-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, KFbY71GfaMTxLkTA7kI+A+Qp/nLDp+34WxB8t1S9vd+XqluxvFT0+U4HPYPah+9y 42t43uZokx4Q14FrXZYwUw== 0000892569-97-000177.txt : 19970127 0000892569-97-000177.hdr.sgml : 19970127 ACCESSION NUMBER: 0000892569-97-000177 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 6 FILED AS OF DATE: 19970124 SROS: NYSE GROUP MEMBERS: ANDREW F. PUZDER GROUP MEMBERS: C. THOMAS THOMPSON GROUP MEMBERS: CARL A. STRUNK GROUP MEMBERS: CARL LEO KARCHER GROUP MEMBERS: CKE RESTAURANTS INC GROUP MEMBERS: FIDELITY NATIONAL FINANCIAL GROUP MEMBERS: FRANK P. WILLEY GROUP MEMBERS: STEPHEN C. MAHOOD GROUP MEMBERS: WILLIAM A. IMPARATO GROUP MEMBERS: WILLIAM P. FOLEY, II SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: CHECKERS DRIVE IN RESTAURANTS INC /DE CENTRAL INDEX KEY: 0000879554 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-EATING PLACES [5812] IRS NUMBER: 581654960 STATE OF INCORPORATION: DE FISCAL YEAR END: 0101 FILING VALUES: FORM TYPE: SC 13D SEC ACT: 1934 Act SEC FILE NUMBER: 005-42091 FILM NUMBER: 97510741 BUSINESS ADDRESS: STREET 1: 600 CLEVELAND ST 8TH FL STREET 2: STE 1050 CITY: CLEARWATER STATE: FL ZIP: 34615 BUSINESS PHONE: 8134413500 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: CKE RESTAURANTS INC CENTRAL INDEX KEY: 0000919628 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-EATING PLACES [5812] IRS NUMBER: 330602639 STATE OF INCORPORATION: DE FISCAL YEAR END: 0130 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: 1200 N HARBOR BLVD CITY: ANAHEIM STATE: CA ZIP: 92801 BUSINESS PHONE: 7147745796 SC 13D 1 SCHEDULE 13D FOR CHECKERS DRIVE-IN RESTAURANTS 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 --------------- SCHEDULE 13D Under the Securities Exchange Act of 1934 CHECKERS DRIVE-IN RESTAURANTS, INC. (Name of Issuer) Common Stock, par value $.001 per share Title of Class of Securities 162809-10-7 (CUSIP Number) Robert A. Wilson Vice President, General Counsel and Secretary CKE Restaurants, Inc. 1200 North Harbor Boulevard Anaheim, California 92801 Tel. (714) 774-5796 (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) November 22, 1996 (Date of Event Which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(3) or (4), check the following box / /. Check the following box if a fee is being paid with the statement. /x/ 2 SCHEDULE 13D CUSIP NO.: 162809 10 7 (1) NAME OF REPORTING PERSON: CKE Restaurants, Inc. S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON: IRS No. 33-0602639 (2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ] (b) [X] (3) SEC USE ONLY (4) SOURCE OF FUNDS: WC (5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) or 2(e) [ ] (6) CITIZENSHIP OR PLACE OF ORGANIZATION: Delaware NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH: (7) SOLE VOTING POWER: 7,350,428(1) (8) SHARED VOTING POWER: 0 (9) SOLE DISPOSITIVE POWER: 7,350,428(1) (10) SHARED DISPOSITIVE POWER: 0 (11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON: 7,350,428(1) (12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES: [ ] (13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11): 12.43%(2) (14) TYPE OF REPORTING PERSON: CO - --------------- (1) Represents warrants to purchase shares of common stock. (2) Based upon 51,768,480 shares of Common Stock outstanding as of October 24, 1996 as reported by the issuer in its 10-Q for the quarterly period ended September 9, 1996. Page 2 of 19 Pages 3 SCHEDULE 13D CUSIP NO.: 162809 10 7 (1) NAME OF REPORTING PERSON: Fidelity National Financial, Inc. S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON: IRS No. 86-0498599 (2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ] (b) [X] (3) SEC USE ONLY (4) SOURCE OF FUNDS: WC (5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) or 2(e) [ ] (6) CITIZENSHIP OR PLACE OF ORGANIZATION: Delaware NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH: (7) SOLE VOTING POWER: 2,108,262(1) (8) SHARED VOTING POWER: 0 (9) SOLE DISPOSITIVE POWER: 2,108,262(1) (10) SHARED DISPOSITIVE POWER: 0 (11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON: 2,108,262(1) (12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES: [ ] (13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11): 3.91%(2) (14) TYPE OF REPORTING PERSON: CO - --------------- (1) Represents warrants to purchase shares of common stock. (2) Based upon 51,768,480 shares of Common Stock outstanding as of October 24, 1996 as reported by the issuer in its 10-Q for the quarterly period ended September 9, 1996. Page 3 of 19 Pages 4 SCHEDULE 13D CUSIP NO.: 162809 10 7 (1) NAME OF REPORTING PERSON: William P. Foley, II S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON: S.S. No. ###-##-#### (2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ] (b) [X] (3) SEC USE ONLY (4) SOURCE OF FUNDS: PF (5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) or 2(e) [ ] (6) CITIZENSHIP OR PLACE OF ORGANIZATION: U.S.A. NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH: (7) SOLE VOTING POWER: 854,700(1) (8) SHARED VOTING POWER: 0 (9) SOLE DISPOSITIVE POWER: 854,700(1) (10) SHARED DISPOSITIVE POWER: 0 (11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON: 854,700(1) (12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES: [ ] (13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11): 1.62%(2) (14) TYPE OF REPORTING PERSON: IN - --------------- (1) Represents warrants to purchase shares of common stock. (2) Based upon 51,768,480 shares of Common Stock outstanding as of October 24, 1996 as reported by the issuer in its 10-Q for the quarterly period ended September 9, 1996. Page 4 of 19 Pages 5 SCHEDULE 13D CUSIP NO.: 162809 10 7 (1) NAME OF REPORTING PERSON: Carl Leo Karcher S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON: S.S. No. ###-##-#### (2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ] (b) [X] (3) SEC USE ONLY (4) SOURCE OF FUNDS: PF (5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) or 2(e) [ ] (6) CITIZENSHIP OR PLACE OF ORGANIZATION: U.S.A. NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH: (7) SOLE VOTING POWER: 569,800(1) (8) SHARED VOTING POWER: 0 (9) SOLE DISPOSITIVE POWER: 569,800(1) (10) SHARED DISPOSITIVE POWER: 0 (11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON: 569,800(1) (12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES: [ ] (13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11): 1.09%(2) (14) TYPE OF REPORTING PERSON: IN - --------------- (1) Represents warrants to purchase shares of common stock. (2) Based upon 51,768,480 shares of Common Stock outstanding as of October 24, 1996 as reported by the issuer in its 10-Q for the quarterly period ended September 9, 1996. Page 5 of 19 Pages 6 SCHEDULE 13D CUSIP NO.: 162809 10 7 (1) NAME OF REPORTING PERSON: Stephen C. Mahood S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON: S.S. No. ###-##-#### (2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ] (b) [X] (3) SEC USE ONLY (4) SOURCE OF FUNDS: PF (5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) or 2(e) [ ] (6) CITIZENSHIP OR PLACE OF ORGANIZATION: U.S.A. NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH: (7) SOLE VOTING POWER: 142,450(1) (8) SHARED VOTING POWER: 0 (9) SOLE DISPOSITIVE POWER: 142,450(1) (10) SHARED DISPOSITIVE POWER: 0 (11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON: 142,450(1) (12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES: [ ] (13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11): .27%(2) (14) TYPE OF REPORTING PERSON: IN - --------------- (1) Represents warrants to purchase shares of common stock. (2) Based upon 51,768,480 shares of Common Stock outstanding as of October 24, 1996 as reported by the issuer in its 10-Q for the quarterly period ended September 9, 1996. Page 6 of 19 Pages 7 SCHEDULE 13D CUSIP NO.: 162809 10 7 (1) NAME OF REPORTING PERSON: William A. Imparato S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON: S.S. No. ###-##-#### (2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ] (b) [X] (3) SEC USE ONLY (4) SOURCE OF FUNDS: PF (5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) or 2(e) [ ] (6) CITIZENSHIP OR PLACE OF ORGANIZATION: U.S.A. NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH: (7) SOLE VOTING POWER: 56,980(1) (8) SHARED VOTING POWER: 0 (9) SOLE DISPOSITIVE POWER: 56,980(1) (10) SHARED DISPOSITIVE POWER: 0 (11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON: 56,980(1) (12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES: [ ] (13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11): .11%(2) (14) TYPE OF REPORTING PERSON: IN - --------------- (1) Represents warrants to purchase shares of common stock. (2) Based upon 51,768,480 shares of Common Stock outstanding as of October 24, 1996 as reported by the issuer in its 10-Q for the quarterly period ended September 9, 1996. Page 7 of 19 Pages 8 SCHEDULE 13D CUSIP NO.: 162809 10 7 (1) NAME OF REPORTING PERSON: C. Thomas Thompson S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON: S.S. No. ###-##-#### (2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ] (b) [X] (3) SEC USE ONLY (4) SOURCE OF FUNDS: PF (5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) or 2(e) [ ] (6) CITIZENSHIP OR PLACE OF ORGANIZATION: U.S.A. NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH: (7) SOLE VOTING POWER: 28,490(1) (8) SHARED VOTING POWER: 0 (9) SOLE DISPOSITIVE POWER: 28,490(1) (10) SHARED DISPOSITIVE POWER: 0 (11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON: 28,490(1) (12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES: [ ] (13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11): .06%(2) (14) TYPE OF REPORTING PERSON: IN - --------------- (1) Represents warrants to purchase shares of common stock. (2) Based upon 51,768,480 shares of Common Stock outstanding as of October 24, 1996 as reported by the issuer in its 10-Q for the quarterly period ended September 9, 1996. Page 8 of 19 Pages 9 SCHEDULE 13D CUSIP NO.: 162809 10 7 (1) NAME OF REPORTING PERSON: Andrew F. Puzder S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON: S.S. No. ###-##-#### (2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ] (b) [X] (3) SEC USE ONLY (4) SOURCE OF FUNDS: PF (5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) or 2(e) [ ] (6) CITIZENSHIP OR PLACE OF ORGANIZATION: U.S.A. NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH: (7) SOLE VOTING POWER: 28,490(1) (8) SHARED VOTING POWER: 0 (9) SOLE DISPOSITIVE POWER: 28,490(1) (10) SHARED DISPOSITIVE POWER: 0 (11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON: 28,490(1) (12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES: [ ] (13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11): .06%(2) (14) TYPE OF REPORTING PERSON: IN - --------------- (1) Represents warrants to purchase shares of common stock. (2) Based upon 51,768,480 shares of Common Stock outstanding as of October 24, 1996 as reported by the issuer in its 10-Q for the quarterly period ended September 9, 1996. Page 9 of 19 Pages 10 SCHEDULE 13D CUSIP NO.: 162809 10 7 (1) NAME OF REPORTING PERSON: Carl A. Strunk S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON: S.S. No. ###-##-#### (2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ] (b) [X] (3) SEC USE ONLY (4) SOURCE OF FUNDS: PF (5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) or 2(e) [ ] (6) CITIZENSHIP OR PLACE OF ORGANIZATION: U.S.A. NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH: (7) SOLE VOTING POWER: 47,490(1) (8) SHARED VOTING POWER: 0 (9) SOLE DISPOSITIVE POWER: 47,490(1) (10) SHARED DISPOSITIVE POWER: 0 (11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON: 47,490(1) (12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES: [ ] (13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11): .09%(2) (14) TYPE OF REPORTING PERSON: IN - --------------- (1) Represents 19,000 shares of common stock and 28,490 warrants to purchase shares of common stock. (2) Based upon 51,768,480 shares of Common Stock outstanding as of October 24, 1996 as reported by the issuer in its 10-Q for the quarterly period ended September 9, 1996. Page 10 of 19 Pages 11 SCHEDULE 13D CUSIP NO.: 162809 10 7 (1) NAME OF REPORTING PERSON: Frank P. Willey S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON: S.S. No. ###-##-#### (2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ] (b) [X] (3) SEC USE ONLY (4) SOURCE OF FUNDS: PF (5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) or 2(e) [ ] (6) CITIZENSHIP OR PLACE OF ORGANIZATION: U.S.A. NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH: (7) SOLE VOTING POWER: 142,450(1) (8) SHARED VOTING POWER: 0 (9) SOLE DISPOSITIVE POWER: 142,450(1) (10) SHARED DISPOSITIVE POWER: 0 (11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON: 142,450(1) (12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES: [ ] (13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11): .27%(2) (14) TYPE OF REPORTING PERSON: IN - --------------- (1) Represents warrants to purchase shares of common stock. (2) Based upon 51,768,480 shares of Common Stock outstanding as of October 24, 1996 as reported by the issuer in its 10-Q for the quarterly period ended September 9, 1996. Page 11 of 19 Pages 12 ITEM 1. SECURITY AND ISSUER. This class of equity securities to which this Statement on Schedule 13D (this "Statement") relates is the Common Stock, par value $0.001 per share (the "Common Stock"), of Checkers Drive-In Restaurants, Inc., a Delaware corporation ("Checkers"), with its principal executive offices located at Barnett Bank Building, 600 Cleveland Street, Eighth Floor, Clearwater, FL 34615. ITEM 2. IDENTITY AND BACKGROUND This Statement is being filed by CKE Restaurants, Inc., a Delaware corporation ("CKE") and the following persons and entities who are parties to the Amended and Restated Credit Agreement dated as of November 22, 1996 (the "Credit Agreement") by and among Checkers, CKE, as agent, and the lenders identified therein: Fidelity National Financial, Inc., a Delaware corporation ("Fidelity"), William P. Foley, II, Carl Leo Karcher, Stephen C. Mahood, William A. Imparato, C. Thomas Thompson, Andrew F. Puzder, Carl A. Strunk and Frank P. Willey (the "Reporting Lenders"). Mr. William P. Foley, II, is the Chairman of the Board and Chief Executive Officer of both Fidelity and CKE, and he owns 21.4% of the outstanding shares of common stock of Fidelity. A limited partnership whose general partner is controlled by Mr. Foley owns 21.4% of the outstanding shares of common stock of CKE, a corporation controlled by Mr. Foley owns 1.4% of the outstanding shares of common stock of CKE, and Fidelity owns 2.7% of the outstanding shares of common stock of CKE. Mr. Foley is a "controlling person" of Fidelity and CKE. (The disclosure of this information shall not be construed as an admission that Mr. Foley is the beneficial owner of any of the Common Stock beneficially owned by Fidelity or CKE either for purposes of Section 13(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act") or for any other purposes and such beneficial ownership is expressly disclaimed.) The Reporting Lenders have no agreement between or among themselves to act in concert with respect to Checkers or its securities which they beneficially own (other than certain registration rights granted by Checkers pursuant to a Registration Rights Agreement dated November 22, 1996 by and among Checkers and the lenders identified in the Credit Agreement); however, the lenders under the Credit Agreement have acted and are expected to continue to act collectively from time to time for purposes related to the Credit Agreement. The filing of this statement is not to be construed as an admission by the Reporting Lenders that they constitute a "group" for purposes of Section 13(d) of the Exchange Act. The filing of this Statement shall not be construed as an admission that any Reporting Lender is, for purposes of Section 13(d) or 13(g) of the Exchange Act, the beneficial owner of any shares of Common Stock which are beneficially owned by any other Reporting Lender and covered by this Statement. CKE is the parent of Carl Karcher Enterprises, Inc., Casa Bonita Incorporated and Summit Family Restaurants Inc. Carl Karcher Enterprises, Inc., along with its franchisees and licensees, operate 667 Carl's Jr. and 27 Rally's quick-service restaurants, primarily located in California, Nevada, Oregon, Arizona, Mexico and the Pacific Rim. Casa Bonita Incorporated operates 108 Taco Bueno quick-service restaurants in Texas and Oklahoma. Summit Family Restaurants Inc, has restaurant operations in nine western states, including 73 Company-operated and 24 franchised JB's Restaurants, 16 HomeTown Buffet restaurants and 6 Galaxy Diner restaurants. Information regarding the directors and executive officers of CKE is set forth on Schedule I attached hereto, which Schedule is hereby incorporated by reference. Except as set forth on Schedule I, all of the directors and executive officers of CKE are citizens of the United States. The principal address of CKE is 1200 North Harbor Boulevard, Anaheim, California 92801. During the last five years, neither CKE nor, to the best knowledge of CKE, any person named in Schedule I attached hereto has been (a) convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or (b) a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. Fidelity is a national underwriter engaged in the business of issuing title insurance policies and performing other title-related services through its underwriting subsidiaries. Information regarding the directors and executive officers of Fidelity is set forth on Schedule II attached hereto, which Schedule is hereby incorporated by reference. Except as set forth on Schedule II, all of the directors and executive officers of Fidelity are citizens of the United States. The principal address of Fidelity is 17911 Von Karman Avenue, Suite 300, Irvine, California 92614. Page 12 of 19 Pages 13 During the last five years, neither Fidelity nor, to the best knowledge of Fidelity, any person named in Schedule II attached hereto has been (a) convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or (b) a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. The name, business address, present principal occupation or employment and the name, principal business and address of the corporation or other organization in which such employment is conducted are set forth below for each of the Reporting Lenders who is a natural person:
Name Business Address Present Principal Occupation - ---- ---------------- ---------------------------- William P. Foley II 17911 Von Karman Avenue Chairman of the Board and Chief Suite 500 Executive Officer of each of CKE Irvine, California 92614 and Fidelity Carl Leo Karcher 72-875 Fred Waring Drive President of CLK, Inc., a franchisee Suite C of Carl Karcher Enterprises, Inc. Palm Desert, California 92660 a subsidiary of CKE Stephen C. Mahood 500 Crescent Court Owner of Stephen C. Mahood Suite 270 Investments, Director of Fidelity Dallas, Texas 75201 William A. Imparato 1515 East Missouri General Partner of Park West Building A Development Company, Director Phoenix, Arizona 85015 of Fidelity C. Thomas Thompson 1200 North Harbor Blvd. President and Chief Operating Officer Anaheim, California 92801 of CKE and Vice Chairman and Chief Executive Officer of Checkers Andrew F. Puzder 17911 Von Karman Avenue Executive Vice President, General Suite 300 Counsel and Assistant Secretary of Irvine, California 92614 Fidelity Carl A. Strunk 17911 Von Karman Avenue Executive Vice President, Chief Suite 500 Financial Officer, Treasurer and Irvine, California 92614 Assistant Secretary of Fidelity Frank P. Willey 17911 Von Karman Avenue President of Fidelity Suite 500 Irvine, California 92614
Page 13 of 19 Pages 14 Each Reporting Lender who is a natural person is a citizen of the United States. During the last five years, none of the Reporting Lenders who is a natural person has been (a) convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or (b) a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION. The obligation to file this Statement was triggered by the restructuring of $38.5 million aggregate principal amount of senior secured debt of Checkers by the Lenders pursuant to the Credit Agreement on November 22, 1996, on which date Checkers issued to the Lenders warrants to purchase a total of 20,000,000 shares of Common Stock of Checkers (of which warrants to purchase 11,310,540 shares of Common Stock were acquired by the Reporting Lenders) as consideration for such restructuring. The exercise price of the warrants is $.075 per share, which is payable in cash or, in certain circumstances, by shares of Common Stock of Checkers. In addition to the restructuring, CKE, KCC Delaware, a Delaware corporation ("KCC") and The Travelers Indemnity Company, a Delaware corporation ("Travelers") agreed to make short-term revolving credit advances in the aggregate amount of $2,500,000 (all of which have been made and remain unpaid as of the date of this Statement). Checkers is obligated to repay such advances in full on or prior to March 22, 1997; however, Checkers has the right to extend the maturity date for payment of such advances for up to three 30-day extension periods. For each such extension period, Checkers has agreed to issue to CKE, KCC and Travelers additional warrants to purchase 333,333 shares on a pro rata basis of Common Stock of Checkers at an exercise price to be determined in accordance with the provision of the Credit Agreement. On December 17, 1996, the Board of Directors of Checkers adopted resolutions approving an investment of up to $20,000,000 in cash by one or more of the Reporting Lenders in exchange for shares of common stock and preferred stock to be determined based on a purchase price not to exceed $1.32 (the closing price of the Common Stock, as reported on the NASDAQ National Market, on December 16, 1996), less appropriate discounts for restricted shares. On January 17, 1997, the board appointed a special committee to oversee the transaction and hired Raymond James and Associates, Inc. to give the fairness opinion. The investment is expected to be completed within 30 to 45 days, subject to the negotiation of definitive agreements, receipt of a fairness opinion and other conditions customary to transactions of this nature. CKE's Board of Directors adopted resolutions approving the additional investment on December 18, 1996. ITEM 4. PURPOSE OF TRANSACTION Each of the Reporting Lenders acquired the Warrants to purchase shares of Common Stock which such Reporting Lender owns (see Item 5) for the purpose of facilitating a significant investment in Checkers. CKE has also given consideration on a preliminary basis to various courses of action with respect to Checkers, including (i) causing CKE or a subsidiary or affiliate of CKE to acquire additional shares in a cash tender offer or exchange offer or in open market transactions or privately negotiated purchases; (ii) proposing a merger or similar transaction between CKE or an affiliate of CKE and the Company; and (iii) seeking additional representation on the Company's Board of Directors. In connection with the restructuring of Checkers debt pursuant to the Credit Agreement, Messrs. Foley and Thompson and Terry Christensen (a designee of KCC) were elected to the Board of Directors of Checkers. Mr. Thompson was subsequently elected as the Vice Chairman of the Board and Chief Executive Officer of Checkers, Mr. Richard E. Fortman was elected President and Chief Operating Officer and Mr. Joseph N. Stein was elected to the position of Executive Vice President and Chief Administrative Officer. Certain of the Reporting Lenders may seek to acquire additional shares. The Reporting Lenders have not reached any conclusion as to any of the foregoing alternatives. Pending such conclusion or a determination to dispose of all or a portion of the warrants and/or any shares of Common Stock which they own, the Reporting Lenders will hold all of such shares as an investment. Page 14 of 19 Pages 15 The Reporting Lenders intend to work with Checkers in an effort to improve the value of the Common Stock and the financial condition and results of operations of Checkers and to that end may suggest changes in management, staffing levels or sales of specific restaurant assets. The Reporting Lenders intend continuously to review their investments in Checkers and may in the future change their present course of action and decide to pursue one of the alternatives discussed in the first paragraph of this Item 4. In pursuing the first of such alternatives, CKE may seek control of the Company or may merely seek to increase its investment in the Company without obtaining control. The Reporting Lenders may determine to dispose of all or a portion of the shares of Common Stock which they now own or may hereafter acquire. In reaching any conclusion as to the foregoing, the Reporting Lenders will take into consideration various factors, such as Checker's business and prospects, other developments concerning Checkers including, but not limited to, the attitude of the Board of Directors and management of Checkers, other business opportunities available to the Reporting Lenders and their affiliates, developments with respect to the Reporting Lenders' businesses and the businesses of their affiliates, general economic conditions, and money and stock market conditions. Other than as described above, the Reporting Lenders have no present plans or proposals which relate to or would result in: (i) the acquisition by any person of additional securities of Checkers, or the disposition of securities of the Company; (ii) an extraordinary corporate transaction, such as a merger, reorganization, or liquidation, involving the Company or any of its subsidiaries; (iii) a sale or transfer of a material amount of assets of the Company or any of its subsidiaries; (iv) any change in the present Board of Directors or management of the Company, including any plans or proposals to change the number or term of directors or to fill any existing vacancies on the Board; (v) any material change in the present capitalization or dividend policy of the Company; (vi) any other material change in the Company's business or corporate structure; (vii) changes in the Company's charter, by-laws, or other instruments corresponding thereto or other actions which may impede the acquisition of control of the Company by any person; (viii) causing a class of securities of the Company to be delisted from a national securities exchange or to cease to be authorized to be quoted in an inter-dealer quotation system of a registered national securities association; (ix) a class of equity securities of the Company becoming eligible for termination of registration pursuant to Section 12(g)(4) of the Exchange Act; or (x) any action similar to any of those enumerated above. ITEM 5. INTEREST IN SECURITIES OF THE ISSUER. (a) This information is hereby incorporated by reference as described in points 7-13 of the cover page for each Reporting Lender. (b) Each Reporting Lender will have the sole power to vote direct the voting of, dispose of and direct the disposition of any Common Stock when acquired by it. (c) None of the Reporting Lenders has effected any transactions between September 12, 1996 and January 24, 1997 except Carl A. Strunk who purchased 4,000 shares of common stock at $1.25 on November 26, 1996, 10,000 shares of common stock at $1.25 on November 26, 1996 and 5,000 shares of common stock at $1.25 on November 27, 1996. (d) Not applicable. (e) Not applicable. ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE ISSUER. Each Reporting Lender is a party to the Credit Agreement and the Registration Rights Agreement, copies of which are filed as Exhibits hereto and are incorporated herein by reference. ITEM 7. MATERIAL TO BE FILED AS EXHIBITS. Page 15 of 19 Pages 16 24 Power of Attorney for William P. Foley, II, Carl Leo Karcher, Stephen C. Mahood, William A. Imparato, C. Thomas Thompson, Andrew F. Puzder, Carl A. Strunk and Frank P. Willey. 99.01 Amended and Restated Credit Agreement dated as of November 22, 1996, among Checkers Drive-In Restaurants, Inc. and the Lenders, including the Reporting Lenders. 99.02 Registration Rights Agreement dated as of 11/22/96 among Checkers and the Lenders, including the Reporting Lenders. 99.03 Joint Filing Agreement among CKE, Fidelity, William P. Foley, II, Carl Leo Karcher, Stephen C. Mahood, William A. Imparato, C. Thomas Thompson, Andrew F. Puzder, Carl A. Strunk and Frank P. Willey. 99.04 The Press Release issued by Checkers, Fidelity and CKE dated November 22, 1996. SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. CKE RESTAURANTS, INC. January 24, 1997 By: /s/ Robert A. Wilson ---------------------- Robert A. Wilson Vice President, General Counsel and Secretary Page 16 of 19 Pages 17 SCHEDULE I DIRECTORS AND EXECUTIVE OFFICERS OF THE REPORTING PERSON The names, present principal occupations and business addresses of the directors and executive officers of CKE are set forth below. If no address is given, the director's or executive officers's business address is that of CKE. Unless otherwise indicated, each occupation set forth opposite an individual's name refers to CKE. Each of the named individuals is a citizen of the United States. DIRECTORS OF CKE: - ----------------- William P. Foley, II, Chairman and Chief Executive Officer, CKE Carl N. Karcher, Chairman Emeritus, CKE W. Howard Lester, Chairman and Chief Executive Officer, Williams-Sonoma, Inc., 3250 Van Ness, San Francisco, CA 94109 Frank P. Willey, President, Fidelity Peter Churm, Chairman Emeritus, Furon Company, 29982 Ivy Glenn Drive, Laguna Niguel, CA 92677 Daniel D. (Ron) Lane, Chairman and Chief Executive Officer, Lane/Kuhn Pacific, Inc., 14 Corporate Plaza, Newport Beach, CA 92660 Carl L. Karcher, President, CLK, Inc., 73-101 Highway 111, Suite 1, Palm Desert, CA 92260 Byron Allumbaugh, Chairman, Ralphs Grocery Company, 1100 West Artesia Boulevard, Compton, CA 90220 EXECUTIVE OFFICERS OF CKE: - -------------------------- William P. Foley, II, Chairman and Chief Executive Officer C. Thomas Thompson, President and Chief Operating Officer Robert E. Weaton, Executive Vice President Rory J. Murphy, Executive Vice President, Restaurant Operations Robert W. Wisely, Senior Vice President, Marketing Loren C. Pannier, Senior Vice President, Investor Relations Richard C. Celio, Senior Vice President, Development Robert A. Wilson, Vice President, General Counsel and Secretary Page 17 of 19 Pages 18 SCHEDULE II DIRECTORS AND EXECUTIVE OFFICERS OF THE REPORTING PERSON The names, present principal occupations and business addresses of the directors and executive officers of Fidelity are set forth below. If no address is given, the director's or executive officers's business address is that of Fidelity. Unless otherwise indicated, each occupation set forth opposite an individual's name refers to Fidelity. Each of the named individuals is a citizen of the United States. DIRECTORS OF FIDELITY NATIONAL FINANCIAL, INC.: William P. Foley, II, Chairman of the Board, Chief Executive Officer Frank P. Willey, President William A. Imparato, General Partner, Park West Development Company, 1515 East Missouri, Building A, Phoenix, AZ 85015 Daniel D. (Ron) Lane, Chairman, Lane/Kuhn Pacific, 14 Corporate Plaza, Newport Beach, CA 92660 J. Thomas Talbot, Owner, The Talbot Company, 500 Newport Center Drive, Suite 900, Newport Beach, CA 92660 Cary H. Thompson, Chief Operations Officer, Aames Financial Corporation, 3731 Wilshire Boulevard, 10th Floor, Los Angeles, CA 90010 Stephen C. Mahood, Owner, Stephen C. Mahood Investments, 500 Crescent Court, Suite 270, Dallas, TX 75201 Donald M. Koll, Koll Company, 4343 Von Karman Avenue, Newport Beach, CA 92660 EXECUTIVE OFFICERS OF FIDELITY NATIONAL FINANCIAL, INC.: William P. Foley, II, Chairman of the Board, Chief Executive Officer Frank P. Willey, President Andrew F. Puzder, Executive Vice President, General Counsel, Assistant Secretary Patrick F. Stone, Executive Vice President Carl A. Strunk, Executive Vice President, Chief Financial Officer, Treasurer, Assistant Secretary Raymond R. Quirk, Vice President M'Liss Jones Kane, Senior Vice President, Corporate Counsel, Corporate Secretary Gary R. Nelson, Vice President Page 18 of 19 Pages 19 EXHIBIT INDEX 24 Power of Attorney for William P. Foley, II, Carl Leo Karcher, Stephen C. Mahood, William A. Imparato, C. Thomas Thompson, Andrew F. Puzder, Carl A. Strunk and Frank P. Willey. 99.01 Amended and Restated Credit Agreement dated as of November 22, 1996, among Checkers and the Reporting Lenders. 99.02 Registration Rights Agreement dated as of 11/22/96 among Checkers and the Lenders, including the Reporting Lenders. 99.03 Joint Filing Agreement among CKE, Fidelity, William P. Foley, II, Carl Leo Karcher, Stephen C. Mahood, William A. Imparato, C. Thomas Thompson, Andrew F. Puzder, Carl A. Strunk and Frank P. Willey. 99.04 The Press Release issued by Checkers, Fidelity and CKE dated November 22, 1996.
