EXHIBIT 10.3
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BUFFETS RESTAURANTS HOLDINGS, INC.
Issuer
13.875% Senior Discount Notes Due 2010
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INDENTURE
Dated as of December 29, 2005
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U.S. BANK NATIONAL ASSOCIATION
Trustee
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CROSS-REFERENCE TABLE
TIA SECTION INDENTURE SECTION
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310(a)...................................................... 7.10
(b)......................................................... 7.10
(c)......................................................... N/A
311(a)...................................................... 7.11
(b)......................................................... 7.11; 10.03
(c)......................................................... 10.03
312(a)...................................................... N/A
(b)......................................................... 10.03
(c)......................................................... 10.03
313(a)...................................................... 7.06
(b)......................................................... 7.06
(c)......................................................... N/A
(d)......................................................... N/A
314(a)...................................................... 4.02; 4.13
(b)......................................................... N/A
(c)......................................................... N/A
(d)......................................................... N/A
(e)......................................................... N/A
(f)......................................................... N/A
315(a)...................................................... N/A
(b)......................................................... N/A
(c)......................................................... N/A
(d)......................................................... N/A
(e)......................................................... N/A
316(a)...................................................... N/A
(b)......................................................... N/A
317(a)...................................................... N/A
(b)......................................................... N/A
318(a)...................................................... N/A
N/A means Not Applicable
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Note: This Cross-Reference Table shall not, for any purpose, be deemed to
be part of this Indenture.
TABLE OF CONTENTS
PAGE
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ARTICLE I Definitions and Incorporation by Reference..................................1
SECTION 1.01 Definitions.................................................................1
SECTION 1.02 Other Definitions..........................................................32
SECTION 1.03 Incorporation by Reference of Trust Indenture Act..........................33
SECTION 1.04 Rules of Construction......................................................34
ARTICLE II The Securities.............................................................34
SECTION 2.01 Form and Dating............................................................34
SECTION 2.02 Execution and Authentication...............................................35
SECTION 2.03 Registrar and Paying Agent.................................................35
SECTION 2.04 Paying Agent To Hold Money in Trust........................................36
SECTION 2.05 Securityholder Lists.......................................................36
SECTION 2.06 Transfer and Exchange......................................................36
SECTION 2.07 Replacement Securities.....................................................37
SECTION 2.08 Outstanding Securities.....................................................37
SECTION 2.09 Temporary Securities.......................................................37
SECTION 2.10 Cancellation...............................................................37
SECTION 2.11 Defaulted Interest.........................................................38
SECTION 2.12 CUSIP Numbers..............................................................38
SECTION 2.13 Issuance of Additional Securities..........................................38
ARTICLE III Redemption.................................................................39
SECTION 3.01 Notices to Trustee.........................................................39
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.............................................40
SECTION 3.05 Deposit of Redemption Price................................................40
SECTION 3.06 Securities Redeemed in Part................................................40
SECTION 3.07 Mandatory Redemption Events................................................40
ARTICLE IV Covenants..................................................................41
SECTION 4.01 Payment of Securities......................................................41
SECTION 4.02 SEC Reports and Financial Reporting........................................41
SECTION 4.03 Limitation on Indebtedness.................................................42
SECTION 4.04 Limitation on Restricted Payments..........................................45
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SECTION 4.05 Limitation on Restrictions on Distributions from Restricted
Subsidiaries...............................................................48
SECTION 4.06 Limitation on Sales of Assets and Subsidiary Stock.........................50
SECTION 4.07 Limitation on Affiliate Transactions.......................................50
SECTION 4.08 Limitation on the Sale or Issuance of Capital Stock of
Restricted Subsidiaries....................................................52
SECTION 4.09 Limitation on Liens........................................................52
SECTION 4.10 [Intentionally Omitted]....................................................52
SECTION 4.11 [Intentionally Omitted]....................................................53
SECTION 4.12 Future Guarantors..........................................................53
SECTION 4.13 Compliance Certificate.....................................................53
SECTION 4.14 Maximum Leverage Ratio.....................................................53
SECTION 4.15 Permitted Business.........................................................53
SECTION 4.16 No Intermediate Holding Companies..........................................54
SECTION 4.17 Further Instruments and Acts...............................................54
SECTION 4.18 Maintenance of Corporate Existence.........................................54
ARTICLE V Successor Company..........................................................54
SECTION 5.01 When Company May Merge or Transfer Assets..................................54
ARTICLE VI Defaults and Remedies......................................................55
SECTION 6.01 Events of Default..........................................................55
SECTION 6.02 Acceleration...............................................................57
SECTION 6.03 Other Remedies.............................................................57
SECTION 6.04 Waiver of Past Defaults....................................................58
SECTION 6.05 Control by Majority........................................................58
SECTION 6.06 Limitation on Suits........................................................58
SECTION 6.07 Rights of Holders to Receive Payment.......................................59
SECTION 6.08 Collection Suit by Trustee.................................................59
SECTION 6.09 Trustee May File Proofs of Claim...........................................59
SECTION 6.10 Priorities.................................................................59
SECTION 6.11 Undertaking for Costs......................................................59
