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RECAPITALIZATION AGREEMENT
among
AMERIKING, INC.
BANCBOSTON INVESTMENTS INC.
MCIT PLC
PMI MEZZANINE FUND, L.P.
and
THE OTHER STOCKHOLDERS NAMED ON THE SIGNATURE PAGES HERETO
Dated as of November __, 1996
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RECAPITALIZATION AGREEMENT
RECAPITALIZATION AGREEMENT (this "Agreement") dated as of November __,
1996, by and among National Restaurant Enterprises, Inc. ("Enterprises"),
AmeriKing, Inc. (the "Company"), (i) each of MCIT PLC ("MCIT"), BancBoston
Investments, Inc. ("BBI"), PMI Mezzanine Fund, L.P. ("PMI"), Jordan/Zalaznick
Capital Company, Leucadia Investors, Inc., ▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇ Revocable Trust,
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇ Profit Sharing Plan, ▇▇▇▇ ▇. ▇▇▇▇, ▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇ ▇. Max, A. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇., ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Profit Sharing Plan and Trust, ▇▇▇▇ Rodzevick, Profit
Sharing Plan and Trust, ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇ ("Jaro"), ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
("▇▇▇▇▇▇"), ▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇ Restaurant Associates, Inc., Jaro Enterprises, Inc., Jaro Restaurant
Associates, Inc., JB Restaurants, Inc., Osburger, Inc., ▇▇▇▇▇-▇▇▇▇▇▇
Restaurants, Inc., Castleking, Inc., ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇ and JII
Partners (collectively, other than PMI, referred to herein as the "Common
Stockholders") and (ii) each of MCIT, BBI, Leucadia Investors, Inc., ▇▇▇▇ ▇.
▇▇▇▇▇▇ ▇▇ Revocable Trust, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇ ▇.
▇▇▇▇▇▇, ▇▇▇▇ ▇. Max, ▇▇▇▇▇ Restaurant Associates, Inc., Jaro Enterprises, Inc.,
Jaro Restaurant Associates, Inc., JB Restaurants, Inc., Osburger, Inc.,
▇▇▇▇▇-▇▇▇▇▇▇ Restaurants, Inc. and Castleking, Inc. (collectively referred to
herein as the "Preferred Stockholders"). The Common Stockholders, Preferred
Stockholders, together with PMI, the Company and TJC Management Corporation
("TJC") are referred to herein as the "Parties".
R E C I T A L S
WHEREAS, the Parties desire to recapitalize the Company, and in
connection therewith, the Company has filed a Registration Statement on Form
S-1 (File No. 333-04261) (as amended or supplemented, the "Registration
Statement") relating to the proposed public offerings (the "Offerings") of
$100.0 million aggregate principal amount of Senior Notes due 2006 (the "Senior
Notes") and $30.0 million aggregate principal amount of Units (the "Units")
consisting of Senior Exchangeable Preferred Stock due 2008 ("Senior Preferred
Stock") and Common Stock $.01 par value of the Company;
WHEREAS, the proposed recapitalization ("Recapitalization") includes
the following primary components: (a) (i) the reclassification of all of the
issued and outstanding shares of (x) Class A Common Stock, Class C Common Stock
and Class D Common Stock into an equal number of shares of Common Stock and (y)
Class B Common Stock into an equal number of shares of Non-Voting Common Stock
and (ii) the retirement of each of the Class A Common Stock, Class B Common
Stock, Class C Common Stock and Class D Common Stock as classes of capital
stock of the Company (collectively, the "Reclassification"); (b) following the
Reclassification the 1,000-for-1 stock split (the "Stock Split") of all
outstanding shares of Common Stock; (c) the Offerings; (d) the prepayment in
full of the Company's
$15.0 million aggregate principal amount of 12.5% Senior Subordinated Notes due
2005 (the "Senior Subordinated Notes") held by PMI as of June 30, 1996, plus
prepayment premiums and accrued interest thereon; (e) the prepayment in full of
the Company's $11.0 million aggregate principal amount of 12.75% Subordinated
Notes due 2005 (the "Subordinated Notes) held by MCIT as of June 30, 1996; (f)
the prepayment in full of the Company's $4.4 million aggregate principal amount
of 12.75% Seller Notes due 2005 (the "Seller Notes") held by affiliates of Jaro
and ▇▇▇▇▇▇ as of June 30, 1996; (g) the repayment of Borrowings under the
Credit Agreement in the aggregate amount of $86.6 million and the termination
of Term Loan A and Term Loan B pursuant to the terms of the Credit Agreement;
(h) the repurchase of all of the warrants to purchase Class C Common Stock of
the Company issued by the Company to PMI; (i) the payment of $[439,000] to TJC
in payment of accrued fees under the TJC Consulting Agreement prior to November
__, 1996; (j) the amendment of the Stockholders Agreement; (k) the amendment of
the Management Subscription Agreement; (l) the amendment of the Option
Agreements; and (m) all other related transactions, agreements and instruments
contemplated by this Agreement and/or described, and based upon the assumptions
described, in the Registration Statement.
WHEREAS, the Company is required to notify BKC and obtain its consent
prior to amending any of the Company's corporate governance documents,
including without limitation, those instruments specified in Section 5.3 of
this Agreement;
WHEREAS, pursuant to the rules and regulations of the Securities and
Exchange Commission, the Company is required to file the Amended and Restated
Company Charter prior to the effective date of the Registration Statement; and
WHEREAS, in order to implement the Recapitalization, the Parties
hereto agree as follows:
ARTICLE I
DEFINITIONS
As used in this Agreement, the following terms shall have the meanings
specified below:
"Amended and Restated Company By-Laws" means the Company's Amended and
Restated By-Laws substantially in the form of Exhibit A hereto.