Page 19 of 19 Pages EX-24 2 POWER OF ATTORNEY 1 EXHIBIT 24 POWER OF ATTORNEY Each of the undersigned hereby constitutes and appoints William P. Foley II, Andrew F. Puzder and M'Liss Jones Kane, and each of them, with full power of substitution, his/her true and lawful attorney-in-fact with full power to sign on his/her behalf a Schedule 13D under the Securities Exchange Act of 1934, and any and all amendments thereto, and to file the same with the Securities and Exchange Commission, and to execute any and all other instruments and take any and all other actions on his/her behalf as such attorney-in-fact deems necessary or advisable in connection therewith, and hereby ratifies and confirms all that such attorney-in-fact may lawfully do or cause to be done by virtue hereof. EXECUTED as of the date set forth below. Date: November 25, 1996 /s/ WILLIAM P. FOLEY II -------------------------------- William P. Foley II Date: November 25, 1996 /s/ CARL LEO KARCHER -------------------------------- Carl Leo Karcher Date: November 25, 1996 /s/ STEPHEN MAHOOD -------------------------------- Stephen Mahood Date: November 25, 1996 /s/ WILLIAM A. IMPARATO -------------------------------- William A. Imparato Date: November 25, 1996 /s/ FRANK P. WILLEY -------------------------------- Frank P. Willey Date: November 25, 1996 /s/ C. THOMAS THOMPSON -------------------------------- C. Thomas Thompson Date: November 25, 1996 /s/ ANDREW F. PUZDER -------------------------------- Andrew F. Puzder Date: November 25, 1996 /s/ ROBERT A. WILSON -------------------------------- Robert A. Wilson Date: November 25, 1996 /s/ CARL A. STRUNK -------------------------------- Carl A. Strunk EX-99.01 3 AMENDED AND RESTATED CREDIT AGREEMENT 1 Exhibit 99.01 AMENDED AND RESTATED CREDIT AGREEMENT dated as of November 22, 1996 among CHECKERS DRIVE-IN RESTAURANTS, INC. The Lenders Listed Herein and CKE RESTAURANTS, INC., as Agent 2 TABLE OF CONTENTS AMENDED AND RESTATED CREDIT AGREEMENT
Page ---- ARTICLE I DEFINITIONS...............1 SECTION 1.01. Definitions..................................................1 SECTION 1.02. Accounting Terms and Determinations.........................12 SECTION 1.03. References..................................................13 SECTION 1.04. Use of Defined Terms........................................13 SECTION 1.05. Terminology.................................................13 ARTICLE II THE CREDIT................13 SECTION 2.01. Syndicated Term Loans.......................................13 SECTION 2.02. Commitment to Lend Revolving Participated Loans.............14 SECTION 2.03. Notes; Miscellaneous Matters................................14 SECTION 2.04. Maturity of Loans...........................................16 SECTION 2.05. Interest Rates..............................................16 SECTION 2.06. Intentionally Deleted.......................................16 SECTION 2.07. Optional Prepayments of Syndicated Term Loan Notes..........16 SECTION 2.08. Principal Payments of Notes.................................16 SECTION 2.09. Intentionally Deleted.......................................18 SECTION 2.10. Intentionally Deleted.......................................18 SECTION 2.11. General Provisions as to Payments...........................18 SECTION 2.12. Computation of Interest and Fees............................18
i 3 SECTION 2.13. Collateral..................................................18 SECTION 2.14. Waiver and Release..........................................19 ARTICLE III CONDITIONS TO CLOSING...............20 SECTION 3.01. Conditions to Closing.......................................20 SECTION 3.02. Conditions to All Borrowings................................22 ARTICLE IV REPRESENTATIONS AND WARRANTIES......22 SECTION 4.01. Corporate Existence and Power...............................22 SECTION 4.02. Corporate and Governmental Authorization; No Contravention..23 SECTION 4.03. Binding Effect..............................................23 SECTION 4.04. Financial Information.......................................23 SECTION 4.05. No Litigation...............................................23 SECTION 4.06. Compliance with ERISA.......................................23 SECTION 4.07. Compliance with Laws; Payment of Taxes......................24 SECTION 4.08. Consolidated Subsidiaries...................................24 SECTION 4.09. Investment Company Act......................................24 SECTION 4.10. Public Utility Holding Company Act..........................24 SECTION 4.11. Ownership of Property; Liens................................24 SECTION 4.12. No Default..................................................24 SECTION 4.13. Full Disclosure.............................................25 SECTION 4.14. Environmental Matters.......................................25 SECTION 4.15. Capital Stock...............................................25 SECTION 4.16. Margin Stock................................................26
ii 4 SECTION 4.17. Insolvency..................................................26 ARTICLE V COVENANTS...........................26 SECTION 5.01. Information.................................................26 SECTION 5.02. Inspection of Property, Books and Records...................29 SECTION 5.03. Minimum Consolidated EBITDA.................................29 SECTION 5.04. Capital Expenditures........................................30 SECTION 5.05. Intentionally Deleted.......................................30 SECTION 5.06. Intentionally Deleted.......................................30 SECTION 5.07. Restricted Payments.........................................30 SECTION 5.08. Limitation on Indebtedness..................................30 SECTION 5.09. Loans or Advances...........................................31 SECTION 5.10. Investments.................................................31 SECTION 5.11. Negative Pledge.............................................31 SECTION 5.12. Maintenance of Existence....................................32 SECTION 5.13. Dissolution.................................................32 SECTION 5.14. Consolidations, Mergers and Sales of Assets.................32 SECTION 5.15. Use of Proceeds.............................................33 SECTION 5.16. Compliance with Laws; Payment of Taxes; SEC Filings.........33 SECTION 5.17. Insurance...................................................33 SECTION 5.18. Change in Fiscal Year.......................................33 SECTION 5.19. Maintenance of Property.....................................33 SECTION 5.20. Environmental Notices.......................................33 SECTION 5.21. Environmental Matters.......................................33
iii 5 SECTION 5.22. Environmental Release....................................................34 SECTION 5.23. Transactions with Affiliates.............................................34 SECTION 5.24. Certain Action in respect of Permitted Subordinated Indebtedness.........34 ARTICLE VI DEFAULTS..............................34 SECTION 6.01. Events of Default........................................................34 ARTICLE VII THE AGENT.............................37 SECTION 7.01. Appointment; Powers and Immunities.......................................37 SECTION 7.02. Reliance by Agent........................................................37 SECTION 7.03. Defaults.................................................................38 SECTION 7.04. Rights of Agent as a Lender..............................................38 SECTION 7.05. Indemnification..........................................................38 SECTION 7.06. Payee of Note Treated as Owner...........................................38 SECTION 7.07. Nonreliance on Agent and Other Lenders...................................39 SECTION 7.08. Failure to Act...........................................................39 SECTION 7.09. Resignation or Removal of Agent..........................................39 ARTICLE VIII [INTENTIONALLY DELETED]...............40 ARTICLE IX MISCELLANEOUS.........................40 SECTION 9.01. Notices..................................................................40 SECTION 9.02. No Waivers...............................................................40 SECTION 9.03. Expenses; Documentary Taxes..............................................40
iv 6 SECTION 9.04. Indemnification...........................................40 SECTION 9.05. Sharing of Setoffs........................................41 SECTION 9.06. Amendments and Waivers....................................42 SECTION 9.07. No Margin Stock Collateral................................42 SECTION 9.08. Successors and Assigns....................................42 SECTION 9.09. Confidentiality...........................................44 SECTION 9.10. Intentionally Deleted.....................................44 SECTION 9.11. Obligations Several.......................................44 SECTION 9.12. California Law............................................44 SECTION 9.13. Severability..............................................45 SECTION 9.14. Interest..................................................45 SECTION 9.15. Interpretation............................................45 SECTION 9.16. Waiver of Jury Trial; Consent to Jurisdiction.............45 SECTION 9.17. Counterparts..............................................45
v 7 EXHIBITS EXHIBIT 2.01(a) Syndicated Term Loan Note EXHIBIT 2.01(b) Form of Warrant EXHIBIT 2.02 Notice of Borrowing EXHIBIT 2.03(a) Revolving Participated Loan Note EXHIBIT 3.01(d) Form of Registration Rights Agreement EXHIBIT 3.01(e) Form of Second Amended and Restated Security Agreement EXHIBIT 3.01(f) Form of Amended and Restated Guaranty EXHIBIT 3.01(g) Form of Amended and Restated Guarantor Security Agreement EXHIBIT 3.01(h) Form of Closing Certificate EXHIBIT 3.01(i) Form of Opinion of Counsel for the Borrower EXHIBIT 3.01(k) Form of Insurance Certificate EXHIBIT 5.01(a)(iii) Form of Compliance Certificate vi 8 SCHEDULES Schedule A Amended Credit Agreement as of July 29, 1996 Schedule 4.04 Material Adverse Effects Schedule 4.08 Subsidiaries Schedule 5.08 Indebtedness Schedule 5.09 Loans Schedule 5.11 Liens Schedule 5.24 Permitted Subordinated Indebtedness vii 9 AMENDED AND RESTATED CREDIT AGREEMENT AMENDED AND RESTATED CREDIT AGREEMENT (this "Agreement") dated as of November 22, 1996, among CHECKERS DRIVE-IN RESTAURANTS, INC., the LENDERS listed on the signature pages hereof and CKE RESTAURANTS, INC., as Agent. WHEREAS, on October 28, 1993 the Borrower, Wachovia Bank of Georgia, N.A., as Agent (the "Initial Agent") and the Initial Banks (as hereinafter defined) entered into a Credit Agreement (the "Original Credit Agreement") pursuant to which the Initial Agent and the Initial Banks made certain loans to the Borrower; WHEREAS, pursuant to the agreements listed on Schedule A attached hereto, the Borrower, the Initial Agent and the Initial Banks from time to time amended and modified the Original Credit Agreement (the Original Credit Agreement as so amended and modified, the "Amended Credit Agreement"); WHEREAS, on July 29, 1996 pursuant to certain agreements, the Prior Agent (as hereinafter defined) and the Prior Lenders (as hereinafter defined) acquired all right, title and interest of the Initial Agent and the Initial Banks in, to and under the Amended Credit Agreement and the Loan Documents (as defined in the Amended Credit Agreement); WHEREAS, on November 12, 1996 pursuant to certain agreements, the Prior Agent and the Prior Lenders assigned to the Agent and the Lenders, and the Agent and the Lenders acquired, an assignment interest in, to and under the Amended Credit Agreement and the Loan Documents; WHEREAS, the Borrower has requested and, subject to the conditions set forth herein, the Agent and the Lenders have agreed to restructure the Borrower's obligations under the Amended Credit Agreement, as amended to date; and WHEREAS, this Agreement amends, restates and supersedes in its entirety the Amended Credit Agreement, as amended to date, and no term or provision of the Amended Credit Agreement shall bind the parties to this Agreement unless specifically set forth herein. NOW, THEREFORE, in consideration of the mutual covenants herein contained and other valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto covenant and agree as follows: ARTICLE I DEFINITIONS SECTION 1.01. Definitions. The terms as defined in this Section 1.01 shall, for all purposes of this Agreement and any amendment hereto (except as herein otherwise expressly provided or unless the context otherwise requires), have the meanings set forth herein: 10 "Affiliate" means (i) any Person that directly, or indirectly through one or more intermediaries, controls the Borrower (a "Controlling Person"), (ii) any Person (other than the Borrower or a Subsidiary) which is controlled by or is under common control with a Controlling Person, or (iii) any Person (other than a Subsidiary) of which the Borrower owns, directly or indirectly, 20% or more of the common stock or equivalent equity interests, excluding existing joint ventures. As used herein, the term "control" means possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ownership of voting securities, by contract or otherwise. "Agent" means CKE Restaurants, Inc., a Delaware corporation, in its capacity as agent for the Lenders hereunder, and its successors and permitted assigns in such capacity. "Agreement" means this Amended and Restated Credit Agreement, together with all amendments and supplements hereto and all exhibits and schedules hereto. "Amended Credit Agreement" has the meaning set forth in the recitals hereto. "Amended and Restated Security Agreement" means that certain Second Amended and Restated Security Agreement substantially in the form attached hereto as Exhibit 3.01(e), delivered by the Borrower dated as of even date herewith. "Assignee" has the meaning set forth in Section 9.08(c). "Assignment Agreement" means an Assignment Agreement executed in accordance with Section 9.08(c). "Borrower" means Checkers Drive-In Restaurants, Inc., a Delaware corporation, and its successors and its permitted assigns. "Borrowing" means (i) the restructuring of the Prior Syndicated Debt as of the Closing Date pursuant to Section 2.01(a), and (ii) any borrowing thereafter consisting of Revolving Participated Loans made to the Borrower by CKE (which Revolving Participated Loans are participated to the Lenders hereunder) pursuant to Article II. "Capital Expenditures" means for any period the sum of all capital expenditures incurred during such period by the Borrower and its Consolidated Subsidiaries, as determined in accordance with GAAP. "Capital Stock" means any nonredeemable capital stock of the Borrower or any Consolidated Subsidiary (to the extent issued to a Person other than the Borrower), whether common or preferred. "CERCLA" means the Comprehensive Environmental Response Compensation and Liability Act, 42 U.S.C. Section 9601 et. seq. and its implementing regulations and amendments. "CERCLIS" means the Comprehensive Environmental Response Compensation and Liability Inventory System established pursuant to CERCLA. 2 11 "Change of Control" means the occurrence of any of the following events: (a) the acquisition after the Closing Date, in one or more transactions, of "beneficial ownership" (within the meaning of Section 13(d) under the Exchange Act and the rules and regulations promulgated thereunder) by (i) any Person or entity, or (ii) any group of Persons or entities who constitute a group (within the meaning of Section 13 of the Exchange Act), in either case, of any securities of the Borrower such that, as a result of such acquisition, such Person, entity or group either (A) "beneficially owns" (within the meaning of Rule 13 under the Exchange Act), directly or indirectly 35% or more of the Borrower's then outstanding voting securities entitled to vote on the election of directors of the Borrower ("Voting Securities") (it being understood that this clause (A) shall not apply if the Lenders or their Affiliates acquire beneficial ownership of 35% or more of Borrowers than outstanding Voting Securities) or (B) otherwise has the ability to elect, directly or indirectly, a majority of the members of the Borrower's Board of Directors; (b) during any period of two consecutive years, individuals who at the beginning of such period constituted the Board of Directors of the Borrower (together with any new directors selected by such Board of Directors or whose nomination for election by the stockholders of the Borrower was approved by a vote of 66 2/3% of the directors of the Borrower then still in office who are either directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the members of the Board of Directors of the Borrower then in office; (c) the sale, lease, transfer or other disposition of all or substantially all of the assets of the Borrower as entirety or substantially as an entirety in one transaction or a series of related transactions; (d) the liquidation or dissolution of the Borrower; or (e) any transaction permitted under Section 5.14 which results in any of the foregoing. "Checkers Restaurant" shall mean any and all restaurants operated as a Checkers restaurant, whether owned or operated by the Borrower or any other Person. "CKE" shall mean CKE Restaurants, Inc., a Delaware corporation, and its successors and assigns. "Closing Certificate" has the meaning set forth in Section 3.01(h). "Closing Date" means the date on which all matters set forth in Section 3.01 are satisfied. "Code" means the Internal Revenue Code of 1986, as amended, or any successor Federal tax code. "Collateral" has the meaning set forth in Section 2.13. "Commitment" means, with respect to the Revolving Participated Loans to be made by CKE pursuant to Section 2.02 of this Agreement, the amount of $2,500,000. "Compliance Certificate" has the meaning set forth in Section 5.01(a)(iii). "Consolidated Cash Flow" means, for any period, Consolidated EBITDA for such period, minus (i) consolidated interest expense of the Borrower and its Consolidated Subsidiaries, to the extent such interest is paid in cash, for such period, minus (ii) the cash portion of the provision for income taxes of the Borrower and its Consolidated Subsidiaries for such period. 3 12 "Consolidated EBITDA" means, for any period, Consolidated Net Income for such period, plus (i) consolidated interest expense of the Borrower and its Consolidated Subsidiaries for such period, plus (ii) provision for income taxes of the Borrower and its Consolidated Subsidiaries for such period, plus (iii) depreciation, amortization (including amortization of goodwill and other intangibles but excluding amortization of prepaid cash expenses that were paid in a prior period) and other non-cash charges (excluding any such non-cash charge to the extent that it represents an accrual of or reserve for cash charges in any future period or amortization of a prepaid cash expense that was paid in a prior period) of the Borrower and its Consolidated Subsidiaries to the extent that such depreciation, amortization and other non-cash charges were deducted in computing Consolidated Net Income for such period, minus (iv) non-cash items increasing consolidated revenues of the Borrower and its Consolidated Subsidiaries in determining Consolidated Net Income for such period, in each case on a consolidated basis and determined in accordance with GAAP. "Consolidated Net Income" means, for any period, the aggregate of the Net Income of the Borrower and its Consolidated Subsidiaries determined on a consolidated basis in accordance with GAAP, but excluding therefrom (i) extraordinary items, (ii) any gains or losses from the sale of any assets of the Borrower or its Subsidiaries, (iii) the net income of any Subsidiary to the extent that the declaration or payment of dividends or similar distributions by that Subsidiary of that net income is not permitted, directly or indirectly, by operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to that Subsidiary or its stockholders, or is not permitted without prior governmental approval (that has not been obtained), and (iv) the income or loss from any entity in which the Borrower's or its Subsidiary's, as applicable, investment is classified pursuant to GAAP as a minority interest. "Consolidated Subsidiary" means at any date any Subsidiary or other entity the accounts of which, in accordance with GAAP, would be consolidated with those of the Borrower in its consolidated financial statements as of such date. "Controlled Group" means all members of a controlled group of corporations and all trades or businesses (whether or not incorporated) under common control which, together with the Borrower, are treated as a single employer under Section 414 of the Code. "Default" has the meaning set forth in Section 6.01. "Default Rate" means a rate per annum equal to the sum of the then applicable interest rate on the Loans plus two percent (2%). "Dollars" or "$" means dollars in lawful currency of the United States of America. "Domestic Business Day" means any day except a Saturday, Sunday or other day on which commercial banks in The State of California are authorized by law to close. "Environmental Authority" means any foreign, federal, state, local or regional government that exercises any form of jurisdiction or authority under any Environmental Requirement. 4 13 "Environmental Authorizations" means all licenses, permits, orders, approvals, notices, registrations or other legal prerequisites for conducting the business of the Borrower or any Wholly Owned Subsidiary required by any Environmental Requirement. "Environmental Judgments and Orders" means all judgments, decrees or orders arising from or in any way associated with any Environmental Requirements, whether or not entered upon consent or written agreements with an Environmental Authority or other entity arising from or in any way associated with any Environmental Requirement. "Environmental Liabilities" means any liabilities, whether accrued, contingent or otherwise, arising from and in any way associated with any Environmental Requirements. "Environmental Notices" means notice from any Environmental Authority, of possible or alleged noncompliance with or liability under any Environmental Requirement, including without limitation any complaints, citations, demands or requests from any Environmental Authority or from any other person or entity for correction of any, violation of any Environmental Requirement or any investigations concerning any violation of any Environmental Requirement. "Environmental Proceedings" means any judicial or administrative proceedings arising from or in any way associated with any Environmental Requirement. "Environmental Releases" means releases as defined in CERCLA or under any applicable state or local environmental law or regulation. "Environmental Requirements" means any legal requirement relating to health, safety or the environment and applicable to the Borrower, any Wholly Owned Subsidiary or the Properties, including but not limited to any such requirement under CERCLA or similar state legislation and all federal, state and local laws, ordinances, regulations, orders, writs, decrees and common law. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended from time to time, or any successor law. Any reference to any provision of ERISA shall also be deemed to be a reference to any successor provision or provisions thereof. "Event of Default" has the meaning set forth in Section 6.01. "Fiscal Quarter" means any fiscal quarter of the Borrower, it being understood that each of the first three fiscal quarters of each Fiscal Year consists of three Reporting Periods and the final fiscal quarter consists of four Reporting Periods. "Fiscal Year" means any fiscal year of the Borrower consisting of the 52 or 53 week period generally ending on the Monday closest to December 31. "GAAP" means generally accepted accounting principles applied on a basis consistent with those which, in accordance with Section 1.02, are to be used in making the calculations for purposes of determining compliance with the terms of this Agreement. "Guarantee" by any Person means any obligation, contingent or otherwise, of such Person directly or indirectly guaranteeing any Indebtedness or other obligation of any other Person and, 5 14 without limiting the generality of the foregoing, any obligation, direct or indirect, contingent or otherwise, of such Person (i) to secure, purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation (whether arising by virtue of partnership arrangements, by agreement to keep-well, to purchase assets, goods, securities or services, to provide collateral security, to take-or-pay, or to maintain financial statement conditions or otherwise) or (ii) entered into for the purpose of assuring in any other manner the obligee of such Indebtedness or other obligation of the payment thereof or to protect such obligee against loss in respect thereof (in whole or in part), provided that the term Guarantee shall not include endorsements for collection or deposit in the ordinary course of business. The term "Guarantee" used as a verb has a corresponding meaning. "Guarantors" means, individually and collectively, (i) InnerCityFoods Leasing Company, a Delaware corporation, (ii) InnerCityFoods Restaurant Company, Inc., a Delaware corporation, (iii) InnerCityFoods Joint Venture Company, a Delaware corporation, and (iv) any other Person delivering a Guaranty to the Agent, together with each of their respective successors and permitted assigns. "Guaranty" means, individually and collectively, (i) those certain Amended and Restated Guaranty Agreements, substantially in the form of Exhibit 3.01(f) hereto, executed and delivered by the Guarantors, jointly and severally, to the Agent, for the ratable benefit of each of the Lenders, together with all amendments and modifications thereto and (ii) any other guaranty agreement delivered to the Agent for the purpose of providing a Guarantee of any of the Borrower's or the Guarantors' obligations under any of the Loan Documents, together with all amendments and modifications thereto. "Guarantor Security Agreements" means those certain Amended and Restated Security Agreements, substantially in the form of Exhibit 3.01(g) hereto, executed and delivered by the Guarantors to the Agent, for the ratable benefit of each of the Lenders, together with all respective amendments and any modifications thereto. "Hazardous Materials" includes, without limitation, (a) solid or hazardous waste, as defined in the Resource Conservation and Recovery Act of 1980, 42 U.S.C. Section 6901 et seq. and its implementing regulations and amendments, or in any applicable state or local law or regulation, (b) "hazardous substance", "pollutant", or "contaminant" as defined in CERCLA, or in any applicable state or local law or regulation, (c) gasoline, or any other petroleum product or by-product, including, crude oil or any fraction thereof or (d) insecticides, fungicides, or rodenticides, as defined in the Federal Insecticide, Fungicide, and Rodenticide Act of 1975, or in any applicable state or local law or regulation, as each such Act, statute or regulation may be amended from time to time. "Indebtedness" shall have the meaning set forth in Section 5.08. "Initial Agent" means Wachovia Bank of Georgia, N.A., a national banking association organized under the laws of the United States of America, in its capacity as agent for the Initial Banks under the Amended Credit Agreement. 