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EXHIBIT 4(e)
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FRI-MRD CORPORATION
NOTE AGREEMENT
Dated as of August 12, 1997
Re:
Up to $75,000,000 15.0% Senior Discount Notes
due January 24, 2002
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TABLE OF CONTENTS
SECTION HEADING PAGE
SECTION 1. DESCRIPTION OF NOTES AND COMMITMENT . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.1. Description of Notes . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.2. Commitment, Closing Date. . . . . . . . . . . . . . . . . . . . . 1
Section 1.3. Right of First Offer. . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 2. PREPAYMENT OF NOTES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 2.1. Optional Prepayments . . . . . . . . . . . . . . . . . . . . . . . 3
Section 2.2. Notice of Prepayments . . . . . . . . . . . . . . . . . . . . . . 3
Section 2.3. Allocation of Prepayments . . . . . . . . . . . . . . . . . . . . 3
SECTION 3. REPRESENTATIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 3.1. Representations of the Company . . . . . . . . . . . . . . . . . . 3
Section 3.2. Representations of the Purchasers . . . . . . . . . . . . . . . . 3
SECTION 4. CLOSING CONDITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 4.1. Closing Certificate . . . . . . . . . . . . . . . . . . . . . . . 5
Section 4.2. Company's Existence and Authority . . . . . . . . . . . . . . . . 5
Section 4.3. Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 4.4. Opinion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 5. COMPANY COVENANTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 5.1. Corporate Existence, Etc. . . . . . . . . . . . . . . . . . . . . 5
Section 5.2. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 5.3. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 5.4. Maintenance, Etc. . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 5.5. Limitations on Indebtedness. . . . . . . . . . . . . . . . . . . . 7
Section 5.6. Limitation on Liens. . . . . . . . . . . . . . . . . . . . . . . . 8
Section 5.7. Restricted Payments . . . . . . . . . . . . . . . . . . . . . . . 8
Section 5.8. Mergers, Consolidations and Sales of Assets . . . . . . . . . . . 9
Section 5.9. Transactions with Affiliates . . . . . . . . . . . . . . . . . . . 9
Section 5.10. Financial Statements, etc . . . . . . . . . . . . . . . . . . . . 11
SECTION 6. EVENTS OF DEFAULT AND REMEDIES THEREFOR . . . . . . . . . . . . . . . . . . . . . . . 11
Section 6.1. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 6.2. Notice to Holders . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 6.3. Acceleration of Maturities . . . . . . . . . . . . . . . . . . . . 13
Section 6.4. Rescission of Acceleration . . . . . . . . . . . . . . . . . . . . 13
SECTION 7. AMENDMENTS, WAIVERS AND CONSENTS . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 7.1. Consent Required . . . . . . . . . . . . . . . . . . . . . . . . . 13
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SECTION HEADING PAGE
Section 7.2. Solicitation of Noteholders . . . . . . . . . . . . . . . . . . . 14
Section 7.3. Effect of Amendment or Waiver . . . . . . . . . . . . . . . . . . 14
SECTION 8. INTERPRETATION OF AGREEMENT; DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . 14
Section 8.1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 8.2. Accounting Principles . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 9. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 9.1. Note Register . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 9.2. Exchange of Notes . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 9.3. Loss, Theft, Etc. of Notes . . . . . . . . . . . . . . . . . . . . 23
Section 9.4. Powers and Rights Not Waived; Remedies Cumulative . . . . . . . . 23
Section 9.5. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 9.6. Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . 24
Section 9.7. Integration and Severability. . . . . . . . . . . . . . . . . . . 24
Section 9.8. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 9.9. Captions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 9.10. Brokerage Fees . . . . . . . . . . . . . . . . . . . . . . . . . 24
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ATTACHMENTS TO NOTE AGREEMENT:
Schedule I Name and Address of Purchasers
Exhibit A Form of 15.0% Senior Discount Note Due January 24, 2002
Exhibit B Closing Certificate of the Company
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FRI-MRD CORPORATION
NOTE AGREEMENT
RE: UP TO $75,000,000 15.0% SENIOR DISCOUNT NOTES
DUE JANUARY 24, 2002
Dated as of August 12, 1997
To the Purchasers named in Schedule I attached hereto that are signatories to
this Agreement
Ladies and Gentlemen:
The undersigned, FRI-MRD Corporation, a Delaware corporation (the
"Company"), agrees with each Purchaser as follows:
SECTION 1. DESCRIPTION OF NOTES AND COMMITMENT.
Section 1.1. Description of Notes. The Company will authorize the
issue and sale of up to $75,000,000 aggregate principal amount of its 15.0%
Senior Discount Notes due January 24, 2002 (the "Notes") to be dated the date
of issue. Each Note will be issued at substantial discount from its principal
amount for a price equal to its Purchase Price on the date of purchase. Cash
interest will not accrue on the Notes prior to July 31, 1999. Thereafter,
interest on the Notes will accrue at the lower of (i) 15.0% per annum and (ii)
the highest rate permitted by law (the "Interest Rate") and will be payable
semi-annually on January 31 and July 31 of each year, commencing on January 31,
2000, and at maturity. The Notes will bear interest on overdue principal
(including any overdue required or optional prepayment of principal) and
premium, if any, and (to the extent legally enforceable) on any overdue
installment of interest at the Interest Rate from the date such payment is due,
whether by acceleration or otherwise, until paid. The Notes will mature on
January 24, 2002, and will be substantially in the form attached hereto as
Exhibit A. Interest on the Notes shall be computed on the basis of a 360-day
year of twelve 30-day months. The term "Notes" as used herein shall include
each Note delivered pursuant to this Agreement. The terms that are capitalized
herein shall have the meanings set forth in Section 8.1 hereof unless the
context shall otherwise require. The Notes will be senior unsecured
obligations of the Company, ranking pari passu with all existing and future
unsecured or unsubordinated Indebtedness of the Company.
Section 1.2. Commitment, Closing Date. Subject to the terms and
conditions hereof and on the basis of the representations and warranties
hereinafter set forth, the Company agrees to
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issue and sell to each Purchaser, and each Purchaser agrees to purchase from
the Company, the aggregate principal amount of Notes set forth opposite such
Purchaser's name on Schedule I attached hereto by delivery of the Purchase
Price for such Notes, which may be paid in cash (the "Cash Portion") or by
delivery of Senior Notes (the "Senior Note Portion") as set forth on Schedule
I. Delivery of the Notes will be made at the principal offices of Skadden,
Arps, Slate, Xxxxxxx & Xxxx LLP, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx, 00000
against (i) payment therefor in Federal or other funds current and immediately
available in an amount equal to the Cash Portion and (ii) delivery of the
Senior Note Portion, together with bond powers duly executed in blank, in each
case at 10 A.M., Eastern time, on August 12, 1997 (the "Initial Closing Date")
and also at such later date or dates, if any, as the Company shall specify by
not less than five Business Days' prior written notice to the applicable
Purchaser (the "Subsequent Closing Date[s]" and, together with the Initial
Closing Date, the "Closing Date"). The Notes delivered to each Purchaser on
the Closing Date will be delivered in the form of a single registered Note
registered in the name of such Purchaser or in the name of such nominee or in
such other denominations (not less than $100,000 in principal amount) as such
Purchaser may specify no later than two Business Days prior to the Closing Date
and in substantially the form attached hereto as Exhibit A; provided, however,
that the Company shall not be required to issue any Notes in a denomination of
less than $1,000,000 if immediately after such issuance there would be issued
and outstanding more than twenty Notes of less than $1,000,000.
Section 1.3. Right of First Offer. The Company shall provide the
Persons who purchased Notes on the Initial Closing Date (the "Original
Purchasers") with written notice (the "Notice") of the Company's desire to
issue Notes (the "Additional Notes") on any Subsequent Closing Date, which
Notice shall set forth the proposed Purchase Price and aggregate principal
amount for the Additional Notes proposed to be sold. If the Original
Purchasers deliver to the Company, within 15 days following the delivery of the
Notice, a written acceptance (an "Acceptance") setting forth the binding
commitment of such Original Purchasers to purchase all but not less than all of
the Additional Notes for the Purchase Price set forth in the Notice (allocated
among the Original Purchasers pro rata based on the principal amount of Notes
purchased on the Initial Closing Date), then the Company shall sell, and the
Original Purchasers shall purchase, all of the Additional Notes on a date no
later than 30 days after delivery of the Notice pursuant to the terms of
Section 1.2. If the Original Purchasers fail to deliver an Acceptance within
15 days after delivery of the Notice, or fail to purchase all of the Additional
Notes within 30 days after delivery of the Notice (which failure shall not
relieve any Original Purchaser of its binding commitment to purchase its pro
rata share of Additional Notes), then the Company may issue Additional Notes to
any one or more other Purchasers at a Purchase Price equal to or greater than
the proposed Purchase Price.
SECTION 2. PREPAYMENT OF NOTES.
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No prepayment of the Notes may be made except to the extent and in the
manner expressly provided in this Agreement.
Section 2.1. Optional Prepayments. The Company may at any time
prepay the outstanding Notes, either in whole or in part, by payment of the
aggregate Accreted Value (or portion thereof) and (in addition) after July 31,
1999 accrued and unpaid interest thereon to the date of such prepayment,
together with a premium equal to the Call Premium, determined two Business Days
prior to the date of such prepayment. Any partial prepayment shall be for an
amount not less than $1,000,000 of the aggregate principal amount of the Notes
then outstanding.
Section 2.2. Notice of Prepayments. The Company will give notice of
any prepayment of the Notes pursuant to Section 2.1 to the holder thereof not
less than 30 days nor more than 45 days before the date fixed for such
prepayment specifying (a) such date, (b) the aggregate Accreted Value (or
portion thereof) of the Notes to be prepaid and (c) accrued and unpaid
interest, if any, applicable to the prepayment. Notice of prepayment having
been so given, the aggregate Accreted Value (or portion thereof) specified in
such notice, together with the Call Premium and accrued and unpaid interest, if
any, shall become due and payable on the prepayment date.
Section 2.3. Allocation of Prepayments. All partial prepayments made
pursuant to Section 2.1 hereof shall be applied on all outstanding Notes
ratably in accordance with the unpaid Accreted Value thereof; provided, that
the Company may make such adjustments so that each Note remaining outstanding
after any such prepayment shall be at least $1,000,000 aggregate principal
amount.
SECTION 3. REPRESENTATIONS.
Section 3.1. Representations of the Company. The Company represents
and warrants that all representations set forth in the form of certificate
attached hereto as Exhibit B are true and correct as of the date hereof and are
incorporated herein by reference with the same force and effect as though
herein set forth in full.
