EXECUTION COPY
EXHIBIT 4.1
================================================================================
BUFFETS HOLDINGS, INC.
Issuer
13.875 % Senior Discount Notes Due 2010
--------------------
INDENTURE
Dated as of May 18, 2004
---------------------
U.S. BANK NATIONAL ASSOCIATION
Trustee
================================================================================
CROSS-REFERENCE TABLE
TIA Section Indenture Section
-------------------------------------------------------------------------------- ------------------
310(a)(1)....................................................................... 7.10
(a)(2).......................................................................... 7.10
(a)(3).......................................................................... N/A
(a)(4).......................................................................... N/A
(b)............................................................................. 7.08; 7.10
(c)............................................................................. N/A
311(a).......................................................................... 7.11
(b)............................................................................. 7.11
(c)............................................................................. N/A
312(a).......................................................................... 2.05
(b)............................................................................. 10.03
(c)............................................................................. 10.03
313(a).......................................................................... 7.06
(b)(1).......................................................................... N/A
(b)(2).......................................................................... 7.06
(c)............................................................................. 10.02
(d)............................................................................. 7.06
314(a).......................................................................... 4.02; 4.13; 10.04;
10.05
(b)............................................................................. N/A
(c)(1).......................................................................... 10.04
(c)(2).......................................................................... 10.04
(c)(3).......................................................................... N/A
(d)............................................................................. N/A
(e)............................................................................. 10.05
(f)............................................................................. 4.13
315(a).......................................................................... 7.01
(b)............................................................................. 7.05
(c)............................................................................. 7.01
(d)............................................................................. 7.01
(e)............................................................................. 6.11
316(a) (last sentence).......................................................... 10.06
(a)(1)(A)....................................................................... 6.05
(a)(1)(B)....................................................................... 6.04
(a)(2).......................................................................... N/A
(b)............................................................................. 6.06; 6.07
317(a)(1)....................................................................... 6.08
(a)(2).......................................................................... 6.09
(b)............................................................................. 2.04
318(a).......................................................................... 10.01
N/A means Not Applicable
__________________
Note: This Cross-Reference Table shall not, for any purpose, be deemed to be
part of this Indenture.
TABLE OF CONTENTS
Page
----
ARTICLE I
Definitions and Incorporation by Reference
SECTION 1.01 Definitions...................................................... 1
SECTION 1.02 Other Definitions................................................ 31
SECTION 1.03 Incorporation by Reference of Trust Indenture Act................ 32
SECTION 1.04 Rules of Construction............................................ 32
ARTICLE II
The Securities
SECTION 2.01 Form and Dating.................................................. 33
SECTION 2.02 Execution and Authentication..................................... 33
SECTION 2.03 Registrar and Paying Agent....................................... 34
SECTION 2.04 Paying Agent To Hold Money in Trust.............................. 35
SECTION 2.05 Securityholder Lists............................................. 35
SECTION 2.06 Transfer and Exchange............................................ 35
SECTION 2.07 Replacement Securities........................................... 35
SECTION 2.08 Outstanding Securities........................................... 36
SECTION 2.09 Temporary Securities............................................. 36
SECTION 2.10 Cancellation..................................................... 36
SECTION 2.11 Defaulted Interest............................................... 36
SECTION 2.12 CUSIP Numbers.................................................... 37
SECTION 2.13 Issuance of Additional Securities................................ 37
SECTION 2.14 Tax Treatment.................................................... 37
ARTICLE III
Redemption
SECTION 3.01 Notices to Trustee............................................... 38
SECTION 3.02 Selection of Securities to be Redeemed........................... 39
SECTION 3.03 Notice of Redemption............................................. 39
SECTION 3.04 Effect of Notice of Redemption................................... 39
SECTION 3.05 Deposit of Redemption Price...................................... 40
SECTION 3.06 Securities Redeemed in Part...................................... 40
ii
ARTICLE IV
Covenants
SECTION 4.01 Payment of Securities............................................ 40
SECTION 4.02 SEC Reports...................................................... 40
SECTION 4.03 Limitation on Indebtedness....................................... 41
SECTION 4.04 Limitation on Restricted Payments................................ 44
SECTION 4.05 Limitation on Restrictions on Distributions from Restricted
Subsidiaries.................................................. 47
SECTION 4.06 Limitation on Sales of Assets and Subsidiary Stock............... 49
SECTION 4.07 Limitation on Affiliate Transactions............................. 52
SECTION 4.08 Limitation on the Sale or Issuance of Capital Stock of
Restricted Subsidiaries....................................... 53
SECTION 4.09 Limitation on Liens.............................................. 54
SECTION 4.10 Change of Control................................................ 54
SECTION 4.11 Offer to Purchase Upon Initial Public Offering................... 56
SECTION 4.12 Future Guarantors................................................ 58
SECTION 4.13 Compliance Certificate........................................... 58
SECTION 4.14 Maximum Leverage Ratio........................................... 58
SECTION 4.15 Permitted Business............................................... 58
SECTION 4.16 No Intermediate Holding Companies................................ 58
SECTION 4.17 Further Instruments and Acts..................................... 59
ARTICLE V
Successor Company
SECTION 5.01 When Company May Merge or Transfer Assets........................ 59
ARTICLE VI
Defaults and Remedies
SECTION 6.01 Events of Default................................................ 60
SECTION 6.02 Acceleration..................................................... 62
SECTION 6.03 Other Remedies................................................... 62
SECTION 6.04 Waiver of Past Defaults.......................................... 62
SECTION 6.05 Control by Majority.............................................. 63
SECTION 6.06 Limitation on Suits.............................................. 63
SECTION 6.07 Rights of Holders to Receive Payment............................. 63
SECTION 6.08 Collection Suit by Trustee....................................... 63
SECTION 6.09 Trustee May File Proofs of Claim................................. 64
SECTION 6.10 Priorities....................................................... 64
iii
SECTION 6.11 Undertaking for Costs............................................ 64
SECTION 6.12 Waiver of Stay, Extension or Usury Laws.......................... 64
ARTICLE VII
Trustee
SECTION 7.01 Duties of Trustee................................................ 65
SECTION 7.02 Rights of Trustee................................................ 66
SECTION 7.03 Individual Rights of Trustee..................................... 67
SECTION 7.04 Trustee's Disclaimer............................................. 67
SECTION 7.05 Notice of Defaults............................................... 67
SECTION 7.06 Reports by Trustee to Holders.................................... 67
SECTION 7.07 Compensation and Indemnity....................................... 67
SECTION 7.08 Replacement of Trustee........................................... 68
SECTION 7.09 Successor Trustee by Merger...................................... 69
SECTION 7.10 Eligibility; Disqualification.................................... 69
SECTION 7.11 Preferential Collection of Claims Against Company................ 69
Article VIII
Discharge of Indenture; Defeasance
SECTION 8.01 Discharge of Liability on Securities; Defeasance................. 70
SECTION 8.02 Conditions to Defeasance......................................... 71
SECTION 8.03 Application of Trust Money....................................... 72
SECTION 8.04 Repayment to Company............................................. 72
SECTION 8.05 Indemnity for Government Obligations............................. 72
SECTION 8.06 Reinstatement.................................................... 72
ARTICLE IX
Amendments
SECTION 9.01 Without Consent of Holders....................................... 73
SECTION 9.02 With Consent of Holders.......................................... 73
SECTION 9.03 Compliance with Trust Indenture Act.............................. 74
SECTION 9.04 Revocation and Effect of Consents and Waivers.................... 74
SECTION 9.05 Notation on or Exchange of Securities............................ 75
SECTION 9.06 Trustee to Sign Amendments....................................... 75
SECTION 9.07 Payment for Consent.............................................. 75
iv
ARTICLE X
Miscellaneous
SECTION 10.01 Trust Indenture Act Controls..................................... 75
SECTION 10.02 Notices.......................................................... 76
SECTION 10.03 Communication by Holders with Other Holders...................... 76
SECTION 10.04 Certificate and Opinion as to Conditions Precedent............... 77
SECTION 10.05 Statements Required in Certificate or Opinion.................... 77
SECTION 10.06 When Securities Disregarded...................................... 77
SECTION 10.07 Rules by Trustee, Paying Agent and Registrar..................... 77
SECTION 10.08 Legal Holidays................................................... 78
SECTION 10.09 GOVERNING LAW.................................................... 78
SECTION 10.10 No Recourse Against Others....................................... 78
SECTION 10.11 Successors....................................................... 78
SECTION 10.12 Multiple Originals............................................... 78
SECTION 10.13 Table of Contents; Headings...................................... 78
Rule 144A/Regulation S/IAI Appendix
Exhibit A - Form of Initial Security............................................ A-1
Exhibit B - Form of Exchange Security or Private Exchange Security.............. B-1
Exhibit C - Form of Transferee Letter of Representation......................... C-1
Schedule 2.14 - Comparable Yield................................................ 1
INDENTURE dated as of May 18, 2004, between Buffets
Holdings, Inc., a Delaware corporation (the "Company"), and
U.S. Bank National Association (the "Trustee").
Each party agrees as follows for the benefit of the other parties
and for the equal and ratable benefit of the Holders of (a) the Company's
13.875% Senior Discount Notes due 2010 (the "Initial Securities") and, if and
when issued pursuant to a registered exchange for Initial Securities, the
Company's 13.875% Senior Discount Notes due 2010 (the "Exchange Securities") and
if and when issued pursuant to a private exchange for Initial Securities, the
Company's 13.875% Senior Discount Notes due 2010 (the "Private Exchange
Securities", together with the Exchange Securities and the Initial Securities,
the "Securities").
ARTICLE I
Definitions and Incorporation by Reference
SECTION 1.01 Definitions.
"2002 Refinancing Transactions" means Buffets' offering of the
Buffets Existing Notes in 2002, Buffets' entering into of the Credit Agreement
in 2002, the repayment of all amounts outstanding under Buffets' then-existing
credit facility, the redemption in 2002 of all of Buffets' 14% senior
subordinated notes due September 29, 2008, the redemption in 2002 of all of the
Company's 16% senior subordinated notes due September 29, 2008, the payment of
related prepayment fees and the payment of fees and expenses relating to such
transactions, all of which were completed on or about June 28, 2002.
"Accreted Value" means, as of any date (the "Specified Date"), the
amount provided below for each $1,000 principal amount at maturity of
Securities:
(1) if the Specified Date occurs on one of the following dates
(each, a "Semi-Annual Accrual Date"), the Accreted Value will equal the
amount set forth below for such Semi-Annual Accrual Date:
Semi-Annual Accreted
Accrual Date Value
----------------------------------------------------------------------- --------
Issue Date............................................................. $ 568.73
July 31, 2004.......................................................... $ 584.74
January 31, 2005....................................................... $ 625.30
July 31, 2005.......................................................... $ 668.68
January 31, 2006....................................................... $ 715.07
July 31, 2006.......................................................... $ 764.68
2
Semi-Annual Accreted
Accrual Date Value
----------------------------------------------------------------------- --------
January 31, 2007....................................................... $ 817.73
July 31, 2007.......................................................... $ 874.46
January 31, 2008....................................................... $ 935.13
July 31, 2008.......................................................... $1000.00
(2) if the Specified Date occurs before the first Semi-Annual
Accrual Date following the Issue Date, the Accreted Value will equal the
sum of (A) the original issue price of a note and (B) an amount equal to
the product of (x) the Accreted Value for such first Semi-Annual Accrual
Date less such original issue price multiplied by (y) a fraction, the
numerator of which is the number of days from the Issue Date to the
Specified Date, using a 360-day year of twelve 30-day months, and the
denominator of which is the number of days elapsed from the Issue Date to
the first Semi-Annual Accrual Date, using a 360-day year of twelve 30-day
months;
(3) if the Specified Date otherwise occurs between two Semi-Annual
Accrual Dates, the Accreted Value will equal to the sum of (A) the
Accreted Value for the Semi-Annual Accrual Date immediately preceding such
Specified Date and (B) an amount equal to the product of (x) the Accreted
Value for the immediately following Semi-Annual Accrual Date less the
Accreted Value for the immediately preceding Semi-Annual Accrual Date
multiplied by (y) a fraction, the numerator of which is the number of days
elapsed from the immediately preceding Semi-Annual Accrual Date to the
Specified Date, using a 360-day year of twelve 30-day months, and the
denominator of which is 180; or
(4) if the Specified Date occurs after the last Semi-Annual
Accrual Date, the Accreted Value will equal $1,000.
Notwithstanding the foregoing, if additional interest accrues on the
Securities on or prior to July 31, 2008 as a result of a Registration Default
under the Registration Rights Agreement or an increase in the interest rate on
the Securities as a result of default interest or Step-Up Interest as set forth
in paragraph 1 in the Securities, such additional interest will be added to the
Accreted Value, and the Accreted Value as of any Specified Date will equal the
sum of (A) the Accreted Value, as calculated above, as of the date such
additional interest began to accrue, plus (B) the amount of interest that would
accrue on the Accreted Value from time to time on a daily basis at a rate of
interest per annum equal to the sum of 13.875% per annum plus the rate of such
additional interest as applicable from time to time, compounded semi-annually on
each Semi-Annual Accrual Date from the date such additional interest began to
accrete through the Specified Date, computed on the basis of a 360-day year of
twelve 30-day months. If such an event were to occur, the Accreted Value on and
after the last Semi-Annual Accrual Date would exceed $1,000.
3
"Acquired Indebtedness" means (1) with respect to any Person that
becomes a Restricted Subsidiary after the Issue Date, Indebtedness of such
Person and its Subsidiaries existing at the time such Person becomes a
Restricted Subsidiary that was not incurred in connection with, or in
contemplation of, such Person becoming a Restricted Subsidiary and (2) with
respect to the Company or any Restricted Subsidiary, any Indebtedness of a
Person (other than the Company or a Restricted Subsidiary) existing at the time
such Person is merged with or into the Company or a Restricted Subsidiary in
connection with the acquisition of an asset or assets from another Person, which
Indebtedness was not, in any case, incurred by such other Person in connection
with, or in contemplation of, such merger or acquisition.
"Additional Assets" means:
(1) any property, plant or equipment useful in a Related Business;
(2) the Capital Stock of a Person that becomes a Restricted
Subsidiary as a result of the acquisition of such Capital Stock by the
Company or another Restricted Subsidiary; or
(3) Capital Stock constituting a minority interest in any Person
that at such time is a Restricted Subsidiary;
provided, however, that any such Restricted Subsidiary described in clause (2)
or (3) above is primarily engaged in a Related Business.
"Additional Securities" means, subject to the Company's compliance
with Section 4.03 and Section 4.14, 13.875% Senior Discount Notes due 2010
issued from time to time after the Issue Date under the terms of this Indenture
(other than pursuant to Section 2.06, 2.07, 2.09 or 3.06 of this Indenture and
other than Exchange Securities or Private Exchange Securities issued pursuant to
an exchange offer for other Securities outstanding on the Issue Date under this
Indenture).
"Affiliate" of any specified Person means any other Person, directly
or indirectly, controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any Person means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing. For
purposes of Sections 4.04, 4.06 and 4.07 only, "Affiliate" shall also mean any
beneficial owner of Capital Stock representing 10% or more of the total voting
power of the Voting Stock (on a fully diluted basis) of the Company or of rights
or warrants to purchase such Capital Stock (whether or not currently
exercisable) and any Person who would be an Affiliate of any such beneficial
owner pursuant to the first sentence hereof.
4
"Asset Disposition" means any sale, lease, transfer or other
disposition (or series of related sales, leases, transfers or dispositions) by
the Company or any Restricted Subsidiary, including any disposition by means of
a merger, consolidation or similar transaction (each referred to for the
purposes of this definition as a "disposition"), of:
(1) any shares of Capital Stock of a Restricted Subsidiary (other
than directors' qualifying shares or shares required by applicable law to
be held by a Person other than the Company or a Restricted Subsidiary);
(2) all or substantially all the assets of any division or line of
business of the Company or any Restricted Subsidiary; or
(3) any other assets of the Company or any Restricted Subsidiary
outside of the ordinary course of business of the Company or such
Restricted Subsidiary;
other than, in the case of (1), (2) and (3) above,
(A) a disposition by a Restricted Subsidiary to the Company
or by the Company or a Restricted Subsidiary to a Wholly Owned
Subsidiary,
(B) for purposes of Section 4.06 only, (x) a disposition
that constitutes a Restricted Payment permitted by Section 4.04 or a
Permitted Investment and (y) a disposition of all or substantially
all the assets of the Company in accordance with Section 5.01,
(C) a disposition of assets with a fair market value of less
than $1,000,000,
(D) entering into Hedging Obligations and
(E) the granting of a Lien permitted under this Indenture.
"Attributable Debt" in respect of a Sale/Leaseback Transaction
means, as at the time of determination, the present value (discounted at the
interest rate borne by the Securities, compounded annually) of the total
obligations of the lessee for net rental payments during the remaining term of
the lease included in such Sale/Leaseback Transaction (including any period for
which such lease has been extended); provided, however, that if such
Sale/Leaseback Transaction results in a Capital Lease Obligation, the amount of
Indebtedness represented thereby will be determined in accordance with the
definition of Capital Lease Obligation.
"Average Life" means, as of the date of determination, with respect
to any Indebtedness, the quotient obtained by dividing (1) the sum of the
products of the numbers of years from the date of determination to the dates of
each successive scheduled principal payment of or redemption or similar payment
with respect to such Indebtedness multiplied by the amount of such payment by
(2) the sum of all such payments.
5
"Board of Directors" with respect to a Person means the Board of
Directors of such Person or any committee thereof duly authorized to act on
behalf of such Board.
"Buffets" means Buffets, Inc. or any successor thereof.
"Buffets Existing Notes" means Buffets' 11-1/4% Senior Subordinated
Notes due 2010.
"Buffets Existing Indenture" means the Indenture dated as of June
28, 2002, among Buffets, the guarantors referred to therein and U.S. Bank
National Association, as trustee, as amended, extended, renewed, replaced,
restated, supplemented or otherwise modified (in whole or in part, and without
limitation as to amount, terms, conditions, covenants and other provisions) from
time to time.
"Buffets Guarantors" means each subsidiary of Buffets that
guarantees Buffets' obligations under the Buffets Existing Notes.
"Business Day" means each day which is not a Legal Holiday.
"Capital Lease Obligation" means an obligation that is required to
be classified and accounted for as a capital lease for financial reporting
purposes in accordance with GAAP, and the amount of Indebtedness represented by
such obligation shall be the capitalized amount of such obligation determined in
accordance with GAAP; and the Stated Maturity thereof shall be the date of the
last payment of rent or any other amount due under such lease prior to the first
date upon which such lease may be terminated by the lessee without payment of a
penalty.
"Capital Stock" of any Person means any and all shares, interests,
rights to purchase, warrants, options, participations or other equivalents of or
interests in (however designated) equity of such Person, including any Preferred
Stock, but excluding any debt securities convertible into such equity.
"Caxton Management Agreement" means the Amended and Restated
Management and Fee Agreement, dated as of February 20, 2004, by and among
Buffets and CxCIC LLC.
"Caxton Shareholder" means Xxxxxx-Xxxxxx Investments L.P., Caxton
Associates, LLC, Xxxxxxxxx X. Xxxxxx, Xxxxxx X. Xxxxxxxxx, Xxxxxx X. Xxxxxx and
any Affiliate of the foregoing.
"Change of Control" means the occurrence of any of the following
events:
(1) prior to the Initial Public Equity Offering, the Permitted
Holders cease to be the "beneficial owner" (as defined in Rules 13d-3 and
13d-5 under the Exchange Act), directly or indirectly, of a majority in
the aggregate of the total voting power of the Voting Stock of the
Company, whether as a result of issuance
6
of securities of the Company, any merger, consolidation, liquidation or
dissolution of the Company, or otherwise (for purposes of this clause (1)
and clause (2) below, the Permitted Holders shall be deemed to
beneficially own any Voting Stock of a Person (the "specified Person")
held by any other Person (the "parent entity") so long as the Permitted
Holders beneficially own (as so defined), directly or indirectly, in the
aggregate a majority of the voting power of the Voting Stock of the parent
entity);
(2) any "person" (as such term is used in Sections 13(d) and 14(d)
of the Exchange Act), other than one or more Permitted Holders, is or
becomes the "beneficial owner," directly or indirectly, of more than 35%
of the total voting power of the Voting Stock of the Company; provided,
however, that the Permitted Holders beneficially own (as defined in Rules
13d-3 and 13d-5 under the Exchange Act), directly or indirectly, in the
aggregate a lesser percentage of the total voting power of the Voting
Stock of the Company than such other person and do not have the right or
ability by voting power, contract or otherwise to elect or designate for
election a majority of the Board of Directors (for the purposes of this
clause (2), such other person shall be deemed to beneficially own any
Voting Stock of a Person (the "specified person") held by any other Person
(the "parent entity"), if such other person is the beneficial owner (as
first defined in clause (1)), directly or indirectly, of more than 35% of
the voting power of the Voting Stock of such parent entity and the
Permitted Holders beneficially own (as defined in Rules 13d-3 and 13d-5
under the Exchange Act), directly or indirectly, in the aggregate a lesser
percentage of the voting power of the Voting Stock of such parent entity
and do not have the right or ability by voting power, contract or
otherwise to elect or designate for election a majority of the board of
directors of such parent entity);
(3) individuals who on the Issue Date constituted the Board of
Directors of the Company (together with any new directors whose election
by such Board of Directors of the Company or whose nomination for election
by the shareholders of the Company, as the case may be, was approved by a
vote of 66-2/3% of the directors of the Company then still in office who
were either directors on the Issue Date or whose election or nomination
for election was previously so approved by the Permitted Holders) cease
for any reason to constitute a majority of the Board of Directors of the
Company then in office; or
(4) to the extent the Buffets Existing Notes are outstanding, a
"Change of Control", as defined in the Buffets Existing Indenture, shall
have occurred; or
(5) the failure at any time by the Company to beneficially own (as
defined in Rules 13d-3 and 13d-5 under the Exchange Act), directly or
indirectly, 100% of the Voting Stock of Buffets (except to the extent
Buffets is merged with and into the Company in accordance with the terms
of this Indenture).
"Code" means the Internal Revenue Code of 1986, as amended.
7
"Company" means the party named as such in this Indenture until a
successor replaces it and, thereafter, means the successor and, for purposes of
any provision contained herein and required by the TIA, each other obligor on
the indenture securities.
"Consolidated Coverage Ratio" means, with respect to any Person as
of any date of determination, the ratio of (x) the aggregate amount of EBITDA of
such Person and its Restricted Subsidiaries for the period of the most recent
four consecutive fiscal quarters for which internal financial statements are
available prior to the date of such determination to (y) Consolidated Interest
Expense of such Person and its Restricted Subsidiaries for such four fiscal
quarters;
provided, however, that:
(1) if such Person or any of its Restricted Subsidiaries has
Incurred any Indebtedness since the beginning of such period that remains
outstanding or if the transaction giving rise to the need to calculate the
Consolidated Coverage Ratio is an Incurrence of Indebtedness, or both,
EBITDA and Consolidated Interest Expense for such period shall be
calculated after giving effect on a pro forma basis to such Indebtedness
as if such Indebtedness had been Incurred on the first day of such period
(except that, in making such computation, the amount of Indebtedness under
any revolving credit facility outstanding on the date of such calculation
shall be computed based on (A) the average daily balance of such
Indebtedness during such four fiscal quarters or such shorter period when
such facility was outstanding or (B) if such facility was created after
the end of such four fiscal quarters, the average balance of such
Indebtedness during the period from the date of creation of such facility
to the date of the computation);
(2) if such Person or any of its Restricted Subsidiaries has
repaid, repurchased, defeased or otherwise discharged any Indebtedness
since the beginning of such period or if any Indebtedness is to be repaid,
repurchased, defeased or otherwise discharged (in each case other than
Indebtedness Incurred under any revolving credit facility unless such
Indebtedness has been permanently repaid and has not been replaced) on the
date of the transaction giving rise to the need to calculate the
Consolidated Coverage Ratio, EBITDA and Consolidated Interest Expense for
such period shall be calculated on a pro forma basis as if such discharge
had occurred on the first day of such period and as if such Person or such
Restricted Subsidiary has not earned the interest income actually earned
during such period in respect of cash or Temporary Cash Investments used
to repay, repurchase, defease or otherwise discharge such Indebtedness;
(3) if since the beginning of such period such Person or any of
its Restricted Subsidiaries shall have made any Asset Disposition, EBITDA
for such period shall be reduced by an amount equal to EBITDA (if
positive) directly attributable to the assets which are the subject of
such Asset Disposition for such period, or increased by an amount equal to
EBITDA (if negative), directly
8
attributable thereto for such period and Consolidated Interest Expense for
such period shall be reduced by an amount equal to the Consolidated
Interest Expense directly attributable to any Indebtedness of such Person
or any of its Restricted Subsidiaries repaid, repurchased, defeased or
otherwise discharged with respect to such Person and its continuing
Restricted Subsidiaries in connection with such Asset Disposition for such
period (or, if the Capital Stock of any Restricted Subsidiary is sold, the
Consolidated Interest Expense for such period directly attributable to the
Indebtedness of such Restricted Subsidiary to the extent such Person and
its continuing Restricted Subsidiaries are no longer liable for such
Indebtedness after such sale);
(4) if since the beginning of such period such Person or any of
its Restricted Subsidiaries (by merger or otherwise) shall have made an
Investment in any Restricted Subsidiary (or any person which becomes a
Restricted Subsidiary) or an acquisition of assets, including any
acquisition of assets occurring in connection with a transaction requiring
a calculation to be made hereunder, which constitutes all or substantially
all of an operating unit of a business, EBITDA and Consolidated Interest
Expense for such period shall be calculated after giving pro forma effect
thereto (including the Incurrence of any Indebtedness) as if such
Investment or acquisition occurred on the first day of such period; and
(5) if since the beginning of such period any entity (that
subsequently became a Restricted Subsidiary or was merged with or into
such Person or any of its Restricted Subsidiaries since the beginning of
such period) shall have made any Asset Disposition, any Investment or
acquisition of assets that would have required an adjustment pursuant to
clause (3) or (4) above if made by such Person or a Restricted Subsidiary
during such period, EBITDA and Consolidated Interest Expense for such
period shall be calculated after giving pro forma effect thereto as if
such Asset Disposition, Investment or acquisition occurred on the first
day of such period.
For purposes of this definition, whenever pro forma effect is to be
given to an acquisition of assets, the amount of income or earnings relating
thereto and the amount of Consolidated Interest Expense associated with any
Indebtedness Incurred in connection therewith, the pro forma calculations shall
be determined in good faith by a responsible financial or accounting Officer of
the Company (and may include any applicable Pro Forma Cost Savings). If any
Indebtedness bears a floating rate of interest and is being given pro forma
effect, the interest on such Indebtedness shall be calculated as if the rate in
effect on the date of determination had been the applicable rate for the entire
period (taking into account any Interest Rate Agreement applicable to such
Indebtedness if such Interest Rate Agreement has a remaining term in excess of
twelve months).
"Consolidated Interest Expense" means, with respect to any Person
for any period, the total interest expense of such Person and its consolidated
Restricted Subsidiaries, plus, to the extent not included in such total interest
expense, and to the extent incurred by such Person or its Restricted
Subsidiaries, without duplication:
9
(1) interest expense attributable to capital leases and the
interest expense attributable to leases constituting part of a
Sale/Leaseback Transaction;
(2) amortization of debt discount and debt issuance cost;
(3) capitalized interest;
(4) non-cash interest expenses;
(5) commissions, discounts and other fees and charges owed with
respect to letters of credit and bankers' acceptance financing;
(6) net payments pursuant to Hedging Obligations;
(7) dividends paid in cash or Disqualified Stock in respect of all
Disqualified Stock of such Person and Preferred Stock of the Restricted
Subsidiaries of such Person held by Persons other than such Person or a
Wholly Owned Subsidiary;
(8) interest incurred in connection with Investments in
discontinued operations;
(9) interest actually paid by such Person or a Restricted
Subsidiary under a Guarantee of Indebtedness of any other Person; and
(10) the cash contributions to any employee stock ownership plan or
similar trust to the extent such contributions are used by such plan or
trust to pay interest or fees to any Person (other than such Person) in
connection with Indebtedness Incurred by such plan or trust; and
less, to the extent included in such total interest expense, (A) the
amortization during such period of capitalized financing costs associated with
the Refinancing Transactions and the 2002 Refinancing Transactions and (B) the
amortization during such period of other capitalized financing costs; provided,
however, that, in the case of (B), the aggregate amount of amortization relating
to such capitalized financing costs deducted in calculating Consolidated
Interest Expense shall not exceed 5% of the aggregate amount of the financing
giving rise thereto.
"Consolidated Net Income" means, with respect to any Person for any
period, the net income of such Person and its consolidated Subsidiaries;
provided, however, that there shall not be included in such Consolidated Net
Income:
(1) any net income of any Person (other than the referent Person)
if such Person is not a Restricted Subsidiary, except that:
(A) subject to the exclusion contained in clause (4) below,
the referent Person's equity in the net income of any such Person
for such
10
period shall be included in such Consolidated Net Income up to the
aggregate amount of cash actually distributed by such Person during
such period to the referent Person as a dividend or other
distribution (subject, in the case of a dividend or other
distribution paid to a Restricted Subsidiary, to the limitations
contained in clause (3) below); and
(B) the referent Person's equity in a net loss of any such
Person for such period shall be included in determining such
Consolidated Net Income but only to the extent the referent Person
or a Restricted Subsidiary funded such net loss with cash;
(2) any net income (or loss) of any Person acquired by the
referent Person or a Subsidiary of the referent Person in a pooling of
interests transaction for any period prior to the date of such
acquisition;
(3) any net income of any Restricted Subsidiary of such Person if
such Restricted Subsidiary is subject to restrictions, directly or
indirectly, on the payment of dividends or the making of distributions by
such Restricted Subsidiary, directly or indirectly, to such Person (other
than restrictions permitted under Section 4.05), except that:
(A) subject to the exclusion contained in clause (4) below,
the Person's equity in the net income of any such Restricted
Subsidiary for such period shall be included in such Consolidated
Net Income up to the aggregate amount of cash actually distributed
by such Restricted Subsidiary during such period to such Person or
another Restricted Subsidiary of such Person as a dividend or other
distribution (subject, in the case of a dividend or other
distribution paid to another Restricted Subsidiary, to the
limitation contained in this clause); and
(B) such Person's equity in a net loss of any such
Restricted Subsidiary for such period shall be included in
determining such Consolidated Net Income;
(4) any gain or loss realized upon the sale or other disposition
of any assets of such Person, its consolidated Subsidiaries or any other
Person (including pursuant to any sale-and-leaseback arrangement) which is
not sold or otherwise disposed of in the ordinary course of business and
any gain or loss realized upon the sale or other disposition of any
Capital Stock of any Person;
(5) extraordinary gains or losses;
(6) to the extent included in total interest expense, any
amortization or write-offs of debt issuance costs and prepayment penalties
realized during such period to the extent attributable to the Indebtedness
being Refinanced in
11
connection with the Refinancing Transactions and the 2002 Refinancing
Transactions;
(7) the cumulative effect of a change in accounting principles;
(8) gains and losses realized upon the refinancing of any
Indebtedness of the Company or any Restricted Subsidiary;
(9) non-cash compensation charges or other non-cash expenses or
charges arising from the grant of or issuance or repricing of Capital
Stock or other equity-based awards or any amendment or substitution of any
such Capital Stock or other equity-based awards;
(10) any non-cash goodwill or non-cash asset impairment charges
subsequent to the Issue Date; and
(11) deferred rent to the extent it is payable after the maturity
date of the Securities.
Notwithstanding the foregoing, for the purposes of Section 4.04 only, there
shall be excluded from Consolidated Net Income any repurchases, repayments or
redemptions of Investments, proceeds realized on the sale of Investments or
return of capital to such Person or a Restricted Subsidiary of such Person to
the extent such repurchases, repayments, redemptions, proceeds or returns
increase the amount of Restricted Payments permitted under Section
4.04(a)(3)(D).
"Credit Agreement" means the Credit Agreement dated as of June 28,
2002, as amended and restated as of February 20, 2004, by and among Buffets, the
guarantors referred to therein, the lenders referred to therein and Credit
Suisse First Boston LLC, together with the related documents thereto (including
the term loans, revolving loans and letter of credit facility thereunder, any
guarantees and security documents), as amended, extended, renewed, replaced,
restated, supplemented or otherwise modified (in whole or in part, and without
limitation as to amount, terms, conditions, covenants and other provisions) from
time to time, and any agreement (and related document or instrument) governing
Indebtedness incurred to Refinance, in whole or in part, the borrowings and
commitments then outstanding or permitted to be outstanding under such Credit
Agreement or a successor Credit Agreement, whether by the same or any other
lender or group of lenders (and whether in the form of commercial paper
facilities, revolving credit loans, term loans, receivables financing, letters
of credit, or any debt securities or other form of debt, convertible debt or
exchangeable debt financing).
"Currency Agreement" means in respect of a Person any foreign
exchange contract, currency swap agreement or other similar agreement designed
to protect such Person against fluctuations in currency values.
12
"Default" means any event which is, or after notice or passage of
time or both would be, an Event of Default.
"Disqualified Stock" means, with respect to any Person, any Capital
Stock which by its terms (or by the terms of any security into which it is
convertible or for which it is exchangeable at the option of the holder) or upon
the happening of any event:
(1) matures or is mandatorily redeemable pursuant to a sinking
fund obligation or otherwise;
(2) is convertible or exchangeable at the option of the holder for
Indebtedness or Disqualified Stock; or
(3) is mandatorily redeemable or must be purchased upon the
occurrence of certain events or otherwise, in whole or in part;
in each case on or prior to the first anniversary of the Stated Maturity of the
Securities; provided, however, that any Capital Stock that would not constitute
Disqualified Stock but for provisions thereof giving holders thereof the right
to require such Person to purchase or redeem such Capital Stock upon the
occurrence of an "asset sale" or "change of control" occurring prior to the
first anniversary of the Stated Maturity of the Securities shall not constitute
Disqualified Stock if (1) the "asset sale" or "change of control" provisions
applicable to such Capital Stock are not more favorable to the holders of such
Capital Stock than the terms applicable to the Securities described in Sections
4.06 and 4.10 of this Indenture and (2) any such requirement only becomes
operative after compliance with such terms applicable to the Securities,
including the purchase of any Securities tendered pursuant thereto.