6 15 "Initial Banks" mean collectively Wachovia Bank of Georgia, N.A., Barnett Bank of Pinellas County, The Boatmen's National Bank of St. Louis, PNC Bank, Kentucky, Inc., NBD Bank and First Alabama Bank. "Interest Period" means the period commencing on the last day of each Reporting Period and ending on the same date of the following Reporting Period; provided that: (a) any Interest Period (other than an Interest Period determined pursuant to paragraph (b) below) which would otherwise end on a day which is not a Domestic Business Day shall be extended to the next succeeding Domestic Business Day; (b) the first Interest Period shall commence on November 26, 1996 and shall end on December 30, 1996; and (c) any Interest Period which begins before the Termination Date and would otherwise end after the Termination Date shall end on the Termination Date. "Investment" means any investment in any Person, whether by means of purchase or acquisition of obligations or securities of such Person, capital contribution to such Person, loan or advance to such Person, making of a time deposit with such Person, Guarantee or assumption of any obligation of such Person or otherwise. "Lender" means each Person listed on the signature pages hereof (other than the Borrower and Guarantors) and its successors and assigns. "Lending Office" means, as to each Lender, its office located at its address set forth on the signature pages hereof or identified on the signature pages hereof as its Lending Office or such other office as such Lender may hereafter designate as its Lending Office by notice to the Borrower and the Agent. "Lien" means, with respect to any asset, any mortgage, deed to secure debt, deed of trust, lien, pledge, charge, security interest, security title, or encumbrance or servitude of any kind in respect of such asset to secure or assure payment of a Indebtedness or a Guarantee, whether by consensual agreement or by operation of statute or other law, or by any agreement, contingent or otherwise, to provide any of the foregoing. For the purposes of this Agreement, a Person shall be deemed to own subject to a Lien any asset which it has acquired or holds subject to the interest of a vendor or lessor under any conditional sale agreement, capital lease (as determined under GAAP) or other title retention agreement relating to such asset. Provided, however, an operating lease (as determined under GAAP) shall not constitute a Lien. "Loan" means a Syndicated Term Loan or a Revolving Participated Loan and "Loans" means Syndicated Term Loans or Revolving Participated Loans or both. "Loan Documents" means this Agreement, the Notes, the Warrants, the Guaranty, the Security Agreements, the Post-Closing Collateral Documents, the Registration Rights Agreement, the Mortgage Documents and any other document evidencing, relating to or securing the obligations of the Borrower hereunder, and any other document or instrument delivered from time to time in connection with this Agreement, the Notes, the Warrants or the obligations of the 7 16 Borrower hereunder, as such documents and instruments may be amended, modified or supplemented from time to time. "Margin Stock" means "margin stock" as defined in Regulations G, T, U or X. "Material Adverse Effect" means, with respect to any event, act, condition or occurrence arising after the Closing Date, or if arising on or before the Closing Date, not disclosed to the Lenders in writing (such written disclosures to include, without limitation, the Borrower's most recent Annual Report on Form 10-K and most recent Quarterly Report on Form 10-Q previously delivered to the Lenders) on or before the Closing Date, of whatever nature (including any adverse determination in any litigation, arbitration, or governmental investigation or proceeding that is not a judgment giving rise to a Default under Section 6.01(j)), whether singly or in conjunction with any other event or events, act or acts, condition or conditions, occurrence or occurrences, whether or not related, a material adverse change in, or a material adverse effect upon, any of (a) the financial condition, operations, business, properties or prospects of the Borrower and its Consolidated Subsidiaries taken as a whole, (b) the rights and remedies of the Agent and the Lenders under the Loan Documents, or (c) the legality, validity or enforceability of any Loan Document. In making any determination of a Material Adverse Effect, all relevant circumstances known to the Lenders shall be considered, including, without limitation, insurance proceeds receivable, opinions of counsel, the merits of any relevant claim, subrogation rights, and contribution rights available to the Borrower. "Multiemployer Plan" shall have the meaning set forth in Section 4001(a)(3) of ERISA. "NTDT Note" means the promissory note of the Borrower held by Nashville Twin Drive-Thru Partners, L.P. ("NTDT"), the outstanding principal amount of which was $1,126,162 as of September 9, 1996. "Net Income" means, as applied to any Person for any period, the aggregate amount of net income of such Person, after taxes, for such period, as determined in accordance with GAAP. "Net Proceeds" means the cash proceeds received by the Borrower in respect to the issuance of Capital Stock in connection with the exercise of subscription rights distributed (including any such rights exercised by the Lenders as required hereunder) pursuant to the Rights Offering, after deducting therefrom reasonable and customary costs and expenses incurred by the Borrower directly in connection with such issuance. "Notes" means (i) the Syndicated Term Loan Notes, and (ii) the Revolving Participated Loan Note, together with all amendments, consolidations, modifications, renewals, and supplements to, and replacements of, items (i) and (ii) above. "Notice of Borrowing" has the meaning set forth in Section 2.02. "Original Credit Agreement" has the meaning set forth in the recitals hereto. "Participant" has the meaning set forth in Section 9.08(b). 8 17 "PBGC" means the Pension Benefit Guaranty Corporation or any entity succeeding to any or all of its functions under ERISA. "Permitted Subordinated Indebtedness" means the Indebtedness identified on Schedule 5.24 hereto. "Person" means an individual, a corporation, a partnership, an unincorporated association, a trust or any other entity or organization, including, but not limited to, a government or political subdivision or an agency or instrumentality thereof. "Plan" means at any time an employee pension benefit plan which is covered by Title IV of ERISA or subject to the minimum funding standards under Section 412 of the Code and is either (i) maintained by a member of the Controlled Group for employees of any member of the Controlled Group or (ii) maintained pursuant to a collective bargaining agreement or any other arrangement under which more than one employer makes contributions and to which a member of the Controlled Group is then making or accruing an obligation to make contributions or has within the preceding five (5) plan years made contributions. "Post-Closing Collateral" has the meaning set forth in Section 2.13(a). "Post-Closing Collateral Documents" has the meaning set forth in Section 2.13(a). "Prior Agent" means The Galileo Fund, L.P., a Massachusetts limited partnership, in its capacity a agent for the Prior Lenders under the Amended Credit Agreement. "Prior Lenders" means collectively The Galileo Fund, L.P., Canpartners Investments IV, LLC, Foothill Capital Corporation and Pearl Street, L.P. "Prior Revolving Participated Loan Note" means the Revolving Participated Loan dated October 2, 1995 of the Borrower in favor of Wachovia Bank of Georgia, N.A. in the original principal amount of $2,000,000. "Prior Syndicated Debt" means the loans, interest, and other obligations of the Borrower to the Lenders outstanding on the Closing Date under the "Loans" as defined in the Amended Credit Agreement. "Prior Syndicated Term Loan Notes" means, collectively (i) the Amended and Restated Syndicated Term Loan Note dated as of April 12, 1995 of the Borrower in favor of Wachovia Bank of Georgia, N.A. in the original principal amount of $12,031,250, (ii) the Amended and Restated Syndicated Term Loan Note dated as of April 12, 1995 of the Borrower in favor of Barnett Bank of Pinellas County in the original principal amount of $7,218,750, (iii) the Amended and Restated Syndicated Term Loan Note dated as of April 12, 1995 of the Borrower in favor of The Boatmen's National Bank of St. Louis in the original principal amount of $4,812,500, (iv) the Amended and Restated Syndicated Term Loan Note dated as of April 12, 1995 of the Borrower in favor of NBD Bank in the original principal amount of $4,812,500, (v) the Amended and Restated Syndicated Term Loan Note dated as of April 12, 1995 of the Borrower in favor of PNC Bank, Kentucky, Inc. in the original principal amount of $4,812,500 and (vi) the Amended and Restated 9 18 Syndicated Term Loan Note dated as of April 12, 1995 of the Borrower in favor of First Alabama Bank in the original principal amount of $4,812,500. "Prior Warrant Agreements" means, individually and collectively, the Warrant Agreements dated as of April 15, 1995 executed and delivered by the Borrower to the Initial Banks, and having been subsequently assigned to the Prior Lenders and re-assigned to the Lenders. "Pro Rata Share" means, with respect to each Lender identified below, the percentage interest set forth opposite the name of such Lender:
Lender Percentage Interest ------ ------------------- CKE Restaurants, Inc. 36.75214 KCC Delaware 14.24501 Fidelity National Financial, Inc. 10.54131 The Travelers Indemnity Company 8.54701 The Galileo Fund, L.P. 5.69801 Foothill Capital Corporation 5.69801 Canpartners Investments IV, LLC 5.69801 William P. Foley II 5.69800 Burt Sugarman 3.56125 Carl Leo Karcher 2.84900 Stephen Mahood 0.71225 --------- Total 100.00000%
"Properties" means all real property owned, leased or otherwise used or occupied by the Borrower or any Consolidated Subsidiary, wherever located. "Rall-Folks Notes" means the promissory notes of the Borrower held by Rall-Folks, Inc. ("Rall-Folks"), the aggregate outstanding principal amount of which was $1,788,000 as of September 9, 1996. "RDG Note" means the promissory note of the Borrower held by Restaurant Development Group, Inc. ("RDG"), the outstanding principal amount of which was approximately $1,693,000 as of September 9, 1996. "Registration Rights Agreement" means the Registration Rights Agreement, in the form of Exhibit 3.01(d) hereto, executed and delivered by the Borrower to Lenders. "Regulation G" means Regulation G of the Board of Governors of the Federal Reserve System, as in effect from time to time, together with all official rulings and interpretations issued thereunder. "Regulation T" means Regulation T of the Board of Governors of the Federal Reserve System, as in effect from time to time, together with all official rulings and interpretations issued thereunder. 10 19 "Regulation U" means Regulation U of the Board of Governors of the Federal Reserve System, as in effect from time to time, together with all official rulings and interpretations issued thereunder. "Regulation X" means Regulation X of the Board of Governors of the Federal Reserve System, as in effect from time to time, together with all official rulings and interpretations issued thereunder. "Released Parties" has the meaning set forth in Section 2.14 hereof. "Reporting Period" means, with respect to any Fiscal Year, each consecutive 4 week period beginning on the first day of such Fiscal Year. "Required Lenders" means at any time Lenders having at least 66 2/3% of the aggregate outstanding principal amount of the Syndicated Term Loan Notes. "Restricted Payment" means (i) any dividend or other distribution on any shares of the Borrower's capital stock (except dividends payable solely in shares of its capital stock) or (ii) any cash payment on account of the purchase, redemption, retirement or acquisition (excluding therefrom any nominal amount of cash paid in lieu of fractional shares of Capital Stock issued in the ordinary course of business) of (a) any shares of the Borrower's capital stock (except shares acquired upon the conversion thereof into other shares of its capital stock) or (b) any option, warrant or other right to acquire shares of the Borrower's capital stock. "Retail Building" means any removable restaurant building owned by the Borrower and operated under the "Checkers" trade name and all related equipment and moveable site improvements. "Revolving Lenders" means CKE and KCC Delaware. "Revolving Participated Loan" means a Loan made by CKE pursuant to Section 2.02. "Revolving Participated Loan Note" means the amended and restated promissory note of the Borrower, substantially in the form of Exhibit 2.03(b), evidencing the obligation of the Borrower to repay the Revolving Participated Loans, together with all amendments, consolidations, modifications, renewals and supplements thereto. "Rights Guaranty" means the commitment of CKE, KCC Delaware and Fidelity National Financial, Inc. pursuant to Section 2.03(d). "Rights Offering" means the distribution by the Borrower to each holder of Common Stock of the Borrower (it being understood that, for purposes of the Rights Offering, the Warrants will be deemed to have been exercised and the shares of Common Stock of the Borrower issuable on exercise of the Warrants shall be deemed to be issued and outstanding and held of record by the Lenders on the record date established for such distribution) of rights to purchase shares of Common Stock of the Borrower, at any price as may be determined by the Borrower up to the average closing price for such common stock for the ten trading days prior to the effective date of 11 20 the registration statement covering such shares, the Net Proceeds of which shall be not less than $10,000,000. "Security Agreements" means the Guarantor Security Agreements and the Amended and Restated Security Agreement. "Subsidiary" means any corporation or other entity of which securities or other ownership interests having ordinary voting power to elect a majority of the board of directors or other persons performing similar functions are at the time directly or indirectly owned by the Borrower, and any partnership in which the Borrower or any Consolidated Subsidiary is a general partner. "Syndicated Term Loans" means the Loans made by the Lenders pursuant to Section 2.01(a). "Syndicated Term Loan Notes" means the amended and restated promissory notes of the Borrower, substantially in the form of Exhibit 2.03(a), evidencing the obligation of the Borrower to repay the Syndicated Term Loans, together with all amendments, consolidations, modifications, renewals, and supplements thereto. "Termination Date" means (i) with respect to the Revolving Participated Loan Commitment and the Revolving Participated Loans, unless extended by the Borrower pursuant to Section 2.03(e), upon the earlier to occur of (I) March 22, 1997 or (II) consummation of the issuance of shares of Capital Stock as a result of the full subscription of rights in the Rights Offering, and (ii) with respect to the Syndicated Term Loans, July 31, 1999. "Transferee" has the meaning set forth in Section 9.08(d). "Unfunded Vested Liabilities" means, with respect to any Plan at any time, the amount (if any) by which (i) the present value of all vested nonforfeitable benefits under such Plan exceeds (ii) the fair market value of all Plan assets allocable to such benefits, all determined as of the then most recent valuation date for such Plan, but only to the extent that such excess represents a potential liability of a member of the Controlled Group to the PBGC or the Plan under Title IV of ERISA. "Warrants" mean the warrants to purchase shares of Borrower's Common Stock in the form attached hereto as Exhibit 2.01(b) to be issued to the Lenders on the Closing Date pursuant to Section 2.01(a). "Wholly Owned Subsidiary" means any Subsidiary all of the shares of capital stock or other ownership interests of which (except directors' qualifying shares) are at the time directly or indirectly owned by the Borrower. SECTION 1.02. Accounting Terms and Determinations. Unless otherwise specified herein, all terms of an accounting character used herein shall be interpreted, all accounting determinations hereunder shall be made, and all financial statements required to be delivered hereunder shall be prepared, in accordance with GAAP, applied on a basis consistent (except for changes with which the Borrower's independent public accountants concur or that are otherwise required by a change in GAAP) with the most recent audited consolidated financial statements of the Borrower and its Consolidated Subsidiaries delivered to the Lenders except for any change in 12 21 which the Borrower's independent public accountants concur or is required by GAAP, in determining compliance with any of the provisions of this Agreement or any of the other Loan Documents: (i) the Borrower shall have objected to determining such compliance on such basis at the time of delivery of such financial statements, or (ii) the Required Lenders shall so object in writing within 30 days after the delivery of such financial statements, in either of which events such calculations shall be made on a basis consistent with those used in the preparation of the latest financial statements as to which such objection shall not have been made (which, if objection is made in respect of the first financial statements delivered under Section 5.01 hereof, shall mean the financial statements referred to in Section 4.04). SECTION 1.03. References. Unless otherwise indicated, references in this Agreement to "Articles", "Exhibits", "Schedules", "Sections " and other Subdivisions are references to articles, exhibits, schedules, sections and other subdivisions hereof. SECTION 1.04. Use of Defined Terms. All terms defined in this Agreement shall have the same defined meanings when used in any of the other Loan Documents, unless otherwise defined therein or unless the context shall require otherwise. SECTION 1.05. Terminology. All personal pronouns used in this Agreement, whether used in the masculine, feminine or neuter gender, shall include all other genders; the singular shall include the plural, and the plural shall include the singular. Titles of Articles and Sections in this Agreement are for convenience only, and neither limit nor amplify the provisions of this Agreement. ARTICLE II THE CREDITS SECTION 2.01. Syndicated Term Loans. (a) Each Lender severally agrees, subject to the terms and conditions set forth herein and based on the representations and warranties set forth herein, to restructure the Borrower's obligations hereunder as provided herein. All Syndicated Term Loans shall earn interest at the rate of 13.00% per annum. In consideration for the restructuring of the Borrower's obligations hereunder, the Commitment and the Rights Guaranty, on the Closing Date, the Borrower shall grant to the Lenders, in proportion to each Lender's Pro Rata Share of the Prior Syndicated Debt, warrants for the purchase of an aggregate of 20,000,000 shares of the Borrower's Common Stock at an exercise price of $.75 each, which warrants may be exercised in accordance with and subject to the terms and conditions of the Warrants. Effective as of the Closing Date, the Prior Warrant Agreements shall be terminated and of no further force or effect. (b) On the Closing Date, subject to satisfaction of the terms and conditions set forth in Article III herein, each Lender severally agrees to deliver to the Borrower the Prior Syndicated Term Loan Notes and the Agent agrees to deliver to the Borrower the Prior Revolving Participated Loan Note, in exchange for (i) a Syndicated Term Loan Note in the principal amount of such Lender's Pro Rata Share of the Prior Syndicated Debt, (ii) a participation interest in the Revolving Participated Loan in an amount equal to such Lender's Pro Rata Share of the Revolving 13 22 Participated Loan Note, and (iii) warrant certificates representing a number of Warrants equal to such Lender's Pro Rata Share of the Warrants issuable pursuant to Section 2.01(a). SECTION 2.02. Commitment to Lend Revolving Participated Loans. CKE shall from time to time on or after December 3, 1996 and through and including the Termination Date applicable to Revolving Participated Loans, upon the written request of the Borrower in the form of notice attached hereto as Exhibit 2.02 (the "Notice of Borrowing"), and on the terms and conditions set forth herein, make Revolving Participated Loans to the Borrower in an aggregate principal amount at any time not to exceed an amount equal to $2,500,000 through and including the Termination Date, which Revolving Participated Loans shall be evidenced by the Revolving Participated Loan Note (in the original stated principal amount of $2,500,000) dated as of the Closing Date. Each Revolving Participated Loan Borrowing under this Section 2.02 shall be in an aggregate principal amount of $500,000 or any larger multiple of $250,000. Within the foregoing limits, the Borrower may borrow under this Section 2.02, repay and reborrow under this Section 2.02 at any time before the Termination Date applicable to Revolving Participated Loans. All Revolving Participated Loans shall earn interest at the rate of 13.00% per annum. CKE shall notify each Revolving Lender of each Revolving Participated Loan Borrowing, and each Revolving Lender other than CKE shall, on the date of each Revolving Participated Loan Borrowings, purchase a participating interest in Revolving Participated Loans in an amount equal to the same proportion of such Revolving Participated Loans as such other Revolving Lender's Pro Rata Share bears to the aggregate Pro Rata Shares of the Revolving Lenders. On the date of each such Revolving Participated Loan Borrowing, each Revolving Lender will immediately transfer to CKE, in immediately available funds, the amount of its participation. Whenever, at any time after CKE has received from any such Revolving Lender its participating interest in a Revolving Participated Loan, the Agent receives any payment on account thereof, the Agent will distribute to such Revolving Lender its participating interest in such amount (appropriately adjusted, in the case of interest payments, to reflect the period of time during which such Revolving Lender's participating interest was outstanding and funded; provided, however, that in the event that such payment received by the Agent is required to be returned, such Revolving Lender will return to the Agent any portion thereof previously distributed by the Agent to it. Each Revolving Lender's obligation to purchase such participating interests shall be absolute and unconditional and shall not be affected by any circumstance, including, without limitation: (i) any set-off, counterclaim, recoupment, defense or other right which such Revolving Lender or any other Person may have against CKE requesting such purchase or any other Persons for any reason whatsoever; (ii) the occurrence or continuance of a Default or an Event of Default or the termination of the Commitments; (iii) any adverse change in the condition (financial or otherwise) of the Borrower, or any other Person; (iv) any breach of this Agreement by the Borrower or any other Revolving Lender; or (v) any other circumstance, happening or event whatsoever, whether or not similar to any of the foregoing. SECTION 2.03. Notes; Miscellaneous Matters. (a) The Syndicated Term Loans of each Lender shall be evidenced by the Syndicated Term Loan Notes payable to the order of such Lender for the account of its Lending Office in an amount equal to the original principal amount of such Lender's Pro Rata Share of the Prior Syndicated Debt. The Revolving Participated Loan shall be evidenced by the Revolving Participated Loan Note payable to the order of CKE in the original principal amount of $2,500,000. 14 23 (b) The Borrower hereby represents, warrants, ratifies and confirms that the Prior Syndicated Debt in the aggregate outstanding principal amount of $35,818,098.88 as of the Closing Date (which consists of an aggregate principal amount of $34,718,098.88 of "Syndicated Term Loans" as defined under the Amended Credit Agreement, an aggregate principal amount of $1,000,000 of "Revolving Participated Loans" as defined under the Amended Credit Agreement, and an aggregate principal amount of $100,000 with respect to the "Extension Fee" as defined under the Amended Credit Agreement (more specifically, the Eleventh Amendment Agreement dated July 29, 1996 identified on Schedule A attached hereto)) as evidenced by the Syndicated Term Loan Notes remains in full force and effect without novation and is payable in accordance with its terms, without defense, offset, recoupment or counterclaim. The Borrower also represents and warrants that the fair market value of the Collateral exceeds the aggregate principal amount of the Loans. CKE shall record with respect to the Revolving Participated Loan Note on the schedule forming a part thereof appropriate notations to evidence the date, amount and maturity of each Revolving Participated Loan made by it, the date and amount of each payment of principal made by the Borrower with respect thereof and, such schedule shall constitute rebuttable presumptive evidence of the principal amount owing and unpaid on the Revolving Participated Loan Note; provided that the failure of CKE to make any such recordation or endorsement shall not affect the obligation of the Borrower hereunder or under the Revolving Participated Loan Note or the ability of CKE to assign such Revolving Participated Loan Note. CKE is hereby irrevocably authorized by the Borrower so to endorse the Revolving Participated Loan Note and to attach to and make a part of the Revolving Participated Loan Note a continuation of any such schedule as and when required. (c) Intentionally Deleted. (d) The Borrower shall prepare and file with the Securities and Exchange Commission, and use its best efforts to be declared effective under the Securities Act of 1933, as amended, a registration statement relating to the shares of Common Stock of the Borrower to be issued in a Rights Offering, and to distribute rights to purchase Common Stock pursuant thereto to Borrower's stockholders and the holders of the Warrants as of a record date which is, within 60 days after the Closing Date. Each of CKE, Fidelity National Financial, Inc. and KCC Delaware hereby agrees, severally and not jointly, to purchase from the Company an aggregate number of shares of Borrower Common Stock equal to the excess, if any, of the maximum number of shares of Borrower Common Stock issuable upon the exercise in full of all subscription rights distributed in such Rights Offering remaining after subtracting from the maximum number of shares of Borrower Common Stock issuable upon the exercise of all subscription rights so distributed and exercised by Persons other than the Lenders and their Affiliates. The obligations of the foregoing Lenders to purchase shares shall be allocated among them in accordance with their relative Pro Rata Shares. (e) The Borrower shall have the right, on notice to the Agent, to extend the Termination Date applicable to the Revolving Participated Loan for three (3) successive one (1)-month periods; provided, that for each such extension the Borrower shall issue to the Revolving Lenders, pro rata in accordance with each Revolving Lender's interests in the Revolving Participated Loan, additional warrants to purchase 333,333 shares of Common Stock of the Borrower upon the first day of each such one-month extension period at an exercise price equal to 90% of the average closing price of Borrower's Common Stock, as reported on the NASDAQ National Market, over the 30 day period ending on the last day of the applicable Termination Date 15 24 (before giving effect to such extension). The terms of the warrants shall be identical to the Warrants. (f) Upon the closing, the Borrower shall take all corporate actions necessary to elect to the Board of Directors of the Borrower three (3) designees of the Lenders, and such Board of Directors shall consist of seven (7) Persons, of whom three (3) Persons shall have been designated by the Lenders. At each election of directors from and after the Closing Date, the Borrower shall nominate for election to its Board of Directors and recommend to its stockholders the election of three (3) designees of the Lenders to the Board of Directors. No change in the actual number of directors of the Borrower shall be made without the prior written consent of the Required Lenders. SECTION 2.04. Maturity of Loans. Except for mandatory prepayments of the Loans required by this Agreement, the Syndicated Term Loans and the Revolving Participated Loans shall mature, and the principal amount thereof, if any, together with all accrued but unpaid interest thereon, if any, shall be due and payable on the applicable Termination Date without notice to or demand upon the Borrower. SECTION 2.05. Interest Rates. (a) Each Loan shall bear interest on the outstanding principal amount thereof, for each day from the date such Loan is made until it becomes due, at a rate per annum equal to 13.00%. Such interest shall be payable for each Interest Period on the last day thereof. Any overdue principal of and, to the extent permitted by applicable law, overdue interest on any Loan shall bear interest, payable on demand, for each day until paid at a rate per annum equal to the Default Rate. (b) After the occurrence and during the continuance of a Default, the principal amount of the Loans (and, to the extent permitted by applicable law, all accrued interest thereon) shall, at the election of the Required Lenders, bear interest at the Default Rate. SECTION 2.06. Intentionally Deleted. SECTION 2.07. Optional Prepayments of Syndicated Term Loan Notes. The Borrower may, upon at least one Domestic Business Day's notice to the Lenders, prepay the Syndicated Term Loan Notes by an aggregate amount of at least $500,000 or any larger multiple of $500,000, without premium or penalty. SECTION 2.08. Principal Payments of Notes. (a) Scheduled Principal Payments. On the last day of each of the following Reporting Periods, the Borrower shall pay the principal amount of the Syndicated Term Loans equal to the greater of the following amounts: 16 25
Amount Equal to the Greater of --------------------------- Reporting Periods x or y ----------------- ------- ----------- From the Closing Date through Reporting Period 4 in Fiscal Year 1997 (n/a) (n/a) For Reporting Periods 5 through 11 in Fiscal Year 1997 $200,000 (n/a) For Reporting Period 12 in Fiscal 1997 through Reporting Period 3 in Fiscal Year 1998 $275,000 50% of Consolidated Cash Flow for the previous Reporting Period For Reporting Period 4 in Fiscal Year 1998 and for all Reporting Periods thereafter $350,000 60% of Consolidated Cash Flow for the previous Reporting Period
