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EXHIBIT 10.96
THIS NOTE IS SUBJECT TO CERTAIN TRANSFER RESTRICTIONS SET
FORTH IN SECTION 7 HEREIN. THIS NOTE WAS ORIGINALLY ISSUED ON
JULY 3,1996 AND HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAW.
SENIOR SUBORDINATED
PROMISSORY NOTE
July 3, 1996 $15,000,000
DenAmerica Corp., a Georgia corporation (the "Company"), hereby
promises to pay to the order of BEP Holdings, Inc., a Delaware corporation, or
its permitted assigns (the "Holder") the principal amount of Fifteen Million
Dollars ($15,000,000), together with interest thereon calculated from the date
hereof in accordance with the provisions of this Note (this "Note"). Certain
defined terms used herein are set forth in Section 5 hereof.
The indebtedness represented by this Note is subordinated to Senior
Indebtedness pursuant to the terms of the Intercreditor Agreement and is senior
to Subordinated Obligations, including the Series B Notes.
1. Payment of Interest.
(a) Rate.
(i) Subject to Section 1(a)(ii) below, interest shall accrue
on a daily basis at the rate of twelve percent (12.0%) per annum on the
unpaid principal amount of this Note outstanding from time to time (or,
if less, at the highest rate then permitted under applicable law),
commencing on the date hereof.
(ii) If, at any time on or after January 1, 1997 and prior to
July 1, 1997, (A) the Company makes a borrowing request under the
Delayed Draw Facility (including any borrowing request which the
Company is required to make under Section 2 hereof), (B) at the time of
such request (and after giving effect to the borrowings covered by such
request), the Company is in compliance with all financial covenants and
other conditions precedent under the Credit Agreement (as in effect on
the Issue Date) which must be satisfied in order to make such
borrowings under the Delayed Draw Facility (other than Agent consent)
and (C) the Agent under the Credit Agreement denies, does not consent
to or otherwise prohibits such borrowings, then the interest rate on
the principal amount of this Note shall automatically increase to
fourteen percent (14.0%) per annum (or, if less, the highest rate then
permitted under applicable law). Any such increase in the interest rate
shall be retroactive to January 1, 1997 (and any interest owed with
respect to periods prior to the Effective Date (as defined below) by
reason of any such increase shall be due and payable on the first
scheduled interest payment date
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under Section 1(b) below following the Effective Date). As used herein,
"Effective Date" shall mean the earlier of (Y) the date on which the
Agent notifies the Company that it will deny, will not consent to or
will otherwise prohibit the requested borrowings or (Z) the 30th day
following the Company's borrowing request, if the Agent has not granted
its consent to such borrowings on or prior to such date (provided that,
in the case of any borrowing request made prior to March 31, 1997, the
date stipulated by this clause (Z) shall be the earlier of such 30th
day or March 31, 1997 and provided further that, in the case of any
borrowing request made on or after March 31, 1997 and prior to June 30,
1997, the date stipulated by this clause (Z) shall be the earlier of
such 30th day or June 30, 1997). In the event that the Company makes a
borrowing request under the Delayed Draw Facility and the Agent under
the Credit Agreement rejects such request on the basis that the amount
of borrowings requested would cause the Company not to be in compliance
with the financial covenants contained in the Credit Agreement, the
Company shall re-submit a reduced request for borrowings for the
maximum amount which would permit the Company to so comply.
(b) Timing.
(i) As and to the extent provided under Section 2(a)(i)
hereof, the Company shall pay to the Holder on or prior to March 31,
1997 all accrued interest for periods through March 31, 1997. Any
interest not so paid on or prior to March 31, 1997 shall be added to
the principal amount of this Note and shall accrue interest at the rate
specified in Section 1(a) above. After March 31, 1997, the Company
shall pay to the Holder all accrued interest on the last day of each
June, September, December and March, beginning June 30, 1997. Any
accrued interest which for any reason has not theretofore been paid
shall be paid in full on the date on which all remaining principal
amount on this Note is paid.
(ii) Notwithstanding Section 1(b)(i), (x) all interest accrued
on this Note through March 31, 1997 shall be payable in cash on March
31, 1997 if the Agent under the Credit Agreement denies, does not
consent to or otherwise prohibits any borrowing request made by the
Company under the Delayed Draw Facility prior to March 31, 1997 under
the circumstances described under Section 1(a)(ii)(B) above and (y) all
interest accrued on this Note through June 30, 1997 (including any
interest previously added to principal under Section 1(b)(i) above)
shall be payable in cash on June 30, 1997 if the Agent under the Credit
Agreement denies, does not consent to or otherwise prohibits any
borrowing request made by the Company under the Delayed Draw Facility
on or after April 1, 1997 but prior to June 30, 1997 under the
circumstances described in Section 1(a)(ii)(B) above.
(c) Overdue Amounts. Interest at the rate specified in Section 1(a)
above shall accrue on any principal payment due under this Note and, to the
extent permitted by applicable law, on any interest which has not been paid on
the date on which it is due and payable until such time as payment therefor is
actually delivered to the Holder.
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2. Payment of Note.
(a) Scheduled Payments.
(i) If, based on the Company's financial condition as of
December 31, 1996 and its results of operations through such date, the
Company has satisfied those financial covenants and other conditions
precedent under the Delayed Draw Facility which must be satisfied in
order to make borrowings thereunder (other than Agent consent), the
Company shall request the maximum amount of borrowings under the
Delayed Draw Facility which it is entitled to make and shall use the
proceeds of such borrowings to repay the principal amount of, and
accrued interest on, this Note. The Company shall use its best efforts
to cause the effective date of such borrowings, and the repayment of
this Note, to occur as soon as practicable after the availability of
its financial statements as of and for the period referred to above,
but not later than March 31, 1997.
(ii) If, based on the Company's financial condition as of
March 31, 1997 and its results of operations through such date, the
Company has satisfied those financial covenants and other conditions
precedent under the Delayed Draw Facility which must be satisfied in
order to make borrowings thereunder (other than Agent consent), the
Company shall request the maximum amount of borrowings under the
Delayed Draw Facility which it is entitled to make and shall use the
proceeds of such borrowings to repay the principal amount of, and
accrued interest on, this Note. The Company shall use its best efforts
to cause the effective date of such borrowings, and the repayment of
this Note to occur, as soon as practicable after the availability of
its financial statements as of and for the period referred to above,
but not later than June 30, 1997.
