and (5) in
reasonable detail, a description of the nature of the event giving
rise to such offer of prepayment.
|
SECTION 9.
|
AFFIRMATIVE
COVENANTS.
|
The Company covenants that so long as any of the
Notes are outstanding:
Section 9.1. Compliance with Law . The Company
will, and will cause each of its Subsidiaries to, comply with all
laws, ordinances or governmental rules or regulations to which each
of them is subject, including, without limitation, Environmental
Laws, and will obtain and maintain in effect all licenses,
certificates, permits, franchises and other governmental
authorizations necessary to the ownership of their respective
properties or to the conduct of their respective businesses, in
each case to the extent necessary to ensure that non-compliance
with such laws, ordinances or governmental rules or regulations or
failures to obtain or maintain in effect such licenses,
certificates, permits, franchises and other governmental
authorizations could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse
Effect.
Section 9.2. Insurance . The Company will, and
will cause each of its Restricted Subsidiaries to, maintain, with
financially sound and reputable insurers, insurance with respect to
their respective properties and businesses against such casualties
and contingencies, of such types, on such terms and in such amounts
(including deductibles, co-insurance and self-insurance, if
adequate reserves are maintained with respect thereto) as is
customary in the case of entities of established reputations
engaged in the same or a similar business and similarly situated,
except for any non-maintenance that could not reasonably be
expected to have a Material Adverse Effect.
Section 9.3. Maintenance of Properties . The
Company will, and will cause each of its Restricted Subsidiaries
to, maintain and keep, or cause to be maintained and kept, their
respective properties in good repair, working order and condition
(other than ordinary wear and tear), so that the business carried
on in connection therewith may be properly conducted at all
times, provided that this Section 9.3 shall not prevent the Company or any
Restricted Subsidiary from discontinuing the operation and the
maintenance of any of its properties if, in the good faith judgment
of the Company, such discontinuance is desirable in the conduct of
its business and such discontinuance could not, individually or in
the aggregate, reasonably be expected to have a Material Adverse
Effect.
Section 9.4. Payment
of Taxes and Claims . The Company will,
and will cause each of its Subsidiaries to, file all tax returns
required to be filed in any jurisdiction and to pay and discharge
all taxes shown to be due and payable on such returns and all other
taxes, assessments, governmental charges, or levies imposed on them
or any of their properties, assets, income or franchises, to the
extent such taxes and assessments have become due and payable and
before they have become delinquent and all claims for which sums
have become due and payable that have or might become a Lien on
properties or assets of the Company or any Subsidiary,
provided that neither
the Company nor any Subsidiary need pay any such tax or assessment
or claims if (a) the amount, applicability or validity thereof
is contested by the Company or such Subsidiary on a timely basis in
good faith and by appropriate proceedings and (b)(i) the
Company or a Subsidiary has established adequate reserves therefor
in accordance with GAAP on the books of the Company or such
Subsidiary or (ii) the nonpayment of all such taxes and
assessments in the aggregate (other than taxes, assessments or
claims the Company or a Subsidiary is contesting in accordance with
provisions set forth in clause (a) above and for which reserves
have been
established in accordance with clause (b)(i) above)
could not reasonably be expected to have a Material Adverse
Effect.
Section 9.5. Corporate Existence, Etc . The
Company will at all times preserve and keep in full force and
effect its corporate existence. Subject to Sections 10.6 and
10.7, the Company will at all times preserve and keep in full force
and effect the corporate existence of each of its Restricted
Subsidiaries (unless merged into the Company or another Restricted
Subsidiary) and all rights and franchises of the Company and its
Restricted Subsidiaries unless, in the good faith judgment of the
Company, the termination of or failure to preserve and keep in full
force and effect such corporate existence, right or franchise could
not, individually or in the aggregate, have a Material Adverse
Effect.
Section 9.6. Guaranty Agreement . (a)(1)
Concurrently with any Subsidiary becoming obligated as a co-obligor
or guarantor in respect of any obligations existing under the Bank
Credit Agreement, the Company shall cause such Subsidiary to
execute and deliver a supplement to the Guaranty Agreement
(a “Supplement”
) in the form of Exhibit A to the Guaranty
Agreement.