The amount of any Disqualified Stock that does not have a fixed
redemption, repayment or repurchase price will be calculated in accordance with
the terms of such Disqualified Stock as if such Disqualified Stock were
redeemed, repaid or repurchased on any date on which the amount of such
Disqualified Stock is to be determined pursuant to this Indenture; provided,
however, that if such Disqualified Stock could not be required to be redeemed,
repaid or repurchased at the time of such determination, the redemption,
repayment or repurchase price will be the book value of such Disqualified Stock
as reflected in the most recent financial statements of such Person.
"EBITDA" means, with respect to any Person for any period, the sum
of Consolidated Net Income, plus the following to the extent deducted in
calculating such Consolidated Net Income:
(1) all income tax expense of such Person and its consolidated
Restricted Subsidiaries;
(2) Consolidated Interest Expense of such Person and its
consolidated Restricted Subsidiaries;
13
(3) depreciation and amortization expense of such Person and its
consolidated Restricted Subsidiaries (excluding amortization expense
attributable to a prepaid operating activity item that was paid in cash in
a prior period);
(4) Restructuring Expenses;
(5) the principal component of any Sale/Leaseback Transaction that
constitutes an operating lease; and
(6) all other non-cash charges of such Person and its consolidated
Restricted Subsidiaries (including, without limitation, deferred rental
expense, but excluding any such non-cash charge to the extent that it
represents an accrual of or reserve for cash expenditures in any future
period) less all non-cash items of income (other than accrual of revenue
in the ordinary course of business) of such Person and its consolidated
Restricted Subsidiaries;
in each case for such period. Notwithstanding the foregoing, the provision for
taxes based on the income or profits of, and the depreciation and amortization
and non-cash charges of, a Restricted Subsidiary shall be added to Consolidated
Net Income to compute EBITDA only to the extent (and in the same proportion)
that the net income of such Restricted Subsidiary was included in calculating
Consolidated Net Income of such Person.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"First Call Date" means July 31, 2008.
"GAAP" means generally accepted accounting principles in the United
States of America as in effect as of the date of Buffets Existing Indenture,
including those set forth in:
(1) the opinions and pronouncements of the Accounting Principles
Board of the American Institute of Certified Public Accountants;
(2) statements and pronouncements of the Financial Accounting
Standards Board; and
(3) such other statements by such other entity as approved by a
significant segment of the accounting profession.
All ratios and computations based on GAAP contained in this Indenture shall be
computed in conformity with GAAP.
"Guarantee" means any obligation, contingent or otherwise, of any
Person directly or indirectly guaranteeing any Indebtedness of any Person and
any obligation, direct or indirect, contingent or otherwise, of such Person:
14
(1) to purchase or pay (or advance or supply funds for the
purchase or payment of) such Indebtedness of such Person (whether arising
by virtue of partnership arrangements, or by agreements to keep-well, to
purchase assets, goods, securities or services, to take-or-pay or to
maintain financial statement conditions or otherwise); or
(2) entered into for the purpose of assuring in any other manner
the obligee of such Indebtedness of the payment thereof or to protect such
obligee against loss in respect thereof (in whole or in part);
provided, however, that the term "Guarantee" shall not include endorsements for
collection or deposit in the ordinary course of business. The term "Guarantee"
used as a verb has a corresponding meaning. The term "Guarantor" shall mean any
Person Guaranteeing any obligation.
"Guaranty Agreement" means a supplemental indenture, in a form
reasonably satisfactory to the Trustee, pursuant to which a Subsidiary Guarantor
guarantees the Company's obligations with respect to the Securities on the terms
provided for in this Indenture and in such supplemental indenture.
"Hedging Obligations" of any Person means the obligations of such
Person pursuant to any Interest Rate Agreement or Currency Agreement.
"Holder" or "Securityholder" means the Person in whose name a
Security is registered on the Registrar's books.
"Incur" means issue, assume, Guarantee, incur or otherwise become
liable for; provided, however, that any Indebtedness or Capital Stock of a
Person existing at the time such Person becomes a Restricted Subsidiary (whether
by merger, consolidation, acquisition or otherwise) shall be deemed to be
Incurred by such Person at the time it becomes a Restricted Subsidiary. The term
"Incurrence" when used as a noun shall have a correlative meaning. Solely for
purposes of determining compliance with Section 4.03, (1) amortization of debt
discount or the accretion of principal with respect to a non-interest bearing or
other discount security and (2) the payment of regularly scheduled interest in
the form of additional Indebtedness of the same instrument or the payment of
regularly scheduled dividends on Capital Stock in the form of additional Capital
Stock of the same clause and with the same terms will not be deemed to be the
Incurrence of Indebtedness.
"Indebtedness" means, with respect to any Person on any date of
determination (without duplication):
(1) the principal in respect of (A) indebtedness of such Person
for money borrowed and (B) indebtedness evidenced by notes, debentures,
bonds or other similar instruments for the payment of which such Person is
responsible or
15
liable, including, in each case, any premium on such indebtedness to the
extent such premium has become due and payable;
(2) all Capital Lease Obligations of such Person and all
Attributable Debt in respect of Sale/Leaseback Transactions entered into
by such Person;
(3) all obligations of such Person issued or assumed as the
deferred purchase price of property, all conditional sale obligations of
such Person and all obligations of such Person under any title retention
agreement (but excluding trade accounts payable arising in the ordinary
course of business);
(4) all obligations of such Person for the reimbursement of any
obligor on any letter of credit, banker's acceptance or similar credit
transaction (other than obligations with respect to letters of credit
securing obligations (other than obligations described in clauses (1)
through (3) above) entered into in the ordinary course of business of such
Person to the extent such letters of credit are not drawn upon or, if and
to the extent drawn upon, such drawing is reimbursed no later than the
tenth Business Day following payment on the letter of credit);
(5) the amount of all obligations of such Person with respect to
the redemption, repayment or other repurchase of any Disqualified Stock of
such Person or, with respect to any Preferred Stock of any Subsidiary of
such Person, the principal amount of such Preferred Stock to be determined
in accordance with this Indenture (but excluding, in each case, any
accrued dividends);
(6) all obligations of the type referred to in clauses (1) through
(5) of other Persons and all dividends of other Persons for the payment of
which, in either case, such Person is responsible or liable, directly or
indirectly, as obligor, guarantor or otherwise, including by means of any
Guarantee;
(7) all obligations of the type referred to in clauses (1) through
(6) of other Persons secured by any Lien on any property or asset of such
Person (whether or not such obligation is assumed by such Person), the
amount of such obligation being deemed to be the lesser of the value of
such property or assets and the amount of the obligation so secured; and
(8) to the extent not otherwise included in this definition,
Hedging Obligations of such Person; provided, that for purposes of
calculating the Leverage Ratio, the aggregate amount of Indebtedness
outstanding pursuant to any Hedging Obligation shall be zero until such
time as such Person has the obligation to make a payment in respect of
such Hedging Obligation and such payment is not made within 10 days.
Notwithstanding the foregoing, in connection with the purchase by such Person or
any of its Restricted Subsidiaries of any business, the term "Indebtedness" will
exclude post-closing payment adjustments to which the seller may become entitled
to the extent such
16
payment is determined by a final closing balance sheet or such payment depends
on the performance of such business after the closing; provided, however, that,
at the time of closing, the amount of any such payment is not determinable and,
to the extent such payment thereafter becomes fixed and determined, the amount
is paid within 30 days thereafter.
The amount of Indebtedness of any Person at any date shall be the
outstanding balance at such date of all unconditional obligations as described
above and the maximum liability, upon the occurrence of the contingency giving
rise to the obligation, of any contingent obligations at such date; provided,
however, that in the case of Indebtedness sold at a discount, the amount of such
Indebtedness at any time will be the accreted value thereof at such time.
Notwithstanding the foregoing, Indebtedness shall not include any liability for
Federal, state, local or other taxes owed or owing to any governmental entity.
"Indenture" means this Indenture as amended or supplemented from
time to time.
"Independent Qualified Party" means an investment banking firm,
accounting firm or appraisal firm of national standing; provided, however, that
such firm is not an Affiliate of the Company.
"Initial Public Equity Offering" means the first underwritten
initial public offering of common stock by the Company pursuant to an effective
registration statement under the Securities Act, which offering (i) has a
primary component and (ii) results in at least $50,000,000 of aggregate gross
proceeds (whether primary or secondary).
"Interest Rate Agreement" means in respect of a Person any interest
rate swap agreement, interest rate cap agreement or other financial agreement or
arrangement designed to manage interest rate exposure.
"Investment" in any Person means any direct or indirect advance,
loan (other than advances to customers in the ordinary course of business that
are recorded as accounts receivable on the balance sheet of the lender) or other
extensions of credit (including by way of Guarantee or similar arrangement) or
capital contribution to (by means of any transfer of cash or other property to
others or any payment for property or services for the account or use of
others), or any purchase or acquisition of Capital Stock, Indebtedness or other
similar instruments issued by such Person. Except as otherwise provided for
herein, the amount of an Investment shall be its fair value at the time the
Investment is made and without giving effect to subsequent changes in value. For
purposes of the definition of "Unrestricted Subsidiary", the definition of
"Restricted Payment" and Section 4.04,
(1) "Investment" shall include the portion (proportionate to the
Company's equity interest in such Subsidiary) of the fair market value of
the net assets of any Subsidiary of the Company at the time that such
Subsidiary is
17
designated an Unrestricted Subsidiary; provided, however, that upon a
redesignation of such Subsidiary as a Restricted Subsidiary, the Company
shall be deemed to continue to have a permanent "Investment" in an
Unrestricted Subsidiary equal to an amount (if positive) equal to (x) the
Company's "Investment" in such Subsidiary at the time of such
redesignation less (y) the portion (proportionate to the Company's equity
interest in such Subsidiary) of the fair market value of the net assets of
such Subsidiary at the time of such redesignation; and
(2) any property transferred to or from an Unrestricted Subsidiary
shall be valued at its fair market value at the time of such transfer, in
each case as determined in good faith by the Board of Directors of the
Company.
"Issue Date" means May 18, 2004.
"Leverage Ratio" means, as of any date of determination, the ratio
of (x) total Indebtedness of the Company and its Restricted Subsidiaries to (y)
EBITDA of the Company for the period of the four consecutive fiscal quarters
most recently ended for which internal financial statements are then available
prior to the date of determination; provided that:
(1) if the Company or any of its Restricted Subsidiaries has
Incurred any Indebtedness since the beginning of such period that remains
outstanding, EBITDA and Indebtedness for such period shall be calculated
after giving effect on a pro forma basis to such Incurrence of
Indebtedness as if such Indebtedness had been Incurred on the first day of
such period (except that, in making such computation, the amount of
Indebtedness under any revolving credit facility outstanding on the date
of such calculation shall be computed based on (A) the average daily
balance of such Indebtedness during such four fiscal quarters or such
shorter period when such facility was outstanding or (B) if such facility
was created after the end of such four fiscal quarters, the average
balance of such Indebtedness during the period from the date of creation
of such facility to the date of the computation);
(2) if the Company or any of its Restricted Subsidiaries has
repaid, repurchased, defeased or otherwise discharged any Indebtedness
since the beginning of such period, EBITDA and Indebtedness for such
period shall be calculated on a pro forma basis as if such discharge had
occurred on the first day of such period and as if the Company or such
Restricted Subsidiary had not earned the interest income actually earned
during such period in respect of cash or Temporary Cash Investments used
to repay, repurchase, defease or otherwise discharge such Indebtedness;
(3) if since the beginning of such period the Company or any of
its Restricted Subsidiaries shall have made any Asset Disposition, EBITDA
for such period shall be reduced by an amount equal to EBITDA (if
positive) directly
18
attributable to the assets which are the subject of such Asset Disposition
for such period, or increased by an amount equal to EBITDA (if negative),
directly attributable thereto for such period and Indebtedness for such
period shall be reduced by an amount equal to the Indebtedness of the
Company or any of its Restricted Subsidiaries repaid, repurchased,
defeased or otherwise discharged with respect to the Company and its
continuing Restricted Subsidiaries in connection with such Asset
Disposition for such period (or, if the Capital Stock of any Restricted
Subsidiary is sold, the Indebtedness of such Restricted Subsidiary to the
extent the Company and its continuing Restricted Subsidiaries are no
longer liable for such Indebtedness after such sale);
(4) if since the beginning of such period the Company or any of
its Restricted Subsidiaries (by merger or otherwise) shall have made an
Investment in any Restricted Subsidiary (or any person which becomes a
Restricted Subsidiary) or an acquisition of assets which constitutes all
or substantially all of an operating unit of a business, EBITDA and
Indebtedness for such period shall be calculated after giving pro forma
effect thereto (including the Incurrence of Indebtedness) as if such
Investment or acquisition occurred on the first day of such period; and
(5) if since the beginning of such period any entity (that
subsequently became a Restricted Subsidiary or was merged with or into the
Company or any of its Restricted Subsidiaries since the beginning of such
period) shall have made any Asset Disposition, any Investment or any
acquisition of assets that would have required an adjustment pursuant to
clause (3) or (4) above if made by the Company or a Restricted Subsidiary
during such period, EBITDA and Indebtedness for such period shall be
calculated after giving pro forma effect thereto as if such Asset
Disposition, Investment or acquisition occurred on the first day of such
period.
For purposes of this definition, whenever pro forma effect is to be given
to an acquisition of assets, the amount of income or earnings relating thereto
and the amount of any Indebtedness Incurred in connection therewith, the pro
forma calculations shall be determined in good faith by a responsible financial
or accounting Officer of the Company (and may include any applicable Pro Forma
Cost Savings).
"Lien" means any mortgage, pledge, security interest, encumbrance,
lien or charge of any kind (including any conditional sale or other title
retention agreement or lease in the nature thereof); provided that any property
that is the subject of a Sale/Leaseback Transaction shall be deemed to be
covered by a Lien.
"Management Agreements" means each of the Caxton Management
Agreement and the Management and Fee Agreement, dated as of October 2, 2000, by
and between Buffets, Inc. and Sentinel Capital Partners, L.L.C.
"Net Available Cash" from an Asset Disposition means cash payments
received therefrom (including any cash payments received by way of deferred
payment of
19
principal pursuant to a note or installment receivable or otherwise and proceeds
from the sale or other disposition of any securities received as consideration,
but only as and when received, but excluding any other consideration received in
the form of assumption by the acquiring Person of Indebtedness or other
obligations relating to such properties or assets or received in any other
non-cash form), in each case net of:
(1) all legal, title and recording tax expenses, underwriting
discounts, commissions and other fees and expenses incurred (including,
without limitation, fees and expenses of counsel, accountants and
investment bankers), and all Federal, state, provincial, foreign and local
taxes required to be accrued as a liability under GAAP, as a consequence
of such Asset Disposition;
(2) all payments made on any Indebtedness which is secured by any
assets subject to such Asset Disposition, in accordance with the terms of
any Lien upon or other security agreement of any kind with respect to such
assets, or which must by its terms, or in order to obtain a necessary
consent to such Asset Disposition, or by applicable law, be repaid out of
the proceeds from such Asset Disposition;
(3) all distributions and other payments required to be made to
minority interest holders in Restricted Subsidiaries as a result of such
Asset Disposition;
(4) the deduction of appropriate amounts provided by the seller as
a reserve, in accordance with GAAP, against any liabilities associated
with the property or other assets disposed in such Asset Disposition and
retained by the Company or any Restricted Subsidiary after such Asset
Disposition; and
(5) any portion of the purchase price from an Asset Disposition
placed in escrow, whether as a reserve for adjustment of the purchase
price, for satisfaction of indemnities in respect of such Asset
Disposition or otherwise in connection with that Asset Disposition;
provided, however, that upon the termination of such escrow, Net Available
Cash will be increased by any portion of funds in the escrow that are
released to the Company or any Restricted Subsidiary.
"Net Cash Proceeds", with respect to any issuance or sale of Capital
Stock, means the cash proceeds of such issuance or sale net of attorneys' fees,
accountants' fees, underwriters' or placement agents' fees, discounts or
commissions and brokerage, consultant and other fees actually incurred in
connection with such issuance or sale and net of taxes paid or payable as a
result thereof.
"Obligations" means with respect to any Indebtedness all obligations
for principal, premium, interest, penalties, fees, indemnifications,
reimbursements, and other amounts payable pursuant to the documentation
governing such Indebtedness.
20
"Officer" means the Chairman of the Board, the President, any Vice
President, the Treasurer or the Secretary of the Company.
"Officers' Certificate" means a certificate signed by two Officers.
"One Year's Coupon" means, with respect to an optional redemption,
the difference between (1) the scheduled Accreted Value of the Securities on the
date that is one year after the redemption date and (2) the Accreted Value of
the Securities as of the redemption date.
"Opinion of Counsel" means a written opinion from legal counsel who
is reasonably acceptable to the Trustee. The counsel may be an employee of or
counsel to the Company or the Trustee.
"Permitted Business" means the businesses engaged in by the Company
and its Subsidiaries on the date hereof and businesses that are related thereto,
extensions thereof or necessary or desirable to facilitate any such business.
"Permitted Closing Date Payments" means, without duplication, the
following payments and distributions: (1) redemption of the Company's series A
senior subordinated and series B junior subordinated notes due 2011 and (2) the
distribution on or about the Issue Date of up to $65,000,000 to holders of the
Company's Capital Stock.
"Permitted Equipment Lease Financings" means one or more
Sale/Leaseback Transactions relating to equipment and/or leasehold improvements.
"Permitted Holders" means (i) Xxxxxx-Xxxxxx Investments L.P., Caxton
Associates, LLC, Sentinel Capital Partners, II, L.P., Xxxxxxxxx X. Xxxxxx,
Xxxxxx X. Xxxxxxxxx, Xxxxxx X. Xxxxxxxxx, Xxxxxx X. Xxxxxx, Xxx X. Xxxxxx and
Xxxxx X. Xxxxx and any other Person who is a controlled Affiliate of any of the
foregoing and any member of senior management of the Company and (ii) any
Related Party of any of the foregoing.
"Permitted Investment" means an Investment by the Company or any
Restricted Subsidiary in:
(1) the Company, a Restricted Subsidiary or a Person that will,
upon the making of such Investment, become a Restricted Subsidiary;
provided, however, that the primary business of such Restricted Subsidiary
is a Related Business;
(2) another Person if as a result of such Investment such other
Person is merged or consolidated with or into, or transfers or conveys all
or substantially all its assets to, the Company or a Restricted
Subsidiary; provided, however, that such Person's primary business is a
Related Business;
(3) cash and Temporary Cash Investments;
21
(4) receivables owing to the Company or any Restricted Subsidiary
if created or acquired in the ordinary course of business and payable or
dischargeable in accordance with customary trade terms; provided, however,
that such trade terms may include such concessionary trade terms as the
Company or any such Restricted Subsidiary deems reasonable under the
circumstances;
(5) payroll, travel and similar advances to directors, officers
and employees to cover matters that are expected at the time of such
advances ultimately to be treated as expenses for accounting purposes and
that are made in the ordinary course of business;
(6) loans or advances to employees made in the ordinary course of
business of the Company or such Restricted Subsidiary in an aggregate
principal amount not to exceed $2,000,000 at any one time outstanding;
(7) stock, obligations or securities received in settlement of
debts created in the ordinary course of business and owing to the Company
or any Restricted Subsidiary or in satisfaction of judgments;
(8) any Person to the extent such Investment represents the
non-cash portion of the consideration received for an Asset Disposition as
permitted pursuant to Section 4.06;
(9) any Person where such Investment was acquired by the Company
or any of its Restricted Subsidiaries (a) in exchange for any other
Investment or accounts receivable held by the Company or any such
Restricted Subsidiary in connection with or as a result of a bankruptcy,
workout, reorganization or recapitalization of the issuer of such other
Investment or accounts receivable or (b) as a result of a foreclosure by
the Company or any of its Restricted Subsidiaries with respect to any
secured Investment or other transfer of title with respect to any secured
Investment in default;
(10) any Person to the extent such Investment consists of Hedging
Obligations otherwise permitted under Section 4.03; and
(11) additional Investments made after the Issue Date in an
aggregate amount which, together with all other Investments made pursuant
to this clause (11) that are then outstanding, do not exceed the greater
of (a) $25,000,000 and (b) 5% of Total Assets.
"Permitted Liens" means, with respect to any Person:
(1) Liens on property (a) existing at the time of acquisition
thereof or (b) of a Person existing at the time such Person is merged into
or consolidated with or acquired by the Company or any Restricted
Subsidiary of the Company; provided that such Liens were in existence
prior to the contemplation of such acquisition, merger or consolidation
and do not extend to any assets other than
22
those acquired or to those of the Person merged into or consolidated with
the Company or a Restricted Subsidiary of the Company, as the case may be;
(2) banker's Liens, rights of setoff and Liens to secure the
performance of bids, tenders, trade or government contracts (other than
for borrowed money), leases, licenses, statutory obligations, surety or
appeal bonds, performance bonds or other obligations of a like nature
incurred in the ordinary course of business;
(3) Liens to secure Indebtedness (including Capital Lease
Obligations) permitted by Section 4.03(b)(10) or 4.03(b)(11) covering only
the assets acquired, leased, constructed or improved with such
Indebtedness;
(4) Liens existing or entered into on the Issue Date;
(5)(a) carriers', warehousemen's, mechanics', landlords',
materialmen's, repairmen's or other like Liens arising in the ordinary
course of business and (b) Liens for taxes, assessments or governmental
charges or claims, in each case, that are not yet due or delinquent or
that are bonded or that are being contested in good faith and by
appropriate proceedings; provided that any reserve or other appropriate
provision shall be required in conformity with GAAP shall have been made
therefor;
(6) Liens, pledges or deposits in connection with (a) workmen's
compensation, obligations and general liability exposure of the Company
and its Restricted Subsidiaries and (b) unemployment insurance and other
social security legislation, including any Lien securing letters of credit
issued in the ordinary course of business in connection therewith, or to
secure the performance of tenders, statutory obligations, surety and
appeal bonds, bids, leases, government contracts, performance and
return-of-money bonds and other similar obligations (exclusive of
obligations for the payment of borrowed money);
(7) Liens on goods (and the proceeds thereof) and documents of
title and the property covered thereby securing Indebtedness in respect of
commercial letters of credit;
(8) minor survey exceptions, minor encumbrances, easements or
reservations of, or rights of others for, licenses, rights-of-way, sewers,
electric lines, telegraph and telephone lines and other similar purposes,
or zoning or other restrictions as to the use of real property or Liens
incidental to the conduct of business of such Person or to the ownership
of its properties which were not Incurred in connection with Indebtedness
and which do not in the aggregate materially adversely affect the value of
said properties or materially impair their use in the operation of the
business of such Person;
(9) Liens arising by reason of a judgment, decree or court order,
to the extent not otherwise resulting in an Event of Default, and any
Liens that are
23
required to protect or enforce any rights in any administrative,
arbitration or other court proceedings in the ordinary course of business;
(10) Liens securing Hedging Obligations so long as such Hedging
Obligations relate to Indebtedness that is, and is permitted under the
Indenture, secured by a Lien on the same property securing such Hedging
Obligations;
(11) Liens securing Refinancing Indebtedness permitted to be
Incurred under the Indenture where the Indebtedness being Refinanced was
secured by a Lien, or amendments or renewals of Liens that were permitted
to be Incurred; provided, in each case, that such Liens do not extend to
any additional property or asset of the Company or a Restricted Subsidiary
of the Company;
(12) Liens incurred in the ordinary course of business of the
Company or any Restricted Subsidiary of the Company with respect to
obligations that do not exceed $5,000,000 at any one time outstanding and
that (a) are not incurred in connection with the borrowing of money or the
obtaining of advances or credit (other than trade credit in the ordinary
course of business) and (b) do not in the aggregate materially detract
from the value of the property or materially impair the use thereof in the
operation of business by the Company or such Restricted Subsidiary;
(13) Liens securing Indebtedness (including related Obligations)
under the Credit Agreement permitted to be Incurred pursuant to Section
4.03;
(14) Liens on Capital Stock of Buffets securing a Guarantee by the
Company of Indebtedness of a Restricted Subsidiary of the Company;
provided, however, that such Indebtedness is otherwise secured by a Lien
on a significant portion of the assets of Buffets;
(15) Liens securing reimbursement obligations with respect to
commercial letters of credit which encumber documents and other property
relating to such letters of credit and products and proceeds thereof;
(16) Liens encumbering deposits made to secure obligations arising
from statutory, regulatory or contractual requirements of the Company or a
Restricted Subsidiary, including rights of offset and setoff;
(17) any lease or sublease to a third party;
(18) Liens on materials, inventory or consumables and the proceeds
therefrom securing trade payables relating to such materials, inventory or
consumables;
(19) Liens in favor of customs and revenues authorities arising as
a matter of law to secure payment of customs duties in connection with the
importation of goods; and
24
(20) any extension, renewal or replacement, in whole or in part, of
any Lien described in the foregoing clauses (1) through (19) provided that
the Lien so extended, renewed or replaced does not extend to any
additional property or assets.
"Person" means any individual, corporation, partnership, limited
liability company, joint venture, association, joint-stock company, trust,
unincorporated organization, government or any agency or political subdivision
thereof or any other entity.
"Preferred Stock", as applied to the Capital Stock of any Person,
means Capital Stock of any class or classes (however designated) which is
preferred as to the payment of dividends or distributions, or as to the
distribution of assets upon any voluntary or involuntary liquidation or
dissolution of such Person, over shares of Capital Stock of any other class of
such Person.
"principal" of a Security means the principal of the Security plus
the premium, if any, payable on the Security which is due or overdue or is to
become due at the relevant time.
"Pro Forma Cost Savings" means, with respect to any period, the
reduction in costs or other adjustments (including, solely in the case of clause
(3)(i) below, an annualization of EBITDA), as applicable, that are:
(1) directly attributable to an asset acquisition and calculated
on a basis that is consistent with Regulation S-X under the Securities Act
in effect and as applied as of the Issue Date;
(2) implemented by the Company or the business that was the
subject of any such asset acquisition, in each case, within one year prior
to the date of the asset acquisition and that are supportable and
quantifiable by the underlying accounting records of the Company or such
business; or
(3) in connection with any acquisition of restaurants or a Person
engaged in a Related Business, (i) the EBITDA reasonably estimated by the
Company's chief financial officer associated with any such acquired
restaurants that were operated for at least three months but no longer
than twelve months by the business that was the subject of any such
acquisition and (ii) cost savings reasonably estimated by the Company's
chief financial officer and reasonably expected by such chief financial
officer to be implemented within six months of the consummation of such
acquisition directly attributable to closing such acquired restaurants or
to headquarters consolidation, including consolidation of functions;
as if, in the case of each of clauses (1), (2) and (3), all such reductions in
costs or other adjustments had been effected as of the beginning of such period.
25
"Public Equity Offering" means any primary sale of Capital Stock
(other than Disqualified Stock) of the Company to the public pursuant to an
effective registration statement under the Securities Act.
"Refinance" means, in respect of any Indebtedness, to refinance,
extend, renew, refund, repay, prepay, redeem, defease or retire, or to issue
other Indebtedness in exchange or replacement for, in whole or in part, such
indebtedness. "Refinanced" and "Refinancing" shall have correlative meanings.
"Refinancing Indebtedness" means Indebtedness that Refinances any
Indebtedness of the Company or any Restricted Subsidiary existing on the Issue
Date or Incurred in compliance with this Indenture, including Indebtedness that
Refinances Refinancing Indebtedness; provided, however, that:
(1) such Refinancing Indebtedness has a Stated Maturity no earlier
than the Stated Maturity of the Indebtedness being Refinanced;
(2) such Refinancing Indebtedness has an Average Life at the time
such Refinancing Indebtedness is Incurred that is equal to or greater than
the Average Life of the Indebtedness being Refinanced; and
(3) such Refinancing Indebtedness has an aggregate principal
amount (or if Incurred with original issue discount, an aggregate issue
price) that is equal to or less than the aggregate principal amount (or if
Incurred with original issue discount, the aggregate accreted value) then
outstanding or committed (plus (i) accrued interest on the Indebtedness
being Refinanced not to exceed the amount of such accrued interest for one
fiscal quarter and (ii) fees and expenses, including any premium and
defeasance costs) under the Indebtedness being Refinanced;
provided further, however, that Refinancing Indebtedness shall not include (A)
Indebtedness of a Subsidiary that Refinances Indebtedness of the Company or (B)
Indebtedness of the Company or a Restricted Subsidiary that Refinances
Indebtedness of an Unrestricted Subsidiary.
"Refinancing Transactions" means the offering of the Securities, the
amendment and restatement of the Credit Agreement entered into on February 20,
2004 and the repayment of Indebtedness (including the repurchase of a portion of
the Buffets Existing Notes) in connection with such transactions.
"Registration Rights Agreement" means the Registration Rights
Agreement dated the Issue Date, between the Company and Credit Suisse First
Boston LLC and any similar registration rights agreement entered into in
connection with the issuance of Additional Securities.
"Related Business" means any business in which the Company was
engaged on the Issue Date and any business that in the good faith judgment of
the Board
26
of Directors is related, ancillary or complementary thereto, arises therefrom or
is necessary or desirable to facilitate such business.
"Related Party" means (1) any controlling stockholder, controlling
member, general partner, majority owned Subsidiary, or spouse or immediate
family member (in the case of an individual) of any Permitted Holder described
in clause (i) of the definition thereof, (2) any estate, trust, corporation,
partnership or other entity, the beneficiaries, stockholders, partners, owners
or Persons holding a controlling interest of which consist solely of one or more
Permitted Holders described in clause (i) of the definition thereof and/or such
other Persons referred to in the immediately preceding clause (1) or (3) any
executor, administrator, trustee, manager, director or other similar fiduciary
of any Person referred to in the immediately preceding clause (2) acting solely
in such capacity.
"Restricted Payment" with respect to any Person means:
(1) the declaration or payment of any dividends or any other
distributions of any sort in respect of its Capital Stock (including any
payment in connection with any merger or consolidation involving such
Person) or similar payment to the direct or indirect holders of its
Capital Stock (other than dividends or distributions payable solely in its
Capital Stock (other than Disqualified Stock) and dividends or
distributions payable solely to the Company or a Restricted Subsidiary,
and other than pro rata dividends or other distributions made by a
Subsidiary that is not a Wholly Owned Subsidiary to minority stockholders
(or owners of an equivalent interest in the case of a Subsidiary that is
an entity other than a corporation));
(2) the purchase, redemption or other acquisition or retirement
for value of any Capital Stock of the Company held by any Person or of any
Capital Stock of a Restricted Subsidiary held by any Affiliate of the
Company (other than a Restricted Subsidiary), including the exercise of
any option to exchange any Capital Stock (other than into Capital Stock of
the Company that is not Disqualified Stock);
(3) the purchase, repurchase, redemption, defeasance or other
acquisition or retirement for value, prior to scheduled maturity,
scheduled repayment or scheduled sinking fund payment of any Subordinated
Obligations of the Company (other than the purchase, repurchase or other
acquisition of Subordinated Obligations of the Company purchased in
anticipation of satisfying a sinking fund obligation, principal
installment or final maturity, in each case due within one year of the
date of such purchase, repurchase or other acquisition);
(4) the making of any Investment (other than a Permitted
Investment) in any Person; or
27
(5) any other payment of any kind to any Caxton Shareholder, other
than payments to Persons for services or goods on fair terms provided at
fair market value and any payments made under the Caxton Management
Agreement in effect on the date hereof to the extent permitted by Section
4.07.
"Restricted Subsidiary" of any Person means any Subsidiary of such
Person that is not an Unrestricted Subsidiary.
"Restructuring Expenses" means losses, expenses and charges incurred
in connection with restructuring within the Company and/or one or more of its
Restricted Subsidiaries, including in connection with integration of acquired
businesses or Persons, disposition of one or more Subsidiaries or businesses,
exiting of one or more lines of business and relocation or consolidation of
facilities, including severance, lease termination and other
non-ordinary-course, non-operating costs and expenses in connection therewith.
"Revolving Credit Facility" means the revolving credit facility and
letter of credit facility contained in the Credit Agreement and any other
facilities or financing arrangements (including commercial paper facilities,
revolving credit loans, term loans, receivables financing letters of credit, or
any debt securities or other form of debt, convertible debt or exchangeable debt
financing) that Refinance or replace, in whole or in part, any such revolving
credit facility, letter or credit facility or financing arrangement.
"Sale/Leaseback Transaction" means an arrangement relating to
property owned by the Company or a Restricted Subsidiary on the Issue Date or
thereafter acquired by the Company or a Restricted Subsidiary whereby the
Company or a Restricted Subsidiary transfers such property to a Person and the
Company or a Restricted Subsidiary leases it from such Person.
"SEC" means the U.S. Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities" means the Securities issued under this Indenture.
"Senior Indebtedness" means, with respect to any Person:
(1) Indebtedness of such Person, whether outstanding on the Issue
Date or thereafter Incurred; and
(2) accrued and unpaid interest (including interest accruing on or
after the filing of any petition in bankruptcy or for reorganization
relating to such Person whether or not post-filing interest is allowed in
such proceeding) in respect of (A) indebtedness of such Person for money
borrowed and (B) indebtedness evidenced by notes, debentures, bonds or
other similar instruments for the payment of which such Person is
responsible or liable
28
unless, in the case of clauses (1) and (2), in the instrument creating or
evidencing the same or pursuant to which the same is outstanding, it is provided
that such obligations are subordinate in right of payment to the Securities of
such Person, as the case may be; provided, however, that Senior Indebtedness of
such Person shall not include:
(1) any obligation of such Person to any Subsidiary;
(2) any liability for Federal, state, local or other taxes owed or
owing by such Person;
(3) any accounts payable or other liability to trade creditors
arising in the ordinary course of business (including guarantees thereof
or instruments evidencing such liabilities);
(4) any Indebtedness of such Person (and any accrued and unpaid
interest in respect thereof) which is subordinate or junior in right of
payment to any other Indebtedness or other obligation of such Person; or
(5) that portion of any Indebtedness which at the time of
Incurrence is Incurred in violation of this Indenture.