Section 3.2. Representations of the Purchasers. Each Purchaser
represents, warrants and agrees that:
(a) Such Purchaser is acquiring its Notes for the
purpose of investment and not with a view to the distribution thereof,
and that such Purchaser has no present intention of selling,
negotiating or otherwise disposing of its Notes; provided that the
disposition of its property shall at all times be and remain within
its control.
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(b) No part of the funds to be used by such
Purchaser to purchase the Notes constitutes assets allocated to any
separate account maintained by it. As used in this Section 3.2(b),
the term "separate account" shall have the meaning assigned to it in
ERISA.
(c) The Notes are issued at a substantial discount
from their principal amount. Consequently, such Purchaser is aware
that it may be required to include amounts in gross income for federal
income tax purposes in advance of receipt of the cash payments to
which the income is attributable.
(d) Such Purchaser is the sole legal and beneficial
owner of the Senior Note Portion, if any, to be delivered by it, free
and clear of all Liens, except for Liens expressly imposed in favor of
FRI by the terms of the Senior Note Indenture.
(e) Such Purchaser is duly organized, validly
existing and in good standing under the laws of the jurisdiction of
its organization with all requisite power and authority to execute,
deliver and perform its obligations under this Agreement and to
consummate the transactions contemplated hereby.
(f) No approval, consent or withholding of objection
on the part of any regulatory body, state, federal or local, or any
other third party is necessary in connection with the execution by
such Purchaser of the Agreement or its acceptance of its Notes or
compliance by such Purchaser with any of the provisions of the
Agreement or the Notes, unless such consent or approval has already
been obtained.
(g) The execution, delivery and performance by such
Purchaser of this Agreement and all other instruments and documents to
be executed and delivered by such Purchaser in connection herewith are
not (and will not be or result) in conflict with or in material
contravention or material violation of any law (including common law),
rule or regulation by which such Purchaser is bound or to which it is
subject or any material agreement to which it is a party.
(h) The Notes have not been registered under the
Securities Act of 1933, as amended (the "Securities Act"), or any
state securities laws, and may not be sold, transferred or otherwise
disposed of by such Purchaser without such registration or an
exemption therefrom. Such Purchaser is either an accredited investor
within the meaning of Rule 501 of the Securities Act or a qualified
institutional buyer within the meaning of Rule 144A of the Securities
Act.
(i) Such Purchaser understands that the Company may
have material, non-public information regarding FRI or the Company and
their respective conditions (financial or otherwise), results of
operations, businesses, properties, plans and prospects (collectively,
"Information"). Such Purchaser further acknowledges that it has been
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offered and does not wish to receive any of this Information and that
such information might be material to such Purchaser's decision to
sell Senior Notes or purchase the Notes or might otherwise be
materially adverse to such Purchaser's Senior Notes. Accordingly,
such Purchaser acknowledges and agrees that the Company shall have no
obligation to disclose to such Purchaser any of such Information.
SECTION 4. CLOSING CONDITIONS.
Each Purchaser's obligation to purchase the Notes on the applicable
Closing Date shall be subject to the performance by the Company of its
agreements hereunder that are to be performed at or prior to the time of
delivery of the Notes, and to the following further conditions precedent:
Section 4.1. Closing Certificate. Such Purchaser shall have received
a certificate dated such Closing Date, signed by an Officer of the Company
substantially in the form attached hereto as Exhibit B.
Section 4.2. Company's Existence and Authority. Such Purchaser shall
have received, in form and substance reasonably satisfactory to it, such
documents and evidence with respect to the Company as such Purchaser may
reasonably request in order to establish the existence and good standing of the
Company and the authorization of the transactions contemplated by this
Agreement.
Section 4.3. Consents. Any consents or approvals required to be
obtained by the Company, FRI or any of their Subsidiaries that are necessary to
permit the consummation of the transactions contemplated hereby on such Closing
Date shall have been obtained.
Section 4.4. Opinion. Each Purchaser shall have received an opinion
dated the applicable Closing Date from Skadden, Arps, Slate, Xxxxxxx & Xxxx
LLP, counsel for the Company, substantially in the form of Exhibit C.
The Company's obligation to sell the Notes to a Purchaser on the
applicable Closing Date shall be subject to the performance by such Purchaser
of its agreements hereunder that are to be performed at or prior to the time of
delivery of the Notes and to the conditions precedent contained in Section 4.3.
SECTION 5. COMPANY COVENANTS.
From and after the date of this Agreement and continuing so long as
any amount remains unpaid on any Note:
Section 5.1. Corporate Existence, Etc. The Company will preserve and
keep in force and effect its corporate existence, and will cause each
Subsidiary to preserve and keep in force
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and effect its corporate, partnership or other existence in accordance with the
respective organizational documents of each such Subsidiary, and the rights and
franchises of the Company and its Subsidiaries, provided that (a) the Company
shall not be required to preserve any such right or franchise, or the
existence, right or franchise of any of its Subsidiaries, if the Board of
Directors of the Company shall determine that the preservation thereof is no
longer desirable in the conduct of the businesses of the Company and its
Subsidiaries taken as a whole and (b) the provisions of this Section 5.1 shall
not limit the ability of the Company or any Subsidiary of the Company to engage
in any transaction permitted by Section 5.8 hereof.
Section 5.2. Insurance. The Company will maintain, and will cause
each Subsidiary to maintain, insurance coverage by financially sound and
reputable insurers in such forms and amounts and against such risks as are
customary for corporations of established reputation engaged in the same or a
similar business and owning and operating similar properties.
Section 5.3. Taxes. The Company will pay or discharge or cause to be
paid or discharged, before the same shall become delinquent, all material
taxes, assessments and governmental charges levied or imposed upon the Company
or any of its Subsidiaries or upon the income, profits or property of the
Company or of any such Subsidiary; provided, however, that the Company shall
not be required to pay or discharge or cause to be paid or discharged any such
tax, assessment or charge (i) whose amount, applicability or validity is being
contested in good faith by appropriate proceedings and, if required by GAAP,
for which adequate provision has been made, or (ii) where the failure to effect
such payment or discharge is not adverse in any material respect to any
Purchaser.
Section 5.4. Maintenance, Etc. The Company will cause all material
properties owned by or leased to it or any of its Subsidiaries and material to
the business of the Company and its Subsidiaries, taken as a whole, to be
maintained and kept in normal condition and working order (ordinary wear and
tear and losses due to casualty excepted) and will from time to time cause to
be made all necessary repairs, renewals, and replacements thereof, all as in
the judgment of the Company may be necessary, so that the business carried on
in connection therewith may be properly conducted; provided, however, that (a)
nothing in this Section shall prevent the Company from discontinuing the use,
operation or maintenance of any of such properties, or disposing of any of
them, if such discontinuance or disposal is, in the judgment of its Board of
Directors or of the Board of Directors, board of trustees or managing partners
of the Subsidiary concerned, or of an Officer (or other agent employed by the
Company or any of its Subsidiaries) of the Company or such Subsidiary having
managerial responsibility for any such property, desirable in the conduct of
the businesses of the Company or any of its Subsidiaries (provided that any
such disposal is for a fair value after taking into account all circumstances
involved in the decision to dispose of such property); and (b) the provisions
of this Section 5.4 shall not limit the ability of the Company or any
Subsidiary to engage in any transaction permitted by Section 5.8 hereof.
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Section 5.5. Limitations on Indebtedness. The Company will not, and
will not permit any Subsidiary to, create, assume or incur any Indebtedness
except:
(1) Indebtedness evidenced by the Notes;
(2) Indebtedness under the Credit Agreement not to
exceed $35,000,000 in principal amount outstanding at any one
time; provided, however, such Indebtedness may exceed
$35,000,000 if the consolidated EBITDA of the Company and its
Subsidiaries, on a pro forma basis for the twelve-month period
ending on the last day of the calendar quarter immediately
preceding the date of such incurrence equals or exceeds 1.75
times the amount of the projected consolidated net interest
expense (before amortization of debt issuance costs) of the
Company and its Subsidiaries for the twelve-month period
immediately following the incurrence of such additional
Indebtedness;
(3) Indebtedness of the Company and its Subsidiaries
outstanding as of the date of this Agreement;
(4) Indebtedness relating to insurance premium
financing or in respect of workers' compensation claims, in
each case incurred in the ordinary course of business;
(5) Indebtedness relating to the Company's and its
Subsidiaries' controlled disbursement accounts or in respect
of overdrafts of zero balance bank accounts, in each case
incurred in the ordinary course of business;
(6) Indebtedness in respect of Capitalized Lease
Obligations or purchase money financings (including the
purchase price of inventory); provided that such Indebtedness
is secured only by the applicable asset;
(7) Indebtedness between a Subsidiary and the
Company or between Subsidiaries;
(8) Indebtedness represented by surety and
performance bonds and similar obligations, in each case
incurred in the ordinary course of business;
(9) Hedging Obligations of the Company or a
Subsidiary incurred in the ordinary course of business;
(10) Notwithstanding any amounts incurred under
clauses (1) through (9) of this Section 5.5, additional
Indebtedness of the Company and its Subsidiaries outstanding
at any time that does not exceed in the aggregate an amount
equal to
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(i) $75,000,000 less (ii) the aggregate principal amount of
Notes then outstanding; and
(11) Indebtedness issued or incurred in connection
with the renewal, expansion or refunding of Indebtedness
permitted by the preceding clauses (1) through (10) of this
Section 5.5; provided that any expansion of such Indebtedness
would otherwise satisfy the conditions of one of the other
clauses (1) through (10) of this Section 5.5.
Section 5.6. Limitation on Liens. The Company will not, and will not
permit any Subsidiary to, create, incur, assume or suffer to exist any Liens
other than Permitted Liens unless the Notes are secured equally and ratably
with any other obligations thereby secured.
Section 5.7. Restricted Payments. The Company will not, and will not
permit any Subsidiary, to make any distribution or declare or pay any dividends
(in cash or other property, other than capital Stock) on, or purchase, redeem
or otherwise retire any of the Company's or any of its Subsidiaries' capital
Stock, whether now or hereafter outstanding, except:
(a) Any Subsidiary may declare and pay dividends or
other distributions to, or purchase, redeem or otherwise retire any
capital Stock from, the Company or any Subsidiary.