(iii) If, at any time prior to June 30, 1997, (A) payment of
the principal amount of this Note and accrued interest thereon is
permitted under the terms of the Senior Indebtedness (including but not
limited to the terms of the Intercreditor Agreement) without causing a
default thereunder and (B) the Company has cash on hand or Investments
of the type described in Section 4(i)(iii) (in either case in excess of
the working capital needs of its business (as determined in good faith
by the Company's Board of Directors)), then the Company shall repay the
principal amount of this Note and accrued interest thereon to the
maximum extent possible. At the request of the Holder, the Company
shall provide the Holder with reasonable financial information in
support of the Board of Director's determination of the Company's
working capital needs.
(iv) In the event that a Company fiscal quarter does not end
on December 31, 1996 or March 31, 1997, then the references to December
31, 1996 or March 31, 1997 contained in Sections 2(a)(i) or (ii) above
(as the case may be) shall be deemed to be references to the last day
of the Company fiscal quarter ending closest to such date.
(v) Subject to Sections 2(d) and 2(e) below, the maturity date
of any principal amount of this Note which has not been repaid on July
1, 1997 shall be March 31, 2002 (the "Maturity Date").
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(b) Optional Prepayments. To the extent permitted by the Intercreditor
Agreement, the Company may, at any time and from time to time, without premium
or penalty, prepay all or a portion of the outstanding principal amount of this
Note; provided, however, that any prepayment shall first be applied to any
accrued but unpaid interest on the principal amount prepaid.
(c) Time of Payment. If any payment of principal or interest on this
Note shall become due on a Saturday, Sunday, or legal holiday under the laws of
the State of New York, such payment shall be made on the next succeeding
Business Day and such extension of time shall in such case be included in
computing interest in connection with such payment.
(d) Certain Mandatory Prepayments. This Note shall be subject to (i)
mandatory prepayment with the proceeds of certain Equity Issuances as and to the
extent provided in Section 4(l) below, (ii) mandatory prepayment from any and
all proceeds (net of taxes and actual expenses) from the sale of the owned
restaurant location at 9040 Signature Road, Indianapolis, Indiana (Michigan
Avenue) and (iii) mandatory prepayment following the occurrence of a Change of
Control; provided, however, that the prepayment required by clause (iii) shall
only be made after the indefeasible payment in full of the Senior Indebtedness.
Any prepayment required by clause (iii) of the preceding sentence shall be made
promptly after such indefeasible payment in full of the Senior Indebtedness. The
amount of any mandatory prepayment shall first be applied to any accrued but
unpaid interest on the principal amount prepaid.
(e) Best Efforts to Prepay. If all or any portion of this Note is not
repaid prior to July 1, 1997, then the Company shall use its best efforts to
repay all outstanding amounts hereunder as soon as practicable thereafter (and
in no event later than the Maturity Date) from all available sources (including,
without limitation, the Delayed Draw Facility) to the extent consistent with (i)
its obligations to holders of the Senior Indebtedness and (ii) the working
capital needs of its business (as determined in good faith by the Company's
Board of Directors). At the request of the Holder, the Company shall provide the
Holder with reasonable financial information in support of the Board of
Director's determination of the Company's working capital needs.
3. Events of Default.
(a) Definition. "Event of Default," wherever used herein, means the
occurrence and continuance of any one of the following events (whatever the
reason for such Event of Default and whether it shall be caused voluntarily or
involuntarily or effected, without limitation, by operation of law or pursuant
to any judgment, decree or order of any court or any order, rule or regulation
of any administrative or governmental body):
(i) default in the payment of any interest on this Note as and
when the same becomes due and payable, and the continuance of such
default for a period of ten (10) Business Days;
(ii) default in the payment of all or any part of the
principal of this Note as and when the same becomes due and payable at
maturity or otherwise;
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(iii) default in the observance or performance of, or breach
of, any covenant, agreement or warranty of the Company contained in
this Note, other than a default in the performance of any covenant,
agreement or warranty which is specifically addressed elsewhere in this
Section 3(a), and continuance of such default or breach for a period of
30 days after there has been delivered, by registered or certified
mail, to the Company by the Holder, a written notice specifying such
default or breach, requiring it to be remedied and stating that such
notice is a "Notice of Default" hereunder;
(iv) (A) the Company or any of its Subsidiaries shall fail to
make any required payment, whether as a result of any failure to pay
any installment of principal or any accrued interest, or as a result of
maturity, on any Indebtedness of the Company or any of its Subsidiaries
in excess of $1,000,000, and such failure shall continue, without
having been duly cured, waived or consented to, for a period of thirty
(30) days or (B) any Indebtedness of the Company or any of its
Subsidiaries in excess of $1,000,000 shall be accelerated prior to its
stated maturity date by the holder or holders thereof;
(v) one or more judgments or decrees in an aggregate amount of
$1,000,000 or more shall be entered by a court or courts of competent
jurisdiction against the Company or any of its Subsidiaries (other than
any judgment as to which, and only to the extent that, a reputable
insurance company has acknowledged coverage of such claim in writing),
if, within 60 days after entry thereof, any such judgments or decrees
shall not have been satisfied and discharged, bonded or stayed pending
appeal, or within 60 days after expiration of such stay any such
judgments or decrees shall not have been discharged;
(vi) a decree, judgment or order by a court of competent
jurisdiction shall have been entered adjudging the Company as bankrupt
or insolvent, or approving as properly filed a petition seeking
reorganization of the Company under any Bankruptcy Law, and such decree
or order shall have continued undischarged and unstayed for a period of
60 days; or a decree or order of a court of competent jurisdiction
ordering the appointment of a Custodian for the Company, or for the
winding up or liquidation of the affairs of the Company, shall have
been entered, and such decree, judgment, or order shall have remained
in force undischarged and unstayed for a period of 60 days; or
(vii) the Company shall institute proceedings to be
adjudicated a voluntary bankrupt, or shall consent to the filing of a
bankruptcy proceeding against it, or shall file a petition or answer or
consent seeking reorganization under any bankruptcy or similar law or
similar statute, or shall consent to the filing of any such petition,
or shall consent to the appointment of a Custodian of it or any of its
material assets or property, or shall make a general assignment for the
benefit of creditors, or shall admit in writing its inability to pay
its debts generally as they become due.
