EXHIBIT 4.2
THE KRYSTAL COMPANY
as Successor to T.K.C. Acquisition Corp.
and
KRYSTAL AVIATION CO. and
KRYSTAL AVIATION MANAGEMENT CO.
as Guarantors
______________________________________________________________________________
SUPPLEMENTAL INDENTURE No. 1
Dated as of September 26, 1997
to
INDENTURE
Dated as of September 26, 1997
______________________________________________________________________________
SUNTRUST BANK, ATLANTA
AS TRUSTEE
THIS SUPPLEMENTAL INDENTURE No. 1 (the "Supplemental Indenture") dated
as of September 26, 1997 among The Krystal Company, a Tennessee corporation, as
successor (the "Successor") to T.K.C. Acquisition Corp., a Tennessee
corporation, as the Company, and Krystal Aviation Co., a Tennessee corporation
and Krystal Aviation Management Co., a Tennessee corporation, as guarantors (the
"Guarantors") and Suntrust Bank, Atlanta, a Georgia banking corporation, as
Trustee.
W I T N E S S E T H:
WHEREAS, there has previously been executed and delivered to the
Trustee an Indenture (the "Indenture") dated as of September 26, 1997 among
T.K.C. Acquisition Corp., as the Company and the Trustee, providing for the
issuance of the Notes (as defined therein) of the Company;
WHEREAS, pursuant to the terms of the Agreement and Plan of Merger,
dated as of July 3, 1997, by and among T.K.C. Acquisition Corp., Port Royal
Holdings, Inc., a Georgia corporation and 100% owner of T.K.C. Acquisition Corp.
and The Krystal Company, T.K.C. Acquisition Corp. merged with and into The
Krystal Company (the "Merger");
WHEREAS, under the Indenture, the Company and the Trustee may enter
into a supplemental indenture to evidence the succession of another person to
the Company and the assumption by such successor of the covenants of the Company
contained in the Indenture and in the Notes, which supplement, pursuant to
Section 9.01 of the Indenture, does not require the consent of the Holders of
Notes;
WHEREAS, under the Indenture, the Company and the Trustee may enter
into a supplemental indenture to evidence the acknowledgment of a Subsidiary of
the Company that it is a Guarantor for all purposes under the Indenture and the
Notes, which supplement, pursuant to Section 9.01 of the Indenture, does not
require the consent of the Holders of Notes;
WHEREAS, the Successor wishes by this Supplemental Indenture to
evidence its succession to the Company and its assumption of the covenants of
the Company contained in the Indenture and the Notes;
WHEREAS. the Guarantors wish by this Supplemental Indenture to
evidence their assumption of all of the obligations of a Guarantor under the
Indenture and the Notes; and
WHEREAS, all acts and proceedings required by law and by the Indenture
to constitute this Supplemental Indenture a valid and binding agreement for the
uses and purposes set forth herein, in accordance with its terms, have been done
and taken, and the execution and delivery of this Supplemental Indenture have
been in all respects duly authorized by the Successor and the Guarantors;
NOW, THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the receipt of which is hereby acknowledged, the
Successor, the Guarantors and the Trustee hereby agree as follows:
1. The Successor hereby acknowledges and agrees that it has
succeeded T.K.C. Acquisition Corp. as the Company under the Indenture and the
Notes, and does hereby assume and agree to perform each and every covenant of
the Company contained in the Indenture and the Notes and does otherwise agree to
be bound by and subject to the terms and provisions of the Indenture and the
Notes in each and every respect as if it had been initially named as the Company
therein. Without in any way limiting the generality of the foregoing, the
Successor hereby agrees to be liable for the due and punctual payment of
principal (and premium, if any) and interest (and Additional Interest) on all of
the Notes.
2. Each Guarantor hereby acknowledges and agrees that it has assumed
all of the obligations of a Guarantor under the Indenture and the Notes and does
otherwise agree to be bound by and subject to the terms and provisions of the
Indenture and the Notes in each and every respect as if each had been initially
named as a Guarantor in the Indenture and the Notes.
3. In order to further evidence the succession of the Successor to
the Company, the Successor's assumption of the covenants of the Company under
the Indenture and Notes and the assumption by the Guarantors of the obligations
of a Guarantor under the Indenture and the Notes, the forms of Notes set forth
in Exhibits A, B, C and D, respectively, to the Indenture are hereby amended by
replacing, in their entirety, such forms of Notes with the forms of Notes set
forth in Exhibits A, B, C and D, respectively, hereto. In exchange for the
Initial Certificated Note outstanding under the Indenture, the Company shall
issue, and the Trustee shall authenticate, a new Initial Global Note in
accordance with Section 2.01(c) of the Indenture.
4. The forms of transfer certificates and investment letters set
forth in Exhibits E, F, G, H and I, respectively, to the Indenture are hereby
amended by replacing, in their entirety, such certificates and letters with the
forms of transfer certificates and investment letters set forth in Exhibits E,
F, G, H and I, respectively, hereto.
5. Each Guarantor hereby represents and warrants to the Trustee that
as of the date hereof:
a. each Guarantor is a corporation validly existing and in good
standing under the laws of the State of Tennessee; and
b. no Default or Event of Default will result from the Merger
or the execution and delivery of this Supplemental Indenture.
6. The Successor hereby represents and warrants to the Trustee that
as of the date hereof:
a. the Successor is a corporation validly existing and in good
standing under the laws of the State of Tennessee; and
b. no Default or Event of Default will result from the Merger
or the execution and delivery of this Supplemental Indenture.
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6. As a condition to the entry into this Supplemental Indenture by
the parties hereto, the Successor and the Guarantors herewith deliver to the
Trustee an Opinion of Counsel (and in the case of subclause (a) below, an
Officers' Certificate) to the effect that:
a. this Supplemental Indenture is authorized or permitted by
the Indenture and all conditions precedent to the execution, delivery and
performance of this Supplemental Indenture have been satisfied;
b. each of the Successor and each Guarantor has all necessary
corporate power and authority to execute and deliver this Supplemental Indenture
and the execution, delivery and performance of this Supplemental Indenture has
been duly authorized by all necessary corporate action of the Successor and each
Guarantor;
c. the execution, delivery and performance of this Supplemental
Indenture do not conflict with, or result in the breach of or constitute a
default under any of the terms, conditions or provisions of (i) the Indenture,
(ii) the charter documents and by-laws of the Successor or either Guarantor or
(iii) any material agreement or instrument to which the Successor or either
Guarantor is subject;
d. the attorneys of the firm responsible for such matters
writing such Opinion of Counsel do not have actual knowledge that the execution,
delivery and performance of this Supplemental Indenture conflict with, or result
in the breach of any of the terms, conditions or provisions of (i) any law or
regulation applicable to the Successor or either Guarantor or (ii) any material
order, writ, injunction or decree of any court or governmental instrumentality
applicable to the Successor or either Guarantor;
e. this Supplemental Indenture has been duly and validly
executed and delivered by the Successor and each Guarantor and the Indenture
together with this Supplemental Indenture constitutes a legal, valid and binding
obligation of the Successor and each Guarantor enforceable against the Successor
and each Guarantor in accordance with its terms, except as such enforceability
may be limited by applicable bankruptcy, insolvency or similar laws affecting
the enforcement of creditors' rights generally and general equitable principles;
and
f. the Indenture together with this Supplemental Indenture
complies with the Trust Indenture Act.
7. For all purposes of this Supplemental Indenture, except as
otherwise herein expressly provided or unless the context otherwise requires:
(i) the terms and expressions used herein shall have the same meanings as
corresponding terms and expressions used in the Indenture; and (ii) the words
"herein," "hereof," and "hereby" and other words of similar import used in this
Supplemental Indenture refer to this Supplemental Indenture as a whole and not
any particular Section of this Supplemental Indenture.
8. The Trustee accepts the amendment to the Indenture effected by
this Supplemental Indenture and agrees to execute the trust created by the
Indenture, as hereby
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amended, but only upon the terms and conditions set forth in the Indenture, as
hereby amended, including the terms and provisions defining and limiting the
liabilities and responsibilities of the Trustee, which terms and provisions
shall in like manner define and limit the Trustee's liabilities in the
performance of the trust created by the Indenture, as hereby amended, and,
without limiting the generality of the foregoing, the Trustee has no
responsibility for the correctness of the recitals of fact herein contained
which shall be taken as the statements of the Successor and each Guarantor and
makes no representations as to the validity or sufficiency of this Supplemental
Indenture and shall incur no liability or responsibility in respect of the
validity thereof.
9. Except as expressly amended hereby, the Indenture is in all
respects ratified and confirmed and all the terms, conditions and provisions
thereof shall remain in full force and effect.
10. This Supplemental Indenture shall form a part of the Indenture
for all purposes, and every Holder of Notes heretofore or hereafter
authenticated and delivered shall be bound hereby.
11. Any notice or communication required or permitted under the
Indenture shall be given, as provided in Section 11.02 of the Indenture, and
addressed if to the Company or any Guarantor: The Krystal Company, One Union
Square, Chattanooga, Tennessee, 37402 Attention: Secretary.
12. This Supplemental Indenture may be executed in any number of
counterparts, each of which when so executed shall be deemed to be an original,
and all of such counterparts shall together constitute one and the same
instrument.
13. This Supplemental Indenture shall be deemed to be a contract made
under the laws of the State of New York and for all purposes shall be governed
by and construed in accordance with such laws.
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IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture
to be duly executed as of the day and year first above written.
THE KRYSTAL COMPANY
By /s/ Philip H. Sanford
---------------------------------------
Name: Philip H. Sanford
Title: Chief Executive Officer
KRYSTAL AVIATION CO.
By /s/ Philip H. Sanford
---------------------------------------
Name: Philip H. Sanford
Title: Chief Executive Officer
KRYSTAL AVIATION MANAGEMENT CO.
By /s/ Philip H. Sanford
---------------------------------------
Name: Philip H. Sanford
Title: Chief Executive Officer
SUNTRUST BANK, ATLANTA
as Trustee
By /s/ David M. Kaye
---------------------------------------
Name: David M. Kaye
Title: Group Vice President
By /s/ Sandra Thompson
---------------------------------------
Name:
Title:
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture to be duly executed as of the day and year first above written.
THE KRYSTAL COMPANY
By /s/ Philip H. Sanford
---------------------------------------
Name: Philip H. Sanford
Title: Chief Executive Officer
KRYSTAL AVIATION CO.
By /s/ Philip H. Sanford
---------------------------------------
Name: Philip H. Sanford
Title: Chief Executive Officer
KRYSTAL AVIATION MANAGEMENT CO.
By /s/ Philip H. Sanford
---------------------------------------
Name: Philip H. Sanford
Title: Chief Executive Officer
SUNTRUST BANK, ATLANTA
as Trustee
By /s/ David M. Kaye
---------------------------------------
Name: David M. Kaye
Title: Group Vice President
By /s/ Sandra Thompson
---------------------------------------
Name:
Title:
EXHIBIT A
FORM OF INITIAL GLOBAL NOTE
---------------------------
FACE OF INITIAL GLOBAL NOTE
---------------------------
THE KRYSTAL COMPANY
No. __ CUSIP No. 501148AA8
THIS NOTE IS A GLOBAL NOTE WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO.
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), AND THIS NOTE MAY NOT BE
OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT OR IN ACCORDANCE WITH AN
APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT (SUBJECT TO THE DELIVERY OF SUCH EVIDENCE, IF ANY,
REQUIRED UNDER THE INDENTURE PURSUANT TO WHICH THIS NOTE IS
ISSUED) AND IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF
ANY STATE OF THE UNITED STATES OR ANY OTHER JURISDICTION.
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY TO THE KRYSTAL COMPANY OR A
SUCCESSOR THEREOF OR THE REGISTRAR FOR REGISTRATION OF TRANSFER
OR EXCHANGE AND ANY NOTE ISSUED IS REGISTERED IN THE NAME OF CEDE
& CO. OR SUCH OTHER ENTITY AS HAS BEEN REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (AND ANY PAYMENT
HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS HAS BEEN
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFER OF THIS GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS IN
WHOLE, AND NOT IN PART, TO NOMINEES OF THE DEPOSITORY TRUST
COMPANY OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE AND
TRANSFERS OF INTERESTS IN THIS GLOBAL NOTE SHALL BE LIMITED TO
TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN
SECTION
2.06 OF THE INDENTURE, DATED AS OF SEPTEMBER 26, 1997 AMONG TKC
ACQUISITION CORP. ("TKC") AND SUNTRUST BANK, ATLANTA AS TRUSTEE,
(AS SUPPLEMENTED BY SUPPLEMENTAL INDENTURE NO. 1 DATED AS OF
SEPTEMBER 26, 1997 AMONG THE KRYSTAL COMPANY, AS THE SUCCESSOR TO
TKC, KRYSTAL AVIATION CO. AND KRYSTAL AVIATION MANAGEMENT CO., AS
GUARANTORS AND THE TRUSTEE) PURSUANT TO WHICH THIS NOTE WAS
ISSUED.
GLOBAL NOTE
REPRESENTING 101/4% SENIOR NOTES DUE 2007
The Krystal Company, a Tennessee corporation, for value received, hereby
promises to pay to CEDE & CO., or its registered assigns, the principal sum
indicated on Schedule A hereof, on October 1, 2007.
Interest Payment Dates: April 1 and October 1, commencing April 1, 1998.
Record Dates: March 15 and September 15.
Reference is hereby made to the further provisions of this Note set forth
on the reverse hereof, which further provisions shall for all purposes have the
same effect as if set forth at this place.
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Unless the certificate of authentication hereon has been duly executed by
the Trustee referred to on the reverse hereof by manual signature, this Note
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purposes.
IN WITNESS WHEREOF, The Krystal Company has caused this Note to be duly executed
under its corporate seal.
THE KRYSTAL COMPANY
By:______________________________
Name:
Title:
Attest:________________________
Dated:_________________________
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
__________________________________
as Trustee, certifies that this is one of
the Notes referred to in the Indenture.
By:________________________________
Authorized Signatory
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REVERSE SIDE OF INITIAL GLOBAL NOTE
THE KRYSTAL COMPANY
GLOBAL NOTE
REPRESENTING 101/4% SENIOR NOTES DUE 2007
1. Indenture.
---------
This Note is one of a duly authorized issue of debt securities of the
Company (as defined below) designated as its "101/4% Senior Notes Due 2007"
(herein called the "Notes") limited in aggregate principal amount to
$100,000,000, issued under an indenture dated as of September 26, 1997 (as
amended or supplemented from time to time, the "Indenture") between TKC
Acquisition Corp. ("TKC") and SunTrust Bank, Atlanta as trustee (the "Trustee,"
which term includes any successor trustee under the Indenture). Pursuant to an
agreement and plan of merger, dated as of July 3, 1997, by and among TKC, Port
Royal Holdings, Inc. and The Krystal Company, TKC merged with and into The
Krystal Company on September 26, 1997, and The Krystal Company became the
surviving corporation (the "Merger"). Immediately following the Merger, The
Krystal Company executed a supplemental indenture no. 1 ("Supplemental Indenture
No. 1"), dated as of September 26, 1997, among The Krystal Company, as the
successor to TKC, Krystal Aviation Co. and Krystal Aviation Management Co., as
guarantors (the "Guarantors") and the Trustee, under which (i) The Krystal
Company acknowledged and agreed that it had succeeded TKC as the Company under
the Indenture and the Notes, agreed to perform each and every covenant of the
Company contained in the Indenture and the Notes and agreed to be bound by and
subject to the terms and provisions of the Indenture and the Notes in each and
every respect as if it had been initially named as the Company in the Indenture
and the Notes and (ii) each of the Guarantors assumed all of the obligations of
a Guarantor under the Indenture and the Notes and agreed to be bound by and
subject to the terms and provisions of the Indenture and the Notes in each and
every respect as if each had been initially named as a Guarantor in the
Indenture and the Notes. The terms of the Notes include those stated in the
Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939, as amended (15 U.S. Code (S)(S) 77aaa-77bbb). The Notes
are subject to all such terms, and Holders of Notes are referred to the
Indenture and such Act for a statement of the respective rights, limitations of
rights, duties and immunities thereunder of the Company, the Guarantors, the
Trustee and each Holder and of the terms upon which the Notes are, and are to
be, authenticated and delivered. The summary of the terms of this Note
contained herein does not purport to be complete and is qualified by reference
to the Indenture. To the extent permitted by applicable law, in the event of
any inconsistency between the terms of this Note and the terms of the Indenture,
the terms of the Indenture shall control. All capitalized terms used in this
Note which are not defined herein shall have the meanings assigned to them in
the Indenture.