For purposes of clarity, Senior Indebtedness shall include the
Securities.
"Significant Subsidiary" means any Restricted Subsidiary that would
be a "Significant Subsidiary" of the Company within the meaning of Rule 1-02
under Regulation S-X promulgated by the SEC.
"Stated Maturity" means, with respect to any security, the date
specified in such security as the fixed date on which the final payment of
principal of such security is due and payable, including pursuant to any
mandatory redemption provision (but excluding any provision providing for the
repurchase of such security at the option of the holder thereof upon the
happening of any contingency unless such contingency has occurred).
"Subordinated Obligation" means, with respect to a Person, any
Indebtedness of such Person (whether outstanding on the Issue Date or thereafter
Incurred) which is subordinate or junior in right of payment to the Securities
or a Subsidiary Guaranty of such Person, as the case may be, pursuant to a
written agreement to that effect. For avoidance of doubt, the refinancing,
purchase, repurchase, redemption, defeasance or other acquisition or retirement
for value of Indebtedness of a Restricted Subsidiary of the Company at a time
that the Company is Guaranteeing such Indebtedness (and such Guarantee is a
Subordinated Obligation of the Company) shall not constitute a refinancing,
purchase, repurchase, redemption, defeasance or other acquisition or retirement
for value of a Subordinated Obligation of the Company so long as the Company is
not paying on such Guarantee.
29
"Subsidiary" means, with respect to any Person, any corporation,
association, partnership or other business entity of which more than 50% of the
total voting power of shares of Voting Stock is at the time owned or controlled,
directly or indirectly, by (1) such Person, (2) such Person and one or more
Subsidiaries of such Person or (3) one or more Subsidiaries of such Person.
"Subsidiary Guarantor" means each Subsidiary of the Company that
hereafter guarantees the Securities pursuant to the terms of this Indenture.
"Temporary Cash Investments" means any of the following:
(1) any investment in direct obligations of the United States of
America or any agency thereof or obligations guaranteed by the United
States of America or any agency thereof;
(2) investments in time deposit accounts, certificates of deposit
and money market deposits maturing within one year of the date of
acquisition thereof issued by a bank or trust company which is organized
under the laws of the United States of America, any state thereof or any
foreign country recognized by the United States of America, and which bank
or trust company has capital, surplus and undivided profits aggregating in
excess of $50,000,000 (or the foreign currency equivalent thereof) and has
outstanding debt that is rated "A" (or such similar equivalent rating) or
higher by at least one nationally recognized statistical rating
organization (as defined in Rule 436 under the Securities Act) or any
money-market fund sponsored by a registered broker dealer or mutual fund
distributor;
(3) repurchase obligations with a term of not more than 30 days
for underlying securities of the types described in clause (1) above
entered into with a bank meeting the qualifications described in clause
(2) above;
(4) investments in commercial paper, maturing not more than 90
days after the date of acquisition, issued by a person (other than an
Affiliate of the Company) organized and in existence under the laws of the
United States of America or any foreign country recognized by the United
States of America with a rating at the time as of which any investment
therein is made of "P-1" (or higher) according to Xxxxx'x Investors
Service, Inc. or "A-1" (or higher) according to Standard and Poor's, a
division of the XxXxxx-Xxxx Companies; and
(5) investments in securities with maturities of six months or
less from the date of acquisition issued or fully guaranteed by any state,
commonwealth or territory of the United States of America, or by any
political subdivision or taxing authority thereof, and rated at least "A"
by Standard & Poor's, a division of the XxXxxx-Xxxx Companies, or "A" by
Xxxxx'x Investors Service, Inc.
30
"Term Loan Facility" means the term loan facility initially
contained in the Credit Agreement and any other facility or financing
arrangement (including commercial paper facilities, revolving credit loans, term
loans, receivables financing, letters of credit, or any debt securities or other
form of debt, convertible debt or exchangeable debt financing) that Refinances
or replaces, in whole or in part, any such facility or financing arrangement.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. Sections
77aaa-77bbbb) as in effect on the date of this Indenture.
"Total Assets" means the total consolidated assets of the Company
and its Restricted Subsidiaries, as set forth on the Company's consolidated
balance sheet for the most recently ended fiscal quarter for which internal
financial statements are available.
"Trustee" means the party named as such in this Indenture until a
successor replaces it and, thereafter, means the successor.
"Trust Officer" means the Chairman of the Board, the President or
any other officer or assistant officer of the Trustee assigned by the Trustee to
administer its corporate trust matters.
"Uniform Commercial Code" means the New York Uniform Commercial Code
as in effect from time to time.
"Unrestricted Subsidiary" means:
(1) any Subsidiary of the Company that at the time of
determination shall be designated an Unrestricted Subsidiary by the Board
of Directors of the Company in the manner provided below; and
(2) any Subsidiary of an Unrestricted Subsidiary.
The Board of Directors of the Company may designate any Subsidiary of the
Company (including any newly acquired or newly formed Subsidiary) to be an
Unrestricted Subsidiary unless such Subsidiary or any of its Subsidiaries owns
any Capital Stock or Indebtedness of, or holds any Lien on any property of, the
Company or any other Subsidiary of the Company that is not a Subsidiary of the
Subsidiary to be so designated; provided, however, that (x) either (A) the
Subsidiary to be so designated has total assets of $1,000 or less or (B) if such
Subsidiary has assets greater than $1,000, such designation would be permitted
under Section 4.04; (y) any Guarantee by the Company or any Restricted
Subsidiary of any Indebtedness of the Subsidiary being so designated shall be
deemed an "Incurrence" of such Indebtedness by the Company or such Restricted
Subsidiary at the time of such designation; and (z) if applicable, the
Incurrence of Indebtedness referred to in clause (y) of this provision would be
permitted under Section 4.03. The Board of Directors of the Company may
designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided,
however, that immediately after giving effect to such designation (A) (i) the
Consolidated Coverage Ratio for the
31
Company and its Restricted Subsidiaries exceeds 2.0 to 1 (or, if such Subsidiary
will be a Restricted Subsidiary of Buffets, Buffets could Incur $1.00 of
additional Indebtedness under Section 4.03(a)) or (ii) the Consolidated Coverage
Ratio for the Company and its Restricted Subsidiaries would be greater than the
Consolidated Coverage Ratio for the Company and its Restricted Subsidiaries
immediately before giving effect to such designation and (B) no Default shall
have occurred and be continuing. Any such designation by the Board of Directors
of the Company shall be evidenced to the Trustee by promptly filing with the
Trustee a copy of the resolution of the Board of Directors of the Company giving
effect to such designation and an Officers' Certificate certifying that such
designation complied with the foregoing provisions.
"U.S. Government Obligations" means direct obligations (or
certificates representing an ownership interest in such obligations) of the
United States of America (including any agency or instrumentality thereof) for
the payment of which the full faith and credit of the United States of America
is pledged and which are not callable or redeemable at the issuer's option.
"Voting Stock" of a Person means all classes of Capital Stock or
other interests (including partnership interests) of such Person then
outstanding and normally entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or trustees thereof.
"Wholly Owned Subsidiary" means a Restricted Subsidiary all the
Capital Stock of which (other than directors' qualifying shares) is owned by the
Company or one or more Wholly Owned Subsidiaries.
SECTION 1.02 Other Definitions.
Defined in
Term Section
----------------------------------------------------------------------- ----------
"Appendix"............................................................. 2.01
"Affiliate Transaction"................................................ 4.07(a)
"Bankruptcy Law"....................................................... 6.01
"Change of Control Offer".............................................. 4.10(b)
"covenant defeasance option"........................................... 8.01(b)
"Custodian"............................................................ 6.01
"Event of Default"..................................................... 6.01
"IPO Offer"............................................................ 4.11(a)
"IPO Offer Amount"..................................................... 4.11(c)(2)
"IPO Offer Period"..................................................... 4.11(c)(2)
"IPO Purchase Date".................................................... 4.11(c)(1)
"legal defeasance option".............................................. 8.01(b)
"Legal Holiday"........................................................ 10.08
"Offer"................................................................ 4.06(b)
"Offer Amount"......................................................... 4.06(c)(2)
32
"Offer Period"......................................................... 4.06(c)(2)
"Paying Agent"......................................................... 2.03
"Purchase Date"........................................................ 4.06(c)(1)
"Registrar"............................................................ 2.03
"Semi-Annual Accrual".................................................. 2.01
"Specified Date"....................................................... 2.01
"Successor Company".................................................... 5.01
SECTION 1.03 Incorporation by Reference of Trust Indenture Act. This
Indenture is subject to the mandatory provisions of the TIA which are
incorporated by reference in and made a part of this Indenture. The following
TIA terms have the following meanings:
"Commission" means the SEC;
"indenture securities" means the Securities;
"indenture security holder" means a Securityholder;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the Trustee;
and
"obligor" on the indenture securities means the Company and any
other obligor on the Securities.
All other TIA terms used in this Indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by SEC rule have the
meanings assigned to them by such definitions.
SECTION 1.04 Rules of Construction. Unless the context otherwise
requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) "including" means including without limitation;
(5) words in the singular include the plural and words in the
plural include the singular;
33
(6) unsecured Indebtedness shall not be deemed to be subordinate
or junior to Secured Indebtedness merely by virtue of its nature as
unsecured Indebtedness;
(7) Indebtedness secured by junior liens shall not be deemed to be
subordinated or junior to other Indebtedness merely because it is secured
by junior liens;
(8) the principal amount of any noninterest bearing or other
discount security at any date shall be the principal amount thereof that
would be shown on a balance sheet of the issuer dated such date prepared
in accordance with GAAP;
(9) interest payable on the Securities shall include additional
interest, if any, required to be paid on the Securities under the
Registration Rights Agreement;
(10) the principal amount of any Preferred Stock shall be (i) the
maximum liquidation value of such Preferred Stock or (ii) the maximum
mandatory redemption or mandatory repurchase price with respect to such
Preferred Stock, whichever is greater; and
(11) all references to the date the Securities were originally
issued shall refer to the Issue Date.
ARTICLE II
The Securities
SECTION 2.01 Form and Dating. Provisions relating to the Initial
Securities, the Private Exchange Securities and the Exchange Securities are set
forth in the Rule 144A/Regulation S/IAI Appendix attached hereto (the
"Appendix") which is hereby incorporated in, and expressly made part of, this
Indenture. The Initial Securities and the Trustee's certificate of
authentication shall be substantially in the form of Exhibit A to the Appendix
which is hereby incorporated in, and expressly made a part of, this Indenture.
The Exchange Securities, the Private Exchange Securities and the Trustee's
certificate of authentication shall be substantially in the form of Exhibit B,
which is hereby incorporated in and expressly made a part of this Indenture. The
Securities may have notations, legends or endorsements required by law, stock
exchange rule, agreements to which the Company is subject, if any, or usage
(provided that any such notation, legend or endorsement is in a form acceptable
to the Company). Each Security shall be dated the date of its authentication.
The terms of the Securities set forth in the Appendix and Exhibit B are part of
the terms of this Indenture.
SECTION 2.02 Execution and Authentication. Two Officers shall sign
the Securities for the Company by manual or facsimile signature.
34
If an Officer whose signature is on a Security no longer holds that
office at the time the Trustee authenticates the Security, the Security shall be
valid nevertheless.
A Security shall not be valid until an authorized signatory of the
Trustee manually signs the certificate of authentication on the Security. The
signature shall be conclusive evidence that the Security has been authenticated
under this Indenture.
On the Issue Date, the Trustee shall authenticate and deliver
$132,000,000 principal amount at maturity of 13.875% Senior Discount Notes due
2010 and, at any time and from time to time thereafter, the Trustee shall
authenticate and deliver Securities for original issue in an aggregate principal
amount specified in such order, in each case upon a written order of the Company
signed by two Officers or by an Officer and either an Assistant Treasurer or an
Assistant Secretary of the Company. Such order shall specify the amount of the
Securities to be authenticated and the date on which the original issue of
Securities is to be authenticated and, in the case of an issuance of Additional
Securities pursuant to Section 2.13 after the Issue Date, shall certify that
such issuance is in compliance with Section 4.03.
The Trustee may appoint an authenticating agent reasonably
acceptable to the Company to authenticate the Securities. Unless limited by the
terms of such appointment, an authenticating agent may authenticate Securities
whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent. An
authenticating agent has the same rights as any Registrar, Paying Agent or agent
for service of notices and demands.
SECTION 2.03 Registrar and Paying Agent. The Company shall maintain
an office or agency where Securities may be presented for registration of
transfer or for exchange (the "Registrar") and an office or agency where
Securities may be presented for payment (the "Paying Agent"). The Registrar
shall keep a register of the Securities and of their transfer and exchange. The
Company may have one or more co-registrars and one or more additional paying
agents. The term "Paying Agent" includes any additional paying agent.
The Company shall enter into an appropriate agency agreement with
any Registrar, Paying Agent or co-registrar not a party to this Indenture, which
shall incorporate the terms of the TIA. The agreement shall implement the
provisions of this Indenture that relate to such agent. The Company shall notify
the Trustee of the name and address of any such agent. If the Company fails to
maintain a Registrar or Paying Agent, the Trustee shall act as such and shall be
entitled to appropriate compensation therefor pursuant to Section 7.07. The
Company or any Wholly Owned Subsidiary incorporated or organized within the
United States of America may act as Paying Agent, Registrar, co-registrar or
transfer agent.
The Company initially appoints the Trustee as Registrar and Paying
Agent in connection with the Securities.
35
SECTION 2.04 Paying Agent To Hold Money in Trust. On or prior to
11:00 a.m. New York time on each due date of the principal and interest on any
Security, the Company shall deposit with the Paying Agent a sum sufficient to
pay such principal and interest when so becoming due. The Company shall require
each Paying Agent (other than the Trustee) to agree in writing that the Paying
Agent shall hold in trust for the benefit of Securityholders or the Trustee all
money held by the Paying Agent for the payment of principal of or interest on
the Securities and shall notify the Trustee of any default by the Company in
making any such payment. If the Company or a Subsidiary acts as Paying Agent, it
shall segregate the money held by it as Paying Agent and hold it as a separate
trust fund. The Company at any time may require a Paying Agent to pay all money
held by it to the Trustee and to account for any funds disbursed by the Paying
Agent. Upon complying with this Section 2.04, the Paying Agent shall have no
further liability for the money delivered to the Trustee.
SECTION 2.05 Securityholder Lists. The Trustee shall preserve in as
current a form as is reasonably practicable the most recent list available to it
of the names and addresses of Securityholders. If the Trustee is not the
Registrar, the Company shall furnish to the Trustee, in writing at least five
Business Days before each interest payment date and at such other times as the
Trustee may request in writing, a list in such form and as of such date as the
Trustee may reasonably require of the names and addresses of Securityholders.
SECTION 2.06 Transfer and Exchange. The Securities shall be issued
in registered form and shall be transferable only upon the surrender of a
Security for registration of transfer. When a Security is presented to the
Registrar or a co-registrar with a request to register a transfer, the Registrar
shall register the transfer as requested if the requirements of this Indenture
and Section 8-401(1) of the Uniform Commercial Code are met. When Securities are
presented to the Registrar or a co-registrar with a request to exchange them for
an equal principal amount at maturity of Securities of other denominations, the
Registrar shall make the exchange as requested if the same requirements are met.
The Company may require payment of a sum sufficient to cover any tax, assessment
or other governmental charge payable in connection with certain transfers and
exchanges.
SECTION 2.07 Replacement Securities. If a mutilated Security is
surrendered to the Registrar or if the Holder of a Security claims that the
Security has been lost, destroyed or wrongfully taken, the Company shall issue
and the Trustee shall authenticate a replacement Security if the requirements of
Section 8-405 of the Uniform Commercial Code are met and the Holder satisfies
any other reasonable requirements of the Trustee. If required by the Trustee or
the Company, such Holder shall furnish an indemnity bond sufficient in the
judgment of the Company and the Trustee to protect the Company, the Trustee, the
Paying Agent, the Registrar and any co-registrar from any loss which any of them
may suffer if a Security is replaced. The Company and the Trustee may charge the
Holder for their expenses in replacing a Security.
Every replacement Security is an additional Obligation of the
Company.
36
SECTION 2.08 Outstanding Securities. Securities outstanding at any
time are all Securities authenticated by the Trustee except for those canceled
by it, those delivered to it for cancellation and those described in this
Section as not outstanding. A Security does not cease to be outstanding because
the Company or an Affiliate of the Company holds the Security.
If a Security is replaced pursuant to Section 2.07, it ceases to be
outstanding unless the Trustee and the Company receive proof satisfactory to
them that the replaced Security is held by a bona fide purchaser.
If the Paying Agent (other than the Company or any Affiliate of the
Company) segregates and holds in trust, in accordance with this Indenture, on a
redemption date or maturity date money sufficient to pay all principal and
interest payable on that date with respect to the Securities (or portions
thereof) to be redeemed or maturing, as the case may be, and the Paying Agent is
not prohibited from paying such money to the Securityholders on that date
pursuant to the terms of this Indenture, then on and after that date such
Securities (or portions thereof) cease to be outstanding and interest on them
ceases to accrue.
SECTION 2.09 Temporary Securities. Until definitive Securities are
ready for delivery, the Company may prepare and the Trustee shall authenticate
temporary Securities. Temporary Securities shall be substantially in the form of
definitive Securities but may have variations that the Company considers
appropriate for temporary Securities. Without unreasonable delay, the Company
shall prepare and the Trustee shall authenticate definitive Securities and
deliver them, without charge to the Holders, in exchange for temporary
Securities.
SECTION 2.10 Cancellation. The Company at any time may deliver
Securities to the Trustee for cancellation. The Registrar and the Paying Agent
shall forward to the Trustee any Securities surrendered to them for registration
of transfer, exchange or payment. The Trustee and no one else shall cancel and
destroy (subject to the record retention requirements of the Exchange Act) all
Securities surrendered for registration of transfer, exchange, payment or
cancellation and deliver a certificate of such destruction to the Company unless
the Company directs the Trustee to deliver canceled Securities to the Company.
The Company may not issue new Securities to replace Securities it has redeemed,
paid or delivered to the Trustee for cancellation.
SECTION 2.11 Defaulted Interest. If the Company defaults in a
payment of interest on the Securities, the Company shall pay defaulted interest
(plus interest on such defaulted interest to the extent lawful) in any lawful
manner. The Company may pay the defaulted interest to the persons who are
Securityholders on a subsequent special record date. The Company shall fix or
cause to be fixed any such special record date and payment date to the
reasonable satisfaction of the Trustee and shall promptly mail to each
Securityholder a notice that states the special record date, the payment date
and the amount of defaulted interest to be paid.
37
SECTION 2.12 CUSIP Numbers. The Company in issuing the Securities
may use "CUSIP" numbers assigned by the Committee on Uniform Securities
Identification Procedures ("CUSIP") and corresponding International Securities
Identification Numbers ("ISIN") (if then generally in use) and, if so, the
Trustee shall use "CUSIP" numbers in notices of redemption as a convenience to
Holders; provided, however, that any such notice may state that no
representation is made as to the correctness of such numbers either as printed
on the Securities or as contained in any notice of a redemption and that
reliance may be placed only on the other identification numbers printed on the
Securities, and any such redemption shall not be affected by any defect in or
omission of such numbers. The Company shall promptly notify the Trustee of any
change in the CUSIP or ISIN numbers.
SECTION 2.13 Issuance of Additional Securities. The Company shall be
entitled, subject to its compliance with Sections 4.03 and 4.14, to issue
Additional Securities under this Indenture which shall have identical terms as
the Initial Securities issued on the Issue Date, other than with respect to the
date of issuance, issue price and first semi-annual accretion or interest
payment date; provided that such Additional Securities are part of the same
issue as the Initial Securities for U.S. Federal income tax purposes. The
Initial Securities issued on the Issue Date, any Additional Securities and all
Exchange Securities or Private Exchange Securities issued in exchange therefor
shall be treated as a single class for all purposes under this Indenture,
including waivers, amendments, redemptions and offers to purchase.
With respect to any Additional Securities, the Company shall set
forth in a resolution of the Board of Directors and an Officers' Certificate, a
copy of each which shall be delivered to the Trustee, the following information:
(1) the aggregate principal amount at maturity of such Additional
Securities to be authenticated and delivered pursuant to this Indenture;
(2) the issue price, the issue date, the first semi-annual
accretion or interest payment date and the CUSIP number and corresponding
ISIN of such Additional Securities; provided, however, that no Additional
Securities may be issued unless such Additional Securities are fungible in
all respects for U.S. Federal income tax purposes with the Securities then
outstanding; and
(3) whether such Additional Securities shall be Transfer
Restricted Securities and issued in the form of Initial Securities as set
forth in the Appendix to this Indenture or shall be issued in the form of
Exchange Securities as set forth in Exhibit B.
SECTION 2.14 Tax Treatment. (a) The parties hereto agree, and each
Holder and each beneficial owner of a Security or a beneficial interest in a
Security by its purchase or acceptance thereof shall be deemed to agree, (i) to
treat, for United States federal income tax purposes, the Securities as debt
instruments that are subject to Treasury Regulation Section 1.1275-4(b); (ii) to
accrue interest with respect to
38
outstanding Securities as original issue discount for United States federal
income tax purposes according to the "noncontingent bond method," set forth in
Section 1.1275-4(b) of the Treasury Regulations, using the comparable yield set
forth in Schedule 2.14 to this Indenture compounded semiannually and the
projected payment schedule attached as Schedule 2.14 to this Indenture; and
(iii) to treat, for United States federal income tax purposes, the possibility
that the Company will pay amounts in excess of stated interest or principal with
respect to the Securities (other than amounts paid with respect to (x) Optional
Redemption in connection with a Public Equity Offering, as described more fully
in Section 5 of Exhibit A hereto, or (y) a Put in connection with a Public
Equity Offering, as described more fully in Section 7 of Exhibit A hereto) as a
contingency that is "remote" or "incidental" within the meaning of Treasury
Regulation Section 1.1275-2(h).
(b) The Company acknowledges and agrees, and each Holder and each
beneficial owner of a Security or a beneficial interest in a Security by its
purchase or acceptance thereof shall be deemed to agree, that (i) the comparable
yield means the annual yield the Company would pay, as of the date of this
Indenture for United States federal income tax purposes, on a noncontingent,
fixed-rate debt instrument with terms and conditions otherwise similar to those
of the Securities; (ii) the schedule of projected payments is not determined for
any purpose other than for the determination of interest accruals and
adjustments thereof in respect of the Securities for United States federal
income tax purposes under Treasury Regulation Section 1.1275-4(b); and (iii) the
comparable yield and the schedule of projected payments do not constitute a
projection or representation regarding the amounts payable on the Securities.
(c) The Company shall provide to each Holder and each beneficial
owner of a Security or a beneficial interest in a Security, upon the written
request of such Holder or beneficial owner of a Security or beneficial interest
in a Security, the projected payment schedule.
ARTICLE III
Redemption
SECTION 3.01 Notices to Trustee. If the Company elects to redeem
Securities pursuant to paragraph 5 of the Securities, it shall notify the
Trustee in writing of the redemption date, the principal amount of Securities to
be redeemed and the paragraph of the Securities pursuant to which the redemption
will occur.
The Company shall give each notice to the Trustee provided for in
this Section 3.01 at least 30 days before the redemption date unless the Trustee
consents to a shorter period. Such notice shall be accompanied by an Officers'
Certificate and an Opinion of Counsel from the Company to the effect that such
redemption will comply with the conditions herein.
39
SECTION 3.02 Selection of Securities to be Redeemed. If fewer than
all the Securities are to be redeemed, the Trustee shall select the Securities
to be redeemed on a pro rata basis, to the extent practicable. The Trustee shall
make the selection from outstanding Securities not previously called for
redemption. The Trustee may select for redemption portions of the principal of
Securities that have denominations larger than $1,000. Securities and portions
of them the Trustee selects shall be in principal amounts at maturity of $1,000
or a whole multiple of $1,000. Provisions of this Indenture that apply to
Securities called for redemption also apply to portions of Securities called for
redemption. The Trustee shall notify the Company promptly of the Securities or
portions of Securities to be redeemed.
SECTION 3.03 Notice of Redemption. At least 30 days but not more
than 60 days before a date for redemption of Securities, the Company shall mail
a notice of redemption by first-class mail to each Holder of Securities to be
redeemed at such Holder's registered address.
The notice shall identify the Securities to be redeemed and shall
state:
(1) the redemption date;
(2) the redemption price;
(3) the name and address of the Paying Agent;
(4) that Securities called for redemption must be surrendered to
the Paying Agent to collect the redemption price;
(5) if fewer than all the outstanding Securities are to be
redeemed, the identification and principal amounts at maturity of the
particular Securities to be redeemed;
(6) that, unless the Company defaults in making such redemption
payment or the Paying Agent is prohibited from making such payment
pursuant to the terms of this Indenture, interest on Securities (or
portion thereof) called for redemption ceases to accrue on and after the
redemption date; and
(7) that no representation is made as to the correctness or
accuracy of the CUSIP number, if any, listed in such notice or printed on
the Securities.
At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at the Company's expense. In such event,
the Company shall provide the Trustee with the information required by this
Section 3.03.
SECTION 3.04 Effect of Notice of Redemption. Once notice of
redemption is mailed, Securities called for redemption become due and payable on
the redemption date and at the redemption price stated in the notice. Upon
surrender to the Paying Agent, such Securities shall be paid at the redemption
price stated in the notice,
40
plus accrued interest to the redemption date (subject to the right of Holders of
record on the relevant record date to receive interest due on the related
interest payment date). Failure to give notice or any defect in the notice to
any Holder shall not affect the validity of the notice to any other Holder.
SECTION 3.05 Deposit of Redemption Price. On or prior to 11:00 a.m.
New York time on the redemption date, the Company shall deposit with the Paying
Agent (or, if the Company or a Subsidiary is the Paying Agent, shall segregate
and hold in trust) money sufficient to pay the redemption price of and accrued
interest on all Securities to be redeemed on that date other than Securities or
portions of Securities called for redemption which have been delivered by the
Company to the Trustee for cancellation.
SECTION 3.06 Securities Redeemed in Part. Upon surrender of a
Security that is redeemed in part, the Company shall execute and the Trustee
shall authenticate for the Holder (at the Company's expense) a new Security
equal in principal amount at maturity to the unredeemed portion of the Security
surrendered.
ARTICLE IV
Covenants
SECTION 4.01 Payment of Securities. The Company shall promptly pay
the principal of and interest on the Securities on the dates and in the manner
provided in the Securities and in this Indenture. Principal and interest shall
be considered paid on the date due if on such date the Trustee or the Paying
Agent (other than the Company or any Affiliate of the Company) holds in
accordance with this Indenture money designated for and sufficient to pay all
principal and interest then due and the Trustee or the Paying Agent, as the case
may be, is not prohibited from paying such money to the Securityholders on that
date pursuant to the terms of this Indenture. If the Company or any Affiliate of
the Company acts as Paying Agent, principal and interest shall be considered
paid on the date due only if paid to the Securityholders.
The Company shall pay interest on overdue principal at the rate
specified therefor in the Securities, and it shall pay interest on overdue
installments of interest at the same rate to the extent lawful.
SECTION 4.02 SEC Reports. Notwithstanding that the Company may not
be subject to the reporting requirements of Section 13 or 15(d) of the Exchange
Act, the Company shall, after effectiveness of the Exchange Offer Registration
Statement (as defined in the Registration Rights Agreement) or the Shelf
Registration Statement (as defined in the Registration Rights Agreement), as the
case may be, file with the SEC and, in any event, provide the Trustee and
Securityholders with such annual reports and such information, documents and
other reports as are specified in Sections 13 and 15(d) of the Exchange Act and
applicable to a U.S. corporation subject to such Sections, such
41
information, documents and other reports to be so filed and provided at the
times specified for the filing of such information, documents and reports under
such Sections.
In addition, at all times on or after the date hereof and prior to
the effectiveness of such registration statements, the Company shall supply to
the Trustee and each Securityholder copies of such reports and other information
within 15 days after the date it would have been required to file such reports
or other information with the SEC had it been subject to such Sections;
provided, however, that the Company will be deemed to have complied with such
obligation following the filing of the Exchange Offer Registration Statement and
prior to the effectiveness thereof, if the Exchange Offer Registration Statement
includes the information specified in the first paragraph of this Section 4.02
at the time the Company would otherwise be required to supply such information
to the Trustee. In addition at all times on or after the date hereof, the
Company shall furnish to the Holders of the Securities and to prospective
investors, upon the requests of such Holders, any information required to be
delivered pursuant to Rule 144A(d)(4) under the Securities Act so long as the
Securities are not freely transferable under the Securities Act. The Company
also shall comply with the other provisions of TIA Section 314(a).
SECTION 4.03 Limitation on Indebtedness. (a) The Company shall not,
and shall not permit any Restricted Subsidiary to, Incur, directly or
indirectly, any Indebtedness; provided, however, that Buffets and each of its
Restricted Subsidiaries will be entitled to Incur Indebtedness if, on the date
of such Incurrence after giving effect thereto on a pro forma basis, no Default
has occurred and is continuing and the Consolidated Coverage Ratio of Buffets
exceeds 2.0 to 1.
(b) Notwithstanding the foregoing paragraph (a), the Company and
the Restricted Subsidiaries shall be entitled to Incur any or all of the
following Indebtedness:
(1) Indebtedness Incurred by the Company and its Restricted
Subsidiaries pursuant to any Revolving Credit Facility; provided, however,
that, immediately after giving effect to any such Incurrence, the
aggregate principal amount of all Indebtedness Incurred under this clause
(1) and then outstanding does not exceed the greater of (A) $80,000,000
and (B) 5% of the consolidated revenue of the Company and its Restricted
Subsidiaries for the most recent four consecutive fiscal quarters for
which internal financial statements are available prior to the date such
Indebtedness was Incurred;
(2) Indebtedness Incurred by the Company and its Restricted
Subsidiaries pursuant to any Term Loan Facility; provided, however, that,
after giving effect to any such Incurrence, the aggregate principal amount
of all Indebtedness Incurred under this clause (2) and then outstanding
does not exceed the greater of (A) $230,000,000 less the sum of all
principal payments with respect to such Indebtedness pursuant to Section
4.06(a)(3)(A) and (B) 25% of the consolidated revenue of the Company and
its Restricted Subsidiaries for the most
42
recent four consecutive fiscal quarters for which internal financial
statements are available prior to the date such Indebtedness was Incurred;
(3) Indebtedness owed to and held by the Company or a Restricted
Subsidiary; provided, however, that (A) any subsequent issuance or
transfer of any Capital Stock which results in any such Restricted
Subsidiary ceasing to be a Restricted Subsidiary or any subsequent
transfer of such Indebtedness (other than to the Company or a Restricted
Subsidiary) shall be deemed, in each case, to constitute the Incurrence of
such Indebtedness by the obligor thereon and (B) if the Company is the
obligor on such Indebtedness owed to a Restricted Subsidiary, such
Indebtedness is expressly subordinated to the prior payment in full in
cash of all obligations with respect to the Securities;
(4) the Securities and the Exchange Securities (other than any
Additional Securities);
(5) Indebtedness outstanding on the Issue Date (other than
Indebtedness described in clause (1), (2), (3) or (4) of this Section
4.03(b));
(6) Refinancing Indebtedness in respect of Indebtedness Incurred
pursuant to Section 4.03(a) or pursuant to clause (4) or (5) of this
Section 4.03(b) or this clause (6);
(7) Hedging Obligations of any Restricted Subsidiary entered into
not for the purpose of speculation;
(8) obligations in respect of one or more standby letters of
credit, performance, bid and surety bonds, workers' compensation claims,
self-insurance claims, self-insurance obligations, bankers' acceptances
and completion guarantees provided by any Restricted Subsidiary in the
ordinary course of business;
(9) Indebtedness arising from the honoring by a bank or other
financial institution of a check, draft or similar instrument drawn
against insufficient funds in the ordinary course of business; provided,
however, that such Indebtedness is extinguished within three Business Days
of its Incurrence;
(10) Indebtedness (including Capital Lease Obligations) Incurred by
any Restricted Subsidiary to finance the purchase, lease, construction or
improvement of property (real or personal) or equipment (whether through
the direct purchase of assets or the Capital Stock of any Person owning
such assets) within 180 days after such purchase, lease or improvement in
an aggregate principal amount which, when added together with the amount
of Indebtedness previously Incurred pursuant to this clause (10) and then
outstanding (including any Refinancing Indebtedness with respect thereto)
does not exceed $25,000,000;
43
(11) Indebtedness of any Restricted Subsidiary attributable to
Permitted Equipment Lease Financings in an aggregate principal amount
which, when added together with the amount of Indebtedness Incurred
pursuant to this clause (11) and then outstanding (including any
Refinancing Indebtedness with respect thereto) does not exceed
$25,000,000; provided, however, that the Net Available Cash from such
Permitted Equipment Lease Financings is applied to reduce Indebtedness as
required by Section 4.06;
(12) the Guarantee by the Company of Indebtedness of any Restricted
Subsidiary permitted to be Incurred under this Indenture or the Guarantee
or co-issuance by any Restricted Subsidiary of any Indebtedness of the
Company or of any Restricted Subsidiary otherwise permitted to be Incurred
pursuant to this Indenture;
(13) Indebtedness of the Company or any Restricted Subsidiary
consisting of indemnification, adjustment of purchase price, earn-out or
similar obligations, in each case incurred in connection with the
acquisition or disposition of any assets, including shares of Capital
Stock or divisions or lines of business, of the Company or any Restricted
Subsidiary;
(14) Acquired Indebtedness, and any Refinancing Indebtedness
thereof, which is in an aggregate amount not to exceed $20,000,000 at any
time outstanding; and
(15) Indebtedness of any Restricted Subsidiary in an aggregate
principal amount which, when taken together with all other Indebtedness of
the Restricted Subsidiaries outstanding on the date of such Incurrence
(other than Indebtedness permitted by clauses (1) through (14) of this
Section 4.03(b) or Section 4.03(a)), does not exceed $25,000,000.