"Amended and Restated Company Charter" means the Company's Amended and
Restated Certificate of Incorporation substantially in the form of Exhibit B
hereto.
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"Amended and Restated Stockholders Agreement" means the Amended and
Restated Stockholders Agreement substantially in the form of Exhibit C hereto.
"Amendment No. 1 to Option Agreement" means Amendment No. 1 to each of
the Option Agreements substantially in the form of Exhibit D hereto..
"Amendment No. 1 to Management Subscription Agreement" means Amendment
No. 1 to the Management Subscription Agreement dated the date hereof
substantially in the form of Exhibit E hereto.
"BKC" means the Burger King Corporation.
"Certificate of Designation" means the Certificate of Designation
authorizing the Senior Preferred Stock.
"Class A Common Stock" means the Company's Class A Common Stock, par
value $.01 per share.
"Class B Common Stock" means the Company's Class B Common Stock, par
value $.01 per share.
"Class C Common Stock" means the Company's Class C Common Stock, par
value $.01 per share.
"Class D Common Stock" means the Company's Class D Common Stock, par
value $.01 per share.
"Class A1 Preferred Stock" means the Company's Class A1 Preferred
Stock, par value $.01 per share.
"Class A2 Preferred Stock" means the Company's Class A2 Preferred
Stock, par value $.01 per share.
"Class B Preferred Stock" means the Company's Class B Preferred Stock,
par value $.01 per share.
"Closing" has the meaning specified in Section 4.1 of this Agreement.
"Closing Time" has the meaning specified in Section 4.1 of this
Agreement.
"Common Stock" means the Company's Common Stock, par value $.01 per
share.
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"Common Stockholders" has the meaning specified in the preamble to
this Agreement.
"Company" has the meaning as specified in the preamble to this
Agreement.
"Consulting Agreement" means the Management and Consulting Agreement
between the Company and TJC, dated as of September 1, 1994, as amended from
time to time.
"Credit Agreement" means the Second Amended and Restated Credit
Agreement, dated February 7, 1986, by and among Enterprises, the Company, The
First National Bank of Boston and the other lenders thereto and the First
National Bank of Boston, as agent.
"Directors Indemnification Agreements" means the Indemnification
Agreements substantially in the form of Exhibit F hereto.
"Enterprises" has the meaning specified in the preamble of this
Agreement.
"Equity Securities" of the Company means the Class A1 Preferred Stock,
Class A2 Preferred Stock, Class B Preferred Stock, Class A Common Stock, Class
B Common Stock, Class C Common Stock and Class D Common Stock.
"Jaro" has the meaning specified in the preamble.
"Jordan Investors" means Jordan/Zalaznick Capital Company, Leucadia
Investors, Inc., TJC, ▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇ Revocable Trust, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇ ▇. Max, ▇▇▇▇ ▇. ▇▇▇▇
Profit Sharing Plan, ▇▇▇▇ ▇. ▇▇▇▇, A. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇., ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
Profit Sharing Plan and Trust, ▇▇▇▇ Rodzevick Profit Sharing Plan and Trust,
▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇ and JII Partners.
"Jordan Investors' Representative" has the meaning specified in
Section 8.2 of this Agreement.
"Liens" means any security interest, lien, charge, restriction,
encumbrance or other interest of another Person.
"Management Investors" means ▇▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇▇,
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Osburger, Inc., Castleking, Inc. and
▇▇▇▇▇-▇▇▇▇▇▇ Restaurants, Inc.
"Management Investors' Representative" has the meaning specified in
Section 8.2 of this Agreement.
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"Management Subscription Agreement" means the Management Subscription
Agreement, dated September 1, 1994, by and among the Company and the
stockholders listed on the signature page thereto.
"Material Adverse Effect" means any circumstances or event that (i)
has, or may be reasonably expected to have, any materially adverse effect upon
the validity or enforceability of this Agreement or any of the other
Recapitalization Documents or (ii) is, or may be reasonably expected to be,
materially adverse to the business or operations of the Company and its
subsidiaries, taken as a whole.
"MCIT" has the meaning specified in the preamble to this Agreement.
"Non-Voting Common Stock" means the Company's non-voting common stock,
par value $.01 per share.
"Offerings" shall mean the concurrent public offerings of Senior Notes
and Units pursuant to the Registration Statement.
"Option Agreements" mean the Stock Option Agreements, dated September
1, 1994, between the Company and each of ▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇.
"▇▇▇▇▇▇" has the meaning specified in the preamble to this Agreement.
"Parties" has the meaning specified in the preamble to this Agreement.
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization
or government or any agency or political subdivision thereof or any other
entity.
"PMI" has the meaning specified in the preamble to this Agreement.
"Preferred Stock" means the Company's Class A1 Preferred Stock, Class
A2 Preferred Stock, Class B Preferred Stock and Senior Preferred Stock.
"Preferred Stockholders" has the meaning specified in the preamble to
this Agreement.
"Pricing Committee" means the Pricing Committee of the Company's Board
of Directors, established in connection with the Offerings, and composed of
Messrs. ▇▇▇▇▇▇ and Jaro.