(b) So long as no Event of Default exists and is
continuing at the time of such payment or would result therefrom, the
Company may declare and pay dividends or other distributions to FRI in
amounts from time to time required to make regular interest payments
with respect to the FRI Notes (excluding therefrom any interest in
respect of any increase in the aggregate principal amount thereof
occurring after the Initial Closing Date), if and so long as FRI uses
the proceeds of such dividends or other distributions to satisfy such
interest obligation.
(c) The Company may declare and pay dividends or
other distributions to FRI during each fiscal year equal to the sum of
(i) an amount not in excess of the federal, state, local and foreign
taxes and assessments payable by FRI and its subsidiaries (determined
on a consolidated basis) for such year, plus (ii) the aggregate amount
of all general corporate, operating and administrative expenses
incurred by FRI (including, without limitation, any such expenses
incurred on behalf of its Subsidiaries) in the ordinary course of
business.
(d) The Company and each Subsidiary may purchase,
acquire, cancel or otherwise retire for value shares of capital Stock
of FRI or any of its Subsidiaries, options on any such shares or
related stock appreciation rights or similar securities held by
directors, officers, employees or former directors, officers or
employees (or their estates or beneficiaries under their estates or
permitted transferees) that were issued
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pursuant to any Stock Based Plan, in each case upon death, disability,
retirement, termination or pursuant to the terms of such Stock Based
Plan; provided, however, that the aggregate consideration paid for
such purchases, acquisitions, cancellations or retirements shall not
exceed $2.5 million in any fiscal year.
Notwithstanding the foregoing, this Agreement does not prevent
immaterial cash dividends in lieu of payment of fractional shares.
Section 5.8. Mergers, Consolidations and Sales of Assets.
(a) The Company will not, and will not permit any
Subsidiary to, (1) consolidate with or be a party to a merger with any
other corporation, (2) sell, lease or otherwise dispose of all or
substantially all of the assets of the Company and its Subsidiaries
(on a consolidated basis), or (3) issue any securities or any rights
or options to purchase securities for less than fair value as
determined in good faith by the Board of Directors, provided, however,
that:
(i) any Subsidiary may merge or consolidate with or
into the Company or any Subsidiary;
(ii) the Company may consolidate or merge with any
other corporation if (A) the Company shall be the surviving or
continuing corporation or else the surviving or continuing
corporation shall (x) have a consolidated EBITDA for the
twelve- month period ending on the last day of the calendar
quarter immediately preceding the date of such consolidation
or merger, determined on a pro forma basis, equal to or
exceeding that of the Company for such period and (y) assume
all of the obligations of the Company under the Notes and this
Agreement and (B) at the time of such consolidation or merger
and after giving effect thereto no Default or Event of Default
shall have occurred and be continuing; and
(iii) any Subsidiary may sell, lease or otherwise
dispose of its assets, or issue securities, to the Company or
any Subsidiary.
Section 5.9. Transactions with Affiliates. The Company will not, and
will not permit any Subsidiary to, enter into any transaction (or series of
related transactions) (a "Transaction") with any holder (or any Affiliate of
such holder) of 5% or more of any class of capital Stock of the Company or with
any Affiliate of the Company, involving payments by the Company or any
Subsidiary (including, without limitation, any sale, purchase, lease or loan or
any other direct or indirect payment, transfer or other disposition) in excess
of $2,000,000, other than the following Transactions:
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(i) Transactions between or among the Company and
its Subsidiaries or between or among such Subsidiaries,
(ii) Transactions the terms of which are at least as
favorable as the terms that could be obtained by the Company
or such Subsidiary, as the case may be, in a comparable
transaction made on an arm's-length basis between unaffiliated
parties (in each case as determined in good faith by a
majority of the directors of the Company unaffiliated with
such holder or Affiliate, or if there are no such directors,
as determined in good faith by its Board of Directors),
(iii) Transactions in which the Company or any
Subsidiary delivers to the holders of the Notes a written
opinion of an independent nationally recognized investment
banking firm stating that such Transaction is fair to the
Company or such Subsidiary from a financial point of view,
(iv) the performance by the Company of its
obligations hereunder and under the Notes,
(v) the payment of reasonable and customary
compensation or fees (including, without limitation, options
or related stock appreciation rights or similar securities
issued pursuant to any Stock Based Plan and payments pursuant
to the Value Creation Units Plan) to officers, directors, and
employees of FRI, the Company or any of its Subsidiaries, in
each case as determined by the Company's Board of Directors in
good faith,
(vi) loans or advances to officers, directors and
employees of FRI, the Company or any of its Subsidiaries made
in the ordinary course of business not to exceed $2 million at
any time outstanding,
(vii) purchases (for equal to or less than fair
value) or sales (for equal to or more than fair value) of
goods and services made in the ordinary course of business,
(viii) Transactions permitted by, and complying
with, the provisions of Section 5.7 hereof,
(ix) Transactions permitted by, and complying with,
the provisions of Section 5.8 hereof,
(x) management and tax sharing agreements in effect
on the date hereof or any replacements thereof which do not
materially increase the obligations of the Company or its
Subsidiaries, or
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(xi) Investments by the Company or any Subsidiary in
any Unrestricted Subsidiary not to exceed $10,000,000 in the
aggregate at any one time outstanding.
Section 5.10. Financial Statements, etc. (a) As long as FRI is a
reporting company under the Exchange Act, the Company shall deliver to the
holders of the Notes, FRI's form 10-Q Quarterly Reports, Form 10-K Annual
Reports, and Form 8-K Current Reports, and any other filings made by FRI with
the SEC, if any, as soon as reasonably practicable after the same are filed.
(b) In the event FRI is no longer a reporting company under
the Exchange Act, the Company shall deliver to the holders of the Notes as soon
as available, but in any event within 60 days after the end of each of the
first three quarters during each of FRI's fiscal years, a company prepared
balance sheet, income statement, and statement of cash flow covering FRI's
operations during such period; and (b) as soon as available, but in any event
within 105 days after the end of each of FRI's fiscal years, financial
statements of FRI for each such fiscal year, audited by independent certified
public accountants. Such audited financial statements shall include a balance
sheet, profit and loss statement, and statement of cash flow and, promptly
after receipt and if prepared, such accountants' letter to management.
(c) Each Purchaser acknowledges that it is familiar with
its responsibilities under the federal securities laws relating to restrictions
on trading in securities of an issuer while in possession of material,
non-public information, and restrictions on sharing such information with other
persons who may engage in such trading; and agrees that such Purchaser will not
violate those restrictions, and will use reasonable efforts to prevent any of
its directors, officers, employees, agents and advisors (including, without
limitation, attorneys, accountants, bankers and financial advisors) who receive
any such information from such Purchaser concerning the Company (whether
prepared by the Company, its advisors or otherwise and irrespective of the form
of communication) from violating those restrictions.
SECTION 6. EVENTS OF DEFAULT AND REMEDIES THEREFOR.
Section 6.1. Events of Default. Any one or more of the following
shall constitute an "Event of Default" as the term is used herein:
(a) Default shall occur in the payment of interest
on any Note when the same shall have become due and such default shall
continue for more than 10 Business Days; or
(b) Default shall occur in the making of any other
payment of the principal of any Note or the Call Premium, if any,
thereon at the expressed or any maturity date or at any date fixed for
prepayment; or
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(c) Default shall occur in the observance or
performance of any other provision of this Agreement which is not
remedied within 30 days after the date on which written notice thereof
is given to the Company by the holders of a majority in aggregate
Accreted Value of the outstanding Notes; or
(d) Any judgment or order for the payment of money
shall be rendered against the Company or a Material Subsidiary of the
Company by a court of competent jurisdiction and shall not be
discharged or stayed within 90 days, and the amount thereof that is
not covered by insurance, letters of credit or a bond shall be in
excess of $10,000,000 and either (i) an enforcement proceeding shall
have been commenced by any creditor upon such judgment or order or
(ii) there shall be any period of 90 consecutive days, after written
notice has been given to the Company by the Holders of at least 25% in
aggregate Accreted Value of the outstanding Notes, during which a stay
of enforcement of such judgment or order, by reason of a pending
appeal or otherwise, shall not be in effect; or
(e) An event of default occurs which extends beyond
any period of grace applicable thereto under any mortgage, indenture
or other instrument under which there may be issued any Indebtedness
of the Company or any Material Subsidiary of the Company for borrowed
money having an outstanding principal amount of $10,000,000 or more in
the aggregate, whether such Indebtedness now exists or shall hereafter
be created, if either (i) such default results from the failure to pay
principal upon the final maturity of such Indebtedness or (ii) as
result of such event of default such Indebtedness has been declared to
be due and payable prior to its stated maturity, provided, however,
that if such default shall be remedied or cured or waived by the
holders of such Indebtedness, then the Event of Default hereunder by
reason thereof shall be deemed to have been thereupon remedied, cured
or waived without further action on the part of the holders of the
Notes; or
(f) The Company or any Material Subsidiary becomes
insolvent, is generally not paying its debts as they become due or
makes an assignment for the benefit of creditors, or the Company or
any Material Subsidiary applies for or consents to the appointment of
a custodian, trustee, liquidator, or receiver for the Company or such
Subsidiary or for the major part of the property of either; or
(g) A custodian, trustee, liquidator, or receiver is
appointed for the Company or any Material Subsidiary or for the major
part of the property of either and is not discharged within 45 days
after such appointment; or
(h) Bankruptcy, reorganization, arrangement or
insolvency proceedings, or other proceedings for relief under any
bankruptcy or similar law or laws for the relief of debtors, are
instituted by or against the Company or any Material Subsidiary and,
if
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instituted against the Company or any Material Subsidiary, are
consented to or are not dismissed within 45 days after such
institution; or
(i) A Change of Control occurs; or
(j) FRI retires or prepays all or any portion of the
FRI Notes with a source other than (i) assets of FRI, (ii) Notes
issued in exchange for FRI Notes or (iii) proceeds of Indebtedness
issued by FRI or the Company that is subordinate in right of payment
to the Notes.
Section 6.2. Notice to Holders. When the Company has knowledge that
any Event of Default described in the foregoing Section 6.1 has occurred, the
Company agrees to give notice to the holders of the outstanding Notes within
three Business Days of the date on which the Company becomes aware of such
Event of Default.
Section 6.3. Acceleration of Maturities. When any Event of Default
described in paragraphs (a) through (j), inclusive, of said Section 6.1 has
happened and is continuing, the holder or holders of 25% or more of the
Accreted Value of outstanding Notes may, by notice to the Company, declare the
entire principal and all interest accrued and unpaid, if any, on all Notes to
be, and all Notes shall thereupon become, forthwith due and payable, without
any presentment, demand, protest or other notice of any kind, all of which are
hereby expressly waived. When any Event of Default described in paragraph (h)
of Section 6.1 has occurred, then the Accreted Value of all outstanding Notes
(together with accrued and unpaid interest, if any) shall immediately become
due and payable without presentment, demand or notice of any kind. Upon the
Notes becoming due and payable as a result of any Event of Default as
aforesaid, the Company will forthwith pay to the holders of the Notes the
entire Accreted Value and interest accrued and unpaid, if any, on the Notes.