(c) Notwithstanding the foregoing, the Company shall not Incur any
Indebtedness pursuant to Section 4.03(b) if the proceeds thereof are used,
directly or indirectly, to Refinance any Subordinated Obligations of the Company
unless such Indebtedness shall be subordinated to the Securities to at least the
same extent as such Subordinated Obligations.
(d) The Company shall not issue Additional Securities unless the
Holders of at least a majority in principal amount at maturity of the Securities
then outstanding have given their written consent to such issuance.
(e) For purposes of determining compliance with this Section 4.03,
(1) in the event that an item of Indebtedness meets the criteria of more than
one of the types of Indebtedness described herein, the Company, in its sole
discretion, shall classify such item of Indebtedness at the time of Incurrence
and only be required to include the amount and type of such Indebtedness in one
of the above clauses and (2) the Company shall be entitled at the time of such
Incurrence to divide and classify an item of
44
Indebtedness in more than one of the types of Indebtedness described herein. In
addition, from time to time the Company may reclassify any Indebtedness Incurred
pursuant to Section 4.03 such that it will be deemed as having been Incurred
under Section 4.03(a) or another clause in Section 4.03(b), so long as such
Indebtedness could have been Incurred under Section 4.03(a) or such new clause
had Section 4.03(a) or such clause been available to the Company at the time of
the original Incurrence of such Indebtedness. Indebtedness under the Revolving
Credit Facility under the Credit Agreement outstanding on the Issue Date shall
be deemed to have been Incurred on the Issue Date in reliance on Section
4.03(b)(1). Indebtedness under the Term Loan Facility under the Credit Agreement
outstanding on the Issue Date shall be deemed to have been Incurred on the Issue
Date in reliance on Section 4.03(b)(2).
SECTION 4.04 Limitation on Restricted Payments. (a) The Company
shall not, and shall not permit any Restricted Subsidiary, directly or
indirectly, to make a Restricted Payment if at the time the Company or such
Restricted Subsidiary makes such Restricted Payment:
(1) a Default shall have occurred and be continuing (or would
result therefrom);
(2) the Consolidated Coverage Ratio for the Company exceeds 2.0 to
1 (or in the case of Restricted Payments described in clause (4) of the
definition thereof made by Buffets, Buffets is not entitled to Incur an
additional $1.00 of Indebtedness under Section 4.03(a)); or
(3) the aggregate amount of such Restricted Payment and all other
Restricted Payments since the Issue Date would exceed the sum of (without
duplication):
(A) with respect to any Restricted Payment described in
clause (3) or (4) of the definition thereof only, 50% of the
Consolidated Net Income accrued during the period (treated as one
accounting period) from the beginning of the fiscal quarter
immediately following the fiscal quarter during which the Issue Date
occurs to the end of the most recent fiscal quarter for which
internal financial statements are then available prior to the date
of such Restricted Payment (or, in case such Consolidated Net Income
shall be a deficit, minus 100% of such deficit); plus
(B) 100% of the aggregate Net Cash Proceeds received by the
Company from the issuance or sale of its Capital Stock (other than
Disqualified Stock) subsequent to the Issue Date (other than an
issuance or sale to a Subsidiary of the Company and other than an
issuance or sale to an employee stock ownership plan or to a trust
established by the Company or any of its Subsidiaries for the
benefit of their employees), 100% of any cash capital contribution
received by the Company from its shareholders subsequent to the
Issue Date and 100% of the fair market
45
value (as determined in good faith by resolution of the Board of
Directors of the Company) of property (other than cash that would
constitute Temporary Cash Investments) of a Related Business
received by the Company or a Restricted Subsidiary subsequent to the
Issue Date as a contribution to its common equity capital or from
the issuance and sale of its Capital Stock (other than from a
Subsidiary or that was financed with loans from the Company or any
of its Restricted Subsidiaries); plus
(C) the amount by which Indebtedness of the Company or a
Restricted Subsidiary is reduced on the Company's consolidated
balance sheet upon the conversion or exchange (other than by a
Subsidiary of the Company) subsequent to the Issue Date of any
Indebtedness of the Company or a Restricted Subsidiary convertible
or exchangeable for Capital Stock (other than Disqualified Stock) of
the Company (less the amount of any cash, or the fair value of any
other property, distributed by the Company upon such conversion or
exchange); plus
(D) an amount equal to the sum of (x) the net reduction in
the Investments (other than Permitted Investments) made by the
Company or any Restricted Subsidiary in any Person resulting from
repurchases, repayments or redemptions of such Investments by such
Person, proceeds realized on the sale of such Investment and
proceeds representing the return of capital (excluding dividends and
distributions), in each case received by the Company or any
Restricted Subsidiary, and (y) to the extent such Person is an
Unrestricted Subsidiary, the portion (proportionate to the Company's
equity interest in such Subsidiary) of the fair market value of the
net assets of such Unrestricted Subsidiary at the time such
Unrestricted Subsidiary is designated a Restricted Subsidiary;
provided, however, that the foregoing sum shall not exceed, in the
case of any such Person or Unrestricted Subsidiary, the amount of
Investments (excluding Permitted Investments) previously made (and
treated as a Restricted Payment) by the Company or any Restricted
Subsidiary in such Person or Unrestricted Subsidiary.
(b) The provisions of Section 4.04(a) shall not prohibit:
(1) any Restricted Payment made out of the Net Cash Proceeds of
the substantially concurrent sale of, or made by exchange for, Capital
Stock of the Company (other than Disqualified Stock and other than Capital
Stock issued or sold to a Subsidiary of the Company or an employee stock
ownership plan or to a trust established by the Company or any of its
Subsidiaries for the benefit of their employees) or a substantially
concurrent capital contribution received by the Company from its
shareholders; provided, however, that (A) such Restricted Payment shall be
excluded in the calculation of the amount of Restricted Payments and (B)
the Net Cash Proceeds from such sale or such capital
46
contribution (to the extent so used for such Restricted Payment) shall be
excluded from the calculation of amounts under Section 4.04(a)(3)(B);
(2) in connection with an Initial Public Equity Offering, Buffets
may terminate the Caxton Management Agreement and pay a termination fee
under such agreement from the Net Cash Proceeds of such Initial Public
Equity Offering; provided, however, that if the aggregate principal amount
at maturity of the Securities outstanding after such Initial Public Equity
Offering (after giving effect to any Securities redeemed or repurchased
(or to be redeemed or repurchased) in connection with such offering)
exceeds 50% of the aggregate principal amount at maturity of the
Securities issued on the Issue Date, then the cash portion of such
termination fee shall not exceed four times the aggregate amount of the
fees paid under the Caxton Management Agreement during the prior 13
monthly accounting periods of the Company immediately prior to the date of
consummation of the Initial Public Equity Offering; provided further,
however, that (A) such Restricted Payment shall be excluded in the
calculation of the amount of Restricted Payments and (B) the Net Cash
Proceeds from such offering (to the extent so used for such Restricted
Payment) shall be excluded from the calculation of amounts under Section
4.04(a)(3)(B);
(3) dividends paid within 60 days after the date of declaration
thereof if at such date of declaration such dividend would have complied
with this Section 4.04; provided, however, that such dividend shall be
included in the calculation of the amount of Restricted Payments;
(4) so long as no Default has occurred and is continuing, the
repurchase or other acquisition of shares of Capital Stock of the Company
or any of its Subsidiaries from employees, former employees, directors or
former directors of the Company or any of its Subsidiaries (or permitted
transferees of such employees, former employees, directors or former
directors), pursuant to the terms of the agreements (including employment,
severance, compensation or shareholder agreements) or plans (or amendments
thereto) approved by the Board of Directors of the Company under which
such individuals purchase or sell or are granted the option to purchase or
sell, shares of such Capital Stock; provided, however, that the aggregate
amount of such repurchases and other acquisitions shall not exceed (A) in
any calendar year, $5,000,000 and (B) in the aggregate, $20,000,000;
provided further, however, that such repurchases and other acquisitions
shall be excluded in the calculation of the amount of Restricted Payments;
provided further, however, that no payments shall be made under this
clause (4) to any Caxton Shareholder or any Related Party thereto;
(5) Permitted Closing Date Payments; provided, however, that such
payments shall be excluded in the calculation of the amount of Restricted
Payments;
47
(6) Payments of intercompany subordinated debt, the incurrence of
which was permitted under Section 4.03(b)(3); provided, however, that no
Default or Event of Default has occurred and is continuing or would
otherwise result therefrom; provided further, however, that such payments
shall be excluded in the calculation of the amount of Restricted Payments;
or
(7) (A) any payment made to any Caxton Shareholder in respect of
any Indebtedness of the Company or any of its Restricted Subsidiaries
permitted under this Indenture and (B) after an Initial Public Equity
Offering, any reasonable directors' fees and related reimbursements of the
Company or any Restricted Subsidiary to directors who are Caxton
Shareholders; provided that such Restricted Payments shall be excluded in
the calculation of the amount of Restricted Payments.
For purposes of determining compliance with this Section 4.04, in
the event that a proposed Restricted Payment meets the criteria of more than one
of the categories of Restricted Payments described in clauses (1) through (7) of
this Section 4.04(b), or is entitled to be incurred pursuant to Section 4.04(a),
the Company shall be entitled to classify such item of Restricted Payment on the
date of its payment in any manner that complies with this Section 4.04.
SECTION 4.05 Limitation on Restrictions on Distributions from
Restricted Subsidiaries. The Company shall not, and shall not permit any
Restricted Subsidiary to, create or otherwise cause or permit to exist or become
effective any consensual encumbrance or restriction on the ability of any
Restricted Subsidiary to (a) pay dividends or make any other distributions on
its Capital Stock to the Company or a Restricted Subsidiary or pay any
Indebtedness owed to the Company or a Subsidiary Guarantor, (b) make any loans
or advances to the Company or (c) transfer any of its property or assets to the
Company, except:
(1) with respect to clauses (a), (b) and (c) above;
(i) any encumbrance or restriction pursuant to an agreement in
effect at or entered into on the Issue Date, including the Credit
Agreement and the Buffets Existing Indenture;
(ii) any encumbrance or restriction with respect to a
Restricted Subsidiary pursuant to an agreement relating to any
Indebtedness (including Acquired Indebtedness) Incurred by such
Restricted Subsidiary on or prior to the date on which such
Restricted Subsidiary was acquired by the Company (other than
Indebtedness Incurred as consideration in, or to provide all or any
portion of the funds or credit support utilized to consummate, the
transaction or series of related transactions pursuant to which such
Restricted Subsidiary became a Restricted Subsidiary or was acquired
by the Company) and outstanding on such date;
48
(iii) any encumbrance or restriction pursuant to an agreement
effecting a Refinancing of Indebtedness Incurred pursuant to an
agreement referred to in Section 4.05(1)(i) or 4.05(1)(ii) or this
clause (iii) or contained in any amendment to an agreement referred
to in Section 4.05(1)(i) or 4.05(1)(ii) or this clause (iii);
provided, however, that the encumbrances and restrictions with
respect to such Restricted Subsidiary contained in any such
refinancing agreement or amendment are no less favorable to the
Securityholders than encumbrances and restrictions with respect to
such Restricted Subsidiary contained in such predecessor agreements;
(iv) any encumbrance or restriction consisting of any
restriction on the sale or other disposition of assets or property
securing Indebtedness as a result of a Lien permitted to be Incurred
under the Indenture on such asset or property;
(v) any encumbrance or restriction with respect to a
Restricted Subsidiary imposed pursuant to an agreement entered into
for the sale or disposition of all or a portion of the Capital Stock
or assets of such Restricted Subsidiary pending the closing of such
sale or disposition;
(vi) any restriction arising under applicable law, regulation
or order;
(vii) any restriction on cash or other deposits or net worth
imposed by suppliers or landlords under contracts entered into in
the ordinary course of business;
(viii) any restriction in any agreement that is not materially
more restrictive than the restrictions under the terms of the Credit
Agreement and the Buffets Existing Indenture as in effect on the
Issue Date; and
(ix) any encumbrances or restrictions created with respect to
(x) Indebtedness of Buffets or Buffets Guarantors permitted to be
Incurred or issued subsequent to the Issue Date pursuant to Section
4.03 and (y) Indebtedness of other Restricted Subsidiaries permitted
to be Incurred or issued subsequent to the Issue Date pursuant to
Section 4.03; provided that in the case of this clause (y) the Board
of Directors of the Company determines (as evidenced by a resolution
of the Board of Directors of the Company) in good faith at the time
such encumbrances or restrictions are created that such encumbrances
or restrictions would not reasonably be expected to impair the
ability of the Company to make payments of interest and scheduled
payments of principal on the Securities in each case as and when
due;
(2) with respect to clause (c) above only,
49
(i) any such encumbrance or restriction consisting of
customary nonassignment provisions in leases governing leasehold
interests to the extent such provisions restrict the transfer of the
lease or the property leased thereunder;
(ii) restrictions contained in security agreements or
mortgages securing Indebtedness of a Restricted Subsidiary to the
extent such restrictions restrict the transfer of the property
subject to such security agreements or mortgages; and
(iii) provisions with respect to the disposition or
distribution of assets or property in joint venture agreements,
asset sale agreements, stock sale agreements and other similar
agreements entered into in the ordinary course of business.
SECTION 4.06 Limitation on Sales of Assets and Subsidiary Stock. (a)
The Company shall not, and shall not permit any Restricted Subsidiary to,
directly or indirectly, consummate any Asset Disposition unless (1) the Company
or such Restricted Subsidiary receives consideration at the time of such Asset
Disposition at least equal to the fair market value (including as to the value
of all non-cash consideration), as determined in good faith by the Board of
Directors of the Company, of the shares and assets subject to such Asset
Disposition; (2) at least 75% of the consideration thereof received by the
Company or such Restricted Subsidiary is in the form of cash or cash equivalents
(provided that such 75% requirement shall not apply to any Asset Disposition in
which the cash or cash equivalents portion of the consideration received
therefor is no less than an amount equal to the product of (x) 4.5 and (y) the
amount of EBITDA for the previously completed four fiscal quarters directly
attributable to the assets or Capital Stock included in such Asset Disposition);
and (3) an amount equal to 100% of the Net Available Cash from such Asset
Disposition is applied by the Company (or such Restricted Subsidiary, as the
case may be) (A) first, to the extent the Company elects (or is required by the
terms of any Indebtedness), to prepay, repay, redeem or purchase Senior
Indebtedness of the Company or Indebtedness (other than any Disqualified Stock)
of a Wholly Owned Subsidiary (in each case other than Indebtedness owed to the
Company or an Affiliate of the Company) within thirteen months from the later of
the date of such Asset Disposition or the receipt of such Net Available Cash;
(B) second, to the extent of the balance of such Net Available Cash after
application in accordance with clause (A), to the extent the Company elects, to
acquire Additional Assets within thirteen months from the later of the date of
such Asset Disposition or the receipt of such Net Available Cash; (C) third, to
the extent of the balance of such Net Available Cash after application in
accordance with clauses (A) and (B), to make an Offer to the holders of the
Securities (and to holders of other Senior Indebtedness of the Company
designated by the Company) to purchase Securities (and such other Senior
Indebtedness of the Company) pursuant to and subject to the conditions of this
Indenture; and (D) fourth, to the extent of the balance of such Net Available
Cash after application in accordance with clauses (A), (B) and (C), for any
purpose not prohibited by the terms of this Indenture; provided, however, that
in connection with any prepayment, repayment or purchase of Indebtedness
pursuant to
50
clause (A) or (C) above, the Company or such Restricted Subsidiary shall
permanently retire such Indebtedness and shall cause the related loan commitment
(if any) to be permanently reduced in an amount equal to the principal amount so
prepaid, repaid or purchased. Notwithstanding the foregoing provisions of this
Section 4.06, the Company and the Restricted Subsidiaries shall not be required
to apply any Net Available Cash in accordance with this Section 4.06 except to
the extent that the aggregate Net Available Cash from all Asset Dispositions
which are not applied in accordance with this Section 4.06 exceeds $20,000,000.
In addition, any Net Available Cash received in respect of Permitted Equipment
Lease Financings Incurred pursuant to Section 4.03(b)(11) shall not be applied
pursuant to Section 4.06(a)(3)(B). Pending application of Net Available Cash
pursuant to this Section 4.06, such Net Available Cash may be invested in
Temporary Cash Investments or applied to temporarily reduce Senior Indebtedness
of the Company or Indebtedness of any Wholly Owned Subsidiary.
For the purposes of this Section 4.06(a), the following are deemed
to be cash or cash equivalents: (1) the assumption of Indebtedness of the
Company or any Restricted Subsidiary and the release of the Company or such
Restricted Subsidiary from all liability on such Indebtedness in connection with
such Asset Disposition; and (2) securities received by the Company or any
Restricted Subsidiary from the transferee that are converted by the Company or
such Restricted Subsidiary into cash within 90 days of receipt thereof.
(b) In the event of an Asset Disposition that requires the
purchase of Securities (and other Senior Indebtedness of the Company) pursuant
to Section 4.06(a)(3)(C), the Company shall purchase Securities tendered
pursuant to an offer by the Company for the Securities (and such other Senior
Indebtedness) (the "Offer") at a purchase price of 100% of their Accreted Value
(or, in the event such other Senior Indebtedness of the Company was not issued
with significant original issue discount, 100% of the principal amount thereof),
without premium, plus accrued but unpaid interest (or, in respect of such other
Senior Indebtedness, such lesser price, if any, as may be provided for by the
terms of such Senior Indebtedness of the Company) in accordance with the
procedures (including prorationing in the event of oversubscription) set forth
in Section 4.06(c). If the aggregate purchase price of Securities tendered
pursuant to the Offer exceeds the Net Available Cash allotted to their purchase,
the Company shall select the Securities to be purchased on a pro rata basis but
in round denominations, which in the case of the Securities shall be
denominations of $1,000 principal amount at maturity or multiples thereof. The
Company shall not be required to make an Offer to purchase Securities (and other
Senior Indebtedness) pursuant to this Section 4.06 if the Net Available Cash
available therefor is less than $20,000,000 (which lesser amount shall be
carried forward for purposes of determining whether such an Offer is required
with respect to the Net Available Cash from any subsequent Asset Disposition).
(c) (1) Promptly, and in any event within 10 days after the
Company becomes obligated to make an Offer, the Company shall deliver to the
Trustee and send, by first-class mail to each Holder, a written notice stating
that the Holder may elect to
51
have his Securities purchased by the Company either in whole or in part (subject
to prorating as described in Section 4.06(b) in the event the Offer is
oversubscribed) in integral multiples of $1,000 of principal amount at maturity,
at the applicable purchase price. The notice shall specify a purchase date not
less than 30 days nor more than 60 days after the date of such notice (the
"Purchase Date") and shall state (A) that the Company has become obligated to
make an Offer, (B) the aggregate principal amount at maturity of Securities that
is subject to such Offer, (C) the purchase price, (D) the circumstances and
relevant facts regarding such Asset Disposition, (E) the Purchase Date and (F)
the instructions, as determined by the Company, consistent with this Section
4.06, that a Holder must follow in order to have its Securities purchased.
(1) Not later than the date upon which written notice of an Offer
is delivered to the Trustee as provided below, the Company shall deliver
to the Trustee an Officers' Certificate as to (A) the amount of the Offer
(the "Offer Amount"), including information as to any other Senior
Indebtedness of the Company included in the Offer, (B) the allocation of
the Net Available Cash from the Asset Dispositions pursuant to which such
Offer is being made and (C) the compliance of such allocation with the
provisions of Section 4.06(a) and (b). On or prior to each Purchase Date,
the Company shall deposit with a Paying Agent an amount equal to the
applicable Offer Amount. Upon the expiration of the period for which the
Offer remains open (the "Offer Period"), the Company shall deliver to the
Trustee for cancellation the Securities or portions thereof which have
been properly tendered to and are to be accepted by the Company. The
Trustee shall, on the Purchase Date, mail or deliver payment (or cause the
delivery of payment) to each tendering Holder in the amount of the
purchase price. In the event that the aggregate purchase price of the
Securities delivered by the Company to the Trustee is less than the Offer
Amount applicable to the Securities, the Trustee shall deliver the excess
to the Company immediately after the expiration of the Offer Period for
application in accordance with this Section 4.06.
(2) Holders electing to have a Security purchased shall be
required to surrender the Security, with an appropriate form duly
completed, to the Company at the address specified in the notice at least
three Business Days prior to the Purchase Date. Holders shall be entitled
to withdraw their election if the Trustee or the Company receives not
later than one Business Day prior to the Purchase Date, a facsimile
transmission or letter setting forth the name of the Holder, the principal
amount at maturity of the Security which was delivered for purchase by the
Holder and a statement that such Holder is withdrawing his election to
have such Security purchased. Holders whose Securities are purchased only
in part shall be issued new Securities equal in principal amount at
maturity to the unpurchased portion of the Securities surrendered.
(3) At the time the Company delivers Securities to the Trustee
which are to be accepted for purchase, the Company shall also deliver an
Officers' Certificate stating that such Securities are to be accepted by
the Company pursuant to and in accordance with the terms of this Section
4.06. A Security
52
shall be deemed to have been accepted for purchase at the time the
Trustee, directly or through an agent, mails or delivers payment therefor
to the surrendering Holder.
(d) The Company shall comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act and any other securities laws
or regulations in connection with the repurchase of Securities pursuant to this
Section 4.06. To the extent that the provisions of any securities laws or
regulations conflict with provisions of this Section 4.06, the Company shall
comply with the applicable securities laws and regulations and shall not be
deemed to have breached its obligations under this Section 4.06 by virtue of its
compliance with such securities laws or regulations.
SECTION 4.07 Limitation on Affiliate Transactions. (a) The Company
shall not, and shall not permit any Restricted Subsidiary to, enter into or
permit to exist any transaction or series of related transactions (including the
purchase, sale, lease or exchange of any property, employee compensation
arrangements or the rendering of any service) with, or for the benefit of, any
Affiliate of the Company (an "Affiliate Transaction") unless (1) the terms of
the Affiliate Transaction are no less favorable to the Company or such
Restricted Subsidiary than those that could be obtained at the time of such
Affiliate Transaction in arm's-length dealings with a Person who is not an
Affiliate; (2) if such Affiliate Transaction involves an amount in excess of
$5,000,000, the material terms of the Affiliate Transaction are set forth in
writing, a majority of the directors of the Company disinterested with respect
to such Affiliate Transaction have determined in good faith that the criteria
set forth in clause (1) of this sentence are satisfied and have approved the
relevant Affiliate Transaction as evidenced by a Board resolution and the Board
of Directors of the Company has received a written opinion from an Independent
Qualified Party to the effect that the financial terms of such Affiliate
Transaction are fair, from a financial standpoint, to the Company and its
Restricted Subsidiaries or not less favorable to the Company and its Restricted
Subsidiaries than could reasonably be expected to be obtained at the time in an
arm's length transaction with a Person who is not an Affiliate; and (3) if such
Affiliate Transaction involves an amount in excess of $15,000,000, the Holders
of at least a majority in principal amount at maturity of the Securities then
outstanding shall also have given their written consent to such Affiliate
Transaction.
(b) The provisions of Section 4.07(a) shall not prohibit (1) any
Investment (other than a Permitted Investment) or other Restricted Payment, in
each case permitted to be made pursuant to, or not prohibited by, Section 4.04;
(2) any issuance of securities, or other payments, awards or grants in cash,
securities or otherwise pursuant to, or the funding of, employment, compensation
or severance arrangements, stock options and stock ownership plans approved by
the Board of Directors of the Company; (3) loans or advances to employees in the
ordinary course of business in accordance with the past practices of the Company
or its Restricted Subsidiaries or otherwise approved by the Board of Directors,
but in any event not to exceed $10,000,000 in the aggregate outstanding at any
one time; (4) the payment of reasonable compensation or employee benefit
arrangements to and indemnity provided for the benefit of directors, officers or
53
employees of the Company or its Restricted Subsidiaries in the ordinary course
of business; (5) the payment of reasonable fees to directors of the Company and
its Restricted Subsidiaries who are not employees of the Company or its
Restricted Subsidiaries; (6) the payment of fees and expenses in the amounts
provided for in the Management Agreements as in effect on the Issue Date,
provided that, except as described in the following provision, no such payments
shall be made (x) in any fiscal quarter ending after July 31, 2006 in which the
Leverage Ratio at the preceding fiscal quarter end is greater than 4.5 to 1.0,
(y) for any fiscal quarter ending after July 31, 2008 in which the Leverage
Ratio at the preceding fiscal quarter end is greater than 4.25 to 1.0 and (z)
during the continuance of any Default or Event of Default (it being understood
that if any such payments are not made under clauses (x), (y) or (z), then such
payments shall be deferred and become payable during the first fiscal quarter in
which payments under the Management Agreements may be made under this proviso),
provided further, that in connection with an Initial Public Equity Offering,
Buffets may terminate the Management Agreements and pay a termination fee under
such agreements from the Net Cash Proceeds of such Initial Public Equity
Offering, except if the aggregate principal amount at maturity of the Securities
outstanding after such Initial Public Equity Offering (after giving effect to
any Securities redeemed or repurchased (or to be redeemed or repurchased) in
connection with such offering) exceeds 50% of the aggregate principal amount at
maturity of the Securities issued on the Issue Date, then the cash portion of
such termination fee shall not exceed four times the aggregate amount of the
fees paid under the Caxton Management Agreement during the prior 13 monthly
accounting periods of the Company immediately prior to the date of consummation
of the Initial Public Equity Offering; (7) any transaction with a Restricted
Subsidiary or joint venture or similar entity which would constitute an
Affiliate Transaction solely because the Company or a Restricted Subsidiary owns
an equity interest in or otherwise controls such Restricted Subsidiary, joint
venture or similar entity; (8) the entering into of a registration rights
agreement with the stockholders of the Company; and (9) the issuance or sale of
any Capital Stock (other than Disqualified Stock) of the Company.
(c) Notwithstanding Sections 4.07(a) and (b), the Company agrees
that it shall not (i) amend or otherwise modify the Caxton Management Agreement
to increase the amount of any fees payable by the Company or any Restricted
Subsidiary thereunder (other than in connection with the Initial Public Equity
Offering to permit the termination fee described in Section 4.07(b)(6)), (ii)
enter into any other agreement with any Caxton Shareholder the terms of which
obligate the Company or any Restricted Subsidiary to pay any fees similar to
those payable under the Caxton Management Agreement or (iii) pay (or permit any
Restricted Subsidiary to pay) any fees and expenses under the Caxton Management
Agreement if such fees and expenses may not be paid under Section 4.07(b)(6)
above unless, in each case, the Holders of a majority in principal amount at
maturity of the outstanding Securities consent to such amendment, modification
or agreement.
SECTION 4.08 Limitation on the Sale or Issuance of Capital Stock of
Restricted Subsidiaries. The Company (1) shall not, and shall not permit any
Restricted Subsidiary to, sell, lease, transfer or otherwise dispose of any
Capital Stock of any
54
Restricted Subsidiary to any Person (other than to the Company or a Wholly Owned
Subsidiary), and (2) shall not permit any Restricted Subsidiary to issue any of
its Capital Stock (other than, if necessary, shares of its Capital Stock
constituting directors' or other legally required qualifying shares) to any
Person (other than the Company or a Wholly Owned Subsidiary) unless (A)
immediately after giving effect to such issuance, sale or other disposition,
neither the Company nor any of its Subsidiaries own any Capital Stock of such
Restricted Subsidiary or (B) immediately after giving effect to such issuance,
sale or other disposition, such Restricted Subsidiary would no longer constitute
a Restricted Subsidiary and any Investment in such Person remaining after giving
effect thereto is treated as a new Investment by the Company and such Investment
would be permitted to be made under Section 4.04 if made on the date of such
issuance, sale or other disposition.
Notwithstanding the foregoing, the issuance or sale of shares of
Capital Stock of any Restricted Subsidiary of the Company will not violate the
provisions of the immediately preceding sentence if such shares are issued or
sold in connection with (x) the formation or capitalization of a Restricted
Subsidiary or (y) a single transaction or a series of substantially
contemporaneous transactions whereby such Restricted Subsidiary becomes a
Restricted Subsidiary of the Company by reason of the acquisition of securities
or assets from another Person.
SECTION 4.09 Limitation on Liens. The Company shall not create,
incur, assume or permit or suffer to exist any Lien (other than Permitted Liens)
(the "Initial Lien") that secures obligations under any Indebtedness of the
Company on any asset or property of the Company, or any income or profits
therefrom, or assign or convey any right to receive income therefrom, unless:
(1) in the case of Liens securing Indebtedness that constitutes
Subordinated Obligations or is otherwise subordinate or junior in right of
payment to the Obligations under the Indenture or the Securities, as the
case may be, the Securities are secured by a Lien on such asset, property
or proceeds that is senior in priority to such Liens; or
(2) in all other cases, the Securities are equally and ratably
secured.
Any Lien created for the benefit of the Holders of the Securities
pursuant to the preceding sentence shall provide by its terms that such Lien
shall be automatically and unconditionally released and discharged upon the
release and discharge of the Initial Lien.
SECTION 4.10 Change of Control. (a) Upon the occurrence of a Change
of Control, each Holder shall have the right to require that the Company
purchase such Holder's Securities at a purchase price in cash equal to 101% of
the Accreted Value thereof on the date of purchase plus accrued and unpaid
interest, if any, to the date of purchase (subject to the right of holders of
record on the relevant record date to receive
55
interest due on the relevant interest payment date), in accordance with the
terms contemplated in Section 4.10(b).
(b) Within 30 days following any Change of Control, the Company
shall mail or otherwise deliver a notice to each Holder with a copy to the
Trustee (the "Change of Control Offer") stating:
(1) that a Change of Control has occurred and that such Holder has
the right to require the Company to purchase such Holder's Securities at a
purchase price in cash equal to 101% of the Accreted Value thereof on the
date of purchase plus accrued and unpaid interest, if any, to the date of
purchase (subject to the right of Holders of record on the relevant record
date to receive interest on the relevant interest payment date);
(2) the circumstances and relevant facts regarding such Change of
Control;
(3) the purchase date (which shall be no earlier than 30 days nor
later than 60 days from the date such notice is mailed); and
(4) the instructions, as determined by the Company, consistent
with this Section 4.10, that a Holder must follow in order to have its
Securities purchased.
(c) Holders electing to have a Security purchased will be required
to surrender the Security, with an appropriate form duly completed, to the
Company at the address specified in the notice at least three Business Days
prior to the purchase date. Holders will be entitled to withdraw their election
if the Trustee or the Company receives not later than one Business Day prior to
the purchase date, a telegram, telex, facsimile transmission or letter setting
forth the name of the Holder, the principal amount at maturity of the Security
which was delivered for purchase by the Holder and a statement that such Holder
is withdrawing his election to have such Security purchased.
(d) On the purchase date, all Securities purchased by the Company
under this Section 4.10 shall be delivered by the Company to the Trustee for
cancellation, and the Company shall pay the purchase price plus accrued and
unpaid interest, if any, to the Holders entitled thereto.
(e) Notwithstanding the foregoing provisions of this Section 4.10,
the Company shall not be required to make a Change of Control Offer upon a
Change of Control if a third party makes the Change of Control Offer in the
manner, at the times and otherwise in compliance with the requirements set forth
in this Section 4.10 applicable to a Change of Control Offer made by the Company
and purchases all Securities validly tendered and not withdrawn under such
Change of Control Offer.
(f) The Company shall comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act and any other securities laws
or regulations in connection with the repurchase of Securities pursuant to this
Section 4.10. To the extent that the provisions of any securities laws or
56
regulations conflict with provisions of this Section 4.10, the Company shall
comply with the applicable securities laws and regulations and shall not be
deemed to have breached its obligations under this Section 4.10 by virtue of its
compliance with such securities laws or regulations.
SECTION 4.11 Offer to Purchase Upon Initial Public Offering. (a)
Within 30 days after the consummation of an Initial Public Equity Offering prior
to July 31, 2007, the Company shall be required to offer to purchase (the "IPO
Offer") from Holders such aggregate principal amount at maturity of Securities
as may be purchased with funds equal in amount to 50% of the Net Cash Proceeds
received by the Company from such Initial Public Equity Offering at a purchase
price of 113.875% of the Accreted Value of the Securities, plus accrued and
unpaid interest, if any, to the date of purchase (subject to the right of
holders of record on the relevant record date to receive interest due on the
relevant interest payment date) in accordance with the procedures (including
prorationing in the event of oversubscription) set forth in Sections 4.11(b) and
4.11(c); provided, however, that such Net Cash Proceeds shall not be required to
be applied towards the purchase of Securities (i) to the extent the Company
applies such Net Cash Proceeds towards the purchase or redemption of, and
actually purchases or redeems, the Buffets Existing Notes and (ii) to the extent
such application is restricted by the terms of the then outstanding Indebtedness
of Buffets; provided further, however, that in no event shall the Company be
required to make an offer to purchase Securities with a principal amount at
maturity that is more than 25% of the aggregate principal amount at maturity of
the Securities originally issued.
Notwithstanding the foregoing, to the extent the Company redeems any
Securities prior to July 31, 2007 pursuant to paragraph 5 of the Securities, any
Securities so redeemed shall reduce the aggregate principal amount at maturity
of Securities that the Company shall be required to offer to purchase pursuant
to this Section 4.11 by the aggregate principal amount of Securities so redeemed
pursuant to paragraph 5 of the Securities.
(b) If the aggregate purchase price of Securities tendered
pursuant to the IPO Offer exceeds the Net Cash Proceeds allotted to their
purchase, the Company shall select the Securities to be purchased on a pro rata
basis but in round denominations, which will be denominations of $1,000
principal amount at maturity or multiples thereof.