"Recapitalization" has the meaning specified in the recitals to this
Agreement.
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"Recapitalization Documents" means this Agreement (including all
Schedules and Exhibits hereto) and each of the agreements, instruments,
consents and documents referred to in Sections 5.2 through 5.13, the
Registration Statement, and the Underwriting Agreements.
"Reclassification" has the meaning set forth in recitals to this
Agreement.
"Registration Statement" has the meaning set forth in the recitals to
this Agreement.
"Seller Notes" has the meaning specified in the recitals to this
Agreement.
"Senior Notes" has the meaning specified in the recitals to this
Agreement.
"Senior Subordinated Notes" has the meaning specified in the recitals
to this Agreement.
"Stock Split" has the meaning specified in the recitals to this
Agreement.
"Stockholder Chart" means the stockholder chart described in Section
2.3 and set forth as Exhibit G hereto.
"Stockholders" means the Common Stockholders, PMI and the Preferred
Stockholders.
"Stockholders Agreement" means the Stockholders Agreement, dated as of
September 1, 1994, as amended by Consent and Amendment No. 1 to the
Stockholders Agreement, dated as of November 30, 1994, as further amended by
Waiver and Amendment No. 2 to the Stockholders Agreement, dated as of February
7, 1996, and as further amended and restated by the Amended and Restated
Stockholders Agreement.
"Subordinated Notes" has the meaning specified in the recitals to this
Agreement.
"Termination Date" means January 31, 1997.
"TJC" has the meaning specified in the preamble to this Agreement.
"Underwriting Agreements" means the Underwriting Agreements, to be
entered into by the Company and the Underwriters in connection with the
Offerings.
"Underwriters" means ▇▇▇▇▇▇▇▇▇, Lufkin & ▇▇▇▇▇▇▇▇ Securities
Corporation and ▇▇▇▇▇▇▇▇ & Company Inc., as representatives, on behalf of
themselves and the other underwriters named in the Underwriting Agreements.
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ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to each of the other Parties to
this Agreement, as of the Closing Time, as follows:
Section 2.1. Due Authorization. The Company is a duly organized,
validly existing corporation under the laws of the State of Delaware. Each of
this Agreement and the other Recapitalization Documents have been duly
authorized, executed and delivered by the Company and each of this Agreement
and such other Recapitalization Documents is a legal, valid and binding
obligation of the Company enforceable against the Company in accordance with
its terms, except as enforcement thereof may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium and other similar laws
affecting the enforceability of creditors' rights generally and by general
principles of equity (whether arising under a proceeding at law or in equity).
The Amended and Restated Company Charter has been duly filed with the Secretary
of State of the State of Delaware.
Section 2.2. Authority; No Conflicts. The Company has the corporate
power and authority and the legal right to make, deliver and perform, and has
taken all necessary corporate action to authorize the transactions contemplated
by this Agreement and the other Recapitalization Documents, and to conduct its
business as described in the Registration Statement. Neither the execution and
delivery of this Agreement or the other Recapitalization Documents nor the
consummation of any of the transactions contemplated herein or therein nor
compliance with the terms and provisions hereof or thereof (a) violates or will
violate any law or regulation or any order or decree of any court or government
instrumentality applicable to the Company or any of its subsidiaries or
properties, except such violations as would not, in the aggregate, have a
Material Adverse Effect, or (b) conflicts with or would result in the breach
of, or constitutes a default under, any contract, lease, indenture, loan
agreement, mortgage, deed of trust or other agreement or instrument to which
the Company or any of its subsidiaries, is a party or by which any of them or
any of their respective assets may be bound, except such conflicts, breaches or
defaults as have been waived or consents therefor have been obtained or such
conflicts, breaches or defaults as would not, in the aggregate, have a Material
Adverse Effect. Except as contemplated herein, no consent, approval,
authorization or order is presently required in connection with the execution
and delivery of this Agreement or the Recapitalization Documents by the Company
or the consummation of the transactions contemplated hereby or thereby that has
not been obtained, except for such consents, approvals, authorizations or
orders as would not, in the aggregate, have a Material Adverse Effect.
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Section 2.3. Capital Stock.
(a) At the Closing Time, the Company's authorized capital stock shall
consist of 4,000,000 shares of Common Stock, 300,000 shares of Non-Voting
Common Stock and 1,300,000 shares of Preferred Stock, including 7,500 shares of
existing Preferred Stock, and [1,200,000](1) shares of Senior Preferred Stock
and [92,500](1) shares of undesignated Preferred Stock. At the Closing Time but
prior to the consummation of the Offerings, the Company shall have
[1,030,660](1) shares of Common Stock outstanding and [1,207,500](1) shares of
Preferred Stock outstanding.
(b) Set forth on the Stockholder Chart is a true, complete and correct
chart showing, among other things, the record ownership of the Company's Equity
Securities prior to the Recapitalization.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE OTHER PARTIES
Each of the Parties to this Agreement (other than the Company and
Enterprises) represents and warrants, severally as to themselves and not
jointly, to each of the other Parties to this Agreement, as of the Closing
Time, as follows:
Section 3.1. Due Authorization. Each of this Agreement and the other
Recapitalization Documents to which such Party is a party have been duly
authorized, executed and delivered by such Party, as required, and each of this
Agreement and such other Recapitalization Documents is a legal, valid and
binding obligation of such Party, enforceable against such Party, in accordance
with its terms, except as enforcement thereof may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium and other similar laws
affecting the enforceability of creditors' rights generally and by general
principles of equity (whether arising under a proceeding at law or in equity).