No course of dealing on the part of any Noteholder nor any delay or failure on
the part of any Noteholder to exercise any right shall operate as a waiver of
such right or otherwise prejudice such holder's rights, powers and remedies.
Section 6.4. Rescission of Acceleration. The provisions of Section
6.3 are subject to the condition that if the principal of and accrued and
unpaid interest, if any, on all or any outstanding Notes have been declared
immediately due and payable by reason of the occurrence of any Event of Default
described in paragraphs (a) through (j), inclusive, of Section 6.1, the holders
of a majority in aggregate Accreted Value of the outstanding Notes may, by
written instrument filed with the Company, rescind and annul such declaration
and the consequences thereof.
SECTION 7. AMENDMENTS, WAIVERS AND CONSENTS.
Section 7.1. Consent Required. Any term, covenant, agreement or
condition of this Agreement may, with the consent of the Company, be amended or
compliance therewith may be waived (either generally or in a particular
instance and either retroactively or prospectively), if
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the Company shall have obtained the consent in writing of the holders of at
least 50% in aggregate Accreted Value of outstanding Notes; provided that
without the written consent of the holders of all of the Notes then
outstanding, no such waiver, modification, alteration or amendment shall be
effective (a) that will change the time of payment of the principal of or the
interest on any Note or reduce the Accreted Value thereof of change the rate or
interest thereon, or (b) that will change any of the provisions with respect to
optional prepayment or (c) that will change the percentage of holders of the
Notes required to consent to any such amendment, modification or waiver of any
of the provisions of this Section 7 or Section 6.
Section 7.2. Solicitation of Noteholders. Executed or true and
correct copies of any waiver effected pursuant to the provisions of Section 7.1
shall be delivered by the Company to each holder of outstanding Notes forthwith
following the date on which the same shall have been executed and delivered by
the holder or holders of the requisite percentage of outstanding Notes.
Section 7.3. Effect of Amendment or Waiver. Any such amendment or
waiver shall apply equally to all of the holders of the Notes and shall be
binding upon them, upon each future holder of any Note and upon the Company,
whether or not such Note shall have been marked to indicate such amendment or
waiver. No such amendment or waiver shall extend to or affect any obligation
not expressly amended or waived or impair any right consequent thereon.
SECTION 8. INTERPRETATION OF AGREEMENT; DEFINITIONS.
Section 8.1. Definitions. Unless the context otherwise requires, the
terms hereinafter set forth when used herein shall have the following meanings
and the following definitions shall be equally applicable to both the singular
and plural forms of any of the terms herein defined:
"Acceptance" shall have the meaning provided in Section 1.3 of this
Agreement.
"Accreted Value" shall mean, with respect to each Note, as of any date
of determination (a) prior to July 31, 1999, the sum of (i) the Purchase Price
of such Note and (ii) the portion of the excess of the principal amount of such
Note over such Purchase Price that has been accreted thereon through such date,
such amount to be so accreted on a daily basis at the rate, compounded
semi-annually, such that the Accreted Value of the Note on July 31, 1999 shall
equal its principal amount and (b) from and after July 31, 1999, the principal
amount of such Note.
"Additional Notes" shall have the meaning provided in Section 1.3 of
this Agreement.
"Affiliate" shall mean any Person (a) that directly or indirectly
through one or more intermediaries controls, or is controlled by, or is under
common control with, any other Person or (b) is an officer, director or
employee of any such Affiliate. The term "control" means the possession,
directly or indirectly, of the power to direct or cause the direction of the
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management and policies of a Person, whether through the ownership of Voting
Stock, by contract or otherwise.
"Board of Directors" shall mean, with respect to any Person, the Board
of Directors of such Person or any committee of the Board of Directors
authorized to act for it hereunder.
"Business Day" shall mean any day other than a Saturday, Sunday,
statutory holiday or other day on which banks in Los Angeles, California are
required by law to close or are customarily closed.
"Call Premium" shall mean:
(a) in connection with any prepayment prior to
January 24, 2000, the greater of (i) 7.5% of the amount of
Accreted Value being prepaid and (ii) an amount such that the
sum of the Accreted Value of the Notes to be prepaid plus such
Call Premium, if invested at the Reinvestment Rate for the
period beginning on the date of prepayment and ending on
January 24, 2002 would yield an annualized return of 9% on
such Accreted Value for such period. "Reinvestment Rate"
shall mean a rate equal to the yield to maturity on the actual
or interpolated yield on U.S. Treasury Bonds with a maturity
equal to the then remaining life to maturity of the Notes plus
50 basis points, adjusted for quarterly compounding.
(b) in connection with any prepayment or payment
from January 24, 2000 until January 24, 2001, an amount equal
to 7.5% of the amount of Accreted Value being prepaid.
(c) in connection with any prepayment or payment
after January 24, 2001, an amount equal to 3.75% of the amount
of Accreted Value being prepaid.
"Capitalized Lease Obligation" means, with respect to any Person, an
obligation of such Person to pay rent or other amounts under a lease that is
required to be capitalized for financial reporting purposes in accordance with
GAAP and the amount of such obligation shall be the capitalized amount thereof
determined in accordance with GAAP.
"Cash Portion" shall have the meaning provided under Section 1.2
herein.
"Change of Control" shall mean an event whereby a "person" or "group"
(within the meaning of Sections 13(d) and 14(d)(2) of the Exchange Act) (other
than any Existing Stockholder) becomes the "beneficial owner" (as defined in
Rule 13d-3 under the Exchange Act) of more than 50% of the total voting power
of the then outstanding Voting Stock of FRI or the Company (calculated on a
fully diluted basis); provided, that a Change of Control shall be deemed not to
have occurred if a "group" (within the meaning of Sections 13(d) and 14(d)(2)
of
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the Exchange Act) becomes the ultimate "beneficial owner" of more than 50% of
the total voting power of the then outstanding Voting Stock of FRI (calculated
on a fully diluted basis), so long as a majority of the voting power of the
Voting Stock of FRI ultimately "beneficially owned" by such "group" is
ultimately "beneficially owned" by any one or more of the Existing
Stockholders.
"Closing Date" shall have the meaning provided in Section 1.2 herein.
"Company" shall mean FRI-MRD Corporation, a Delaware corporation.
"Credit Agreement" shall mean (i) the Loan and Security Agreement,
dated as of January 10, 1997, among the Company, certain of its Subsidiaries,
FRI, and Foothill Capital Corporation, as such agreement may be restated,
amended, supplemented or otherwise modified from time to time hereafter and
(ii) any refunding or replacement of any agreement provided for in clause (i)
or this clause (ii).
"Default" shall mean any event or condition, the occurrence of which
would, with the lapse of time or the giving of notice, or both, constitute an
Event of Default as defined in Section 6.1.
"Disqualified Stock" means any capital Stock that, by its terms (or by
the terms of any security into which it is convertible or for which it is
exchangeable), or upon the happening of any event, matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable
at the option of the holder thereof, in whole or in part, on or prior to the
earlier of the maturity date of the Notes or the date on which no Notes are
outstanding.
"EBITDA" shall mean, for any Person, such Person's earnings (loss)
before (i) gain (loss) on disposition of properties, (ii) provision for
divestitures and writedown of long-lived assets, (iii) writedown of goodwill,
(iv) interest, (v) taxes, (v) depreciation, (vi) amortization, (vii) gain
(loss) on extinguishment of debt, and (viii) extraordinary items, in each case
as determined in accordance with GAAP.
"Environmental Legal Requirement" shall mean any international,
Federal, state or local statute, law, regulation, order, consent decree,
judgment, permit, license, code, covenant, deed restriction, common law,
treaty, convention, ordinance or other requirement relating to public health,
safety or the environment, including, without limitation, those relating to
releases, discharges or emissions to air, water, land or groundwater, to the
withdrawal or use of groundwater, to the use and handling of polychlorinated
biphenyls or asbestos, to the disposal, treatment, storage or management of
hazardous or solid waste, or Hazardous Substances or crude oil, or any fraction
thereof, or to exposure to toxic or hazardous materials, to the handling,
transportation, discharge or release of gaseous or liquid Hazardous Substances
and any regulation, order, notice or demand issued pursuant to such law,
statute or ordinance, in each case applicable to the property of the Company or
any of its Subsidiaries or the operation, construction or modification of any
such property, including without limitation the following:
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the Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended by the Superfund Amendments and Reauthorization Act of 1986,
the Solid Waste Disposal Act, as amended by the Resource Conservation and
Recovery Act of 1976 and the Hazardous and Solid Waste Amendments of 1984, the
Hazardous Material Transportation Act, as amended, the Federal Water Pollution
Control Act, as amended by the Clean Water Act of 1976, the Safe Drinking Water
Act, the Clean Air Act, as amended, the Toxic Substances Control Act of 1976,
the Occupational Safety and Health Act of 1977, as amended, the Emergency
Planning and Community Right-to-Know Act of 1986, the National Environmental
Policy Act of 1975, the Oil Pollution Act of 1990 and any similar or
implementing state law, and any state statute and any further amendments to
these laws providing for financial responsibility for cleanup or other actions
with respect to the release or threatened release of Hazardous Substances or
crude oil, or any fraction thereof and all rules and regulations promulgated
thereunder.
"Equity Interests" means capital Stock or warrants, options or other
rights to acquire capital Stock (but excluding any publicly-traded debt
security that is convertible into, or exchangeable for, capital Stock).
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended, and any successor statute of similar import, together with
the regulations thereunder, in each case as in effect from time to time.
References to sections of ERISA shall be construed to also refer to any
successor sections.
"Event of Default" shall have the meaning set forth in Section 6.1
hereof.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and any successor statute thereto.
"Existing Stockholder" means (i) with respect to FRI, the stockholders
of FRI on the date hereof including (without limitation) Apollo FRI Partners,
L.P. and Green Equity Investors, L.P. and the Related Persons of such
stockholders and (ii) with respect to the Company, FRI and each Person
specified in clause (i) above.
"FRI" means Family Restaurants, Inc., a Delaware corporation.
"FRI Notes" shall mean the Senior Notes, the Subordinated Notes and
any other general unsecured Indebtedness of FRI, which may be in one or more
classes or series and may include zero coupon notes.