SECTION 6.12 Waiver of Stay, Extension or Usury Laws....................................60
ARTICLE VII Trustee....................................................................60
SECTION 7.01 Duties of Trustee..........................................................60
SECTION 7.02 Rights of Trustee..........................................................61
SECTION 7.03 Individual Rights of Trustee...............................................62
SECTION 7.04 Trustee's Disclaimer.......................................................62
SECTION 7.05 Notice of Defaults.........................................................62
SECTION 7.06 Reports by Trustee to Holders..............................................62
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SECTION 7.07 Compensation and Indemnity.................................................63
SECTION 7.08 Replacement of Trustee.....................................................63
SECTION 7.09 Successor Trustee by Merger................................................64
SECTION 7.10 Eligibility; Disqualification..............................................65
SECTION 7.11 Preferential Collection of Claims Against Company..........................65
ARTICLE VIII Discharge of Indenture; Defeasance.........................................65
SECTION 8.01 Discharge of Liability on Securities; Defeasance...........................65
SECTION 8.02 Conditions to Defeasance...................................................66
SECTION 8.03 Application of Trust Money.................................................67
SECTION 8.04 Repayment to Company.......................................................67
SECTION 8.05 Indemnity for Government Obligations.......................................67
SECTION 8.06 Reinstatement..............................................................67
ARTICLE IX Amendments.................................................................68
SECTION 9.01 Without Consent of Holders.................................................68
SECTION 9.02 With Consent of Holders....................................................69
SECTION 9.03 Compliance with Trust Indenture Act........................................69
SECTION 9.04 Revocation and Effect of Consents and Waivers..............................70
SECTION 9.05 Notation on or Exchange of Securities......................................70
SECTION 9.06 Trustee to Sign Amendments.................................................70
SECTION 9.07 Payment for Consent........................................................70
ARTICLE X Miscellaneous..............................................................71
SECTION 10.01 Trust Indenture Act Controls...............................................71
SECTION 10.02 Notices....................................................................71
SECTION 10.03 Communication by Holders with Other Holders................................72
SECTION 10.04 Certificate and Opinion as to Conditions Precedent.........................72
SECTION 10.05 Statements Required in Certificate or Opinion..............................72
SECTION 10.06 When Securities Disregarded................................................72
SECTION 10.07 Rules by Trustee, Paying Agent and Registrar...............................73
SECTION 10.08 Legal Holidays.............................................................73
SECTION 10.09 GOVERNING LAW..............................................................73
SECTION 10.10 No Recourse Against Others.................................................73
SECTION 10.11 Successors.................................................................73
SECTION 10.12 Multiple Originals.........................................................73
SECTION 10.13 Table of Contents; Headings................................................73
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Rule 144A/Regulation S/IAI Appendix
Exhibit A - Form of Security................................................A-1
Exhibit B - Form of Transferee Letter of Representation.....................B-1
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INDENTURE dated as of December 29, 2005 between
Buffets Restaurants 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 the Company's
13.875% Senior Discount Notes due 2010 issued on the date hereof (the "Initial
Securities") and Additional Securities (as defined below) issued after the date
hereof.
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
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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
Buffets Holdings' 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
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Issue Date......................................... $ 513.426
January 31, 2006................................... $ 519.758
July 31, 2006...................................... $ 555.816
January 31, 2007................................... $ 594.376
July 31, 2007...................................... $ 635.611
January 31, 2008................................... $ 679.706
July 31, 2008...................................... $ 726.861
January 31, 2009................................... $ 777.287
July 31, 2009...................................... $ 831.211
SEMI ANNUAL ACCRETED
ACCRUAL DATE VALUE
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January 31, 2010................................... $ 888.876
July 31, 2010...................................... $ 950.542
December 15, 2010.................................. $ 1,000.000
(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 Security 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; or
(3) if the Specified Date otherwise occurs between two Semi
Annual Accrual Dates, the Accreted Value will equal 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.
Notwithstanding the foregoing, if additional interest accrues
on the Securities as a result of an increase in the interest rate on the
Securities as a result of 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 accrue
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.
"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)
2
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 of this Indenture, 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, Section 2.07, Section 2.09 or
Section 3.06 of 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.
"Affiliate Subordinated Debt" means any Indebtedness owed by
the Company to one or more of its stockholders or Affiliates thereof; provided
that (i) such Indebtedness is a Subordinated Obligation, (ii) no cash interest
shall be payable on such Indebtedness, (iii) no payment on or in respect of such
Indebtedness may be made while the Securities are outstanding, and (iv) the
maturity date of such Indebtedness is after the first anniversary of the Stated
Maturity of the Securities.
"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
3
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, Buffets Holdings, or a Wholly Owned Subsidiary of the
Company or Buffets Holdings, or by the Company to Buffets
Holdings or a Wholly Owned Subsidiary of the Company or
Buffets Holdings,
(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.
4
"Bankruptcy Law" has the meaning set forth in Section 6.01.
"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 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 Existing Notes" means Buffets' 11-1/4% Senior
Subordinated Notes due 2010.
"Buffets Guarantors" means each subsidiary of Buffets that
guarantees Buffets' obligations under the Buffets Existing Notes.
"Buffets Holdings" means Buffets Holdings, Inc. or any
successor thereof.
"Buffets Holdings Existing Indenture" means the Indenture
dated as of May 18, 2004, between Buffets Holdings 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 Holdings Existing Notes" means Buffets Holdings'
13.875% Senior Discount Notes due 2010.
"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.