The Indenture restricts, among other things, the Company's ability to
incur additional indebtedness and issue preferred stock, pay dividends or make
certain other restricted payments, incur liens, sell stock of Subsidiaries,
apply net proceeds from certain asset sales, merge
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or consolidate with any other person, sell, assign, transfer, lease, convey or
otherwise dispose of substantially all of the assets of the Company or enter
into certain transactions with affiliates.
2. Principal and Interest.
----------------------
The Krystal Company, a Tennessee corporation (such corporation, and
its successors and assigns under the Indenture hereinafter referred to, being
herein called the "Company"), promises to pay the principal amount set forth on
Schedule A of this Note to the Holder hereof on October 1, 2007.
The Company shall pay interest at a rate of 101/4% per annum, from
September 26, 1997 or from the most recent Interest Payment Date thereafter to
which interest has been paid or duly provided for, semiannually in arrears on
April 1 and October 1 of each year, commencing on April 1, 1998, in cash, to the
Holder hereof until the principal amount hereof is paid or made available for
payment. The interest so payable, and punctually paid or duly provided for, on
any Interest Payment Date will, subject to certain exceptions provided in the
Indenture, be paid to the Person in whose name this Note (or the Note in
exchange or substitution for which this Note was issued) is registered at the
close of business on the Record Date for interest payable on such Interest
Payment Date. The Record Date for any interest payment is the close of business
on March 15 or September 15, as the case may be, whether or not a Business Day,
immediately preceding the Interest Payment Date on which such interest is
payable. Any such interest not so punctually paid or duly provided for
("Defaulted Interest") shall forthwith cease to be payable to the Holder on such
Record Date and shall be paid as provided in Section 2.11 of the Indenture.
Interest will be computed on the basis of a 360-day year of twelve 30-day
months.
Each payment of interest in respect of an Interest Payment Date will
include interest accrued through the day before such Interest Payment Date. If
an Interest Payment Date falls on a day that is not a Business Day, the interest
payment to be made on such Interest Payment Date will be made on the next
succeeding Business Day with the same force and effect as if made on such
Interest Payment Date, and no additional interest will accrue as a result of
such delayed payment.
If this Note is exchanged in a Registered Exchange Offer prior to the
Record Date for the first Interest Payment Date following such exchange, accrued
and unpaid interest, if any, on this Note, up to but not including the date of
issuance of the Exchange Note or Exchange Notes issued in exchange for this
Note, shall be paid on the first Interest Payment Date for such Exchange Note or
Exchange Notes to the Holder or Holders of such Exchange Note or Exchange Notes
on the first Record Date with respect to such Exchange Note or Exchange Notes.
If this Note is exchanged in a Registered Exchange Offer subsequent to the
Record Date for the first Interest Payment Date following such exchange but on
or prior to such Interest Payment Date, then any such accrued and unpaid
interest with respect to this Note and any accrued and unpaid interest on the
Exchange Note or Exchange Notes issued in exchange for this Note, through the
day before such Interest Payment Date, shall be paid on such Interest Payment
Date to the Holder of this Note on such Record Date.
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To the extent lawful, the Company shall pay interest on overdue
principal, overdue premium, Defaulted Interest and overdue Additional Interest
(without regard to any applicable grace period) at the interest rate borne on
this Note. The Company's obligation pursuant to the previous sentence shall
apply whether such overdue amount is due at its Stated Maturity, as a result of
the Company's obligations pursuant to Section 3.05, Section 4.07 or Section 4.08
of the Indenture, or otherwise.
3. Registration Rights, Additional Interest.
----------------------------------------
The Holder of this Note is entitled to the benefits of the
Registration Rights Agreement, dated September 26, 1997, between TKC, as
predecessor to the Company, and the Initial Purchaser (the "Registration Rights
Agreement"), which agreement is attached to the Indenture as Exhibit J thereto.
Such benefits include the right of the Holder to receive Additional Interest in
the event of a failure on the part of the Company to comply with certain
registration covenants, as provided in Section 4 of the Registration Rights
Agreement.
4. Method of Payment.
-----------------
The Company, through the Paying Agent, shall pay interest on this Note
to the registered Holder of this Note, as provided above. The Holder must
surrender this Note to a Paying Agent to collect principal payments. The
Company will pay principal, premium, if any, and interest and Additional
Interest, if any, in money of the United States of America that at the time of
payment is legal tender for payment of all debts public and private. Principal,
premium, if any, and interest and Additional Interest, if any, shall be paid by
checks, mailed to the registered Holders at their registered addresses; provided
that all payments with respect to Notes the Holders of which have given wire
transfer instructions to the Company will be required to be made by wire
transfer of immediately available funds to the accounts specified by the Holders
thereof.
5. Paying Agent and Registrar.
--------------------------
Initially, the Trustee will act as Paying Agent and Registrar under
the Indenture. The Company may, upon written notice to the Trustee, appoint and
change any Paying Agent or Registrar. The Company or any of its Affiliates may
act as Paying Agent or Registrar; provided that if the Company or such Affiliate
--------
is acting as Paying Agent, the Company or such Affiliate shall segregate all
funds held by it as Paying Agent and hold them in trust for the benefit of the
Holders or the Trustee.
6. Note Guarantees.
---------------
This Note is initially entitled to the benefits of the Note Guarantees
made by Krystal Aviation Co. and Krystal Aviation Management Co. pursuant to the
Indenture, and may thereafter be entitled to Note Guarantees made by other
Guarantors for the benefit of Holders of the Notes. Each present Guarantor has,
and each future Guarantor will, irrevocably and unconditionally, jointly and
severally, guarantee on a senior basis the punctual payment when due, whether at
Stated Maturity, by acceleration, in connection with a Change of Control Offer,
an
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Asset Sale Offer or redemption, or otherwise, of all obligations of the Company
under the Indenture and this Note, whether for payment of principal of, premium,
if any, interest or Additional Interest, if any, on the Notes, expenses,
indemnification or otherwise. A Guarantor shall be released from its Note
Guarantee upon the terms and subject to the conditions set forth in the
Indenture.
7. Redemption.
----------
The Notes are not redeemable at the option of the Company prior to
April 1, 2002. Thereafter, the Notes will be subject to redemption at the
option of the Company, in whole or in part, upon not less than 30 nor more than
60 calendar days' prior notice, at the redemption prices (expressed as
percentages of principal amount) set forth below, plus accrued and unpaid
interest thereon and Additional Interest, if any, to the applicable Redemption
Date (subject to the right of each Holder of record on the relevant Record Date
to receive interest due on the relevant Interest Payment Date), if redeemed
during the twelve-month period beginning April 1 of the years indicated below:
YEAR PERCENTAGE
---- ----------
2002 105.125%
2003 103.417%
2004 101.708%
2005 and thereafter 100.000%
Notwithstanding the foregoing, at any time prior to April 1, 2000, the
Company, at its option, may redeem up to 35% of the aggregate principal amount
of the Notes originally issued, in part, with the net proceeds of one or more
Public Equity Offerings made by the Company or of a capital contribution made by
the Parent to the common equity capital of the Company with the net proceeds of
one or more Public Equity Offerings made by the Parent, at a redemption price
equal to 110.25% of the aggregate principal amount thereof together with accrued
and unpaid interest and Additional Interest, if any, to the date of the
redemption payment; provided, however, that after such redemption the aggregate
-------- -------
principal amount of the Notes outstanding must equal at least 65% of the
aggregate principal amount of the Notes originally issued and provided, further,
-------- -------
that such redemption shall occur within 60 days of the date of closing of such
Public Equity Offering.
8. Notice of Redemption.
--------------------
At least 30 calendar days but not more than 60 calendar days before a
Redemption Date, the Company shall send, or cause to be sent, a notice of
redemption, by first-class mail, postage prepaid, to Holders of Notes to be
redeemed at the addresses of such Holders as they appear in the Note Register.
If less than all of the Notes are to be redeemed at any time, the
Trustee shall select the Notes to be redeemed on a pro rata basis; provided that
the Trustee may select for redemption portions (equal to $1,000 or any integral
multiple thereof) of the principal of Notes that have denominations larger than
$1,000 (Notes in denominations of $1,000 or less may be redeemed
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only in whole). If any Note is redeemed subsequent to a Record Date with
respect to any Interest Payment Date specified above and on or prior to such
Interest Payment Date, then any accrued interest will be paid on such Interest
Payment Date to the Holder of the Note on such Record Date. If money in an
amount sufficient to pay the Redemption Price of all Notes (or portions thereof)
to be redeemed on the Redemption Date is deposited with the Paying Agent on or
before the applicable Redemption Date and certain other conditions are
satisfied, interest on the Notes or portions thereof to be redeemed on the
applicable Redemption Date will cease to accrue.
9. Repurchase at the Option of Holders upon Change of Control.
----------------------------------------------------------
Upon the occurrence of a Change of Control, each Holder shall have the
right in accordance with the terms hereof and the Indenture to require the
Company to purchase such Holder's Notes, in whole or in part, in a principal
amount that is an integral multiple of $1,000, pursuant to a Change of Control
Offer, at a purchase price in cash equal to 101% of the principal amount of such
Notes (or portions thereof) plus accrued and unpaid interest and Additional
Interest, if any, to the Change of Control Payment Date.
Within 30 calendar days after the date of any Change of Control, the
Company shall send, or cause to be sent, by first-class mail, postage prepaid, a
notice regarding the Change of Control Offer to each Holder. The Holder of this
Note may elect to have this Note or a portion hereof in an authorized
denomination purchased by completing the form entitled "Option of Holder to
Elect Purchase" appearing below and tendering this Note pursuant to the Change
of Control Offer. Unless the Company defaults in the payment of the Change of
Control Purchase Price with respect thereto, all Notes or portions thereof
accepted for payment pursuant to the Change of Control Offer will cease to
accrue interest from and after the Change of Control Payment Date.
10. Repurchase at the Option of Holders upon Asset Sale.
---------------------------------------------------
If at any time the Company or any Subsidiary engages in any Asset
Sale, as a result of which the aggregate amount of Excess Proceeds exceeds $5.0
million, the Company shall, within 30 calendar days of the date the amount of
Excess Proceeds exceeds $5.0 million, use the then-existing Excess Proceeds to
make an offer to purchase from all Holders of Notes, on a pro rata basis, Notes
in an aggregate principal amount equal in amount to the then-existing Excess
Proceeds, at a purchase price in cash in an amount equal to 100% of the
principal amount thereof plus accrued and unpaid interest thereon and Additional
Interest, if any, to the Asset Sale Purchase Date. Upon completion of an Asset
Sale Offer (including payment of the Asset Sale Purchase Price for accepted
Notes), any surplus Excess Proceeds that were the subject of such offer shall
cease to be Excess Proceeds, and the Company may then use such amounts for
general corporate purposes.
Within 30 calendar days of the date the amount of Excess Proceeds
exceeds $5.0 million, the Company shall send, or cause to be sent, by first-
class mail, postage prepaid, a notice regarding the Asset Sale Offer to each
Holder. The Holder of this Note may elect to have this Note or a portion hereof
in an authorized denomination purchased by completing the form entitled "Option
of Holder to Elect Purchase" appearing below and tendering this Note pursuant to
the
A-8
Asset Sale Offer. Unless the Company defaults in the payment of the Asset Sale
Purchase Price with respect thereto, all Notes or portions thereof selected for
payment pursuant to the Asset Sale Offer will cease to accrue interest from and
after the Asset Sale Purchase Date.
11. The Global Note.
---------------
So long as this Global Note is registered in the name of the
Depository or its nominee, members of, or participants in, the Depository
("Agent Members") shall have no rights under the Indenture with respect to this
Global Note held on their behalf by the Depository or the Trustee as its
custodian, and the Depository may be treated by the Company, the Guarantors, the
Trustee and any agent of the Company, the Guarantors, or the Trustee as the
absolute owner of this Global Note for all purposes. Notwithstanding the
foregoing, nothing herein shall (i) prevent the Company, the Guarantors, the
Trustee or any agent of the Company, the Guarantors or the Trustee, from giving
effect to any written certification, proxy or other authorization furnished by
the Depository or (ii) impair, as between the Depository and its Agent Members,
the operation of customary practices governing the exercise of the rights of a
Holder.
The Holder of this Global Note may grant proxies and otherwise
authorize any Person, including Agent Members and Persons that may hold
interests in this Global Note through Agent Members, to take any action which a
Holder is entitled to take under the Indenture or the Notes.
Whenever, as a result of optional redemption by the Company, a Change
of Control Offer, an Asset Sale Offer, a Registered Exchange Offer or an
exchange for Certificated Notes, this Global Note is redeemed, repurchased or
exchanged in part, this Global Note shall be surrendered by the Holder thereof
to the Trustee who shall cause an adjustment to be made to Schedule A hereof so
that the principal amount of this Global Note will be equal to the portion not
redeemed, repurchased or exchanged and shall thereafter return this Global Note
to such Holder; provided that this Global Note shall be in a principal amount of
--------
$1,000 or an integral multiple of $1,000.
12. The Registered Exchange Offer.
-----------------------------
Any Initial Notes represented by this Global Note that are presented
to the Registrar for exchange pursuant to the Registered Exchange Offer (as
defined in the Registration Rights Agreement) shall be exchanged for a Global
Note representing Exchange Notes s of equal principal amount upon surrender of
this Global Note to the Registrar in accordance with the terms of the Registered
Exchange Offer and the Indenture.
13. Transfer and Exchange.
---------------------
The transfer of this Note is subject to certain restrictions,
including those to which reference is made in the Private Placement Legend. A
Holder may transfer or exchange Notes as provided in the Indenture and subject
to certain limitations therein set forth. The Registrar may require a Holder,
among other things, to furnish appropriate endorsements or transfer documents
and to pay any taxes, fees and expenses required by law or permitted by the
Indenture.
A-9
14. Denominations.
-------------
The Notes are issuable only in registered form without coupons in
denominations of $1,000 and integral multiples thereof of principal amount.
15. Discharge and Defeasance.
------------------------
Subject to certain conditions, the Company may, at any time, terminate
some or all of the obligations of the Company and each Guarantor, under the
Notes, each Note Guarantee and the Indenture if the Company irrevocably deposits
in trust with the Trustee cash or U.S. Government Obligations for the payment of
principal, premium, if any, interest and Additional Interest, if any, on the
Notes to redemption or maturity, as the case may be.
16. Amendment, Waiver.
-----------------
Subject to certain exceptions set forth in the Indenture, (i) the
Indenture or the Notes may be amended with the written consent of the Holders of
at least a majority in principal amount of the outstanding Notes (which consent
may, but need not, be given in connection with any tender offer or exchange
offer for the Notes) and (ii) any Default and its consequences may be waived
with the written consent of the Holders of at least a majority in principal
amount of the outstanding Notes. Subject to certain exceptions set forth in the
Indenture, without the consent of any Holder, the Company and the Trustee may
amend the Indenture or the Notes (i) to evidence the succession of another
Person to the Company and the assumption by such successor of the covenants of
the Company under the Indenture and contained in the Notes; (ii) to add to the
covenants of the Company, for the benefit of the Holders of all of the Notes, or
to surrender any right or power conferred on the Company under the Indenture;
(iii) to add any additional Events of Default; (iv) to provide for
uncertificated Notes in addition to or in place of Certificated Notes; (v) to
evidence and provide for the acceptance of appointment under the Indenture of a
successor Trustee; (vi) to secure the Notes; (vii) to cure any ambiguity in the
Indenture, or to correct or supplement any provision in the Indenture which may
be inconsistent with any other provision therein or to add any other provisions
with respect to matters or questions arising under the Indenture, provided that
such actions shall not adversely affect the interests of the Holders of Notes in
any material respect; (viii) to comply with the requirements of the Commission
in order to effect or maintain the qualification of the Indenture under the
Trust Indenture Act; or (ix) to evidence the agreement or acknowledgment of a
Subsidiary that it is a Guarantor for all purposes under the Indenture
(including, without limitation, Article X thereof).