Section 3.2. Authority; No Conflicts. Such Party has the power and
authority and the legal right to make, deliver and perform, and has taken all
necessary corporate action to authorize the transactions contemplated by, this
Agreement and the other Recapitalization Documents to which such Party is a
party. Neither the execution and delivery of this Agreement or such
Recapitalization Documents nor the consummation of any of the transactions
contemplated herein or therein nor compliance with the terms and provisions
hereof or thereof (a) violates or will violate any law or regulation or any
order or decree of any court or government instrumentality applicable to such
Party, except such violations as
---------
1 Assuming 1,200,000 shares of Senior Preferred Stock and 30,000 shares of
Common Stock are sold in the Offerings.
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would not, in the aggregate, have a Material Adverse Effect, or (b) conflicts
with or would result in the breach of, or constitutes a default under, any
contract, lease, indenture, loan agreement, mortgage, deed of trust or other
agreement or instrument to which such Party is a party or by which they or any
of their respective assets may be bound, except such conflicts, breaches or
defaults as have been waived or consents therefor have been obtained or such
conflicts, breaches or defaults as would not, in the aggregate, have a Material
Adverse Effect. No consent, approval, authorization or order of any
governmental authority is presently required in connection with the execution
and delivery of this Agreement or the Recapitalization Documents by such Party
or the consummation of the transactions contemplated hereby or thereby that has
not been obtained.
Section 3.3. Capital Stock. Such Party, if a Stockholder, is the
record and beneficial owner of the Company's Equity Securities ascribed to such
Party in the Stockholder Chart and beneficially owns such Equity Securities
free and clear of any Liens, other than such as may be created under the
Stockholders Agreement.
ARTICLE IV
THE CLOSING
Section 4.1. Closing. Upon satisfaction of the conditions set forth
herein, the transactions contemplated by this Agreement, other than those
contemplated by Sections 5.2, 5.3, 5.4(a), 5.6, 5.10, 5.12 and 5.13 which will
be deemed consummated at the times set forth therein, shall be consummated at
the closing (the "Closing") thereof, which shall occur on the closing date of
the Offerings (the "Closing Time") at the offices of ▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇, New
York, New York, or at such other place as shall be agreed upon by the
Stockholders and the Company. All of the transactions contemplated by this
Agreement shall be deemed to have been consummated simultaneously and none of
such transactions shall be deemed consummated unless all of such transactions
are consummated. Notwithstanding the foregoing, if the Closing does not occur
by the Termination Date, none of the Parties hereto shall have any obligations
under Article V or otherwise under this Agreement.
ARTICLE V
THE RECAPITALIZATION
Section 5.1. General. Each of the Parties (in whatever capacity,
including as stockholders of the Company) will take all actions, including
executing and delivering all of the Recapitalization Documents to which it is a
party, necessary or reasonably requested by the Company, to authorize, adopt,
approve, implement, consummate and close the Recapitalization Documents and the
Recapitalization generally, provided that, with regard to
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Parties that are directors of the Company, the foregoing will be subject to
their fiduciary duties as directors.
Section 5.2. Amended Charter Documents.
(a) Prior to the effective date of the Registration Statement, the
Amended and Restated Company Charter that provides for, among other things, the
authorization of 92,500 shares of undesignated Preferred Stock will be duly
approved and adopted as the Charter of the Company and filed by the Company
with the Secretary of State of the State of Delaware.
In the event the Closing does not occur by the Termination Date, then
the Stockholders hereby consent, and the Company hereby agrees, without any
further action by the Stockholders, to promptly effect an amendment to the
Amended and Restated Company Charter so that it is identical to the Company's
certificate of incorporation in effect as of the date hereof.
(b) At or prior to the Closing, the Amended and Restated Company
By-Laws will be duly approved and adopted as the By-Laws of the Company.
(c) Prior to the Closing Time, the Certificate of Designation will be
filed by the Company with the Secretary of State of the State of Delaware.
(d) Prior to the effective date of the Registration Statement, BKC
will consent to the adoption by the Company of those documents referred to in
Sections 5.2(a), 5.2(b) and 5.3(c) of this Agreement.
Section 5.3. Reclassification and Stock Split.
(a) Effective simultaneously upon the filing of the Amended and
Restated Company Charter, the Reclassification shall be effected and (i) each
share of Class A Common Stock, Class C Common Stock and Class D Common Stock
currently issued and outstanding shall be converted into a like number of
shares of Common Stock and (ii) each share of Class B Common Stock currently
issued and outstanding shall be converted into a like number of shares of
Non-Voting Common Stock. Upon written notice, holders of the Class A Common
Stock, Class C Common Stock or Class D Common Stock shall deliver their stock
certificates to the Company for cancellation and such certificates that are not
so delivered will thereafter represent the right to receive a new certificate
or certificates representing an equivalent number of shares of Common Stock or
Non-Voting Common Stock, as the case may be, subject to the effect of the Stock
Split.
(b) the Stock Split shall be consummated and each holder of shares of
capital stock of the Company shall be entitled to receive a new certificate or
certificates representing the
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appropriate number of shares of Common Stock or Non-Voting Common Stock, as the
case may be.