(b) Consequences of the Occurrence of an Event of Default.
(i) If an Event of Default (other than an Event of Default
described in Sections 3(a)(vi)or (a)(vii)) occurs and is continuing,
then, and in every such case, unless the principal of this Note shall
have already become due and payable, the
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Holder by a notice in writing to the Company (an "Acceleration
Notice"), may declare all of the principal of this Note, together with
accrued interest thereon, to be due and payable immediately. If an
Event of Default specified in Section 3(a)(vi) or (a)(vii) occurs, all
principal of and accrued interest on this Note shall automatically be
immediately due and payable without any declaration or other act on the
part of the Holder.
(ii) Subject to the provisions of Article II of the
Intercreditor Agreement, if an Event of Default occurs and is
continuing, the Holder may pursue any available remedy to collect the
payment of principal or interest on this Note or to enforce the
performance of any provision of this Note. No delay or omission by the
Holder in exercising any right or remedy accruing upon an Event of
Default shall impair such right or remedy or constitute a waiver of or
acquiescence in the Event of Default. Every right and remedy given by
this Section 3 or by law to the Holder may be exercised from time to
time, and as often as may be deemed expedient, by the Holder.
(iii) No right or remedy herein conferred upon or reserved to
the Holder is intended to be exclusive of any other right or remedy,
and every right and remedy shall, to the extent permitted by law, be
cumulative and in addition to every other right and remedy given
hereunder or now or hereafter existing at law or in equity or
otherwise. The assertion or employment of any right or remedy
hereunder, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.
4. Covenants.
(a) Financial and Other Reports; Compliance Certificate; Notice of
Default.
(i) To the extent required by applicable law or regulation,
including the requirements of Section 13 or 15(d) of the Exchange Act,
the Company shall file with the SEC all quarterly and annual reports
and such other information, documents or other reports (or copies of
such portions of any of the foregoing as the SEC may by rules and
regulations prescribe) required to be filed pursuant to such provisions
of the Exchange Act. The Company shall deliver to the Holder, within 5
days after it files the same with the SEC, copies of the quarterly and
annual reports and the information, documents, and other reports (or
copies of such portions of any of the foregoing as the SEC may by rules
and regulations prescribe) that it files with the SEC. To the extent
that the Company is not subject to the requirements of Section 13 or
15(d) of the Exchange Act, the Company nonetheless shall deliver to the
Holder the information described in Sections 13 and 15(d) of the
Exchange Act within the time periods provided in Sections 13 and 15(d)
for filing with the SEC as if the Company were subject to Section 13 or
15(d) of the Exchange Act.
(ii) The Company will deliver to the Holder:
(A) copies of all reports, financial statements,
compliance certificates and other notices and information
required to be delivered to the lender or lenders (or any
agent therefor) under any Credit Agreement,
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promptly upon delivery thereof to such lender or lenders (or
agent therefor), and copies of all notices of default
delivered to the Company by any such lender or lenders (or
agent), promptly upon receipt thereof by the Company;
provided, that upon receipt by the Company of a written
request from the Holder to stop delivering such notices and
information to the Holder, the Company shall stop delivering
such notices and information to the Holder until the Holder
delivers a written request to the Company requesting that the
Company recommence delivery of such notices and information to
the Holder;
(B) copies of all reports, financial statements,
compliance certificates and other notices and information
required to be delivered to the holder or holders (or any
agent therefor) under the Series B Indenture or the Series B
Notes, promptly upon delivery thereof to such holder or
holders (or agent therefor), and copies of all notices of
default delivered to the Company by any such holder or holders
(or agent), promptly upon receipt thereof by the Company;
provided, that upon receipt by the Company of a written
request from the Holder to stop delivering such notices and
information to the Holder, the Company shall stop delivering
such notices and information to the Holder until the Holder
delivers a written request to the Company requesting that the
Company recommence delivery of such notices and information to
the Holder; and
(C) the Company's annual report to stockholders,
promptly upon delivery thereof to the stockholders.
(iii) The Company shall mail to the Holder within 60 days
after the end of each of the first three fiscal quarters in each fiscal
year, and within 120 days after the end of each fiscal year, an
Officers' Certificate stating that a review of its activities and the
activities of its Subsidiaries during the preceding fiscal quarter or
fiscal year has been made under the supervision of the signing Officers
with a view to determining whether the Company has kept, observed,
performed and fulfilled its obligations under this Note and further
stating, as to each such Officer signing such certificate, whether or
not the signer knows of any failure by the Company or any Subsidiary of
the Company to comply with any conditions or covenants in this Note
and, if such signer does know of such a failure to comply, the
certificate shall describe such failure with particularity.
(iv) The Company shall, so long as this Note is outstanding,
mail to the Holder, promptly upon becoming aware of any Default or
Event of Default under this Note, an Officers' Certificate specifying
such Default or Event of Default and what action the Company is taking
or proposes to take with respect thereto.
(b) Limitation on Restricted Payments. The Company shall not,
and shall not permit any of its Subsidiaries to, directly or indirectly, (i)
declare or pay any dividend or make any distribution on account of, or purchase,
redeem or otherwise acquire for value, any Capital Stock or other Equity
Interests of the Company or any such Subsidiary (other than (A) dividends or
distributions payable by the Company in Capital Stock (other than Redeemable
Stock) of the Company, or (B) dividends or distributions payable by a Subsidiary
of the Company in cash or Capital Stock (other than Redeemable Stock) of
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such Subsidiary so long as, in the case of any dividend or distribution payable
on any class or series of any Capital Stock or Equity Interest of any such
Subsidiary, the Company or the Subsidiaries of the Company receive at least
their pro rata share of such dividend or distribution in accordance with their
Equity Interest in such class or series), or (ii) purchase, redeem, or otherwise
acquire or retire for value, or make any payment or prepayment of principal,
interest or other amounts on or in respect of, any Subordinated Obligations,
directly or indirectly, (the foregoing actions set forth in clauses (i) and (ii)
being referred to as "Restricted Payments"); except (x) the payment of interest
on the Series B Notes in accordance with the terms thereof, as in effect on the
Issue Date or as amended in compliance with this Note (provided that no such
interest may be paid if a Default or Event of Default shall be continuing at the
time of such payment of interest or shall result therefrom) and (y) payments
required by Section 4.13(b)(i) of the Series B Indenture (provided that no such
payments may be made if a Default or Event of Default shall be continuing at the
time of such payment or shall result therefrom).