17. Defaults and Remedies.
---------------------
Under the Indenture, Events of Default include: (i) a default for 30
days in the payment when due of interest on, or Additional Interest with respect
to, the Notes; (ii) default in payment when due of the principal of or premium,
if any, on the Notes; (iii) failure by the Company to observe or perform certain
covenants, conditions, agreements or other provisions of the Indenture or this
Note (and, in the case of certain covenants, agreements or other provisions,
such failure has continued for 60 calendar days after written notice by the
Trustee or the Holders of at least 25% in principal amount of the Notes); (iv)
default in the payment of Indebtedness of
A-10
the Company or any of its Subsidiaries at its final maturity or acceleration of
such Indebtedness in an amount in excess of $5.0 million in the aggregate; (v)
certain events of bankruptcy or insolvency with respect to the Company or any of
its Subsidiaries; (vi) certain undischarged judgments in excess of $5.0 million
in the aggregate; or (vii) the Note Guarantee of any Guarantor being held in any
judicial proceeding to be unenforceable or invalid or ceasing for any reason to
be in full force and effect (other than in accordance with the terms of the
Indenture) or any Guarantor or any Person acting on behalf of any Guarantor
denying or disaffirming the Note Guarantee of such Guarantor.
If an Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in principal amount of the Notes, subject to certain
limitations, may declare all the Notes to be immediately due and payable.
Certain events of bankruptcy or insolvency shall result in the Notes being
immediately due and payable upon the occurrence of such Events of Default
without any further act of the Trustee or any Holder.
Holders of Notes may not enforce the Indenture or the Notes except as
provided in the Indenture. The Trustee may refuse to enforce the Indenture or
the Notes unless it receives reasonable indemnity or security. Subject to
certain limitations, Holders of a majority in principal amount of the Notes may
direct the Trustee in its exercise of any trust or power under the Indenture.
The Holders of a majority in principal amount of the then outstanding Notes, by
written notice to the Trustee and the Company, may rescind any declaration of
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, interest, premium or Additional Interest
that has become due solely because of acceleration. No such rescission shall
affect any subsequent Default or impair any right consequent thereto.
18. Individual Rights of Trustee.
----------------------------
Subject to certain limitations imposed by the Trust Indenture Act, the
Trustee or any Paying Agent or Registrar, in its individual or any other
capacity, may become the owner or pledgee of Notes and may otherwise deal with
the Company, the Guarantors or its or their Affiliates with the same rights it
would have if it were not Trustee, Paying Agent or Registrar, as the case may
be, under the Indenture.
19. No Recourse Against Certain Others.
----------------------------------
No director, officer, employee, incorporator or stockholder of the
Company or any Guarantor, as such, shall have any liability for any obligations
of the Company or any such Guarantor under the Notes, the Note Guarantees or the
Indenture or for any claim based on, in respect of or by reason of, such
obligations or their creation, solely by reason of its status as a director,
officer, employee, incorporator or stockholder of the Company or any such
Guarantor. By accepting a Note, each Holder waives and releases all such
liability (but only such liability) as part of the consideration for issuance of
such Note to such Holder.
A-11
20. Authentication.
--------------
This Note shall not be valid until the Trustee or an authenticating
agent manually signs the certificate of authentication on the other side of this
Note.
21. Abbreviations.
-------------
Customary abbreviations may be used in the name of a Holder 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).
22. CUSIP Numbers.
-------------
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Company has caused CUSIP numbers to be
printed on the Notes and has directed the Trustee to use CUSIP numbers in
notices of redemption as a convenience to Holders of Notes. No representation
is made as to the accuracy of such numbers either as printed on the Notes or as
contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.
23. Governing Law.
-------------
THE INDENTURE, ANY NOTE GUARANTEES AND THIS NOTE SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
AGREEMENTS MADE AND TO BE PERFORMED IN SAID STATE.
The Company will furnish to any Holder upon written request and
without charge to the Holder a copy of the Indenture which has in it the text of
this Note. Requests may be made to:
The Krystal Company
One Union Square
Chattanooga, TN 37402
Attention: Secretary
A-12
SCHEDULE A
SCHEDULE OF PRINCIPAL AMOUNT
The initial principal amount at maturity of this Note shall be $100,000,000.
The following decreases/increase in the principal amount in denominations of
$1,000 or integral multiples thereof at maturity of this Note have been made:
Total Principal
Decrease in Increase in Amount at Notation
Date of Principal Following such Maturity Made by
Decrease/ Amount at Amount at Decrease/ or on Behalf of
Increase Maturity Maturity Increase Trustee
- -------- -------- -------- -------- -------
_____________ _____________ _____________ _____________ _____________
_____________ _____________ _____________ _____________ _____________
_____________ _____________ _____________ _____________ _____________
_____________ _____________ _____________ _____________ _____________
_____________ _____________ _____________ _____________ _____________
_____________ _____________ _____________ _____________ _____________
_____________ _____________ _____________ _____________ _____________
_____________ _____________ _____________ _____________ _____________
_____________ _____________ _____________ _____________ _____________
_____________ _____________ _____________ _____________ _____________
_____________ _____________ _____________ _____________ _____________
_____________ _____________ _____________ _____________ _____________
_____________ _____________ _____________ _____________ _____________
_____________ _____________ _____________ _____________ _____________
_____________ _____________ _____________ _____________ _____________
_____________ _____________ _____________ _____________ _____________
_____________ _____________ _____________ _____________ _____________
_____________ _____________ _____________ _____________ _____________
_____________ _____________ _____________ _____________ _____________
A-13
ASSIGNMENT
(To be executed by the registered Holder
if such Holder desires to transfer this Note)
FOR VALUE RECEIVED ___________________________ hereby sells, assigns and
transfers unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
TAX IDENTIFYING NUMBER OF TRANSFEREE
- --------------------------------------
- --------------------------------------
________________________________________________________________________________
(Please print name and address of transferee)
________________________________________________________________________________
this Note, together with all right, title and interest herein, and does hereby
irrevocably constitute and appoint _________________________________ Attorney to
transfer this Note on the Security Register, with full power of substitution.
Dated: ________________
______________________________ ___________________________________
Signature of Holder Signature Guaranteed:
NOTICE: The signature to the foregoing Assignment must correspond to the Name
as written upon the face of this Note in every particular, without alteration or
any change whatsoever.
A-14
OPTION OF HOLDER TO ELECT PURCHASE
(check as appropriate)
[_] In connection with the Change of Control Offer made pursuant to
Section 4.07 of the Indenture, the undersigned hereby elects to have
[_] the entire principal amount
[_] $_______________ ($1,000 in principal amount or an integral
multiple thereof) of this Note
repurchased by the Company. The undersigned hereby directs the Trustee or
Paying Agent to pay it or __________________________ an amount in cash
equal to 101% of the principal amount indicated in the preceding sentence
plus accrued and unpaid interest and Additional Interest thereon, if any,
to the Change of Control Payment Date.
[_] In connection with the Asset Sale Offer made pursuant to Section
4.08 of the Indenture, the undersigned hereby elects to have
[_] the entire principal amount
[_] $________________ ($1,000 in principal amount or an integral
multiple thereof) of this Note
repurchased by the Company. The undersigned hereby directs the Trustee or
Paying Agent to pay it or ____________________________ an amount in cash
equal to 100% of the principal amount indicated in the preceding sentence
plus accrued and unpaid interest and Additional Interest thereon, if any,
to the Asset Sale Purchase Date.
Dated: ________________
_______________________________ ___________________________________
Signature of Holder Signature Guaranteed:
NOTICE: The signature to the foregoing must correspond to the Name as written
upon the face of this Note in every particular, without alteration or any change
whatsoever.
A-15
` EXHIBIT B
FORM OF INITIAL CERTIFICATED NOTE
---------------------------------
FACE OF INITIAL CERTIFICATED NOTE
---------------------------------
THE KRYSTAL COMPANY
No.____ CUSIP No. _________
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT'), AND THIS NOTE MAY NOT BE
OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT OR IN ACCORDANCE WITH AN
APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT (SUBJECT TO THE DELIVERY OF SUCH EVIDENCE, IF ANY,
REQUIRED UNDER THE INDENTURE PURSUANT TO WHICH THIS NOTE IS
ISSUED) AND IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF
ANY STATE OF THE UNITED STATES OR ANY OTHER JURISDICTION.
101/4% SENIOR NOTE DUE 2007
---------------------------
The Krystal Company, a Tennessee corporation, for value received,
hereby promises to pay to __________, or its registered assigns, the principal
amount of ________, on October 1, 2007.
Interest Payment Dates: April 1 and October 1, commencing April 1,
1998.
Record Dates: March 15 and September 15.
Reference is hereby made to the further provisions of this Note set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been duly executed
by the Trustee referred to on the reverse hereof by manual signature, this Note
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purposes.
IN WITNESS WHEREOF, The Krystal Company has caused this Note to be
duly executed under its corporate seal.
THE KRYSTAL COMPANY
By:______________________________
Name:
Title:
Attest:___________________________
Dated: ___________________________
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
____________________________________________________
as Trustee, certifies that this is one of
the Notes referred to in the Indenture.
By:_______________________________
Authorized Signatory
B-2
REVERSE SIDE OF INITIAL CERTIFICATED NOTE
THE KRYSTAL COMPANY
101/4% SENIOR NOTE DUE 2007
1. Indenture.
---------
This Note is one of a duly authorized issue of debt securities of the
Company (as defined below) designated as its "101/4% Senior Notes Due 2007"
(herein called the "Notes") limited in aggregate principal amount to
$100,000,000, issued under an indenture dated as of September 26, 1997 (as
amended or supplemented from time to time, the "Indenture") between TKC
Acquisition Corp. ("TKC") and SunTrust Bank, Atlanta, as trustee (the "Trustee,"
which term includes any successor trustee under the Indenture). Pursuant to an
agreement and plan of merger, dated as of July 3, 1997, by and among TKC, Port
Royal Holdings, Inc. and The Krystal Company, TKC merged with and into The
Krystal Company on September 26, 1997, and The Krystal Company became the
surviving corporation (the "Merger"). Immediately following the Merger, The
Krystal Company executed a supplemental indenture no. 1 ("Supplemental Indenture
No. 1"), dated as of September 26, 1997, among The Krystal Company, as the
successor to TKC, Krystal Aviation Co. and Krystal Aviation Management Co., as
guarantors (the "Guarantors") and the Trustee, under which (i) The Krystal
Company acknowledged and agreed that it had succeeded TKC as the Company under
the Indenture and the Notes, agreed to perform each and every covenant of the
Company contained in the Indenture and the Notes and agreed to be bound by and
subject to the terms and provisions of the Indenture and the Notes in each and
every respect as if it had been initially named as the Company in the Indenture
and the Notes and (ii) each of the Guarantors assumed all of the obligations of
a Guarantor under the Indenture and the Notes and agreed to be bound by and
subject to the terms and provisions of the Indenture and the Notes in each and
every respect as if each had been initially named as a Guarantor in the
Indenture and the Notes. The terms of the Notes include those stated in the
Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939, as amended (15 U.S. Code (S)(S) 77aaa-77bbb). The Notes
are subject to all such terms, and Holders of Notes are referred to the
Indenture and such Act for a statement of the respective rights, limitations of
rights, duties and immunities thereunder of the Company, the Guarantors, the
Trustee and each Holder and of the terms upon which the Notes are, and are to
be, authenticated and delivered. The summary of the terms of this Note contained
herein does not purport to be complete and is qualified by reference to the
Indenture. To the extent permitted by applicable law, in the event of any
inconsistency between the terms of this Note and the terms of the Indenture, the
terms of the Indenture shall control. All capitalized terms used in this Note
which are not defined herein shall have the meanings assigned to them in the
Indenture.
The Indenture restricts, among other things, the Company's ability to
incur additional indebtedness and issue preferred stock, pay dividends or make
certain other restricted payments, incur liens, sell stock of Subsidiaries,
apply net proceeds from certain asset sales, merge or consolidate with any other
person, sell, assign, transfer, lease, convey or otherwise dispose of
substantially all of the assets of the Company and enter into certain
transactions with affiliates.
B-3
2. Principal and Interest.
----------------------
The Krystal Company, a Tennessee corporation (such corporation, and
its successors and assigns under the Indenture hereinafter referred to, being
herein called the "Company"), promises to pay the principal amount of ______ to
the Holder hereof on October 1, 2007.
The Company shall pay interest at a rate of 101/4% per annum, from
September 26, 1997 or from the most recent Interest Payment Date thereafter to
which interest has been paid or duly provided for, semiannually in arrears on
April 1 and October 1 of each year, commencing on April 1, 1998, in cash, to the
Holder hereof until the principal amount hereof is paid or made available for
payment. The interest so payable, and punctually paid or duly provided for, on
any Interest Payment Date will, subject to certain exceptions provided in the
Indenture, be paid to the Person in whose name this Note (or the Note in
exchange or substitution for which this Note was issued) is registered at the
close of business on the Record Date for interest payable on such Interest
Payment Date. The Record Date for any interest payment is the close of business
on March 15 or September 15, as the case may be, whether or not a Business Day,
immediately preceding the Interest Payment Date on which such interest is
payable. Any such interest not so punctually paid or duly provided for
("Defaulted Interest") shall forthwith cease to be payable to the Holder on such
Record Date and shall be paid as provided in Section 2.11 of the Indenture.
Interest will be computed on the basis of a 360-day year of twelve 30-day
months.
Each payment of interest in respect of an Interest Payment Date will
include interest accrued through the day before such Interest Payment Date. If
an Interest Payment Date falls on a day that is not a Business Day, the interest
payment to be made on such Interest Payment Date will be made on the next
succeeding Business Day with the same force and effect as if made on such
Interest Payment Date, and no additional interest will accrue as a result of
such delayed payment.
If this Note is exchanged in a Registered Exchange Offer, prior to the
Record Date for the first Interest Payment Date following such exchange, accrued
and unpaid interest, if any, on this Note, up to but not including the date of
issuance of the Exchange Note or Exchange Notes issued in exchange for this
Note, shall be paid on the first Interest Payment Date for such Exchange Note or
Exchange Notes to the Holder or Holders of such Exchange Note or Exchange Notes
on the first Record Date with respect to such Exchange Note or Exchange Notes.
If this Note is exchanged in a Registered Exchange Offer subsequent to the
Record Date for the first Interest Payment Date following such exchange but on
or prior to such Interest Payment Date, then any such accrued and unpaid
interest with respect to this Note and any accrued and unpaid interest on the
Exchange Note or Exchange Notes issued in exchange for this Note, through the
day before such Interest Payment Date, shall be paid on such Interest Payment
Date to the Holder of this Note on such Record Date.
To the extent lawful, the Company shall pay interest on overdue
principal, overdue premium, Defaulted Interest and overdue Additional Interest
(without regard to any applicable grace period) at the interest rate borne on
this Note. The Company's obligation pursuant to the previous sentence shall
apply whether such overdue amount is due at its Stated Maturity, as a
B-4
result of the Company's obligations pursuant to Section 3.05, Section 4.07 or
Section 4.08 of the Indenture, or otherwise.