As used in this Section 2.08(a), Consolidated Cash Flow shall exclude the portion of Consolidated Cash Flow attributable to any Person other than a Wholly Owned Subsidiary that is not received by the Borrower or any Guarantor. (b) Mandatory Principal Payments upon Sales of Assets. Except to the extent otherwise provided in this Section 2.08(a), all proceeds (whenever received, whether at closing or as a result of payments under any promissory note, net however of prorated property taxes and reasonable transactional costs incurred with respect to such closing) payable to and received by Borrower or any Guarantor from the sale of assets (except for sales of inventory in the ordinary course of business) owned by the Borrower and/or its Consolidated Subsidiaries permitted by Section 5.14 hereof shall be paid to the Lenders and shall be applied against the outstanding principal payments required to be paid under Section 2.08a in order of maturity. Notwithstanding foregoing, provided no Default exists, the Borrower may retain fifty percent (50%) the of such net proceeds of asset sales and may use the portion so retained for general corporate purposes (other than dividends, distributions or loans). Nothing herein shall be construed to permit the Borrower to sell any of its assets other than as expressly authorized by this Agreement. (c) Prepayment at Election of Lenders Upon Change of Control. Upon the occurrence of a Change of Control (which Change of Control the parties agree shall not occur from the election of representatives of the Lenders to the Borrower's Board of Directors on the Closing Date pursuant to this Agreement or any additional stock purchased by Lenders or their Affiliates), each Lender shall have the right to require the Borrower to prepay the Notes at a prepayment price 17 26 equal to 103% of the principal amount thereof, plus accrued and unpaid interest, if any, to the date of prepayment. Within five Domestic Business Days following any Change of Control, the Borrower will mail a notice thereof to each Lender, with a copy to the Agent (a "Change of Control Notice"). Any Lender, by written notice to the Borrower within 30 days following receipt of such Change of Control Notice, may elect prepayment of its Notes and the Borrower shall prepay such Notes at the price specified above no later than 30 days thereafter. (d) Prepayment Upon Rights Offering. Upon the consummation of the issuance and sale of Capital Stock in connection with a Rights Offering, the Borrower shall prepay the entire principal amount of the Revolving Participated Loans, plus accrued and unpaid interest, if any, thereon to the date of prepayment. SECTION 2.09. Intentionally Deleted. SECTION 2.10. Intentionally Deleted. SECTION 2.11. General Provisions as to Payments. (a) The Borrower shall make each payment of principal of, and interest on, the Syndicated Term Loans and of fees hereunder not later than 11:00 A.M. (Eastern Standard Time) on the date when due, in Federal or other funds immediately available, to the Agent at its address referred to in Section 9.01. The Borrower shall make each payment of principal of, and interest on, the Revolving Syndicated Term Loan not later than 11:00 A.M. (Eastern Standard Time) on the date when due, in Federal or other funds immediately available, to the Agent. (b) Whenever any payment of principal of, or interest on, the Loans or of fees hereunder shall be due on a day which is not a Domestic Business Day, the date for payment thereof shall be extended to the next succeeding Domestic Business Day. SECTION 2.12. Computation of Interest and Fees. Interest on Loans shall be computed on the basis of a year of 360 days and a month of 30 days. All fees payable hereunder shall be computed on the basis of a year of 360 days and paid for the actual number of days elapsed (including the first day but excluding the last day). SECTION 2.13. Collateral. (a) In addition to the collateral security granted by the Borrower and the Guarantors under the Security Agreements the Borrower shall (and shall cause each of the Guarantors to), at the sole cost and expense of the Borrower (subject to the limitations described in subsection 2.13(c) below), grant to the Agent and do all things requested to maintain, for the ratable benefit of the Lenders to secure all obligations of the Borrower hereunder (including, without limitation, the Syndicated Term Loan Notes and the Revolving Participated Loan Note), a continuing, blanket and general lien upon and security interest and title in and to all real property, equipment, inventory, general intangibles, personal property and assets of the Borrower and the Guarantors, or other assets as the Required Lenders shall designate in their reasonable discretion (the "Post-Closing Collateral") and shall deliver (or cause to be delivered) to the Agent such duly executed security agreements, security deeds, mortgages, deeds of trust, estoppels, subordination agreements, pledge agreements, stock powers, Uniform Commercial Code financing statements, 18 27 title certificates, affidavits, and other documents, as are reasonably necessary or desirable in the judgment of the Required Lenders to perfect first priority liens (as such first priority may be available) against the Post-Closing Collateral (collectively, the "Post-Closing Collateral Documents"). (b) The Borrower shall (and shall cause each of the Guarantors to), after an Event of Default, at the sole cost and expense of the Borrower, deliver (or cause to be delivered) to the Agent such appraisals, surveys, title searches, title policies, environmental audits and other documents, all of which shall be satisfactory to the Required Lenders in all respects, as are deemed reasonably necessary or desirable by the Required Lenders in connection with the Collateral. (c) The Borrower agrees to pay up to $200,000 of costs and expenses incurred by the Agent and the Lenders in connection with the actions contemplated by this Section 2.13, including, without limitation, all filing fees, lien search fees, intangible taxes (whether incurred before or after payment in full of the Loans), documentary stamp taxes (whether incurred before or after payment in full of the Loans), surveys, environmental surveys, and title reports. All such documentation shall be reasonable and customary and in form and substance satisfactory to the Agent and the Lenders in their discretion. The Borrower hereby irrevocably appoints the Agent as the Borrower's attorney-in-fact to (i) deliver and record in the appropriate filing office any instrument contemplated or required hereby (including, without limitation, the relevant security deeds, mortgages, deeds of trust, and Uniform Commercial Code financing statements) and to pay the related recording expenses and (ii) from time to time in the Agent's discretion, to take any other action which the Agent may deem reasonably necessary or advisable to accomplish the purposes of this Section 2.13 with respect to the Collateral. SECTION 2.14. Waiver and Release. THROUGH THE DATE OF THIS AGREEMENT, THE BORROWER AND EACH GUARANTOR HEREBY KNOWINGLY AND VOLUNTARILY, FOREVER RELEASES, ACQUITS AND DISCHARGES THE AGENT AND THE LENDERS (BUT NOT ANY OF THE PRIOR LENDERS), THEIR DIRECTORS, OFFICERS, PARTNERS, TRUSTEES, BENEFICIARIES, EMPLOYEES, AGENTS, CONTROLLING PERSONS AND SHAREHOLDERS (COLLECTIVELY, THE "RELEASED PARTIES") (A) FROM AND OF ANY AND ALL CLAIMS ARISING FROM ACTS OR OMISSIONS OF ANY OF THE RELEASED PARTIES OR THE PRIOR LENDERS, THEIR DIRECTORS, OFFICERS, PARTNERS, TRUSTEES, BENEFICIARIES, EMPLOYEES, AGENTS, CONTROLLING PERSONS AND SHAREHOLDERS (COLLECTIVELY, THE "PRIOR LENDER PARTIES") THAT MAY HAVE OCCURRED PRIOR TO THE CLOSING DATE THAT ANY OF THE RELEASED PARTIES OR ANY OF THE PRIOR LENDER PARTIES (1) IS IN ANY WAY RESPONSIBLE FOR THE PAST, CURRENT OR FUTURE CONDITION OR DETERIORATION OF THE BUSINESS OPERATIONS AND/OR FINANCIAL CONDITION OF THE BORROWER, OR (2) BREACHED ANY AGREEMENT TO LOAN MONEY OR MAKE OTHER FINANCIAL ACCOMMODATIONS AVAILABLE TO THE BORROWER OR TO FUND ANY OPERATIONS OF THE BORROWER AT ANY TIME, AND (B) FROM AND OF ANY AND ALL OTHER CLAIMS, DAMAGES, LOSSES, ACTIONS, COUNTERCLAIMS, SUITS, JUDGMENTS, OBLIGATIONS, LIABILITIES, DEFENSES, AFFIRMATIVE DEFENSES, SETOFFS, AND DEMANDS OF ANY KIND OR NATURE WHATSOEVER, IN LAW OR IN EQUITY, WHETHER PRESENTLY KNOWN OR UNKNOWN, WHICH THE BORROWER OR ANY GUARANTOR MAY HAVE HAD, NOW HAVE, OR WHICH IT CAN, SHALL OR MAY HAVE FOR, UPON, OR BY REASON OF 19 28 ANY MATTER, COURSE OR THING WHATSOEVER RELATING TO, ARISING OUT OF, BASED UPON, OR IN ANY MANNER CONNECTED WITH, ANY TRANSACTION, EVENT, CIRCUMSTANCE, ACTION, FAILURE TO ACT, OR OCCURRENCE OF ANY SORT OR TYPE, WHETHER KNOWN OR UNKNOWN, WHICH OCCURRED, EXISTED, WAS TAKEN, PERMITTED, BEGUN, OR OTHERWISE RELATED OR CONNECTED TO OR WITH ANY OR ALL OF THE LOANS, THIS AGREEMENT, THE AMENDED CREDIT AGREEMENT, ANY OR ALL OF THE LOAN DOCUMENTS, AND/OR ANY DIRECT OR INDIRECT ACTION OR OMISSION OF ANY OF THE RELEASED PARTIES OR THE PRIOR LENDER PARTIES ARISING FROM ACTS OR OMISSIONS OF THE RELEASED PARTIES OR THE PRIOR LENDER PARTIES THAT MAY HAVE OCCURRED PRIOR TO THE CLOSING DATE. THE BORROWER FURTHER AGREES THAT FROM AND AFTER THE DATE HEREOF, IT WILL NOT ASSERT TO ANY PERSON OR ENTITY THAT ANY DETERIORATION OF THE BUSINESS OPERATIONS OR FINANCIAL CONDITION OF THE BORROWER WAS CAUSED BY ANY BREACH OR WRONGFUL ACT OF ANY OF THE RELEASED PARTIES OR THE PRIOR LENDER PARTIES OCCURRING PRIOR TO THE DATE HEREOF. It is the intention of the parties that the foregoing shall be effective as a full and final accord and satisfactory release of each and every matter specifically or generally referred to above. In furtherance of this intention, the parties acknowledge that each is familiar with Section 1542 of the California Civil Code, which provides as follows: A general release does not extend to claims which the creditor does not know or suspect to exist in his favor at the time of executing the release, which if known by him must have materially affected his settlement with the debtor. The parties hereto waive and relinquish any right and benefits which they each may have under said Section 1542. The parties acknowledge that they may hereafter discover facts in addition to or different from those which they now know or believe to be true with respect to the Action or the subject matter of this Agreement, but it is their intention to fully, finally and forever settle and release any and all matters, disputes and differences, known or unknown, suspected or unsuspected, which do now exist, may exist or heretofore have existed between them. ARTICLE III CONDITIONS TO CLOSING SECTION 3.01. Conditions to Closing. The obligation of each Lender to make a Syndicated Term Loan or of CKE to make a Revolving Participated Loan on the occasion of the first Borrowing, and to restructure the obligations hereunder, is subject to the satisfaction of the conditions set forth below and receipt by the Agent of the documents, instruments, agreements and certificates set forth below (in sufficient number of counterparts (except as to the Notes and the Warrants) for delivery of a counterpart to each Lender and retention of one counterpart by the Agent): 20 29 (a) from each of the parties hereto of either (i) a duly executed counterpart of this Agreement signed by such party or (ii) a facsimile transmission stating that such party has duly executed a counterpart of this Agreement and sent such counterpart to the Agent; (b) duly executed originals of the Syndicated Term Loan Notes and the Participated Loan; (c) duly executed originals of the Warrants; (d) duly executed Registration Rights Agreement; (e) duly executed Amended and Restated Security Agreement; (f) duly executed Guaranty by each of the Guarantors; (g) duly executed Guarantor Security Agreements; (h) a certificate (the "Closing Certificate") substantially in the form of Exhibit 3.01(h)), dated as of the Closing Date, signed by a principal financial officer of the Borrower, to the effect that (i) no Default has occurred and is continuing, and (ii) the representations and warranties of the Borrower contained in Article IV are true on and as of the Closing Date; (i) an opinion letter (together with any opinions of local counsel relied on therein) of Shumaker, Loop & Kendrick, counsel for the Borrower, dated as of the Closing Date, substantially in the form of Exhibit 3.01(i) and covering such additional matters relating to the transactions contemplated hereby as the Agent or any Lender may reasonably request; (j) all documents which the Agent or any Lender may reasonably request relating to the existence of the Borrower and the Guarantors, the corporate authority for and the validity of this Agreement, the Notes, the Warrant Agreements and the other Loan Documents and any other matters relevant hereto, or thereto, all in form and substance reasonably satisfactory to the Agent, including, without limitation, a certificate of incumbency of each of the Borrower and the Guarantors, signed by the Secretary or an Assistant Secretary of the Borrower and the Guarantors, certifying as to the names, true signatures and incumbency of the officer or officers, respectively, of the Borrower and the Guarantors authorized to execute and deliver the Loan Documents, and certified copies of the following items, for the Borrower and each of the Guarantors, respectively: (i) Certificate/Articles of Incorporation, (ii) Bylaws, (iii) a certificate of the Secretary of State of the state of incorporation of each as to the good standing of each as a corporation in that state, and (iv) the action taken by the Board of Directors authorizing the execution, delivery and performance of this Agreement, the Notes, the Warrants and the other Loan Documents to which the Borrower or any of the Guarantors is a party; (k) a list in the form of Exhibit 3.01(k) hereto certified by the principal financial officer of the Borrower, of all insurance required by Section 5.17 showing the insurer, the face amount and the nature of coverage, and the Agent as a loss payee (or beneficiary, as the case may be) under each policy then in force; 21 30 (l) all mortgages and security interests securing the Borrower's obligations hereunder (and the Guarantors' obligations under the Guaranties) shall be duly perfected and validly recorded; and (m) there shall not have occurred any material adverse change in the condition (financial or otherwise), operation, properties, assets, liabilities, earnings or prospects of the Borrower or the Guarantors since September 9, 1996. SECTION 3.02. Conditions to All Borrowings. The obligation of CKE to make a Revolving Participated Loan on the occasion of each Borrowing is subject to the satisfaction of the following conditions: (a) receipt by the Agent of a Notice of Borrowing; (b) the fact that, immediately before and after such Borrowing, no Default shall have occurred and be continuing; (c) the fact that the representations and warranties of the Borrower contained in Article IV of this Agreement shall be true on and as of the date of such Borrowing; and (d) the fact that, immediately after such Borrowing, the aggregate outstanding principal amount of the Revolving Participated Loans will not exceed the amount of the Commitment. Each Borrowing hereunder shall be deemed to be a representation and warranty by the Borrower on the date of such Borrowing as to the truth and accuracy of the facts specified in paragraphs (b), (c) and (d) of this Section; provided that such Borrowing shall not be deemed to be such a representation and warranty to the effect set forth in Section 4.04(b) as to any event, act or condition having a Material Adverse Effect which has theretofore been disclosed in writing by the Borrower to the Lenders if the aggregate outstanding principal amount of the Loans immediately after such Borrowing will not exceed the aggregate outstanding principal amount thereof immediately before such Borrowing. ARTICLE IV REPRESENTATIONS AND WARRANTIES The Borrower represents and warrants that: SECTION 4.01. Corporate Existence and Power. The Borrower is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation, is duly qualified to transact business in every jurisdiction where, by the nature of its business, such qualification is necessary, except where the failure to qualify could not reasonably be expected to have or cause a Material Adverse Effect, and has all corporate powers and all governmental licenses, authorizations, consents and approvals required to carry on its business as now conducted, except where the failure to have any license, authorization, consent or approval could not reasonably be expected to have or cause a Material Adverse Effect. 22 31 SECTION 4.02. Corporate and Governmental Authorization; No Contravention. The execution, delivery and performance by the Borrower of this Agreement, the Notes, the Warrant Agreements and the other Loan Documents delivered as of the Closing Date (i) are within the Borrower's corporate powers, (ii) have been duly authorized by all necessary corporate action, (iii) require no action by or in respect of or filing with, any governmental body, agency or official, (iv) do not contravene, or constitute a default under, any provision of applicable law or regulation or of the certificate of incorporation or by-laws of the Borrower or of any agreement, judgment, injunction, order, decree or other material instrument binding upon the Borrower or any Guarantor, and (v) do not result in the creation or imposition of any Lien on any asset of the Borrower or any Guarantor other than Liens created or imposed pursuant to the Loan Documents. SECTION 4.03. Binding Effect. This Agreement constitutes a valid and binding agreement of the Borrower enforceable in accordance with its terms, the Notes, the Warrant Agreements and the other Loan Documents, when executed and delivered in accordance with this Agreement, will constitute valid and binding obligations of the Borrower enforceable in accordance with their respective terms, provided that the enforceability hereof and thereof is subject in each case to general principles of equity and to bankruptcy, insolvency and similar laws affecting the enforcement of creditors' rights generally, and to standards of good faith and commercial reasonableness. SECTION 4.04. Financial Information. (a) The consolidated balance sheet of the Borrower and its Consolidated Subsidiaries as of January 1, 1996, and the related consolidated statements of income, shareholders' equity and cash flows for the Fiscal Year then ended, reported on by KPMG Peat Marwick, and the consolidated balance sheet of the Borrower and its Consolidated Subsidiaries of September 9, 1996, and the related consolidated statements of operations and cash flows for the Fiscal Quarter then ended, copies of which have been delivered to each of the Lenders, fairly present, in conformity with GAAP, the consolidated financial position of the Borrower and its Consolidated Subsidiaries as of such dates and their consolidated results of operations and cash flows for such periods stated. (b) Since September 9, 1996 and excepted as disclosed in Schedule 4.04 attached hereto, there has been no event, act, condition or occurrence having a Material Adverse Effect. SECTION 4.05. No Litigation. Except as disclosed as Schedule 4.05, there is no action, suit or proceeding pending, or to the knowledge of the Borrower threatened, against or affecting the Borrower or any of its Subsidiaries before any court or arbitrator or any governmental body, agency or official which could reasonably be expected to have or cause a Material Adverse Effect. SECTION 4.06. Compliance with ERISA. (a) The Borrower and each member of the Controlled Group have fulfilled their obligations in all material respects under the minimum funding standards of ERISA and the Code with respect to each Plan and are in compliance in all material respects with the presently applicable provisions of ERISA and the Code, and have not incurred any liability to the PBGC or a Plan under Title IV of ERISA. 23 32 (b) Neither the Borrower nor any member of the Controlled Group is or ever been obligated to contribute to any Multiemployer Plan. SECTION 4.07. Compliance with Laws; Payment of Taxes. The Borrower and its Consolidated Subsidiaries are in compliance with all applicable laws, regulations and similar requirements of governmental authorities, except where such compliance is being contested in good faith through appropriate proceedings and except where the failure to comply could not reasonably be expected to have or cause a Material Adverse Effect. There have been filed on behalf of the Borrower and its Consolidated Subsidiaries all Federal and state income, excise, property and other tax returns which are required to be filed by them and all taxes due pursuant to such returns or pursuant to any assessment received by or on behalf of the Borrower or any Consolidated Subsidiary have been paid. There have been filed on behalf of the Borrower and its Consolidated Subsidiaries all local income, excise, property and other tax returns that are required to be filed by them and all taxes due pursuant to the returns or any assessment received by Borrower or any Consolidated Subsidiary have been paid, except to the extent that unfiled tax returns and unpaid taxes could not reasonably be expected to have or cause a Material Adverse Effect. The charges, accruals and reserves on the books of the Borrower and its Consolidated Subsidiaries in respect of taxes or other governmental charges are, in the opinion of the Borrower, adequate, except for any changes in taxes which are imposed retroactively. SECTION 4.08. Consolidated Subsidiaries. Each of the Borrower's Consolidated Subsidiaries is a corporation or other business entity duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation, and has all corporate powers and all governmental licenses, authorizations, consents and approvals required to carry on its business as now conducted, except where the failure to have any license, authorization, consent, or approval could not reasonably be expected to have or cause a Material Adverse Effect. The Borrower has no Subsidiaries except for those Subsidiaries listed on Schedule 4.08, which accurately sets forth each such Subsidiary's complete name and jurisdiction of incorporation. SECTION 4.09. Investment Company Act. Neither the Borrower nor any of its Consolidated Subsidiaries is an "investment company" within the meaning of the Investment Company Act of 1940, as amended. SECTION 4.10. Public Utility Holding Company Act. Neither the Borrower nor any of its Consolidated Subsidiaries is a "holding company", or a "subsidiary company" of a "holding company", or an "affiliate" of a "holding company" or of a "subsidiary company" of a "holding company", as such terms are defined in the Public Utility Holding Company Act of 1935, as amended. SECTION 4.11. Ownership of Property; Liens. Each of the Borrower and its Consolidated Subsidiaries has title to its properties sufficient for the conduct of its business, and none of such property is subject to any Lien except as permitted in Section 5.11. SECTION 4.12. No Default. Except as disclosed in the Forms 10K, 10Q and 8K of Borrower filed with the Securities and Exchange Commission, neither the Borrower nor any of its Consolidated Subsidiaries is in default under or with respect to any agreement, instrument or undertaking to which it is a party or by which it or any of its property is bound which could have 24 33 or cause a Material Adverse Effect and no Default or Event of Default has occurred and is continuing. SECTION 4.13. Full Disclosure. All written information heretofore furnished by the Borrower to the Agent or any Lender for purposes of or in connection with this Agreement or any transaction contemplated hereby is, and all such information hereafter furnished by the Borrower to the Agent or any Lender will be, true, accurate and complete in every material respect or based on reasonable estimates on the date as of which such information is stated or certified. The Borrower has disclosed to the Lenders in writing any and all facts which could have or cause a Material Adverse Effect. SECTION 4.14. Environmental Matters. (a) Neither the Borrower nor any Consolidated Subsidiary is subject to any Environmental Liability which could have or cause a Material Adverse Effect as the Environmental Liability becomes due and neither the Borrower nor any Consolidated Subsidiary has been designated as a potentially responsible party under CERCLA or under any state statute similar to CERCLA. None of the Properties has been identified on any current or proposed (i) National Priorities List under 40 C.F.R. Section 300, (ii) CERCLIS list or (iii) any list arising from a state statute similar to CERCLA. (b) No Hazardous Materials are being used, produced, manufactured, processed, treated, recycled, generated, stored, disposed of, managed or otherwise handled at, or shipped or transported to or from the Properties except in material compliance with Environmental Requirements. No Hazardous Materials are present at, on, in or under the Properties, or, to the best of the knowledge of the Borrower, at or from any adjacent site or facility (except for Hazardous Materials, such as cleaning solvents, pesticides and other materials used, produced, manufactured, processed, treated, recycled, generated, stored, disposed of, managed, or otherwise handled in minimal amounts in the ordinary course of business in compliance with all applicable Environmental Requirements) in such quantities that the cost to monitor, investigate, and/or remediate the Hazardous Materials in compliance with Environmental Requirements could not reasonably be expected to have or cause a Material Adverse Effect. (c) The Borrower, and each of its Consolidated Subsidiaries, is in compliance with all Environmental Requirements in connection with the operation of the Properties and the Borrower's, and each of its Consolidated Subsidiary's respective businesses, except where the potential Environmental Liability could not reasonably be expected to have or cause a Material Adverse Effect. SECTION 4.15. Capital Stock. All Capital Stock, debentures, bonds, notes and all other securities of the Borrower and its Consolidated Subsidiaries presently issued and outstanding are validly and properly issued in accordance with all applicable laws, including but not limited to, the "Blue Sky" laws of all applicable states and the federal securities laws. The issued shares of Capital Stock of the Borrower's Wholly Owned Subsidiaries are owned by the Borrower free and clear of any Lien or adverse claim. At least a majority of the issued shares of capital stock of each of the Borrower's Subsidiaries other than Wholly Owned Subsidiaries is owned by the Borrower free and clear of any Lien or adverse claim. 