5
"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 of the Company" 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 70% in the aggregate of the total voting power of the Voting Stock
of the Company, whether as a result of issuance 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); PROVIDED, HOWEVER, it shall not be deemed to be a
Change of Control of the Company if the Permitted Holders cease to be
the beneficial owner of at least 70% of the total voting power of the
Voting Stock of the Company as a result of the issuance by the Company
of additional Voting Stock of the Company to third parties (that is not
Disqualified Stock) so long as (i) the Permitted Holders are the
beneficial owner of a majority in the aggregate of the total voting
power of the Voting Stock of the Company or (ii) the Permitted Holders
have the right or ability by voting power, contract or otherwise to
elect or designate for election a majority of the Board of Directors.
(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
6
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 or Buffets
Holdings Existing Notes are outstanding, a "Change of Control", as
defined in the Buffets Existing Indenture or Buffets Holdings Existing
Indenture, as applicable, 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, 70% of the Voting Stock of Buffets Holdings
(except to the extent Buffets Holdings is merged with and into the
Company or the Company is merged with and into Buffets Holdings in
accordance with the terms of this Indenture), provided that it shall
not be deemed to be a Change of Control of the Company if the Company
does not beneficially own 70% of the Voting Stock of Buffets Holdings
as a result of issuance by Buffets Holdings of additional Voting Stock
of Buffets Holdings to third parties (that is not Disqualified Stock)
so long as the Company beneficially owns a majority of the Voting Stock
of Buffets Holdings.
"Code" means the Internal Revenue Code of 1986, as amended.
"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:
7
(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 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)
8
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:
(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;
9
(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 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;
10
(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 5.05),
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 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 such Person 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
(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.
"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;
12
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 Section
4.06 of this Indenture or Section 4.10 of the Buffets Holdings Existing
Indenture and (2) any such requirement only becomes operative after compliance
with such terms applicable to the Securities.
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;
(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
13
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.
"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:
(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.
14
"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 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
15
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 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.
16
"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 or of Buffets Holdings.
"Initial Public Equity Offering" means the first underwritten
initial public offering of common stock by the Company or Buffets Holdings
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 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 December 29, 2005.
17
"Leverage Ratio" means, as of any date of determination, the
ratio of (x) total Indebtedness of Buffets Holdings and its Restricted
Subsidiaries to (y) EBITDA of Buffets Holdings 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 Buffets Holdings 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 Buffets Holdings 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 Buffets Holdings 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 Buffets Holdings
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 attributable thereto
for such period and Indebtedness for such period shall be reduced by an
amount equal to the Indebtedness of Buffets Holdings or any of its
Restricted Subsidiaries repaid, repurchased, defeased or otherwise
discharged with respect to Buffets Holdings 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
Buffets Holdings and its continuing Restricted Subsidiaries are no
longer liable for such Indebtedness after such sale);
(4) if since the beginning of such period Buffets Holdings
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
18
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
Buffets Holdings 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 Buffets
Holdings 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 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
19
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, whether or not allowed under any Bankruptcy Law.
"Officer" means the Chairman of the Board, the President,
Chief Executive Officer, Chief Financial Officer, any Vice President, the
Treasurer or the Secretary of the Company.
"Officers' Certificate" means a certificate signed by two
Officers.
"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.
"Option Agreements" means (i) the Option Agreement, dated as
of December 29, 2005, among the Company and the parties listed on Schedule I
hereto, (ii) the Option Agreement, dated as of December 29, 2005, among the
Company and the parties listed on Schedule II hereto and (iii) any other similar
option agreements entered into by the Company and holders of Buffets Holdings
Existing Notes after the Issue Date
20
containing substantially the same terms and conditions as the terms and
conditions of the Option Agreement described in clause (i) of this definition.
"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 Company Business" means, with respect to the
Company, (i) the ownership of Capital Stock of Buffets Holdings and any other
Permitted Investment, (ii) the Incurrence by the Company of any Indebtedness
permitted by Section 4.03 hereof (and performance of its obligations
thereunder), (iii) the execution, delivery and performance of the Transaction
Agreements, (iv) any transactions permitted under Section 4.07 and (v) such
other business that is reasonably necessary in furtherance of the business
described in clauses (i) through (iv) of this definition.
"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 or
Buffets Holdings 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;
(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;
21
(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 for the Company and
the Restricted Subsidiaries 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 by Restricted Subsidiaries
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 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),
22
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 required to protect or enforce any rights in any
administrative, arbitration or other court proceedings in the ordinary
course of business;
23
(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 for the Company and the
Restricted Subsidiaries 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 Buffets Holdings of Indebtedness of a Restricted Subsidiary of
Buffets Holdings; 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
(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.
24
"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 Buffets Holdings 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
Buffets Holdings 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 chief financial officer of Buffets Holdings 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 chief financial officer of Buffets Holdings 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 or Buffets Holdings 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 after the Issue Date 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 Buffets
Holdings Existing Notes, 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.
"Related Business" means any business in which the Company or
Buffets Holdings was engaged on the Issue Date and any business that in the good
faith judgment of the Board 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
26
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 or Buffets
Holdings held by any Person (other than the Company) or of any Capital
Stock of a Restricted Subsidiary of Buffets Holdings 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
(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.
27
"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
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 or a
Guarantee of the Securities of such Person, as the case may be; PROVIDED,
HOWEVER, that Senior Indebtedness of such Person shall not include:
28
(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).
"Step-Up Interest" has the meaning set forth in paragraph 1 of
the Securities.
"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 Guarantee of the Securities 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.
"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
29
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 or of Buffets Holdings) 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.
"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,
30
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. xx.xx.
77aaa-77bbbb) as in effect on the date of this Indenture.