(2) Concurrently with
the delivery by any Subsidiary of a Supplement pursuant to
Section 9.6(a)(1), the Company shall cause such Subsidiary to
deliver to each holder of Notes (i) such documents and
evidence with respect to such Subsidiary as any holder may
reasonably request in order to establish the existence and good
standing of such Subsidiary and evidence that the Board of
Directors of such Subsidiary has adopted resolutions authorizing
the execution and delivery of such Supplement, (ii) evidence
of compliance with such Subsidiary’s outstanding Debt
instruments in the form of (A) a compliance certificate from
such Subsidiary to the effect that such Subsidiary is in compliance
with all terms and conditions of its outstanding Debt instruments,
(B) consents or approvals of the holder or holders of any
evidence of Debt or Security, and/or (C) amendments of
agreements pursuant to which any evidence of Debt or Security may
have been issued, all as may be reasonably deemed necessary by the
holders of Notes to permit the execution and delivery of such
Supplement by such Subsidiary, (iii) an opinion of counsel to
the effect that (A) such Subsidiary is a corporation or other
business entity, duly organized, validly existing and in good
standing, if applicable, under the laws of its jurisdiction of
organization, has the corporate or other power and the authority to
execute and deliver such Supplement and to perform the Guaranty
Agreement, (B) the execution and delivery of such Supplement
and performance of the Guaranty Agreement has been duly authorized
by all necessary action on the part of such Subsidiary, such
Supplement has been duly executed and delivered by such Subsidiary
and the Guaranty Agreement constitutes the legal, valid and binding
contract of such Subsidiary enforceable against such Subsidiary in
accordance with its terms, subject to bankruptcy, insolvency,
fraudulent conveyance or similar laws affecting creditors’
rights generally, and general principles of equity (regardless of
whether the application of such principles is considered in a
proceeding in equity or at law), (C) the execution and
delivery of such Supplement and the performance by such Subsidiary
of the Guaranty Agreement do not conflict with
or result in any breach of any of the provisions of
or constitute a default under or result in the creation of a Lien
upon any of the property of such Subsidiary pursuant to the
provisions of its charter documents or any agreement or other
instrument known to such counsel to which such Subsidiary is a
party to or by which such Subsidiary may be bound and (D) no
approval, consent or withholding of objection on the part of, or
filing, registration or qualification with, any Governmental
Authority, Federal or state, is necessary in connection with the
lawful execution and delivery of such Supplement by such Subsidiary
or the performance of the Guaranty Agreement by such Subsidiary,
which opinion may contain such assumptions and qualifications as
are reasonably acceptable to the Required Holders and (iv) all
other documents and showings reasonably requested by the holders of
Notes in connection with the execution and delivery of such
Supplement, which documents shall be reasonably satisfactory in
form and substance to such holders and their special counsel, and
each holder of Notes shall have received a copy (executed or
certified as may be appropriate) of all of the foregoing legal
documents.
(b) If at
any time, pursuant to the terms and conditions of the Bank Credit
Agreement, any Guarantor is no longer obligated as a co-obligor
and/or guarantor under the Bank Credit Agreement and the Company
shall have delivered to each holder of Notes an Officer’s
Certificate certifying that (1) such Guarantor is not
obligated as a co-obligor and/or guarantor under the Bank Credit
Agreement and (2) immediately preceding the release of such
Guarantor from the Guaranty Agreement and after giving effect
thereto, no Default or Event of Default shall have existed or would
exist, then, upon receipt by the holders of Notes of such
Officer’s Certificate, such Guarantor shall be discharged
from its obligations under the Guaranty Agreement.