(c) As a result of the Reclassification and the Stock Split, if any
fractional interest in a share of Common Stock or Non-Voting Common Stock, as
the case may be, would be deliverable, the Company, in lieu of delivering the
fractional share, shall pay an amount to the holder thereof equal to the fair
market value of such fractional interest as determined by the Board of
Directors.
Section 5.4. Issuance of Securities.
(a) At or prior to the effective date, the Stockholders, will consent
to the Offerings and to the execution and delivery of the Underwriting
Agreements by the Company to the Underwriters.
(b) At the Closing the Company and the Underwriters will consummate
the Offerings pursuant to the terms of the Underwriting Agreements and the
Company will issue the Senior Notes, the Units, the Senior Preferred Stock and
the Common Stock.
Section 5.5. Repayment of Credit Agreement Borrowings.
(a) At the Closing, the Company will use a portion of the net proceeds
from the Offerings to repay the entire outstanding aggregate principal amount
of the Term Loan A facility, Term Loan B facility and Revolving Credit facility
plus accrued interest and any other amounts owed thereon through the Closing
Date. At the Closing, the lenders under the Credit Agreement, will deliver to
the Company the notes evidencing the principal amount of the Term Loan A
facility, Term Loan B facility and Revolving Credit facility held by such
lenders to be repaid together with written instructions to complete the
repayment.
Section 5.6. Subordinated Note Repurchase.
(a) At the Closing, the Company will use a portion of the net proceeds
from the Offerings to repurchase at a minimum of 105% of the principal amount
the entire outstanding aggregate principal amount of the Senior Subordinated
Notes plus the applicable prepayment premium and will pay accrued interest
thereon through the Closing Time. Upon repurchase by the Company, such notes
shall cease to accrue interest and the Company's obligations thereunder shall
be cancelled. At the Closing, the holders of the Senior Subordinated Notes will
deliver to the Company the note(s) evidencing the principal amount of Senior
Subordinated Notes held by such holder to be repurchased, together with written
instructions to complete such repurchase.
(b) At the Closing, the Company will use a portion of the net proceeds
from the Offerings to repurchase at 100% of the principal amount the entire
outstanding aggregate
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principal amount of the Subordinated Notes and will pay accrued interest
thereon through the Closing Time. Upon repurchase by the Company, such notes
shall cease to accrue interest and the Company's obligations thereunder shall
be cancelled. At the Closing, the holders of the Subordinated Notes will
deliver to the Company the note(s) evidencing the principal amount of
Subordinated Notes held by such holder to be repurchased, together with written
instructions to complete such repurchase.
(c) At the Closing, the Company will use a portion of the net proceeds
from the Offerings to repurchase at 100% of the principal amount the entire
outstanding aggregate principal amount of the Seller Notes from the holders
thereof and will pay interest thereon through the Closing Time. Upon repurchase
by the Company, such notes shall cease to accrue interest and the Company's
obligations thereunder shall be cancelled. At the Closing, the holders of the
Seller Notes will deliver to the Company the notes evidencing the principal
amount of Seller Notes held by such holder to be repurchased, together with
written instructions to complete such repurchase.
Section 5.7. Repurchase of Warrants. At the Closing, the Company will
repurchase all of the warrants issued to PMI pursuant to Section 18 of the
Common Stock Purchase Warrants, dated February 7, 1996, issued by the Company,
pursuant to a repurchase agreement substantially in the form of Exhibit H.
Section 5.8. ▇▇▇▇▇▇ Employment Agreement. At or prior to the Closing,
▇▇. ▇▇▇▇▇▇ will enter into a new Employment and Non-Interference Agreement in
substantially the form of Exhibit I hereto.
Section 5.9. Directors Indemnification Agreements. At the Closing, the
Company will enter into the Directors Indemnification Agreements with each of
the signatories to the Registration Statement.
Section 5.10. 1996 Annual Meeting of Stockholders. The Parties hereby
agree to execute and deliver stockholder consents, substantially in the form of
Exhibit J hereto, with regard to (a) the Amended and Restated Company Charter,
(b) the Amended and Restated Company By-Laws, (c) the Reclassification, (d) the
Stock Split, (e) the Recapitalization Agreement and Recapitalization Documents,
(f) the election of directors of the Company as reasonably requested by the
Company, (g) the ratification of the appointment of accountants and (h) such
other matters as the Pricing Committee shall determine to submit for
stockholder approval. The Parties hereto hereby agree and acknowledge that such
stockholder consents shall serve as and constitute the Company's 1996 Annual
Meeting of Stockholders.
Section 5.11. Amended and Restated Stockholders Agreement. At the
Closing, the Company and the Stockholders will execute, deliver and consummate
the Amended and Restated Stockholders Agreement.
-12-
Section 5.12. Amendment to Management Subscription Agreement.
Effective upon the filing of the Amended and Restated Company Charter, the
Company, Jaro and affiliates of Jaro and the Management Investors Subscription
will execute, deliver and consummate Amendment No. 1 to the Management
Agreement.
Section 5.13. Amendment to Option Agreements. Effective upon the
filing of the Amended and Restated Company Charter, the Company, Enterprises,
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ will execute, deliver and consummate the
Amendment No. 1 to the Option Agreements.