"Total Assets" means the total consolidated assets of Buffets
Holdings and its Restricted Subsidiaries, as set forth on Buffets Holdings'
consolidated balance sheet for the most recently ended fiscal quarter for which
internal financial statements are available.
"Transaction Agreements" means (i) the Contribution Agreement,
dated as of December 29, 2005, among the Company and certain stockholders of
Buffets Holdings named therein, (ii) the Stockholders' Agreement, dated as of
December 29, 2005, among the Company and the stockholders party thereto, (iii)
the Warrant Agreement, dated as of September 29, 2000, as supplemented by an
Assumption Agreement dated as of December 29, 2005, among Buffets Holdings, the
Company and the warrantholder party thereto, (iv) the Stockholders' Agreement,
dated as of September 29, 2000, as supplemented by a Transferee Agreement, dated
as of December 29, 2005, executed by Company, (v) the Option Agreements, and
(vi) this Indenture.
"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 (other than Buffets
Holdings or Buffets) 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 (other than Buffets Holdings or Buffets) (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
31
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 Company and its Restricted Subsidiaries
exceeds 2.0 to 1 (or, if such Subsidiary will be a Restricted Subsidiary of
Buffets Holdings or Buffets, Buffets Holdings or Buffets, as applicable, 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 (or
if such Subsidiary will be a Restricted Subsidiary of Buffets Holdings or
Buffets, the Consolidated Coverage Ratio for Buffets Holdings or Buffets, as
applicable, and its Restricted Subsidiaries would be greater than the
Consolidated Coverage Ratio for Buffets Holdings or Buffets, as applicable, and
its Restricted Subsidiaries) 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 Buffets Holdings or one or more Wholly Owned Subsidiaries of the
Company or Buffets Holdings, as applicable.
32
SECTION 1.02 OTHER DEFINITIONS.
TERM DEFINED IN
--------- ----------
SECTION
Affiliate Transaction 4.07
Appendix 2.01
Commission 1.03
Company Preamble
covenant defeasance option 8.01(b)
CUSIP 2.12
Custodian 6.01(8)
Event of Default 6.01
including 1.04(4)
indenture securities 1.03
indenture security holder 1.03
indenture to be qualified 1.03
indenture trustee 1.03
Initial Securities Preamble
institutional trustee 1.03
ISIN 2.12
legal defeasance option 8.01(b)
Legal Holiday 10.08
Notice of Default 6.01(8)
obligor 1.03
Paying Agent 2.03
Registrar 2.03
Successor Company 5.01(a)(1)
Test Date 4.14
Trustee Preamble
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.
33
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;
(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) 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
(10) 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
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.
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The 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 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.
SECTION 2.02 EXECUTION AND AUTHENTICATION. One Officer
shall sign the Securities for the Company by manual or facsimile signature.
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
$14,666,976 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 at maturity specified in such order, in each case upon a written order of
the Company signed by one Officer of the Company; provided that the total
aggregate principal amount at maturity of Initial Securities and Additional
Securities issued under the Indenture shall not exceed $18,200,000 (assuming
that no Step-Up Interest accrues on such Securities). 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.
35
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, Buffets Holdings or any Wholly Owned Subsidiary of the Company or
Buffets Holdings 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.
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, if any, 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, if any, 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
36
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.
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
37
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, if any, 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.
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 Section 4.03, 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. The Initial Securities issued on the Issue Date and any Additional
Securities 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 of 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 date and the CUSIP number and corresponding ISIN of such
Additional Securities, if any; and
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(3) whether such Additional Securities shall be Transfer
Restricted Securities and issued in the form of Securities as set forth
in the Appendix to this Indenture.
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 and the principal amount at maturity
of Securities to be redeemed.
The Company shall give each notice to the Trustee provided for
in this Section 3.01 at least 35 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.
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 minimum principal amounts
at maturity of $1,000 and, if in excess of $1,000 principal amount at maturity,
a whole multiple of $1 but in no event shall the unredeemed portion of any
Securities be less than $1,000 principal amount at maturity. 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;
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(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, plus accrued interest to the redemption date, if any
(subject to the right of Holders of record on the relevant record date to
receive interest, if any, 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.
SECTION 3.07 MANDATORY REDEMPTION EVENTS. Upon the earlier
of (a) the closing of the purchase of the Buffets Holdings Existing Notes under
the Option Agreements and (b) a Change of Control of the Company (each a
"Mandatory Redemption Event"), the Accreted Value of the Securities shall
immediately become due and payable. The Company shall give at least 30 days
prior written notice (or such shorter notice period as is acceptable to the
Trustee) to the Trustee and the Securityholders of any proposed mandatory
redemption date.
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ARTICLE IV
COVENANTS
SECTION 4.01 PAYMENT OF SECURITIES. The Company shall
promptly pay the principal of and interest, if any, 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, if any, 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 AND FINANCIAL REPORTING.
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 cause
Buffets Holdings to provide the Trustee and Securityholders with such annual
reports and such information, documents and other reports of Buffets Holdings 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 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.
The Company shall supply to the Trustee and each
Securityholder copies of such reports and other information of Buffets Holdings
within 15 days after the date Buffets Holdings would have been required to file
such reports or other information with the SEC had it been subject to such
Sections. 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 shall also
comply with the other provisions of TIA ss. 314(a) to the extent applicable.