(c) (1) Promptly, and in any event within 30 days after the
Company becomes obligated to make an IPO Offer, the Company shall deliver to the
Trustee and send, by first-class mail to each Holder, a written notice stating
that the Holder may elect to have his Securities purchased by the Company either
in whole or in part (subject to prorating as described in Section 4.11(b) in the
event the IPO Offer is oversubscribed) in integral multiples of $1,000 of
principal amount at maturity, at the purchase price specified in Section
4.11(a). The notice shall specify a purchase date not less than 30 days nor more
than 60 days after the date of such notice (the "IPO Purchase Date") and shall
state (A) that the Company has become obligated to make an IPO Offer, (B) the
57
aggregate principal amount at maturity of Securities that is subject to such IPO
Offer, (C) the purchase price, (D) the circumstances and relevant facts
regarding such Initial Public Equity Offering, (E) the IPO Purchase Date and (F)
the instructions, as determined by the Company, consistent with this Section
4.11, that a Holder must follow in order to have its Securities purchased.
(1) Not later than the date upon which written notice of an IPO
Offer is delivered to the Trustee as provided in clause (1) above, the
Company shall deliver to the Trustee an Officers' Certificate as to (A)
the amount of the IPO Offer (the "IPO Offer Amount"), (B) the allocation
of the Net Cash Proceeds from the Initial Public Equity Offering pursuant
to which such IPO Offer is being made and (C) the compliance of such
allocation with the provisions of Section 4.11(a). On or prior to the IPO
Purchase Date, the Company shall deposit with a Paying Agent an amount
equal to the IPO Offer Amount. Upon the expiration of the period for which
the IPO Offer remains open (the "IPO Offer Period"), the Company shall
deliver to the Trustee for cancellation the Securities or portions thereof
which have been properly tendered to and are to be accepted by the
Company. The Trustee shall, on the IPO Purchase Date, mail or deliver
payment (or cause the delivery of payment) to each tendering Holder in the
amount of the purchase price. In the event that the aggregate purchase
price of the Securities delivered by the Company to the Trustee is less
than the IPO Offer Amount applicable to the Securities, the Trustee shall
deliver the excess to the Company immediately after the expiration of the
IPO Offer Period.
(2) Holders electing to have a Security purchased shall be
required to surrender the Security, with an appropriate form duly
completed, to the Company at the address specified in the notice at least
three Business Days prior to the IPO Purchase Date. Holders shall be
entitled to withdraw their election if the Trustee or the Company receives
not later than one Business Day prior to the IPO Purchase Date, a
facsimile transmission or letter setting forth the name of the Holder, the
principal amount at maturity of the Security which was delivered for
purchase by the Holder and a statement that such Holder is withdrawing his
election to have such Security purchased. Holders whose Securities are
purchased only in part shall be issued new Securities equal in principal
amount at maturity to the unpurchased portion of the Securities
surrendered.
(3) At the time the Company delivers Securities to the Trustee
which are to be accepted for purchase, the Company shall also deliver an
Officers' Certificate stating that such Securities are to be accepted by
the Company pursuant to and in accordance with the terms of this Section
4.11. A Security shall be deemed to have been accepted for purchase at the
time the Trustee, directly or through an agent, mails or delivers payment
therefor to the surrendering Holder.
(d) The Company shall comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act and any other securities laws
or
58
regulations in connection with the repurchase of Securities pursuant to this
Section 4.11. To the extent that the provisions of any securities laws or
regulations conflict with provisions of this Section 4.11, the Company shall
comply with the applicable securities laws and regulations and shall not be
deemed to have breached its obligations under this Section 4.11 by virtue of its
compliance with such securities laws or regulations.
SECTION 4.12 Future Guarantors. The Company shall cause each
domestic Restricted Subsidiary of the Company that Guarantees any other
Indebtedness of the Company to, at the same time, execute and deliver to the
Trustee a Guaranty Agreement pursuant to which such Restricted Subsidiary will
Guarantee payment of the Securities on the terms and conditions set forth in the
Guaranty Agreement. For the avoidance of doubt, the Guarantee by any Restricted
Subsidiary of Indebtedness of another Restricted Subsidiary at a time that such
Indebtedness is also Guaranteed by the Company shall not constitute a Guarantee
of Indebtedness of the Company.
SECTION 4.13 Compliance Certificate. The Company shall deliver to
the Trustee, within 120 days after the end of each fiscal year of the Company,
an Officers' Certificate stating that in the course of the performance by the
signers of their duties as Officers of the Company they would normally have
knowledge of any Default and whether or not the signers know of any Default that
occurred during such fiscal year. If they do, the certificate shall describe the
Default, its status and what action the Company is taking or proposes to take
with respect thereto. The Company also shall comply with TIA Section 314(a)(4).
SECTION 4.14 Maximum Leverage Ratio. The Company shall not permit
the Leverage Ratio as of each of July 31, 2008, July 31, 2009 and July 31, 2010
(or if any such date is not the end of a monthly accounting period for the
Company, then the date that is the last day of an accounting period that is
nearest to such date) (each such date, a "Test Date") to be greater than 6.0 to
1.0; provided that no Default or Event of Default shall occur under this Section
4.14 until the 60th day after the applicable Test Date; and provided further
that if (a) during such 60 day period, the Company shall have issued any Capital
Stock (other than Disqualified Stock) to repay or otherwise retire any of its
Indebtedness or any Indebtedness of its Restricted Subsidiaries and (b) after
giving pro forma effect to such transactions, the Leverage Ratio as of the
applicable Test Date would have been equal to or less than 6.0 to 1.0, then no
Default or Event of Default shall have occurred under this Section 4.14 with
respect thereto.
SECTION 4.15 Permitted Business. The Company shall not, and shall
not permit any Restricted Subsidiary to, engage in any business other than
Permitted Business, except to the extent it is not material to the Company and
its Restricted Subsidiaries, taken as a whole.
SECTION 4.16 No Intermediate Holding Companies. Except for a
transaction with a third party permitted under Section 5.01 or a merger of
Buffets with or into the Company, the Company shall cause Buffets to remain a
direct Wholly Owned Subsidiary of the Company.
59
SECTION 4.17 Further Instruments and Acts. Upon request of the
Trustee, the Company will execute and deliver such further instruments and do
such further acts as may be reasonably necessary or proper to carry out more
effectively the purpose of this Indenture.
ARTICLE V
Successor Company
SECTION 5.01 When Company May Merge or Transfer Assets. (a) The
Company shall not consolidate with or merge with or into, or convey, transfer or
lease, in one transaction or a series of transactions, directly or indirectly,
all or substantially all its assets to, any Person, unless:
(1) the resulting, surviving or transferee Person (the "Successor
Company") shall be a Person organized and existing under the laws of the
United States of America, any State thereof or the District of Columbia
and the Successor Company (if not the Company) shall expressly assume, by
an indenture supplemental hereto, executed and delivered to the Trustee,
and other agreements in forms reasonably satisfactory to the Trustee, all
the obligations of the Company under the Securities, this Indenture and
the Registration Rights Agreement;
(2) immediately after giving pro forma effect to such transaction
(and treating any Indebtedness which becomes an obligation of the
Successor Company or any Subsidiary as a result of such transaction as
having been Incurred by such Successor Company or such Subsidiary at the
time of such transaction), no Default shall have occurred and be
continuing;
(3) immediately after giving pro forma effect to such transaction,
(A) the Successor Company would be able to Incur an additional $1.00 of
Indebtedness pursuant to Section 4.03(a) or (B) the Consolidated Coverage
Ratio for the Successor Company and its Restricted Subsidiaries would be
equal to or greater than such ratio for the Company and its Restricted
Subsidiaries immediately prior to such transaction; and
(4) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that such
consolidation, merger or transfer and such supplemental indenture (if any)
comply with this Indenture;
provided, however, that clause (3) will not be applicable to (A) a Restricted
Subsidiary consolidating with, merging into or transferring all or part of its
properties and assets to the Company or any Restricted Subsidiary or (B) the
Company merging with an Affiliate of the Company solely for the purpose and with
the sole effect of reincorporating the Company in another jurisdiction.
60
The Successor Company shall be the successor to the Company and
shall succeed to, and be substituted for, and may exercise every right and power
of, the Company under this Indenture, and the predecessor Company, except in the
case of a lease, shall be released from the obligation to pay the principal of
and interest on the Securities.
ARTICLE VI
Defaults and Remedies
SECTION 6.01 Events of Default. An "Event of Default" occurs if:
(1) the Company defaults in any payment of interest on any
Security when the same becomes due and payable, and such default continues
for a period of 30 days;
(2) the Company defaults in the payment of the principal of any
Security when the same becomes due and payable at its Stated Maturity,
upon optional redemption, upon required purchase, upon declaration of
acceleration or otherwise;
(3) the Company fails to comply with Section 5.01, 4.14 or 4.16;
(4) the Company fails to comply with Section 4.02, 4.03, 4.04,
4.05, 4.06, 4.07, 4.08, 4.09, 4.10, 4.11, 4.12 and 4.15 (other than a
failure to purchase Securities when required under Section 4.06, 4.10 or
4.11) and such failure continues for 30 days after the notice specified
below;
(5) the Company fails to comply with any of its agreements in the
Securities or this Indenture (other than those referred to in clause (1),
(2), (3) or (4) above) and such failure continues for 60 days after the
notice specified below;
(6) Indebtedness of the Company or any Significant Subsidiary is
not paid within any applicable grace period after final maturity or is
accelerated by the holders thereof because of a default and the total
amount of such Indebtedness unpaid or accelerated exceeds $10,000,000;
(7) the Company or any Significant Subsidiary pursuant to or
within the meaning of any Bankruptcy Law:
(A) commences a voluntary case;
(B) consents to the entry of an order for relief against it
in an involuntary case;
61
(C) consents to the appointment of a Custodian of it or for
any substantial part of its property; or
(D) makes a general assignment for the benefit of its
creditors;
or takes any comparable action under any foreign laws relating to
insolvency;
(8) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that:
(A) is for relief against the Company or any Significant
Subsidiary in an involuntary case;
(B) appoints a Custodian of the Company or any Significant
Subsidiary or for any substantial part of its property; or
(C) orders the winding up or liquidation of the Company or
any Significant Subsidiary;
or any similar relief is granted under any foreign laws and the order or
decree remains unstayed and in effect for 60 days; or
(9) any judgment or decree for the payment of money in excess of
$10,000,000 or its foreign currency equivalent at the time is entered
against the Company or any Significant Subsidiary, remains outstanding for
a period of 60 consecutive days following the entry of such judgment or
decree and is not discharged, waived or the execution thereof stayed
within 10 days after the notice specified below.
The foregoing will constitute Events of Default whatever the reason
for any such Event of Default and whether it is voluntary or involuntary or is
effected by operation of law or pursuant to any judgment, decree or order of any
court or any order, rule or regulation of any administrative or governmental
body.
The term "Bankruptcy Law" means Xxxxx 00, Xxxxxx Xxxxxx Code, or any
similar Federal or State law for the relief of debtors. The term "Custodian"
means any receiver, trustee, assignee, liquidator, custodian or similar official
under any Bankruptcy Law.
A Default under clauses (4), (5) or (9) is not an Event of Default
until the Trustee or the holders of at least 25% in principal amount at maturity
of the outstanding Securities notify the Company of the Default and the Company
does not cure such Default within the time specified after receipt of such
notice. Such notice must specify the Default, demand that it be remedied and
state that such notice is a "Notice of Default".
62
The Company shall deliver to the Trustee, within 30 days after the
occurrence thereof, written notice in the form of an Officers' Certificate of
any Event of Default under clause (6) and any event which with the giving of
notice or the lapse of time would become an Event of Default under clause (4),
(5) or (9), its status and what action the Company is taking or proposes to take
with respect thereto.
SECTION 6.02 Acceleration. If an Event of Default (other than an
Event of Default specified in Section 6.01(7) or (8) with respect to the
Company) occurs and is continuing, the Trustee by notice to the Company, or the
Holders of at least 25% in principal amount at maturity of the outstanding
Securities by notice to the Company and the Trustee, may declare the principal
of and accrued but unpaid interest on all the Securities to be due and payable.
Upon such a declaration, such principal and interest shall be due and payable
immediately. If an Event of Default specified in Section 6.01(7) or (8) with
respect to the Company occurs and is continuing, the Accreted Value of and
interest on all the Securities shall ipso facto become and be immediately due
and payable without any declaration or other act on the part of the Trustee or
any Securityholders. The Holders of a majority in principal amount at maturity
of the outstanding Securities by notice to the Trustee may rescind an
acceleration and its consequences if the rescission would not conflict with any
judgment or decree and if all existing Events of Default have been cured or
waived except nonpayment of principal or interest that has become due solely
because of acceleration. No such rescission shall affect any subsequent Default
or impair any right consequent thereto.
SECTION 6.03 Other Remedies. If an Event of Default occurs and is
continuing, the Trustee may pursue any available remedy to collect the payment
of Accreted Value of or interest on the Securities or to enforce the performance
of any provision of the Securities or this Indenture.
The Trustee may maintain a proceeding even if it does not possess
any of the Securities or does not produce any of them in the proceeding. A delay
or omission by the Trustee or any Securityholder in exercising any right or
remedy accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. No remedy is
exclusive of any other remedy. All available remedies are cumulative.
SECTION 6.04 Waiver of Past Defaults. The Holders of a majority in
principal amount at maturity of the outstanding Securities by notice to the
Trustee may waive an existing Default and its consequences except (i) a Default
in the payment of the Accreted Value of or interest on a Security, (ii) a
Default arising from the failure to redeem or purchase any Security when
required pursuant to this Indenture or (iii) a Default in respect of a provision
that under Section 9.02 cannot be amended without the consent of each
Securityholder affected. When a Default is waived, it is deemed cured, but no
such waiver shall extend to any subsequent or other Default or impair any
consequent right.
63
SECTION 6.05 Control by Majority. The Holders of a majority in
principal amount at maturity of the outstanding Securities may direct the time,
method and place of conducting any proceeding for any remedy available to the
Trustee or of exercising any trust or power conferred on the Trustee. However,
the Trustee may refuse to follow any direction that conflicts with law or this
Indenture or, subject to Section 7.01, that the Trustee determines is unduly
prejudicial to the rights of other Securityholders or would involve the Trustee
in personal liability; provided, however, that the Trustee may take any other
action deemed proper by the Trustee that is not inconsistent with such
direction. Prior to taking any action hereunder, the Trustee shall be entitled
to indemnification satisfactory to it in its sole discretion against all losses
and expenses caused by taking or not taking such action.
SECTION 6.06 Limitation on Suits. Except to enforce the right to
receive payment of Accreted Value, premium (if any) or interest when due, no
Securityholder may pursue any remedy with respect to this Indenture or the
Securities unless:
(1) the Holder gives to the Trustee written notice stating that an
Event of Default is continuing;
(2) the Holders of at least 25% in principal amount at maturity of
the outstanding Securities make a written request to the Trustee to pursue
the remedy;
(3) such Holder or Holders offer to the Trustee reasonable
security or indemnity against any loss, liability or expense;
(4) the Trustee does not comply with such request within 60 days
after receipt of the request and the offer of security or indemnity; and
(5) the Holders of a majority in principal amount at maturity of
the outstanding Securities do not give the Trustee a direction
inconsistent with the request during such 60-day period.
A Securityholder may not use this Indenture to prejudice the rights
of another Securityholder or to obtain a preference or priority over another
Securityholder.
SECTION 6.07 Rights of Holders to Receive Payment. Notwithstanding
any other provision of this Indenture, the right of any Holder to receive
payment of Accreted Value of and interest on the Securities held by such Holder,
on or after the respective due dates expressed in the Securities, or to bring
suit for the enforcement of any payment with respect to the Securities, shall
not be impaired or affected without the consent of such Holder.
SECTION 6.08 Collection Suit by Trustee. If an Event of Default
specified in Section 6.01(1) or (2) occurs and is continuing, the Trustee may
recover judgment in its own name and as trustee of an express trust against the
Company for the
64
whole amount then due and owing (together with interest on any unpaid interest
to the extent lawful) and the amounts provided for in Section 7.07.
SECTION 6.09 Trustee May File Proofs of Claim. The Trustee may file
such proofs of claim and other papers or documents as may be necessary or
advisable in order to have the claims of the Trustee and the Securityholders
allowed in any judicial proceedings relative to the Company, its creditors or
its property and, unless prohibited by law or applicable regulations, may vote
on behalf of the Holders in any election of a trustee in bankruptcy or other
Person performing similar functions, and any Custodian in any such judicial
proceeding is hereby authorized by each Holder to make payments to the Trustee
and, in the event that the Trustee shall consent to the making of such payments
directly to the Holders, to pay to the Trustee any amount due it for the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and its counsel, and any other amounts due the Trustee under Section
7.07.
SECTION 6.10 Priorities. If the Trustee collects any money or
property pursuant to this Article VI, it shall pay out the money or property in
the following order:
FIRST: to the Trustee for amounts due under Section 7.07;
SECOND: to Securityholders for amounts due and unpaid on the
Securities for Accreted Value and interest, ratably, without
preference or priority of any kind, according to the amounts due and
payable on the Securities for Accreted Value and interest,
respectively; and
THIRD: to the Company.
The Trustee may fix a special record date and payment date for any
payment to Securityholders pursuant to this Section 6.10. At least 15 days
before such record date, the Trustee shall mail to each Securityholder a notice
that states the record date, the payment date and amount to be paid.
SECTION 6.11 Undertaking for Costs. In any suit for the enforcement
of any right or remedy under this Indenture or in any suit against the Trustee
for any action taken or omitted by it as Trustee, a court in its discretion may
require the filing by any party litigant in the suit of an undertaking to pay
the costs of the suit, and the court in its discretion may assess reasonable
costs, including reasonable attorneys' fees, against any party litigant in the
suit, having due regard to the merits and good faith of the claims or defenses
made by the party litigant. This Section 6.11 does not apply to a suit by the
Trustee, a suit by a Holder pursuant to Section 6.07 or a suit by Holders of
more than 10% in principal amount at maturity of the Securities.
SECTION 6.12 Waiver of Stay, Extension or Usury Laws. The Company
(to the extent it may lawfully do so) shall not at any time insist upon, or
plead, or in any manner whatsoever claim or take the benefit or advantage of,
any stay, extension or usury law or other law that would prohibit or forgive the
Company from
65
paying all or any portion of the principal of or interest on the Securities as
contemplated herein, wherever enacted, now or at any time hereafter in force,
which may affect the covenants or the performance of this Indenture; and the
Company (to the extent that it may lawfully do so) hereby expressly waives all
benefit or advantage of any such law, and shall not hinder, delay or impede the
execution of any power herein granted to the Trustee, but shall suffer and
permit the execution of every such power as though no such law had been enacted.
ARTICLE VII
Trustee
SECTION 7.01 Duties of Trustee. (a) If an Event of Default has
occurred and is continuing, the Trustee shall exercise the rights and powers
vested in it by this Indenture and use the same degree of care and skill in
their exercise as a prudent Person would exercise or use under the circumstances
in the conduct of such Person's own affairs.
(b) Except during the continuance of an Event of Default:
(1) the Trustee undertakes to perform such duties and only such
duties as are specifically set forth in this Indenture and no implied
covenants or obligations shall be read into this Indenture against the
Trustee; and
(2) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness
of the opinions expressed therein, upon certificates or opinions furnished
to the Trustee and conforming to the requirements of this Indenture.
However, the Trustee shall examine the certificates and opinions to
determine whether or not they conform to the requirements of this
Indenture.
(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act or its own bad faith or
willful misconduct, except that:
(1) this paragraph does not limit the effect of paragraph (b) of
this Section 7.01;
(2) the Trustee shall not be liable for any error of judgment made
in good faith by a Trust Officer unless it is proved that the Trustee was
negligent in ascertaining the pertinent facts; and
(3) the Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 6.05.
66
(d) Every provision of this Indenture that in any way relates to
the Trustee is subject to paragraphs (a), (b) and (c) of this Section 7.01.
(e) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with the Company.
(f) Money held in trust by the Trustee need not be segregated from
other funds except to the extent required by law.
(g) No provision of this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur financial liability in the
performance of any of its duties hereunder or in the exercise of any of its
rights or powers, if it shall have reasonable grounds to believe that repayment
of such funds or adequate indemnity against such risk or liability is not
reasonably assured to it.
(h) Every provision of this Indenture relating to the conduct or
affecting the liability of or affording protection to the Trustee shall be
subject to the provisions of this Section 7.01 and to the provisions of the TIA.
SECTION 7.02 Rights of Trustee. (a) The Trustee may rely on any
document believed by it to be genuine and to have been signed or presented by
the proper person. The Trustee need not investigate any fact or matter stated in
the document.
(b) Before the Trustee acts or refrains from acting, it may
require an Officers' Certificate or an Opinion of Counsel. The Trustee shall not
be liable for any action it takes or omits to take in good faith in reliance on
the Officers' Certificate or Opinion of Counsel.
(c) The Trustee may act through agents and shall not be
responsible for the misconduct or negligence of any agent appointed with due
care.
(d) The Trustee shall not be liable for any action it takes or
omits to take in good faith which it believes to be authorized or within its
rights or powers; provided, however, that the Trustee's conduct does not
constitute bad faith, willful misconduct or negligence.
(e) The Trustee may consult with counsel, and the advice or
opinion of counsel with respect to legal matters relating to this Indenture and
the Securities shall be full and complete authorization and protection from
liability in respect to any action taken, omitted or suffered by it hereunder in
good faith and in accordance with the advice or opinion of such counsel.
(f) Except with respect to Sections 4.02 and 4.13, the Trustee
shall have no duty to inquire as to the performance of the Company with respect
to the covenants contained in Article IV. In addition, the Trustee shall not be
deemed to have knowledge of an Event of Default except (i) any Default or Event
of Default occurring
67
pursuant to Sections 6.01(1) and 6.01(2) or (ii) any Default or Event of Default
of which the Trustee shall have received written notification or obtained actual
knowledge.
(g) Delivery of reports, information and documents to the Trustee
under Section 4.02 is for informational purposes only, and the Trustee's receipt
of the foregoing shall not constitute constructive notice of any information
contained therein, or determinable from information contained therein, including
the Company's compliance with any of its covenants hereunder (as to which the
Trustee is entitled to rely conclusively on Officers' Certificates).
SECTION 7.03 Individual Rights of Trustee. The Trustee in its
individual or any other capacity may become the owner or pledges of Securities
and may otherwise deal with the Company or its Affiliates with the same rights
it would have if it were not Trustee. Any Paying Agent, Registrar, co-registrar
or co-paying agent may do the same with like rights. However, the Trustee must
comply with Sections 7.10 and 7.11.
SECTION 7.04 Trustee's Disclaimer. The Trustee shall not be
responsible for and makes no representation as to the validity or adequacy of
this Indenture or the Securities, it shall not be accountable for the Company's
use of the proceeds from the Securities, and it shall not be responsible for any
statement of the Company in the Indenture or in any document issued in
connection with the sale of the Securities or in the Securities other than the
Trustee's certificate of authentication.
SECTION 7.05 Notice of Defaults. If a Default occurs and is
continuing and if it is known to the Trustee, the Trustee shall mail to each
Securityholder notice of the Default within 90 days after it occurs. Except in
the case of a Default in payment of Accreted Value of or interest on any
Security (including payments pursuant to the mandatory redemption provisions of
such Security, if any), the Trustee may withhold the notice if and so long as a
committee of its Trust Officers in good faith determines that withholding the
notice is not opposed to the interests of Securityholders.
SECTION 7.06 Reports by Trustee to Holders. As promptly as
practicable after each May 15 beginning with the May 15 following the date of
this Indenture, and in any event prior to July 15 in each year, the Trustee
shall mail to each Securityholder a brief report dated as of May 15 that
complies with TIA Section 313(a). The Trustee also shall comply with TIA Section
313(b).
A copy of each report at the time of its mailing to Securityholders
shall be filed with the SEC and each stock exchange (if any) on which the
Securities are listed. The Company agrees to notify promptly the Trustee
whenever the Securities become listed on any stock exchange and of any delisting
thereof.
SECTION 7.07 Compensation and Indemnity. The Company shall pay to
the Trustee from time to time reasonable compensation for its services. The
Trustee's compensation shall not be limited by any law on compensation of a
trustee of an express trust. The Company shall reimburse the Trustee upon
request for all
69
reasonable out-of-pocket expenses incurred or made by it, including costs of
collection, in addition to the compensation for its services. Such expenses
shall include the reasonable compensation and expenses, disbursements and
advances of the Trustee's agents, counsel, accountants and experts. The Company
shall indemnify the Trustee against any and all loss, liability or expense
(including attorneys' fees) incurred by it in connection with the administration
of this trust and the performance of its duties hereunder. The Trustee shall
notify the Company promptly of any claim for which it may seek indemnity.
Failure by the Trustee to so notify the Company shall not relieve the Company of
its obligations hereunder. The Company shall defend the claim and the Trustee
may have separate counsel and the Company shall pay the reasonable fees and
expenses of such counsel. The Company need not reimburse any expense or
indemnify against any loss, liability or expense incurred by the Trustee through
the Trustee's own willful misconduct, negligence or bad faith.
To secure the Company's payment obligations in this Section 7.07,
the Trustee shall have a lien prior to the Securities on all money or property
held or collected by the Trustee other than money or property held in trust to
pay the Accreted Value of and interest on particular Securities.
The Company's payment obligations pursuant to this Section 7.07
shall survive the discharge of this Indenture. When the Trustee incurs expenses
after the occurrence of a Default specified in Section 6.01(7) or (8) with
respect to the Company, the expenses are intended to constitute expenses of
administration under the Bankruptcy Law.
SECTION 7.08 Replacement of Trustee. The Trustee may resign at any
time by so notifying the Company. The Holders of a majority in principal amount
of the outstanding Securities may remove the Trustee by so notifying the Trustee
and may appoint a successor Trustee. The Company shall remove the Trustee if:
(1) the Trustee fails to comply with Section 7.10;
(2) the Trustee is adjudged bankrupt or insolvent;
(3) a receiver or other public officer takes charge of the Trustee
or its property; or
(4) the Trustee otherwise becomes incapable of acting.
If the Trustee resigns, is removed by the Company or by the Holders
of a majority in principal amount at maturity of the outstanding Securities and
such Holders do not reasonably promptly appoint a successor Trustee, or if a
vacancy exists in the office of Trustee for any reason (the Trustee in such
event being referred to herein as the retiring Trustee), the Company shall
promptly appoint a successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon the
resignation or removal of the
69
retiring Trustee shall become effective, and the successor Trustee shall have
all the rights, powers and duties of the Trustee under this Indenture. The
successor Trustee shall mail a notice of its succession to Securityholders. The
retiring Trustee shall promptly transfer all property held by it as Trustee to
the successor Trustee, subject to the lien provided for in Section 7.07.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee or the Holders of
10% in principal amount at maturity of the outstanding Securities may petition
any court of competent jurisdiction for the appointment of a successor Trustee.
If the Trustee fails to comply with Section 7.10, any Securityholder
may petition any court of competent jurisdiction for the removal of the Trustee
and the appointment of a successor Trustee.
Notwithstanding the replacement of the Trustee pursuant to this
Section 7.08, the Company's obligations under Section 7.07 shall continue for
the benefit of the retiring Trustee.
SECTION 7.09 Successor Trustee by Merger. If the Trustee
consolidates with, merges or converts into, or transfers all or substantially
all its corporate trust business or assets to, another corporation or banking
association, the resulting, surviving or transferee corporation without any
further act shall be the successor Trustee.
In case at the time such successor or successors by merger,
conversion or consolidation to the Trustee shall succeed to the trusts created
by this Indenture any of the Securities shall have been authenticated but not
delivered, any such successor to the Trustee may adopt the certificate of
authentication of any predecessor trustee, and deliver such Securities so
authenticated; and in case at that time any of the Securities shall not have
been authenticated, any successor to the Trustee may authenticate such
Securities either in the name of any predecessor hereunder or in the name of the
successor to the Trustee; and in all such cases such certificates shall have the
full force which it is anywhere in the Securities or in this Indenture provided
that the certificate of the Trustee shall have.
SECTION 7.10 Eligibility; Disqualification. The Trustee shall at all
times satisfy the requirements of TIA Section 310(a). The Trustee shall have a
combined capital and surplus of at least $50,000,000 as set forth in its most
recent published annual report of condition. The Trustee shall comply with TIA
Section 310(b); provided, however, that there shall be excluded from the
operation of TIA Section 310(b)(1) any indenture or indentures under which other
securities or certificates of interest or participation in other securities of
the Company are outstanding if the requirements for such exclusion set forth in
TIA Section 310(b)(1) are met.
SECTION 7.11 Preferential Collection of Claims Against Company. The
Trustee shall comply with TIA Section 311(a), excluding any creditor
relationship listed in
70
TIA Section 311(b). A Trustee who has resigned or been removed shall be subject
to TIA Section 311(a) to the extent indicated.
ARTICLE VIII
Discharge of Indenture; Defeasance
SECTION 8.01 Discharge of Liability on Securities; Defeasance. (a)
When (1) the Company delivers to the Trustee all outstanding Securities (other
than Securities replaced pursuant to Section 2.07) for cancellation or (2) all
outstanding Securities have become due and payable, whether at maturity or on a
redemption date as a result of the mailing of a notice of redemption pursuant to
Article III hereof or (3) all outstanding Securities will become due and payable
within one year or are to be called for redemption within one year under
arrangements reasonably satisfactory to the Trustee and, in the case of clauses
(2) and (3), the Company irrevocably deposits with the Trustee funds sufficient
to pay at maturity or upon redemption all outstanding Securities, including
interest thereon to maturity or such redemption date (other than Securities
replaced pursuant to Section 2.07), and if in any case the Company pays all
other sums payable hereunder by the Company, then this Indenture shall, subject
to Section 8.01(c), cease to be of further effect. The Trustee shall acknowledge
satisfaction and discharge of this Indenture on demand of the Company
accompanied by an Officers' Certificate and an Opinion of Counsel and at the
cost and expense of the Company.
(b) Subject to Sections 8.01(c) and 8.02, the Company at any time
may terminate (1) all its obligations under the Securities and this Indenture
("legal defeasance option") or (2) its obligations under Sections 4.02, 4.03,
4.04, 4.05, 4.06, 4.07, 4.08, 4.09, 4.10, 4.11, 4.12, 4.14, 4.15 and 4.16 and
the operation of Sections 6.01(4), 6.01(6), 6.01(7), 6.01(8) and 6.01(9) (but,
in the case of Sections 6.01(7) and (8), with respect only to Significant
Subsidiaries) and the limitations contained in Section 5.01(a)(3) ("covenant
defeasance option"). The Company may exercise its legal defeasance option
notwithstanding its prior exercise of its covenant defeasance option.
If the Company exercises its legal defeasance option, payment of the
Securities may not be accelerated because of an Event of Default with respect
thereto. If the Company exercises its covenant defeasance option, payment of the
Securities may not be accelerated because of an Event of Default specified in
Sections 6.01(4), 6.01(6), 6.01(7), 6.01(8) and 6.01(9) (but, in the case of
Sections 6.01(7) and (8), with respect only to Significant Subsidiaries) or
because of the failure of the Company to comply with Section 5.01(a)(3).
Upon satisfaction of the conditions set forth herein and upon
request of the Company, the Trustee shall acknowledge in writing the discharge
of those obligations that the Company terminates.
71
(c) Notwithstanding clauses (a) and (b) above, the Company's
obligations in Sections 2.03, 2.04, 2.05, 2.06, 2.07, 2.08, 7.07 and 7.08 and in
this Article VIII shall survive until the Securities have been paid in full.
Thereafter, the Company's obligations in Sections 7.07, 8.04 and 8.05 shall
survive.
SECTION 8.02 Conditions to Defeasance. The Company may exercise its
legal defeasance option or its covenant defeasance option only if:
(1) the Company irrevocably deposits in trust with the Trustee
money or U.S. Government Obligations for the payment of the Accreted Value
of and interest on the Securities to maturity or redemption, as the case
may be;
(2) the Company delivers to the Trustee a certificate from a
nationally recognized firm of independent accountants or other nationally
recognized firm of financial experts expressing their opinion that the
payments of principal and interest when due and without reinvestment on
the deposited U.S. Government Obligations plus any deposited money without
investment will provide cash at such times and in such amounts as will be
sufficient to pay principal and interest when due on all the Securities to
maturity or redemption, as the case may be;
(3) 123 days pass after the deposit is made and during the 123-day
period no Default specified in Sections 6.01(7) or (8) with respect to the
Company occurs which is continuing at the end of the 123-day period;
(4) the deposit does not constitute a default under any other
material agreement binding on the Company;
(5) the Company delivers to the Trustee an Opinion of Counsel to
the effect that the trust resulting from the deposit does not constitute,
or is qualified as, a regulated investment company under the Investment
Company Act of 1940;
(6) in the case of the legal defeasance option, the Company shall
have delivered to the Trustee an Opinion of Counsel stating that (A) the
Company has received from, or there has been published by, the Internal
Revenue Service a ruling, or (B) since the date of this Indenture there
has been a change in the applicable Federal income tax law, in either case
to the effect that, and based thereon such Opinion of Counsel shall
confirm that, the Securityholders will not recognize income, gain or loss
for Federal income tax purposes as a result of such defeasance and will be
subject to Federal income tax on the same amounts, in the same manner and
at the same times as would have been the case if such defeasance had not
occurred;
(7) in the case of the covenant defeasance option, the Company
shall have delivered to the Trustee an Opinion of Counsel to the effect
that the Securityholders will not recognize income, gain or loss for
Federal income tax purposes as a result of such covenant defeasance and
will be subject to Federal
72
income tax on the same amounts, in the same manner and at the same times
as would have been the case if such covenant defeasance had not occurred;
and
(8) the Company delivers to the Trustee an Officers' Certificate
and an Opinion of Counsel, each stating that all conditions precedent to
the defeasance of the Securities as contemplated by this Article VIII have
been complied with.
Before or after a deposit, the Company may make arrangements
reasonably satisfactory to the Trustee for the redemption of Securities at a
future date in accordance with Article III.
SECTION 8.03 Application of Trust Money. The Trustee shall hold in
trust money or U.S. Government Obligations deposited with it pursuant to this
Article VIII. It shall apply the deposited money and the money from U.S.