Section 9.7. Additional Subsidiaries. If any
additional Significant Subsidiary is acquired or formed after the
Effective Date or any Subsidiary becomes a Significant Subsidiary
after the Effective Date, the Company will, within 30 days after
such Significant Subsidiary is acquired or formed or such
Subsidiary becomes a Significant Subsidiary, notify the holders of
Notes and the Collateral Agent thereof and will (a) cause such
Significant Subsidiary to deliver simultaneously therewith similar
documents applicable to such Significant Subsidiary required under
Section 4 as reasonably requested by the Required Holders or
Collateral Agent including, without limitation, a supplement to the
Pledge Agreement and all certificates evidencing any certificated
Equity Interests required to be pledged pursuant to the Pledge
Agreement, together with duly executed in blank and undated stock
powers attached thereto and favorable opinions of counsel to such
Person (which shall cover, among other things, the legality,
validity, binding effect and enforceability of the documentation
referred to in clause (a)) and (b) become a party to the
Intercreditor Agreement by executing and delivering to the holders
of Notes a joinder agreement to the Intercreditor Agreement, all in
form and substance reasonably satisfactory to the Required
Holders.
Section 9.8. Pledged
Assets. The Company will cause (a) 100%
of the issued and outstanding Equity Interests of each Domestic
Subsidiary owned by the Company or any Restricted Subsidiary and
(b) 65% (or such greater percentage that, due to a change in an
applicable Law after the date hereof, (1) could not reasonably be
expected to cause the
undistributed earnings of such Foreign Subsidiary as
determined for United States federal income tax purposes to be
treated as a deemed dividend to such Foreign Subsidiary’s
United States parent and (2) could not reasonably be expected to
cause any material adverse tax consequences) of the issued and
outstanding Equity Interests entitled to vote (within the meaning
of Treas. Reg. Section 1.956 2(c)(2)) and 100% of the issued and
outstanding Equity Interests not entitled to vote (within the
meaning of Treas. Reg. Section 1.956 2(c)(2)) in each Foreign
Subsidiary directly owned by a the Company or any Restricted
Subsidiary to be subject at all times to a first priority,
perfected Lien in favor of the Collateral Agent, for the benefit of
the holders of the Senior Secured Obligations, pursuant to the
terms and conditions of the Collateral Documents, together with
opinions of counsel and any filings and deliveries reasonably
necessary in connection therewith to perfect the security interests
therein, all in form and substance reasonably satisfactory to the
Required Holders and the Collateral Agent.
|
SECTION 10.
|
NEGATIVE
COVENANTS.
|
The Company covenants that so long as any of the
Notes are outstanding:
Section 10.1. Fixed Charges
Coverage Ratio . The Company will not, at
any time, permit the Fixed Charges Coverage Ratio to be less
than:
|
Period
|
Ratio
|
|
From and after May 21, 2008 to and including
March 1, 2011
|
2.25 to
1.00
|
|
From and after March 2, 2011 to and including
March 1, 2012
|
2.50 to
1.00
|
|
Thereafter
|
2.75 to
1.00
|
Section 10.2. Adjusted Total Debt
to Consolidated EBITDAR Ratio . The
Company will not, at any time, permit the ratio of Adjusted Total
Debt to Consolidated EBITDAR for the then most recently ended
period of four consecutive fiscal quarters of the Company to be
greater than:
|
Period
|
Ratio
|
|
From and after May 21, 2008 to and including June
3, 2008
|
4.50 to
1.00
|
|
From and after June 4, 2008 to and including
September 2, 2008
|
4.60 to
1.00
|
|
From and after September 3, 2008 to and including
December 2, 2008
|
4.50 to
1.00
|
|
From and after December 3, 2008 to and including
September 1, 2009
|
4.25 to
1.00
|
|
From and after September 2, 2009 to and including
March 2, 2010
|
4.00 to
1.00
|
|
From and after March 3, 2010 to and including
March 1, 2011
|
3.75 to
1.00
|
|
From and after March 2, 2011 to and including
March 1, 2012
|
3.50 to
1.00
|
|
Thereafter
|
3.25 to
1.00
|
Section 10.3. Consolidated Net
Worth . The Company will not, at any
time, permit Consolidated Net Worth to be less than the sum of (a)
$300,000,000 and (b) an aggregate amount equal to 25% of its
Consolidated Net Income (but, each case, only if a positive number)
for each completed fiscal year ending after June 4,
2003.