"GAAP" shall mean generally accepted accounting principles in the
United States as in effect on the date of this Agreement and not including any
interpretations or regulations that have been proposed but that have not been
enacted.
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"Hazardous Substance" shall mean any hazardous or toxic material,
substance or waste, pollutant or contaminant which is regulated under any
statute, law, ordinance, rule or regulation of any local, state, regional or
federal authority having jurisdiction over the property of the Company and it
Subsidiaries or its use, including but not limited to any material, substance
or waste which is: (a) defined as a hazardous substance under Section 31 1 of
the Federal Water Pollution Control Act (33 U.S.C. SS1317) as amended; (b)
regulated as a hazardous waste under Section 1004 or Section 3001 of the
Federal Solid Waste Disposal Act, as amended by the Resource Conservation and
Recovery Act (42 U.S.C. Section 6901 et seq.) as amended; (c) defined as a
hazardous substance under Section 101 of the Comprehensive Environmental
Response, Compensation and Liability Act (42 U.S.C. Section 9601 et seq.) or
(d) defined or regulated as a hazardous substance or hazardous waste under any
rules or regulations promulgated under any of the foregoing statutes.
"Hedging Obligations" with respect to any Person, means the
obligations of such Person under (i) interest rate swap agreements, interest
rate cap agreements and interest rate collar agreements and (ii) other
agreements or arrangements designed to protect such Person against fluctuations
in interest rates or currency exchange rates.
"Indebtedness" of any Person as of any date means and includes,
without duplication, (i) all debt of such Person, (ii) all obligations of such
Person in respect of letters of credit or letter of credit reimbursement
obligations (whether or not such items would appear on the balance sheet of
such Person) and (iii) all guarantees by such Person of items that would
constitute Indebtedness under this definition (whether or not such items would
appear on such balance sheet). The amount of Indebtedness of any Person at any
date shall be, without duplication, the principal amount that would be shown on
a balance sheet of such Person prepared as of such date in accordance with GAAP
and the maximum liability of any contingent obligations referred to in clauses
(i) through (iii) above at such date.
"Initial Closing Date" shall have the meaning provided under Section
1.2 of this Agreement.
"Information" shall have the meaning provided under Section 3.2 of
this Agreement.
"Interest Rate" shall have the meaning provided under Section 1.1 of
this Agreement.
"Investment" shall mean the sum of all investments, made in cash or by
delivery of property on or prior to the applicable date of determination, by
the Company or any of its Subsidiaries in any Unrestricted Subsidiary, whether
by acquisition of stock, Indebtedness, or other obligation or security of such
Unrestricted Subsidiary, or by loan, advance, capital contribution or
otherwise, less the aggregate amount by which such investments have been
reduced by repayment, sale of such Unrestricted Subsidiary, redesignation of
such Unrestricted Subsidiary as a Subsidiary or otherwise.
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"Lien" shall mean any lien, security interest, charge or encumbrance
of any kind (including any conditional sale or other title retention agreement,
any lease in the nature thereof, and any agreement to give any security
interest).
"Material Subsidiary" shall mean a Subsidiary of the Company that is a
"significant subsidiary" as defined in Rule 1-02(w) of Regulation S-X
promulgated under the Securities Act.
"Note" shall have the meaning provided in Section 1.1 of this
Agreement.
"Note Register" shall have the meaning provided in Section 9.1 of this
Agreement.
"Note Registrar" shall have the meaning provided in Section 9.1 of
this Agreement.
"Notice" shall have the meaning provided in Section 1.3 of this
Agreement.
"Noteholder" shall mean any of the holders of one or more Notes from
time to time.
"Officer" shall mean the Chairman of the Board, the President, any
Vice President, the Treasurer, the Secretary or the Controller of any Person.
"Original Purchaser" shall have the meaning provided in Section 1.3 of
this Agreement.
"Permitted Lien" means (i) Liens existing on the date of this
Agreement; (ii) Liens for taxes, assessments or governmental charges or claims
that are not yet due or delinquent or that are being contested in good faith by
appropriate proceedings if a reserve or other appropriate provision, if any, as
shall be required in conformity with GAAP shall have been made therefor; (iii)
statutory Liens or landlords', carriers', warehousemen's, mechanics',
suppliers', materialmen's, repairmen's or other like Liens arising in the
ordinary course of business with respect to amounts not yet overdue for a
period of 45 days or amounts being contested in good faith by appropriate
proceedings if a reserve or other appropriate provision, if any, as shall be
required by GAAP shall have been made therefor; (iv) Liens incurred by or
deposits made in connection with workers' compensation, unemployment insurance
and other types of social security benefits; (v) Liens incurred or deposits
made to secure the performance of tenders, bids, leases, statutory obligations,
surety and appeal bonds, government contracts, performance and return-of-money
bonds and other obligations of like nature incurred in the ordinary course of
business; (vi) attachment or judgment Liens not giving rise to a Default or an
Event of Default; (vii) easements, rights-of-way, restrictions and other
similar charges or encumbrances not interfering with the ordinary conduct of
the business of the Company or any of its Subsidiaries; (viii) leases or
subleases granted to others incurred in the ordinary course of business; (ix)
purchase money Liens incurred to secure the purchase price of property (and
Liens on property existing at the time of the acquisition thereof), which Lien
shall not cover any property other than that being acquired, purchased,
improved or constructed, and shall not cover property purchased, acquired,
constructed or improved more than 12 months before the creation of such
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Lien; (x) title defects or irregularities that do not in the aggregate
materially impair the use of the property; (xi) obligations with respect to
Capitalized Lease Obligations; (xii) Liens pursuant to sale and leaseback
transactions incurred in the ordinary course of business; (xiii) Liens securing
obligations under the Credit Agreement and the documents entered into in
connection therewith; (xiv) Liens in favor of the Company or any wholly owned
Subsidiary of the Company; (xv) any other Liens imposed by operation of law
that do not materially affect the Company's ability to perform its obligations
under the Notes and this Agreement; (xvi) extensions (but not expansions that
are not otherwise Permitted Liens), renewals or refundings of any Liens
referred to in clauses (i) through (xv) above; and (xvii) Liens in addition to
the foregoing, provided that the amount of the obligations secured by such
Liens does not exceed in the aggregate $29,000,000.
"Person" shall mean an individual, partnership, corporation, trust or
unincorporated organization, and a government or agency or political
subdivision thereof.
"Purchase Price" with respect to any Note shall mean the Purchase
Price thereof, expressed as a percentage of the principal amount thereof and as
an amount in U.S. dollars, as set forth on Schedule I attached hereto.
"Purchaser" shall mean the Persons listed under Schedule I attached
hereto.
"Related Person" shall mean, with respect to any Person, (A) an
Affiliate of such Person, (B) any investment manager, investment advisor or
general partner of such Person, and (C) any investment fund, investment account
or investment entity whose investment manager, investment advisor or general
partner is such Person or a Related Person of such Person.
"Securities Act" shall have the same meaning as in Section 3.2(h).
"Senior Note Indenture" shall mean the indenture relating to the
Senior Notes between FRI, as issuer, and IBJ Xxxxxxxx Bank & Trust Company, a
New York banking corporation, as trustee thereunder dated as of January 27,
1994, as may be restated, amended, supplemented or otherwise modified from time
to time.
"Senior Notes" means (i) the 9 3/4% Senior Notes of FRI due February
1, 2002 as such Notes may be restated, amended, supplemented or otherwise
modified from time to time hereafter and (ii) any refunding or replacement of
any Indebtedness provided for in clause (i) or this clause (ii).
"Senior Note Portion" shall have the meaning provided under Section
1.2 herein.
"Stock" means all shares, options, warrants, interests,
participations, or other equivalents (regardless of how designated) of or in a
corporation or equivalent entity, whether
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voting or nonvoting, including common stock, preferred stock, or any other
"equity security" (as such term is defined in Rule 3a11-1 of the General Rules
and Regulations promulgated by the SEC under the Exchange Act).
"Stock Based Plan" means any stock option plan, stock appreciation
rights plan or other similar plan or supplement relating to capital Stock of
FRI or any of its Subsidiaries, whether in effect on the date hereof or
established hereafter, established for the benefit of employees of FRI or of
any Subsidiary of FRI.
"Subordinated Notes" mean (i) the 10 7/8% Senior Subordinated
Discounts Notes of FRI due February 1, 2004 as such Notes may be restated,
amended, supplemented or otherwise modified from time to time hereafter (ii)
and any refunding or replacement of any Indebtedness provided for in clause (i)
or this clause (ii).
"Subsequent Closing Date" shall have the meaning provided under
Section 1.2 of this Agreement.
The term "subsidiary" shall mean, as to any particular parent
corporation, any corporation, partnership, limited liability company, business
trust or other entity of which more than 50% (by number of votes) of the Voting
Stock shall be owned by such parent corporation and/or one or more corporations
which are themselves Subsidiaries of such parent corporation. The term
"Subsidiary" shall mean a subsidiary of the Company other than an Unrestricted
Subsidiary.
"Transaction" shall have the meaning provided under Section 5.9
herein.
"Value Creation Units Plan" shall mean the Family Restaurants, Inc.
and FRI-MRD Value Creation Units Plan.
"Unrestricted Subsidiary" shall mean any Subsidiary of the Company
(whether now existing or hereafter created) that is designated an Unrestricted
Subsidiary by the Board of Directors of the Company and not thereafter
redesignated as a Subsidiary. Upon designation of a Subsidiary as an
Unrestricted Subsidiary the Company shall be deemed to have made an Investment
in such Unrestricted Subsidiary equal to the fair market value of the net
assets thereof as determined in good faith by the Board of Directors of the
Company. There are no Unrestricted Subsidiaries as of the Initial Closing
Date.
"Voting Stock" shall mean securities of any class or classes the
holders of which are ordinarily, in the absence of contingencies, entitled to
elect a majority of the corporate directors (or Persons performing similar
functions).
Section 8.2. Accounting Principles. Where the character or amount of
any asset or liability or item of income or expense is required to be
determined or any consolidation or other
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26
accounting computation is required to be made for the purposes of this
Agreement, the same shall be done in accordance with GAAP, to the extent
applicable, except where such principles are inconsistent with the requirements
of this Agreement.
SECTION 9. MISCELLANEOUS.