The Company shall also provide the Trustee and each
Securityholder (i) within 60 days after the end of each of its first three
fiscal quarters of each fiscal year, an unaudited balance sheet as of the end of
each such fiscal quarter (commencing with the first fiscal quarter ending after
the Issue Date) on a consolidated basis for the Company and its Subsidiaries and
(ii) within 120 days after the end of each of its fiscal years, an unaudited
balance sheet as of the end of each such fiscal year (commencing with the first
fiscal year ending after the Issue Date) on a consolidated basis for the Company
and its Subsidiaries.
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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 Buffets Holdings 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 Buffets
Holdings 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 Buffets Holdings 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 Buffets Holdings 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;
(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, including Initial Securities and any
Additional Securities issued to the holders of Buffets Holdings
Existing Notes who enter into Option Agreements;
(5) Indebtedness of Buffets Holdings or any Restricted
Subsidiary outstanding on the Issue Date (other than Indebtedness
described in clause (1), (2), (3) or (4) of this Section 4.03(b));
42
(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;
(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 or co-issuance by any Restricted
Subsidiary of any Indebtedness of any other Restricted Subsidiary
otherwise permitted to be Incurred pursuant to this Indenture;
(13) Indebtedness of 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 any Restricted Subsidiary;
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(14) Acquired Indebtedness, and any Refinancing Indebtedness
thereof, which is in an aggregate amount not to exceed $20,000,000 at
any time outstanding;
(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; and
(16) Affiliate Subordinated Debt Incurred by the Company to
the extent required to pay for general corporate, overhead and other
expenses of the Company; PROVIDED, HOWEVER, such Affiliate Subordinated
Debt shall not exceed $5,000,000 at any time outstanding; and PROVIDED,
FURTHER, HOWEVER, that Affiliate Subordinated Debt shall be expressly
subordinated and junior in right of payment to the prior payment in
full, in cash, of any and all Obligations due under the Securities
(including interest accruing after the commencement of any bankruptcy
proceeding, whether or not such interest is an allowed claim in such
proceeding) and, so long as the Securities are outstanding, the holders
of the Affiliate Subordinated Debt shall not be entitled to (a) call a
default or accelerate any of the Obligations due thereunder except upon
a proceeding under any Bankruptcy Law which constitutes an Event of
Default under this Indenture or with the prior written consent of the
Holders of a majority in principal amount at maturity of the
Securities, or (b) to receive any payment or distribution of any
character, whether in cash, securities, or other property, on account
of any Obligations under the Affiliate Subordinated Debt; and PROVIDED,
FURTHER, that Affiliate Subordinated Debt shall contain no "default" or
"event of default" other than "events of default" that are
substantially the same as the provisions of Section 6.01(6) and (7) of
this Indenture and "event of default" for failure to pay the principal
of such Affiliate Subordinated Debt at final maturity.
(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) 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 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
44
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. (e) 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 Buffets Holdings
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 of Buffets Holdings accrued during
the period (treated as one accounting period) from July 1,
2004 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 May 18, 2004
(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 May 18, 2004 and 100% of the
fair market 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 May 18, 2004 as a
45
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 May
18, 2004 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 stockholders; 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 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
46
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 or of Buffets Holdings 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) 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
(6) (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
47
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
(6) 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, the Buffets Holdings Existing
Indenture 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;
(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
48
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, the Buffets Holdings Existing
Indenture 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 Holdings, 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,
(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
49
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 directly or indirectly, consummate any Asset
Disposition and the Company shall not permit Buffets Holdings or any of its
Restricted Subsidiaries to, directly or indirectly, consummate any Asset
Disposition unless Buffets Holdings or such Restricted Subsidiary fully complies
with the provisions of Section 4.06 of the Buffets Holdings Existing Indenture.
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 or Buffets Holdings; (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
50
otherwise approved by the Board of Directors, but in any event not to exceed
$10,000,000 for the Company and its Restricted Subsidiaries 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 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; (9) the
issuance or sale of any Capital Stock (other than Disqualified Stock) of the
Company; (10) the issuance or Incurrence of Affiliate Subordinated Debt
permitted under Section 4.03(b)(16) hereof; (11) the execution, delivery and
performance of the Transaction Agreements; (12) the transfer of its rights or
obligations under the Option Agreements by the Company to its Restricted
Subsidiaries in accordance with the terms of the Option Agreements; and (13) any
merger or consolidation between the Company and Buffets Holdings.
(c) Notwithstanding Sections 4.07(a) and (b), the Company
agrees that Buffets Holdings shall not (i) amend or otherwise modify the Caxton
Management Agreement to increase the amount of any fees payable by 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
51
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 Restricted Subsidiary to any Person (other than to
the Company, Buffets Holdings or a Wholly Owned Subsidiary of the Company or
Buffets Holdings), 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, Buffets Holdings or a Wholly Owned Subsidiary of
the Company or Buffets Holdings) 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 (a) such shares are
issued or sold in connection with (x) the formation or capitalization of a
Restricted Subsidiary, (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 or (z) any merger or consolidation between the
Company and Buffets Holdings, (b) Buffets Holdings issues shares of its common
stock upon exercise of warrants outstanding on the date hereof under the Warrant
Agreement, dated as of September 29, 2000, as supplemented by an Assumption
Agreement dated as of December 29, 2005, among Buffets Holdings, the Company and
the warrantholder party thereto or stock options issued under Buffets Holdings,
Inc. Equity Participation Plan or (c) Buffets Holdings issues shares of its
Voting Stock (that is not Disqualified Stock) that does not result in a Change
of Control of the Company.
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) 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.
SECTION 4.10 [INTENTIONALLY OMITTED].