ARTICLE VI
CONDITIONS OF THE PARTIES'
(OTHER THAN THE COMPANY AND ENTERPRISES) OBLIGATIONS
Section 6.1. Conditions of the Stockholders' Obligations. The
obligation of each of the Parties (other than the Company and Enterprises) on
the Closing Time to consummate the transactions contemplated by Article V of
this Agreement will be subject to the prior or concurrent satisfaction on the
Closing Time of the following conditions:
(a) Representations and Warranties; Agreements; No Default. The
representations and warranties of the Company set forth in this
Agreement will be true in all material respects at and as if repeated
on and as of the Closing Time after giving effect to the transactions
contemplated hereby; and the Company will have executed, delivered and
consummated all Recapitalization Documents on its part to be performed
pursuant to this Agreement on or prior to the Closing Time.
(b) Certificate as to Representations, Etc. The Parties (other
than the Company and Enterprises) will each have received an Officers'
Certificate signed by the Chief Executive Officer and the Chief
Financial Officer of the Company, addressed to the Parties (other than
the Company and Enterprises) and dated as of the date of the Closing,
certifying the accuracy of the statements set forth in clause (a)
above.
(c) Recapitalization and Recapitalization Documents. (a) Each of
the other Parties to the Recapitalization Documents will have
executed, delivered and consummated the Recapitalization Documents to
which they are parties, (b) the Offerings will close concurrently with
the Closing hereunder and (c) the Recapitalization will have been
consummated.
-13-
(d) Closing Papers. The Parties will have received copies of the
following:
(i) copies of the resolutions adopted by the Board of
Directors and stockholders of the Company authorizing the
execution, delivery and performance of this Agreement and each of
the Recapitalization Documents and the other transactions
contemplated hereby;
(ii) copies of each of the Recapitalization Documents; and
(iii) an incumbency certificate in respect of officers of
the Company executing the Recapitalization Documents, a standard
good standing certificate from the Secretary of the State of
Delaware in respect of the Company, and such other customary and
standard documents reasonably requested by any of the Parties.
ARTICLE VII
CONDITIONS OF THE COMPANY'S OBLIGATIONS
Section 7.1. Conditions of the Company's Obligations. The obligation
of the Company on the Closing Time to consummate the transactions contemplated
by this Agreement will be subject to the prior or concurrent satisfaction on
the Closing Time of the following conditions:
(a) Representations and Warranties; Agreements. The
representations and warranties of the other Parties set forth in this
Agreement shall be true in all material respects at and as if repeated
on and as of the Closing Time after giving effect to the transactions
contemplated hereby and the other Parties will have performed all
agreements on their part to be performed pursuant to this Agreement on
or prior to the Closing Time.
(b) Recapitalization and Recapitalization Documents. (a) Each of
the other Parties to the Recapitalization Documents will have
executed, delivered and consummated the Recapitalization Documents to
which they are parties, (b) the Offerings will be consummated, (c) the
Recapitalization will have been consummated and (d) BKC shall have
delivered a written consent to the Company with respect to the matters
set forth in Section 5.2(d) of this Agreement.
(c) Consummation of the Offerings. The Offerings shall have been
consummated substantially in accordance with the terms set forth in
the Registration Statement.
-14-
ARTICLE VIII
MISCELLANEOUS
Section 8.1. Waiver of First Refusal, Anti-Dilution Rights and
Registration Rights. Each of the Parties (i) waives any right of first refusal
it may have from the issuance and sale of the Units, Senior Preferred Stock or
Common Stock in the Offerings, including, but not limited to, any prior notice
or response periods any Party may be entitled to, (ii) waives any right it may
have to anti-dilution adjustment of its Equity Securities (including any
warrants or options to purchase any Equity Securities) arising from the
issuance and sale of the Units, Senior Preferred Stock or Common Stock in the
Offerings; provided that such waiver shall not apply to any adjustments
required as a result of the Stock Split and (iii) waives any "piggyback
registration rights" it may have and related notice requirements as a result of
the Offerings.
Section 8.2. Power of Attorney.
(a) Each of the Jordan Investors hereby appoint A. ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇., or his designee, to serve as their agent and attorney-in-fact (the
"Jordan Investors' Representative"), with full power and authority (including
power of substitution), in the name of and for an on behalf of each of the
Jordan Investors, or in its own name as the Jordan Investors' Representative,
to take all actions required or permitted under this Agreement and in
connection with the transactions contemplated hereby (including, without
limitation, the execution and delivery of each of the Recapitalization
Documents and to effect all of the transactions set forth in Article V hereof).
The authority conferred hereby shall be an agency coupled with an interest, and
all authority conferred hereby is irrevocable and not subject to termination by
any of the Jordan Investors, or by operation of law, whether by the death or
incapacity of any of the Jordan Investors, or the occurrence of any other
event. Any notice given to the Jordan Investors' Representative shall
constitute effective notice to each of the Jordan Investors, and any other
party to this Agreement or any other Person may rely on any notice, consent,
election or other communication received from the Jordan Investors'
Representative as if such notice, consent, election or other communication had
been received from each of the Jordan Investors.
(b) Each of the Management Investors hereby appoint ▇▇▇▇▇▇▇▇
▇▇▇▇, or his designee, to serve as their agent and attorney-in-fact (the
"Management Investors' Representative"), with full power and authority
(including power of substitution), in the name of and for an on behalf of each
of the Management Investors, or in its own name as the Management Investors'
Representative, to take all actions required or permitted under this Agreement
and in connection with the transactions contemplated hereby (including, without
limitation, the execution and delivery of each of the Recapitalization
Documents and to effect all of the transactions set forth in Article V hereof).