3. Registration Rights, Additional Interest.
----------------------------------------
The Holder of this Note is entitled to the benefits of the Registration
Rights Agreement, dated September 26, 1997, between TKC, as the predecessor to
the Company, and the Initial Purchaser (the "Registration Rights Agreement"),
which agreement is attached to the Indenture as Exhibit J thereto. Such benefits
include the right of the Holder to receive Additional Interest in the event of a
failure on the part of the Company to comply with certain registration
covenants, as provided in Section 4 of the Registration Rights Agreement .
4. Method of Payment.
-----------------
The Company, through the Paying Agent, shall pay interest on this Note
to the registered Holder of this Note, as provided above. The Holder must
surrender this Note to a Paying Agent to collect principal payments. The Company
will pay principal, premium, if any, and interest and Additional Interest, if
any, in money of the United States of America that at the time of payment is
legal tender for payment of all debts public and private. Principal, premium, if
any, and interest and Additional Interest, if any, shall be paid by check,
mailed to the registered Holders at their registered addresses; provided that
all payments with respect to Notes that the Holders of which have given wire
transfer instructions to the Company, will be required to be made by wire
transfer of immediately available funds to the accounts specified by the Holders
thereof.
5. Paying Agent and Registrar.
--------------------------
Initially, the Trustee will act as Paying Agent and Registrar under the
Indenture. The Company may, upon written notice to the Trustee, appoint and
change any Paying Agent or Registrar. The Company or any of its Affiliates may
act as Paying Agent or Registrar; provided that if the Company or such Affiliate
--------
is acting as Paying Agent, the Company or such Affiliate shall segregate all
funds held by it as Paying Agent and hold them in trust for the benefit of the
Holders or the Trustee.
6. Note Guarantees.
---------------
This Note is initially entitled to the benefits of the Note Guarantees
made by Krystal Aviation Co. and Krystal Aviation Management Co. pursuant to the
Indenture, and may thereafter be entitled to Note Guarantees made by other
Guarantors for the benefit of the Holders of the Notes. Each present Guarantor
has, and each future Guarantor will, irrevocably and unconditionally, jointly
and severally, guarantee on a senior basis the punctual payment when due,
whether at Stated Maturity, by acceleration, in connection with a Change of
Control Offer, an Asset Sale Offer or redemption, or otherwise, of all
obligations of the Company under the Indenture and this Note, whether for
payment of principal of, premium, if any, interest or Additional Interest, if
any, on the Notes, expenses, indemnification or otherwise. A Guarantor
B-5
shall be released from its Note Guarantee upon the terms and subject to the
conditions set forth in the Indenture.
7. Redemption.
----------
The Notes are not redeemable at the option of the Company prior to
April 1, 2002. Thereafter, the Notes will be subject to redemption at the option
of the Company, in whole or in part, upon not less than 30 nor more than 60
calendar days' prior notice, at the redemption prices (expressed as percentages
of principal amount) set forth below, plus accrued and unpaid interest thereon,
and Additional Interest, if any, to the applicable Redemption Date (subject to
the right of each Holder of record on the relevant Record Date to receive
interest due on the relevant Interest Payment Date), if redeemed during the
twelve-month period beginning April 1 of the years indicated below:
YEAR Percentage
---- ----------
2002 105.125%
2003 103.417%
2004 101.708%
2005 and thereafter 100.000%
Notwithstanding the foregoing, at any time prior to April 1, 2000, the
Company, at its option, may redeem up to 35% of the aggregate principal amount
of the Notes originally issued, in part, with the net proceeds of one or more
Public Equity Offerings made by the Company or of a capital contribution made by
the Parent to the common equity capital of the Company with the net proceeds of
one or more Public Equity Offerings made by the Parent, at a redemption price
equal to 110.25% of the aggregate principal amount thereof together with accrued
and unpaid interest and Additional Interest, if any, to the date of the
redemption payment; provided, however, that after such redemption, the aggregate
-------- -------
principal amount of the Notes outstanding must equal at least 65% of the
aggregate principal amount of the Notes originally issued and provided, further,
-------- -------
that such redemption shall occur within 60 days of the date of closing such
Public Equity Offering.
8. Notice of Redemption.
--------------------
At least 30 calendar days but not more than 60 calendar days before a
Redemption Date, the Company shall send, or cause to be sent, a notice of
redemption, by first-class mail, postage prepaid, to Holders of Notes to be
redeemed at the addresses of such Holders as they appear in the Note Register.
If less than all of the Notes are to be redeemed at any time, the
Trustee shall select the Notes to be redeemed on a pro rata basis; provided that
the Trustee may select for redemption portions (equal to $1,000 or any integral
multiple thereof) of the principal of Notes that have denominations larger than
$1,000 (Notes in denominations of $1,000 or less may be redeemed only in whole).
If any Note is redeemed subsequent to a Record Date with respect to any Interest
Payment Date specified above and on or prior to such Interest Payment Date, then
any accrued interest will be paid on such Interest Payment Date to the Holder of
the Note on such Record
B-6
Date. If money in an amount sufficient to pay the Redemption Price of all Notes
(or portions thereof) to be redeemed on the Redemption Date is deposited with
the Paying Agent on or before the applicable Redemption Date and certain other
conditions are satisfied, interest on the Notes or portions thereof to be
redeemed on the applicable Redemption Date will cease to accrue.
9. Repurchase at the Option of Holders upon Change of Control.
----------------------------------------------------------
Upon the occurrence of a Change of Control, each Holder shall have the
right in accordance with the terms hereof and the Indenture to require the
Company to purchase such Holder's Notes, in whole or in part, in a principal
amount that is an integral multiple of $1,000, pursuant to a Change of Control
Offer, at a purchase price in cash equal to 101% of the principal amount of such
Notes (or portions thereof) plus accrued and unpaid interest and Additional
Interest, if any, to the Change of Control Payment Date.
Within 30 calendar days after the date of any Change of Control, the
Company shall send, or cause to be sent, by first-class mail, postage prepaid, a
notice regarding the Change of Control Offer to each Holder. The Holder of this
Note may elect to have this Note or a portion hereof in an authorized
denomination purchased by completing the form entitled "Option of Holder to
Elect Purchase" appearing below and tendering this Note pursuant to the Change
of Control Offer. Unless the Company defaults in the payment of the Change of
Control Purchase Price with respect thereto, all Notes or portions thereof
accepted for payment pursuant to the Change of Control Offer will cease to
accrue interest from and after the Change of Control Payment Date.
10. Repurchase at the Option of Holders upon Asset Sale.
---------------------------------------------------
If at any time the Company or any Subsidiary engages in any Asset Sale,
as a result of which the aggregate amount of Excess Proceeds exceeds $5.0
million, the Company shall, within 30 calendar days of the date the amount of
Excess Proceeds exceeds $5.0 million, use the then-existing Excess Proceeds to
make an offer to purchase from all Holders of Notes, on a pro rata basis, Notes
in an aggregate principal amount equal in amount to the then-existing Excess
Proceeds, at a purchase price in cash in an amount equal to 100% of the
principal amount thereof plus accrued and unpaid interest thereon and Additional
Interest, if any, to the Asset Sale Purchase Date. Upon completion of an Asset
Sale Offer (including payment of the Asset Sale Purchase Price for accepted
Notes), any surplus Excess Proceeds that were the subject of such offer shall
cease to be Excess Proceeds, and the Company may then use such amounts for
general corporate purposes. Within 30 calendar days of the date the amount of
Excess Proceeds exceeds $5.0 million, the Company shall send, or cause to be
sent, by first-class mail, postage prepaid, a notice regarding the Asset Sale
Offer to each Holder. The Holder of this Note may elect to have this Note or a
portion hereof in an authorized denomination purchased by completing the form
entitled "Option of Holder to Elect Purchase" appearing below and tendering this
Note pursuant to the Asset Sale Offer. Unless the Company defaults in the
payment of the Asset Sale Purchase Price with respect thereto, all Notes or
portions thereof selected for payment pursuant to the Asset Sale Offer will
cease to accrue interest from and after the Asset Sale Purchase Date.
B-7
11. The Registered Exchange Offer.
-----------------------------
Any Initial Notes (including this Note) that are presented to the
Registrar for exchange pursuant to the Registered Exchange Offer (as defined in
the Registration Rights Agreement) shall be exchanged for Exchange Notes of
equal principal amount upon surrender of such Notes to the Registrar in
accordance with the terms of the Registered Exchange Offer and the Indenture.
12. Transfer and Exchange.
---------------------
The transfer of this Note is subject to certain restrictions,
including those to which reference is made in the Private Placement Legend. A
Holder may transfer or exchange Notes as provided in the Indenture and subject
to certain limitations therein set forth. The Registrar may require a Holder,
among other things, to furnish appropriate endorsements or transfer documents
and to pay any taxes, fees and expenses required by law or permitted by the
Indenture. The Registrar need not register the transfer or exchange of
Certificated Notes or portions thereof selected for redemption (except, in the
case of a Certificated Note to be redeemed in part, the portion of such
Certificated Note not to be redeemed) or any Certificated Notes for a period of
15 calendar days before a selection of Notes to be redeemed.
13. Denominations.
-------------
The Notes are issuable only in registered form without coupons in
denominations of $1,000 and integral multiples thereof of principal amount;
provided that Initial Certificated Notes originally purchased by or transferred
to Institutional Accredited Investors shall be subject to a minimum denomination
of $250,000.
14. Discharge and Defeasance.
------------------------
Subject to certain conditions, the Company may, at any time, terminate
some or all of the obligations of the Company and each Guarantor under the
Notes, each Note Guarantee and the Indenture if the Company irrevocably deposits
in trust with the Trustee cash or U.S. Government Obligations for the payment of
principal, premium, if any, interest and Additional Interest, if any, on the
Notes to redemption or maturity, as the case may be.
15. Amendment;Waiver.
----------------
Subject to certain exceptions set forth in the Indenture, (i) the
Indenture or the Notes may be amended with the written consent of the Holders of
at least a majority in principal amount of the outstanding Notes (which consent
may, but need not, be given in connection with any tender offer or exchange
offer for the Notes) and (ii) any Default and its consequences may be waived
with the written consent of the Holders of at least a majority in principal
amount of the outstanding Notes. Subject to certain exceptions set forth in the
Indenture, without the consent of any Holder, the Company and the Trustee may
amend the Indenture or the Notes (i) to evidence the succession of another
Person to the Company and the assumption by such successor of the covenants of
the Company under the Indenture and contained in the Notes; (ii) to add to the
covenants of the Company, for the benefit of the Holders of all of the Notes, or
to surrender
B-8
any right or power conferred on the Company under the Indenture; (iii) to add
any additional Events of Default; (iv) to provide for uncertificated Notes in
addition to or in place of Certificated Notes; (v) to evidence and provide for
the acceptance of appointment under the Indenture of a successor Trustee; (vi)
to secure the Notes; (vii) to cure any ambiguity in the Indenture, or to correct
or supplement any provision in the Indenture which may be inconsistent with any
other provision therein or to add any other provisions with respect to matters
or questions arising under the Indenture, provided that such actions shall not
adversely affect the interests of the Holders of Notes in any material respect;
(viii) to comply with the requirements of the Commission in order to effect or
maintain the qualification of the Indenture under the Trust Indenture Act; or
(ix) to evidence the agreement or acknowledgment of a Subsidiary that it is a
Guarantor for all purposes under the Indenture (including, without limitation,
Article X thereof).
16. Defaults and Remedies.
---------------------
Under the Indenture, Events of Default include: (i) a default for 30
days in the payment when due of interest on, or Additional Interest with respect
to, the Notes; (ii) default in payment when due of the principal of or premium,
if any, on the Notes; (iii) failure by the Company to observe or perform certain
covenants, conditions, agreements or other provisions of the Indenture or this
Note (and, in the case of certain covenants, agreements or other provisions,
such failure has continued for 60 calendar days after written notice by the
Trustee or the Holders of at least 25% in principal amount of the Notes); (iv)
default in the payment of Indebtedness of the Company or any of its Subsidiaries
at its final maturity or acceleration of such Indebtedness in an amount in
excess of $5.0 million in the aggregate; (v) certain events of bankruptcy or
insolvency with respect to the Company or any of its Subsidiaries; (vi) certain
undischarged judgments in excess of $5.0 million in the aggregate; or (vii) the
Note Guarantee of any Guarantor being held in any judicial proceeding to be
unenforceable or invalid or ceasing for any reason to be in full force and
effect (other than in accordance with the terms of the Indenture) or any
Guarantor or any Person acting on behalf of any Guarantor denying or
disaffirming the Note Guarantee of such Guarantor.
If an Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in principal amount of the Notes, subject to certain
limitations, may declare all the Notes to be immediately due and payable.
Certain events of bankruptcy or insolvency shall result in the Notes being
immediately due and payable upon the occurrence of such Events of Default
without any further act of the Trustee or any Holder.
Holders of Notes may not enforce the Indenture or the Notes except as
provided in the Indenture. The Trustee may refuse to enforce the Indenture or
the Notes unless it receives reasonable indemnity or security. Subject to
certain limitations, Holders of a majority in principal amount of the Notes may
direct the Trustee in its exercise of any trust or power under the Indenture.
The Holders of a majority in principal amount of the then outstanding Notes, by
written notice to the Trustee and the Company, may rescind any declaration of
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, interest, premium or Additional Interest
that has become due solely because of acceleration. No such rescission shall
affect any subsequent Default or impair any right consequent thereto.
B-9
17. Individual Rights of Trustee.
----------------------------
Subject to certain limitations imposed by the Trust Indenture Act, the
Trustee or any Paying Agent or Registrar, in its individual or any other
capacity, may become the owner or pledgee of Notes and may otherwise deal with
the Company, the Guarantors or its or their Affiliates with the same rights it
would have if it were not Trustee, Paying Agent or Registrar, as the case may
be, under the Indenture.
18. No Recourse Against Certain Others.
----------------------------------
No director, officer, employee, incorporator or stockholder of the
Company or any Guarantor, as such, shall have any liability for any obligations
of the Company or any such Guarantor under the Notes, the Note Guarantees or the
Indenture or for any claim based on, in respect of, or by reason of, such
obligations or their creation, solely by reason of its status as a director,
officer, employee, incorporator or stockholder of the Company or any such
Guarantor. By accepting a Note, each Holder waives and releases all such
liability (but only such liability) as part of the consideration for issuance of
such Note to such Holder.
19. Authentication.
--------------
This Note shall not be valid until the Trustee or an authenticating
agent manually signs the certificate of authentication on the other side of this
Note.
20. Abbreviations.
-------------
Customary abbreviations may be used in the name of a Holder 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).
21. CUSIP Numbers.
-------------
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Company has caused CUSIP numbers to be
printed on the Notes and has directed the Trustee to use CUSIP numbers in
notices of redemption as a convenience to Holders of Notes. No representation
is made as to the accuracy of such numbers either as printed on the Notes or as
contained in any notice of redemption, and reliance may be placed only on the
other identification numbers placed thereon.
22. Governing Law.
-------------
THE INDENTURE, ANY NOTE GUARANTEES AND THIS NOTE SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
AGREEMENTS MADE AND TO BE PERFORMED IN SAID STATE.
B-10
The Company will furnish to any Holder upon written request and
without charge to the Holder a copy of the Indenture which has in it the text of
this Note. Requests may be made to:
The Krystal Company
One Union Square
Chattanooga, TN 37402
Attention: Secretary
B-11
ASSIGNMENT
(To be executed by the registered Holder
if such Holder desires to transfer this Note)
FOR VALUE RECEIVED ___________________________ hereby sells, assigns and
transfers unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
TAX IDENTIFYING NUMBER OF TRANSFEREE
- --------------------------------------
- --------------------------------------
________________________________________________________________________________
(Please print name and address of transferee)
________________________________________________________________________________
this Note, together with all right, title and interest herein, and does hereby
irrevocably constitute and appoint _________________________________ Attorney to
transfer this Note on the Security Register, with full power of substitution.
Dated: ________________
___________________________ _______________________________
Signature of Holder Signature Guaranteed:
NOTICE: The signature to the foregoing Assignment must correspond to the Name
as written upon the face of this Note in every particular, without alteration or
any change whatsoever.