(c) Corporate Existence. The Company shall do or cause to be done all
things necessary to preserve and keep in full force and effect its corporate
existence and the corporate or other existence of each of its Subsidiaries in
accordance with the respective organizational documents of each of them and the
rights (charter and statutory) and corporate franchises of the Company and each
of its Subsidiaries; provided, however, that the Company shall not be required
to preserve, with respect to itself, any right or franchise, and with respect to
any of its Subsidiaries, any such existence, right or franchise, if (i) the
Board of Directors of the Company shall determine (as evidenced by a Board
Resolution) that the preservation thereof is no longer desirable in the conduct
of the business of the Company and (ii) the loss thereof is not disadvantageous
in any material respect to the business and operations of the Company. The
Company will not, and will not permit any of its Subsidiaries to, engage in any
business other than the business of owning, leasing, operating, developing,
re-imaging and acquiring restaurants and restaurant franchises (the "Restaurant
Business").
(d) Payment of Taxes and Other Claims. The Company shall, and shall
cause each of its Subsidiaries to, pay or discharge, or cause to be paid or
discharged, before the same shall become delinquent, (i) all material taxes,
assessments and governmental charges (including withholding taxes and any
penalties, interest and additions to taxes) levied or imposed upon the Company
or any of its Subsidiaries or upon any properties of the Company or any of its
Subsidiaries, and (ii) all material claims, whether for labor, materials,
supplies, services or anything else, which become due and payable and which by
law have or may become a Lien upon the property of the Company or any of its
Subsidiaries; provided, however, that the Company and its Subsidiaries shall not
be required to pay or discharge or cause to be paid or discharged any such tax,
assessment, charge or claim whose amount, applicability or validity is being
contested in good faith by appropriate proceedings and for which adequate
reserves have been established in accordance with GAAP.
(e) Maintenance of Properties and Insurance.
(i) The Company shall cause all properties used or useful to
the conduct of its business and the business of each of its
Subsidiaries to be maintained and kept in good condition, repair and
working order (reasonable wear and tear excepted) and supplied with all
necessary equipment and shall cause to be made
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all necessary repairs, renewals, replacements, betterments and
improvements thereof, all as in its reasonable judgment may be
necessary, so that the business carried on in connection therewith may
be properly and advantageously conducted at all times; provided,
however, that nothing in this Section 4(e) shall prevent the Company or
any of its Subsidiaries from discontinuing any operation or maintenance
of any of such properties (including, but not limited to, the closing
of any of the restaurants it operates), or disposing of any of them, if
such discontinuance or disposal is (A) in the judgment of the Board of
Directors of the Company (as evidenced by a Board Resolution),
desirable in the conduct of the business of the Company or its
Subsidiaries, (B) not prohibited by Section 4(j) hereof, and (C) not
disadvantageous in any material respect to the business and operations
of the Company.
(ii) The Company shall provide, or cause to be provided, for
itself and each of its Subsidiaries, insurance (including appropriate
self-insurance) against loss or damage of the kinds that, in the
reasonable, good faith opinion of the Company are adequate and
appropriate for the conduct of the business of the Company and its
Subsidiaries in a prudent manner, with reputable insurers or with the
government of the United States of America or an agency or
instrumentality thereof, in such amounts, with such deductibles, and by
such methods as shall be customary, in the reasonable, good faith
opinion of the Company, and adequate and appropriate for the conduct of
the business of the Company and its Subsidiaries in a prudent manner
for Persons similarly situated in the restaurant industry.
(f) Compliance with Laws, Contracts, Licenses and Permits. The Company
will, and will cause each of its Subsidiaries to, comply in all material
respects with (i) all applicable laws and regulations wherever its business is
conducted, (ii) the provisions of its charter documents and bylaws, (iii) all
material agreements and instruments by which it or any of its properties may be
bound, and (iv) all applicable decrees, orders, and judgments. If any
authorization, consent, approval, operating right, permit or license from any
officer, agency or instrumentality of any government shall become necessary or
required in order that the Company or any of its Subsidiaries may fulfill any of
its obligations under this Note, the Company or such Subsidiary will promptly
take or cause to be taken all reasonable steps within its power to obtain such
authorization, consent, approval, operating right, permit or license, and, upon
written request of the Holder, furnish to the Holder evidence thereof.
(g) Waiver of Stay, Extension or Usury Laws. The Company covenants (to
the extent that it may lawfully do so) that it will not at any time insist upon,
plead, or in any manner whatsoever claim or take the benefit or advantage of,
any usury law or other similar law which would prohibit or forgive the Company
from paying all or any portion of the principal of or interest on or other
amounts payable under this Note as contemplated herein, wherever enacted, now or
at any time hereafter in force, or which may affect the covenants or the
performance of this Note; and (to the extent that it may lawfully do so) the
Company hereby expressly waives all benefit or advantage of any such law insofar
as such law applies to this Note.