Section 9.1. Note Register. The Company, in its capacity as note
registrar (the "Note Registrar") shall cause to be kept a register (the "Note
Register") for the registration and transfer of the Notes; provided, however,
the Company may at any time designate and cause any other Person to act as the
Note Registrar in order to maintain the Note Register pursuant to the terms of
this Note Agreement. The Note Registrar will register or transfer or cause to
be registered or transferred, as hereinafter provided and under such reasonable
regulations as it may prescribe, any Note issued pursuant to this Agreement.
At any time, and from time to time, the holder of any Note which has
been duly registered as hereinabove provided may transfer such Note upon
surrender thereof with the Note Registrar duly endorsed or accompanied by a
written instrument of transfer duly executed by the holder of such Note or its
attorney duly authorized in writing and, unless transferred pursuant to an
effective registration statement under the Securities Act, by an opinion of
counsel in form and substance satisfactory to the Company to the effect that
such transfer will be made in compliance with an exemption from the
registration requirements of the Securities Act. Notes shall not be
transferred in denominations of less than $100,000. Notwithstanding any other
provision of this Note Agreement, the Company shall not be required to issue,
transfer or exchange any Note for a denomination of less than $1,000,000 if
immediately after such issue, transfer or exchange there would be issued and
outstanding more than twenty Notes in a denomination of less than $1,000,000.
Promptly upon request of a Noteholder, the Company shall provide such
holder, and any qualified institutional buyer designated by such holder, such
financial and other information as is necessary in order to permit compliance
with the information requirements of Rule 144A(d)(4) under the Securities Act
in connection with the resale of Notes, except at such times as the Company is
subject to the reporting requirements of Section 13 or 15(d) of the Exchange
Act. For purposes of this paragraph, the term "qualified institutional buyer"
shall have the meaning specified in Rule 144A under the Securities Act.
The Person in whose name any Note shall be registered shall be deemed
and treated as the owner and holder thereof for all purposes of this Agreement.
Payment of or on account of the principal, premium and interest, if any, on any
Note shall be made to or upon the written order of such holder.
Section 9.2. Exchange of Notes. At any time and from time to time,
upon not less than ten days' notice given by the holder of any Note initially
delivered or of any Note substituted therefor pursuant to Section 9.1, this
Section 9.2 or Section 9.3, and, upon surrender of such
22
27
Note at its office, the Company will deliver in exchange therefor, without
expense to the holder, except as set forth below, Notes for the same aggregate
Accreted Value as the then unpaid Accreted Value of the Note so surrendered, in
the denomination of $1,000,000 or any amount in excess thereof as such holder
shall specify, dated as of the date to which interest has been paid on the Note
so surrendered or, if such surrender is prior to the payment of any interest
thereon, then dated as of the date of issue, registered in the name of such
Person or Persons as may be designated by such holder, and otherwise of the
same form and tenor as the Notes so surrendered for exchange. The Company may
require the payment of a sum sufficient to cover any stamp tax or governmental
charge imposed upon such exchange or transfer.
Section 9.3. Loss, Theft, Etc. of Notes. Upon receipt of evidence
satisfactory to the Company of the loss, theft, mutilation or destruction of
any Note, and in the case of any such loss, theft, or destruction upon delivery
of a bond or indemnity in such form and amount as shall be reasonably
satisfactory to the Company, or in the event of such mutilation upon surrender
and cancellation of any Note, the Company will make and deliver without expense
to the holder thereof, a new Note, of like tenor, in lieu of such lost, stolen,
destroyed or mutilated Note.
Section 9.4. Powers and Rights Not Waived; Remedies Cumulative. No
delay or failure on the part of the holder of any Note in the exercise of any
power or right shall operate as a waiver thereof; nor shall any single or
partial exercise of the same preclude any other or further exercise thereof, or
the exercise of any other power or right, and the rights and remedies of the
holder of any Note are cumulative to and are not exclusive of any rights or
remedies any such holder would otherwise have, and no waiver or consent, given
or extended pursuant to Section 7 hereof or otherwise, shall extend to or
affect any obligation or right not expressly waived or consented to.
Section 9.5. Notices. All communications provided for hereunder
shall be in writing and, if to any Purchaser, delivered or mailed by prepaid
overnight air courier, or by facsimile communication, in each case addressed to
such Purchaser at its address appearing on Schedule I to this Agreement or such
other address as such Purchaser or subsequent holder may designate to the
Company in writing, and if to the Company, delivered and mailed by prepaid
overnight air courier, or by facsimile communication, in each case to the
Company at 00000 Xxx Xxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxx 00000, Attention:
General Counsel or to such other address as the Company may in writing
designate to such Purchaser or subsequent holder; provided, however, that a
notice sent by overnight air courier shall only be effective if delivered at a
street address designated for such purpose in Schedule I, and a notice to such
Purchaser by facsimile communication shall only be effective if confirmed by a
copy thereof by prepaid overnight air courier, in either case, as such
Purchaser or a subsequent holder of any Note may designate to the Company in
writing.
Section 9.6. Successors and Assigns. This Agreement shall be binding
upon the Company and its successors and assigns and shall inure to each
Purchaser's benefit and to the benefit of its successors and assigns, including
each successive holder or holders of any Notes.
23
28
Section 9.7. Integration and Severability. This Agreement embodies
the entire agreement and understanding between the Purchasers and the Company,
and supersedes all prior agreements and understandings relating to the subject
matter hereof. Should any part of this Agreement for any reason be declared
invalid or unenforceable, such decision shall not affect the validity of any
remaining portion, which remaining portion shall remain in force and effect as
if this Agreement had been executed with the invalid or unenforceable portion
thereof eliminated (or, if possible, rewritten to the extent necessary to
eliminate such invalidity or unenforceability) and it is hereby declared the
intention of the parties hereto that they would have executed the remaining
portion of this Agreement without including therein any such part, parts or
portion which may, for any reason, be hereafter declared invalid or
unenforceable.
Section 9.8. Governing Law. THIS AGREEMENT AND THE NOTES ISSUED AND
SOLD HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS MADE AND PERFORMED WITHIN THE
STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. EACH
PARTY HERETO HEREBY SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF THE UNITED
STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK FOR PURPOSES OF ALL
LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT AND THE NOTES OR
THE TRANSACTIONS CONTEMPLATED HEREBY. EACH PARTY HERETO IRREVOCABLY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR
HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN
SUCH A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS
BEEN BROUGHT IN AN INCONVENIENT FORUM.
Section 9.9. Captions. The descriptive headings of the various
Sections or parts of this Agreement are for convenience only and shall not
affect the meaning or construction of any of the provisions hereof.
Section 9.10. Brokerage Fees. Libra Investments, Inc. has acted as
agent for the Company in connection with the transactions contemplated hereby
and is being paid a commission by the Company pursuant to a separate letter
agreement.
24
29
The execution hereof by you shall constitute a contract between us for
the uses and purposes hereinabove set forth, and this Agreement may be executed
in any number of counterparts, each executed counterpart constituting an
original but all together only one agreement.
FRI-MRD CORPORATION, as Company
By _____________________________
Name:
Title:
[signature pages continued on next page]
S-1
30
THE XXXXX & XXXXXXXXXX MASTER RETIREMENT
TRUST
By: XxxXxx-Xxxxxxx Financial Corporation
Its: Investment Advisor
By:_____________________________________
Name:
Title:
[signature pages continued on next page]
S-2
00
XXX XXXXXXXX XXXXX, XX BEHALF OF ITS
STRATEGIC INCOME FUND SERIES
By: XxxXxx-Xxxxxxx Financial Corporation
Its: Investment Advisor
By:______________________________________
Name:
Title:
[signature pages continued on next page]
S-3
32
HIGHBRIDGE CAPITAL CORPORATION
By: XxxXxx-Xxxxxxx Financial Corporation
Its: Investment Advisor
By:______________________________________
Name:
Title:
[signature pages continued on next page]
S-4
00
XXX XXXXXXXX XXXXX, XX BEHALF OF ITS HIGH
YIELD CORPORATE BOND FUND SERIES
By: XxxXxx-Xxxxxxx Financial Corporation
Its: Investment Advisor
By:______________________________________
Name:
Title:
[signature pages continued on next page]
S-5
34
MAINSTAY VP SERIES FUND, INC., ON BEHALF
OF HIGH YIELD CORPORATE BOND PORTFOLIO
By: XxxXxx-Xxxxxxx Financial Corporation
Its: Investment Advisor
By:__________________________
Name:
Title:
[signature pages continued on next page]
S-6
35
POLICE OFFICERS PENSION SYSTEM OF THE CITY
OF HOUSTON
By: XxxXxx-Xxxxxxx Financial Corporation
Its: Investment Advisor
By:_______________________________________
Name:
Title:
[signature pages continued on next page]
S-7
36
VULCAN MATERIALS COMPANY HIGH YIELD ACCOUNT
By: XxxXxx-Xxxxxxx Financial Corporation
Its: Investment Advisor
By:_______________________________________
Name:
Title:
S-8
37
SCHEDULE I TO NOTE AGREEMENT
Purchaser: THE XXXXX & XXXXXXXXXX MASTER RETIREMENT TRUST
1. Principal Amount.
In U.S. Dollars: $1,350,000
The Purchase Price of the Note will be $1,010,880 and will
consist of:
$265,000 of Senior Notes together with interest accrued
thereon through August 12, 1997 (valued at $199,539.48), and
$811,340.52 of cash
2. In the case of payments on account of the Notes:
By wire transfer of Federal or other immediately available funds
(identifying each payment as to issuer, security and principal or
interest) to:
ABA # 000000000
STATE STREET BANK AND TRUST COMPANY
XXXXXX, XXXX 00000
FOR CREDIT TO:
ACCT NAME: XXXXX & XXXXXXXXXX MASTER RETIREMENT
TRUST
DDA # 09237520
ACCT # ZH23
3. All communications shall be delivered or mailed to:
XxxXxx-Xxxxxxx Financial Corporation
0 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx Xxxxxxxxx
Fax: (000) 000-0000
with a copy to:
Kleinberg, Kaplan, Xxxxx & Xxxxx, P.C.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxx X. Xxxxxxxxx, Esq.
Fax: (000) 000-0000
4. Tax I.D. #: 043216086
38
Purchaser: THE MAINSTAY FUNDS, ON BEHALF OF ITS STRATEGIC INCOME
FUND SERIES
1. Principal Amount.
In U.S. Dollars: $520,000
The Purchase Price of the Note will be $389,376 in cash
2. In the case of payments on account of the Notes:
By wire transfer of Federal or other immediately available funds
(identifying each payment as to issuer, security and principal or
interest) to:
ABA # 000000000
BANK OF NEW YORK/CUST.