B-12
OPTION OF HOLDER TO ELECT PURCHASE
(check as appropriate)
[_] In connection with the Change of Control Offer made pursuant to Section
4.07 of the Indenture, the undersigned hereby elects to have
[_] the entire principal amount
[_] $_______________ ($1,000 in principal amount or an integral multiple
thereof) of this Note
repurchased by the Company. The undersigned hereby directs the Trustee or
Paying Agent to pay it or __________________________ an amount in cash
equal to 101% of the principal amount indicated in the preceding sentence
plus accrued and unpaid interest and Additional Interest thereon, if any,
to the Change of Control Payment Date.
[_] In connection with the Asset Sale Offer made pursuant to Section 4.08 of
the Indenture, the undersigned hereby elects to have
[_] the entire principal amount
[_] $________________ ($1,000 in principal amount or an integral multiple
thereof) of this Note
repurchased by the Company. The undersigned hereby directs the Trustee or
Paying Agent to pay it or ____________________________ an amount in cash
equal to 100% of the principal amount indicated in the preceding sentence
plus accrued and unpaid interest and Additional Interest thereon, if any,
to the Asset Sale Purchase Date.
Dated: ________________
_______________________________ ___________________________
Signature of Holder Signature Guaranteed:
NOTICE: The signature to the foregoing must correspond to the Name as written
upon the face of this Note in every particular, without alteration or any change
whatsoever.
B-13
EXHIBIT C
FORM OF EXCHANGE GLOBAL NOTE
----------------------------
FACE OF EXCHANGE GLOBAL NOTE
----------------------------
THE KRYSTAL COMPANY
No. ___ CUSIP No. 501148AA8
THIS NOTE IS A GLOBAL NOTE WITHIN THE MEANING OF THE INDENTURE HEREINAFTER
REFERRED TO.
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY TO THE KRYSTAL COMPANY OR A SUCCESSOR THEREOF OR THE REGISTRAR FOR
REGISTRATION OF TRANSFER OR EXCHANGE AND ANY NOTE ISSUED IS REGISTERED IN THE
NAME OF CEDE & CO. OR SUCH OTHER ENTITY AS HAS BEEN REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (AND ANY PAYMENT HEREON IS MADE
TO CEDE & CO. OR TO SUCH OTHER ENTITY AS HAS BEEN REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY), ANY TRANSFER, PLEDGE OR OTHER
USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFER OF THIS GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS IN WHOLE, AND NOT IN
PART, TO NOMINEES OF THE DEPOSITORY TRUST COMPANY OR TO A SUCCESSOR THEREOF OR
SUCH SUCCESSOR'S NOMINEE.
GLOBAL NOTE
REPRESENTING 10 1/4% SENIOR NOTES DUE 2006
The Krystal Company, a Tennessee corporation, for value received,
hereby promises to pay to CEDE & CO., or its registered assigns, the principal
sum indicated on Schedule A hereof, on October 1, 2007.
Interest Payment Dates: April 1 and October 1, commencing April 1,
1997.
Record Dates: March 15 and September 15.
Reference is hereby made to the further provisions of this Note set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been duly executed
by the Trustee referred to on the reverse hereof by manual signature, this Note
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purposes.
IN WITNESS WHEREOF, The Krystal Company has caused this Note to be
duly executed under its corporate seal.
THE KRYSTAL COMPANY
By:______________________________
Name:
Title:
Attest:_________________________
Dated:__________________________
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
_____________________________________________,
as Trustee, certifies that this is one of
the Notes referred to in the Indenture.
By:__________________________________________
Authorized Signatory
C-2
REVERSE SIDE OF EXCHANGE GLOBAL NOTE
THE KRYSTAL COMPANY
GLOBAL NOTE
REPRESENTING 10 1/4% SENIOR NOTES DUE 2007
1. Indenture.
---------
This Note is one of a duly authorized issue of debt securities of the
Company (as defined below) designated as its "10 1/4% Senior Notes Due 2007"
(herein called the "Notes") limited in aggregate principal amount to
$100,000,000, issued under an indenture dated as of September 26, 1997 (as
amended or supplemented from time to time, the "Indenture") between TKC
Acquisition Corp. ("TKC") and SunTrust Bank, Atlanta, as trustee (the "Trustee,"
which term includes any successor trustee under the Indenture). Pursuant to an
agreement and plan of merger, dated as of July 3, 1997, by and among TKC, Port
Royal Holdings, Inc. and The Krystal Company, TKC merged with and into The
Krystal Company on September 26, 1997, and The Krystal Company became the
surviving corporation (the "Merger"). Immediately following the Merger, The
Krystal Company executed a supplemental indenture no. 1 ("Supplemental Indenture
No.1"), dated as of September 26, 1997, among The Krystal Company, as the
successor to TKC, Krystal Aviation Co. and Krystal Aviation Management Co., as
guarantors (the "Guarantors") and the Trustee, under which (i) The Krystal
Company acknowledged and agreed that it had succeeded TKC as the Company under
the Indenture and the Notes, agreed to perform each and every covenant of the
Company contained in the Indenture and the Notes and agreed to be bound by and
subject to the terms and provisions of the Indenture and the Notes in each and
every respect as if it had been initially named as the Company in the Indenture
and the Notes and (ii) each of the Guarantors assumed all of the obligations of
a Guarantor under the Indenture and the Notes and agreed to be bound by and
subject to the terms and provisions of the Indenture and the Notes in each and
every respect as if each had been initially named as a Guarantor in the
Indenture and the Notes. The terms of the Notes include those stated in the
Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939, as amended (15 U.S. Code (S)(S) 77aaa-77bbb). The Notes
are subject to all such terms, and Holders of Notes are referred to the
Indenture and such Act for a statement of the respective rights, limitations of
rights, duties and immunities thereunder of the Company, the Guarantors, the
Trustee and each Holder and of the terms upon which the Notes are, and are to
be, authenticated and delivered. The summary of the terms of this Note
contained herein does not purport to be complete and is qualified by reference
to the Indenture. To the extent permitted by applicable law, in the event of
any inconsistency between the terms of this Note and the terms of the Indenture,
the terms of the Indenture shall control. All capitalized terms used in this
Note which are not defined herein shall have the meanings assigned to them in
the Indenture.
The Indenture restricts, among other things, the Company's ability to
incur additional indebtedness and issue preferred stock, pay dividends or make
certain other restricted payments, incur liens, sell stock of Subsidiaries,
apply net proceeds from certain asset sales, merge or consolidate with any other
person, sell, assign, transfer, lease, convey or otherwise dispose of
substantially all of the assets of the Company and enter into certain
transactions with affiliates.
C-3
2. Principal and Interest.
----------------------
The Krystal Company, a Tennessee corporation (such corporation, and
its successors and assigns under the Indenture hereinafter referred to, being
herein called the "Company"), promises to pay the principal amount set forth on
Schedule A of this Note to the Holder hereof on October 1, 2007.
The Company shall pay interest at a rate of 10 1/4% per annum, from
September 26, 1997 or from the most recent Interest Payment Date thereafter to
which interest has been paid or duly provided for, semiannually in arrears on
April 1 and October 1 of each year, commencing on April 1, 1998, in cash, to the
Holder hereof until the principal amount hereof is paid or made available for
payment. The interest so payable, and punctually paid or duly provided for, on
any Interest Payment Date will, subject to certain exceptions provided in the
Indenture, be paid to the Person in whose name this Note (or the Note in
exchange or substitution for which this Note was issued) is registered at the
close of business on the Record Date for interest payable on such Interest
Payment Date. The Record Date for any interest payment is the close of business
on March 15 or September 15, as the case may be, whether or not a Business Day,
immediately preceding the Interest Payment Date on which such interest is
payable. Any such interest not so punctually paid or duly provided for
("Defaulted Interest") shall forthwith cease to be payable to the Holder on such
Record Date and shall be paid as provided in Section 2.11 of the Indenture.
Interest will be computed on the basis of a 360-day year of twelve 30-day
months.
Each payment of interest in respect of an Interest Payment Date will
include interest accrued through the day before such Interest Payment Date. If
an Interest Payment Date falls on a day that is not a Business Day, the interest
payment to be made on such Interest Payment Date will be made on the next
succeeding Business Day with the same force and effect as if made on such
Interest Payment Date, and no additional interest will accrue as a result of
such delayed payment.
If this Note is issued pursuant to a Registered Exchange Offer, on or
prior to the Record Date for the first Interest Payment Date following such
exchange, accrued and unpaid interest, if any, on the equivalent principal
amount of the Initial Note in exchange for which this Note was issued, up to but
not including the date of issuance of this Note, shall be paid on the first
Interest Payment Date for this Note to the Holder of this Note on the first
Record Date with respect to this Note. If this Note is issued pursuant to a
Registered Exchange Offer, subsequent to the Record Date for the first Interest
Payment Date following such exchange but on or prior to such Interest Payment
Date, then any such accrued and unpaid interest with respect to the equivalent
principal amount of the Initial Note in exchange for which this Note was issued
and any accrued and unpaid interest on this Note through the day before such
Interest Payment Date shall be paid on such Interest Payment Date to the Holder
of such Initial Note on such Record Date.
To the extent lawful, the Company shall pay interest on overdue
principal, overdue premium, Defaulted Interest and overdue Additional Interest
(without regard to any applicable grace period) at the interest rate borne on
this Note. The Company's obligation pursuant to the previous sentence shall
apply whether such overdue amount is due at its Stated Maturity, as a
C-4
result of the Company's obligations pursuant to Section 3.05, Section 4.07 or
Section 4.08 of the Indenture, or otherwise.
3. Method of Payment.
-----------------
The Company, through the Paying Agent, shall pay interest on this Note
to the registered Holder of this Note, as provided above. The Holder must
surrender this Note to a Paying Agent to collect principal payments. The
Company will pay principal, premium, if any, and interest and Additional
Interest, if any, in money of the United States of America that at the time of
payment is legal tender for payment of all debts public and private. Principal,
premium, if any, and interest and Additional Interest, if any, shall be paid by
checks, mailed to the registered Holders at their registered addresses; provided
that all payments with respect to Notes that the Holders of which have given
wire transfer instructions to the Company, will be required to be made by wire
transfer of immediately available funds to the accounts specified by the Holders
thereof.
4. Paying Agent and Registrar.
--------------------------
Initially, the Trustee will act as Paying Agent and Registrar under
the Indenture. The Company may, upon written notice to the Trustee, appoint and
change any Paying Agent or Registrar. The Company or any of its Affiliates may
act as Paying Agent or Registrar; provided that if the Company or such Affiliate
--------
is acting as Paying Agent, the Company or such Affiliate shall segregate all
funds held by it as Paying Agent and hold them in trust for the benefit of the
Holders or the Trustee.
5. Note Guarantees.
---------------
This Note is initially entitled to the benefits of the Note Guarantees
made by Krystal Aviation Co. and Krystal Aviation Management Co. pursuant to the
Indenture, and may thereafter be entitled to Note Guarantees made by other
Guarantors for the benefit of the Holders of the Notes. Each Guarantor has, and
each future Guarantor will, irrevocably and unconditionally, jointly and
severally, guarantee on a senior basis the punctual payment when due, whether at
Stated Maturity, by acceleration, in connection with a Change of Control Offer,
an Asset Sale Offer or redemption, or otherwise, of all obligations of the
Company under the Indenture and this Note, whether for payment of principal of,
premium, if any, interest or Additional Interest, if any, on the Notes,
expenses, indemnification or otherwise. A Guarantor shall be released from its
Note Guarantee upon the terms and subject to the conditions set forth in the
Indenture.
6. Redemption.
----------
The Notes are not redeemable at the option of the Company prior to
April 1, 2002. Thereafter, the Notes will be subject to redemption at the
option of the Company, in whole or in part, upon not less than 30 nor more than
60 calendar days' prior notice, at the redemption prices (expressed as
percentages of principal amount) set forth below, plus accrued and unpaid
interest thereon and Additional Interest, if any, to the applicable Redemption
Date (subject to the right of
C-5
each Holder of record on the relevant Record Date to receive interest due on the
relevant Interest Payment Date), if redeemed during the twelve-month period
beginning April 1 of the years indicated below:
YEAR Percentage
---- ----------
2002 105.125%
2003 103.417%
2004 101.708%
2005 and thereafter 100.000%
Notwithstanding the foregoing, at any time prior to April 1, 2000, the
Company, at its option, may redeem up to 35% of the aggregate principal amount
of the Notes originally issued, in part, with the net proceeds of one or more
Public Equity Offerings made by the Company or of a capital contribution made by
the Parent to the common equity capital of the Company with the net proceeds of
one or more Public Equity Offerings made by the Parent , at a redemption price
equal to 110.25% of the aggregate principal amount thereof together with accrued
and unpaid interest and Additional Interest, if any, to the date of the
redemption payment; provided, however, that after such redemption, the aggregate
-------- -------
principal amount of the Notes outstanding must equal at least 65% of the
aggregate principal amount of the Notes originally issued and provided, further,
-------- -------
that such redemption shall occur within 60 days of the date of closing such
Public Equity Offering.
7. Notice of Redemption.
--------------------
At least 30 calendar days but not more than 60 calendar days before a
Redemption Date, the Company shall send, or cause to be sent, a notice of
redemption, by first-class mail, postage prepaid, to Holders of Notes to be
redeemed at the addresses of such Holders as they appear in the Note Register.
If less than all of the Notes are to be redeemed at any time, the
Trustee shall select the Notes to be redeemed on a pro rata basis; provided that
the Trustee may select for redemption portions (equal to $1,000 or any integral
multiple thereof) of the principal of Notes that have denominations larger than
$1,000 (Notes in denominations of $1,000 or less may be redeemed only in whole).
If any Note is redeemed subsequent to a Record Date with respect to any Interest
Payment Date specified above and on or prior to such Interest Payment Date, then
any accrued interest will be paid on such Interest Payment Date to the Holder of
the Note on such Record Date. If money in an amount sufficient to pay the
Redemption Price of all Notes (or portions thereof) to be redeemed on the
Redemption Date is deposited with the Paying Agent on or before the applicable
Redemption Date and certain other conditions are satisfied, interest on the
Notes or portions thereof to be redeemed on the applicable Redemption Date will
cease to accrue.
8. Repurchase at the Option of Holders upon Change of Control.
----------------------------------------------------------
Upon the occurrence of a Change of Control, each Holder shall have the
right in accordance with the terms hereof and the Indenture to require the
Company to purchase such Holder's Notes, in whole or in part, in a principal
amount that is an integral multiple of $1,000,
C-6
pursuant to a Change of Control Offer, at a purchase price in cash equal to 101%
of the principal amount of such Notes (or portions thereof) plus accrued and
unpaid interest and Additional Interest, if any, to the Change of Control
Payment Date.
Within 30 calendar days after the date of any Change of Control, the
Company shall send, or cause to be sent, by first-class mail, postage prepaid, a
notice regarding the Change of Control Offer to each Holder. The Holder of this
Note may elect to have this Note or a portion hereof in an authorized
denomination purchased by completing the form entitled "Option of Holder to
Elect Purchase" appearing below and tendering this Note pursuant to the Change
of Control Offer. Unless the Company defaults in the payment of the Change of
Control Purchase Price with respect thereto, all Notes or portions thereof
accepted for payment pursuant to the Change of Control Offer will cease to
accrue interest from and after the Change of Control Payment Date.
9. Repurchase at the Option of Holders upon Asset Sale.
---------------------------------------------------
If at any time the Company or any Subsidiary engages in any Asset
Sale, as a result of which the aggregate amount of Excess Proceeds exceeds $5.0
million, the Company shall, within 30 calendar days of the date the amount of
Excess Proceeds exceeds $5.0 million, use the then-existing Excess Proceeds to
make an offer to purchase from all Holders of Notes, on a pro rata basis, Notes
in an aggregate principal amount equal in amount to the then-existing Excess
Proceeds, at a purchase price in cash in an amount equal to 100% of the
principal amount thereof plus accrued and unpaid interest thereon and Additional
Interest, if any, to the Asset Sale Purchase Date. Upon completion of an Asset
Sale Offer (including payment of the Asset Sale Purchase Price for accepted
Notes), any surplus Excess Proceeds that were the subject of such offer shall
cease to be Excess Proceeds, and the Company may then use such amounts for
general corporate purposes.