Section 10.4. Debt
. The Company will not create, incur, assume or
suffer to exist, or permit any Restricted Subsidiary to create,
incur, assume or suffer to exist, any Debt, except:
(a) Debt
under the Notes;
(b) Debt of
the Company and the Guarantors under the Franchise
Facility;
(c) Debt of
the Company and the Guarantors under the Bank Credit Agreement in
an aggregate principal amount not to exceed
$500,000,000;
(d) Debt of
the Company and its Restricted Subsidiaries existing on the
Effective Date and set forth in Schedule 10.4;
(e) purchase money
Debt (including Capital Lease Obligations or obligations under
Synthetic Leases) incurred by the Company or any of its Restricted
Subsidiaries to finance the purchase of fixed assets, and renewals,
refinancings and extensions thereof; provided , that (i) the aggregate
principal amount of all such Debt at any one time outstanding shall
not exceed $20,000,000, (ii) such Debt when incurred shall not
exceed the purchase price of the asset(s) financed; and (iii) no
such Debt shall be refinanced for a principal amount in excess of
the principal balance outstanding thereon at the time of such
refinancing;
(f) secured Debt
of the Company and its Restricted Subsidiaries assumed in
connection with a Permitted Acquisition so long as such Debt (i)
was not incurred in anticipation of or in connection with the
respective Permitted Acquisition and (ii) does not exceed
$50,000,000 in the aggregate at any time outstanding;
(g) obligations
(contingent or otherwise) of the Company or any Restricted
Subsidiary existing or arising under any Hedging Agreement,
provided that (i) such
obligations are (or were) entered into by such Person in the
ordinary course of business for the purpose of directly mitigating
risks associated with liabilities, commitments, investments,
assets, or property held or reasonably anticipated by such Person,
or changes in the value of securities issued by such Person, and
not for purposes of speculation or
taking a “market view;” and (ii) such
Hedging Agreement does not contain any provision exonerating the
non defaulting party from its obligation to make payments on
outstanding transactions to the defaulting party;
(h) Debt in
the form of Guaranties of Debt permitted by Section 10.12(c);
and
(i) other
unsecured Debt of the Company and its Restricted Subsidiaries not
to exceed $10,000,000 in the aggregate at any one time
outstanding.
Section 10.5. Liens
. The Company will not, and will not permit any of
its Restricted Subsidiaries to, directly or indirectly create,
incur, assume or permit to exist (upon the happening of a
contingency or otherwise) any Lien on or with respect to any
property or asset (including, without limitation, any document or
instrument in respect of goods or accounts receivable) of the
Company or any such Restricted Subsidiary, whether now owned or
held or hereafter acquired, or any income or profits therefrom, or
assign or otherwise convey any right to receive income or profits,
except:
(a) Liens
for taxes, assessments or other governmental charges which are not
yet due and payable or the payment of which is not at the time
required under this Agreement for the reasons set forth in
Section 9.4;
(b) statutory Liens of
landlords and Liens of carriers, warehousemen, mechanics,
materialmen and other similar Liens, in each case, incurred in the
ordinary course of business for sums not yet due and
payable;
(c) Liens
(other than any Lien imposed by ERISA) incurred or deposits made in
the ordinary course of business (1) in connection with
workers’ compensation, unemployment insurance and other types
of social security or retirement benefits, or (2) to secure
(or to obtain letters of credit that secure) the performance of
tenders, statutory obligations, surety bonds, appeal bonds, bids,
leases (other than Capital Leases), performance bonds, purchase,
construction or sales contracts, in each case not incurred or made
in connection with the borrowing of money, the obtaining of
advances or credit or the payment of the deferred purchase price of
property;
(d) any
attachment or judgment Lien, unless the judgment it secures shall
not, within 60 days after the entry thereof, have been discharged
or execution thereof stayed pending appeal, or shall not have been
discharged within 60 days after the expiration of any such
stay;
(e) leases
or subleases granted to others, easements, rights-of-way,
restrictions and other similar charges or encumbrances or minor
survey exceptions, in each case incidental to the ownership of
property or assets or the ordinary conduct of the business of the
Company or any of its Restricted Subsidiaries,
provided that such
Liens would not, in the aggregate, have a Material Adverse
Effect;
(f) Liens on
property or assets of any Restricted Subsidiary securing Debt owing
to the Company or to a Wholly-Owned Restricted
Subsidiary;
(g) Liens
existing on the Effective Date and securing the Debt of the Company
and its Restricted Subsidiaries referred to on Schedule 10.5
hereto;
(h) any
Lien created to secure all or any part of the purchase price, or to
secure Debt incurred or assumed to pay all or any part of the
purchase price or cost of construction, of property (or any
improvement thereon) acquired or constructed by the Company or a
Restricted Subsidiary after the date of the Closing,
provided that:
(1) any