25 34 SECTION 4.16. Margin Stock. Neither the Borrower nor any of its Consolidated Subsidiaries is engaged principally, or as one of its important activities, in the business of purchasing or carrying any Margin Stock, and no part of the proceeds of any Loan will be used to purchase or carry any Margin Stock or to extend credit to others for the purpose of purchasing or carrying any Margin Stock, or be used for any purpose which violates, or which is inconsistent with, the provisions of Regulation X. SECTION 4.17. Insolvency. After giving effect to the execution and delivery of this Agreement, the Notes and the other Loan Documents, the Borrower will not be "insolvent," within the meaning of such term as defined in Section 101 of Title 11 of the United States Code or Section 2 of the Uniform Fraudulent Transfer Act, or any other applicable state law pertaining to fraudulent transfers, as amended from time to time, or be unable to pay its debts generally as such debts become due, or have an unreasonably small capital to engage in any business or transaction, whether current or contemplated. ARTICLE V COVENANTS The Borrower agrees that, so long as any amount payable hereunder or under any Note remains unpaid: SECTION 5.01. Information. (a) The Borrower will deliver to each of the Lenders: (i) as soon as available and in any event within 120 days after the end of each Fiscal Year, a consolidated balance sheet of the Borrower and its Consolidated Subsidiaries as of the end of such Fiscal Year and the related consolidated statements of operations, stockholders' equity and cash flows for such Fiscal Year, setting forth in each case in comparative form the figures for the previous fiscal year, all certified by KPMG Peat Marwick or other independent public accountants of nationally recognized standing, with such certification to be free of exceptions and qualifications not acceptable to the Required Lenders; (ii) as soon as available and in any event within 45 days after the end of each of the first 3 Fiscal Quarters of each Fiscal Year, a consolidated balance sheet of the Borrower and its Consolidated Subsidiaries as of the end of such Fiscal Quarter and the related statements of operations and statements of cash flows for such Fiscal Quarter and for the portion of the Fiscal Year ended at the end of such Fiscal Quarter, setting forth in each case in comparative form the figures for the corresponding Fiscal Quarter and the corresponding portion of the previous Fiscal Year, all certified (subject to normal year-end adjustments) as to fairness of 26 35 presentation, GAAP and consistency by the chief financial officer or the chief accounting officer of the Borrower, except to the extent that interim financial statements on Form 10-Q do not require footnotes and other disclosures that would otherwise be required by GAAP; (iii) simultaneously with the delivery of each set of financial statements referred to in paragraphs (i) and (ii) above and at the end of each Reporting Period, a certificate, substantially in the form of Exhibit 5.01(a)(iii) (a "Compliance Certificate"), of the chief financial officer or the chief accounting officer of the Borrower (i) setting forth in reasonable detail the calculations required to establish whether the Borrower was in compliance with the requirements of Sections 5.03 through 5.11, inclusive, and 5.14 on the date of such financial statements and (ii) stating whether any Default exists on the date of such certificate and, if any Default then exists, setting forth the details thereof and the action which the Borrower is taking or proposes to take with respect thereto; (iv) simultaneously with the delivery of each set of annual financial statements referred to in paragraph (a)(i) above, a statement of the firm of independent public accountants which reported on such statements to the effect that nothing has come to their attention to cause them to believe that any Default existed on the date of such financial statements, or, if any Default then exists, setting forth the details thereof, and a copy of the audit report and/or management letter provided by such accountants to the Borrower; (v) within 5 Domestic Business Days after the Borrower has knowledge of the occurrence of any Default, a certificate of the chief financial officer or the chief accounting officer of the Borrower setting forth the details thereof and the action which the Borrower is taking or proposes to take with respect thereto; (vi) promptly upon the mailing thereof to the stockholders of the Borrower generally, copies of all financial statements, reports and proxy statements so mailed; and (vii) promptly upon the filing thereof, copies of all registration statements (other than the exhibits thereto and any registration statements on Form S-8 or its equivalent) and annual, quarterly or monthly reports which the Borrower shall have filed with the Securities and Exchange Commission. (b) Upon the request of the Agent or any Lender, the Borrower will deliver to of the Lenders: 27 36 (i) if and when any member of the Controlled Group (A) gives or is required to give notice to the PBGC of any "reportable event" (as defined in Section 4043 of ERISA) with respect to any Plan which might constitute grounds for a termination of such Plan under Title IV of ERISA, or knows that the plan administrator of any Plan has given or is required to give notice of any such reportable event, a copy of the notice of such reportable event given or required to be given to the PBGC; (B) receives notice of complete or partial withdrawal liability under Title IV of ERISA, a copy of such notice; or (C) receives notice from the PBGC under Title IV of ERISA of an intent to terminate or appoint a trustee to administer any Plan, a copy of such notice; and (ii) as soon as available and in any event within 25 days after the end of each of the first 12 Reporting Periods of each Fiscal Year, a consolidated statement of income and balance sheet of the Borrower and its Consolidated Subsidiaries as of the end of such Reporting Period and for the portion of the Fiscal Year ended at the end of such Reporting Period, setting forth in each case in comparative form the figures for the corresponding Reporting Period and the corresponding portion of the previous Fiscal Year, all certified (subject to normal year-end adjustments) as to fairness of presentation, GAAP and consistency by the chief financial officer or the chief accounting officer of the Borrower, except to the extent that interim financial statements do not require footnotes and that such financial statements are subject to normal year-end adjustments; (iii) promptly upon receipt or obtaining knowledge thereof, any and all bona fide offers or expressions of interest (whether verbal or written, solicited or unsolicited) to merge with or to acquire all or any part of the assets or capital stock of the Borrower; (iv) within 25 days after the end of each Reporting Period, a variance report which reconciles the performance of the Borrower for the immediately preceding Reporting Period to the projected budget of the Borrower for such period; (v) within 25 days after the end of each Reporting Period, an accounts payable schedule for the Borrower; (vi) within 25 days after the end of each fiscal quarter of the Borrower, a written schedule of all fee simple and leased properties of the Borrower as of such date; (vii) within 25 days after the end of each Reporting Period, a written schedule of the revenues, profit contributions and other operating 28 37 and financial information with respect to each Checkers Restaurant, on an individual and regional basis; (viii) within 5 days after the end of each calendar week, written weekly sales reports with respect to each Checkers Restaurant, on an individual and regional basis; (ix) within 25 days after the end of each Reporting Period, a written summary of the Borrower's advertising and promotional activities, including a summary of amounts expended in connection therewith and a cost/benefit analysis of such expenditures; and (x) from time to time such additional information regarding the financial position or business of the Borrower and its Subsidiaries as may be reasonably requested. SECTION 5.02. Inspection of Property, Books and Records. The Borrower will (i) keep, and cause each Consolidated Subsidiary to keep, proper books of record and account in which full, true and correct entries in conformity with GAAP shall be made of all dealings and transactions in relation to its business and activities; and (ii) permit, and cause each Wholly Owned Subsidiary to permit, representatives of any Lender at the Borrower's expense to visit and inspect any of their respective properties, to examine and make abstracts from any of their respective books and records and to discuss their respective affairs, finances and accounts with their respective officers, employees and independent public accountants. The Borrower agrees to cooperate and assist in such visits and inspections, in each case at such reasonable times and as often as may reasonably be desired. SECTION 5.03. Minimum Consolidated EBITDA. For each three consecutive Reporting Period cycle ending with the Reporting Period listed below, Consolidated EBITDA shall not be less than the amounts listed below:
Reporting Period Amount ($) ---------------- ---------- Fiscal Year 1996: N/A Fiscal Year 1997: Reporting Period 1 625,000 Reporting Period 2 1,000,000 Reporting Period 3 1,250,000 Reporting Period 4 1,250,000 Reporting Periods 5-6 1,250,000 Reporting Periods 7-9 1,300,000 Reporting Periods 10-13 2,000,000 Fiscal Year 1998: Reporting Periods 1-13 2,750,000 Fiscal Year 1999: Reporting Periods 1 through 2,750,000
29 38 the Reporting Period in which the Termination Date occurs. SECTION 5.04. Capital Expenditures. Capital Expenditures shall not exceed (a) $1,500,000 for the period from September 16, 1996 through the end of Fiscal Year 1996, and (b) $4,000,000 for any Fiscal Year thereafter (unless otherwise approved by the Borrower's Board of Directors). SECTION 5.05. Intentionally Deleted. SECTION 5.06. Intentionally Deleted. SECTION 5.07. Restricted Payments. The Borrower will not declare or make any Restricted Payments other than Restricted Payments made for the purpose of purchasing any redeemable warrants issued in a rights offering. SECTION 5.08. Limitation on Indebtedness. Neither the Borrower nor any of its Subsidiaries will create, incur, assume, or become, be or remain liable in any manner in respect of, or allow to exist, any Indebtedness (which term shall include: all indebtedness, obligations and liabilities which in accordance with generally accepted accounting principles would be reflected on the balance sheet of the Borrower as a liability; all indebtedness, obligations and liabilities, whether or not assumed by Borrower or any Subsidiary, secured by any mortgage, pledge or lien existing on property owned by the Borrower or any Subsidiary; and all amounts representing rental payments which, in accordance with generally accepted accounting principles, would be classified as a liability on its balance sheet), except for: (a) the Notes and any other obligations owed to the Lenders under this or otherwise; (b) Indebtedness of the Borrower existing as of the date of this Agreement which is specifically disclosed in Schedule 5.08 attached hereto; (c) Indebtedness representing trade debt, wages, employee benefits, advance payments on sales contracts and other indebtedness incurred in the ordinary course of business; (d) Indebtedness existing as of the date of this Agreement secured by liens by subsection (a) of Section 5.11; (e) Liabilities for taxes, assessments, governmental charges, liens or claims described in Section 5.16 hereof to the extent that payment thereof is not required by such Section 5.16; and (f) Indebtedness in respect of final judgments for the payment of money not in excess of $10,000 in the aggregate at any time outstanding (excluding sums covered by insurance) remaining unsatisfied and in effect for any period of less than thirty (30) days or in respect of which a stay of execution shall have been obtained pending an appeal or proceeding for review. 30 39 SECTION 5.09. Loans or Advances. Neither the Borrower nor any Guarantor shall make loans or advances to any Person except (without duplication): (a) loans or advances to employees not exceeding $50,000 in the aggregate principal amount outstanding at any time, in each case made in the ordinary course of business and consistent with practices existing on the Closing Date; (b) deposits required by government agencies or public utilities; (c) loans, advances or monetary capital contributions from the Borrower or a Guarantor to any Guarantor, or from any Guarantor to the Borrower; (d) loans in existence on the Closing Date not exceeding a total aggregate principal amount of $53,957,868 outstanding as described on Schedule 5.09 attached hereto, which are evidenced by legally enforceable promissory notes and subject to the Lenders' perfected Liens and shall be delivered to the Agent; and (e) loans or advances consented to by the Required Lenders in connection with asset sales under Section 5.14 or loans or advances in connection with asset sales which do not require the consent of the Required Lenders; provided that after giving effect to the making of any loans, advances or deposits permitted by this Section, the Borrower will be in full compliance with all the provisions of this Agreement. SECTION 5.10. Investments. Neither the Borrower nor any Guarantor shall make Investments in any Person except as permitted by Section 5.09 and except Investments (i) in direct obligations of the United States Government maturing within one year, (ii) in certificates of deposit issued by a commercial bank whose long-term certificates of deposit are rated at least AA or the equivalent thereof by Standard & Poor's Corporation and Aa or the equivalent thereof by Moody's Investors Service, Inc., (iii) in commercial paper rated A1 or the equivalent thereof by Standard & Poor's Corporation or P1 or the equivalent thereof by Moody's Investors Service, Inc. and in either case maturing within 6 months after the date of acquisition, (iv) in tender bonds the payment of the principal of and interest on which is fully supported by a letter of credit issued by a United States bank whose long-term certificates of deposit are rated at least AA or the equivalent thereof by Standard & Poor's Corporation and Aa or the equivalent thereof by Moody's Investors Service, Inc, and (v) not in excess of $150,000 individually. SECTION 5.11. Negative Pledge. Neither the Borrower nor any Wholly Owned Subsidiary will create, assume or suffer to exist any Lien on any asset now owned or hereafter acquired by it, except: (a) Liens existing on the date of this Agreement and identified on 5.11; (b) any Lien existing on any asset of any corporation at the time such corporation becomes a Consolidated Subsidiary and not created in contemplation of such event; (c) any Lien on any asset securing Indebtedness incurred or assumed for the purpose of financing all or any part of the cost of acquiring or constructing such asset; (d) any Lien on any asset of any corporation existing at the time such corporation is merged with or into the Borrower or a Consolidated Subsidiary and not created in contemplation of such event; (e) any Lien existing on any asset prior to the acquisition thereof by the Borrower or a Consolidated Subsidiary and not created in contemplation of such acquisition; 31 40 (f) Liens securing Indebtedness owing by any Subsidiary to the Borrower; (g) any Lien arising out of the refinancing, extension, renewal or refunding of any Indebtedness secured by any Lien permitted by any of the foregoing paragraphs of this Section , provided that (i) such Indebtedness is not secured by any additional assets, and (ii) the amount of such Indebtedness secured by any such Lien is not increased or, if increased, the excess of the amount of the Indebtedness secured by any such lien over the amount of the Indebtedness so refinanced extended, renewed, or refunded shall be tendered to the Agent as a prepayment of the Syndicated Term Loans; (h) Liens incidental to the conduct of its business or the ownership of its assets which (i) do not secure Indebtedness and (ii) do not in the aggregate materially detract from the value of its assets or materially impair the use thereof in the operation of its business; (i) any Lien on Margin Stock; (j) Liens in favor of the Lenders created under the Loan Documents; and (k) Liens incurred by Borrower in the ordinary course of business for items not past due and payable, including mechanics' and materialmen's liens and deposits and charges for workers' compensation and liens for taxes and assessments not past due and payable. SECTION 5.12. Maintenance of Existence. The Borrower shall, and shall cause each Subsidiary to, maintain its corporate existence and carry on its business in substantially the same manner and in substantially the same fields as such business is now carried on and maintained. SECTION 5.13. Dissolution. Neither the Borrower nor any of its Wholly Owned Subsidiaries shall suffer or permit dissolution or liquidation either in whole or in part or redeem or retire any shares of its own stock or that of any Wholly Owned Subsidiary, except through corporate reorganization to the extent permitted by Section 5.14. SECTION 5.14. Consolidations, Mergers and Sales of Assets. The Borrower will not, nor will it permit any Wholly Owned Subsidiary to, consolidate or merge with or into, or sell, lease or otherwise transfer all or any substantial part of its assets to, any other Person, or discontinue or eliminate any business line or segment; provided, however, that if no Default has occurred and is continuing (i) the Borrower may merge with another Person if (A) such Person was organized under the laws of the United States of America or one of its states, (B) the Borrower is the corporation surviving such merger, and (C) immediately after giving effect to such merger, no Default shall have occurred and be continuing, (ii) Subsidiaries of the Borrower may merge with one another or, if the Borrower is the surviving corporation, the Borrower, and (iii) the foregoing limitation on the sale, lease or other transfer of assets and on the discontinuation or elimination of a business line or segment shall not prohibit the Borrower from selling or permitting the sale of assets owned by the Borrower and its Subsidiaries for not less than 85% (or a lesser percentage as may be consented to by the Required Lenders in writing) of their book value provided that any such sale or sales, in any single transaction or series of related transactions, in excess of $250,000 shall be consented to in writing in advance by the Required Lenders (other than sales of used buildings to franchisees to be operated by such franchisees as Checkers Restaurants). 32 41 SECTION 5.15. Use of Proceeds. No portion of the proceeds of the Loans will be used by the Borrower or any Subsidiary (i) in connection with, whether directly or indirectly, any tender offer for, or other acquisition of, stock of any corporation with a view towards obtaining control of such other corporation, (ii) directly or indirectly, for the purpose, whether immediate, incidental or ultimate, of purchasing or carrying any Margin Stock, or (iii) for any purpose in violation of any applicable law or regulation. SECTION 5.16. Compliance with Laws; Payment of Taxes; SEC Filings. The Borrower will, and will cause each of its Wholly Owned Subsidiaries and each member of the Controlled Group to, comply with applicable laws (including but not limited to ERISA), regulations and similar requirements of governmental authorities (including but not limited to PBGC) in all material respects, except where the necessity of such compliance is being contested in good faith through appropriate proceedings. The Borrower will, and will cause each of its Wholly Owned Subsidiaries to, pay promptly before past due all taxes, assessments, governmental charges, claims for labor, supplies, rent and other obligations which, if unpaid, might become or remain a lien against the property of the Borrower or any Wholly Owned Subsidiary, except liabilities being contested in good faith and against which, if requested by the Agent, the Borrower will set up reserves in accordance with GAAP. The Borrower will timely file all reports with the Securities and Exchange Commission (including Forms 10K, 10Q and 8K) required to be filed under, and will otherwise comply in all respects with, applicable securities laws. SECTION 5.17. Insurance. The Borrower will maintain, and will cause each of its Wholly Owned Subsidiaries to maintain (either in the name of the Borrower or in such Subsidiary's own name), with financially sound and reputable insurance companies, insurance on all its property in at least such amounts and against at least such risks as are usually insured against in the same general area by companies of established repute engaged in the same or similar business, and as required by the other Loan Documents. SECTION 5.18. Change in Fiscal Year. The Borrower will not change its Fiscal Year without the consent of the Required Lenders. SECTION 5.19. Maintenance of Property. The Borrower shall, and shall cause each Wholly Owned Subsidiary to, maintain all of its properties and assets in good condition, repair and working order, except for ordinary wear and tear and loss by casualty. SECTION 5.20. Environmental Notices. The Borrower shall furnish to the Lenders and the Agent prompt written notice of all Environmental Liabilities, pending, threatened or anticipated Environmental Proceedings, Environmental Notices, Environmental Judgments and Orders, and Environmental Releases at, on, in, under or in any way affecting the Properties or any adjacent property, and all facts, events, or conditions that could lead to any of the foregoing. SECTION 5.21. Environmental Matters. The Borrower and its Wholly Owned Subsidiaries will not, and will not permit any Third Party to, use, produce, manufacture, process, treat, recycle, generate, store, dispose of, manage at, or otherwise handle, or ship or transport to or from the Properties any Hazardous Materials except for Hazardous Materials such as cleaning solvents, pesticides and other similar materials used, produced, manufactured, processed, treated, recycled, generated, stored, disposed, managed, or otherwise handled in minimal amounts in the ordinary course of business in compliance with all applicable Environmental Requirements. 33 42 SECTION 5.22. Environmental Release. The Borrower agrees that upon the occurrence of an Environmental Release at or on any of the Properties it will act immediately to investigate the extent of, and to take appropriate remedial action to eliminate, such Environmental Release, whether or not ordered or otherwise directed to do so by any Environmental Authority. SECTION 5.23. Transactions with Affiliates. Excluding any transactions otherwise permitted by this Agreement, neither the Borrower nor any of its Wholly Owned Subsidiaries shall enter into, or be a party to (and the Borrower shall use its best efforts to cause any other Subsidiary to not enter into or be a party to), any transaction with any Affiliate of the Borrower or such Subsidiary (which Affiliate is not the Borrower or a Subsidiary), except (i) such transactions between and/or among the Borrower and its Wholly Owned Subsidiaries which are permitted by law, consistent with its past practices, in the ordinary course of business and pursuant to reasonable terms which are no less favorable to Borrower or such Wholly Owned Subsidiary than would be obtained in a comparable arm's length transaction with a Person which is not an Affiliate or (ii) such transactions as are otherwise fully disclosed to the Agent and the Lenders and consented to in writing in advance by the Required Lenders. SECTION 5.24. Certain Action in respect of Permitted Subordinated Indebtedness. The Borrower shall not amend, modify or otherwise change in any respect having an adverse effect on the Borrower's financial condition or results of operations or otherwise disadvantageous in any respect to the Agent or the Lenders any of the terms or conditions of any Permitted Subordinated Indebtedness (including, without limitation, any terms or conditions relating to the payment of principal, interest or fees in connection therewith), or any other document evidencing, securing or relating to any Permitted Subordinated Indebtedness; provided, however, that notwithstanding the foregoing the Borrower shall be permitted to convert the Permitted Subordinated Indebtedness evidenced by the Rall-Folks Notes, the RDG Note and the NTDT Note into common stock of the Borrower on the terms and conditions specified in Borrower's Quarterly Report on Form 10-Q for the period ended September 9, 1996. ARTICLE VI DEFAULTS SECTION 6.01. Events of Default. If one or more of the following events (each, a "Default") shall have occurred and be continuing: (a) the Borrower shall fail to pay when due any principal of any Loan or shall fail to pay any interest on any Loan within 5 Domestic Business Days after such interest shall become due, or shall fail to pay any fee or other amount payable hereunder within 5 Domestic Business Days after such fee or other amount becomes due; or (b) the Borrower shall fail to observe or perform any covenant contained in: (i) Section 5.01 (except Section 5.01(a)(v)) and such failure shall continue for 15 Business Days after the earlier to occur of (x) written notice thereof has been given to the Borrower by the Agent at the request of any Lender or (y) the Borrower obtains knowledge of any such failure; or (ii) Sections 5.01(a)(v), 5.02(ii), 5.03 to 5.15, inclusive, Sections 5.18, 5.23 or 5.24; or 34 43 (c) the Borrower shall fail to observe or perform any covenant or agreement contained or incorporated by reference in this Agreement (other than those covered by paragraph (a) or (b) above) and such failure shall not have been cured within 30 days after the earlier to occur of (i) written notice thereof has been given to the Borrower by the Agent at the request of any Lender or (ii) the Borrower otherwise becomes aware of any such failure; or (d) any representation, warranty, certification or statement made by the Borrower in Article IV of this Agreement or in any certificate, financial statement or other document delivered pursuant to this Agreement shall prove to have been incorrect or misleading in any material respect when made (or deemed made); or (e) the Borrower (other than Indebtedness described in Section 5.08(c) and Indebtedness described in Section 5.08(e) which is not delinquent and for which adequate reserves have been established by the Borrower) or any Wholly Owned Subsidiary shall fail to make any payment in respect of Indebtedness outstanding in an aggregate amount in excess of $500,000 (other than the Notes) when due or within any applicable grace period; or (f) any event or condition shall occur which results in the acceleration of the maturity of Indebtedness of the Borrower or any Wholly Owned Subsidiary outstanding in an aggregate amount in excess of $500,000 (including, without limitation, any required mandatory prepayment or "put" of such Indebtedness to the Borrower or any Wholly Owned Subsidiary) or enables (or, with the giving of notice or lapse of time or both, would enable) the holders of such Indebtedness or any Person acting on such holders' behalf to accelerate the maturity thereof (including, without limitation, any required mandatory prepayment or "put" of such Indebtedness to the Borrower or any Wholly Owned Subsidiary); or (g) the Borrower or any Wholly Owned Subsidiary shall commence a voluntary case or other proceeding seeking liquidation, reorganization or other relief with respect to itself or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect or seeking the appointment of a trustee, receiver, liquidator, custodian or other similar official of it or any substantial part of its property, or shall consent to any such relief or to the appointment of or taking possession by any such official in an involuntary case or other proceeding commenced against it, or shall make a general assignment for the benefit of creditors, or shall fail generally to pay its debts as they become due, or shall take any corporate action to authorize any of the foregoing; or (h) an involuntary case or other proceeding shall be commenced against the Borrower or any Wholly Owned Subsidiary (with the exception of Checkers of Chicago, Inc.) seeking liquidation, reorganization or other relief with respect to it or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect or seeking the appointment of a trustee, receiver, liquidator, custodian or other similar official of it or any substantial part of its property, and such involuntary case or other proceeding shall remain undismissed and unstayed for a period of 60 days; or an order for relief shall be entered against the Borrower or any Wholly Owned Subsidiary under the federal bankruptcy laws as now or hereafter in effect; or (i) the Borrower or any member of the Controlled Group shall fail to pay when due any material amount which it shall have become liable to pay to the PBGC or to a Plan under Title IV of ERISA; or notice of intent to terminate a Plan or Plans shall be filed under Title IV of 35 44 ERISA by the Borrower, any member of the Controlled Group, any plan administrator or any combination of the foregoing; or the PBGC shall institute proceedings under Title IV of ERISA to terminate or to cause a trustee to be appointed to administer any such Plan or Plans or a proceeding shall be instituted by a fiduciary of any such Plan or Plans to enforce Section 515 or 4219(c)(5) of ERISA and such proceeding shall not have been dismissed within 30 days thereafter; or a condition shall exist by reason of which the PBGC would be entitled to obtain a decree adjudicating that any such Plan or Plans must be terminated; or the Borrower or any other member of the Controlled Group shall enter into, contribute or be obligated to contribute to, terminate or incur any withdrawal liability with respect to, a Multiemployer Plan; (j) one or more final, nonappealable judgments or orders for the payment of money in an aggregate amount in excess of $1,000,000 shall be rendered against the Borrower or any Wholly Owned Subsidiary and such judgment or order shall continue unsatisfied and unstayed for a period of 30 days; or (k) a federal tax lien for a claimed amount in excess of $100,000 shall be filed against the Borrower under Section 6323 of the Code or a lien of the PBGC shall be filed against the Borrower under Section 4068 of ERISA and in either case such lien shall remain undischarged for a period of 25 days after the date of filing; or (l) except as a result of the election of representatives of Lenders to Borrower's Board of Directors on the Closing Date pursuant to this Agreement or any additional stock purchases by Lenders, as of any date a majority of the Board of Directors of the Borrower consists of individuals who were not either (A) directors of the Borrower as of the corresponding date of the previous year, (B) selected or nominated to become directors by the Board of Directors of the Borrower of which a majority consisted of individuals described in clause (A), or (C) selected or nominated to become directors by the Board of Directors of the Borrower of which a majority consisted of individuals described in clause (A) and individuals described in clause (B); or (m) (i) any default by the Borrower or any of the Guarantors under any of the Loan Documents shall exist after the satisfaction of any applicable grace, notice or cure periods, if any, (ii) any Loan Documents (including, without limitation, the Guaranty) shall cease to be enforceable, or (iii) any Guarantor or the Borrower shall assert that any Loan Document (including, without limitation, the Guaranty) shall cease to be enforceable then, and in every such event (an "Event of Default"), the Agent shall if requested by the Required Lenders, by notice to the Borrower declare the Notes (together with accrued interest thereon) to be, and the Notes shall thereupon become, immediately due and payable without presentment, demand, protest or additional notice of any kind, all of which are hereby waived by the Borrower together with interest at the Default Rate accruing on the principal amount thereof from and after the date of such Event of Default; provided that if any Event of Default specified in paragraph (g) or (h) above occurs with respect to the Borrower, without any notice to the Borrower or any other act by the Agent or the Lenders, the Notes (together with accrued interest thereon) shall become immediately due and payable without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Borrower together with interest thereon at the Default Rate accruing on the principal amount thereof from and after the date of such Event of Default. Notwithstanding the foregoing, the Agent shall have available to it all other remedies at law or 36 45 equity, and shall, subject to the provisions of Article VII, exercise any one or all of them at the request of the Required Lenders. ARTICLE VII THE AGENT SECTION 7.01. Appointment; Powers and Immunities. Each Lender hereby irrevocably appoints and authorizes the Agent to act as its agent hereunder and under the other Loan Documents with such powers as are specifically delegated to the Agent by the terms hereof and thereof, together with such other powers as are reasonably incidental thereto. The Agent: (a) shall have no duties or responsibilities except as expressly set forth in this Agreement and the other Loan Documents, and shall not by reason of this Agreement or any other Loan Document be a trustee for any Lender; (b) shall not be responsible to the Lenders for any recitals, statements, representations or warranties contained in this Agreement or any other Loan Document, or in any certificate or other document referred to or provided for in, or received by any Lender under, this Agreement or any other Loan Document, or for the validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement or any other Loan Document or any other document referred to or provided for herein or therein or for any failure by the Borrower to perform any of its obligations hereunder or thereunder; (c) shall not be required to initiate or conduct any litigation or collection proceedings hereunder or under any other Loan Document except to the extent requested by the Required Lenders, and then only on terms and conditions reasonably satisfactory to the Agent, and (d) shall not be responsible for any action taken or omitted to be taken by it hereunder or under any other Loan Document or any other document or instrument referred to or provided for herein or therein or in connection herewith or therewith, except for its own gross negligence or wilful misconduct. The Agent may employ agents and attorneys-in-fact and shall not be responsible for the negligence or misconduct of any such agents or attorneys-in-fact selected by it with reasonable care. The provisions of this Article VII are solely for the benefit of the Agent and the Lenders, and the Borrower shall not have any rights as a third party beneficiary of any of the provisions hereof. In performing its functions and duties under this Agreement and under the other Loan Documents, the Agent shall act solely as agent of the Lenders and does not assume and shall not be deemed to have assumed any obligation towards or relationship of agency or trust with or for the Borrower. The duties of the Agent shall be ministerial and administrative in nature, and the Agent shall not have by reason of this Agreement or any other Loan Document a fiduciary relationship in respect of any Lender. SECTION 7.02. Reliance by Agent. The Agent shall be entitled to rely upon any certification, notice or other communication (including any thereof by telephone, telefax, telegram or cable) believed by it to be genuine and correct and to have been signed or sent by or on behalf of the proper Person or Persons, and upon advice and statements of legal counsel, independent accountants or other experts selected by the Agent. As to any matters not expressly provided for by this Agreement or any other Loan Document, the Agent shall in all cases be fully protected in acting, or in refraining from acting, hereunder and thereunder in accordance with instructions signed by the Required Lenders, and such instructions of the Required Lenders in any action taken or failure to act pursuant thereto shall be binding on all of the Lenders. 