Within 30 calendar days of the date the amount of Excess Proceeds
exceeds $5.0 million, the Company shall send, or cause to be sent, by first-
class mail, postage prepaid, a notice regarding the Asset Sale Offer to each
Holder. The Holder of this Note may elect to have this Note or a portion hereof
in an authorized denomination purchased by completing the form entitled "Option
of Holder to Elect Purchase" appearing below and tendering this Note pursuant to
the Asset Sale Offer. Unless the Company defaults in the payment of the Asset
Sale Purchase Price with respect thereto, all Notes or portions thereof selected
for payment pursuant to the Asset Sale Offer will cease to accrue interest from
and after the Asset Sale Purchase Date.
10. The Global Note.
---------------
So long as this Global Note is registered in the name of the
Depository or its nominee, members of, or participants in, the Depository
("Agent Members") shall have no rights under the Indenture with respect to this
Global Note held on their behalf by the Depository or the Trustee as its
custodian, and the Depository may be treated by the Company, the Guarantors, the
Trustee and any agent of the Company, the Guarantors or the Trustee as the
absolute owner of this Global Note for all purposes. Notwithstanding the
foregoing, nothing herein shall (i) prevent the Company, the Guarantors, the
Trustee or any agent of the Company, the Guarantors or the
C-7
Trustee, from giving effect to any written certification, proxy or other
authorization furnished by the Depository or (ii) impair, as between the
Depository and its Agent Members, the operation of customary practices governing
the exercise of the rights of a Holder.
The Holder of this Global Note may grant proxies and otherwise
authorize any Person, including Agent Members and Persons that may hold
interests in this Global Note through Agent Members, to take any action which a
Holder is entitled to take under the Indenture or the Notes.
Whenever, as a result of optional redemption by the Company, a Change
of Control Offer, an Asset Sale Offer or an exchange for Certificated Notes,
this Global Note is redeemed, repurchased or exchanged in part, this Global Note
shall be surrendered by the Holder thereof to the Trustee who shall cause an
adjustment to be made to Schedule A hereof so that the principal amount of this
Global Note will be equal to the portion not redeemed, repurchased or exchanged
and shall thereafter return this Global Note to such Holder; provided that this
--------
Global Note shall be in a principal amount of $1,000 or an integral multiple of
$1,000.
11. Transfer and Exchange.
---------------------
A Holder may transfer or exchange Notes as provided in the Indenture
and subject to certain limitations therein set forth. The Registrar may require
a Holder, among other things, to furnish appropriate endorsements or transfer
documents and to pay any taxes, fees and expenses required by law or permitted
by the Indenture.
12. Denominations.
-------------
The Notes are issuable only in registered form without coupons in
denominations of $1,000 and integral multiples thereof of principal amount.
13. Discharge and Defeasance.
------------------------
Subject to certain conditions, the Company may, at any time, terminate
some or all of the obligations of the Company and each Guarantor under the
Notes, each Note Guarantee, and the Indenture if the Company irrevocably
deposits in trust with the Trustee cash or U.S. Government Obligations for the
payment of principal, premium, if any, interest and Additional Interest, if any,
on the Notes to redemption or maturity, as the case may be.
14. Amendment, Waiver.
-----------------
Subject to certain exceptions set forth in the Indenture, (i) the
Indenture or the Notes may be amended with the written consent of the Holders of
at least a majority in principal amount of the outstanding Notes (which consent
may, but need not, be given in connection with any tender offer or exchange
offer for the Notes) and (ii) any Default and its consequences may be waived
with the written consent of the Holders of at least a majority in principal
amount of the outstanding Notes. Subject to certain exceptions set forth in the
Indenture, without the consent of any Holder, the Company and the Trustee may
amend the Indenture or the Notes (i) to evidence the succession of another
Person to the Company and the assumption by such successor
C-8
of the covenants of the Company under the Indenture and contained in the Notes;
(ii) to add to the covenants of the Company, for the benefit of the Holders of
all of the Notes, or to surrender any right or power conferred on the Company
under the Indenture; (iii) to add any additional Events of Default; (iv) to
provide for uncertificated Notes in addition to or in place of Certificated
Notes; (v) to evidence and provide for the acceptance of appointment under the
Indenture of a successor Trustee; (vi) to secure the Notes; (vii) to cure any
ambiguity in the Indenture, or to correct or supplement any provision in the
Indenture which may be inconsistent with any other provision therein or to add
any other provisions with respect to matters or questions arising under the
Indenture, provided that such actions shall not adversely affect the interests
of the Holders of Notes in any material respect; (viii) to comply with the
requirements of the Commission in order to effect or maintain the qualification
of the Indenture under the Trust Indenture Act; or (ix) to evidence the
agreement or acknowledgment of a Subsidiary that it is a Guarantor for all
purposes under the Indenture (including, without limitation, Article X thereof).
15. Defaults and Remedies.
---------------------
Under the Indenture, Events of Default include: (i) a default for 30
days in the payment when due of interest on, or Additional Interest with respect
to, the Notes; (ii) default in payment when due of the principal of or premium,
if any, on the Notes; (iii) failure by the Company to observe or perform certain
covenants, conditions, agreements or other provisions of the Indenture or this
Note (and, in the case of certain covenants, agreements or other provisions,
such failure has continued for 60 calendar days after written notice by the
Trustee or the Holders of at least 25% in principal amount of the Notes); (iv)
default in the payment of Indebtedness of the Company or any of its Subsidiaries
at its final maturity or acceleration of such Indebtedness in an amount in
excess of $5.0 million in the aggregate; (v) certain events of bankruptcy or
insolvency with respect to the Company or any of its Subsidiaries; (vi) certain
undischarged judgments in excess of $5.0 million in the aggregate; or (vii) the
Note Guarantee of any Guarantor being held in any judicial proceeding to be
unenforceable or invalid or ceasing for any reason to be in full force and
effect (other than in accordance with the terms of the Indenture) or any
Guarantor or any Person acting on behalf of any Guarantor denying or
disaffirming the Note Guarantee of such Guarantor.
If an Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in principal amount of the Notes, subject to certain
limitations, may declare all the Notes to be immediately due and payable.
Certain events of bankruptcy or insolvency shall result in the Notes being
immediately due and payable upon the occurrence of such Events of Default
without any further act of the Trustee or any Holder.
Holders of Notes may not enforce the Indenture or the Notes except as
provided in the Indenture. The Trustee may refuse to enforce the Indenture or
the Notes unless it receives reasonable indemnity or security. Subject to
certain limitations, Holders of a majority in principal amount of the Notes may
direct the Trustee in its exercise of any trust or power under the Indenture.
The Holders of a majority in principal amount of the then outstanding Notes, by
written notice to the Trustee and the Company, may rescind any declaration of
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, interest,
C-9
premium or Additional Interest that has become due solely because of
acceleration. No such rescission shall affect any subsequent Default or impair
any right consequent thereto.
16. Individual Rights of Trustee.
----------------------------
Subject to certain limitations imposed by the Trust Indenture Act, the
Trustee or any Paying Agent or Registrar, in its individual or any other
capacity, may become the owner or pledgee of Notes and may otherwise deal with
the Company, the Guarantors or its or their Affiliates with the same rights it
would have if it were not Trustee, Paying Agent or Registrar, as the case may
be, under the Indenture.
17. No Recourse Against Certain Others.
----------------------------------
No director, officer, employee, incorporator or stockholder of the
Company or any Guarantor, as such, shall have any liability for any obligations
of the Company or any such Guarantor under the Notes, the Note Guarantees or the
Indenture or for any claim based on, in respect of, or by reason of, such
obligations or their creation, solely by reason of its status as a director,
officer, employee, incorporator or stockholder of the Company or any such
Guarantor. By accepting a Note, each Holder waives and releases all such
liability (but only such liability) as part of the consideration for issuance of
such Note to such Holder.
18. Authentication.
--------------
This Note shall not be valid until the Trustee or an authenticating
agent manually signs the certificate of authentication on the other side of this
Note.
19. Abbreviations.
-------------
Customary abbreviations may be used in the name of a Holder 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).
20. CUSIP Numbers.
-------------
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Company has caused CUSIP numbers to be
printed on the Notes and has directed the Trustee to use CUSIP numbers in
notices of redemption as a convenience to Holders of Notes. No representation
is made as to the accuracy of such numbers either as printed on the Notes or as
contained in any notice of redemption, and reliance may be placed only on the
other identification numbers placed thereon.
21. Governing Law.
-------------
THE INDENTURE, ANY NOTE GUARANTEES AND THIS NOTE SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE
C-10
LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED
IN SAID STATE.
The Company will furnish to any Holder upon written request and
without charge to the Holder a copy of the Indenture which has in it the text of
this Note. Requests may be made to:
The Krystal Company
One Union Square
Chattanooga, TN 37402
Attention: Secretary
C-11
SCHEDULE A
SCHEDULE OF PRINCIPAL AMOUNT
The initial principal amount at maturity of this Note shall be $____________.
The following decreases/increase in the principal amount in denominations of
$1,000 or integral multiples thereof at maturity of this Note have been made:
Total Principal Notation
Decrease in Increase in Amount at Maturity Made by
Date of Principal Amount Principal Amount Following such or on Behalf of
Decrease/Increase at Maturity at Maturity Decrease/Increase Trustee
- ------------------ ------------ ----------- ----------------- -------
- ------------------ ------------------- ------------------- ------------------- -------------------
- ------------------ ------------------- ------------------- ------------------- -------------------
- ------------------ ------------------- ------------------- ------------------- -------------------
- ------------------ ------------------- ------------------- ------------------- -------------------
- ------------------ ------------------- ------------------- ------------------- -------------------
- ------------------ ------------------- ------------------- ------------------- -------------------
- ------------------ ------------------- ------------------- ------------------- -------------------
- ------------------ ------------------- ------------------- ------------------- -------------------
- ------------------ ------------------- ------------------- ------------------- -------------------
- ------------------ ------------------- ------------------- ------------------- -------------------
- ------------------ ------------------- ------------------- ------------------- -------------------
- ------------------ ------------------- ------------------- ------------------- -------------------
- ------------------ ------------------- ------------------- ------------------- -------------------
- ------------------ ------------------- ------------------- ------------------- -------------------
- ------------------ ------------------- ------------------- ------------------- -------------------
- ------------------ ------------------- ------------------- ------------------- -------------------
- ------------------ ------------------- ------------------- ------------------- -------------------
- ------------------ ------------------- ------------------- ------------------- -------------------
- ------------------ ------------------- ------------------- ------------------- -------------------
- ------------------ ------------------- ------------------- ------------------- -------------------
- ------------------ ------------------- ------------------- ------------------- -------------------
C-12
ASSIGNMENT
(To be executed by the registered Holder
if such Holder desires to transfer this Note)
FOR VALUE RECEIVED _____________________________ hereby sells, assigns and
transfers unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
TAX IDENTIFYING NUMBER OF TRANSFEREE
- -------------------------------
- -------------------------------
________________________________________________________________________________
(Please print name and address of transferee)
________________________________________________________________________________
this Note, together with all right, title and interest herein, and does hereby
irrevocably constitute and appoint ________________________________ Attorney to
transfer this Note on the Security Register, with full power of substitution.
Dated:__________________________
________________________________ _____________________________
Signature of Holder Signature Guaranteed:
NOTICE: The signature to the foregoing Assignment must correspond to the Name
as written upon the face of this Note in every particular, without alteration or
any change whatsoever.
C-13
OPTION OF HOLDER TO ELECT PURCHASE
(check as appropriate)
[_] In connection with the Change of Control Offer made pursuant to
Section 4.07 of the Indenture, the undersigned hereby elects to have
[_] the entire principal amount
[_] $______________ ($1,000 in principal amount or an integral multiple
thereof)
repurchased by the Company. The undersigned hereby directs the Trustee or
Paying Agent to pay it or _____________________ an amount in cash equal to
101% of the principal amount indicated in the preceding sentence plus
accrued and unpaid interest and Additional Interest thereon, if any, to the
Change of Control Payment Date.
[_] In connection with the Asset Sale Offer made pursuant to Section
4.08 of the Indenture, the undersigned hereby elects to have
[_] the entire principal amount
[_] $______________ ($1,000 in principal amount or an integral
multiple thereof)
repurchased by the Company. The undersigned hereby directs the Trustee or
Paying Agent to pay it or __________________________ an amount in cash
equal to 100% of the principal amount indicated in the preceding sentence
plus accrued and unpaid interest and Additional Interest thereon, if any,
to the Asset Sale Purchase Date.
Dated:________________________
______________________________ ______________________________
Signature of Holder Signature Guaranteed:
NOTICE: The signature to the foregoing must correspond to the Name as written
upon the face of this Note in every particular, without alteration or any change
whatsoever.
C-14
EXHIBIT D
FORM OF EXCHANGE CERTIFICATED NOTE
----------------------------------
FACE OF EXCHANGE CERTIFICATED NOTE
----------------------------------
THE KRYSTAL COMPANY
No.__ CUSIP No. _________
10 1/4% SENIOR NOTE DUE 2007
The Krystal Company, a Tennessee corporation, for value received,
hereby promises to pay to ___________, or its registered assigns, the principal
amount of __________ on October 1, 2007.
Interest Payment Dates: April 1 and October 1, commencing April 1,
1998.
Record Dates: March 15 and September 15.
Reference is hereby made to the further provisions of this Note set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been duly executed
by the Trustee referred to on the reverse hereof by manual signature, this Note
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purposes.
IN WITNESS WHEREOF, The Krystal Company has caused this Note to be
duly executed under its corporate seal.
THE KRYSTAL COMPANY
By:_______________________________
Name:
Title:
Attest:_______________________
Dated:________________________
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
______________________________________________
as Trustee, certifies that this is one of
the Notes referred to in the Indenture.
By:________________________________
Authorized Signatory
D-2
REVERSE SIDE OF EXCHANGE CERTIFICATED NOTE
------------------------------------------
THE KRYSTAL COMPANY
10 1/4% SENIOR NOTE DUE 2007
1. Indenture.
---------
This Note is one of a duly authorized issue of debt securities of the
Company (as defined below) designated as its "10 1/4% Senior Notes Due 2007"
(herein called the "Notes") limited in aggregate principal amount to
$100,000,000, issued under an indenture dated as of September 26, 1997 (as
amended or supplemented from time to time, the "Indenture") between TKC
Acquisition Corp. ("TKC") and SunTrust Bank, Atlanta, as trustee (the "Trustee,"
which term includes any successor trustee under the Indenture). Pursuant to an
agreement and plan of merger, dated as of July 3, 1997, by and among TKC, Port
Royal Holdings, Inc. and The Krystal Company, TKC merged with and into The
Krystal Company on September 26, 1997, and The Krystal Company became the
surviving corporation (the "Merger"). Immediately following the Merger, The
Krystal Company executed a supplemental indenture no. 1 ( "Supplemental
Indenture No. 1"), dated as of September 26, 1997, among The Krystal Company, as
the successor to TKC, Krystal Aviation Co. and Krystal Aviation Management Co.,
as guarantors (the "Guarantors") and the Trustee, under which (i) The Krystal
Company acknowledged and agreed that it had succeeded TKC as the Company under
the Indenture and the Notes, agreed to perform each and every covenant of the
Company contained in the Indenture and the Notes and agreed to be bound by and
subject to the terms and provisions of the Indenture and the Notes in each and
every respect as if it had been initially named as the Company in the Indenture
and the Notes and (ii) each of the Guarantors assumed all of the obligations of
a Guarantor under the Indenture and the Notes and agreed to be bound by and
subject to the terms and provisions of the Indenture and the Notes in each and
every respect as if each had been initially named as a Guarantor in the
Indenture and the Notes. The terms of the Notes include those stated in the
Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939, as amended (15 U.S. Code (S)(S) 77aaa-77bbb). The Notes
are subject to all such terms, and Holders of Notes are referred to the
Indenture and such Act for a statement of the respective rights, limitations of
rights, duties and immunities thereunder of the Company, the Guarantors, the
Trustee and each Holder and of the terms upon which the Notes are, and are to
be, authenticated and delivered. The summary of the terms of this Note
contained herein does not purport to be complete and is qualified by reference
to the Indenture. To the extent permitted by applicable law, in the event of
any inconsistency between the terms of this Note and the terms of the Indenture,
the terms of the Indenture shall control. All capitalized terms used in this
Note which are not defined herein shall have the meanings assigned to them in
the Indenture.