such Lien shall extend solely to the item or items of such property
(or improvement thereon) so acquired or constructed and, if
required by the terms of the instrument originally creating such
Lien, other property (or improvement thereon) which is an
improvement to or is acquired for specific use in connection with
such acquired or constructed property (or improvement thereon) or
which is real property being improved by such acquired or
constructed property (or improvement thereon);
(2) the
principal amount of the Debt secured by any such Lien shall at no
time exceed an amount equal to the lesser of (i) the cost to
the Company or such Restricted Subsidiary of the property (or
improvement thereon) so acquired or constructed and (ii) the
Fair Market Value (as determined in good faith by one or more
officers of the Company to whom authority to enter into the subject
transaction has been delegated by the board of directors of the
Company) of such property (or improvement thereon) at the time of
such acquisition or construction;
(3) any
such Lien shall be created contemporaneously with, or within
365 days after, the acquisition or construction of such
property; and
(4) the
aggregate principal amount of all Debt secured by such Liens shall
be permitted by the limitation set forth in Section
10.4(e);
(i) Liens
securing Debt permitted by Section 10.4(f), provided that each such Lien shall
extend solely to the item or items of property acquired and, if
required by the terms of the instrument originally creating such
Lien (1) other property which is an improvement to or is
acquired for specific use in connection with such acquired property
or (2) other property that does not constitute property or
assets of the Company or any of its Restricted
Subsidiaries;
(j) any Lien
renewing, extending or refunding any Lien permitted by paragraphs
(g), (h) or (i) of this Section 10.5, provided that (1) the principal
amount of Debt secured by such Lien immediately prior to such
extension, renewal or refunding is not increased or the maturity
thereof reduced, (2) such Lien is not extended to any other
property and (3) immediately after such extension, renewal or
refunding no Default or Event of Default would exist;
and
(k) Liens
in favor of the Collateral Agent to secure the Senior Secured
Obligations.
Any Person that becomes a Restricted Subsidiary
after the Effective Date shall, for all purposes of this Section
10.5, be deemed to have created or incurred, at the time it becomes
a Restricted Subsidiary, all outstanding Liens of such Person
immediately after it becomes a Restricted Subsidiary, and any
Person extending, renewing or refinancing any Debt secured by any
Lien shall, without duplication, be deemed to have incurred such
Lien at the time of such extension, renewal or
refinancing.
Section 10.6. Merger,
Consolidation, Etc . The Company will
not, and will not permit any of its Restricted Subsidiaries to,
consolidate with or merge with any other corporation or convey,
transfer or lease substantially all of its assets in a single
transaction or series of transactions to any Person (except that a
Restricted Subsidiary of the Company may (x) consolidate with
or merge with, or convey, transfer or lease substantially all of
its assets in a single transaction or series of transactions to,
(i) the Company or a Wholly-Owned Restricted Subsidiary of the
Company or (ii) any other Person so long as the survivor of
such merger or the Person that acquires by conveyance, transfer or
lease substantially all of the assets of such Restricted Subsidiary
as an entirety, as the case may be, is a Restricted Subsidiary and
(y) convey, transfer or lease all of its assets in compliance
with the provisions of Section 10.7), provided that the foregoing
restriction does not apply to the consolidation or merger of the
Company with, or the conveyance, transfer or lease of substantially
all of the assets of the Company in a single transaction or series
of transactions to, any Person so long as:
(a) the
successor formed by such consolidation or the survivor of such
merger or the Person that acquires by conveyance, transfer or lease
substantially all of the assets of the Company as an entirety, as
the case may be (the “Successor
Corporation” ), shall be
(1) the Company or (2) a solvent corporation organized
and existing under the laws of the United States or any State
thereof (including the District of Columbia);
(b) if the
Company is not the Successor Corporation, (1) the Successor
Corporation shall have executed and delivered to each holder of the
Notes its assumption of the due and punctual performance and
observance of each covenant and condition of this Agreement and the
Notes (pursuant to such agreements and instruments as shall be
reasonably satisfactory to the Required Holders), (2) the
Successor Corporation shall have caused to be delivered to each
holder of any Notes an opinion of nationally recognized independent
counsel, or other independent counsel reasonably satisfactory to
the Required Holders, to the effect that all agreements or
instruments effecting such assumption are enforceable in accordance
with their terms and comply with the terms hereof and (3) each
Guarantor shall have reaffirmed in writing its obligations under
the Guaranty Agreement; and
(c) immediately after
giving effect to such transaction, no Default or Event of Default
would exist.