(h) Limitation on Additional Indebtedness. The Company will not, and
will not permit any of its Subsidiaries to, directly or indirectly, create,
incur, issue, assume,
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guarantee or otherwise become directly or indirectly liable with respect to any
Indebtedness or Redeemable Stock, except:
(i) Indebtedness of the Company under or in respect of this
Note, as in effect on the Issue Date or as amended in accordance with
Section 6 hereof, in an aggregate principal amount not to exceed
$15,000,000 (plus any interest which is added to principal or
capitalized under the terms hereof), less the amount of any repayment
or prepayment of this Note;
(ii) Indebtedness of the Company under or in respect of the
Series B Notes, as in effect on the Issue Date or as amended in
accordance with Section 4(n) hereof, in an aggregate principal amount
not to exceed the aggregate principal amount outstanding on the Issue
Date, less the amount of any repayment, prepayment or redemption of the
Series B Notes;
(iii) Senior Indebtedness incurred from time to time, and any
guaranties of Senior Indebtedness, and any costs and expenses due under
any of the Loan Documents (as defined under the Credit Agreement) by
any Subsidiary of the Company;
(iv) Indebtedness of the Company and its Subsidiaries under
Interest Rate Agreements relating to Indebtedness permitted hereby;
(v) Existing Indebtedness, less the amount of any repayment,
prepayment, or redemption of Existing Indebtedness;
(vi) Capitalized Lease Obligations and Indebtedness
constituting purchase money obligations for property acquired in the
ordinary course of business;
(vii) other Indebtedness that is expressly permitted under
Section 7.2(g) or (h) of the Credit Agreement, as in effect on the
Issue Date; and
(viii) additional unsecured Indebtedness of the Company not
otherwise permitted by any of clauses (i) through (vii) above, provided
that the aggregate outstanding principal amount of such additional
Indebtedness shall not at any time exceed $5,000,000.
(i) Limitation on Investments. The Company shall not, and shall not
permit any of its Subsidiaries to, have outstanding or acquire or commit itself
to acquire or hold any Investment, except:
(i) Investments existing on the Issue Date;
(ii) Investments by the Company and any of its Subsidiaries in
the Company or in any wholly-owned Subsidiary of the Company;
(iii) Investments in: (A) cash, (B) marketable obligations
issued or guaranteed by the United States of America which mature
within one (1) year after the date of acquisition thereof or which are
required to be repurchased, within ninety (90) days after the date of
acquisition thereof by any commercial bank or trust
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company incorporated under the laws of the United States of America or
any State thereof or the District of Columbia, (C) commercial paper
maturing within one (1) year from the date of acquisition thereof and
having, at the date of acquisition thereof, the highest rating
obtainable from Moody's Investors Service, Inc. or Standard & Poor's
Corporation, (D) bankers' acceptances eligible for rediscount under
Federal Reserve Board requirements accepted by any commercial bank or
trust company referred to in clause (B) hereof, (E) certificates of
deposit maturing within one (1) year from the date of acquisition
thereof issued by any commercial bank or trust company referred to in
clause (B) hereof, having capital and surplus of at least $100,000,000
and having at least an "A" rating or better, and (F) certificates of
deposit issued by any bank organized under the laws of any other
jurisdiction and having combined capital and surplus of not less than
$100,000,000 and having at least an "A" rating or better;
(iv) Investments expressly permitted under Section 7.8(a), (d)
and (g) of the Credit Agreement, as in effect on the Issue Date; and
(v) Investments constituting Restaurant Acquisitions or assets
used or useful in the Restaurant Business.
(j) Limitation on Asset Sales, etc. The Company will not, and will not
permit any of its Subsidiaries to sell, lease, sublease or otherwise transfer or
dispose of any property (an "Asset Sale"), except:
(i) Asset Sales consisting of sales of inventory in the
ordinary course of business, sales of obsolete equipment, or sales of
equipment which is uneconomic or no longer used by the Company or any
Subsidiary;
(ii) Asset Sales consisting of sales of property having a fair
market value, in the aggregate for all such Asset Sales from and after
the Issue Date, of not greater than $21,000,000; provided, that (1)
prior to and after giving effect to such Asset Sale, no Event of
Default is continuing and (2) the consideration received by the Company
or such Subsidiary on the closing date of such Asset Sale shall be
equal to the fair market value of the assets sold and at least 80% of
the consideration shall consist of immediately available funds
(provided that the Company and its Subsidiaries shall be entitled to
sell non- or under-performing restaurants in transactions which fail to
meet the 80% test contained in this clause (ii) so long as the fair
market value of the aggregate proceeds of such transactions does not
exceed $10,000,000);
(iii) Asset Sales in connection with sale/leaseback
transactions;
(iv) Asset Sales by any wholly-owned Subsidiary of the Company
to the Company or to any other wholly-owned Subsidiary of the Company;
(v) Asset Sales expressly permitted by Section 7.5(e) of the
Credit Agreement, as in effect on the Issue Date; and
(vi) Asset Sales consisting of in-kind swaps of restaurant
properties with other owners or operators of restaurant properties.
12
(k) Subsidiary Payment Restrictions; Conflicting Agreements.
(i) The Company will not, and will not permit any of its
Subsidiaries to, directly or indirectly, create or otherwise cause or
suffer to exist or become effective any encumbrance or restriction on
the ability of any Subsidiary to (A) pay dividends or make any other
distributions on its Capital Stock, or pay any Indebtedness owed to the
Company or any of its Subsidiaries, (B) make loans or advances to the
Company or any of its Subsidiaries or (C) transfer any of its
properties to the Company or any of its Subsidiaries, except for such
encumbrances or restrictions existing under or by reason of (1) the
Credit Agreement, provided that such encumbrances or restrictions are
no more burdensome than those in effect under the Credit Agreement on
the Issue Date, (2) this Note, (3) the Series B Indenture or the Series
B Notes, provided that such encumbrances or restrictions are no more
burdensome than those in effect under the Series B Indenture or Series
B Notes on the Issue Date, (4) applicable law, (5) customary
non-assignment provisions in leases and franchise agreements entered
into in the ordinary course of business and consistent with past
practices, and (6) the instruments governing purchase money obligations
for property acquired in the ordinary course of business that impose
restrictions of the nature described in clause (C) above on the
property so acquired.
(ii) The Company will not enter into or become bound by any
agreement or instrument that directly restricts the Company from making
any payment on or in respect of this Note or otherwise performing and
complying with its obligations hereunder, except for the Credit
Agreement, provided, that any such restrictions in the Credit Agreement
are not more restrictive than the terms of the Credit Agreement as in
effect on the Issue Date.
(l) Issuance of Equity Securities.