37 46 SECTION 7.03. Defaults. The Agent shall not be deemed to have knowledge of the occurrence of a Default or an Event of Default unless the Agent has received notice from a Lender or the Borrower specifying such Default or Event of Default and stating that such notice is a "Notice of Default". In the event that the Agent receives such a notice of the occurrence of a Default or an Event of Default, the Agent shall give prompt notice thereof to the Lenders. The Agent shall (subject to Section 9.06) take such action hereunder with respect to such Default or Event of Default as shall be directed by the Required Lenders, provided that, unless and until the Agent shall have received such directions, the Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Default or Event of Default as it shall deem advisable in the best interests of the Lenders. SECTION 7.04. Rights of Agent as a Lender. CKE and its successors and assigns, in its capacity as a Lender hereunder, shall have the same rights, powers and obligations hereunder as any other Lender and may exercise the same as though it were not acting as the Agent, and the term "Lender" or "Lenders" shall, unless the context otherwise indicates, include CKE in its individual capacity. The Agent may (without having to account therefor to any Lender) accept deposits from, lend money to and generally engage in any kind of banking, trust or other business with the Borrower (and any of its Affiliates) as if it were not acting as the Agent, and the Agent may accept fees and other consideration from the Borrower (in addition to any agency fees and arrangement fees heretofore or hereinafter agreed to between the Borrower and the Agent) for services in connection with this Agreement or any other Loan Document or otherwise without having to account for the same to the Lenders. SECTION 7.05. Indemnification. Each Lender severally agrees to indemnify the Agent, to the extent the Agent shall not have been reimbursed by the Borrower, in an amount equal to its Pro Rata Share, for any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses (including, without limitation, counsel fees and disbursements) or disbursements of any kind and nature whatsoever which may be imposed on, incurred by or asserted against the Agent in any way relating to or arising out of this Agreement or any other Loan Document or any other documents contemplated by or referred to herein or therein or the transactions contemplated hereby or thereby (excluding, unless an Event of Default has occurred and is continuing, the normal administrative costs and expenses incident to the performance of its agency duties hereunder) or the enforcement of any of the terms hereof or thereof or any such other documents; provided, however that no Lender shall be liable for any of the foregoing to the extent they arise from the gross negligence or wilful misconduct of the Agent. If any indemnity furnished to the Agent for any purpose shall, in the opinion of the Agent, be insufficient or become impaired, the Agent may call for additional indemnity and cease, or not commence, to do the acts indemnified against until such additional indemnity is furnished. SECTION 7.06. Payee of Note Treated as Owner. The Agent may deem and treat the payee of any Note as the owner thereof for all purposes hereof unless and until a written notice of the assignment or transfer thereof shall have been filed with the Agent and the provisions of Section 9.08(c) have been satisfied. Any requests, authority or consent of any Person who at the time of making such request or giving such authority or consent is the holder of any Note shall be conclusive and binding on any subsequent holder, transferee or assignee of that Note or of any Note or Notes issued in exchange therefor or replacement thereof. 38 47 SECTION 7.07. Nonreliance on Agent and Other Lenders. Each Lender agrees that it has, independently and without reliance on the Agent or any other Lender, and based on such documents and information as it has deemed appropriate, made its own credit analysis of the Borrower and decision to enter into this Agreement and that it will, independently and without reliance upon the Agent or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own analysis and decisions in taking or not taking action under this Agreement or any of the other Loan Documents. The Agent shall not be required to keep itself informed as to the performance or observance by the Borrower of this Agreement or any of the other Loan Documents or any other document referred to or provided for herein or therein or to inspect the properties or books of the Borrower or any other Person. Except for notices, reports and other documents and information expressly required to be furnished to the Lenders by the Agent hereunder or under the other Loan Documents, the Agent shall not have any duty or responsibility to provide any Lender with any credit or other information concerning the affairs, financial condition or business of the Borrower or any other Person (or any of their Affiliates) which may come into the possession of the Agent. SECTION 7.08. Failure to Act. Except for action expressly required of the Agent hereunder or under the other Loan Documents, the Agent shall in all cases be fully justified in failing or refusing to act hereunder and thereunder unless it shall receive further assurances to its satisfaction by the Lenders of their indemnification obligations under Section 7.05 against any and all liability and expense which may be incurred by the Agent by reason of taking, continuing to take, or failing to take any such action. SECTION 7.09. Resignation or Removal of Agent. Subject to the appointment and acceptance of a successor Agent as provided below, the Agent may resign at any time by giving notice thereof to the Lenders and the Borrower, and the Agent may be removed at any time with or without cause by the Required Lenders. If a Lender which is serving as Agent assigns all of its rights and interests hereunder pursuant to Section 9.08 hereof, such assignment shall operate as, and shall be deemed notice to the other Lenders and to the Borrower of, the Agent's resignation. Upon any such resignation or removal, the Required Lenders or their respective assignees shall have the right to appoint a successor Agent. If no successor Agent shall have been so appointed by the Required Lenders or their respective assignees and shall have accepted such appointment within 30 days after the retiring Agent's notice of resignation, the Required Lenders' removal of the retiring Agent, or the retiring Agent's notice of assignment, then the Retiring Agent may, on behalf of the Lenders, appoint a successor Agent. Upon the acceptance of any appointment as Agent hereunder by a successor Agent, such successor Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring Agent, and the retiring Agent shall be discharged from its duties and obligations hereunder. Notwithstanding the foregoing, if each Lender shall assign all of its respective rights and interests hereunder pursuant to Section 9.08 hereof to the assignee or assignees, then such assignee or assignees, or their respective designee, shall automatically be deemed to be, and shall have all of the powers, rights and privileges of, the Agent as of the effective date of such assignment unless and until the Required Lenders remove such assignee or assignees as Agent and appoint a Successor Agent as provided above. After any retiring Agent's resignation or removal hereunder as Agent, the provisions of this Article VII shall continue in effect for its benefit in respect of any actions taken or omitted to be taken by it while it was acting as the Agent hereunder. 39 48 ARTICLE VIII [INTENTIONALLY DELETED] ARTICLE IX MISCELLANEOUS SECTION 9.01. Notices. All notices, requests and other communications to any party hereunder shall be in writing (including bank wire, telecopier or similar writing) and shall be given to such party at its address or telecopier number set forth on the signature pages hereof or such other address or telecopier number as such party may hereafter specify for the purpose by notice to each other party. Each such notice, request or other communication shall be effective (i) if given by telecopier, when such telecopy is transmitted to the telecopier number specified in this Section and the appropriate confirmation is received, (ii) if given by mail, 72 hours after such communication is deposited in the mails with first class postage prepaid, addressed as aforesaid or (iii) if given by any other means, when delivered at the address specified in this Section ; provided that notices to the Agent under Article II or Article VIII shall not be effective until received. SECTION 9.02. No Waivers. No failure or delay by the Agent or any Lender in exercising any right, power or privilege hereunder or under any Note or other Loan Document shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by law. SECTION 9.03. Expenses; Documentary Taxes. The Borrower shall pay (i) all reasonable out-of-pocket expenses of the Agent, including reasonable fees and disbursements of special counsel for the Lenders and the Agent and of special counsel for the Prior Lenders and the Prior Agent, in connection with the preparation of this Agreement and the other Loan Documents (including all of such fees and disbursements of special counsel for the Prior Lenders and the Prior Agent which were incurred up to the Closing Date in connection with prior amendments, extensions, waivers and other actions relating to the Amended Credit Agreement and the other Loan Documents (as defined in the Amended Credit Agreement)), any waiver or consent hereunder or thereunder or any amendment hereof or thereof or any Default or alleged Default hereunder or thereunder and (ii) if a Default occurs, all out-of-pocket expenses incurred by the Agent and the Lenders, including fees and disbursements of counsel, in connection with such Default and collection and other enforcement proceedings resulting therefrom, including out-of-pocket expenses incurred in enforcing this Agreement and the other Loan Documents. The Borrower shall pay all of the expenses described in clause (i) of this Section on or within 90 days following consummation of the Rights Offering, or on May 31, 1996, if the Rights Offering is not consummated on or prior to such date. The Borrower shall indemnify the Agent and each Lender against any transfer taxes, documentary taxes, assessments or charges made by any Authority by reason of the execution and delivery of this Agreement or the other Loan Documents. SECTION 9.04. Indemnification. The Borrower shall indemnify the Agent, the Lenders and each affiliate thereof and their respective directors, officers, partners, trustees, beneficiaries, controlling persons, shareholders, employees and agents from, and hold each of them 40 49 harmless against, any and all losses, liabilities, claims or damages to which any of them may become subject, insofar as such losses, liabilities, claims or damages arise out of or result from (i) any actual or proposed use by the Borrower of the proceeds of any extension of credit by any Lender hereunder, or (ii) breach by the Borrower of this Agreement (including, without limitation, representations, warranties and covenants relating to environmental matters) or any other Loan Document, or (iii) any acts or omissions of any of the Prior Lenders that may have occurred prior to the Closing Date or any and all claims that any of the Prior Lenders (A) is in any way responsible for the past, current or future condition or deterioration of the business operations and/or financial condition of the Borrower, or (B) breached any agreement to loan money or make other financial accommodations available to the Borrower or to fund any operations of the Borrower at any time, and from and of any and all other claims, damages, losses, actions, counterclaims, suits, judgments, obligations, liabilities, defenses, affirmative defenses, setoffs, and demands of any kind or nature whatsoever, in law or in equity, whether presently known or unknown, which the Borrower or any Guarantor may have had, now have, or which it can, shall or may have for, upon, or by reason of any matter, course or thing whatsoever relating to, arising out of, based upon, or in any manner connected with, any transaction, event, circumstance, action, failure to act, or occurrence of any sort or type, whether known or unknown, which occurred, existed, was taken, permitted, begun, or otherwise related or connected to or with any or all of the Loans, this Agreement, the Amended Credit Agreement, any or all of the Loan Documents, and/or any direct or indirect action or omission of any of the Lender Parties arising from acts or omissions of the Lender Parties that may have occurred prior to the closing date, or (iv) from any investigation, litigation (including, without limitation, any actions taken by the Agent or any of the Lenders to enforce this Agreement or any of the other Loan Documents) or other proceeding (including, without limitation, any threatened investigation or proceeding) relating to the foregoing, and the Borrower shall reimburse the Agent and each Lender, and each affiliate thereof and their respective directors, officers, employees and agents, upon demand for any expenses (including, without limitation, legal fees) incurred in connection with any such investigation or proceeding; but excluding any such losses, liabilities, claims, damages or expenses incurred by reason of the gross negligence or wilful misconduct of the Person to be indemnified. SECTION 9.05. Sharing of Setoffs. Each Lender agrees that if it shall, by exercising any right of setoff or counterclaim or otherwise, receive payment of a proportion of the aggregate amount of principal and interest owing with respect to the Notes held by it which is greater than the proportion received by any other Lender in respect of the aggregate amount of all principal and interest owing with respect to the Notes held by such other Lender, the Lender receiving such proportionately greater payment shall purchase such participations in the Notes held by the other Lenders owing to such other Lenders, and such other adjustments shall be made, as may be required so that all such payments of principal and interest with respect to the Notes held by the Lenders owing to such other Lenders shall be shared by the Lenders pro rata; provided that (i) nothing in this Section shall impair the right of any Lender to exercise any right of setoff or counterclaim it may have and to apply the amount subject to such exercise to the payment of indebtedness of the Borrower other than its indebtedness under the Notes, and (ii) if all or any portion of such payment received by the purchasing Lender is thereafter recovered from such purchasing Lender, such purchase from each other Lender shall be rescinded and such other Lender shall repay to the purchasing Lender the purchase price of such participation to the extent of such recovery together with an amount equal to such other Lender's ratable share (according to the proportion of (x) the amount of such other Lender's required repayment to (y) the total amount so recovered from the purchasing Lender) of any interest or other amount paid or payable by the 41 50 purchasing Lender in respect of the total amount so recovered. The Borrower agrees, to the fullest extent it may effectively do so under applicable law, that any holder of a participation in a Note, whether or not acquired pursuant to the foregoing arrangements, may exercise rights of setoff or counterclaim and other rights with respect to such participation as fully as if such holder of a participation were a direct creditor of the Borrower in the amount of such participation. SECTION 9.06. Amendments and Waivers. (a) Any provision of this Agreement, the Notes or any other Loan Documents may be amended or waived if, but only if, such amendment or waiver is in writing and is signed by the Borrower and the Required Lenders (and, if the rights or duties of the Agent are affected thereby, by the Agent); provided that, no such amendment or waiver shall, unless signed by all Lenders, (i) change the Pro Rata Share of any Lender or subject any Lender to any additional obligation, (ii) change the principal of or rate of interest on any Syndicated Term Loan or any fees or other amounts payable hereunder, (iii) change the date fixed for any payment of principal or interest on any Syndicated Term Loan or the amount of principal or interest due on any date fixed for the payment thereof, (iv) change the percentage of Lenders which shall be required for the Lenders or any of them to take any action under this Section or any other provision of this Agreement, (v) release or substitute all or a substantial portion of the collateral (if any) held as security for the Borrower's obligations hereunder, or (vi) release any Guarantee given to support payment of the Borrower's obligations hereunder. (b) The Borrower will not solicit, request or negotiate for or with respect to any proposed waiver or amendment of any of the provisions of this Agreement unless each Lender shall be informed thereof by the Borrower and shall be afforded an opportunity of considering the same and shall be supplied by the Borrower with sufficient information to enable it to make an informed decision with respect thereto. Executed or true and correct copies of any waiver or consent effected pursuant to the provisions of this Agreement shall be delivered by the Borrower to each Lender forthwith following the date on which the same shall have been executed and delivered by the requisite percentage of Lenders. The Borrower will not, directly or indirectly, pay or cause to be paid any remuneration, whether by way of supplemental or additional interest, fee or otherwise, to any Lender (in its capacity as such) as consideration for or as an inducement to the entering into by such Lender of any waiver or amendment of any of the terms and provisions of this Agreement unless such remuneration is concurrently paid, on the same terms, ratably to all such Lenders. SECTION 9.07. No Margin Stock Collateral. Each of the Lenders represents to the Agent and each of the other Lenders that it in good faith is not, directly or indirectly (by negative pledge or otherwise), relying upon any Margin Stock as collateral in the extension or maintenance of the credit provided for in this Agreement. SECTION 9.08. Successors and Assigns. (a) The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns; provided that the Borrower may not assign or otherwise transfer any of its rights under this Agreement. 42 51 (b) Any Lender (or successor or assignee of any Lender) may at any time sell to one or more Persons (each a "Participant") participating interests in any Loan owing to such Lender, any Note held by such Lender, or any other interest of such Lender hereunder. In the event of any such sale by a Lender of a participating interest to a Participant, such Lender's obligations under this Agreement shall remain unchanged, such Lender shall remain solely responsible for the performance thereof, such Lender shall remain the holder of any such Note for all purposes under this Agreement, and the Borrower and the Agent shall continue to deal solely and directly with such Lender in connection with such Lender's rights and obligations under this Agreement. In no event shall a Lender that sells a participation be obligated to the Participant to take or refrain from taking any action hereunder except that such Lender may agree that it will not (except as provided below), without the consent of the Participant, agree to (i) the change of any date fixed for the payment of principal of or interest on the related loan or loans, (ii) the change of the amount of any principal, interest or fees due on any date fixed for the payment thereof with respect to the related loan or loans, (iii) the change of the principal of the related loan or loans, (iv) any change in the rate at which either interest is payable thereon or (if the Participant is entitled to any part thereof) fee is payable hereunder from the rate at which the Participant is entitled to receive interest or fee (as the case may be) in respect of such participation, (v) the release or substitution of all or any substantial part of the collateral (if any) held as security for the Borrower's obligations hereunder, or (vi) the release of any Guarantee given to support payment of the Borrower's obligations hereunder. Each Lender selling a participating interest in any Syndicated Term Loan, Note, or other interest under this Agreement shall provide the Borrower and the Agent with written notification stating that such sale has occurred and identifying the Participant and the interest purchased by such Participant. (c) Any Lender or assignee of any Lender (in either case, a "Transferor") may at any time assign to one or more banks or other financial institutions (each an "Assignee") all, or a proportionate part of all, of its rights and obligations under this Agreement, the Notes and the other Loan Documents (but in no event shall such assignment of any portion of the principal balance of any Note (other than the Revolving Participated Loan Note) be less than either (i) the entire principal amount of such Note, or (ii) $2,000,000), and such Assignee shall assume all rights and obligations of the Transferor hereunder pursuant to an agreement executed by such Assignee, such Transferor and the Agent in form and substance satisfactory to the Agent (an "Assignment Agreement"). Upon (a) execution of the Assignment Agreement by such Transferor, such Assignee and the Agent, (b) payment by such Assignee to such Transferor of an amount equal to the purchase price agreed between such Transferor and such Assignee, and (c) payment of a processing and recordation fee of $2,000 to the Agent, such Assignee shall for all purposes be a Lender party to this Agreement and shall have all the rights and obligations of a Lender under this Agreement to the same extent as if it were an original party hereto with a Pro Rata Share as set forth in the Assignment Agreement, and the Transferor shall be released from its obligations hereunder to a corresponding extent, and no further consent or action by the Borrower, the Lenders or the Agent shall be required. Upon the consummation of any transfer to an Assignee pursuant to this paragraph (c), the Transferor, the Agent and the Borrower shall make appropriate arrangements so that, if required, a new Note (or Notes) is (are) issued to such Assignee. (d) Subject to the provisions of Section 9.09, the Borrower authorizes each Lender to disclose to any Participant, Assignee or other transferee (each a "Transferee") and any prospective Transferee who has agreed in writing to be bound by Section 9.09 any and all financial information in such Lender's possession concerning the Borrower which has been delivered to such 43 52 Lender by the Borrower pursuant to this Agreement or which has been delivered to such Lender by the Borrower in connection with such Lender's credit evaluation prior to entering into this Agreement. (e) Intentionally Deleted. (f) Anything in this Section 9.08 to the contrary notwithstanding, any Lender may assign and pledge all or any portion of the Syndicated Term Loans and/or obligations owing to it to any Federal Reserve Bank or the United States Treasury as collateral security pursuant to Regulation A of the Board of Governors of the Federal Reserve System and any Operating Circular issued by such Federal Reserve Bank, provided that any payment in respect of such assigned Syndicated Term Loans and/or obligations made by the Borrower to the assigning and/or pledging Lender in accordance with the terms of this Agreement shall satisfy the Borrower's obligations hereunder in respect of such assigned Syndicated Term Loans and/or obligations to the extent of such payment. No such assignment shall release the assigning and/or pledging Lender from its obligations hereunder. SECTION 9.09. Confidentiality. Each Lender agrees to keep any information delivered or made available by the Borrower to it which is clearly indicated to be confidential information, confidential from anyone other than persons employed or retained by such Lender who are or are expected to become engaged in evaluating, approving, structuring or administering the Borrower's obligations hereunder provided, that, such individuals shall be subject to the agreement contained in this Section 9.09; provided, however that nothing herein shall prevent any Lender from disclosing such information (i) to any other Lender, (ii) upon the order of any court or administrative agency after notice to the Borrower, (iii) upon the request or demand of any regulatory agency or authority having jurisdiction over such Lender after notice to the Borrower, (iv) which has been publicly disclosed by Borrower, (v) to the extent reasonably required in connection with any litigation to which the Agent, any Lender or their respective Affiliates may be a party, (vi) to the extent reasonably required in connection with the exercise of any remedy hereunder, (vii) to such Lender's legal counsel and independent auditors and (viii) to any actual or proposed Participant, Assignee or other Transferee of all or part of its rights hereunder, provided that such proposed Participant, Assignee or other Transferee agrees in writing to be bound by this Section . SECTION 9.10. Intentionally Deleted. SECTION 9.11. Obligations Several. The obligations of each Lender hereunder are several, and no Lender shall be responsible for the obligations or commitment of any other Lender hereunder. Nothing contained in this Agreement and no action taken by the Lenders pursuant hereto shall be deemed to constitute the Lenders to be a partnership, an association, a joint venture or any other kind of entity. The amounts payable at any time hereunder to each Lender shall be a separate and independent debt, and each Lender shall be entitled to protect and enforce its rights arising out of this Agreement or any other Loan Document and it shall not be necessary for any other Lender to be joined as an additional party in any proceeding for such purpose. SECTION 9.12. California Law. This Agreement and each Note shall be construed in accordance with and governed by the law of the State of California. 