The authority conferred hereby shall be an agency coupled with an interest, and
all authority conferred hereby is irrevocable and not subject to termination by
any of the Management Investors, or by operation of law, whether by the death
or incapacity of any of the Management Investors, or the occurrence of any
-15-
other event. Any notice given to the Management Investors' Representative shall
constitute effective notice to each of the Management Investors, and any other
party to this Agreement or any other Person may rely on any notice, consent,
election or other communication received from the Management Investors'
Representative as if such notice, consent, election or other communication had
been received from each of the Management Investors.
(c) The Jordan Investors' Representative and the Management
Investors' Representative shall have no duties or responsibilities except those
expressly set forth herein. The Jordan Investors' Representative and the
Management Investors' Representative shall be held harmless by the Jordan
Investors and the Management Investors, as the case may be, from any liability,
loss, claim, demand or expense (including attorney's fees and expenses) arising
out of or in connection with the performance of their obligations in accordance
with this Agreement, except for any of the foregoing arising out of the gross
negligence or willful misconduct of the Jordan Investors' Representative and
the Management Investors' Representative, as the case may be. The foregoing
provision shall survive the resignation or substitution of the Jordan
Investors' Representative or the Management Investors' Representative, as the
case may be, or the termination of this Agreement.
Section 8.3. Notices. Subject to Section 8.2 hereof, all notices and
other communications pertaining to this Agreement shall be in writing and shall
be delivered in person with receipt acknowledged, or telecopied and confirmed
immediately in writing by a copy mailed by registered or certified mail, return
receipt requested, postage prepaid, addressed as hereafter set forth, or mailed
by registered or certified mail, return receipt requested, postage prepaid, to
the address set forth under the respective party's name on the signature pages
to this Agreement, or to such other person or address as shall be furnished to
the other party in compliance with this Section.
Section 8.4. Consent to Amendments and Waivers. The provisions of this
Agreement may be amended only if the Company has obtained the written consent
of a majority of the Parties, provided that (a) any adjustments to the
Recapitalization Documents and the Recapitalization generally resulting from
the determination of the interest rate of the Senior Notes or Senior Preferred
Stock or the number of shares of Units, Senior Preferred Stock or Common Stock
to be issued in the Offerings will not be considered amendments, and (b)
waivers, supplements and modifications with regard to the representations and
warranties in this Agreement will not be considered amendments.
Section 8.5. Governing Law. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of New York.
Section 8.6. Successors and Assigns. Whenever in this Agreement any of
the parties hereto is referred to, such reference shall be deemed to include
the successors and assigns of such party; and all covenants and agreements of
the Company contained herein shall bind its successors and assigns. The Company
may not assign or transfer any of its rights or obligations hereunder (by
operation of law or otherwise) without the prior written consent of each of the
Parties.
-16-
Section 8.7. Survival. All representations, warranties, covenants and
agreements herein will survive the Closing.
-17-
IN WITNESS WHEREOF, the Parties hereto as Common Stockholders have
duly executed this Agreement as of the date first above written.
AMERIKING, INC.
By:
---------------------------------
Name:
Title:
Address:
NATIONAL RESTAURANT
ENTERPRISES, INC.
By:
---------------------------------
Name:
Title:
Address:
MCIT PLC
By:
---------------------------------
Name:
Title:
Address:
BANCBOSTON INVESTMENTS INC.
By:
---------------------------------
Name:
Title:
Address:
-18-
PMI MEZZANINE FUND, L.P.,
a Delaware limited partnership
PACIFIC MEZZANINE INVESTORS, L.L.C.
a Delaware limited liability company,
its General Partner
By:
---------------------------------
Name:
Title:
Address:
JORDAN INVESTORS:
JORDAN/ZALAZNICK CAPITAL COMPANY
By:
---------------------------------
Name:
Title:
LEUCADIA INVESTORS, INC.
By:
---------------------------------
Name:
Title:
-19-
▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇ REVOCABLE TRUST
------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇
Title: Trustee
------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
------------------------------------
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------
▇▇▇▇ ▇. Max
-20-
▇▇▇▇ ▇. ▇▇▇▇ PROFIT SHARING PLAN
By:
------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇
Title: Trustee
---------------------------------------
▇▇▇▇ ▇. ▇▇▇▇
---------------------------------------
A. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇.
Address: ▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇. PROFIT SHARING
PLAN AND TRUST
By:
------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
Title: Trustee
-21-
▇▇▇▇ ▇▇▇▇▇▇▇▇ PROFIT SHARING PLAN
AND TRUST
By:
-----------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Trustee
--------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------------------
▇▇▇▇▇▇ ▇▇▇▇
JII PARTNERS
By:
-----------------------------------
Name:
Title:
-22-
MANAGEMENT STOCKHOLDERS:
-----------------------------------------------
▇▇▇▇▇▇▇▇ ▇▇▇▇
Address: c/o AmeriKing, Inc., ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
-----------------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------------------------
▇▇▇▇ ▇▇▇▇▇▇
-----------------------------------------------
▇▇▇▇ ▇▇▇▇▇▇
-----------------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇
-----------------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-23-
JARO INVESTORS:
▇▇▇▇▇ RESTAURANTS ASSOCIATES, INC.
By:
------------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇▇▇▇
Title: President
JARO ENTERPRISES, INC.
By:
------------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇▇▇▇
Title: President
JARO RESTAURANTS ASSOCIATES, INC.
By:
------------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇▇▇▇
Title: President
JB RESTAURANTS, INC.