Government Obligations through the Paying Agent and in accordance with this
Indenture to the payment of principal of and interest on the Securities.
SECTION 8.04 Repayment to Company. The Trustee and the Paying Agent
shall promptly turn over to the Company upon request any excess money or
securities held by them at any time.
Subject to any applicable abandoned property law, the Trustee and
the Paying Agent shall pay to the Company upon request any money held by them
for the payment of Accreted Value or interest that remains unclaimed for two
years, and, thereafter, Securityholders entitled to the money must look to the
Company for payment as general creditors.
SECTION 8.05 Indemnity for Government Obligations. The Company shall
pay and shall indemnify the Trustee against any tax, fee or other charge imposed
on or assessed against deposited U.S. Government Obligations or the principal
and interest received on such U.S. Government Obligations.
SECTION 8.06 Reinstatement. If the Trustee or Paying Agent is unable
to apply any money or U.S. Government Obligations in accordance with this
Article VIII by reason of any legal proceeding or by reason of any order or
judgment of any court or governmental authority enjoining, restraining or
otherwise prohibiting such application, the Company's obligations under this
Indenture and the Securities and the Subsidiary Guarantor's obligations under
their respective Guarantees shall be revived and reinstated as though no deposit
had occurred pursuant to this Article VIII until such time as the Trustee or
Paying Agent is permitted to apply all such money or U.S. Government Obligations
in accordance with this Article VIII; provided, however, that, if the Company
has made any payment of Accreted Value or interest on any Securities because of
the reinstatement of its obligations, the Company shall be subrogated to the
rights of the Holders of such Securities to receive such payment from the money
or U.S. Government Obligations held by the Trustee or Paying Agent.
73
ARTICLE IX
Amendments
SECTION 9.01 Without Consent of Holders. The Company and the Trustee
may amend this Indenture or the Securities without notice to or consent of any
Securityholder:
(1) to cure any ambiguity, omission, defect or inconsistency;
(2) to comply with Article V;
(3) to provide for uncertificated Securities in addition to or in
place of certificated Securities; provided, however, that the
uncertificated Securities are issued in registered form for purposes of
Section 163(f) of the Code or in a manner such that the uncertificated
Securities are described in Section 163(f)(2)(B) of the Code;
(4) to add guarantees with respect to the Securities or to secure
the Securities;
(5) to add to the covenants of the Company for the benefit of the
Holders of the Securities or to surrender any right or power herein
conferred upon the Company;
(6) to make any change that does not adversely affect the rights
of any Securityholder; or
(7) to comply with any requirements of the SEC in connection with
qualifying, or maintaining the qualification of, this Indenture under the
TIA.
After an amendment under this Section 9.01 becomes effective, the
Company shall mail to Securityholders a notice briefly describing such
amendment. The failure to give such notice to all Securityholders, or any defect
therein, shall not impair or affect the validity of an amendment under this
Section 9.01.
SECTION 9.02 With Consent of Holders. The Company and the Trustee
may amend this Indenture or the Securities without notice to any Securityholder
but with the written consent of the Holders of at least a majority in principal
amount at maturity of the Securities then outstanding (including consents
obtained in connection with a tender offer or exchange for the Securities).
However, without the consent of each Securityholder affected thereby, an
amendment may not:
(1) reduce the principal amount at maturity of Securities whose
Holders must consent to an amendment;
74
(2) reduce the rate of or extend the time for payment of interest
or premium on any Security;
(3) reduce the principal amount at maturity or Accreted Value of,
change the calculation of Accreted Value so as to reduce the Accreted
Value at any time, or extend the Stated Maturity of any Security;
(4) reduce the amount payable upon the redemption of any Security
or change the time at which any Security may be redeemed in accordance
with Article III;
(5) make any Security payable in money other than that stated in
the Security;
(6) impair the right of any Holder of the Securities to receive
payment of principal amount at maturity or Accreted Value of and interest
on such Holder's Securities on or after the due dates therefor or to
institute suit for the enforcement of any payment on or with respect to
such Holder's Securities;
(7) make any change in Section 6.04 or 6.07 or the second sentence
of this Section 9.02; or
(8) make any changes in the ranking or priority of any Security
that would adversely affect the Securityholders.
It shall not be necessary for the consent of the Holders under this
Section 9.02 to approve the particular form of any proposed amendment, but it
shall be sufficient if such consent approves the substance thereof.
After an amendment under this Section 9.02 becomes effective, the
Company shall mail to Securityholders a notice briefly describing such
amendment. The failure to give such notice to all Securityholders, or any defect
therein, shall not impair or affect the validity of an amendment under this
Section 9.02.
SECTION 9.03 Compliance with Trust Indenture Act. Every amendment to
this Indenture or the Securities shall comply with the TIA as then in effect.
SECTION 9.04 Revocation and Effect of Consents and Waivers. A
consent to an amendment or a waiver by a Holder of a Security shall bind the
Holder and every subsequent Holder of that Security or portion of the Security
that evidences the same debt as the consenting Holder's Security, even if
notation of the consent or waiver is not made on the Security. However, any such
Holder or subsequent Holder may revoke the consent or waiver as to such Holder's
Security or portion of the Security if the Trustee receives the notice of
revocation before the date the amendment or waiver becomes effective. After an
amendment or waiver becomes effective, it shall bind every Securityholder. An
amendment or waiver becomes effective upon the execution of such amendment or
waiver by the Trustee.
75
The Company may, but shall not be obligated to, fix a record date
for the purpose of determining the Securityholders entitled to give their
consent or take any other action described above or required or permitted to be
taken pursuant to this Indenture. If a record date is fixed, then
notwithstanding the immediately preceding paragraph, those Persons who were
Securityholders at such record date (or their duly designated proxies), and only
those Persons, shall be entitled to give such consent or to revoke any consent
previously given or to take any such action, whether or not such Persons
continue to be Holders after such record date. No such consent shall be valid or
effective for more than 120 days after such record date.
SECTION 9.05 Notation on or Exchange of Securities. If an amendment
changes the terms of a Security, the Trustee may require the Holder of the
Security to deliver it to the Trustee. The Trustee may place an appropriate
notation on the Security regarding the changed terms and return it to the
Holder. Alternatively, if the Company or the Trustee so determines, the Company
in exchange for the Security shall issue and the Trustee shall authenticate a
new Security that reflects the changed terms. Failure to make the appropriate
notation or to issue a new Security shall not affect the validity of such
amendment.
SECTION 9.06 Trustee to Sign Amendments. The Trustee shall sign any
amendment authorized pursuant to this Article IX if the amendment does not
adversely affect the rights, duties, liabilities or immunities of the Trustee.
If it does, the Trustee may but need not sign it. In signing such amendment, the
Trustee shall be entitled to receive indemnity reasonably satisfactory to it and
to receive, and (subject to Section 7.01) shall be fully protected in relying
upon, an Officers' Certificate and an Opinion of Counsel stating that such
amendment is authorized or permitted by this Indenture.
SECTION 9.07 Payment for Consent. Neither the Company nor any
Affiliate of the Company shall, directly or indirectly, pay or cause to be paid
any consideration, whether by way of interest, fee or otherwise, to any Holder
for or as an inducement to any consent, waiver or amendment of any of the terms
or provisions of this Indenture or the Securities unless such consideration is
offered to be paid to all Holders that so consent, waive or agree to amend in
the time frame set forth in solicitation documents relating to such consent,
waiver or agreement.
ARTICLE X
Miscellaneous
SECTION 10.01 Trust Indenture Act Controls. If any provision of this
Indenture limits, qualifies or conflicts with another provision which is
required to be included in this Indenture by the TIA, the required provision
shall control.
76
SECTION 10.02 Notices. Any notice or communication shall be in
writing and delivered in person or mailed by first-class mail addressed as
follows:
if to the Company:
Buffets Holdings, Inc.
0000 Xxxxxx Xxx
Xxxxx, Xxxxxxxxx 00000
Attention: General Counsel
with a copy to:
Xxxx, Weiss, Rifkind, Xxxxxxx & Xxxxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxxxxx
if to the Trustee:
U.S. Bank National Association
000 Xxxx Xxxxx Xxxxxx
Xxxxx 000
Xx. Xxxx, Xxxxxxxxx 00000
Attention: Corporate Trust Services
The Company or the Trustee by notice to the other may designate
additional or different addresses for subsequent notices or communications.
Any notice or communication delivered in person or mailed to a
Securityholder shall be delivered in person or mailed to the Securityholder at
the Securityholder's address as it appears on the registration books of the
Registrar and shall be sufficiently given if so mailed within the time
prescribed.
Failure to deliver or mail a notice or communication to a
Securityholder or any defect in it shall not affect its sufficiency with respect
to other Securityholders. If a notice or communication is delivered or mailed in
the manner provided above, it is duly given, whether or not the addressee
receives it.
SECTION 10.03 Communication by Holders with Other Holders.
Securityholders may communicate pursuant to TIA Section 312(b) with other
Securityholders with respect to their rights under this Indenture or the
Securities. The Company, the Trustee, the Registrar and anyone else shall have
the protection of TIA Section 312(c).
77
SECTION 10.04 Certificate and Opinion as to Conditions Precedent.
Upon any request or application by the Company to the Trustee to take or refrain
from taking any action under this Indenture, the Company shall furnish to the
Trustee:
(1) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee stating that, in the opinion of the signers,
all conditions precedent, if any, provided for in this Indenture relating
to the proposed action have been complied with; and
(2) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee stating that, in the opinion of such counsel,
all such conditions precedent have been complied with.
SECTION 10.05 Statements Required in Certificate or Opinion. Each
certificate or opinion with respect to compliance with a covenant or condition
provided for in this Indenture shall include:
(1) a statement that the individual making such certificate or
opinion has read such covenant or condition;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(3) a statement that, in the opinion of such individual, he has
made such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such covenant or
condition has been complied with; and
(4) a statement as to whether or not, in the opinion of such
individual, such covenant or condition has been complied with.
SECTION 10.06 When Securities Disregarded. In determining whether
the Holders of the required principal amount at maturity of Securities have
concurred in any direction, waiver or consent, Securities owned by the Company
or by any Person directly or indirectly controlling or controlled by or under
direct or indirect common control with the Company shall be disregarded and
deemed not to be outstanding, except that, for the purpose of determining
whether the Trustee shall be protected in relying on any such direction, waiver
or consent, only Securities which the Trustee knows are so owned shall be so
disregarded. Also, subject to the foregoing, only Securities outstanding at the
time shall be considered in any such determination.
SECTION 10.07 Rules by Trustee, Paying Agent and Registrar. The
Trustee may make reasonable rules for action by or a meeting of Securityholders.
The Registrar and the Paying Agent may make reasonable rules for their
functions.
78
SECTION 10.08 Legal Holidays. A "Legal Holiday" is a Saturday, a
Sunday or a day on which banking institutions are not required to be open in the
State of New York. If a payment date is a Legal Holiday, payment shall be made
on the next succeeding day that is not a Legal Holiday, and no interest shall
accrue for the intervening period. If a regular record date is a Legal Holiday,
the record date shall not be affected.
SECTION 10.09 GOVERNING LAW. THIS INDENTURE AND THE SECURITIES SHALL
BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO
THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE
REQUIRED THEREBY.
SECTION 10.10 No Recourse Against Others. A director, officer,
employee, incorporator or stockholder, as such, of the Company shall not have
any liability for any obligations of the Company under the Securities or this
Indenture or for any claim based on, in respect of or by reason of such
obligations or their creation. By accepting a Security, each Securityholder
waives and releases all such liability. The waiver and release shall be part of
the consideration for the issue of the Securities.
SECTION 10.11 Successors. All agreements of the Company in this
Indenture and the Securities shall bind its successors. All agreements of the
Trustee in this Indenture shall bind its successors.
SECTION 10.12 Multiple Originals. The parties may sign any number of
copies of this Indenture. Each signed copy shall be an original, but all of them
together represent the same agreement. One signed copy is enough to prove this
Indenture.
SECTION 10.13 Table of Contents; Headings. The table of contents,
cross-reference sheet and headings of the Articles and Sections of this
Indenture have been inserted for convenience of reference only, are not intended
to be considered a part hereof and shall not modify or restrict any of the terms
or provisions hereof.
79
IN WITNESS WHEREOF, the parties have caused this Indenture to be
duly executed as of the date first written above.
BUFFETS HOLDINGS, INC.,
by
/s/ R. Xxxxxxx Xxxxxxx, Jr.
-----------------------------------
Name: R. Xxxxxxx Xxxxxxx, Jr.
Title: Executive Vice President and
Chief Financial Officer
U.S. BANK NATIONAL ASSOCIATION,
by
/s/ Xxxxxxx X. Xxxxxxxx
-----------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Vice President
Rule 144A/REGULATION S/IAI APPENDIX
PROVISIONS RELATING TO INITIAL SECURITIES,
PRIVATE EXCHANGE SECURITIES AND EXCHANGE SECURITIES
1. Definitions
1.1 Definitions
For the purposes of this Appendix the following terms shall have the
meanings indicated below:
"Applicable Procedures" means, with respect to any transfer or
transaction involving a Temporary Regulation S Global Security or beneficial
interest therein, the rules and procedures of the Depository for such a
Temporary Regulation S Global Security, to the extent applicable to such
transaction and as in effect from time to time.
"Definitive Security" means a certificated Initial Security or
Exchange Security or Private Exchange Security bearing, if required, the
appropriate restricted securities legend set forth in Section 2.3(e).
"Depository" means The Depository Trust Company, its nominees and
their respective successors.
"Distribution Compliance Period", with respect to any Securities,
means the period of 40 consecutive days beginning on and including the later of
(1) the day on which such Securities are first offered to Persons other than
distributors (as defined in Regulation S under the Securities Act) in reliance
on Regulation S and (2) the issue date with respect to such Securities.
"Exchange Securities" means (1) the 13.875% Senior Discount Notes
due 2010 issued pursuant to the Indenture in connection with a Registered
Exchange Offer pursuant to a Registration Rights Agreement and (2) Additional
Securities, if any, offered and sold by the Company pursuant to a registration
statement filed with the SEC under the Securities Act.
"IAI" means an institutional "accredited investor," as defined in
Rule 501(a) (1), (2), (3) or (7) of Regulation D under the Securities Act.
"Initial Purchasers" means (1) with respect to the Initial
Securities issued on the Issue Date, Credit Suisse First Boston LLC and (2) with
respect to each issuance of Additional Securities, the Persons purchasing
Additional Securities under the related Purchase Agreement.
"Initial Securities" means (1) $132,000,000 aggregate principal
amount at maturity of 13.875% Senior Discount Notes due 2010 issued on the Issue
Date and
2
(2) Additional Securities, if any, issued in a transaction exempt from the
registration requirements of the Securities Act.
"Private Exchange" means the offer by the Company, pursuant to a
Registration Rights Agreement, to the Initial Purchasers to issue and deliver to
each such Initial Purchaser, in exchange for the Initial Securities held by such
Initial Purchaser as part of the initial distribution of such Initial
Securities, a like aggregate principal amount of Private Exchange Securities.
"Private Exchange Securities" means any 13.875% Senior Discount
Notes due 2010 issued in connection with a Private Exchange.
"Purchase Agreement" means (1) with respect to the Initial
Securities issued on the Issue Date, the Purchase Agreement dated May 11, 2004,
between the Company and the Initial Purchaser and (2) with respect to each
issuance of Additional Securities, the purchase agreement or underwriting
agreement among the Company and the Persons purchasing such Additional
Securities.
"QIB" means a "qualified institutional buyer" as defined in Rule
144A.
"Registered Exchange Offer" means the offer by the Company, pursuant
to a Registration Rights Agreement, to certain Holders of Initial Securities, to
issue and deliver to such Holders, in exchange for the Initial Securities, a
like aggregate principal amount of Exchange Securities registered under the
Securities Act.
"Registration Default" has the meaning given to such term in the
Registration Rights Agreement.
"Registration Rights Agreement" means (1) with respect to the
Initial Securities issued on the Issue Date, the Registration Rights Agreement
dated May 18, 2004, among the Company and the Initial Purchasers and (2) with
respect to each issuance of Additional Securities issued in a transaction exempt
from the registration requirements of the Securities Act, the registration
rights agreement, if any, between the Company and the Persons purchasing such
Additional Securities under the related Purchase Agreement.
"Rule 144A Securities" means all Securities offered and sold to QIBs
in reliance on Rule 144A.
"Securities" means the Initial Securities, the Exchange Securities
and the Private Exchange Securities, treated as a single class under the
Indenture.
"Securities Act" means the Securities Act of 1933.
"Securities Custodian" means the custodian with respect to a Global
Security (as appointed by the Depository), or any successor Person thereto, and
shall initially be the Trustee.
3
"Shelf Registration Statement" means the registration statement
issued by the Company in connection with the offer and sale of Initial
Securities or Private Exchange Securities pursuant to a Registration Rights
Agreement.
"Transfer Restricted Securities" means Securities that bear or are
required to bear a legend relating to restrictions on transfer relating to the
Securities Act set forth in Section 2.3(e).
1.2 Other Definitions
Defined in
Term Section:
------------------------------------------ ----------
Agent Members 2.1(b)
Global Securities 2.1(a)
IAI Global Security 2.1(a)
Permanent Regulation S Global Security 2.1(a)
Regulation S 2.1(a)
Regulation S Global Security 2.1(a)
Rule 144A 2.1(a)
Rule 144A Global Security 2.1(a)
Temporary Regulation S Global Security 2.1(a)
2. The Securities
2.1 (a) Form and Dating. The Initial Securities will be offered and sold
by the Company pursuant to a Purchase Agreement. The Initial Securities will be
resold initially only to (i) QIBs in reliance on Rule 144A under the Securities
Act ("Rule 144A") and (ii) Persons other than U.S. Persons (as defined in
Regulation S) in reliance on Regulation S under the Securities Act ("Regulation
S"). Initial Securities may thereafter be transferred to, among others, QIBs,
IAIs and purchasers in reliance on Regulation S, subject to the restrictions on
transfer set forth herein. Initial Securities initially resold pursuant to Rule
144A shall be issued initially in the form of one or more global Securities in
definitive, fully registered form (collectively, the "Rule 144A Global
Security"); Initial Securities initially resold to IAIs shall be issued
initially in the form of one or more global Securities in definitive, fully
registered form (collectively, the "IAI Global Security"); and Initial
Securities initially resold pursuant to Regulation S shall be issued initially
in the form of one or more temporary global securities in fully registered form
(collectively, the "Temporary Regulation S Global Security"), in each case
without interest coupons and with the global securities legend and the
applicable restricted securities legend set forth in Exhibit A hereto, which
shall be deposited on behalf of the purchasers of the Initial Securities
represented thereby with the Securities Custodian and registered in the name of
the Depository or a nominee of the Depository, duly executed by the Company and
authenticated by the Trustee as provided in this Indenture. Except as set forth
in this Section 2.1(a), beneficial ownership interests in the Temporary
Regulation S Global Security will not be exchangeable for interests in the Rule
144A
4
Global Security, the IAI Global Security, a permanent global security (the
"Permanent Regulation S Global Security", and together with the Temporary
Regulation S Global Security, the "Regulation S Global Security") or any other
Security prior to the expiration of the Distribution Compliance Period and then,
after the expiration of the Distribution Compliance Period, may be exchanged for
interests in a Rule 144A Global Security, an IAI Global Security or the
Permanent Regulation S Global Security only upon certification in form
reasonably satisfactory to the Trustee that (i) beneficial ownership interests
in such Temporary Regulation S Global Security are owned either by non-U.S.
persons or U.S. persons who purchased such interests in a transaction that did
not require registration under the Securities Act and (ii) in the case of an
exchange for an IAI Global Security, certification that the interest in the
Temporary Regulation S Global Security is being transferred to an IAI acquiring
the securities for its own account or for the account of another IAI.
Beneficial interests in Temporary Regulation S Global Securities or
IAI Global Securities may be exchanged for interests in Rule 144A Global
Securities if (1) such exchange occurs in connection with a transfer of
Securities in compliance with Rule 144A and (2) the transferor of the beneficial
interest in the Temporary Regulation S Global Security or the IAI Global
Security, as applicable, first delivers to the Trustee a written certificate (in
a form satisfactory to the Trustee) to the effect that the beneficial interest
in the Temporary Regulation S Global Security or the IAI Global Security, as
applicable, is being transferred to a Person (a) who the transferor reasonably
believes to be a QIB, (b) purchasing for its own account or the account of a QIB
in a transaction meeting the requirements of Rule 144A, and (c) in accordance
with all applicable securities laws of the States of the United States and other
jurisdictions.
Beneficial interests in Temporary Regulation S Global Securities and
Rule 144A Global Securities may be exchanged for an interest in IAI Global
Securities if (1) such exchange occurs in connection with a transfer of the
securities in compliance with an exemption under the Securities Act and (2) the
transferor of the Regulation S Global Security or Rule 144A Global Security, as
applicable, first delivers to the trustee a written certificate (substantially
in the form of Exhibit C) to the effect that (A) the Regulation S Global
Security or Rule 144A Global Security, as applicable, is being transferred to an
IAI acquiring the securities for its own account or for the account of another
IAI, in each case in a minimum principal amount at maturity of Securities of
$250,000, for investment purposes and not with a view to or for offer or sale in
connection with any distribution in violation of the Securities Act and (B) in
accordance with all applicable securities laws of the States of the United
States and other jurisdictions.
Beneficial interests in a Rule 144A Global Security or an IAI Global
Security may be transferred to a Person who takes delivery in the form of an
interest in a Regulation S Global Security, whether before or after the
expiration of the Distribution Compliance Period, only if the transferor first
delivers to the Trustee a written certificate (in the form provided in the
Indenture) to the effect that such transfer is being made in accordance with
Rule 903 or 904 of Regulation S or Rule 144 (if applicable).
5
The Rule 144A Global Security, the IAI Global Security, the
Temporary Regulation S Global Security and the Permanent Regulation S Global
Security are collectively referred to herein as "Global Securities". The
aggregate principal amount at maturity of the Global Securities may from time to
time be increased or decreased by adjustments made on the records of the Trustee
and the Depository or its nominee as hereinafter provided.
(b) Book-Entry Provisions. This Section 2.1(b) shall apply only to a
Global Security deposited with or on behalf of the Depository.
The Company shall execute and the Trustee shall, in accordance with
this Section 2.1(b), authenticate and deliver initially one or more Global
Securities that (a) shall be registered in the name of the Depository for such
Global Security or Global Securities or the nominee of such Depository and (b)
shall be delivered by the Trustee to such Depository or pursuant to such
Depository's instructions or held by the Trustee as custodian for the
Depository.
Members of, or participants in, the Depository ("Agent Members")
shall have no rights under this Indenture with respect to any Global Security
held on their behalf by the Depository or by the Trustee as the custodian of the
Depository or under such Global Security, and the Company, the Trustee and any
agent of the Company or the Trustee shall be entitled to treat the Depository as
the absolute owner of such Global Security for all purposes whatsoever.
Notwithstanding the foregoing, nothing herein shall prevent the Company, the
Trustee or any agent of the Company or the Trustee from giving effect to any
written certification, proxy or other authorization furnished by the Depository
or impair, as between the Depository and its Agent Members, the operation of
customary practices of such Depository governing the exercise of the rights of a
holder of a beneficial interest in any Global Security.
(c) Definitive Securities. Except as provided in this Section 2.1 or
Section 2.3 or 2.4, owners of beneficial interests in Global Securities
shall not be entitled to receive physical delivery of Definitive
Securities.
2.2 Authentication
The Trustee shall authenticate and deliver: (1) on the Issue Date,
an aggregate principal amount at maturity of $132,000,000 of 13.875% Senior
Discount Notes due 2010, (2) any Additional Securities for an original issue in
an aggregate principal amount at maturity specified in the written order of the
Company pursuant to Section 2.02 of the Indenture and (3) Exchange Securities or
Private Exchange Securities for issue only in a Registered Exchange Offer or a
Private Exchange, respectively, pursuant to a Registration Rights Agreement, for
a like principal amount at maturity of Initial Securities, in each case upon a
written order of the Company signed by two Officers or by an Officer and either
an Assistant Treasurer or an Assistant Secretary of the Company. Such order
shall specify the amount of the Securities to be authenticated and the date on
which the original issue of Securities is to be authenticated and, in the case
of
6
any issuance of Additional Securities pursuant to Section 2.13 of the Indenture,
shall certify that such issuance is in compliance with Section 4.03 of the
Indenture.
2.3 Transfer and Exchange
(a) Transfer and Exchange of Definitive Securities. When
Definitive Securities are presented to the Registrar with a request:
(x) to register the transfer of such Definitive Securities; or
(y) to exchange such Definitive Securities for an equal principal
amount at maturity of Definitive Securities of other
authorized denominations,
the Registrar shall register the transfer or make the exchange as requested if
its reasonable requirements for such transaction are met; provided, however,
that the Definitive Securities surrendered for transfer or exchange:
(i) shall be duly endorsed or accompanied by a written instrument of
transfer in form reasonably satisfactory to the Company and the Registrar,
duly executed by the Holder thereof or its attorney duly authorized in
writing; and
(ii) if such Definitive Securities are required to bear a restricted
securities legend, they are being transferred or exchanged pursuant to an
effective registration statement under the Securities Act, pursuant to
Section 2.3(b) or pursuant to clause (A), (B) or (C) below, and are
accompanied by the following additional information and documents, as
applicable:
(A) if such Definitive Securities are being delivered to the
Registrar by a Holder for registration in the name of such Holder,
without transfer, a certification from such Holder to that effect;
or
(B) if such Definitive Securities are being transferred to the
Company, a certification to that effect; or
(C) if such Definitive Securities are being transferred (x)
pursuant to an exemption from registration in accordance with Rule
144A, Regulation S or Rule 144 under the Securities Act; or (y) in
reliance upon another exemption from the requirements of the
Securities Act: (i) a certification to that effect (in the form set
forth on the reverse of the Security) and (ii) if the Company so
requests, an opinion of counsel or other evidence reasonably
satisfactory to it as to the compliance with the restrictions set
forth in the legend set forth in Section 2.3(e)(i).
(b) Restrictions on Transfer of a Definitive Security for a
Beneficial Interest in a Global Security. A Definitive Security may not be
exchanged for a beneficial interest in a Rule 144A Global Security, an IAI
Global Security or a Permanent
7
Regulation S Global Security except upon satisfaction of the requirements set
forth below. Upon receipt by the Trustee of a Definitive Security, duly endorsed
or accompanied by appropriate instruments of transfer, in form satisfactory to
the Trustee, together with:
(i) certification, in the form set forth on the reverse of the
Security, that such Definitive Security is either (A) being transferred to
a QIB in accordance with Rule 144A, (B) being transferred to an IAI or (C)
being transferred after expiration of the Distribution Compliance Period
by a Person who initially purchased such Security in reliance on
Regulation S to a buyer who elects to hold its interest in such Security
in the form of a beneficial interest in the Permanent Regulation S Global
Security; and
(ii) written instructions directing the Trustee to make, or to
direct the Securities Custodian to make, an adjustment on its books and
records with respect to such Rule 144A Global Security (in the case of a
transfer pursuant to clause (b)(i)(A)), IAI Global Security (in the case
of a transfer pursuant to clause (b)(1)(B)) or Permanent Regulation S
Global Security (in the case of a transfer pursuant to clause (b)(i)(C))
to reflect an increase in the aggregate principal amount at maturity of
the Securities represented by the Rule 144A Global Security, IAI Global
Security or Permanent Regulation S Global Security, as applicable, such
instructions to contain information regarding the Depository account to be
credited with such increase,
then the Trustee shall cancel such Definitive Security and cause, or direct the
Securities Custodian to cause, in accordance with the standing instructions and
procedures existing between the Depository and the Securities Custodian, the
aggregate principal amount at maturity of Securities represented by the Rule
144A Global Security, IAI Global Security or Permanent Regulation S Global
Security, as applicable, to be increased by the aggregate principal amount at
maturity of the Definitive Security to be exchanged and shall credit or cause to
be credited to the account of the Person specified in such instructions a
beneficial interest in the Rule 144A Global Security, IAI Global Security or
Permanent Regulation S Global Security, as applicable, equal to the principal
amount at maturity of the Definitive Security so canceled. If no Rule 144A
Global Securities, IAI Global Securities or Permanent Regulation S Global
Securities, as applicable, are then outstanding, the Company shall issue and the
Trustee shall authenticate, upon written order of the Company in the form of an
Officers' Certificate of the Company, a new Rule 144A Global Security, IAI
Global Security or Permanent Regulation S Global Security, as applicable, in the
appropriate principal amount.
(c) Transfer and Exchange of Global Securities.
(i) The transfer and exchange of Global Securities or beneficial
interests therein shall be effected through the Depository, in accordance
with this Indenture (including applicable restrictions on transfer set
forth herein, if any) and the procedures of the Depository therefor. A
transferor of a beneficial interest in a
8
Global Security shall deliver to the Registrar a written order given in
accordance with the Depository's procedures containing information
regarding the participant account of the Depository to be credited with a
beneficial interest in the Global Security. The Registrar shall, in
accordance with such instructions, instruct the Depository to credit to
the account of the Person specified in such instructions a beneficial
interest in the Global Security and to debit the account of the Person
making the transfer the beneficial interest in the Global Security being
transferred.
(ii) If the proposed transfer is a transfer of a beneficial interest
in one Global Security to a beneficial interest in another Global
Security, the Registrar shall reflect on its books and records the date
and an increase in the principal amount at maturity of the Global Security
to which such interest is being transferred in an amount equal to the
principal amount at maturity of the interest to be so transferred, and the
Registrar shall reflect on its books and records the date and a
corresponding decrease in the principal amount of the Global Security from
which such interest is being transferred.
(iii) Notwithstanding any other provisions of this Appendix (other
than the provisions set forth in Section 2.4), a Global Security may not
be transferred as a whole except by the Depository to a nominee of the
Depository or by a nominee of the Depository to the Depository or another
nominee of the Depository or by the Depository or any such nominee to a
successor Depository or a nominee of such successor Depository.
(iv) In the event that a Global Security is exchanged for Definitive
Securities pursuant to Section 2.4 of this Appendix, prior to the
consummation of a Registered Exchange Offer or the effectiveness of a
Shelf Registration Statement with respect to such Securities, such
Securities may be exchanged only in accordance with such procedures as are
substantially consistent with the provisions of this Section 2.3
(including the certification requirements set forth on the reverse of the
Securities intended to ensure that such transfers comply with Rule 144A,
Regulation S or another applicable exemption under the Securities Act, as
the case may be) and such other procedures as may from time to time be
adopted by the Company.
(d) Restrictions on Transfer of Temporary Regulation S Global
Securities. During the Distribution Compliance Period, beneficial ownership
interests in Temporary Regulation S Global Securities may only be sold, pledged
or transferred in accordance with the Applicable Procedures and only (i) to the
Company, (ii) in an offshore transaction in accordance with Regulation S (other
than a transaction resulting in an exchange for an interest in a Permanent
Regulation S Global Security) or (iii) pursuant to an effective registration
statement under the Securities Act, in each case in accordance with any
applicable securities laws of any State of the United States.
9
(e) Legend.
(i) Except as permitted by the following paragraphs (ii), (iii) and
(iv), each Security certificate evidencing the Global Securities (and all
Securities issued in exchange therefor or in substitution thereof), in the
case of Securities offered otherwise than in reliance on Regulation S,
shall bear a legend in substantially the following form:
THIS SECURITY (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A
TRANSACTION EXEMPT FROM REGISTRATION UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND THIS
SECURITY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE
ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM.
EACH PURCHASER OF THIS SECURITY IS HEREBY NOTIFIED THAT THE SELLER
OF THIS SECURITY MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS
OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER.
THE HOLDER OF THIS SECURITY AGREES FOR THE BENEFIT OF THE COMPANY
THAT (A) THIS SECURITY MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE
TRANSFERRED, ONLY (I) TO THE COMPANY, (II) IN THE UNITED STATES TO A
PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES
ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (III)
TO AN INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING OF RULE
501(A)(1),(2),(3) OR (7) UNDER THE SECURITIES ACT THAT IS AN
INSTITUTIONAL INVESTOR ACQUIRING THE SECURITIES FOR ITS OWN ACCOUNT
OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL ACCREDITED INVESTOR, IN
EACH CASE IN A MINIMUM PRINCIPAL AMOUNT AT MATURITY OF SECURITIES OF
$250,000, FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO OR FOR
OFFER OR SALE IN CONNECTION WITH ANY DISTRIBUTION IN VIOLATION OF
THE SECURITIES ACT, (IV) OUTSIDE THE UNITED STATES IN AN OFFSHORE
TRANSACTION IN ACCORDANCE WITH RULE 904 UNDER THE SECURITIES ACT,
(V) PURSUANT TO EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT
PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE) OR (VI) PURSUANT TO
AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN
EACH OF CASES (I) THROUGH (VI), IN ACCORDANCE WITH ANY APPLICABLE
SECURITIES LAWS OF ANY STATE OF THE UNITED STATES, AND (B) THE
HOLDER
10
WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY
PURCHASER OF THIS SECURITY FROM IT OF THE RESALE RESTRICTIONS
REFERRED TO IN (A) ABOVE.
Each certificate evidencing a Security offered in reliance on
Regulation S shall, in addition to the foregoing, bear a legend in
substantially the following form:
THIS SECURITY (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A
TRANSACTION ORIGINALLY EXEMPT FROM REGISTRATION UNDER THE SECURITIES
ACT, AND MAY NOT BE TRANSFERRED IN THE UNITED STATES OR TO, OR FOR
THE ACCOUNT OR BENEFIT OF, ANY U.S. PERSON EXCEPT PURSUANT TO AN
AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT AND ALL APPLICABLE STATE SECURITIES LAWS. TERMS USED
ABOVE HAVE THE MEANINGS GIVEN TO THEM IN REGULATION S UNDER THE
SECURITIES ACT.
Each Definitive Security shall also bear the following additional
legend:
IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE
REGISTRAR AND TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION
AS SUCH TRANSFER AGENT MAY REASONABLY REQUIRE TO CONFIRM THAT THE
TRANSFER COMPLIES WITH THE FOREGOING RESTRICTIONS.