(i) The Company shall not, and shall not permit any of its
Subsidiaries to, issue, sell, give away, transfer or assign any Equity
Interests, except:
(A) the issuance of Warrants in connection with this
Note or the Credit Agreement;
(B) the issuance of common stock or warrants to
acquire common stock to (1) the holders of Warrants upon
exercise thereof in accordance with the terms thereof as in
effect on the Issue Date, (2) holders of the Unit Purchase
Options upon exercise thereof in accordance with the terms
thereof as in effect on the Issue Date and (3) BancBoston
Ventures in connection with the repayment of the Company's
Series A 13% Subordinated Notes due 2003 prior to the Issue
Date;
(C) the issuance of employee stock options to
employees or directors of the Company or any of its
Subsidiaries pursuant to an employee stock option plan
approved by the Board of Directors of the Company, and the
issuance of shares of common stock of the Company upon
exercise of such options in accordance with the terms thereof;
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(D) the issuance and sale by the Company of Capital
Stock of the Company (other than Redeemable Stock) to Persons
selling stock or assets to the Company in a Restaurant
Acquisition; provided, that the aggregate value of all Capital
Stock issued from and after the Issue Date to acquire such
assets shall not exceed $25,000,000. For purposes of this
paragraph (D), the value of any common stock of the Company so
issued shall be the average trading price for common stock of
the Company on a national securities exchange as of the close
of trading for the ten (10) trading days immediately preceding
the date of such Investment and the value of any other Capital
Stock of the Company so issued shall be reasonably determined
by the Company's Board of Directors; and
(E) the issuance and sale by the Company of Capital
Stock of the Company (other than Redeemable Stock) in one or
more underwritten public offerings or private placements (an
"Equity Issuance"); provided that (1) prior to and after
giving effect to such Equity Issuance, no Event of Default
shall be continuing, (2) the consideration received by the
Company from such Equity Issuance consists solely of cash, and
(3) all of the Excess Securities Proceeds of such Equity
Issuance are used by the Company as set forth in subparagraph
(ii) below; and
(F) any pledge of Capital Stock of any Subsidiary of
the Company to secure Senior Indebtedness and any other
obligations under the Loan Documents (as defined in the Credit
Agreement).
(ii) Within 10 days after the closing date of any Equity
Issuance (an "Equity Issuance Trigger Date"), the Company shall, if and
to the extent permitted by the Credit Agreement (as in effect on the
Issue Date) and subject to Article II of the Intercreditor Agreement
and Section 4.13(b)(i) of the Series B Indenture (as in effect on the
Issue Date), use such Excess Securities Proceeds to prepay the
principal amount of this Note plus accrued and unpaid interest thereon
to the date of such payment. To the extent that the Company is
prohibited by the Credit Agreement (as in effect on the Issue Date)
from prepaying this Note with Excess Securities Proceeds as
contemplated by this Section 4(l), the Company shall promptly use all
Excess Securities Proceeds to permanently reduce outstanding Senior
Indebtedness. To the extent that any Excess Securities Proceeds remain
after prepayment of this Note in full and prepayment of all Senior
Indebtedness, the Company may use the remaining amount for any other
purpose.
(m) Transactions with Affiliates. The Company shall not, and shall not
permit any of its Subsidiaries to, directly or indirectly, enter into any
transaction with any Affiliate (an "Affiliate Transaction"), except for
transactions (including any investments, loans or advances by or to any
Affiliate) the terms of which in good faith are fair and reasonable to the
Company or such Subsidiary, as the case may be, and are at least as favorable as
the terms that could be obtained by the Company or such Subsidiary, as the case
may be, in a comparable transaction made on an arms' length basis between
unaffiliated parties; provided that with respect to any Affiliate Transaction
resulting in consideration to either party in excess of $250,000, a majority of
the Board of Directors of the Company that are not affiliated with the other
party to such Affiliate Transaction shall have approved such Affiliate
Transaction, as evidenced by a Board Resolution. Notwithstanding the foregoing,
14
the following transactions shall not be deemed to be Affiliate Transactions for
purposes of this covenant: (i) any Restricted Payment not otherwise prohibited
pursuant to Section 4(b), and (ii) transactions between or among any of the
Company and its wholly-owned Subsidiaries.
(n) Amendments to Certain Documents.
(i) The Company will not amend, modify, supplement or restate
any of the Series B Notes or the Indenture with respect to the Series B
Notes.
(ii) The Company will not, and will not permit any of its
Subsidiaries to, amend, modify, supplement or restate its articles or
certificate of incorporation or by-laws in any manner (unless required
by amendments after the date hereof to applicable corporate laws) that
would individually or in the aggregate materially adversely affect the
rights or interests of the Holder.
(iii) The Company will not, and will not permit any of its
Subsidiaries to, amend, modify, supplement or restate any instrument or
agreement governing any Existing Indebtedness in any manner that would
(A) increase the principal amount thereof or interest rate payable
thereon, (B) make the mandatory prepayment, repayment, redemption,
repurchase or sinking fund obligations thereunder more burdensome on
the Company or any of its Subsidiaries, or (C) make the covenants or
events of default more restrictive or burdensome in any material
respect on the Company or any of its Subsidiaries.
(iv) The Company will not amend, modify, supplement or restate
the Delayed Draw Facility if the result thereof would be to have a
material adverse impact on the Company's ability to borrow under such
Facility or use such borrowings to prepay this Note, as compared to the
terms of the Delayed Draw Facility in effect on the Issue Date.
5. Definitions.
"Affiliate" of any specified Person means any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person. A Person shall be deemed to "control"
(including with correlative meanings, the terms "controlling," "controlled by,"
and "under common control with") another Person if the controlling Person (a) is
an executive officer or a member of the Board of Directors of the controlled
Person, (b) is the direct or indirect beneficial holder of at least 10% of the
then outstanding capital stock (or other shares of beneficial interest) of such
Person, or (c) otherwise possesses, directly or indirectly, the power to direct
or cause the direction of the management or policies of the controlled Person,
whether through ownership of voting securities, by agreement or otherwise.
"Affiliate Transaction" shall have the meaning specified in
Section 4(m).
"Asset Sale" shall have the meaning specified in Section 4(j).
"Bankruptcy Law" means Title 11, U.S. Code or any similar
Federal, state or foreign law for the relief of debtors.
15
"Board of Directors" means, with respect to any Person, the
Board of Directors of such Person or any committee of the Board of Directors of
such Person authorized, with respect to any particular matter, to exercise the
power of the Board of Directors of such Person.
"Board Resolution" means, with respect to any Person, a duly
adopted resolution of the Board of Directors of such Person.
"Business Day" means a day that is not a Legal Holiday.