The Indenture restricts, among other things, the Company's ability to
incur additional indebtedness and issue preferred stock, pay dividends or make
certain other restricted payments, incur liens, sell stock of Subsidiaries,
apply net proceeds from certain asset sales, merge or consolidate with any other
person, sell, assign, transfer, lease, convey or otherwise dispose of
substantially all of the assets of the Company and enter into certain
transactions with affiliates.
D-3
2. Principal and Interest.
----------------------
The Krystal Company, a Tennessee corporation (such corporation, and
its successors and assigns under the Indenture hereinafter referred to, being
herein called the "Company"), promises to pay the principal amount of ________
to the Holder hereof on October 1, 2007.
The Company shall pay interest at a rate of 10 1/4% per annum, from
September 26, 1997 or from the most recent Interest Payment Date thereafter to
which interest has been paid or duly provided for, semiannually in arrears on
April 1 and October 1 of each year, commencing on April 1, 1998, in cash, to the
Holder hereof until the principal amount hereof is paid or made available for
payment. The interest so payable, and punctually paid or duly provided for, on
any Interest Payment Date will, subject to certain exceptions provided in the
Indenture, be paid to the Person in whose name this Note (or the Note in
exchange or substitution for which this Note was issued) is registered at the
close of business on the Record Date for interest payable on such Interest
Payment Date. The Record Date for any interest payment is the close of business
on March 15 or September 15, as the case may be, whether or not a Business Day,
immediately preceding the Interest Payment Date on which such interest is
payable. Any such interest not so punctually paid or duly provided for
("Defaulted Interest") shall forthwith cease to be payable to the Holder on such
Record Date and shall be paid as provided in Section 2.11 of the Indenture.
Interest will be computed on the basis of a 360-day year of twelve 30-day
months.
Each payment of interest in respect of an Interest Payment Date will
include interest accrued through the day before such Interest Payment Date. If
an Interest Payment Date falls on a day that is not a Business Day, the interest
payment to be made on such Interest Payment Date will be made on the next
succeeding Business Day with the same force and effect as if made on such
Interest Payment Date, and no additional interest will accrue as a result of
such delayed payment.
If this Note is issued pursuant to a Registered Exchange Offer, on or
prior to the Record Date for the first Interest Payment Date following such
exchange, accrued and unpaid interest, if any, on the equivalent principal
amount of the Initial Note in exchange for which this Note was issued, up to but
not including the date of issuance of this Note, shall be paid on the first
Interest Payment Date for this Note to the Holder of this Note on the first
Record Date with respect to this Note. If this Note is issued pursuant to a
Registered Exchange Offer, subsequent to the Record Date for the first Interest
Payment Date following such exchange, but on or prior to such Interest Payment
Date, then any such accrued and unpaid interest with respect to the equivalent
principal amount of the Initial Note in exchange for which this Note was issued
and any accrued and unpaid interest on this Note through the day before such
Interest Payment Date shall be paid on such Interest Payment Date to the Holder
of such Initial Note on such Record Date.
To the extent lawful, the Company shall pay interest on overdue
principal, overdue premium, Defaulted Interest and overdue Additional Interest
(without regard to any applicable grace period) at the interest rate borne on
this Note. The Company's obligation pursuant to the previous sentence shall
apply whether such overdue amount is due at its Stated Maturity, as a
D-4
result of the Company's obligations pursuant to Section 3.05, Section 4.07 or
Section 4.08 of the Indenture, or otherwise.
3. Method of Payment.
-----------------
The Company, through the Paying Agent, shall pay interest on this Note
to the registered Holder of this Note, as provided above. The Holder must
surrender this Note to a Paying Agent to collect principal payments. The
Company will pay principal, premium, if any, and interest and Additional
Interest, if any, in money of the United States of America that at the time of
payment is legal tender for payment of all debts public and private. Principal,
premium, if any, and interest and Additional Interest, if any, shall be paid by
check mailed to the registered Holders at their registered addresses; provided
that all payments with respect to Notes that the Holders of which have given
wire transfer instructions to the Company, will be required to be made by wire
transfer of immediately available funds to the accounts specified by the Holders
thereof.
4. Paying Agent and Registrar.
--------------------------
Initially, the Trustee will act as Paying Agent and Registrar under
the Indenture. The Company may, upon written notice to the Trustee, appoint and
change any Paying Agent or Registrar. The Company or any of its Affiliates may
act as Paying Agent or Registrar; provided that if the Company or such Affiliate
--------
is acting as Paying Agent, the Company or such Affiliate shall segregate all
funds held by it as Paying Agent and hold them in trust for the benefit of the
Holders or the Trustee.
5. Note Guarantees.
---------------
This Note is initially entitled to the benefits of the Note Guarantees
made by Krystal Aviation Co. and Krystal Aviation Management Co. pursuant to the
Indenture, and may thereafter be entitled to Note Guarantees made by other
Guarantors for the benefit of the Holders of the Notes. Each present Guarantor
has, and each future Guarantor will, irrevocably and unconditionally, jointly
and severally, guarantee on a senior subordinated basis the punctual payment
when due, whether at Stated Maturity, by acceleration, in connection with a
Change of Control Offer, an Asset Sale Offer or redemption, or otherwise, of all
obligations of the Company under the Indenture and this Note, whether for
payment of principal of, premium, if any, interest or Additional Interest, if
any, on the Notes, expenses, indemnification or otherwise. A Guarantor shall be
released from its Note Guarantee upon the terms and subject to the conditions
set forth in the Indenture.
6. Redemption.
----------
The Notes are not redeemable at the option of the Company prior to
April 1, 2002. Thereafter, the Notes will be subject to redemption at the
option of the Company, in whole or in part, upon not less than 30 nor more than
60 calendar days' prior notice, at the redemption prices (expressed as
percentages of principal amount) set forth below, plus accrued and unpaid
interest thereon and Additional Interest, if any, to the applicable Redemption
Date (subject to the right of
D-5
each Holder of record on the relevant Record Date to receive interest due on the
relevant Interest Payment Date), if redeemed during the twelve-month period
beginning April 1 of the years indicated below:
YEAR Percentage
---- ----------
2002 105.125%
2003 103.417%
2004 101.708%
2005 and thereafter 100.000%
Notwithstanding the foregoing, at any time prior to April 1, 2000, the
Company, at its option, may redeem up to 35% of the aggregate principal amount
of the Notes originally issued, in part, with the net proceeds of one or more
Public Equity Offering made by the Company or of a capital contribution made by
the Parent to the common equity capital of the Company with the net proceeds of
one or more Public Equity Offerings made by the Parent, at the redemption price
equal to 110.25% of the aggregate principal amount thereof together with accrued
and unpaid interest and Additional Interest, if any, to the date of the
redemption payment; provided, however, that after such redemption, the aggregate
-------- -------
principal amount of the Notes outstanding must equal at least 65% of the
aggregate principal amount of the Notes originally issued and provided, further,
-------- -------
that such redemption shall occur within 60 days of the date of closing such
Public Equity Offering..
7. Notice of Redemption.
--------------------
At least 30 calendar days but not more than 60 calendar days before a
Redemption Date, the Company shall send, or cause to be sent, a notice of
redemption, by first-class mail, postage prepaid, to Holders of Notes to be
redeemed at the addresses of such Holders as they appear in the Note Register.
If less than all of the Notes are to be redeemed at any time, the
Trustee shall select the Notes to be redeemed on a pro rata basis; provided that
the Trustee may select for redemption portions (equal to $1,000 or any integral
multiple thereof) of the principal of Notes that have denominations larger than
$1,000 (Notes in denominations of $1,000 or less may be redeemed only in whole).
If any Note is redeemed subsequent to a Record Date with respect to any Interest
Payment Date specified above and on or prior to such Interest Payment Date, then
any accrued interest will be paid on such Interest Payment Date to the Holder of
the Note on such Record Date. If money in an amount sufficient to pay the
Redemption Price of all Notes (or portions thereof) to be redeemed on the
Redemption Date is deposited with the Paying Agent on or before the applicable
Redemption Date and certain other conditions are satisfied, interest on the
Notes or portions thereof to be redeemed on the applicable Redemption Date will
cease to accrue.
8. Repurchase at the Option of Holders upon Change of Control.
----------------------------------------------------------
Upon the occurrence of a Change of Control, each Holder shall have the
right in accordance with the terms hereof and the Indenture to require the
Company to purchase such Holder's Notes, in whole or in part, in a principal
amount that is an integral multiple of $1,000,
D-6
pursuant to a Change of Control Offer, at a purchase price in cash equal to 101%
of the principal amount of such Notes (or portions thereof) plus accrued and
unpaid interest and Additional Interest, if any, to the Change of Control
Payment Date.
Within 30 calendar days after the date of any Change of Control, the
Company shall send, or cause to be sent, by first-class mail, postage prepaid, a
notice regarding the Change of Control Offer to each Holder. The Holder of this
Note may elect to have this Note or a portion hereof in an authorized
denomination purchased by completing the form entitled "Option of Holder to
Elect Purchase" appearing below and tendering this Note pursuant to the Change
of Control Offer. Unless the Company defaults in the payment of the Change of
Control Purchase Price with respect thereto, all Notes or portions thereof
accepted for payment pursuant to the Change of Control Offer will cease to
accrue interest from and after the Change of Control Payment Date.
9. Repurchase at the Option of Holders upon Asset Sale.
--------------------------- -----------------------
If at any time the Company or any Subsidiary engages in any Asset
Sale, as a result of which the aggregate amount of Excess Proceeds exceeds $5.0
million, the Company shall, within 30 calendar days of the date the amount of
Excess Proceeds exceeds $5.0 million, use the then-existing Excess Proceeds to
make an offer to purchase from all Holders of Notes, on a pro rata basis, Notes
in an aggregate principal amount equal in amount to the then-existing Excess
Proceeds, at a purchase price in cash in an amount equal to 100% of the
principal amount thereof plus accrued and unpaid interest thereon and Additional
Interest, if any, to the Asset Sale Purchase Date. Upon completion of an Asset
Sale Offer (including payment of the Asset Sale Purchase Price for accepted
Notes), any surplus Excess Proceeds that were the subject of such offer shall
cease to be Excess Proceeds, and the Company may then use such amounts for
general corporate purposes.
Within 30 calendar days of the date the amount of Excess Proceeds
exceeds $5.0 million, the Company shall send, or cause to be sent, by first-
class mail, postage prepaid, a notice regarding the Asset Sale Offer to each
Holder. The Holder of this Note may elect to have this Note or a portion hereof
in an authorized denomination purchased by completing the form entitled "Option
of Holder to Elect Purchase" appearing below and tendering this Note pursuant to
the Asset Sale Offer. Unless the Company defaults in the payment of the Asset
Sale Purchase Price with respect thereto, all Notes or portions thereof selected
for payment pursuant to the Asset Sale Offer will cease to accrue interest from
and after the Asset Sale Purchase Date.
10. Transfer and Exchange.
---------------------
A Holder may transfer or exchange Notes as provided in the Indenture
and subject to certain limitations therein set forth. The Registrar may require
a Holder, among other things, to furnish appropriate endorsements or transfer
documents and to pay any taxes, fees and expenses required by law or permitted
by the Indenture. The Registrar need not register the transfer or exchange of
Certificated Notes or portions thereof selected for redemption (except, in the
case of a Certificated Note to be redeemed in part, the portion of such
Certificated Note not
D-7
to be redeemed) or any Certificated Notes for a period of 15 calendar days
before a selection of Notes to be redeemed.
11. Denominations.
-------------
The Notes are issuable only in registered form without coupons in
denominations of $1,000 and integral multiples thereof of principal amount.
12. Discharge and Defeasance.
------------------------
Subject to certain conditions, the Company may, at any time, terminate
some or all of the obligations of the Company and each Guarantor under the
Notes, each Note Guarantee and the Indenture if the Company irrevocably deposits
in trust with the Trustee, cash or U.S. Government Obligations for the payment
of principal, premium, if any, interest and Additional Interest, if any, on the
Notes to redemption or maturity, as the case may be.
13. Amendment Waiver.
----------------
Subject to certain exceptions set forth in the Indenture, (i) the
Indenture or the Notes may be amended with the written consent of the Holders of
at least a majority in principal amount of the outstanding Notes (which consent
may, but need not, be given in connection with any tender offer or exchange
offer for the Notes) and (ii) any Default and its consequences may be waived
with the written consent of the Holders of at least a majority in principal
amount of the outstanding Notes. Subject to certain exceptions set forth in the
Indenture, without the consent of any Holder, the Company and the Trustee may
amend the Indenture or the Notes (i) to evidence the succession of another
Person to the Company and the assumption by such successor of the covenants of
the Company under the Indenture and contained in the Notes; (ii) to add to the
covenants of the Company, for the benefit of the Holders of all of the Notes, or
to surrender any right or power conferred on the Company under the Indenture;
(iii) to add any additional Events of Default; (iv) to provide for
uncertificated Notes in addition to or in place of Certificated Notes; (v) to
evidence and provide for the acceptance of appointment under the Indenture of a
successor Trustee; (vi) to secure the Notes; (vii) to cure any ambiguity in the
Indenture, or to correct or supplement any provision in the Indenture which may
be inconsistent with any other provision therein or to add any other provisions
with respect to matters or questions arising under the Indenture, provided that
such actions shall not adversely affect the interests of the Holders of Notes in
any material respect; (viii) to comply with the requirements of the Commission
in order to effect or maintain the qualification of the Indenture under the
Trust Indenture Act; or (ix) to evidence the agreement or acknowledgment of a
Subsidiary that it is a Guarantor for all purposes under the Indenture
(including, without limitation, Article X thereof).
14. Defaults and Remedies.
---------------------
Under the Indenture, Events of Default include: (i) a default for 30
days in the payment when due of interest on, or Additional Interest with respect
to, the Notes; (ii) default in payment when due of the principal of or premium,
if any, on the Notes; (iii) failure by the Company to observe or perform certain
covenants, conditions, agreements or other provisions of
D-8
the Indenture or this Note (and, in the case of certain covenants, agreements or
other provisions, such failure has continued for 60 calendar days after written
notice by the Trustee or the Holders of at least 25% in principal amount of the
Notes); (iv) default in the payment of Indebtedness of the Company or any of its
Subsidiaries at its final maturity or acceleration of such Indebtedness in an
amount in excess of $5.0 million in the aggregate; (v) certain events of
bankruptcy or insolvency with respect to the Company or any of its Subsidiaries;
(vi) certain undischarged judgments in excess of $5.0 million in the aggregate;
or (vii) the Note Guarantee of any Guarantor being held in any judicial
proceeding to be unenforceable or invalid or ceasing for any reason to be in
full force and effect (other than in accordance with the terms of the Indenture)
or any Guarantor or any Person acting on behalf of any Guarantor denying or
disaffirming the Note Guarantee of such Guarantor.
If an Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in principal amount of the Notes, subject to certain
limitations, may declare all the Notes to be immediately due and payable.
Certain events of bankruptcy or insolvency shall result in the Notes being
immediately due and payable upon the occurrence of such Events of Default
without any further act of the Trustee or any Holder.