GLA 111612
FOR CREDIT TO:
ACCT NAME: MAINSTAY STRATEGIC INCOME FUND
ACCT # 267451
3. All communications shall be delivered or mailed to:
XxxXxx-Xxxxxxx Financial Corporation
0 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx Xxxxxxxxx
Fax: (000) 000-0000
with a copy to:
Kleinberg, Kaplan, Xxxxx & Xxxxx, P.C.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxx X. Xxxxxxxxx, Esq.
Fax: (000) 000-0000
4. Tax I.D. #: 133924140
39
Purchaser: HIGHBRIDGE CAPITAL CORPORATION
1. Principal Amount.
In U.S. Dollars: $1,150,000
The Purchase Price of the Note will be $861,120 in cash
2. In the case of payments on account of the Notes:
By wire transfer of Federal or other immediately available funds
(identifying each payment as to issuer, security and principal or
interest) to:
ABA # 000-000-000
BEAR XXXXXX SECURITIES INC.
ACCT # 09253186
ACCT NAME: HIGHBRIDGE CAPITAL CORPORATION
ACCT # 101-44079-2-6
3. All communications shall be delivered or mailed to:
XxxXxx-Xxxxxxx Financial Corporation
0 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx Xxxxxxxxx
Fax: (000) 000-0000
with a copy to:
Kleinberg, Kaplan, Xxxxx & Xxxxx, P.C.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxx X. Xxxxxxxxx, Esq.
Fax: (000) 000-0000
4. Tax I.D. #: Bear Xxxxxxx Securities Corp.-Foreign (no tax i.d. #).
40
Purchaser: THE MAINSTAY FUNDS, ON BEHALF OF ITS HIGH YIELD
CORPORATE BOND FUND SERIES
1. Principal Amount.
In U.S. Dollars: $52,200,000
The Purchase Price of the Note will be $39,087,360 and will
consist of: $13,895,000 of Senior Notes together with interest
accrued thereon through August 12, 1997 (valued at
$10,462,645.52), and $28,624,714.48 of cash
2. In the case of payments on account of the Notes:
By wire transfer of Federal or other immediately available funds
(identifying each payment as to issuer, security and principal or
interest) to:
ABA # 000000000
STATE STREET BANK AND TRUST COMPANY
XXXXXX, XXXX 00000
FOR CREDIT TO:
ACCT NAME: MAINSTAY HIGH YIELD CORPORATE BOND FUND
DDA # 4266 0761
ACCT # SN04
3. All communications shall be delivered or mailed to:
XxxXxx-Xxxxxxx Financial Corporation
0 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx Xxxxxxxxx
Fax: (000) 000-0000
with a copy to:
Kleinberg, Kaplan, Xxxxx & Xxxxx, P.C.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxx X. Xxxxxxxxx, Esq.
Fax: (000) 000-0000
4. Tax I.D. #: 00-0000000
41
Purchaser: MAINSTAY VP SERIES FUND, INC., ON BEHALF OF HIGH YIELD
CORPORATE BOND PORTFOLIO
1. Principal Amount.
In U.S. Dollars: $4,400,000
The Purchase Price of the Note will be $3,294,720 and will
consist of: $1,350,000 of Senior Notes together with interest
accrued thereon through August 12, 1997 (valued at
$1,016,521.87), and $2,278,198.13 of cash
2. In the case of payments on account of the Notes:
By wire transfer of Federal or other immediately available funds
(identifying each payment as to issuer, security and principal or
interest) to:
ABA # 000000000
BANK OF NEW YORK/CUST.
GLA 111612
FOR CREDIT TO:
ACCT NAME: MAINSTAY V.P. SERIES HIGH YIELD CORPORATE
BOND FUND
ACCT # 274467
3. All communications shall be delivered or mailed to:
XxxXxx-Xxxxxxx Financial Corporation
0 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx Xxxxxxxxx
Fax: (000) 000-0000
with a copy to:
Kleinberg, Kaplan, Xxxxx & Xxxxx, P.C.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxx X. Xxxxxxxxx, Esq.
Fax: (000) 000-0000
4. Tax I.D. #: 00-0000000
42
Purchaser: POLICE OFFICERS PENSION SYSTEM OF THE CITY OF HOUSTON
1. Principal Amount.
In U.S. Dollars: $1,200,000
The Purchase Price of the Note will be $898,560 in cash
2. In the case of payments on account of the Notes:
By wire transfer of Federal or other immediately available funds
(identifying each payment as to issuer, security and principal or
interest) to:
ABA # 000-000-000
NORTHERN TRUST/CHGO TRUST
FOR CREDIT TO:
ACCT # 5186061000
ACCT NAME: POLICE OFFICERS PENSION SYSTEM OF THE
CITY OF HOUSTON ACCT # 26-41113
3. All communications shall be delivered or mailed to:
XxxXxx-Xxxxxxx Financial Corporation
0 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx Xxxxxxxxx
Fax: (000) 000-0000
with a copy to:
Kleinberg, Kaplan, Xxxxx & Xxxxx, P.C.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxx X. Xxxxxxxxx, Esq.
Fax: (000) 000-0000
4. Tax I.D. #: 00-0000000
43
Purchaser: VULCAN MATERIALS COMPANY HIGH YIELD ACCOUNT
1. Principal Amount.
In U.S. Dollars: $180,000
The Purchase Price of the Note will be $134,784 and will
consist of: $50,000 of Senior Notes together with interest
accrued thereon through August 12, 1997 (valued at
$37,648.96), and $97,135.04 of cash
2. In the case of payments on account of the Notes:
By wire transfer of Federal or other immediately available funds
(identifying each payment as to issuer, security and principal or
interest) to:
ABA # 000-000-000
NORTHERN TRUST/CHGO TRUST
FOR CREDIT TO:
ACCT # 5186061000
ACCT NAME: VULCAN MATERIALS
ACCT # 26-00065
3. All communications shall be delivered or mailed to:
XxxXxx-Xxxxxxx Financial Corporation
0 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx Xxxxxxxxx
Fax: (000) 000-0000
with a copy to:
Kleinberg, Kaplan, Xxxxx & Xxxxx, P.C.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxx X. Xxxxxxxxx, Esq.
Fax: (000) 000-0000
4. Tax I.D. #: 751867619
44
FRI-MRD CORPORATION
15.0% SENIOR DISCOUNT NOTE DUE JANUARY 24, 2002
No. R- August 12, 1997
FRI-MRD CORPORATION, a Delaware corporation (the "Company"), for value
received, hereby promises to pay to
or registered assigns
on the twenty-fourth day of January, 2002
the principal amount of
[_____] DOLLARS ($__________)
This Note is issued at a substantial discount from its principal amount for a
price equal to the Purchase Price. Cash interest will not accrue on this Note
prior to July 31, 1999. Thereafter, interest on this Note will accrue at the
rate of 15.0% per annum (or, if less, the highest rate permitted by law) and be
payable semi-annually on January 31 and July 31 of each year, commencing on
January 31, 2000, and at maturity. The Company agrees to pay interest on
overdue principal (including any overdue required or optional prepayment of
principal) and premium, if any, and (to the extent legally enforceable) on any
overdue installment of interest at the Interest Rate per annum from the date
such payment is due, whether by acceleration or otherwise, until paid. Both
the principal hereof and interest hereon are payable at the principal office of
the Company at 00000 Xxx Xxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxx 00000 in coin or
currency of the United States of America which at the time of payment shall be
legal tender for the payment of public and private debts. If any amount of
principal, premium or interest, if any, on or in respect of this Note becomes
due and payable on any date which is not a Business Day, such amount shall be
payable on the next preceding Business Day. "Business Day" means any day other
than a Saturday, Sunday, statutory holiday or other day on which banks in Los
Angeles, California are required by law to close or are customarily closed.
This Note is one of the 15.0% Senior Discount Notes due January 24,
2002 of the Company in the aggregate principal amount of up to $75,000,000
issued or to be issued under and pursuant to the terms and provisions of the
Note Agreement, dated as of August 12, 1997 (the "Note Agreement"), entered
into by the Company with the original purchaser therein referred to and this
Note and the holder hereof are entitled equally and ratably with the holders of
all other Notes outstanding under the Note Agreement to all the benefits
provided for thereby or referred to therein, to which Note Agreement reference
is hereby made for the statement
EXHIBIT A
(TO NOTE AGREEMENT)
45
thereof. Capitalized terms used herein and not otherwise defined shall have
the meanings provided in the Note Agreement.
This Note and the other Notes outstanding under the Note Agreement may
be declared due prior to their expressed maturity dates and certain prepayments
are required to be made thereon, all in the events, on the terms and in the
manner and amounts as provided in the Note Agreement.
The Notes are not subject to prepayment or redemption at the option of
the Company prior to their expressed maturity dates except on the terms and
conditions and in the amounts and with the premium, if any, set forth in the
Note Agreement.
This Note is registered on the books of the Company and is
transferable only by surrender thereof at the principal office of the Company
duly endorsed or accompanied by a written instrument of transfer duly executed
by the registered holder of this Note or its attorney duly authorized in
writing and, unless transferred pursuant to an effective registration statement
under the Securities Act of 1933, as amended, by an opinion of counsel in form
and substance satisfactory to the Company to the effect that such transfer will
be made in compliance with an exemption from the registration requirements of
the Securities Act of 1933, as amended. THIS NOTE IS SUBJECT TO SIGNIFICANT
ADDITIONAL RESTRICTIONS ON TRANSFER CONTAINED IN THE NOTE AGREEMENT. Payment
of or on account of principal, premium and interest, if any, on this Note shall
be made only to or upon the order in writing of the registered holder.
This Note and said Note Agreement are governed by and construed in
accordance with the laws of New York.
FRI-MRD CORPORATION
By _____________________________
Name:
Title:
EXHIBIT A
(TO NOTE AGREEMENT)
46
FRI-MRD CORPORATION
CLOSING CERTIFICATE
Ladies and Gentlemen:
This certificate is delivered to you in compliance with the
requirements of the Note Agreement, dated as of August 12, 1997 (the
"Agreement"), entered into by the undersigned, FRI-MRD CORPORATION, a Delaware
corporation (the "Company"), with you, and as an inducement to and as part of
the consideration for your purchase on this date of $___________ principal
amount of the 15.0% Senior Discount Notes due January 24, 2002 (the "Notes") of
the Company pursuant to the Agreement. The terms which are capitalized herein
shall have the same meanings as in the Agreement.