"Capitalized Lease Obligation" of any Person means, at the
time any determination thereof is to be made, the amount of the liability in
respect of a capital lease of such Person which would at such time be required
to be capitalized on the balance sheet of such Person in accordance with GAAP.
"Capital Stock" means any and all shares of, or interests or
participations in, corporate stock.
"Change of Control" means a change of control or any other
term having a similar or correlative meaning contained in the Credit Agreement
(including Section 8.1(i) thereof) or any other instrument defining the rights
of Indebtedness of the Company.
"Company" shall have the meaning specified in the preamble.
"Credit Agreement" means (a) the Amended and Restated Credit
Agreement, dated as of July __, 1996, among the Company, Banque Paribas, as
agent, and the Lenders party thereto, as modified, amended, restated or
supplemented from time to time, and (b) each agreement or instrument pursuant to
which obligations under the Credit Agreement described in clause (a) above, or
any subsequent Credit Agreement, are amended, deferred, extended, renewed,
replaced, refunded or refinanced, in whole or part, in each case, as modified,
amended, restated or supplemented from time to time.
"Custodian" means any receiver, trustee, assignee, liquidator,
sequestrator or similar official under any Bankruptcy Law.
"Default" means any event which constitutes, or after notice
or passage of time or both would constitute, an Event of Default.
"Delayed Draw Facility" means Delayed Draw Term Loans (as
defined in the Credit Agreement, as in effect on the Issue Date).
"Dollars" and "$" mean lawful currency of the United States of
America.
"Equity Interests" means Capital Stock and warrants, options
or other rights to acquire Capital Stock.
"Equity Issuance" shall have the meaning specified in Section
4(l).
"Equity Issuance Trigger Date" shall have the meaning
specified in 4(l).
16
"Event of Default" shall have the meaning specified in Section
3.
"Excess Securities Proceeds" means, with respect to any Equity
Issuance, the aggregate cash proceeds received by the Company or any Subsidiary
from such Equity Issuance, less the amount of all brokerage commissions and
other reasonable costs and expenses (including fees and expenses of counsel and
investment bankers) incurred by the Company or any Subsidiary in connection with
such Equity Issuance.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated by the SEC thereunder.
"Existing Indebtedness" means Indebtedness of the Company and
its Subsidiaries described in Schedule I hereto.
"Extension of Credit" means any loan, letter of credit or
other extension of credit of any kind or character.
"GAAP" means generally accepted accounting principles set
forth in the opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board which are in effect
in the United States at the time and for the period as to which such accounting
principles are to be applied.
"Holder" shall have the meaning specified in the preamble.
"Indebtedness" means, with respect to any Person, (a) all
indebtedness of such Person for borrowed money, whether current or funded,
secured or unsecured, (b) all indebtedness of such Person for the deferred
purchase price of property or services, other than trade payables and accrued
liabilities arising in the ordinary course of business and payable in accordance
with customary trade terms, (c) all indebtedness of such Person created or
arising under any conditional sale or other title retention agreement with
respect to property acquired by such Person (even if the rights and remedies of
the seller or lender under such agreement in the event of default are limited to
repossession or sale of such property), (d) all indebtedness of such Person
secured by a Lien to secure all or part of the purchase price of the property
subject to such Lien, (e) all Capitalized Lease Obligations of such Person, (f)
any liability of such Person in respect of banker's acceptances or letters of
credit, and (g) all indebtedness referred to in clause (a), (b), (c), (d), (e)
or (f) above which is guaranteed by such Person or which such Person has agreed
(contingently or otherwise) to purchase or otherwise acquire or in respect of
which it has otherwise assured a creditor against loss.
"Insolvency or Liquidation Proceeding" means, with respect to
any Person, (a) any insolvency or bankruptcy or similar case or proceeding, or
any reorganization, receivership, liquidation, dissolution or winding up of such
Person, whether voluntary or involuntary, or (b) any assignment for the benefit
of creditors or any other marshaling of assets and liabilities of such Person.
"Intercreditor Agreement" means (a) the Senior Intercreditor
Agreement dated as of July __, 1996 between Banque Paribas, as Agent under the
Credit Agreement and the Holder, as amended, modified, restated or supplemented
from time to time, and
17
(b) each agreement or instrument pursuant to which obligations under the
Intercreditor Agreement described in clause (a) above, or any subsequent
Intercreditor Agreement, are amended, deferred, extended, renewed or replaced,
in whole or in part, in each case, as amended, modified, restated or
supplemented from time to time.
"Interest Rate Agreement" means the obligation of any Person
pursuant to any interest rate swap agreement, interest rate collar agreement or
other similar agreement or arrangement designed to protect such Person or any of
its Subsidiaries against fluctuations in interest rates.
"Investment" of any Person means (a) any share of capital
stock, evidence of indebtedness or other security issued by any other Person,
(b) any loan, advance, or extension of credit to, or contribution to the capital
of, any other Person, (c) any purchase of the securities or business or any
integral part of the business of any other Person (including any purchase of all
or any substantial portion of the assets of such Person), or any commitment to
make any such purchase, and (d) any other investment in any other Person;
provided, however, that the term "Investment" shall not include (i) trade and
customer accounts receivable for services rendered in the ordinary course of
business and payable in accordance with customary trade terms, and letters of
credit or other instruments securing the same, or (ii) advances to officers or
employees, but only to the extent that the aggregate amount of all advances to
officers and employees outstanding at any particular time does not exceed
$500,000 at any time prior to the first anniversary of the Issue Date and
$350,000 from and after the first anniversary of the Issue Date.
"Issue Date" means the date of first issuance of this Note.
"Legal Holiday" means any date on which banks are not open for
business generally in New York, New York.
"Lien" means any mortgage, lien, pledge, charge, security
interest, or other encumbrance of any kind, whether or not filed, recorded or
otherwise perfected under applicable law (including any conditional sale or
other title retention agreement and any lease deemed to constitute a security
interest, and any option or other agreement to give any security interest).
"Officer" means, with respect to the Company, the Chairman of
the Board, the President, any Vice President, the Chief Financial Officer, the
Treasurer, the Controller, or the Secretary of the Company.
"Officers' Certificate" means a certificate signed by two
Officers or by an Officer and an Assistant Secretary of the Company.