44 53 SECTION 9.13. Severability. In case any one or more of the provisions contained in this Agreement, the Notes or any of the other Loan Documents should be invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein and therein shall not in any way be affected or impaired thereby and shall be enforced to the greatest extent permitted by law. SECTION 9.14. Interest. In no event shall the amount of interest due or payable hereunder or under the Notes exceed the maximum rate of interest allowed by applicable law, and in the event any such payment is inadvertently made to any Lender by the Borrower or inadvertently received by any Lender, then such excess sum shall be credited as a payment of principal, unless the Borrower shall notify such Lender in writing that it elects to have such excess sum returned forthwith. It is the express intent hereof that the Borrower not pay and the Lenders not receive, directly or indirectly in any manner whatsoever, interest in excess of that which may legally be paid by the Borrower under applicable law. SECTION 9.15. Interpretation. No provision of this Agreement or any of the other Loan Documents shall be construed against or interpreted to the disadvantage of any party hereto by any court or other governmental or judicial authority by reason of such party having or being deemed to have structured or dictated such provision. SECTION 9.16. Waiver of Jury Trial; Consent to Jurisdiction. The Borrower and each of the Lenders and the Agent irrevocably (a) waives any and all right to trial by jury in any legal proceeding arising out of this Agreement, any of the other Loan Documents, or any of the transactions contemplated hereby or thereby, (b) submits to the nonexclusive personal jurisdiction in the State of California, the courts thereof and the United States District Courts sitting therein, for the enforcement of this Agreement, the Notes and the other Loan Documents, (c) waives any and all personal rights under the law of any jurisdiction to object on any basis (including, without limitation, inconvenience of forum) to jurisdiction or venue within the State of California for the purpose of litigation to enforce this Agreement, the Notes or the other Loan Documents, and (d) agrees that service of process may be made upon it in the manner prescribed in Section 9.01 for the giving of notice to the Borrower. Nothing herein contained, however, shall prevent the Agent from bringing any action or exercising any rights against any security and against the Borrower personally, and against any assets of the Borrower, within any other state or jurisdiction. SECTION 9.17. Counterparts. This Agreement may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. 45 54 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written. CHECKERS DRIVE-IN RESTAURANTS, INC. By:______________________________________________ Name: Title: 600 Cleveland Street Suite 1050 Clearwater, Florida 34615 Attention: Chief Financial Officer Telecopier number: (813) 443-7047 Telephone number: (813) 441-3500 CKE RESTAURANTS, INC., as Agent and as a Lender By:______________________________________________ Name: Tile: 1200 North Harbor Boulevard Anaheim, California 92801 Attention: Telecopier No.: (714)_______________ Telephone No.: (714)________________ KCC DELAWARE By:______________________________________________ Name: Title: _____________________________________ _____________________________________ Attention: Telecopier No.: ( )_______________ Telephone No.: ( )_______________ 46 55 FIDELITY NATIONAL FINANCIAL, INC. By:______________________________________________ Name: Title: _____________________________________ _____________________________________ Attention: Telecopier No.: ( )_______________ Telephone No.: ( )_______________ THE TRAVELERS INDEMNITY COMPANY By:______________________________________________ Name: Title: _____________________________________ _____________________________________ Attention: Telecopier No.: ( )_______________ Telephone No.: ( )_______________ __________________________________________________ William P. Foley II _____________________________________ _____________________________________ Attention: Telecopier No.: ( )_______________ Telephone No.: ( )_______________ __________________________________________________ Burt Sugarman _____________________________________ _____________________________________ Attention: Telecopier No.: ( )_______________ Telephone No.: ( )_______________ 47 56 __________________________________________________ Carl Leo Karcher _____________________________________ _____________________________________ Attention: Telecopier No.: ( )_______________ Telephone No.: ( )_______________ __________________________________________________ Stephen Mahood _____________________________________ _____________________________________ Attention: Telecopier No.: ( )_______________ Telephone No.: ( )_______________ THE GALILEO FUND, L.P. By: DDJ Galileo, LLC, its General Partner By:_______________________________________________ Name: Title: 141 Linden Street Suite 4 Wellesley, MA 02181 Attention: Robert L. Hockett Telecopier number: (617) 283-8555 Telephone number: (617) 283-8518 48 57 FOOTHILL CAPITAL CORPORATION By:_____________________________________________ Name: Title: 1111 Santa Monica Blvd. Suite 1500 Los Angeles, CA 90025 Attention: Dennis Ascher Telecopier number: (310) 479-0461 Telephone number: (310) 996-7156 CANPARTNERS INVESTMENTS IV, LLC By:_____________________________________________ Name: Title: c/o Canyon Partners 9665 Wilshire Boulevard Suite 200 Beverly Hills, CA 90212 Attention: Scott Imbach Telecopier number: (310) 247-2701 Telephone number: (310) 247-2700 49 58 SCHEDULE A AMENDED CREDIT AGREEMENT AS OF JULY 29, 1996 1. Amended and Restated Credit Agreement dated as of April 12, 1995 among Checkers Drive-In Restaurants, Inc., the Prior Agent and the Prior Banks 2. Amendment Agreement dated as of July 26, 1995 among the Borrower, the Guarantors, the Prior Agent and the Prior Banks 3. Second Amendment Agreement dated as of October 2, 1995 among the Borrower, the Guarantors, the Prior Agent and the Prior Banks 4. Third Amendment Agreement dated as of January 2, 1996 among the Borrower, the Guarantors, the Prior Agent and the Prior Banks 5. Fourth Amendment Agreement dated as of January 31, 1996 among the Borrower, the Guarantors, the Prior Agent and the Prior Banks 6. Fifth Amendment Agreement dated as of February 29, 1996 among the Borrower, the Guarantors, the Prior Agent and the Prior Banks 7. Sixth Amendment Agreement dated as of March 8, 1996 among the Borrower, the Guarantors, the Prior Agent and the Prior Banks 8. Seventh Amendment Agreement dated as of March 11, 1996 among the Borrower, the Guarantors, the Prior Agent and the Prior Banks 9. Eighth Amendment Agreement dated as of March 13, 1996 among the Borrower, the Guarantors, the Prior Agent and the Prior Banks 10. Ninth Amendment Agreement dated as of March 15, 1996 among the Borrower, the Guarantors, the Prior Agent and the Prior Banks 11. Tenth Amendment Agreement dated as of May 29, 1996 among the Borrower, the Guarantors, the Prior Agent and the Prior Banks 12. Eleventh Amendment Agreement dated as of July 29, 1996 among the Borrower, the Guarantors, the Prior Agent and the Prior Banks 50 EX-99.02 4 REGISTRATION RIGHTS AGREEMENT 1 REGISTRATION RIGHTS AGREEMENT REGISTRATION RIGHTS AGREEMENT (this "Agreement") dated as of November __, 1996 by and among Checkers Drive-In Restaurants, Inc., a Delaware corporation (the "Company"), and each of the several Holders (as hereinafter defined) executing a signature page hereto. This Agreement is made pursuant to that certain Amended and Restated Credit Agreement dated as of the date hereof, as subsequently amended or modified from time to time, by and among the Company and the Holders (the "Amended and Restated Credit Agreement"). In order to induce the Holders to enter into the Amended and Restated Credit Agreement, the Company has agreed to provide the registration rights set forth in this Agreement. The execution of this Agreement is a condition to the closing of the transactions contemplated by the Amended and Restated Credit Agreement. In consideration of the foregoing, the parties hereby agree as follows: DEFINITIONS. As used in this Agreement, the following terms shall have the following meanings: "Advice" shall have the meaning set forth in Section 5. "Affiliate" means, with respect to any specified Person, any other Person who, directly or indirectly, controls, is controlled by, or is under common control with such specified Person. "Amended and Restated Credit Agreement" shall have the meaning set forth in the preamble. "Business Day" means any day other than a day on which banks are authorized or required to be closed in the State of New York. "Commission" means the Securities and Exchange Commission. "Common Stock" means the common stock, par value $.001 per share, of the Company. "Company" shall have the meaning set forth in the preamble and shall include the Company's successors by merger, acquisition, reorganization or otherwise. "Controlling Persons" shall have the meaning set forth in Section 7(a). "Demand Registration Effective Date" means the date 60 days after the earlier of (i) the applicable Demand Registration Filing Date or (ii) the date on which the applicable Demand Registration Statement is filed with the Commission. "Demand Registration Effective Period" shall have the meaning set forth in Section 3(a). "Demand Registration Filing Date" shall have the meaning set forth in Section 3(a). 2 "Demand Registration Statement" shall have the meaning set forth in Section 3(a). "Exchange Act" means the Securities Exchange Act of 1934, as amended from time to time, or any successor statute, and the rules and regulations of the Commission promulgated thereunder. "Holder" means (i) each Person (other than the Company) who is a signatory to this Agreement and (ii) each Person (other than the Company and its Affiliates) to whom a Holder transfers Shares if such Person acquires such Shares as Registrable Shares. "Holders' Counsel" means Stradling, Yocca, Carlson & Rauth, special counsel to the Holders, or any successor counsel selected by the holders of a majority in interest of the Registrable Shares. "Inspectors" shall have the meaning set forth in Section 5(m). "NASD" shall have the meaning set forth in Section 5(q). "NASDAQ" shall have the meaning set forth in Section 5(o). "Objection Notice" shall have the meaning set forth in Section 5(a). "Objecting Party" shall have the meaning set forth in Section 5(a). "Person" means any individual, corporation, partnership, joint venture, association, joint-stock company, trust, limited liability company, unincorporated organization or government or other agency or political subdivision thereof. "Piggy-Back Registration" shall have the meaning set forth in Section 4(a). "Prospectus" means the prospectus included in any Registration Statement (including, without limitation, a prospectus that discloses information previously omitted from a prospectus filed as part of an effective Registration Statement in reliance upon Rule 430A promulgated under the Securities Act), as amended or supplemented by any prospectus supplement, with respect to the terms of the offering of any portion of the Registrable Shares covered by such Registration Statement, and all other amendments and supplements to the prospectus, including post-effective amendments, and all material incorporated by reference or deemed to be incorporated by reference in such prospectus. "Records" shall have the meaning set forth in Section 5(m). "Registrable Shares" means the Shares; provided, however, that any Shares shall cease to be Registrable Shares when (i) a Registration Statement covering such Registrable Shares has been declared effective and such Registrable Shares have been disposed of pursuant to such effective Registration Statement or (ii) such Registrable Shares are transferred to any Person other than a Holder pursuant to Rule 144 (or any similar provision then in force, but not Rule 144A) under the Securities Act, including a sale pursuant to the provisions of Rule 144(k). "Registration Expenses" shall have the meaning set forth in Section 6. 3 "Registration Statement" means any registration statement of the Company that covers any of the Registrable Shares pursuant to the provisions of this Agreement (including any Shelf Registration Statement), and all amendments and supplements to any such registration statement, including post-effective amendments, in each case including the Prospectus, all exhibits, and all material incorporated by reference or deemed to be incorporated by reference in such registration statement. "Shares" means shares of Common Stock which may be issued to any Holder upon exercise of any or all of the Warrants held by such Holder. "Securities Act" means the Securities Act of 1933, as amended from time to time, or any successor statute, and the rules and regulations of the Commission promulgated thereunder. "Shelf Registration Statement" shall have the meaning set forth in Section 2(a). "Suspension Notice" has the meaning set forth in Section 5. "Suspension Period" has the meaning set forth in Section 5. "Target Effective Date" means the date 60 days after the earlier of (i) the Target Filing Date or (ii) the date on which the Shelf Registration Statement is filed with the Commission. "Target Effective Period" shall have the meaning set forth in Section 2(a). "Target Filing Date" means the date 180 days after the date of this Agreement "Warrants" means the Warrants to Purchase Shares of Common Stock of the Company dated as of the date hereof, together with all amendments, consolidations, modifications, renewals, and supplements thereto and replacements and substitutions thereof. SHELF REGISTRATION. Filing; Effectiveness. As soon as practicable but not later than the Target Filing Date, the Company shall prepare and file with the Commission a "shelf" registration statement (the "Shelf Registration Statement") on the appropriate form for an offering to be made on a continuous basis pursuant to Rule 415 under the Securities Act (or such successor rule or similar provision then in effect) covering all of the Registrable Shares. The Company shall use its best efforts to have the Shelf Registration Statement declared effective on or before the Target Effective Date and to keep such Shelf Registration Statement continuously effective for the period (the "Target Effective Period") beginning on the Target Effective Date or the date on which such Shelf Registration Statement is declared effective, if later, and ending on the later of the date on which the Holders no longer hold any Registrable Shares or November 22, 2002. The Holders of Registrable Shares shall be permitted to withdraw all or any part of the Registrable Shares from a Shelf Registration Statement at any time prior to the effective date of such Shelf Registration Statement. Supplements; Amendments. The Company agrees, if necessary, to supplement or amend the Shelf Registration Statement, as required by the rules, regulations or instructions applicable to the registration form used by the Company for such Shelf Registration 4 Statement or by the Securities Act or as requested (which request shall result in the filing of a supplement or amendment) by any Holder of Registrable Shares to which such Shelf Registration Statement relates, and the Company agrees to furnish to the Holders, Holders' Counsel and any managing underwriter copies of any such supplement or amendment prior to its being used and/or filed with the Commission. Liquidated Damages. If the Shelf Registration Statement is not filed on or before the Target Filing Date, the Company shall pay liquidated damages to each Holder in an amount equal to $.10 per 1,000 shares per week of such Holder's issued and outstanding Registrable Securities beginning on the Target Filing Date. If the Shelf Registration Statement is filed but has not become effective on or before the Target Effective Date, the Company shall pay liquidated damages to each Holder in an amount equal to $.10 per 1,000 shares of such Holder's issued and outstanding Registrable Securities per week beginning on the Target Effective Date. The weekly liquidated damages associated with a late filing or a late declaration of effectiveness shall increase by an amount equal to $.10 per 1,000 shares of the issued and outstanding Registrable Securities 90 days after the Target Filing Date or the Target Effective Date, as the case may be. Thereafter, the weekly liquidated damages associated with a late filing or a late declaration of effectiveness shall further increase by an amount equal to $.10 per 1,000 shares of the issued and outstanding Registrable Securities at the close of each subsequent 90-day period during which the Shelf Registration Statement has not been filed or declared effective, as the case may be. If a stop order is imposed or if for any other reason the effectiveness of the Shelf Registration Statement is suspended during the Target Effective Period, then the Company shall pay liquidated damages to each Holder of issued and outstanding Registrable Securities in an amount equal to $.10 per 1,000 shares of such Holder's issued and outstanding Registrable Securities per week beginning on the date of such stop order or other suspension of effectiveness. The weekly liquidated damages associated with a suspension of the effectiveness of the Shelf Registration Statement shall increase by an amount equal to $.10 per 1,000 shares of the issued and outstanding Registrable Securities 90 days after the stop order was imposed or the effectiveness of the Shelf Registration Statement was otherwise suspended. Thereafter, the weekly liquidated damages associated with a suspension of effectiveness of the Shelf Registration Statement shall further increase by an amount equal to $.10 per 1,000 shares of the issued and outstanding Registrable Securities at the close of each subsequent 90-day period during which such stop order remains in effect or the effectiveness of such Shelf Registration Statement remains suspended. For purposes of the three preceding sentences, Holders will not be entitled to receive liquidated damages under this Agreement during a Suspension Period (as hereinafter defined) except to the extent permitted by Section 5 of this Agreement. The Registrable Securities with respect to which liquidated damages shall accrue and be payable in accordance with this Section 2(c) shall be those Registrable Securities held by the Holders which are included or proposed to be included in the Shelf Registration Statement. Liquidated damages shall be deemed to commence accruing on the day on which the event triggering such liquidated damages occurs. The liquidated damages to be paid to Holders pursuant to this Section 2(c) shall cease to accrue (i) with respect to the liquidated damages for failure to file on or prior to the Target Filing Date, on the day after the Shelf Registration Statement is filed, (ii) with respect to the liquidated damages for failure to have the Shelf Registration Statement declared effective on or prior to the Target Effective Date, on the day after the Shelf Registration Statement is declared effective, or (iii) with respect to the liquidated damages for the suspension of effectiveness, on the day after the reinstatement of effectiveness of the Shelf Registration Statement. 5 Notwithstanding the foregoing, if the sole reason why (i) the Company has not filed the Shelf Registration Statement on or before the Target Filing Date and/or (ii) the Shelf Registration Statement has not become effective on or before the Target Effective Date, is because the Holders did not provide the Company with information which is required to be disclosed in the Shelf Registration Statement and which the Company requested the Holder to so provide in writing at least 15 days prior to the Target Filing Date and/or Target Effective Date, as the case may be, the Company's obligation to pay liquidated damages with respect thereto will not begin to accrue until twenty business days after such information has been provided. The Company shall pay the liquidated damages due with respect to any Registrable Securities at the end of each month during which such damages accrue. Liquidated damages shall be paid to the Holders of Registrable Securities entitled to receive such liquidated damages by wire transfer in immediately available funds to the accounts designated by such Holders. The parties hereto agree that the liquidated damages provided for in this Section 2(c) constitute a reasonable estimate of the damages that will be suffered by Holders of Registrable Securities by reason of the failure of the Shelf Registration Statement to be filed, to be declared effective and/or to remain effective, as the case may be, in accordance with this Agreement. The right of the Holders to be paid the liquidated damages provided for in this Section 2(c) shall be the sole remedy of the Holders with respect to (i) the filing of the Shelf Registration Statement after the Target Filing Date, (ii) the Shelf Registration Statement becoming effective after the Target Effective Date, (iii) the imposition of a stop order or other event suspending the effectiveness of the Shelf Registration Statement during the Target Effective Period, (iv) a Suspension Period exceeding 90 days and (v) the giving of more than one Suspension Notice during any twelve consecutive months, and none of the foregoing shall be deemed a default under any Loan Document as such term is defined in the Amended and Restated Credit Agreement. Effective Registration. A registration will not be deemed to have been effected as a Shelf Registration Statement unless the Shelf Registration Statement with respect thereto has been declared effective by the Commission and the Company has complied in all material respects with its obligations under this Agreement with respect thereto; provided, however, that if after it has been declared effective, the offering of Registrable Shares pursuant to a Shelf Registration Statement is interfered with by any stop order, injunction or other order or requirement of the Commission or any other governmental agency or court, such Shelf Registration Statement will be deemed not to have become effective during the period of such interference (and liquidated damages shall accrue and be payable under Section 2(c) from and after the issuance of any stop order, injunction, or other order or requirement of the Commission or any other governmental agency or court) until the offering of Registrable Shares pursuant to such Shelf Registration Statement may legally resume. If a registration requested pursuant to this Section 2 is deemed not to have been effected, then the Company shall continue to be obligated to effect a registration pursuant to this Section 2. Selection of Underwriter. If the Holders so elect, the offering of Registrable Shares pursuant to a Shelf Registration Statement shall be in the form of an underwritten offering. If they so elect, the Holders participating in such Shelf Registration Statement shall select one or more nationally recognized firms of investment bankers reasonably acceptable to the Company to act as the book-running managing underwriter or underwriters in connection with such offering and shall select any additional investment bankers and managers reasonably acceptable to the Company to be 6 used in connection with the offering. DEMAND REGISTRATION Request for Registration. From time to time after a date on which the Shelf Registration Statement ceases to be effective, any Holder of the issued and outstanding Registrable Securities may make a written request that the Company file a registration statement under the Securities Act with the Commission to register such number of shares of Registrable Shares as each such Holder may request (which request shall specify the number of Registrable Shares intended to be disposed of by such Holder and the intended method of distribution thereof) (a "Demand Registration Statement"). Within 10 days after receipt of such request, the Company shall give written notice of such registration request to all other Holders and thereupon the shall effect the filing of such Demand Registration Statement and shall include in such Demand Registration Statement all Registrable Securities with respect to which the Company has received written requests for inclusion therein (which request shall specify the number of Registrable Shares intended to be disposed of by such Holder and the intended method of distribution thereof) within 15 business days after the receipt by the applicable Holders of the notice from the Company of a request for Demand Registration Statement. The Company shall use its best efforts to have the Shelf Registration Statement declared effective on or before the date which is 60 days after receipt by the company of the applicable request for the filing of a Demand Registration Statement (a "Demand Registration Filing Date") and to keep such Demand Registration Statement continuously effective for a period (the "Demand Registration Effective Period") of at least 6 months following the Demand Registration Effective Date or the date on which such Demand Registration Statement is declared effective, if later. Liquidated Damages. If the Demand Registration Statement is not filed on or before the applicable Demand Registration Filing Date, the Company shall pay liquidated damages to each Holder in an amount equal to $.10 per 1,000 shares per week of such Holder's issued and outstanding Registrable Securities beginning on the applicable Demand Registration Filing Date. If the Demand Registration Statement is filed but has not become effective on or before the applicable Demand Registration Effective Date, the Company shall pay liquidated damages to each Holder in an amount equal to $.10 per 1,000 shares of such Holder's issued and outstanding Registrable Securities per week beginning on the applicable Demand Registration Effective Date. The weekly liquidated damages associated with a late filing or a late declaration of effectiveness shall increase by an amount equal to $.10 per 1,000 shares of the issued and outstanding Registrable Securities 90 days after a Demand Registration Filing Date or Demand Registration Effective Date, as the case may be. Thereafter, the weekly liquidated damages associated with a late filing or a late declaration of effectiveness shall further increase by an amount equal to $.10 per 1,000 shares of the issued and outstanding Registrable Securities at the close of each subsequent 90-day period during which the Demand Registration Statement has not been filed or declared effective, as the case may be. If a stop order is imposed or if for any other reason the effectiveness of a Demand Registration Statement is suspended during the applicable Demand Registration Effective Period, then the Company shall pay liquidated damages to each Holder of issued and outstanding Registrable Securities in an amount equal to $.10 per 1,000 shares of such Holder's issued and outstanding Registrable Securities per week beginning on the date of such stop order or other suspension of effectiveness. The weekly liquidated damages associated with a suspension of the effectiveness of the Demand Registration Statement shall increase by an amount equal to $.10 per 1,000 shares of the issued and outstanding Registrable Securities 90 days after the stop order was imposed or the 7 effectiveness of the applicable Demand Registration Statement was otherwise suspended. Thereafter, the weekly liquidated damages associated a suspension of the effectiveness of a Demand Registration Statement shall further increase by an amount equal to $.10 per 1,000 shares of the issued and outstanding Registrable Securities at the close of each subsequent 90-day period during which the stop order remains in effect or the effectiveness of the applicable Demand Registration Statement remains suspended, as the case may be. For purposes of the three preceding