52
SECTION 4.11 [INTENTIONALLY OMITTED].
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
ss. 314(a)(4) to the extent applicable.
SECTION 4.14 MAXIMUM LEVERAGE RATIO. The Company shall not
permit the Leverage Ratio of Buffets Holdings 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 Buffets Holdings, 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 or
Buffets Holdings 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. Except if the Company
merges or consolidates with or into Buffets Holdings, the Company shall not
engage in any business other than Permitted Company Business, except to the
extent it is not material to the Company. From and after the merger or
consolidation as described in the preceding sentence, the Company shall not
engage in any business other than Permitted Business or Permitted Company
Business, except to the extent it is not material to the Company and its
Restricted Subsidiaries, taken as a whole. In addition, the Company 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.
53
SECTION 4.16 NO INTERMEDIATE HOLDING COMPANIES. Except for a
transaction with a third party permitted under Section 5.01, a merger of Buffets
Holdings with or into the Company and/or a merger of Buffets with or into
Buffets Holdings, the Company shall cause Buffets Holdings to remain a direct
Subsidiary of the Company and Buffets to remain a direct Wholly Owned Subsidiary
of Buffets Holdings.
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.
SECTION 4.18 MAINTENANCE OF CORPORATE EXISTENCE. Except as
provided in Article V, the Company shall do or cause to be done all things
reasonably necessary to preserve and keep in full force and effect its corporate
existence, rights and franchises; PROVIDED, HOWEVER, that the Company shall not
be required to preserve such rights and franchises, if the Company shall
determine that the preservation thereof is no longer desirable in the conduct of
the business of the Company and its Restricted Subsidiaries, taken as a whole,
and that the loss thereof does not, and will not have, a material adverse effect
on the Holders.
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 and this Indenture;
(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) (assuming
that it were Buffets) or (B) the
54
Consolidated Coverage Ratio for the Successor Company and its
Restricted Subsidiaries would be equal to or greater than such ratio
for Buffets Holdings 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 with or 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.
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 the payment of Accreted Value or
the principal amount at maturity of any Security when the same becomes
due and payable at its Stated Maturity or interest thereon, if any,
upon optional or mandatory redemption, upon required purchase, upon
declaration of acceleration or otherwise;
(2) the Company fails to comply with Section 5.01 or 4.14 or
4.16;
(3) the Company fails to comply with Section 4.02, 4.03,
4.04, 4.05, 4.06, 4.07, 4.08, 4.09, 4.12, 4.15 and 4.18 (other than a
failure to purchase Securities when required under Section 4.06) and
such failure continues for 30 days after the notice specified below;
(4) 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) or (3) above) and such failure continues for 60 days
after the notice specified below;
(5) (A) Indebtedness of the Company or any Significant
Subsidiary is not paid within any applicable grace period after final
maturity or is accelerated by
55
the holders thereof because of a default and the total amount of such
Indebtedness unpaid or accelerated exceeds $10,000,000 or (B) the
Indebtedness in respect of the Buffets Holdings Existing Notes or
Buffets Existing Notes is not paid within any applicable grace period
after final maturity or is accelerated;
(6) 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;
(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;
(7) 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
(8) 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.
56
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 (3), (4) or (8) 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".
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 (5) and any event which with the giving of
notice or the lapse of time would become an Event of Default under clause (3),
(4) or (8), 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(6) or (7) 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 Accreted
Value of and accrued but unpaid interest, if any, on all the Securities to be
due and payable. Upon such a declaration, such Accreted Value and interest, if
any, shall be due and payable immediately. If an Event of Default specified in
Section 6.01(6) or (7) 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, if any, 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.
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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.
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 (if
any) 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.
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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, if any, 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 whole amount then due and owing (together with
interest on any unpaid interest, if any, 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, if any, ratably,
without preference or priority of any kind, according to the
amounts due and payable on the Securities for Accreted Value
and interest, if any, 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
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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 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:
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(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.
(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.
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(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 pursuant to Section 6.01(1) 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, if any, 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
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Securityholder a brief report dated as of May 15 that complies with TIA ss.
313(a). The Trustee also shall comply with TIA ss. 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 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, if any, 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(6) or (7)
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 at maturity 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;
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(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 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.
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SECTION 7.10 ELIGIBILITY; DISQUALIFICATION. The Trustee
shall at all times satisfy the requirements of TIA ss. 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 ss. 310(b); provided, however, that there shall be excluded from the
operation of TIA ss. 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 ss. 310(b)(1) are met.
SECTION 7.11 PREFERENTIAL COLLECTION OF CLAIMS AGAINST
COMPANY. The Trustee shall comply with TIA ss. 311(a), excluding any creditor
relationship listed in TIA ss. 311(b). A Trustee who has resigned or been
removed shall be subject to TIA ss. 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, if any, 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, 4.12, 4.14, 4.15, 4.16 and 4.18
and the operation of Sections 6.01(3), 6.01(5), 6.01(6), 6.01(7) and 6.01(8)
(but, in the case of Sections 6.01(6) and (7), 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
65
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(3), 6.01(5), 6.01(6), 6.01(7) and 6.01(8) (but, in the case of Sections
6.01(6) and (7), 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.
(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, if any, 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, if any, 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(6) or (7) 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
66
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 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
67
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.
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.
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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;
(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 or shall 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.
69
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.
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.
70
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.
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 Restaurants Holdings, Inc.