"Person" means any individual, corporation, partnership,
limited liability company, joint venture, association, joint-stock company,
trust, unincorporated organization or government or other agency or political
subdivision thereof.
"Post-Petition Interest" means, with respect to any
Indebtedness of any Person, all interest accrued or accruing on such
Indebtedness after the commencement of any Insolvency or Liquidation Proceeding
against such Person in accordance with and at the contract rate (including,
without limitation, any rate applicable upon default) specified
18
in the agreement or instrument creating, evidencing or governing such
Indebtedness, whether or not, pursuant to applicable law or otherwise, the claim
for such interest is allowed as a claim in such Insolvency or Liquidation
Proceeding.
"principal" of any Indebtedness (including this Note) means
the principal of such Indebtedness plus any applicable premium on such
Indebtedness.
"property" means any right or interest in or to property or
assets of any kind whatsoever, whether real, personal or mixed and whether
tangible or intangible.
"Redeemable Stock" means any Equity Interest which, by its
terms, or upon the happening of any event, matures, is mandatorily redeemable or
repurchasable (other than for Capital Stock not constituting Redeemable Stock),
in whole or in part, prior to 180 days after the maturity date of this Note, or
is, by its terms or upon the happening of any event, required to be redeemed or
repurchased, redeemable or repurchasable at the option of the holder thereof, in
whole or in part, at any time prior to 180 days after the maturity date of this
Note.
"Restaurant Acquisition" means the acquisition by the Company
after the Issue Date of any restaurant which was previously developed and
operating as a restaurant (whether or not operated as a restaurant on the date
of such acquisition), whether through the acquisition of shares of a corporation
or by purchase of assets.
"Restaurant Business" shall have the meaning specified in
Section 4(c).
"Restricted Payment" shall have the meaning specified in
Section 4(b).
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations of the SEC promulgated thereunder.
"Senior Indebtedness" means all amounts payable (including,
without limitation, any Indebtedness) by the Company under or with respect to
(a) Extensions of Credit under the Credit Agreement in an aggregate principal
amount not exceeding the sum of (i) $57,500,000, plus (ii) the aggregate
principal amount of Extensions of Credit under the Credit Agreement the proceeds
of which are used, substantially simultaneously, to prepay this Note, minus the
sum, without duplication, of (A) all permanent repayments of Extensions of
Credit under the Credit Agreement, and (B) all permanent reductions of
commitments for revolving credit under any Credit Agreement, and (b) interest
(including Post-Petition Interest), fees, costs and expenses owing under any
Credit Agreement and incurred in compliance herewith.
"Series B Indenture" means the Indenture, dated as of March
29, 1996, between the Company and the State Street Bank and Trust Company, as
trustee, governing the terms of the Series B Notes, as amended by the
Supplemental Indenture of even date herewith.
"Series B Notes" means the Series B 13% Subordinated Notes due
2003, issued by the Company pursuant to the Series B Indenture.
19
"Subordinated Obligations" means all Indebtedness of the
Company which is subordinate or junior in right of payment to this Note,
including, without limitation, all Indebtedness of the Company under or in
respect of the Series B Notes.
"Subsidiary" with respect to any Person, means (a) any
corporation of which the outstanding Capital Stock having at least a majority of
the votes entitled to be cast in the election of directors under ordinary
circumstances shall at the time be owned, directly or indirectly, by such Person
or (b) any other Person of which at least a majority of the voting interest
under ordinary circumstances is at such time, directly or indirectly, owned by
such Person.
"Unit Purchase Options" means the unit purchase options of the
Company in existence on the Issue Date.
"Warrants" means the common stock purchase warrants of the
Company in existence or in effect on the Issue Date.
6. Amendment and Waiver. Except as otherwise expressly provided herein, the
provisions of this Note may be amended and the Company may take any action
herein prohibited, or omit to perform any act herein required to be performed by
it, only if the Company has obtained the written consent of the Holder.
7. Transfer and Exchange. The Holder, by its acceptance of this Note, agrees
that it may not transfer or assign this Note or any of its rights hereunder
unless (i) the Holder transfers or assigns all of its rights and interests under
this Note and (ii) such transfer is in accordance with all applicable laws.
8. Cancellation. After all principal and accrued interest at any time owed on
this Note have been paid in full, the Note shall be surrendered to the Company
for cancellation and shall not be reissued.
9. Place of Payment; Notices. Payments of principal and interest and any notice
hereunder are to be made by Company check and are to be delivered to the
following addresses:
To the Holder:
BEP Holdings, Inc.
815 Preston Road
Dallas, Texas 75225
To the Company:
DenAmerica Corp.
7373 North Scottsdale Road
Suite D-120
Scottsdale, Arizona 85253
20
or to such other address as specified by prior written notice to the other
party. Notices sent by either party shall be deemed received when delivered
personally or one (1) day after being sent by Federal Express or other overnight
carrier or five (5) days after being sent by certified or registered mail.
10. Governing Law. All questions concerning the construction, validity and
interpretation of this Note will be governed by and construed in accordance with
the domestic laws of the State of Delaware, without giving effect to any choice
of law or conflict of law provision or rule (whether of the State of Delaware or
any other jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of Delaware.
11. Waiver of Presentment, Demand and Dishonor. Except as otherwise provided in
this Note, the Company hereby waives presentment for payment, protest, demand,
notice of protest, notice of nonpayment and diligence with respect to this Note,
and waives and renounces all rights to the benefits of any moratorium,
appraisement, exemption, or homestead now provided or that hereafter may be
provided by any federal or applicable state statute, including but not limited
to exemptions provided by or allowed under the Federal Bankruptcy Code, both as
to itself and as to all of its property, whether real or personal, against the
enforcement and collection of the obligations evidenced by this Note and any and
all extensions, renewals, and modifications hereof.
12. Other Matters. At any time when this Note is held by any Affiliate of
Unigate PLC, this Note shall be subject to offset under that certain Stock
Purchase Agreement dated May 31, 1996, between the Company and BEP Holdings,
Inc.
* * * * * *
21
IN WITNESS WHEREOF, the Company has executed and delivered
this Note on the date first above written.
DENAMERICA CORP.
By ___________________________
Its __________________________