No such conveyance, transfer or lease of
substantially all of the assets of the Company shall have the
effect of releasing the Company or any Successor Corporation from
its liability under this Agreement or the Notes.
Section 10.7. Sale of Assets,
Etc . The Company will not, and will not
permit any of its Restricted Subsidiaries to, convey, sell, lease,
assign, transfer or otherwise dispose of, including by way of
merger (collectively, a “Disposition” ), any of
its assets, business or property, whether now owned or hereafter
acquired, or, in the case of any Restricted Subsidiary, issue or
sell any shares of such Restricted Subsidiary’s common stock
to any Person other than the Company or any Wholly-Owned Restricted
Subsidiary of the Company or a Restricted Subsidiary that is a
Guarantor (or to qualify directors if required by applicable law),
except:
(a) Dispositions for
fair market value of obsolete or worn out property or other
property not necessary for operations, disposed of in the ordinary
course of business;
(b) Dispositions of
inventory and Permitted Investments in the ordinary course of
business;
(c) Dispositions of
assets of any Restricted Subsidiary to the Company or any
Wholly-Owned Restricted Subsidiary;
(d) Dispositions
pursuant to the Franchise Partner Program;
(e) Dispositions
pursuant to the Traditional Franchisee program,
provided that the
aggregate units sold to Traditional Franchisees subsequent to
February 28, 2007 shall not exceed the lesser of: (1) 40 units or
(2) units whose Consolidated Restaurant Revenues represent more
than 5% of the Consolidated Restaurant Revenues of the Company for
the four Fiscal Quarter period ending with the most recent Fiscal
Quarter ended; provided,
however, that no Default or Event of
Default has occurred and is continuing or would occur as a result
of such transaction; and
(f) any other
sale of the Consolidated Assets with an aggregate book value, when
aggregated with all other such sales since February 28, 2007, not
exceeding $200,000,000 on the date of such transfer;
provided, however, that
(i) no Default or Event of Default has occurred and is continuing
or would occur as a result of such transaction and (ii) the Company
shall have applied the Net Cash Proceeds of such sale to the
prepayment of the Debt under the Bank Credit Agreement and
permanently reduce the commitments thereunder and offer to prepay
the Notes in accordance with Section 8.8(d).
Section 10.8. Nature of
Business . The Company will not, and will
not permit any Restricted Subsidiary to, engage in any business if,
as a result thereof, the general nature of the business which would
then be engaged in by the Company and its Restricted Subsidiaries
taken as a whole would be substantially changed from the general
nature of the business engaged in by the Company and its Restricted
Subsidiaries on the date of the Closing.
Section 10.9. Transactions with
Affiliates . The Company will not, and
will not, permit any Restricted Subsidiary to, enter into, directly
or indirectly, any Material transaction or Material group of
related transactions (including, without limitation, the purchase,
lease, sale or exchange of properties of any kind or the rendering
of any service) with any Affiliate (other than the Company, a
Restricted Subsidiary or a Franchise Partner pursuant to the
Franchise Partner Program), except (a) in the ordinary course
and pursuant to the reasonable requirements of the
Company’s or such Restricted
Subsidiary’s business and upon fair and reasonable terms
which are not less favorable to the Company or such Restricted
Subsidiary than would be obtainable in a comparable
arm’s-length transaction with a Person not an Affiliate or
(b) transactions with License Subsidiaries in the ordinary
course of business, pursuant to the reasonable requirements of the
Company’s or such Restricted Subsidiary’s business and
in accordance with past business practice.