0000 Xxxxxxx 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
00 Xxxxxxxxxx Xxxxxx
XX-XX-XX0X
Xx. Xxxx, XX 00000-0000
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
71
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 ss. 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 ss. 312(c).
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
72
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.
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.
73
IN WITNESS WHEREOF, the parties have caused this Indenture to
be duly executed as of the date first written above.
BUFFETS RESTAURANTS HOLDINGS, INC.,
By /s/ R. Xxxxxxx Xxxxxxx, Jr.
-------------------------------
Name: R. Xxxxxxx Xxxxxxx, Jr.
Title: Chief Executive Officer
U.S. BANK NATIONAL ASSOCIATION
By /s/ Xxxxxxx Xxxxxxxx
-------------------------------
Name: Xxxxxxx Xxxxxxxx
Title: Vice President
74
RULE 144A/REGULATION S/IAI APPENDIX
PROVISIONS RELATING TO SECURITIES
1. DEFINITIONS
1.1 DEFINITIONS
For the purposes of this Appendix the following terms shall have the
meanings indicated below:
"Additional Securities" means, subject to the Company's
compliance with Section 4.03 of the Indenture, 13.875% Senior Discount Notes due
2010 issued from time to time after the Issue Date under the terms of the
Indenture (other than pursuant to Section 2.06, 2.07, 2.09 or 3.06 of the
Indenture).
"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
Additional 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.
"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 Securities" means $14,666,976 aggregate principal
amount at maturity of 13.875% Senior Discount Notes due 2010 issued on the Issue
Date.
"QIB" means a "qualified institutional buyer" as defined in
Rule 144A.
"Rule 144A Securities" means all Securities offered and sold
to QIBs in reliance on Rule 144A.
"Securities" means the Initial Securities and the Additional
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.
"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 Securities will be offered and sold by
the Company pursuant to the Option Agreements. The Initial Securities will
initially be Definitive Securities and Transfer Restricted Securities and will
be dated the Issue Date. Additional Securities will initially be Definitive
Securities and Transfer Restricted Securities. The Securities may be transferred
to, among others, (i) QIBs in reliance on Rule 144A under the Securities Act
("Rule 144A"), (ii) IAIs in transactions exempt from registration under the
Securities Act and (iii) Persons other than U.S. Persons (as defined in
Regulation S) in reliance on Regulation S under the Securities Act ("Regulation
S"). Unless consented to in writing by the Company, no Global Securities (as
defined below) shall be issued under this Indenture.
The remaining paragraphs of Section 2.1(a) and Sections 2.1(b), 2.1(c),
2.3(b), 2.3(c), 2.3(f), 2.3(g)(ii) and 2.4 will apply only if Global Securities
are issued.
If Global Securities are permitted, Securities that are resold pursuant
to Rule 144A may be issued in the form of one or more global Securities in
definitive, fully registered form (collectively, the "Rule 144A Global
Security"); Securities that are resold to IAIs may be issued in the form of one
or more Global Securities in definitive, fully registered form (collectively,
the "IAI Global Security"); and Securities that are resold pursuant to
Regulation S may be issued initially in the form of one or more temporary global
securities in fully
2
registered form (collectively, the "Temporary Regulation S Global Security"), in
each case 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 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 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 B) 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
3
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).
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.
4
2.2 AUTHENTICATION
The Trustee shall authenticate and deliver: (1) on the Issue
Date, an aggregate principal amount at maturity of $14,666,976 of 13.875% Senior
Discount Notes due 2010 and (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, in each case upon a
written order of the Company signed by one Officer of the Company; provided that
the total aggregate principal amount at maturity of Initial Securities and
Additional Securities issued under the Indenture shall not exceed $18,200,000
(assuming that no Step-Up Interest accrues on such Securities). 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 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
5
(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 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
6
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 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, 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.
7
(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.
(e) LEGEND.
(i) Except as permitted by the following paragraph (ii),
each Security certificate evidencing the Global Securities or
Definitive 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 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
8
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.
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).
(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.
9
(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 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
10
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.
(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.
11
EXHIBIT A
---------
[FORM OF FACE OF 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.
THIS DEBT INSTRUMENT WAS ISSUED WITH "ORIGINAL ISSUE DISCOUNT"
WITHIN THE MEANING OF SECTION 1273 OF THE INTERNAL REVENUE CODE OF 1986, AS
AMENDED, AND THE TREASURY REGULATIONS PROMULGATED THEREUNDER. THE COMPANY AGREES
TO PROVIDE PROMPTLY TO THE HOLDER OF THIS DEBT INSTRUMENT, UPON WRITTEN REQUEST,
THE ISSUE PRICE, THE AMOUNT OF ORIGINAL ISSUE DISCOUNT, THE ISSUE DATE AND THE
YIELD TO MATURITY OF THIS DEBT INSTRUMENT. ANY SUCH WRITTEN REQUEST SHOULD BE
SENT TO R. XXXXXXX XXXXXXX AT THE FOLLOWING ADDRESS: 0000 XXXXXXX XXX, XXXXX, XX
00000, TELEPHONE NUMBER: 000-000-0000.
A-4
BUFFETS RESTAURANTS HOLDINGS, INC.
13.875% SENIOR DISCOUNT NOTE DUE 2010
No. _____ [CUSIP No. ______] [if applicable]
$______________
BUFFETS RESTAURANTS HOLDINGS, INC., a Delaware corporation
(the "Company"), promises to pay to ______________, the principal amount at
maturity of __________ Dollars (or if greater, the Accreted Value) on December
15, 2010.