By:
------------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇▇▇▇
Title: President
-24-
▇▇▇▇▇▇ INVESTORS:
OSBURGER, INC.
By:
------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: President
CASTLEKING, INC.
By:
------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: President
▇▇▇▇▇-▇▇▇▇▇▇ RESTAURANTS, INC.
By:
------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: President
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
TJC MANAGEMENT CORPORATION
By:
------------------------------------
Name:
Title:
-25-
IN WITNESS WHEREOF, the Parties hereto as Preferred Stockholders have
duly executed this Agreement as of the date first written above.
MCIT PLC
By:
------------------------------------
Name:
Title:
Address:
BANCBOSTON INVESTMENTS INC.
By:
------------------------------------
Name:
Title:
Address:
LEUCADIA INVESTORS, INC.
By:
------------------------------------
Name:
Title:
▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇ REVOCABLE TRUST
---------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇
Title: Trustee
---------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-26-
---------------------------------------
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------------
▇▇▇▇ ▇. ▇▇▇
▇▇▇▇ INVESTORS:
▇▇▇▇▇ RESTAURANTS ASSOCIATES, INC.
By:
------------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇▇▇▇
Title: President
JARO ENTERPRISES, INC.
By:
------------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇▇▇▇
Title: President
JARO RESTAURANTS ASSOCIATES, INC.
By:
------------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇▇▇▇
Title: President
-27-
JB RESTAURANTS, INC.
By:
------------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇▇▇▇
Title: President
▇▇▇▇▇▇ INVESTORS:
OSBURGER, INC.
By:
------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: President
CASTLEKING, INC.
By:
------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: President
▇▇▇▇▇-▇▇▇▇▇▇ RESTAURANTS, INC.
By:
------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: President
-28-
EXHIBIT A
AMENDED AND RESTATED COMPANY BY-LAWS
EXHIBIT B
AMENDED AND RESTATED COMPANY CHARTER
EXHIBIT C
AMENDED AND RESTATED STOCKHOLDERS AGREEMENT
EXHIBIT D
AMENDMENT NO. 1 TO OPTION AGREEMENT
EXHIBIT E
AMENDMENT NO. 1 TO MANAGEMENT SUBSCRIPTION AGREEMENT
EXHIBIT F
INDEMNIFICATION AGREEMENT
EXHIBIT G
STOCKHOLDER CHART
EXHIBIT H
PMI WARRANT REPURCHASE AGREEMENT
TO COME
EXHIBIT I
RESTATED ▇▇▇▇▇▇ EMPLOYMENT AND NON-DISCLOSURE AGREEMENT
EXHIBIT J
STOCKHOLDER WRITTEN CONSENT IN LIEU OF 1996 ANNUAL MEETING
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section 2.1. Due Authorization............................................ 7
Section 2.2. Authority; No Conflicts...................................... 7
Section 2.3. Capital Stock................................................ 8
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE OTHER PARTIES
Section 3.1. Due Authorization............................................ 8
Section 3.2. Authority; No Conflicts...................................... 8
Section 3.3. Capital Stock................................................ 9
ARTICLE IV
THE CLOSING
Section 4.1. Closing...................................................... 9
ARTICLE V
THE RECAPITALIZATION
Section 5.1. General...................................................... 9
Section 5.2. Amended Charter Documents.................................... 10
Section 5.3. Reclassification and Stock Split............................. 10
Section 5.4. Issuance of Securities....................................... 11
Section 5.5. Repayment of Credit Agreement Borrowings..................... 11
Section 5.6. Subordinated Note Repurchase................................. 11
Section 5.7. Repurchase of Warrants....................................... 12
Section 5.8. ▇▇▇▇▇▇ Employment Agreement.................................. 12
Section 5.9. Directors Indemnification Agreements......................... 12
Section 5.10. 1996 Annual Meeting of Stockholders......................... 12
-i-
Page
Section 5.11. Amended and Restated Stockholders Agreement................. 12
Section 5.12. Amendment to Management Subscription Agreement.............. 13
Section 5.13. Amendment to Option Agreements.............................. 13
ARTICLE VI
CONDITIONS OF THE PARTIES'
(OTHER THAN THE COMPANY AND ENTERPRISES) OBLIGATIONS
Section 6.1. Conditions of the Stockholders' Obligations.................. 13
ARTICLE VII
CONDITIONS OF THE COMPANY'S OBLIGATIONS
Section 7.1. Conditions of the Company's Obligations...................... 14
ARTICLE VIII
MISCELLANEOUS
Section 8.1. Waiver of First Refusal, Anti-Dilution Rights and
Registration Rights........................................ 15
Section 8.2. Power of Attorney............................................ 15
Section 8.3. Notices...................................................... 16
Section 8.4. Consent to Amendments and Waivers............................ 16
Section 8.5. Governing Law................................................ 16
Section 8.6. Successors and Assigns....................................... 16
Section 8.7. Survival..................................................... 17
-ii-
EXHIBITS
A Amended and Restated Company By-Laws
B Amended and Restated Company Charter
C Amended and Restated Stockholders Agreement
D Amendment No. 1 to Option Agreement
E Amendment No. 1 to Management Subscription Agreement
F Indemnification Agreement
G Stockholder Chart
H PMI Warrant Repurchase Agreement
I Restated ▇▇▇▇▇▇ Employment and Non-Disclosure Agreement
J Stockholder Written Consent in Lieu of 1996 Annual Meeting