Holders of Notes may not enforce the Indenture or the Notes except as
provided in the Indenture. The Trustee may refuse to enforce the Indenture or
the Notes unless it receives reasonable indemnity or security. Subject to
certain limitations, Holders of a majority in principal amount of the Notes may
direct the Trustee in its exercise of any trust or power under the Indenture.
The Holders of a majority in principal amount of the then outstanding Notes, by
written notice to the Trustee and the Company, may rescind any declaration of
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, interest, premium or Additional Interest
that has become due solely because of acceleration. No such rescission shall
affect any subsequent Default or impair any right consequent thereto.
15. Individual Rights of Trustee.
----------------------------
Subject to certain limitations imposed by the Trust Indenture Act, the
Trustee or any Paying Agent or Registrar, in its individual or any other
capacity, may become the owner or pledgee of Notes and may otherwise deal with
the Company, the Guarantors or its or their Affiliates with the same rights it
would have if it were not Trustee, Paying Agent or Registrar, as the case may
be, under the Indenture.
16. No Recourse Against Certain Others.
----------------------------------
No director, officer, employee, incorporator or stockholder of the
Company or any Guarantor, as such, shall have any liability for any obligations
of the Company or any such Guarantor under the Notes, the Note Guarantees or the
Indenture or for any claim based on, in respect of, or by reason of; such
obligations or their creation, solely by reason of its status as a director,
officer, employee, incorporator or stockholder of the Company or any such
Guarantor. By accepting a Note, each Holder waives and releases all such
liability (but only such liability) as part of the consideration for issuance of
such Note to such Holder.
D-9
17. Authentication.
--------------
This Note shall not be valid until the Trustee or an authenticating
agent manually signs the certificate of authentication on the other side of this
Note.
18. Abbreviations.
-------------
Customary abbreviations may be used in the name of a Holder 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).
19. CUSIP Numbers.
-------------
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Company has caused CUSIP numbers to be
printed on the Notes and has directed the Trustee to use CUSIP numbers in
notices of redemption as a convenience to Holders of Notes. No representation
is made as to the accuracy of such numbers either as printed on the Notes or as
contained in any notice of redemption, and reliance may be placed only on the
other identification numbers placed thereon.
20. Governing Law.
-------------
THE INDENTURE, ANY NOTE GUARANTEES AND THIS NOTE SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
AGREEMENTS MADE AND TO BE PERFORMED IN SAID STATE.
The Company will furnish to any Holder upon written request and
without charge to the Holder a copy of the Indenture which has in it the text of
this Note. Requests may be made to:
The Krystal Company
One Union Square
Chattanooga, TN 37402
Attention: Secretary
D-10
ASSIGNMENT
(To be executed by the registered Holder
if such Holder desires to transfer this Note)
FOR VALUE RECEIVED ___________________________ hereby sells, assigns and
transfers unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
TAX IDENTIFYING NUMBER OF TRANSFEREE
- ------------------------------------
- ------------------------------------
________________________________________________________________________________
(Please print name and address of transferee)
________________________________________________________________________________
this Note, together with all right, title and interest herein, and does hereby
irrevocably constitute and appoint _________________________________ Attorney to
transfer this Note on the Security Register, with full power of substitution.
Dated: ________________
______________________________ ____________________________
Signature of Holder Signature Guaranteed:
NOTICE: The signature to the foregoing Assignment must correspond to the Name
as written upon the face of this Note in every particular, without alteration or
any change whatsoever.
D-11
OPTION OF HOLDER TO ELECT PURCHASE
(check as appropriate)
[_] In connection with the Change of Control Offer made pursuant to Section
4.07 of the Indenture, the undersigned hereby elects to have
[_] the entire principal amount
[_] $_______________ ($1,000 in principal amount or an integral multiple
thereof) of this Note
repurchased by the Company. The undersigned hereby directs the Trustee or
Paying Agent to pay it or __________________________ an amount in cash
equal to 101% of the principal amount indicated in the preceding sentence
plus accrued and unpaid interest and Additional Interest thereon, if any,
to the Change of Control Payment Date.
[_] In connection with the Asset Sale Offer made pursuant to Section 4.08 of
the Indenture, the undersigned hereby elects to have
[_] the entire principal amount
[_] $________________ ($1,000 in principal amount or an integral multiple
thereof) of this Note
repurchased by the Company. The undersigned hereby directs the Trustee or
Paying Agent to pay it or ____________________________ an amount in cash
equal to 100% of the principal amount indicated in the preceding sentence
plus accrued and unpaid interest and Additional Interest thereon, if any,
to the Asset Sale Purchase Date.
Dated: ________________
_____________________________ _____________________________
Signature of Holder Signature Guaranteed:
NOTICE: The signature to the foregoing must correspond to the Name as written
upon the face of this Note in every particular, without alteration or any change
whatsoever.
D-12
EXHIBIT E
FORM OF TRANSFER CERTIFICATE
FOR TRANSFER TO A QIB
SunTrust Bank, Atlanta
58 Edgewood Avenue, 4th Floor Annex
Atlanta, Georgia 30303
Attention: Corporate Trust Administration
Re: The Krystal Company (the "Company") 10 1/4% Senior Notes Due 2007 (the
----------------------------------------------------------------------
"Notes")
-----
Ladies and Gentlemen:
Reference is hereby made to the Indenture dated as of September 26,
1997 (as amended and supplemented from time to time, the "Indenture") between
TKC Acquisition Corp. ("TCK") and SunTrust Bank, Atlanta, as Trustee, and the
Supplemental Indenture No. 1 dated as of the same date among the Company, as the
successor to TKC, Krystal Aviation Co. and Krystal Aviation Management Co., as
guarantors (the "Guarantors") and the Trustee. Capitalized terms used but not
defined herein shall have the meanings given them in the Indenture. This letter
relates to $___________ aggregate principal amount of Notes which are held in
the name of [name of transferor] (the "Transferor") to effect the transfer of
such Notes in exchange for an equivalent beneficial interest in the Initial
Global Note.
In connection with such request, and with respect to such Notes, the
Transferor does hereby certify that such Notes are being transferred in
accordance with (i) the transfer restrictions set forth in the Notes and (ii)
Rule 144A under the United States Securities Act of 1933, as amended ("Rule
144A"), to a transferee that the Transferor reasonably believes is purchasing
the Notes for its own account or an account with respect to which the transferee
exercises sole investment discretion, and the transferee, as well as any such
account, is a "qualified institutional buyer" within the meaning of Rule 144A,
in a transaction meeting the requirements of Rule 144A and in accordance with
applicable securities laws of any state of the United States or any other
jurisdiction.
E-1
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceeding or official inquiry with respect
to the matters covered hereby.
Very truly yours,
_________________________________
[Name of Transferor]
By:______________________________
Name:
Title:
Date:____________________________
cc: The Krystal Company
One Union Square
Chattanooga, TN 37402
Attention: Philip H. Sanford
E-2
EXHIBIT F
FORM OF TRANSFER CERTIFICATE FOR TRANSFER TO AN
INSTITUTIONAL ACCREDITED INVESTOR
SunTrust Bank, Atlanta
58 Edgewood Avenue, 4th Floor Annex
Atlanta, Georgia 30303
Attention: Corporate Trust Administration
Re: The Krystal Company (the "Company") 10 1/4% Senior Notes Due 2007 (the
----------------------------------------------------------------------
"Notes")
-----
Ladies and Gentlemen:
Reference is hereby made to the Indenture dated as of September 26,
1997 (as amended and supplemented from time to time, the "Indenture") between
TKC Acquisition Corp. ("TCK") and SunTrust Bank, Atlanta, as Trustee, and the
Supplemental Indenture No. 1 dated as of the same date among the Company, as the
successor to TKC, Krystal Aviation Co. and Krystal Aviation Management Co., as
guarantors (the "Guarantors") and the Trustee. Capitalized terms used but not
defined herein shall have the meanings given them in the Indenture.
This letter relates to U.S. $___________ aggregate principal amount of
Notes which are held [in certificated form in the name of [name of transferor]
(the "Transferor")] [through the beneficial interest of [name of transferor]
(the "Transferor") in the Initial Global Note] to effect the transfer of such
Notes to an institutional "accredited investor" as defined in Rule 501(a)(1),
(2), (3) or (7) of Regulation D under the Securities Act of 1933, as amended
("Institutional Accredited Investor").
In connection with such request, and with respect to such Notes, the
Transferor does hereby certify that such Notes are being transferred (i) in
accordance with the transfer restrictions set forth in the Notes and (ii) to a
transferee that the Transferor reasonably believes is an Institutional
Accredited Investor that is acquiring at least $250,000 principal amount of
Notes for its own account or for one or more accounts as to which the transferee
exercises sole investment discretion and (iii) in accordance with applicable
securities laws of any state of the United States or any other jurisdiction.
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby.
Very truly yours,
_________________________________
[Name of Transferor]
By:______________________________
Name:
Title:
Date:____________________________
cc: The Krystal Company
One Union Square
Chattanooga, TN 37402
Attention: Philip H. Sanford
F-2
EXHIBIT G
FORM OF INVESTMENT LETTER
FOR INSTITUTIONAL ACCREDITED INVESTORS
SunTrust Bank, Atlanta
58 Edgewood Avenue, 4th Floor Annex
Atlanta, Georgia 30303
Attention: Corporate Trust Administration
Re: The Krystal Company (the "Company") 10 1/4% Senior Notes Due
------------------------------------------------------------
2007 (the "Notes")
----------------
Ladies and Gentlemen:
Reference is hereby made to the Indenture dated as of September 26,
1997 (as amended and supplemented from time to time, the "Indenture") between
TKC Acquisition Corp. ("TCK") and SunTrust Bank, Atlanta, as Trustee, and the
Supplemental Indenture No. 1 dated as of the same date among the Company, as the
successor to TKC, Krystal Aviation Co. and Krystal Aviation Management Co., as
guarantors (the "Guarantors") and the Trustee. Capitalized terms used but not
defined herein shall have the meanings given them in the Indenture
In connection with our proposed purchase of $_______________ aggregate
principal amount of Notes, we confirm that:
1. We understand that the Notes have not been registered under the
Securities Act of 1933, as amended (the "Securities Act"), and may not be sold
except as permitted in the following sentence. We understand and agree, on our
own behalf and on behalf of any accounts for which we are acting as hereinafter
stated, (x) that such Notes are being offered only in a transaction not
involving any public offering within the meaning of the Securities Act, (y) that
if we should resell, pledge or otherwise transfer such Notes within two years
after the later of the date of the original issuance of the Notes and the last
date on which the Company or any affiliate (within the meaning of Rule 144 under
the Securities Act ("Rule 144")) of the Company was the owner of such Notes (or
any predecessor of such Notes), or within three months after we cease to be an
affiliate of the Company, such Notes may be resold, pledged or transferred only
(i) to the Company, (ii) so long as Notes are eligible for resale pursuant to
Rule 144A under the Securities Act ("Rule 144A") to a person whom we reasonably
believe is a "qualified institutional buyer" (as defined in Rule 144A) ("QIB")
that purchases for its own account or for the account of a QIB to whom notice is
given that the resale, pledge or transfer is being made in reliance on Rule
144A, (iii) in an offshore transaction in accordance with Regulation S under the
Securities Act, (iv) to an institution that is an "accredited investor" as
defined in Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities
Act ("Institutional Accredited Investor") that has certified to the Company and
the Trustee that it is such an accredited investor and is acquiring the Notes
for investment purposes and not for distribution, (v) pursuant to an effective
registration statement
under the Securities Act or (vi) pursuant to any other available exemption from
the registration requirements of the Securities Act, in each case in accordance
with any applicable securities laws of any state of the United States, and we
will notify any purchaser of the Notes from us of the above resale restrictions,
if then applicable. We further understand that, in connection with any transfer
of the Notes by us, the Company and the Trustee may request, and if so requested
we will furnish, such certificates, legal opinions and other information as they
may reasonably require to confirm that any such transfer complies with the
foregoing restrictions. We understand that the Notes will be issued in
registered form only and that any certificates issued will bear a legend
substantially to the effect set forth in the Indenture.
2. We are able to fend for ourselves in this transaction, 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 Notes, and we and
any accounts for which we are acting are each able to bear the economic risk of
our or its investment and can afford the complete loss of such investment.
3. We understand that the minimum principal amount of Notes that may
be purchased by an Institutional Accredited Investor is $250,000.
4. We understand that the Company, the Trustee and others will rely
upon the truth and accuracy of the foregoing acknowledgments, representations
and agreements, and we agree that if any of the acknowledgments, representations
and warranties deemed to have been made by us by our purchase of Notes, for our
own account or for one or more accounts as to each of which we exercise sole
investment discretion, are no longer accurate, we shall promptly notify the
Company and the Trustee.
5. We are acquiring the Notes purchased by us for investment
purposes, and not for distribution, for our own account or for one or more
accounts as to each of which we exercise sole investment discretion and we are
or such account is an Institutional Accredited Investor.
G-2
6. You are entitled to rely upon this letter and you are irrevocably
authorized to produce this letter or a copy hereof to any interested party in
any administrative or legal proceeding or official inquiry with respect to the
matters covered hereby.
Very truly yours,
_______________________________
[Name of Purchaser]
By:____________________________
Name:
Title:
Date:__________________________
cc: The Krystal Company
One Union Square
Chattanooga, TN 37402
Attention: Philip H. Sanford
G-3
EXHIBIT H
FORM OF TRANSFER CERTIFICATE FOR TRANSFER
TO A NON-U.S. PERSON
SunTrust Bank, Atlanta
58 Edgewood Avenue, 4th Floor Annex
Atlanta, Georgia 30303
Attention: Corporate Trust Administration
Re: The Krystal Company (the "Company") 10 1/4% Senior Notes Due 2007 (the
----------------------------------------------------------------------
"Notes")
-----
Ladies and Gentlemen:
Reference is hereby made to the Indenture dated as of September 26,
1997 (as amended and supplemented from time to time, the "Indenture") between
TKC Acquisition Corp. ("TCK") and SunTrust Bank, Atlanta, as Trustee, and the
Supplemental Indenture No. 1 dated as of the same date among the Company, as the
successor to TKC, Krystal Aviation Co. and Krystal Aviation Management Co., as
guarantors (the "Guarantors") and the Trustee. Capitalized terms used but not
defined herein shall have the meanings given them in the Indenture.
This letter relates to $_____________ aggregate principal amount of
Notes which are held [in certificated form in the name of [name of transferor]
(the "Transferor")] [through the beneficial interest of [name of transferor]
(the "Transferor") in the Initial Global Note] to effect the transfer of such
Notes in exchange for Initial Certificated Notes.
In connection with such request, the Transferor does hereby certify
that such Notes are being transferred in accordance with (i) the transfer
restrictions set forth in the Notes and (ii) Regulation S ("Regulation S") under
the United States Securities Act of 1933, as amended (the "Securities Act") and
does hereby further certify that:
(1) the offer of the Notes was not made to a person in the United
States;
(2) the transaction was executed in, on or through the facilities of
a designated offshore securities market, and neither the Transferor,
nor any person acting on its behalf knows that the transaction was
pre-arranged with a buyer in the United States;
(3) no directed selling efforts have been made in contravention of
the requirements of Rule 903(b) or 904(b) of Regulation S, as
applicable; and
(4) the transaction is not part of a plan or scheme to evade the
registration requirements of the Securities Act.
In addition, if the sale is made during a Restricted Period (as
defined in Regulation S) and the provisions of Rule 903(c)(2) or (3) or Rule
904(c)(1) of Regulation S are applicable thereto, we confirm that such sale has
been made in accordance with the applicable provisions of Rule 903(c)(2) or (3)
or Rule 904(c)(1), as the case may be.
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceeding or official inquiry with respect
to the matters covered hereby.
Very truly yours,
_________________________________
[Name of Transferor]
By:______________________________
Name:
Title:
Date:____________________________
cc: The Krystal Company
One Union Square
Chattanooga, TN 37402
Attention: Philip H. Sanford
H-2