Section 10.10. Redesignation of Restricted and
Unrestricted Subsidiaries. The Company
may designate any Unrestricted Subsidiary to be a Restricted
Subsidiary and may designate any Restricted Subsidiary to be an
Unrestricted Subsidiary by giving written notice to each holder of
Notes that the Company has made such designation,
provided, however, that
no Unrestricted Subsidiary may be designated a Restricted
Subsidiary and no Restricted Subsidiary may be designated an
Unrestricted Subsidiary unless, at the time of such designation and
after giving effect thereto, no Default or Event of Default shall
exist. Any Restricted Subsidiary which has been designated an
Unrestricted Subsidiary and which has then been redesignated a
Restricted Subsidiary, in each case in accordance with the
provisions of the first sentence of this Section 10.10, shall
not at any time thereafter be redesignated an Unrestricted
Subsidiary without the prior written consent of the Required
Holders. Any Unrestricted Subsidiary which has been designated a
Restricted Subsidiary and which has then been redesignated an
Unrestricted Subsidiary, in each case in accordance with the
provisions of the first sentence of this Section 10.10, shall
not at any time thereafter be redesignated a Restricted Subsidiary
without the prior written consent of the Required
Holders.
Section 10.11. Limitation on Capital
Expenditures. The Company will not permit
Capital Expenditures of the Company and its Subsidiaries to exceed
(a) $30,000,000 in the aggregate for the fiscal year ending June 2,
2009, (b) $30,000,000 in the aggregate for the fiscal year ending
June 1, 2010 and (c) for each fiscal year thereafter, an aggregate
amount of 30% of the Consolidated EBITDA for the prior fiscal
year; provided, however,
if subsequent to the Effective Date, the Adjusted
Total Debt to EBITDAR Ratio is less than 3.0 to 1.0 as of the last
day of two consecutive Fiscal Quarters, the limitation on Capital
Expenditures provided for above shall no longer apply.
Section 10.12. Investments, Loans,
Etc. The Company will not, and will not
permit any of its Restricted Subsidiaries to, purchase, hold or
acquire (including pursuant to any merger with any Person that was
not a wholly owned Subsidiary prior to such merger), any common
stock, evidence of indebtedness or other securities (including any
option, warrant, or other right to acquire any of the foregoing)
of, make or permit to exist any loans or advances to, Guaranty any
obligations of, or make or permit to exist any investment or any
other interest in, any other Person (all of the foregoing being
collectively called “Investments” ), or
purchase or otherwise acquire (in one transaction or a series of
transactions) any assets of any other Person that constitute a
business unit, or create or form any Subsidiary, except:
(a) Investments (other
than Permitted Investments) existing on the Effective Date and set
forth on Schedule 5.16 (including Investments in
Subsidiaries);
(b) Permitted
Investments;
(c) Guaranties of Debt
under (i) the Franchise Facility and (ii) other Indebtedness in an
amount not to exceed $10,000,000 in the aggregate at any one time
outstanding;
(d) Investments made
by the Company or any Restricted Subsidiary in or to the Company or
any Restricted Subsidiary;
(e) loans
or advances to employees, officers or directors of the Company or
any Restricted Subsidiary in the ordinary course of business for
travel, relocation and related expenses;
(f) Hedging
Agreements permitted by Section 10.15;
(g) Investments in
franchise operators through the Franchise Partner Program;
provided , that such
Investments made pursuant to this subsection (g) together with
Investments made pursuant to subsection (h) below shall not exceed
$10,000,000 in the aggregate at any one time
outstanding;
(h) Investments in
franchise operators through the Traditional Franchisee program
pursuant to the purchase option agreements entered into with those
operators; provided, that such Investments made pursuant to this
subsection (h) together with Investments made pursuant to
subsection (g) above shall not exceed $10,000,000 in the aggregate
at any one time outstanding;
(i) Investments
received in settlement of Debt created in the ordinary course of
business;
(j) Acquisitions
by the Company or any Restricted Subsidiary meeting the following
requirements (each such Acquisition constituting a
“Permitted Acquisition”
):
(1)