(ii) Upon any sale or transfer of a Transfer Restricted Security
(including any Transfer Restricted Security represented by a Global
Security) pursuant to Rule 144 under the Securities Act, the Registrar
shall permit the transferee thereof to exchange such Transfer Restricted
Security for a Definitive Security that does not bear the legend set forth
above and rescind any restriction on the transfer of such Transfer
Restricted Security, if the transferor thereof certifies in writing to the
Registrar that such sale or transfer was made in reliance on Rule 144
(such certification to be in the form set forth on the reverse of the
Security).
(iii) After a transfer of any Initial Securities or Private Exchange
Securities pursuant to and during the period of the effectiveness of a
Shelf Registration Statement with respect to such Initial Securities or
Private Exchange Securities, as the case may be, all requirements
pertaining to legends on such Initial Security or such Private Exchange
Security will cease to apply, the requirements requiring any such Initial
Security or such Private Exchange Security issued to certain Holders be
issued in global form will cease to apply, and a certificated Initial
Security or Private Exchange Security or an Initial Security or Private
Exchange Security in global form, in each case without restrictive
transfer legends, will be available to the transferee of the Holder of
such Initial Securities
11
or Private Exchange Securities upon exchange of such transferring Holder's
certificated Initial Security or Private Exchange Security or directions
to transfer such Holder's interest in the Global Security, as applicable.
(iv) Upon the consummation of a Registered Exchange Offer with
respect to the Initial Securities, all requirements pertaining to such
Initial Securities that Initial Securities issued to certain Holders be
issued in global form will still apply with respect to Holders of such
Initial Securities that do not exchange their Initial Securities, and
Exchange Securities in certificated or global form, in each case without
the restricted securities legend set forth in Exhibit A hereto will be
available to Holders that exchange such Initial Securities in such
Registered Exchange Offer.
(v) Upon the consummation of a Private Exchange with respect to the
Initial Securities, all requirements pertaining to such Initial Securities
that Initial Securities issued to certain Holders be issued in global form
will still apply with respect to Holders of such Initial Securities that
do not exchange their Initial Securities, and Private Exchange Securities
in global form with the global securities legend and the applicable
restricted securities legend set forth in Exhibit A hereto will be
available to Holders that exchange such Initial Securities in such Private
Exchange.
(f) Cancellation or Adjustment of Global Security. At such time as
all beneficial interests in a Global Security have either been exchanged for
Definitive Securities, redeemed, purchased or canceled, such Global Security
shall be returned to the Depository for cancellation or retained and canceled by
the Trustee. At any time prior to such cancellation, if any beneficial interest
in a Global Security is exchanged for Definitive Securities, redeemed, purchased
or canceled, the principal amount at maturity of Securities represented by such
Global Security shall be reduced and an adjustment shall be made on the books
and records of the Trustee (if it is then the Securities Custodian for such
Global Security) with respect to such Global Security, by the Trustee or the
Securities Custodian, to reflect such reduction.
(g) No Obligation of the Trustee.
(i) The Trustee shall have no responsibility or obligation to any
beneficial owner of a Global Security, a member of, or a participant in
the Depository or other Person with respect to the accuracy of the records
of the Depository or its nominee or of any participant or member thereof,
with respect to any ownership interest in the Securities or with respect
to the delivery to any participant, member, beneficial owner or other
Person (other than the Depository) of any notice (including any notice of
redemption) or the payment of any amount, under or with respect to such
Securities. All notices and communications to be given to the Holders and
all payments to be made to Holders under the Securities shall be given or
made only to or upon the order of the registered Holders (which shall be
the Depository or its nominee in the case of a Global Security). The
rights of
12
beneficial owners in any Global Security shall be exercised only through
the Depository subject to the applicable rules and procedures of the
Depository. The Trustee may rely and shall be fully protected in relying
upon information furnished by the Depository with respect to its members,
participants and any beneficial owners.
(ii) The Trustee shall have no obligation or duty to monitor,
determine or inquire as to compliance with any restrictions on transfer
imposed under this Indenture or under applicable law with respect to any
transfer of any interest in any Security (including any transfers between
or among Depository participants, members or beneficial owners in any
Global Security) other than to require delivery of such certificates and
other documentation or evidence as are expressly required by, and to do so
if and when expressly required by, the terms of this Indenture, and to
examine the same to determine substantial compliance as to form with the
express requirements hereof.
2.4 Definitive Securities
(a) A Global Security deposited with the Depository or with the
Trustee as Securities Custodian for the Depository pursuant to Section 2.1 shall
be transferred to the beneficial owners thereof in the form of Definitive
Securities in an aggregate principal amount at maturity equal to the principal
amount at maturity of such Global Security, in exchange for such Global
Security, only if such transfer complies with Section 2.3 hereof and (i) the
Depository notifies the Company that it is unwilling or unable to continue as
Depository for such Global Security and the Depository fails to appoint a
successor depositary or if at any time such Depository ceases to be a "clearing
agency" registered under the Exchange Act and, in either case, a successor
Depository is not appointed by the Company within 90 days of such notice, or
(ii) an Event of Default has occurred and is continuing or (iii) the Company, in
its sole discretion, notifies the Trustee in writing that it elects to cause the
issuance of Definitive Securities under this Indenture.
(b) Any Global Security that is transferable to the beneficial
owners thereof pursuant to this Section 2.4 shall be surrendered by the
Depository to the Trustee located at its principal corporate trust office in the
Borough of Manhattan, The City of New York, to be so transferred, in whole or
from time to time in part, without charge, and the Trustee shall authenticate
and deliver, upon such transfer of each portion of such Global Security, an
equal aggregate principal amount at maturity of Definitive Securities of
authorized denominations. Any portion of a Global Security transferred pursuant
to this Section 2.4 shall be executed, authenticated and delivered only in
denominations of $1,000 principal amount at maturity and any integral multiple
thereof and registered in such names as the Depository shall direct. Any
Definitive Security delivered in exchange for an interest in the Transfer
Restricted Security shall, except as otherwise provided by Section 2.3(e)
hereof, bear the applicable restricted securities legend and definitive note
legend set forth in Exhibit A hereto.
13
(c) Subject to the provisions of Section 2.4(b) hereof, the
registered Holder of a Global Security shall be entitled to grant proxies and
otherwise authorize any Person, including Agent Members and Persons that may
hold interests through Agent Members, to take any action which a Holder is
entitled to take under this Indenture or the Securities.
(d) In the event of the occurrence of one of the events specified in
Section 2.4(a) hereof, the Company shall promptly make available to the Trustee
a reasonable supply of Definitive Securities in definitive, fully registered
form without interest coupons. In the event that the Definitive Securities are
not issued to each such beneficial owner promptly after the Registrar has
received a request from the Holder of a Global Security to issue such Definitive
Security, the Company expressly acknowledges, with respect to the right of any
Holder to pursue a remedy pursuant to Article VI of the Indenture, the right of
any beneficial holder of Securities to pursue such remedy with respect to the
portion of the Global Security that represents such beneficial holder's
Securities as if such Definitive Securities had been issued.
EXHIBIT A
[FORM OF FACE OF INITIAL SECURITY]
[Global Securities Legend]
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), NEW YORK, NEW
YORK, TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR
PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR
SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY
PAYMENT IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC) ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN
WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH
SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE
LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE
INDENTURE REFERRED TO ON THE REVERSE HEREOF.
[[FOR REGULATION S GLOBAL SECURITY ONLY] UNTIL 40 DAYS AFTER THE
LATER OF COMMENCEMENT OR COMPLETION OF THE OFFERING, AN OFFER OR SALE OF
SECURITIES WITHIN THE UNITED STATES BY A DEALER (AS DEFINED IN THE SECURITIES
ACT) MAY VIOLATE THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT IF SUCH
OFFER OR SALE IS MADE OTHERWISE THAN IN ACCORDANCE WITH RULE 144A THEREUNDER.]
[Restricted Securities Legend for Securities Offered Otherwise than in Reliance
on Regulation S]
THIS SECURITY (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A
TRANSACTION EXEMPT FROM REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), AND THIS SECURITY MAY NOT BE OFFERED,
SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN
APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THIS SECURITY IS HEREBY
NOTIFIED THAT THE SELLER OF THIS SECURITY MAY BE RELYING ON THE EXEMPTION FROM
THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A
THEREUNDER.
A-1
THE HOLDER OF THIS SECURITY AGREES FOR THE BENEFIT OF THE COMPANY
THAT (A) THIS SECURITY MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED,
ONLY (I) TO THE COMPANY, (II) WITHIN THE UNITED STATES TO A PERSON WHOM THE
SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN
RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF
RULE 144A, (III) TO AN "ACCREDITED INVESTOR" WITHIN THE MEANING OF RULE
501(A)(1),(2),(3) OR (7) UNDER THE SECURITIES ACT THAT IS AN INSTITUTIONAL
INVESTOR ACQUIRING THE SECURITIES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF SUCH
AN INSTITUTIONAL ACCREDITED INVESTOR, IN EACH CASE IN A MINIMUM PRINCIPAL AMOUNT
AT MATURITY OF SECURITIES OF $250,000, FOR INVESTMENT PURPOSES AND NOT WITH A
VIEW TO OR FOR OFFER OR SALE IN CONNECTION WITH ANY DISTRIBUTION IN VIOLATION OF
THE SECURITIES ACT, (IV) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN
ACCORDANCE WITH RULE 904 UNDER THE SECURITIES ACT, (V) PURSUANT TO AN EXEMPTION
FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF
AVAILABLE) OR (VI) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT, IN EACH OF CASES (I) THROUGH (VI) IN ACCORDANCE WITH ANY
APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES, AND (B) THE HOLDER
WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THIS
SECURITY FROM IT OF THE RESALE RESTRICTIONS REFERRED TO IN (A) ABOVE.
[Restricted Securities Legend for Securities Offered in Reliance on Regulation
S.]
THIS SECURITY (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A
TRANSACTION ORIGINALLY EXEMPT FROM REGISTRATION UNDER THE U.S. SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), AND MAY NOT BE TRANSFERRED IN THE
UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, ANY U.S. PERSON EXCEPT
PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT AND ALL APPLICABLE STATE SECURITIES LAWS. TERMS USED ABOVE HAVE
THE MEANINGS GIVEN TO THEM IN REGULATION S UNDER THE SECURITIES ACT.
[Temporary Regulation S Global Security Legend]
EXCEPT AS SET FORTH BELOW, BENEFICIAL OWNERSHIP INTERESTS IN THIS
TEMPORARY REGULATION S GLOBAL SECURITY WILL NOT BE EXCHANGEABLE FOR INTERESTS IN
THE PERMANENT REGULATION S GLOBAL SECURITY OR ANY OTHER SECURITY REPRESENTING AN
INTEREST IN THE SECURITIES REPRESENTED HEREBY WHICH DO NOT CONTAIN A LEGEND
CONTAINING RESTRICTIONS ON TRANSFER, UNTIL THE EXPIRATION OF THE "40-DAY
DISTRIBUTION
A-2
COMPLIANCE PERIOD" (WITHIN THE MEANING OF RULE 903(b)(2) OF REGULATION S UNDER
THE SECURITIES ACT) AND THEN ONLY UPON CERTIFICATION IN FORM REASONABLY
SATISFACTORY TO THE TRUSTEE THAT SUCH BENEFICIAL INTERESTS ARE OWNED EITHER BY
NON-U.S. PERSONS OR U.S. PERSONS WHO PURCHASED SUCH INTERESTS IN A TRANSACTION
THAT DID NOT REQUIRE REGISTRATION UNDER THE SECURITIES ACT. DURING SUCH 40-DAY
DISTRIBUTION COMPLIANCE PERIOD, BENEFICIAL OWNERSHIP INTERESTS IN THIS TEMPORARY
REGULATION S GLOBAL SECURITY MAY ONLY BE SOLD, PLEDGED OR TRANSFERRED (I) TO THE
COMPANY, (II) OUTSIDE THE UNITED STATES IN A TRANSACTION IN ACCORDANCE WITH RULE
904 OF REGULATION S UNDER THE SECURITIES ACT, OR (III) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH OF CASES (I) THROUGH
(III) IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE
UNITED STATES. HOLDERS OF INTERESTS IN THIS TEMPORARY REGULATION S GLOBAL
SECURITY WILL NOTIFY ANY PURCHASER OF THIS SECURITY OF THE RESALE RESTRICTIONS
REFERRED TO ABOVE, IF THEN APPLICABLE.
AFTER THE EXPIRATION OF THE DISTRIBUTION COMPLIANCE PERIOD,
BENEFICIAL INTERESTS IN THIS TEMPORARY REGULATION S GLOBAL SECURITY MAY BE
EXCHANGED FOR INTERESTS IN A RULE 144A GLOBAL SECURITY ONLY IF (1) SUCH EXCHANGE
OCCURS IN CONNECTION WITH A TRANSFER OF THE SECURITIES IN COMPLIANCE WITH RULE
144A AND (2) THE TRANSFEROR OF THE REGULATION S GLOBAL SECURITY FIRST DELIVERS
TO THE TRUSTEE A WRITTEN CERTIFICATE (IN THE FORM ATTACHED TO THIS CERTIFICATE)
TO THE EFFECT THAT THE REGULATION S GLOBAL SECURITY IS BEING TRANSFERRED (A) TO
A PERSON WHO THE TRANSFEROR REASONABLY BELIEVES TO BE A QUALIFIED INSTITUTIONAL
BUYER WITHIN THE MEANING OF RULE 144A, (B) TO A PERSON WHO IS PURCHASING FOR ITS
OWN ACCOUNT OR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144A, AND (C) IN ACCORDANCE WITH ALL APPLICABLE
SECURITIES LAWS OF THE STATES OF THE UNITED STATES AND OTHER JURISDICTIONS.
AFTER THE EXPIRATION OF THE DISTRIBUTION COMPLIANCE PERIOD,
BENEFICIAL INTERESTS IN THIS TEMPORARY REGULATION S GLOBAL SECURITY MAY BE
EXCHANGED FOR INTERESTS IN AN IAI GLOBAL SECURITY ONLY IF (1) SUCH EXCHANGE
OCCURS IN CONNECTION WITH A TRANSFER OF THE SECURITIES IN COMPLIANCE WITH AN
EXEMPTION UNDER THE SECURITIES ACT AND (2) THE TRANSFEROR OF THE REGULATION S
GLOBAL SECURITY FIRST DELIVERS TO THE TRUSTEE A WRITTEN CERTIFICATE (IN THE FORM
ATTACHED TO THIS CERTIFICATE) TO THE EFFECT THAT THE REGULATION S GLOBAL
SECURITY IS BEING TRANSFERRED (A) TO AN "ACCREDITED INVESTOR" WITHIN THE MEANING
A-3
OF RULE 501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT THAT IS AN
INSTITUTIONAL INVESTOR ACQUIRING THE SECURITIES FOR ITS OWN ACCOUNT OR FOR THE
ACCOUNT OF SUCH AN INSTITUTIONAL ACCREDITED INVESTOR, IN EACH CASE IN A MINIMUM
PRINCIPAL AMOUNT AT MATURITY OF SECURITIES OF $250,000, FOR INVESTMENT PURPOSES
AND NOT WITH A VIEW TO OR FOR OFFER OR SALE IN CONNECTION WITH ANY DISTRIBUTION
IN VIOLATION OF THE SECURITIES ACT AND (B) IN ACCORDANCE WITH ALL APPLICABLE
SECURITIES LAWS OF THE STATES OF THE UNITED STATES AND OTHER JURISDICTIONS.
BENEFICIAL INTERESTS IN A RULE 144A GLOBAL SECURITY OR AN IAI GLOBAL
SECURITY MAY BE TRANSFERRED TO A PERSON WHO TAKES DELIVERY IN THE FORM OF AN
INTEREST IN THE REGULATION S GLOBAL SECURITY, WHETHER BEFORE OR AFTER THE
EXPIRATION OF THE 40-DAY DISTRIBUTION COMPLIANCE PERIOD, ONLY IF THE TRANSFEROR
FIRST DELIVERS TO THE TRUSTEE A WRITTEN CERTIFICATE (IN THE FORM ATTACHED TO
THIS CERTIFICATE) TO THE EFFECT THAT SUCH TRANSFER IS BEING MADE IN ACCORDANCE
WITH RULE 903 OR 904 OF REGULATION S OR RULE 144 (IF AVAILABLE).
[Definitive Securities Legend]
IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE
REGISTRAR AND TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS SUCH
TRANSFER AGENT MAY REASONABLY REQUIRE TO CONFIRM THAT THE TRANSFER COMPLIES WITH
THE FOREGOING RESTRICTIONS.
THE COMPANY (WHICH TERM INCLUDES ANY SUCCESSOR THERETO) AGREES, AND
BY ACCEPTING A BENEFICIAL OWNERSHIP INTEREST IN THIS SECURITY EACH HOLDER AND
ANY BENEFICIAL OWNER OF THIS SECURITY OR OWNER OF A BENEFICIAL INTEREST IN THIS
SECURITY WILL BE DEEMED TO HAVE AGREED, FOR UNITED STATES FEDERAL INCOME TAX
PURPOSES (i) TO TREAT THIS SECURITY AS A DEBT INSTRUMENT THAT IS SUBJECT TO
TREAS. REG. SEC. 1.1275-4 (THE "CONTINGENT PAYMENT REGULATIONS"), (II) TO ACCRUE
INTEREST WITH RESPECT TO THE SECURITY AS ORIGINAL ISSUE DISCOUNT FOR UNITED
STATES FEDERAL INCOME TAX PURPOSES ACCORDING TO THE "NONCONTINGENT BOND METHOD,"
SET FORTH IN THE CONTINGENT PAYMENT REGULATIONS, AND TO BE BOUND BY THE
COMPANY'S DETERMINATION OF THE "COMPARABLE YIELD" AND "PROJECTED PAYMENT
SCHEDULE," WITHIN THE MEANING OF THE CONTINGENT PAYMENT REGULATIONS, WITH
RESPECT TO THIS SECURITY, AND (III) TO TREAT THE POSSIBILITY THAT THE COMPANY
WILL PAY AMOUNTS IN EXCESS OF STATED INTEREST OR PRINCIPAL WITH RESPECT TO THE
NOTES (OTHER THAN (X) AN OPTIONAL REDEMPTION IN CONNECTION WITH A
A-4
PUBLIC EQUITY OFFERING, AS DESCRIBED IN SECTION 5 HEREOF, OR (Y) A PUT IN
CONNECTION WITH A PUBLIC EQUITY OFFERING AS DESCRIBED MORE FULLY IN SECTION 7
HEREOF) AS A CONTINGENCY THAT IS "REMOTE" OR "INCIDENTAL" WITHIN THE MEANING OF
TREAS. REG. SEC. 1.1275-2(H). THE COMPANY AGREES TO PROVIDE PROMPTLY TO THE
HOLDER OF THIS SECURITY, UPON WRITTEN REQUEST, THE COMPARABLE YIELD AND
PROJECTED PAYMENT SCHEDULE. ANY SUCH WRITTEN REQUEST SHOULD BE SENT TO THE
COMPANY AT THE FOLLOWING ADDRESS: 0000 Xxxxxx xxx, xxxxx, xxxxxxxxx 00000,
TELEPHONE NUMBER: (000) 000-0000.
A-5
BUFFETS HOLDINGS, INC.
13.875% SENIOR DISCOUNT NOTE DUE 2010
No. _____ CUSIP No. ______
$___________
BUFFETS HOLDINGS, INC., a Delaware corporation (the "Company"),
promises to pay to "Cede & Co.", or its registered assigns, the principal amount
at maturity of __________ Dollars on December 15, 2010.
Interest Payment Dates: January 31 and July 31
Record Dates: January 15 and July 15
Additional provisions of this Security are set forth on the other
side of this Security.
IN WITNESS WHEREOF, the parties have caused this instrument to be
duly executed.
Dated:
BUFFETS HOLDINGS, INC.,
by
___________________________________
Name:
Title:
by
___________________________________
Name:
Title:
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
U.S. BANK NATIONAL ASSOCIATION,
as Trustee, certifies that
this is one of the Securities
referred to in the Indenture,
by:
A-6
by:
___________________________________
Authorized Signatory
A-7
[FORM OF REVERSE SIDE OF INITIAL SECURITY]
13.875% SENIOR DISCOUNT NOTE DUE 2010
1. Interest and Accreted Value
BUFFETS HOLDINGS, INC., a Delaware corporation (such corporation,
and its successors and assigns under the Indenture hereinafter referred to,
being herein called the "Company"), promises to pay interest on the principal
amount at maturity of this Security at the rate per annum shown above. No cash
interest will accrue on the Securities prior to July 31, 2008. The Accreted
Value of each Security will increase from the date of issuance until July 31,
2008, at a rate of 13.875% per annum, reflecting the accrual of non-cash
interest, such that the Accreted Value will equal the stated principal amount at
maturity on July 31, 2008. Cash interest on the Securities will accrue at the
rate of 13.875% per annum from July 31, 2008, or from the most recent date to
which interest has been paid or provided for, and will be payable semiannually
in arrears on January 31 and July 31 of each year, commencing on January 31,
2009. The Company shall make each interest payment to the Holders of record of
the Securities on the immediately preceding January 15 and July 15. The Company
shall pay interest on overdue principal at 1% per annum in excess of the above
rate and will pay interest on overdue installments of interest at such higher
rate to the extent lawful. Interest will be computed on the basis of a 360-day
year of twelve 30-day months.
If a Registration Default (as defined in the Registration Rights
Agreement applicable to this Security) occurs, additional interest will accrue
on this Security at a rate of 0.25% per annum (increasing by an additional 0.25%
per annum after each consecutive 90-day period that occurs after the date on
which such Registration Default occurs up to a maximum additional interest rate
of 1.5%) from and including the date on which any such Registration Default
shall occur to but excluding the date on which all Registration Defaults have
been cured.
If the Leverage Ratio as of July 31, 2006 or July 31, 2008 (or if
either such date is not the end of an accounting period for the Company, then
the date that is the last day of a monthly accounting period that is nearest to
such date) is greater than 4.50 to 1.0 (in the case of July 31, 2006 or the last
date of the monthly accounting period nearest to such date) or 4.25 to 1.0 (in
the case of July 31, 2008 or the last date of the monthly accounting period
nearest to such date), additional interest will accrue on this Security at a
rate of 1.00% per annum ("Step-Up Interest"). Any such interest rate increase
will be permanent and cumulative up to a maximum of 2% per annum.
All additional interest that accrues on this Securities on or prior
to July 31, 2008, whether as a result of a Registration Default, Step-Up
Interest or default interest will be added to the Accreted Value of this
Security, and all additional interest that accrues thereafter will be payable in
cash to the Holder of this Security on each scheduled interest payment date
(except as provided in Section 2.11 of the Indenture).
A-8
"Accreted Value" means, as of any date (the "Specified Date"), the
amount provided below for each $1,000 principal amount at maturity of
Securities:
(a) if the Specified Date occurs on one of the following dates
(each, a "Semi-Annual Accrual Date"), the Accreted Value will equal the
amount set forth below for such Semi-Annual Accrual Date:
Semi-Annual Accreted
Accrual Date Value
-------------------------------------------------------------------------------- ----------
Issue Date...................................................................... $ 568.73
July 31, 2004................................................................... $ 584.74
January 31, 2005................................................................ $ 625.30
July 31, 2005................................................................... $ 668.68
January 31, 2006................................................................ $ 715.07
July 31, 2006................................................................... $ 764.68
January 31, 2007................................................................ $ 817.73
July 31, 2007................................................................... $ 874.46
January 31, 2008................................................................ $ 935.13
July 31, 2008................................................................... $ 1000.00
(b) if the Specified Date occurs before the first Semi-Annual
Accrual Date following the Issue Date, the Accreted Value will equal the
sum of (A) the original issue price of a note and (B) an amount equal to
the product of (x) the Accreted Value for such first Semi-Annual Accrual
Date less such original issue price multiplied by (y) a fraction, the
numerator of which is the number of days from the Issue Date to the
Specified Date, using a 360-day year of twelve 30-day months, and the
denominator of which is the number of days elapsed from the Issue Date to
the first Semi-Annual Accrual Date, using a 360-day year of twelve 30-day
months;
(c) if the Specified Date otherwise occurs between two Semi-Annual
Accrual Dates, the Accreted Value will equal to the sum of (A) the
Accreted Value for the Semi-Annual Accrual Date immediately preceding such
Specified Date and (B) an amount equal to the product of (x) the Accreted
Value for the immediately following Semi-Annual Accrual Date less the
Accreted Value for the immediately preceding Semi-Annual Accrual Date
multiplied by (y) a fraction, the numerator of which is the number of days
elapsed from the immediately preceding Semi-Annual Accrual Date to the
Specified Date, using a 360-day year of twelve 30-day months, and the
denominator of which is 180; or
(d) if the Specified Date occurs after the last Semi-Annual Accrual
Date, the Accreted Value will equal $1,000.
A-9
Notwithstanding the foregoing, if additional interest accrues on the
Securities on or prior to July 31, 2008 as a result of a Registration Default
under the Registration Rights Agreement or an increase in the interest rate on
the Securities as a result of default interest or Step-Up Interest, such
additional interest will be added to the Accreted Value, and the Accreted Value
as of any Specified Date will equal the sum of (A) the Accreted Value, as
calculated above, as of the date such additional interest began to accrue, plus
(B) the amount of interest that would accrue on the Accreted Value from time to
time on a daily basis at a rate of interest per annum equal to the sum of
13.875% per annum plus the rate of such additional interest as applicable from
time to time, compounded semi-annually on each Semi-Annual Accrual Date from the
date such additional interest began to accrete through the Specified Date,
computed on the basis of a 360-day year of twelve 30-day months. If such an
event were to occur, the Accreted Value on and after the last Semi-Annual
Accrual Date would exceed $1,000.
All references in this Security, in any context, to Accreted Value
or any interest or other amount payable on or with respect to the Securities
shall be deemed to include any additional interest pursuant to the Registration
Rights Agreement.
2. Method of Payment
The Company will pay interest on the Securities (except defaulted
interest) to the Persons who are registered holders of Securities at the close
of business on the January 15 or the July 15 immediately preceding the interest
payment date even if Securities are canceled after the record date and on or
before the interest payment date. Holders must surrender Securities to a Paying
Agent to collect principal payments. The Company will pay principal and interest
in money of the United States that at the time of payment is legal tender for
payment of public and private debts. Payments in respect of the Securities
represented by a Global Security (including principal, premium, if any, and
interest will be made by wire transfer of immediately available funds to the
accounts specified by The Depository Trust Company. The Company will make all
payments in respect of a Definitive Security (including principal, premium, if
any, and interest) by mailing a check to the registered address of each Holder
thereof; provided, however, that payments on a Definitive Security will be made
by wire transfer to a U.S. dollar account maintained by the payee with a bank in
the United States if such Holder elects payment by wire transfer by giving
written notice to the Trustee or the Paying Agent to such effect designating
such account no later than 30 days immediately preceding the relevant due date
for payment (or such other date as the Trustee may accept in its discretion).
3. Paying Agent and Registrar
Initially, U.S. Bank National Association (the "Trustee") will act
as Paying Agent and Registrar. The Company may appoint and change any Paying
Agent, Registrar or co-registrar without notice. The Company or any of its
domestically incorporated or organized Wholly Owned Subsidiaries may act as
Paying Agent, Registrar or co-registrar.
A-10
4. Indenture
The Company issued the Securities under an Indenture dated as of May
18, 2004 (the "Indenture"), between the Company and the Trustee. The terms of
the Securities include those stated in the Indenture and those made part of the
Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C. Sections
77aaa-77bbbb) as in effect on the date of the Indenture (the "TIA"). Terms
defined in the Indenture and not defined herein have the meanings ascribed
thereto in the Indenture. The Securities are subject to all such terms, and
Securityholders are referred to the Indenture and the TIA for a statement of
those terms.
The Securities are senior discount obligations of the Company, of
which $132,000,000 in aggregate principal amount at maturity will be initially
issued on the Issue Date. Subject to the conditions set forth in the Indenture,
the Company may issue an unlimited amount of Additional Securities pursuant to
Section 2.13 of the Indenture. The Initial Securities issued on the Issue Date,
any Additional Securities and all Exchange Securities or Private Exchange
Securities issued in exchange therefor will be treated as a single class for all
purposes under the Indenture. The Indenture contains covenants that limit the
ability of the Company and its subsidiaries to incur additional indebtedness;
pay dividends or distributions on, or redeem or repurchase capital stock; make
investments; issue or sell capital stock of subsidiaries; engage in transactions
with affiliates; transfer or sell assets; guarantee indebtedness; restrict
dividends or other payments of subsidiaries; incur liens; and consolidate, merge
or transfer all or substantially all of its assets and the assets of its
subsidiaries. These covenants are subject to important exceptions and
qualifications.
5. Optional Redemption
Except as set forth below, the Company shall not be entitled to
redeem the Securities at its option prior to July 31, 2008.
On and after July 31, 2008, the Company shall be entitled at its
option to redeem all or a portion of the Securities upon not less than 30 nor
more than 60 days' notice, at the redemption prices (expressed in percentages of
Accreted Value), plus accrued interest to the redemption date (subject to the
right of Holders of record on the relevant record date to receive interest due
on the relevant interest payment date), if redeemed during the 12-month period
commencing on July 31 of the years set forth below:
Redemption
Period Price
------------------- ----------
2008 106.938%
2009 103.469
2010 and thereafter 100.000
A-11
In addition, provided, that the redemption occurs within 90 days
after the date of the applicable Public Equity Offering and before July 31,
2007, the Company shall be entitled at its option to redeem all or a portion of
the Securities with the Net Cash Proceeds received by the Company from any
Public Equity Offering at the following redemption prices (expressed as a
percentage of Accreted Value), plus accrued and unpaid interest to the
redemption date:
Redemption
Period Price
------------------------------- ----------
Issue Date to July 31, 2005 117.344%
August 1, 2005 to July 31, 2006 120.813
August 1, 2006 to July 31, 2007 127.750
At any time on or prior to the First Call Date, after the completion
of a Change of Control Offer that was accepted by Holders of Securities having
an Accreted Value of not less than 75% of the total Accreted Value of Securities
then outstanding, the Company may redeem the "Untendered Notes upon not less
than 30 nor more than 60 days' prior notice but in no event more than 90 days
after the completion of such Change of Control Offer, mailed by first-class mail
to each Holder's registered address, at a redemption price equal to 101% of the
Accreted Value of the Untendered Notes at the redemption date plus accrued and
unpaid interest, if any, to the date of redemption (subject to the right of
Holders of record on the relevant record date to receive interest due on the
relevant interest payment date).
6. Notice of Redemption
Notice of redemption will be mailed at least 30 days but not more
than 60 days before the redemption date to each Holder of Securities to be
redeemed at its registered address. Securities in denominations larger than
$1,000 principal amount at maturity may be redeemed in part but only in whole
multiples of $1,000. If money sufficient to pay the redemption price of and
accrued interest on all Securities (or portions thereof) to be redeemed on the
redemption date is deposited with the Paying Agent on or before the redemption
date and certain other conditions are satisfied, on and after such date interest
ceases to accrue, on such Securities (or such portions thereof) called for
redemption.
7. Put Provisions
Upon a Change of Control, any Holder of Securities will have the
right to cause the Company to repurchase the Securities of such Holder at a
repurchase price equal to 101% of the Accreted Value thereof on the date of
purchase, plus accrued and unpaid interest, if any, to the date of purchase
(subject to the right of Holders of record on the relevant record date to
receive interest due on the relevant interest payment date) as provided in, and
subject to the terms of, the Indenture.
A-12
Under certain circumstances as set forth in the Indenture, the
Company will be required to offer to purchase Securities with the Net Available
Cash from Asset Dispositions.
As provided in, and subject to the terms of, the Indenture, within
30 days after the consummation of an Initial Public Equity Offering prior to
July 31, 2007, the Company shall be required to offer to purchase from Holders
such aggregate principal amount at maturity of Securities as may be purchased
with funds equal in amount to 50% of the Net Cash Proceeds received by the
Company from such Initial Public Equity Offering at a purchase price of 113.875%
of the Accreted Value of the Securities, plus accrued and unpaid interest, if
any, to the date of purchase (subject to the right of holders of record on the
relevant record date to receive interest due on the related interest payment
date); provided, however, that such Net Cash Proceeds shall not be required to
be applied towards the purchase of Securities (i) to the extent the Company
applies such Net Cash Proceeds towards the purchase or redemption of, and
actually purchases or redeems, Buffets Existing Notes and (ii) to the extent
such application is restricted by the terms of the then outstanding Indebtedness
of Buffets; provided further, however, that in no event will the Company be
required to make an offer to purchase Securities with a principal amount at
maturity that is more than 25% of the aggregate principal amount at maturity of
the Securities originally issued.
8. Denominations; Transfer; Exchange
The Securities are in registered form without coupons in
denominations of $1,000 aggregate principal amount at maturity and whole
multiples of $1,000 aggregate principal amount at maturity. A Holder may
transfer or exchange Securities in accordance with the Indenture. The Registrar
may require a Holder, among other things, to furnish appropriate endorsements or
transfer documents and to pay any taxes and fees required by law or permitted by
the Indenture. The Registrar need not register the transfer of or exchange any
Securities selected for redemption (except, in the case of a Security to be
redeemed in part, the portion of the Security not to be redeemed) or any
Securities for a period of 15 days before a selection of Securities to be
redeemed or 15 days before an interest payment date.
9. Persons Deemed Owners
The registered Holder of this Security may be treated as the owner
of it for all purposes.
10. Unclaimed Money
If money for the payment of Accreted Value, principal or interest
remains unclaimed for two years, the Trustee or Paying Agent shall pay the money
back to the Company at its request unless an abandoned property law designates
another Person. After any such payment, Holders entitled to the money must look
only to the Company and not to the Trustee for payment.
A-13
11. Discharge and Defeasance
Subject to certain conditions set forth in the Indenture, the
Company at any time shall be entitled to terminate some or all of its
obligations under the Securities and the Indenture if the Company deposits with
the Trustee money or U.S. Government Obligations for the payment of principal
and interest on the Securities to redemption or maturity, as the case may be.