The Company represents and warrants to you as follows:
1. Subsidiaries. Annex I hereto states the name of each
Subsidiary of FRI and/or the Company, the jurisdiction of
incorporation and the percentage of its Voting Stock owned by FRI, the
Company and each other Subsidiary. Except as set forth on Annex I
attached hereto, the Company and each Subsidiary has good and
marketable title to all of the shares it purports to own of the stock
of each Subsidiary, in each case free and clear of any Lien other than
Permitted Liens. All such shares have been duly issued and are fully
paid and non-assessable.
2. Corporate Organization and Authority. Except as set forth
on Annex I attached hereto, FRI, the Company and each Subsidiary,
(a) is a corporation duly organized, validly
existing and in good standing under the laws of its
jurisdiction of incorporation;
(b) has all requisite power and authority and all
necessary licenses and permits to own and operate its
properties and carry on its business as now conducted and as
presently proposed to be conducted; and
EXHIBIT B
(TO NOTE AGREEMENT)
47
(c) is duly licensed or qualified and is in good
standing as a foreign corporation in each jurisdiction wherein
the nature of the business transacted by it or the nature of
the property owned or leased by it makes such licensing or
qualification necessary, except where any failure to be so
licensed or qualified would not have a material adverse effect
on the properties, business, profits or condition of the
Company and its Subsidiaries.
3. Financial Statements. (a) The consolidated balance
sheets of FRI and its Subsidiaries as of December 29, 1996, and the
statements of income and stockholder equity (deficit) and changes in
financial position or cash flows for the fiscal year ended on said
date, accompanied by a report thereon containing an opinion
unqualified as to scope limitations imposed by FRI and otherwise
without qualification except as therein noted, by KPMG Peat Marwick
LLP, have been prepared in accordance with GAAP consistently applied
except as therein noted, are correct and complete and present fairly
the financial position of FRI and its Subsidiaries as of such date and
the results of their operations and cash flows for such period. The
unaudited consolidated balance sheet of FRI and its Subsidiaries as of
March 30, 1997, and the unaudited statements of income and cash flows
for the fiscal period ended on said date prepared by FRI have been
prepared in accordance with GAAP consistently applied, are correct and
complete and present fairly the financial position of FRI and its
Subsidiaries as of said date and the results of their operations and
cash flows for such period subject to year-end audit and adjustments.
(b) Except as set forth on Annex I attached hereto, since
March 30, 1997, there has been no material change in the condition,
financial or otherwise, of FRI and its Subsidiaries (such change, a
"Material Adverse Change") as shown on the consolidated balance sheet
as of such date except changes in the ordinary course of business, and
the Company has no knowledge of any events or circumstances (excluding
general economic conditions) which the Company has concluded is
reasonably likely to result in a Material Adverse Change..
4. Full Disclosure. FRI's Form 10-K dated March 31, 1997,
FRI's Form 10-Q dated May 14, 1997 and the financial statements
referred to in paragraph 3, in each case as of their respective dates,
B-2
48
do not contain any untrue statement of a material fact or omit a
material fact necessary to make the statements contained therein or
herein not misleading. To the Company's knowledge, FRI has filed all
reports, schedules, forms, statements and other documents required to
be filed by it with the Securities and Exchange Commission.
5. Pending Litigation. Except as set forth on Annex I
attached hereto, there are no proceedings pending or, to the knowledge
of the Company, threatened against or affecting the Company or any
Subsidiary in any court or before any governmental authority or
arbitration board or tribunal which are reasonably likely to
materially and adversely affect the properties, business, profits or
condition (financial or otherwise) of the Company and its
Subsidiaries.
6. Title to Properties. Except as set forth on Annex I
attached hereto, the Company and each Subsidiary, has good and
marketable title in fee simple (or its equivalent under applicable
law) to all the real property it purports to own and has good title to
all the other property it purports to own, including that reflected in
the most recent balance sheet referred to in paragraph 3, except as
sold or otherwise disposed of in the ordinary course of business, and
except for Permitted Liens.
7. Sale is Legal and Authorized. The sale of the Notes and
compliance by the Company with all of the provisions of the Agreement
and the Notes:
(a) are within the corporate powers and authority
of the Company;
(b) will not materially violate any material
provisions of any material law (including common law), rule or
regulation or any order of any court or governmental authority
or agency and will not conflict with or result in any material
breach of any of the terms, conditions or provisions of, or
constitute a default under the Restated Certificate of
Incorporation or By-laws of the Company or any indenture or
other agreement or instrument to which the Company is a party
or by which it may be bound or result in the
B-3
49
imposition of any material Liens on any property of the
Company; and
(c) have been duly authorized by proper corporate
action on the part of the Company (no action by the
stockholders of the Company being required by law, by the
Restated Certificate of Incorporation or By-laws of the
Company or otherwise), has been duly executed and delivered by
the Company. The Agreement and the Notes constitute the
legal, valid and binding obligations, contracts and agreements
of the Company enforceable in accordance with their respective
terms, except as such enforceability may be limited by
bankruptcy, reorganization, receivership, insolvency or
similar laws affecting the enforcement of creditors' rights
generally and limitations on the enforcement of equitable
remedies.
8. No Defaults. No Default or Event of Default as defined in
the Agreement has occurred and is continuing. Neither the Company nor
any of its Subsidiaries is in default in the payment of any material
Indebtedness and is not in default under any instrument or instruments
or agreements under and subject to which any material Indebtedness has
been issued and no event has occurred and is continuing under the
provisions of any such instrument or agreement which with the lapse of
time or the giving of notice, or both, would constitute an event of
default thereunder.
9. Consent. No approval, consent or withholding of objection
on the part of any regulatory body, state, federal or local, or any
other third party is necessary in connection with the execution and
delivery by the Company of the Agreement or the Notes or compliance by
the Company with any of the provisions of the Agreement or the Notes,
unless such consent or approval has already been obtained.
10. Taxes. All material tax returns required to be filed by
the Company or any Subsidiary in any jurisdiction have, in fact, been
filed, and all material taxes, assessments, fees, and other
governmental charges upon the Company or any Subsidiary or upon any of
their respective properties, income or franchises, which are due and
payable have been paid. For all taxable years ending on or
B-4
50
before 1996, the federal income tax liability of the Company and its
Subsidiaries has been satisfied. The Company does not know of any
proposed additional tax assessment against it for which adequate
provision has not been made in its accounts, and no material
controversy in respect of additional Federal or state income taxes is
pending or to the knowledge to the Company threatened.
11. Use of Proceeds. The net proceeds from the sale of the
Notes will be used for general corporate purposes. None of the
transactions contemplated in the Agreement (including, without
limitation thereof, the use of proceeds from the issuance of the
Notes) will violate or result in a violation of Section 7 of the
Exchange Act, or any regulation issued pursuant thereto, including,
without limitation, Regulations G, T and X of the Board of Governors
of the Federal Reserve System, 12 C.F.R., Chapter 11. Neither the
Company nor any Subsidiary owns or intends to carry or purchase any
"margin stock" within the meaning of said Regulation G.
12. Private Offering. Neither the Company, directly or
indirectly, nor any agent on its behalf has offered or will offer the
Notes or any similar security, or has solicited or will solicit, an
offer to acquire the Notes or any similar security from any Person so
as to bring the issuance and sale of the Notes within the provisions
of Section 5 of the Securities Act.
13. Compliance with Law. Except as set forth in Annex I,
neither the Company nor any Subsidiary (a) is in violation of any
material law, ordinance, franchise, governmental rule or regulation,
including without limitation, the Occupational Safety and Health Act
of 1970, ERISA and any Environmental Legal Requirement to which it is
subject; or (b) has failed to obtain any license, permit, franchise or
other governmental authorization necessary to the ownership of its
property or to the conduct of its business, which violation or failure
to obtain would materially adversely affect the prospects, profits,
properties or condition (financial or otherwise) of the Company and
its Subsidiaries, taken as a whole, or impair the ability of the
Company to perform its obligations contained in the Agreement or the
Notes. Neither the Company nor any Subsidiary is in default with
respect to any order of any court or governmental authority or
arbitration board or tribunal.
14. Intercompany Debt. Since June 29, 1997, no payments have
been made by the Company or any of its Subsidiaries to FRI
B-5
51
except as would have been permitted under Section 5 of the Agreement.
The Company's and its Subsidiaries' Indebtedness to FRI did not exceed
$500,000 as of the date hereof.
Dated: August 12, 1997
FRI-MRD CORPORATION
By_____________________________
Name:
Title:
B-5
52
Annex I
A. Subsidiaries (FRI-MRD Corporation is a wholly-owned subsidiary of Family
Restaurants, Inc., and all other subsidiaries listed are wholly-owned
(directly or indirectly) subsidiaries of FRI-MRD Corporation)
Company State of Shares
Shares Incorporation Authorized Issued
------ ------------- ---------- ------
FRI-Admin Corporation Delaware 1,000 100
FRI-MRD Corporation Delaware 1,000 100
EL Torito Restaurants, Inc. Delaware 1,000 100
Chi-Chi's, Inc. Delaware 2,000 1,000
El Torito Franchising Company Delaware 1,000 100
CCMR of Timonium, Inc. Delaware 600 200
CCMR of Maryland, Inc. Delaware 600 200
Chi-Chi's of Greenbelt, Inc. Kentucky 2,000 100
Chi-Chi's of South Carolina, Inc. Kentucky 2,000 000
Xxx-Xxx'x xx Xxxx Xxxxxxxx, Inc. Kentucky 2,000 100
Chi-Chi's Franchise Operations Co. Kentucky 2,000 100
Chi-Chi's Management Corporation Kentucky 2,000 100
Maintenance Support Group Kentucky 2,000 100
CCMR Advertising Agency, Inc. Kentucky 2,000 100
CCMR of Catonsville, Inc. Kentucky 2,000 100
CCMR of Cumberland, Inc. Kentucky 2,000 100
CCMR of Xxxxxxxxx, Inc. Kentucky 2,000 100
53
CCMR of Golden Ring, Inc. Kentucky 2,000 100
CCMR of Greenbelt, Inc. Kentucky 2,000 100
CCMR of Harford County, Inc. Kentucky 2,000 100
CCMR of Inner Harbor, Inc. Kentucky 2,000 100
CCMR of Xxxxxxx Highway, Inc. Kentucky 2,000 100
Chi-Chi's of Kansas, Inc. Kansas 2,000 100
B. Indebtedness as of June 29, 1997
See attached Exhibit B
C. Liens as of January 10, 1997
See attached Exhibit C
D. Material Adverse Changes since March 30, 1997
none
E. Pending Litigation
none
F. Title to Properties Exceptions
none
G. Compliance with Law Exceptions
none