Except as described herein, this Security shall be issued at a
discount from the principal amount at maturity and not bear interest. The
Accreted Value of this Security shall increase as specified on the other side of
this Security.
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 RESTAURANTS 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:
-----------------------
Authorized Signatory
A-5
[FORM OF REVERSE SIDE OF INITIAL SECURITY]
13.875% SENIOR DISCOUNT NOTE DUE 2010
1. ACCRETED VALUE
The Securities of BUFFETS RESTAURANTS HOLDINGS, INC., a
Delaware corporation (such corporation, and its successors and assigns under the
Indenture hereinafter referred to, being herein called the "Company"), will be
issued at a discount from their principal amount at maturity. Except for overdue
amounts as described below and in the Indenture, no cash interest will accrue on
the Securities. The Accreted Value of each Security will increase from the date
of issuance, 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 December 15, 2010. 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, if
any.
If the Leverage Ratio of Buffets Holdings as of July 31, 2006
or July 31, 2008 (or if either such date is not the end of an accounting period
for Buffets Holdings, 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 as a
result of Step-Up Interest will be added to the Accreted Value of this Security.
"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.............................................. $ 513.426
January 31, 2006........................................ $ 519.758
July 31, 2006........................................... $ 555.816
A-6
SEMI ANNUAL ACCRETED
ACCRUAL DATE VALUE
------------ --------
January 31, 2007........................................ $ 594.376
July 31, 2007........................................... $ 635.611
January 31, 2008........................................ $ 679.706
July 31, 2008........................................... $ 726.861
January 31, 2009........................................ $ 777.287
July 31, 2009........................................... $ 831.211
January 31, 2010........................................ $ 888.876
July 31, 2010........................................... $ 950.542
December 15, 2010....................................... $ 1,000.000
(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; or
(c) if the Specified Date otherwise occurs between two Semi
Annual Accrual Dates, the Accreted Value will equal to the sum of (A)
the Semi Annual 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.
Notwithstanding the foregoing, if additional interest accrues
on the Securities as a result of an increase in the interest rate on the
Securities as a result of 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 accrue 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.
A-7
2. METHOD OF PAYMENT
Holders must surrender Securities to a Paying Agent to collect
principal payments. The Company will pay principal and interest, if any, 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 and interest, if any, 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 and interest, if any,) 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, Buffets Holdings
or any of their Wholly Owned Subsidiaries may act as Paying Agent, Registrar or
co-registrar.
4. INDENTURE
The Company issued the Securities under an Indenture dated as
of December 29, 2005 (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.
xx.xx. 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 $14,666,976 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 Additional Securities pursuant to Section 2.13 of the
Indenture. The Initial Securities issued on the Issue Date and any Additional
Securities 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.
A-8
5. OPTIONAL REDEMPTION
At any time, the Company shall be entitled to redeem all or a
portion of the Securities upon not less than 30 days but not more than 60 days'
notice at a redemption price equal to 100% of the Accreted Value of the
Securities on 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 any).
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 and in no event shall the unredeemed portion of any Security be
less than $1,000 principal amount at maturity. 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. MANDATORY REDEMPTION
Upon the earlier of (a) the closing of the purchase of the
Buffets Holdings Existing Notes under the Option Agreements and (b) a Change of
Control of the Company, the Accreted Value of the Securities shall immediately
become due and payable. The Company shall give at least 30 days prior written
notice (or such shorter notice period as is acceptable to the Trustee) to the
Trustee and the Securityholders of any proposed mandatory redemption date.
8. DENOMINATIONS; TRANSFER; EXCHANGE
The Securities are in registered form without coupons in
minimum denominations of $1,000 aggregate principal amount at maturity and, if
in excess of $1,000 aggregate principal amount at maturity, whole multiples of
$1 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.
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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, if any, 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.
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 Accreted
Value and interest, if any, 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 or to secure the Securities, or to add additional covenants or
surrender rights and powers conferred on the Company or to comply with any
requirement 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 in
payment of Accreted Value or principal on the Securities at maturity, upon
redemption pursuant to paragraph 5 of the Securities, upon mandatory redemption
pursuant to paragraph 7 of the Securities upon acceleration or otherwise, or
failure by the Company to redeem or purchase Securities when required; (ii)
failure of the Company to comply with certain covenants relating to a merger,
consolidation or sale of all or substantially all the assets of the Company or
maintain certain leverage ratios for Buffets Holdings or restrict the formation
of intermediate holding companies; (iii) failure by the Company to comply
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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 or the acceleration of the
Buffets Holdings Existing Notes or the Buffets Existing Notes; (v) certain
events of bankruptcy or insolvency with respect to the Company and the
Significant Subsidiaries and (vi) certain judgments or decrees for the payment
of money, the portion of which not covered by insurance exceeding $10,000,000.
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.
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.
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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. 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 Restaurants Holdings, Inc.
0000 Xxxxxxx Xxx
Xxxxx, Xxxxxxxxx 00000
Attention: General Counsel
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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
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(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.
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[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 Amount of increase Principal amount at maturity Signature of authorized
Exchange in Principal amount in Principal amount of this Global Security officer of Trustee or
at maturity of this at maturity of this following such (decrease Custodian for the
Global Security Global Security or increase) Securities]
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EXHIBIT B
---------
[Form of Transferee Letter of Representation]
Buffets Restaurants Holdings, Inc.
0000 Xxxxxxx 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 Restaurants 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
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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: ______________________
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