12. Amendments and Waivers
Subject to certain exceptions set forth in the Indenture, (i) the
Indenture and the Securities may be amended with the written consent of the
Holders of at least a majority in principal amount at maturity outstanding of
the Securities and (ii) any default or noncompliance with any provision may be
waived with the written consent of the Holders of a majority in principal amount
at maturity outstanding of the Securities. Subject to certain exceptions set
forth in the Indenture, without the consent of any Securityholder, the Company
and the Trustee shall be entitled to amend the Indenture or the Securities to
cure any ambiguity, omission, defect or inconsistency, or to comply with Article
V of the Indenture, or to provide for uncertificated Securities in addition to
or in place of Definitive Securities, or to add guarantees with respect to the
Securities, including Subsidiary Guaranties, or to secure the Securities, or to
add additional covenants or surrender rights and powers conferred on the Company
or to comply with any request of the SEC in connection with qualifying the
Indenture under the Act, or to make any change that does not adversely affect
the rights of any Securityholder.
13. Defaults and Remedies
Under the Indenture, Events of Default include (i) default for 30
days in payment of interest on the Securities; (ii) default in payment of
principal on the Securities at maturity, upon redemption pursuant to paragraph 5
of the Securities, upon acceleration or otherwise, or failure by the Company to
redeem or purchase Securities when required; (iii) failure by the Company to
comply with other agreements in the Indenture or the Securities, in certain
cases subject to notice and lapse of time; (iv) certain accelerations (including
failure to pay within any grace period after final maturity) of other
Indebtedness of the Company or any Significant Subsidiary if the amount
accelerated (or so unpaid) exceeds $10,000,000; (v) certain events of bankruptcy
or insolvency with respect to the Company and the Significant Subsidiaries; (vi)
certain judgments or decrees for the payment of money, the portion of which not
covered by insurance exceeding $10,000,000 and (vii) certain defaults with
respect to Subsidiary Guaranties. If an Event of Default occurs and is
continuing, the Trustee or the Holders of at least 25% in principal amount at
maturity of the Securities may declare all the Securities to be due and payable
immediately. Certain events of bankruptcy or insolvency are Events of Default
which will result in the Securities being due and payable immediately upon the
occurrence of such Events of Default.
A-14
Securityholders may not enforce the Indenture or the Securities
except as provided in the Indenture. The Trustee may refuse to enforce the
Indenture or the Securities unless it receives indemnity or security
satisfactory to it. Subject to certain limitations, Holders of a majority in
principal amount at maturity of the Securities may direct the Trustee in its
exercise of any trust or power. The Trustee may withhold from Securityholders
notice of any continuing Default (except a Default in payment of principal or
interest) if it determines that withholding notice is not opposed to the
interest of the Holders.
14. Trustee Dealings with the Company
Subject to certain limitations imposed by the Act, the Trustee under
the Indenture, in its individual or any other capacity, may become the owner or
pledgee of Securities and may otherwise deal with and collect obligations owed
to it by the Company or its Affiliates and may otherwise deal with the Company
or its Affiliates with the same rights it would have if it were not Trustee.
15. No Recourse Against Others
A director, officer, employee, incorporator or stockholder, as such,
of the Company or the Trustee shall not have any liability for any obligations
of the Company under the Securities or the Indenture or for any claim based on,
in respect of or by reason of such obligations or their creation. By accepting a
Security, each Securityholder waives and releases all such liability. The waiver
and release are part of the consideration for the issue of the Securities.
16. Authentication
This Security shall not be valid until an authorized signatory of
the Trustee (or an authenticating agent) manually signs the certificate of
authentication on the other side of this Security.
17. Abbreviations
Customary abbreviations may be used in the name of a Securityholder
or an assignee, such as TEN COM (= tenants in common), TEN ENT (= tenants by the
entireties), JT TEN (= joint tenants with rights of survivorship and not as
tenants in common), CUST (= custodian), and U/G/M/A (= Uniform Gift to Minors
Act).
18. CUSIP Numbers
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures the Company has caused CUSIP numbers to be
printed on the Securities and has directed the Trustee to use CUSIP numbers in
notices of redemption as a convenience to Securityholders. No representation is
made as to the accuracy of such numbers either as printed on the Securities or
as contained in any notice
A-15
of redemption and reliance may be placed only on the other identification
numbers placed thereon.
19. Holders' Compliance with Registration Rights Agreement
Each Holder of a Security, by acceptance hereof, acknowledges and
agrees to the provisions of the Registration Rights Agreement applicable to this
Security, including the obligations of the Holders with respect to a
registration and the indemnification of the Company to the extent provided
therein.
20. GOVERNING LAW
THIS SECURITY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO APPLICABLE
PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF
ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
The Company will furnish to any Securityholder upon written request
and without charge to the Securityholder a copy of the Indenture which has in it
the text of this Security. Requests may be made to:
Buffets Holdings, Inc.
0000 Xxxxxxx Xxx
Xxxxx, Xxxxxxxxx 00000
Attention: General Counsel
A-16
ASSIGNMENT FORM
To assign this Security, fill in the form below:
I or we assign and transfer this Security to
(Print or type assignee's name, address and zip code)
(Insert assignee's soc. sec. or tax I.D. No.)
and irrevocably appoint agent to transfer this Security on the
books of the Company. The agent may substitute another to act for him.
__________________________________________________________________________
Date: ______________________ Your Signature: _____________________________
__________________________________________________________________________
Sign exactly as your name appears on the other side of this Security.
In connection with any transfer of any of the Securities evidenced by this
certificate occurring prior to the expiration of the period referred to in Rule
144(k) under the Securities Act after the later of the date of original issuance
of such Securities and the last date, if any, on which such Securities were
owned by the Company or any Affiliate of the Company, the undersigned confirms
that such Securities are being transferred in accordance with its terms:
CHECK ONE BOX BELOW
(1) [ ] to the Company; or
(2) [ ] inside the United States to a "qualified institutional
buyer" (as defined in Rule 144A under the Securities Act
of 1933, as amended (the "Securities Act") that
purchases for its own account or for the account of a
qualified institutional buyer to whom notice is given
that such transfer is being made in reliance on Rule
144A, in each case pursuant to and in compliance with
Rule 144A under the Securities Act; or
(3) [ ] to an institutional "accredited investor" (as defined in
Rule 501(a)(1), (2), (3) or (7) under the Securities Act
of 1933) that has furnished to the Trustee a signed
letter containing certain representations and
agreements; or
(4) [ ] outside the United States in an offshore transaction
within the meaning of Regulation S under the Securities
Act in compliance with Rule 904 under the Securities
Act; or
A-17
(5) [ ] pursuant to the exemption from registration provided by
Rule 144 under the Securities Act; or
(6) [ ] pursuant to another available exemption from
registration under the Securities Act; or
(7) [ ] pursuant to an effective registration statement under
the Securities Act;
Unless one of the boxes is checked, the Trustee will refuse to register any of
the Securities evidenced by this certificate in the name of any person other
than the registered holder thereof; provided, however, that if box (3), (4), (5)
or (6) is checked, the Trustee shall be entitled to require, prior to
registering any such transfer of the Securities, such legal opinions,
certifications and other information as the Company has reasonably requested to
confirm that such transfer is being made pursuant to an exemption from, or in a
transaction not subject to, the registration requirements of the Securities Act
of 1933, such as the exemption provided by Rule 144 under such Act.
__________________________________
Signature
Signature Guarantee:
__________________________________ __________________________________
Signature must be guaranteed Signature
Signatures must be guaranteed by an "eligible guarantor institution"
meeting the requirements of the Registrar, which requirements include membership
or participation in the Security Transfer Agent Medallion Program ("STAMP") or
such other "signature guarantee program" as may be determined by the Registrar
in addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.
A-18
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY
The following increases or decreases in this Global Security have
been made:
Date of Amount of decrease in Amount of increase in Principal amount at Signature of authorized
Exchange Principal amount at Principal amount at maturity of this Global officer of Trustee or
maturity maturity of this Global Security following such Custodian for the
of this Global Security Security decrease or increase) Securities
A-19
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the Company
pursuant to 4.06, 4.10 or 4.11 of the Indenture, check the box:
[ ]
If you want to elect to have only part of this Security purchased by
the Company pursuant to Section 4.06, 4.10 or 4.11 of the Indenture, state the
amount in principal amount at maturity: $______________
Date:___________________ Your Signature: _________________________________
(Sign exactly as your name
appears on the other side of this
Security.)
Signature Guarantee: _____________________________________________________
(Signature must be guaranteed)
Signatures must be guaranteed by an "eligible guarantor institution" meeting the
requirements of the Registrar, which requirements include membership or
participation in the Security Transfer Agent Medallion Program ("STAMP") or such
other "signature guarantee program" as may be determined by the Registrar in
addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.
A-20
EXHIBIT B
[FORM OF FACE OF EXCHANGE SECURITY
OR PRIVATE EXCHANGE SECURITY]*/**/
__________________
*/ If the Security is to be issued in global form add the Global Securities
Legend from Exhibit A to the Appendix and the attachment from such Exhibit A
captioned "SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY".
**/ If the Security is a Private Exchange Security issued in a Private Exchange
to an Initial Purchaser holding an unsold portion of its initial allotment, add
the Restricted Securities Legend from Exhibit A to the Appendix and replace the
Assignment Form included in this Exhibit B with the Assignment Form included in
such Exhibit A.
B-1
BUFFETS HOLDINGS, INC. CORP.
13.875% SENIOR DISCOUNT NOTE DUE 2010
No. _____ CUSIP No._________
$__________
BUFFETS HOLDINGS, INC., a Delaware corporation (the "Company"),
promises to pay to _______________, or its registered assigns, the principal
amount at maturity of ___________ Dollars on December 15, 2010.
Interest Payment Dates: January 31 and July 31
Record Dates: January 15 and July 15
Additional provisions of this Security are set forth on the other
side of this Security.
IN WITNESS WHEREOF, the parties have caused this instrument to be
duly executed.
Dated:
BUFFETS HOLDINGS, INC.,
by
___________________________________
Name:
Title:
by
___________________________________
Name:
Title:
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
U.S. BANK NATIONAL ASSOCIATION,
as Trustee, certifies that
this is one of the Securities
referred to in the Indenture,
B-2
by:
___________________________________
Authorized Signatory
B-3
[FORM OF REVERSE SIDE OF EXCHANGE SECURITY OR PRIVATE EXCHANGE SECURITY]
13.875% SENIOR DISCOUNT NOTE DUE 2010
1. Interest and Accreted Value
BUFFETS HOLDINGS, INC., a Delaware corporation (such corporation,
and its successors and assigns under the Indenture hereinafter referred to,
being herein called the "Company"), promises to pay interest on the principal
amount at maturity of this Security at the rate per annum shown above. No cash
interest will accrue on the Securities prior to July 31, 2008. The Accreted
Value of each Security will increase from the date of issuance until July 31,
2008, at a rate of 13.875% per annum, reflecting the accrual of non-cash
interest, such that the Accreted Value will equal the stated principal amount at
maturity on July 31, 2008. Cash interest on the Securities will accrue at the
rate of 13.875% per annum from July 31, 2008, or from the most recent date to
which interest has been paid or provided for, and will be payable semiannually
in arrears on January 31 and July 31 of each year, commencing on January 31,
2009. The Company shall make each interest payment to the Holders of record of
the Securities on the immediately preceding January 15 and July 15. The Company
shall pay interest on overdue principal at 1% per annum in excess of the above
rate and will pay interest on overdue installments of interest at such higher
rate to the extent lawful. Interest will be computed on the basis of a 360-day
year of twelve 30-day months.
If a Registration Default (as defined in the Registration Rights
Agreement applicable to this Security) occurs, additional interest will accrue
on this Security at a rate of 0.25% per annum (increasing by an additional 0.25%
per annum after each consecutive 90-day period that occurs after the date on
which such Registration Default occurs up to a maximum additional interest rate
of 1.5%) from and including the date on which any such Registration Default
shall occur to but excluding the date on which all Registration Defaults have
been cured.
If the Leverage Ratio as of July 31, 2006 or July 31, 2008 (or if
either such date is not the end of a monthly accounting period for the Company,
then the date that is the last day of an accounting period that is nearest to
such date) is greater than 4.50 to 1.0 (in the case of July 31, 2006 or the last
date of the monthly accounting period nearest to such date) or 4.25 to 1.0 (in
the case of July 31, 2008 or the last date of the monthly accounting period
nearest to such date), additional interest will accrue on this Security at a
rate of 1.00% per annum ("Step-Up Interest"). Any such interest rate increase
will be permanent and cumulative up to a maximum of 2% per annum.
All additional interest that accrues on this Securities on or prior
to July 31, 2008, whether as a result of a Registration Default, Step-Up
Interest or default interest will be added to the Accreted Value of this
Security, and all additional interest that accrues thereafter will be payable in
cash to the Holder of this Security on each scheduled interest payment date
(except as provided in Section 2.11 of the Indenture).
B-4
"Accreted Value" means, as of any date (the "Specified Date"), the
amount provided below for each $1,000 principal amount at maturity of
Securities:
(a) if the Specified Date occurs on one of the following dates
(each, a "Semi-Annual Accrual Date"), the Accreted Value will equal the
amount set forth below for such Semi-Annual Accrual Date:
Semi-Annual Accreted
Accrual Date Value
-------------------------------------------------------------------------------- ----------
Issue Date...................................................................... $ 568.73
July 31, 2004................................................................... $ 584.74
January 31, 2005................................................................ $ 625.30
July 31, 2005................................................................... $ 668.68
January 31, 2006................................................................ $ 715.07
July 31, 2006................................................................... $ 764.68
January 31, 2007................................................................ $ 817.73
July 31, 2007................................................................... $ 874.46
January 31, 2008................................................................ $ 935.13
July 31, 2008................................................................... $ 1000.00
(b) if the Specified Date occurs before the first Semi-Annual
Accrual Date following the Issue Date, the Accreted Value will equal the
sum of (A) the original issue price of a note and (B) an amount equal to
the product of (x) the Accreted Value for such first Semi-Annual Accrual
Date less such original issue price multiplied by (y) a fraction, the
numerator of which is the number of days from the Issue Date to the
Specified Date, using a 360-day year of twelve 30-day months, and the
denominator of which is the number of days elapsed from the Issue Date to
the first Semi-Annual Accrual Date, using a 360-day year of twelve 30-day
months;
(c) if the Specified Date otherwise occurs between two Semi-Annual
Accrual Dates, the Accreted Value will equal to the sum of (A) the
Accreted Value for the Semi-Annual Accrual Date immediately preceding such
Specified Date and (B) an amount equal to the product of (x) the Accreted
Value for the immediately following Semi-Annual Accrual Date less the
Accreted Value for the immediately preceding Semi-Annual Accrual Date
multiplied by (y) a fraction, the numerator of which is the number of days
elapsed from the immediately preceding Semi-Annual Accrual Date to the
Specified Date, using a 360-day year of twelve 30-day months, and the
denominator of which is 180; or
(d) if the Specified Date occurs after the last Semi-Annual Accrual
Date, the Accreted Value will equal $1,000.
B-5
Notwithstanding the foregoing, if additional interest accrues on the
Securities on or prior to July 31, 2008 as a result of a Registration Default
under the Registration Rights Agreement or an increase in the interest rate on
the Securities as a result of Default Interest or Step-Up Interest, such
additional interest will be added to the Accreted Value, and the Accreted Value
as of any Specified Date will equal the sum of (A) the Accreted Value, as
calculated above, as of the date such additional interest began to accrue, plus
(B) the amount of interest that would accrue on the Accreted Value from time to
time on a daily basis at a rate of interest per annum equal to the sum of
13.875% per annum plus the rate of such additional interest as applicable from
time to time, compounded semi-annually on each Semi-Annual Accrual Date from the
date such additional interest began to accrete through the Specified Date,
computed on the basis of a 360-day year of twelve 30-day months. If such an
event were to occur, the Accreted Value on and after the last Semi-Annual
Accrual Date would exceed $1,000.
All references in this Security, in any context, to Accreted Value
or any interest or other amount payable on or with respect to the Securities
shall be deemed to include any additional interest pursuant to the Registration
Rights Agreement.
2. Method of Payment
The Company will pay interest on the Securities (except defaulted
interest) to the Persons who are registered holders of Securities at the close
of business on the January 15 or the July 15 immediately preceding the interest
payment date even if Securities are canceled after the record date and on or
before the interest payment date. Holders must surrender Securities to a Paying
Agent to collect principal payments. The Company will pay principal and interest
in money of the United States that at the time of payment is legal tender for
payment of public and private debts. Payments in respect of the Securities
represented by a Global Security (including principal, premium, if any, and
interest will be made by wire transfer of immediately available funds to the
accounts specified by The Depository Trust Company. The Company will make all
payments in respect of a Definitive Security (including principal, premium, if
any, and interest) by mailing a check to the registered address of each Holder
thereof; provided, however, that payments on a Definitive Security will be made
by wire transfer to a U.S. dollar account maintained by the payee with a bank in
the United States if such Holder elects payment by wire transfer by giving
written notice to the Trustee or the Paying Agent to such effect designating
such account no later than 30 days immediately preceding the relevant due date
for payment (or such other date as the Trustee may accept in its discretion).
3. Paying Agent and Registrar
Initially, U.S. Bank National Association (the "Trustee") will act
as Paying Agent and Registrar. The Company may appoint and change any Paying
Agent, Registrar or co-registrar without notice. The Company or any of its
domestically incorporated or organized Wholly Owned Subsidiaries may act as
Paying Agent, Registrar or co-registrar.
B-6
4. Indenture
The Company issued the Securities under an Indenture dated as of May
18, 2004 (the "Indenture"), between the Company and the Trustee. The terms of
the Securities include those stated in the Indenture and those made part of the
Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C. Sections
77aaa-77bbbb) as in effect on the date of the Indenture (the "TIA"). Terms
defined in the Indenture and not defined herein have the meanings ascribed
thereto in the Indenture. The Securities are subject to all such terms, and
Securityholders are referred to the Indenture and the TIA for a statement of
those terms.
The Securities are senior discount obligations of the Company, of
which $132,000,000 in aggregate principal amount at maturity will be initially
issued on the Issue Date. Subject to the conditions set forth in the Indenture,
the Company may issue an unlimited amount of Additional Securities pursuant to
Section 2.13 of the Indenture. The Initial Securities issued on the Issue Date,
any Additional Securities and all Exchange Securities or Private Exchange
Securities issued in exchange therefor will be treated as a single class for all
purposes under the Indenture. The Indenture contains covenants that limit the
ability of the Company and its subsidiaries to incur additional indebtedness;
pay dividends or distributions on, or redeem or repurchase capital stock; make
investments; issue or sell capital stock of subsidiaries; engage in transactions
with affiliates; transfer or sell assets; guarantee indebtedness; restrict
dividends or other payments of subsidiaries; incur liens; and consolidate, merge
or transfer all or substantially all of its assets and the assets of its
subsidiaries. These covenants are subject to important exceptions and
qualifications.
5. Optional Redemption
Except as set forth below, the Company shall not be entitled to
redeem the Securities at its option prior to July 31, 2008.
On and after July 31, 2008, the Company shall be entitled at its
option to redeem all or a portion of the Securities upon not less than 30 nor
more than 60 days' notice, at the redemption prices (expressed in percentages of
Accreted Value), plus accrued interest to the redemption date (subject to the
right of Holders of record on the relevant record date to receive interest due
on the relevant interest payment date), if redeemed during the 12-month period
commencing on July 31 of the years set forth below:
Redemption
Period Price
------------------- ----------
2008 106.938
2009 103.469
2010 and thereafter 100.000
B-7
In addition, provided, that the redemption occurs within 90 days
after the date of the applicable Public Equity Offering and before July 31,
2007, the Company shall be entitled at its option to redeem all or a portion of
the Securities with the Net Cash Proceeds received by the Company from any
Public Equity Offering at the following redemption prices (expressed as a
percentage of Accreted Value), plus accrued and unpaid interest to the
redemption date:
Redemption
Period Price
------------------------------- ----------
Issue Date to July 31, 2005 117.344%
August 1, 2005 to July 31, 2006 120.813
August 1, 2006 to July 31, 2007 127.750
At any time on or prior to the First Call Date, after the completion
of a Change of Control Offer that was accepted by Holders of Securities having
an Accreted Value of not less than 75% of the total Accreted Value of Securities
then outstanding, the Company may redeem the "Untendered Notes upon not less
than 30 nor more than 60 days' prior notice but in no event more than 90 days
after the completion of such Change of Control Offer, mailed by first-class mail
to each Holder's registered address, at a redemption price equal to 101% of the
Accreted Value of the Untendered Notes at the redemption date plus accrued and
unpaid interest, if any, to the date of redemption (subject to the right of
Holders of record on the relevant record date to receive interest due on the
relevant interest payment date).
6. Notice of Redemption
Notice of redemption will be mailed at least 30 days but not more
than 60 days before the redemption date to each Holder of Securities to be
redeemed at its registered address. Securities in denominations larger than
$1,000 principal amount at maturity may be redeemed in part but only in whole
multiples of $1,000. If money sufficient to pay the redemption price of and
accrued interest on all Securities (or portions thereof) to be redeemed on the
redemption date is deposited with the Paying Agent on or before the redemption
date and certain other conditions are satisfied, on and after such date interest
ceases to accrue, on such Securities (or such portions thereof) called for
redemption.
7. Put Provisions
Upon a Change of Control, any Holder of Securities will have the
right to cause the Company to repurchase the Securities of such Holder at a
repurchase price equal to 101% of the Accreted Value thereof on the date of
purchase, plus accrued and unpaid interest, if any, to the date of purchase
(subject to the right of Holders of record on the relevant record date to
receive interest due on the relevant interest payment date) as provided in, and
subject to the terms of, the Indenture.
B-8
Under certain circumstances as set forth in the Indenture, the
Company will be required to offer to purchase Securities with the Net Available
Cash from Asset Dispositions.
As provided in, and subject to the terms of, the Indenture, within
30 days after the consummation of an Initial Public Equity Offering prior to
July 31, 2007, the Company shall be required to offer to purchase from Holders
such aggregate principal amount at maturity of Securities as may be purchased
with funds equal in amount to 50% of the Net Cash Proceeds received by the
Company from such Initial Public Equity Offering at a purchase price of 113.875%
of the Accreted Value of the Securities, plus accrued and unpaid interest, if
any, to the date of purchase (subject to the right of holders of record on the
relevant record date to receive interest due on the related interest payment
date); provided, however, that such Net Cash Proceeds shall not be required to
be applied towards the purchase of Securities (i) to the extent the Company
applies such Net Cash Proceeds towards the purchase or redemption of, and
actually purchases or redeems, Buffets Existing Notes and (ii) to the extent
such application is restricted by the terms of the then outstanding Indebtedness
of Buffets; provided further, however, that in no event will the Company be
required to make an offer to purchase Securities with a principal amount at
maturity that is more than 25% of the aggregate principal amount at maturity of
the Securities originally issued.
8. Denominations; Transfer; Exchange
The Securities are in registered form without coupons in
denominations of $1,000 aggregate principal amount at maturity and whole
multiples of $1,000 aggregate principal amount at maturity. A Holder may
transfer or exchange Securities in accordance with the Indenture. The Registrar
may require a Holder, among other things, to furnish appropriate endorsements or
transfer documents and to pay any taxes and fees required by law or permitted by
the Indenture. The Registrar need not register the transfer of or exchange any
Securities selected for redemption (except, in the case of a Security to be
redeemed in part, the portion of the Security not to be redeemed) or any
Securities for a period of 15 days before a selection of Securities to be
redeemed or 15 days before an interest payment date.
9. Persons Deemed Owners
The registered Holder of this Security may be treated as the owner
of it for all purposes.
10. Unclaimed Money
If money for the payment of Accreted Value, principal or interest
remains unclaimed for two years, the Trustee or Paying Agent shall pay the money
back to the Company at its request unless an abandoned property law designates
another Person. After any such payment, Holders entitled to the money must look
only to the Company and not to the Trustee for payment.
B-9
11. Discharge and Defeasance
Subject to certain conditions set forth in the Indenture, the
Company at any time shall be entitled to terminate some or all of its
obligations under the Securities and the Indenture if the Company deposits with
the Trustee money or U.S. Government Obligations for the payment of principal
and interest on the Securities to redemption or maturity, as the case may be.
12. Amendments and Waivers
Subject to certain exceptions set forth in the Indenture, (i) the
Indenture and the Securities may be amended with the written consent of the
Holders of at least a majority in principal amount at maturity outstanding of
the Securities and (ii) any default or noncompliance with any provision may be
waived with the written consent of the Holders of a majority in principal amount
at maturity outstanding of the Securities. Subject to certain exceptions set
forth in the Indenture, without the consent of any Securityholder, the Company
and the Trustee shall be entitled to amend the Indenture or the Securities to
cure any ambiguity, omission, defect or inconsistency, or to comply with Article
V of the Indenture, or to provide for uncertificated Securities in addition to
or in place of Definitive Securities, or to add guarantees with respect to the
Securities, including Subsidiary Guaranties, or to secure the Securities, or to
add additional covenants or surrender rights and powers conferred on the Company
or to comply with any request of the SEC in connection with qualifying the
Indenture under the Act, or to make any change that does not adversely affect
the rights of any Securityholder.
13. Defaults and Remedies
Under the Indenture, Events of Default include (i) default for 30
days in payment of interest on the Securities; (ii) default in payment of
principal on the Securities at maturity, upon redemption pursuant to paragraph 5
of the Securities, upon acceleration or otherwise, or failure by the Company to
redeem or purchase Securities when required; (iii) failure by the Company to
comply with other agreements in the Indenture or the Securities, in certain
cases subject to notice and lapse of time; (iv) certain accelerations (including
failure to pay within any grace period after final maturity) of other
Indebtedness of the Company or any Significant Subsidiary if the amount
accelerated (or so unpaid) exceeds $10,000,000; (v) certain events of bankruptcy
or insolvency with respect to the Company and the Significant Subsidiaries; (vi)
certain judgments or decrees for the payment of money, the portion of which not
covered by insurance exceeding $10,000,000 and (vii) certain defaults with
respect to Subsidiary Guaranties. If an Event of Default occurs and is
continuing, the Trustee or the Holders of at least 25% in principal amount at
maturity of the Securities may declare all the Securities to be due and payable
immediately. Certain events of bankruptcy or insolvency are Events of Default
which will result in the Securities being due and payable immediately upon the
occurrence of such Events of Default.
B-10
Securityholders may not enforce the Indenture or the Securities
except as provided in the Indenture. The Trustee may refuse to enforce the
Indenture or the Securities unless it receives indemnity or security
satisfactory to it. Subject to certain limitations, Holders of a majority in
principal amount at maturity of the Securities may direct the Trustee in its
exercise of any trust or power. The Trustee may withhold from Securityholders
notice of any continuing Default (except a Default in payment of principal or
interest) if it determines that withholding notice is not opposed to the
interest of the Holders.
14. Trustee Dealings with the Company
Subject to certain limitations imposed by the Act, the Trustee under
the Indenture, in its individual or any other capacity, may become the owner or
pledgee of Securities and may otherwise deal with and collect obligations owed
to it by the Company or its Affiliates and may otherwise deal with the Company
or its Affiliates with the same rights it would have if it were not Trustee.
15. No Recourse Against Others
A director, officer, employee, incorporator or stockholder, as such,
of the Company or the Trustee shall not have any liability for any obligations
of the Company under the Securities or the Indenture or for any claim based on,
in respect of or by reason of such obligations or their creation. By accepting a
Security, each Securityholder waives and releases all such liability. The waiver
and release are part of the consideration for the issue of the Securities.
16. Authentication
This Security shall not be valid until an authorized signatory of
the Trustee (or an authenticating agent) manually signs the certificate of
authentication on the other side of this Security.
17. Abbreviations
Customary abbreviations may be used in the name of a Securityholder
or an assignee, such as TEN COM (= tenants in common), TEN ENT (= tenants by the
entireties), JT TEN (= joint tenants with rights of survivorship and not as
tenants in common), CUST (= custodian), and U/G/M/A (= Uniform Gift to Minors
Act).
18. CUSIP Numbers
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures the Company has caused CUSIP numbers to be
printed on the Securities and has directed the Trustee to use CUSIP numbers in
notices of redemption as a convenience to Securityholders. No representation is
made as to the accuracy of such numbers either as printed on the Securities or
as contained in any notice
B-11
of redemption and reliance may be placed only on the other identification
numbers placed thereon.
19. Holders' Compliance with Registration Rights Agreement
Each Holder of a Security, by acceptance hereof, acknowledges and
agrees to the provisions of the Registration Rights Agreement applicable to this
Security, including the obligations of the Holders with respect to a
registration and the indemnification of the Company to the extent provided
therein.
20. GOVERNING LAW
THIS SECURITY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO APPLICABLE
PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF
ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
The Company will furnish to any Securityholder upon written request
and without charge to the Securityholder a copy of the Indenture which has in it
the text of this Security. Requests may be made to:
Buffets Holdings, Inc.
0000 Xxxxxxx Xxx
Xxxxx, Xxxxxxxxx 00000
Attention: General Counsel
B-12
__________________________________________________________________________
ASSIGNMENT FORM
To assign this Security, fill in the form below:
I or we assign and transfer this Security to
(Print or type assignee's name, address and zip code)
(Insert assignee's soc. sec. or tax I.D. No.)
and irrevocably appoint agent to transfer this Security on
the books of the Company. The agent may substitute another to act for him.
__________________________________________________________________________
Date: _____________________ Your Signature:_______________________________
__________________________________________________________________________
Sign exactly as your name appears on the other side of this Security.
B-13
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the Company
pursuant to Section 4.06, 4.10 or 4.11 of the Indenture, check the box:
[ ]
If you want to elect to have only part of this Security purchased by
the Company pursuant to Section 4.06, 4.10 of 4.11 of the Indenture, state the
amount in principal amount at maturity:$____________________
Date: __________________ Your Signature: _________________________________
(Sign exactly as your name
appears on the other side of this
Security.)
Signature Guarantee: _____________________________________________________
(Signature must be guaranteed)
Signatures must be guaranteed by an "eligible guarantor institution" meeting the
requirements of the Registrar, which requirements include membership or
participation in the Security Transfer Agent Medallion Program ("STAMP") or such
other "signature guarantee program" as may be determined by the Registrar in
addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.
B-14
EXHIBIT C
[Form of Transferee Letter of Representation]
BUFFETS HOLDINGS, INC.
0000 Xxxxxx Xxx
Xxxxx, Xxxxxxxxx 00000
Attention: General Counsel
[ ]
[ ]
[ ]
Ladies and Gentlemen:
This certificate is delivered to request a transfer of $[ ]
principal amount at maturity of the 13.875% Senior Discount Notes due 2010 (the
"Securities") of Buffets Holdings, Inc. (the "Company").
Upon transfer, the Securities would be registered in the name of the
new beneficial owner as follows:
Name:____________________________
Address:_________________________
Taxpayer ID Number:______________
The undersigned represents and warrants to you that:
1. We are an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) under the Securities Act of 1933, as amended (the
"Securities Act")), purchasing for our own account or for the account of such an
institutional "accredited investor" at least $250,000 principal amount at
maturity of the Securities, and we are acquiring the Securities not with a view
to, or for offer or sale in connection with, any distribution in violation of
the Securities Act. We have such knowledge and experience in financial and
business matters as to be capable of evaluating the merits and risks of our
investment in the Securities, and we invest in or purchase securities similar to
the Securities in the normal course of our business. We, and any accounts for
which we are acting, are each able to bear the economic risk of our or its
investment.
2. We understand that the Securities have not been registered under
the Securities Act and, unless so registered, may not be sold except as
permitted in the following sentence. We agree on our own behalf and on behalf of
any investor account for which we are purchasing Securities to offer, sell or
otherwise transfer such Securities prior to the date that is two years after the
later of the date of original issue and the last date on which the Company or
any affiliate of the Company was the owner of such
C-1
Securities (or any predecessor thereto) (the "Resale Restriction Termination
Date") only (i) to the Company, (ii) in the United States to a person whom the
seller reasonably believes is a qualified institutional buyer in a transaction
meeting the requirements of Rule 144A, (iii) to an institutional "accredited
investor" within the meaning of Rule 501(a)(1), (2), (3) or (7) under the
Securities Act that is an institutional accredited investor purchasing for its
own account or for the account of an institutional accredited investor, in each
case in a minimum principal amount at maturity of the Securities of $250,000,
(iv) outside the United States in a transaction complying with the provisions of
Rule 904 under the Securities Act, (v) pursuant to an exemption from
registration under the Securities Act provided by Rule 144 (if available), (vi)
pursuant to another available exemption from registration under the Securities
Act or (vii) pursuant to an effective registration statement under the
Securities Act, in each of cases (i) through (vii) subject to any requirement of
law that the disposition of our property or the property of such investor
account or accounts be at all times within our or their control and in
compliance with any applicable state securities laws. The foregoing restrictions
on resale will not apply subsequent to the Resale Restriction Termination Date.
If any resale or other transfer of the Securities is proposed to be made
pursuant to clause (iii) above prior to the Resale Restriction Termination Date,
the transferor shall deliver a letter from the transferee substantially in the
form of this letter to the Company and the Trustee, which shall provide, among
other things, that the transferee is an institutional "accredited investor"
within the meaning of Rule 501(a)(1), (2), (3) or (7) under the Securities Act
and that it is acquiring such Securities for investment purposes and not for
distribution in violation of the Securities Act. Each purchaser acknowledges
that the Company and the Trustee reserve the right prior to the offer, sale or
other transfer prior to the Resale Restriction Termination Date of the
Securities pursuant to clause (iii), (iv) or (v) above to require the delivery
of an opinion of counsel, certifications or other information satisfactory to
the Company and the Trustee.
TRANSFEREE:_________________,
by: ______________________
C-2
SCHEDULE 2.14
COMPARABLE YIELD
Issue Price: [y]%
Comparable Yield: 13.875 %
[INSERT PROJECTED PAYMENT SCHEDULE]
1