sentences, Holders will not be entitled to receive liquidated damages under this Agreement during a Suspension Period (as hereinafter defined) except to the extent permitted by Section 5 of this Agreement. The Registrable Securities with respect to which liquidated damages shall accrue and be payable in accordance with this Section 3(b) shall be those Registrable Securities held by the Holders which are included or requested to be included by a Holder in the applicable Demand Registration Statement. Liquidated damages shall be deemed to commence accruing on the day on which the event triggering such liquidated damages occurs. The liquidated damages to be paid to Holders pursuant to this Section 3(b) shall cease to accrue (i) with respect to the liquidated damages for failure to file on or prior to a Demand Registration Filing Date, on the day after the applicable Demand Registration Statement is filed, (ii) with respect to the liquidated damages for failure to have a Demand Registration Statement declared effective on or prior to the applicable Demand Registration Effective Date, on the day after such Demand Registration Statement is declared effective, or (iii) with respect to the liquidated damages for the suspension of effectiveness, on the day after the reinstatement of effectiveness of the applicable Demand Registration Statement. Notwithstanding the foregoing, if the sole reason why (i) the Company has not filed a Demand Registration Statement on or before the applicable Demand Registration Filing Date and/or (ii) a Demand Registration Statement has not become effective on or before the applicable Demand Registration Effective Date, is because the Holders did not provide the Company with information which is required to be disclosed in such Demand Registration Statement and which the Company requested the Holder to so provide in writing at least 15 days prior to the applicable Demand Registration Filing Date and/or Demand Registration Effective Date, as the case may be, the Company's obligation to pay liquidated damages with respect thereto will not begin to accrue until twenty business days after such information has been provided. The Company shall pay the liquidated damages due with respect to any Registrable Securities at the end of each month during which such damages accrue. Liquidated damages shall be paid to the Holders of Registrable Securities entitled to receive such liquidated damages by wire transfer in immediately available funds to the accounts designated by such Holders. The parties hereto agree that the liquidated damages provided for in this Section 3(b) constitute a reasonable estimate of the damages that will be suffered by Holders of Registrable Securities by reason of the failure of a Demand Registration Statement to be filed, to be declared effective and/or to remain effective, as the case may be, in accordance with this Agreement. The right of the Holders to be paid the liquidated damages provided for in this Section 3(b) shall be the sole remedy of the Holders with respect to (i) the filing of a Demand Registration Statement after the applicable Demand Registration Filing Date, (ii) a Demand Registration Statement becoming effective after the applicable Demand Registration Effective Date, (iii) the imposition of a stop order or other event suspending the effectiveness of a Demand Registration Statement during the applicable Demand Registration Effective Period, (iv) a Suspension Period exceeding 90 days, and 8 (v) the giving of more than one Suspension Notice during any twelve consecutive months, and none of the foregoing shall be deemed a default under any Loan Document as such term is defined in the Amended and Restated Credit Agreement. Effective Registration. The Company's obligations with respect to a Demand Registration Statement will not be deemed to have been satisfied unless the applicable Demand Registration Statement has been declared effective by the Commission and the Company has complied in all material respects with its obligations under this Agreement with respect thereto; provided, however, that if after it has been declared effective, the offering of Registrable Shares pursuant to a Demand Registration Statement is interfered with by any stop order, injunction or other order or requirement of the Commission or any other governmental agency or court, such Demand Registration Statement will be deemed not to have become effective during the period of such interference (and liquidated damages shall accrue and be payable under Section 3(b) from and after the issuance of any stop order, injunction, or other order or requirement of the Commission or any governmental agency or Court) until the offering of Registrable Shares pursuant to such Demand Registration Statement may legally resume. If a registration requested pursuant to this Section 3 is deemed not to have been effected, then the Company shall continue to be obligated to effect a registration pursuant to this Section 3. Selection of Underwriter. If the Holders so elect, the offering of Registrable Shares pursuant to a Demand Registration Statement shall be in the form of an underwritten offering. If they so elect, the Holders participating in such Demand Registration Statement shall select one or more nationally recognized firms of investment bankers reasonably acceptable to the Company to act as the book-running managing underwriter or underwriters in connection with such offering and shall select any additional investment bankers and managers reasonably acceptable to the Company to be used in connection with the offering. (e) Piggy-Back Registration. (f) Request for Registration. Each time the Company proposes to file a registration statement under the Securities Act with respect to an offering by the Company for its own account or for the account of any of its securityholders of any class of equity security (other than (i) a registration statement on Form S-4 or S-8 (or any substitute form that is adopted by the Commission) or (ii) a registration statement filed in connection with an exchange offer or offering of securities solely to the Company's existing securityholders), then the Company shall give written notice of such proposed filing to the Holders of Registrable Shares as soon as practicable (but in no event less than 30 days before the anticipated filing date), and such notice shall offer such Holders the opportunity to register such number of shares of Registrable Shares as each such Holder may request (which request shall specify the Registrable Shares intended to be disposed of by such Holder and the intended method of distribution thereof) (a "Piggy-Back Registration"). The Company shall use its best efforts to cause the managing underwriter or underwriters of a proposed underwritten offering to permit the Registrable Shares requested to be included in a Piggy-Back Registration to be included on the same terms and conditions as any similar securities of the Company or any other securityholder included therein and to permit the sale or other disposition of such Registrable Shares in accordance with the intended method of distribution thereof. Any Holder shall have the right to withdraw its request for inclusion of its Registrable Shares in any registration statement pursuant to this Section 4 by giving written notice to the Company of such withdrawal. The Company may withdraw a Piggy-Back Registration at any time prior to the time it becomes 9 effective, provided that the Company shall give immediate notice of such withdrawal to the Holders of Registrable Shares requested to be included in such Piggy-Back Registration and shall reimburse such Holders for all reasonable out-of-pocket expenses (including counsel fees and expenses) incurred prior to such withdrawal. (g) Reduction of Offering. In connection with an underwritten offering where Piggy-Back Registration has been requested as provided in Section 4(a), the Company shall use its best efforts to cause all Registrable Shares requested to be included in such Piggy-Back Registration to be included as provided in Section 4(a). If the managing underwriter or underwriters of any such underwritten offering have informed, in writing, the Holders of the Registrable Shares requesting inclusion in such offering that it is their opinion that the total number of shares which the Company, Holders of Registrable Shares and any other Persons participating in such registration intend to include in such offering is such as to materially and adversely affect the success of such offering, then (i) the number of shares to be offered for the account of all Persons (other than the Holders) participating in such registration other than pursuant to demand registration rights shall be reduced or limited (to zero if necessary) pro rata in proportion to the respective number of shares requested to be registered by such Persons to the extent necessary to reduce the total number of shares requested to be included in such offering to the number of shares, if any, recommended by such managing underwriter or underwriters and (ii) if such managing underwriter or underwriters recommend a further reduction in the number of shares in the offering, then the number of shares to be offered for the account of the Holders shall be reduced or limited (to zero if necessary) pro rata in proportion to the respective number of shares requested to be registered by such Holders to the extent necessary to reduce the total number of shares requested to be included in such offering to the number of shares, if any, recommended by such managing underwriter or underwriters. No registration effected under this Section 4, and no failure to effect a registration under this Section 4 shall relieve the Company of its obligation to effect a registration upon the request of Holders pursuant to Sections 2 or 3. No failure to effect a registration under this Section 4 and to complete the sale of Registrable Shares in connection therewith shall relieve the Company of any other obligation under this Agreement, including without limitation, the Company's obligations under Sections 6 and 7. 4. REGISTRATION PROCEDURES. In connection with the obligations of the Company to effect or cause the registration of any Registrable Shares pursuant to the terms and conditions of this Agreement, the Company shall use its best efforts to effect the registration and sale of such Registrable Shares in accordance with the intended method of distribution thereof as quickly as practicable, and in connection therewith: (a) The Company shall prepare and file with the Commission a Registration Statement on the appropriate form under the Securities Act, which form shall comply as to form in all material respects with the requirements of the applicable form and include all financial statements required by the Commission to be filed therewith, and use its best efforts to cause such Registration Statement to become effective and remain effective in accordance with the provisions of this Agreement; provided that, at least ten Business Days prior to filing a Registration Statement or Prospectus or any amendments or supplements thereto, including documents incorporated by reference after the initial filing of the Registration Statement, the Company shall furnish to the Holders of the Registrable Shares 10 covered by such Registration Statement, Holders' Counsel and the underwriters, if any, draft copies of all such documents proposed to be filed, which documents will be subject to the review of Holders' Counsel and the underwriters, if any, and the Company will not, unless required by law, file any Registration Statement or amendment thereto or any Prospectus or any supplement thereto to which Holders holding a majority in interest of the Registrable Shares covered by such Registration Statement or the underwriters with respect to such Shares, if any, shall object; provided, however, that any such objection to the filing of any Registration Statement or amendment thereto or any Prospectus or supplement thereto shall be made by written notice (the "Objection Notice") delivered to the Company no later than ten Business Days after the party or parties asserting such objection (the "Objecting Party") receives draft copies of the documents that the Company proposes to file. The Objection Notice shall set forth the objections and the specific areas in the draft documents where such objections arise. The Company shall have five Business Days after receipt of the Objection Notice to correct such deficiencies to the satisfaction of the Objecting Party, and will notify each Holder of any stop order issued or threatened by the Commission in connection therewith and shall use its best efforts to prevent the entry of such stop order or to remove it if entered at the earliest possible moment. (b) The Company shall promptly prepare and file with the Commission such amendments and post-effective amendments to the Registration Statement as may be necessary to keep such Registration Statement effective for as long as such registration is required to remain effective pursuant to the terms hereof; shall cause the Prospectus to be supplemented by any required Prospectus supplement, and, as so supplemented, to be filed pursuant to Rule 424 under the Securities Act; and shall comply with the provisions of the Securities Act applicable to it with respect to the disposition of all Registrable Shares covered by such Registration Statement during the applicable period in accordance with the intended methods of disposition by the Holders set forth in such Registration Statement or supplement to the Prospectus; (c) The Company shall promptly furnish to any Holder and the underwriters, if any, without charge, such number of conformed copies of such Registration Statement and any post-effective amendment thereto and such number of copies of the Prospectus (including each preliminary Prospectus) and any amendments or supplements thereto, any documents incorporated by reference therein and such other documents as such Holder or underwriter may request in order to facilitate the public sale or other disposition of the Registrable Shares being sold by such Holder. (d) The Company shall, on or prior to the date on which a Registration Statement is declared effective, (i) use its best efforts to register or qualify the Registrable Shares covered by such Registration Statement under the securities or "blue sky" laws of each of the fifty states of the United States; (ii) do any and all other acts and things which may be necessary or advisable to enable such Holder to consummate the disposition of such Registrable Shares owned by such Holder; (iii) use its best efforts to keep each such registration or qualification (or exemption therefrom) effective during the period in which the Registration Statement is required to be kept effective; and (iv) use its best efforts to do any and all other acts or things necessary or advisable to enable the disposition in such jurisdictions of such Registrable Shares; provided, however, that the Company shall not be required (x) to qualify generally to do business in any jurisdiction where it would not 11 otherwise be required to qualify but for this Section 5(d) or (y) to file any general consent to service of process. (d) (e) The Company shall use its best efforts to cause the Registrable Shares covered by a Registration Statement to be registered with or approved by such other governmental agencies or authorities as may be necessary by virtue of the business and operations of the Company to enable the Holders to consummate the disposition of such Registrable Shares. (f) The Company shall promptly notify each Holder, Holders' Counsel and any underwriter and (if requested by any such Person) confirm such notice in writing, (i) when a Prospectus or any Prospectus supplement or post-effective amendment has been filed and, with respect to a Registration Statement or any post-effective amendment, when the same has become effective, (ii) of any request by the Commission or any state securities authority for amendments and supplements to a Registration Statement and Prospectus or for additional information after the Registration Statement has become effective, (iii) of the issuance by the Commission of any stop order suspending the effectiveness of a Registration Statement or the initiation or threatening of any proceedings for that purpose, (iv) of the issuance by any state securities commission or other regulatory authority of any order suspending the qualification or exemption from qualification of any of the Registrable Shares under state securities or "blue sky" laws or the initiation of any proceedings for that purpose, (v) if, between the effective date of a Registration Statement and the closing of any sale of Registrable Shares covered thereby, the representations and warranties of the Company contained in any underwriting agreement, securities sales agreement or other similar agreement, if any, relating to the offering cease to be true and correct in all material respects, and (vi) of the happening of any event which makes any statement made in a Registration Statement or related Prospectus untrue or which requires the making of any changes in such Registration Statement or Prospectus so that they will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein in light of the circumstances under which they were made not misleading; and, as promptly as practicable thereafter, prepare and file with the Commission and furnish a supplement or amendment to such Prospectus so that, as thereafter deliverable to the purchasers of such Registrable Shares, such Prospectus will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. (g) The Company shall make generally available to the Holders an earnings statement satisfying the provisions of Section 11(a) of the Securities Act as soon as practicable but in no event later than 90 days after the end of the 12-month period beginning with the first day of the Company's first fiscal quarter commencing after the effective date of a Registration Statement, which earnings statement shall cover said 12-month period, and which requirement will be deemed to be satisfied if the Company timely files complete and accurate information on forms 10-Q, 10-K and 8-K under the Exchange Act and otherwise complies with Rule 158 under the Securities Act. (h) The Company shall promptly use its best efforts to prevent the issuance of any order suspending the effectiveness of a Registration Statement, and if one is 12 issued use its best efforts to obtain the withdrawal of any order suspending the effectiveness of a Registration Statement at the earliest possible moment. The Company shall, if requested by the managing underwriter or underwriters, if any, Holders' Counsel, or any Holder promptly incorporate in a Prospectus supplement or post-effective amendment such information as such managing underwriter or underwriters requests, or Holders' Counsel requests, to be included therein, including, without limitation, with respect to the Registrable Shares being sold by such Holder to such underwriter or underwriters, the purchase price being paid therefor by such underwriter or underwriters and with respect to any other terms of an underwritten offering of the Registrable Shares to be sold in such offering, and promptly make all required filings of such Prospectus supplement or post-effective amendment. (j) The Company shall, as promptly as practicable after filing with the Commission of any document which is incorporated by reference into a Registration Statement (in the form in which it was incorporated), deliver a copy of each such document to each of the Holders and to Holders' Counsel. (j) (v) The Company shall cooperate with the Holders and the managing underwriter or underwriters, if any, to facilitate the timely preparation and delivery of certificates (which shall not bear any restrictive legends unless required under applicable law) representing securities sold under a Registration Statement, and enable such securities to be in such denominations and registered in such names as the managing underwriter or underwriters, if any, or such Holders may request and keep available and make available to the Company's transfer agent prior to the effectiveness of such Registration Statement a supply of such certificates. (l) The Company shall enter into such customary agreements (including, if applicable, an underwriting agreement in customary form) and take such other actions as the Holders or the underwriters retained by the Holders participating in an underwritten public offering, if any, may request in order to expedite or facilitate the disposition of Registrable Shares (the Holders may, at their option, require that any or all of the representations, warranties and covenants of the Company to or for the benefit of any underwriters also be made to and for the benefit of the Holders). (m) The Company shall promptly make available to each Holder, any underwriter participating in any disposition pursuant to a Registration Statement, and any attorney, accountant or other agent or representative retained by any such Holder or underwriter (collectively, the "Inspectors"), all financial and other records, pertinent corporate documents and properties of the Company (collectively, the "Records"), as shall be reasonably necessary to enable them to exercise their due diligence responsibility, and cause the Company's officers, directors and employees to supply all information requested by any such Inspector in connection with such Registration Statement. (n) The Company shall furnish to each Holder and to each underwriter, if any, a signed counterpart, addressed to such Holder or underwriter, of (i) an opinion or opinions of counsel to the Company and (ii) a comfort letter or comfort letters from the Company's independent public accountants, each in customary form and covering such 13 matters of the type customarily covered by opinions or comfort letters, as the case may be, as the Holders of Registrable Shares included in such offering or the managing underwriter therefor reasonably requests. The Company shall use its best efforts to cause the Registrable Shares included in a Registration Statement to be (i) listed on each securities exchange, if any, on which similar securities issued by the Company are then listed or (ii) authorized to be quoted and/or listed, as applicable, on the National Association of Securities Dealers, Inc. Automated Quotation ("NASDAQ") or the National Market System of NASDAQ if the Registrable Shares so qualify. (p) The Company shall provide a CUSIP number for all Registrable Shares covered by a Registration Statement not later than the effective date of such Registration Statement. (q) The Company shall cooperate with each Holder and each underwriter participating in the disposition of Registrable Shares and their respective counsel in connection with any filings required to be made with the National Association of Securities Dealers, Inc. ("NASD"). (r) The Company shall, during the period when the Prospectus is required to be delivered under the Securities Act, promptly file all documents required to be filed with the Commission pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act. (s) The Company shall appoint a transfer agent and registrar for all Registrable Shares covered by a Registration Statement not later than the effective date of such Registration Statement. (t) In connection with an underwritten offering, the Company will participate, to the extent reasonably requested by the managing underwriter for the offering or the Holders, in customary efforts to sell the securities under the offering, including without limitation, participating in "road shows." In the case of a Shelf Registration Statement, each Holder, upon receipt of any notice (a "Suspension Notice") from the Company of the happening of any event of the kind described in Section 5(f)(vi), shall forthwith discontinue disposition of the Registrable Shares pursuant to the Shelf Registration Statement covering such Registrable Shares until such Holder's receipt of the copies of the supplemented or amended Prospectus contemplated by Section 5(f) or until it is advised in writing (the "Advice") by the Company that the use of the Prospectus may be resumed, and has received copies of any additional or supplemental filings which are incorporated by reference in the Prospectus, and, if so directed by the Company, such Holder will, or will request the managing underwriter or underwriters, if any, to, deliver to the Company (at the Company's expense) all copies, other than permanent file copies then in such Holder's possession, of the Prospectus covering such Registrable Shares current at the time of receipt of such notice; provided, however, that the Company shall not give a Suspension Notice until after the Shelf Registration Statement has been declared effective and shall not give more than one Suspension Notice during any period of twelve consecutive months and in no event shall the period from the date on which any 14 Holder receives a Suspension Notice to the date on which any Holder receives either the Advice or copies of the supplemented or amended Prospectus contemplated by Section 5(f) (the "Suspension Period") exceed 90 days. In the event that the Company shall give any Suspension Notice, (i) the Company shall use its best efforts and take such actions as are reasonably necessary to render the Advice and end the Suspension Period as promptly as practicable and (ii) the time periods for which a Shelf Registration Statement is required to be kept effective pursuant to Section 2 hereof shall be extended by the number of days during the Suspension Period. If the Suspension Period exceeds 90 days, the Company shall pay liquidated damages to each Holder in the amount of $.10 per 1,000 shares per week of the issued and outstanding Registrable Securities included in the Shelf Registration Statement for each week during which the Suspension Period is in effect. The amount of such liquidated damages shall increase in an amount equal to $.10 per 1,000 shares per week of the issued and outstanding Registrable Securities 180 days after receipt of the Suspension Notice. The Company shall pay the liquidated damages due with respect to any issued and outstanding Registrable Securities at the end of each month during which such damages accrue. Liquidated damages shall be paid to the Holders of issued and outstanding Registrable Securities entitled to receive such liquidated damages by wire transfer in immediately available funds to the accounts designated by such Holders. If any Registration Statement refers to any Holder by name or otherwise as the holder of any securities of the Company, then such Holder shall have the right to require (i) the insertion therein of language, in form and substance reasonably satisfactory to such Holder, to the effect that the holding by such Holder of such securities is not to be construed as a recommendation by such Holder of the investment quality of the Company's securities covered thereby and that such holding does not imply that such Holder will assist in meeting any future financial requirements of the Company or (ii) in the event that such reference to such Holder by name or otherwise is not required by the Securities Act or any similar Federal or state "blue sky" statute and the rules and regulations thereunder then in force, the deletion of the reference to such Holder. 5. INFORMATION BY HOLDER. Each Holder of Registrable Securities shall furnish to the Company such information regarding such Holder and the distribution proposed by such Holder as the Company may reasonably request in writing and as shall be reasonably required in connection with any registration, qualification or compliance referred to in this Section 5, and shall promptly notify the Company of any change in such information necessary to update such information. 6. REGISTRATION EXPENSES. Any and all expenses incident to the Company's performance of or compliance with this Agreement, including without limitation, all Commission and securities exchange, NASDAQ or NASD registration and filing fees, all fees and expenses incurred in connection with compliance with state securities or "blue sky" laws (including reasonable fees and disbursements of counsel for any underwriters or Holders in connection with "blue sky" qualifications of the Registrable Shares), printing expenses, messenger and delivery expenses, internal expenses (including, without limitation, all salaries and expenses of the Company's officers and employees performing legal or accounting duties), all expenses for word processing, printing and distributing any Registration Statement, any Prospectus, any amendments or supplements thereto, any underwriting agreements, securities sales agreements and other documents relating to the performance of and compliance with this Agreement, the fees and expenses incurred in connection with the listing of the Registrable Shares, the fees and disbursements of counsel for the Company and of the independent certified public accountants of the Company (including the 15 expenses of any comfort letters or costs associated with the delivery by independent certified public accountants of a comfort letter or comfort letter requested pursuant to Section 5(n), Securities Act liability insurance (if the Company elects to obtain such insurance), the reasonable fees and expenses of any special experts or other Persons retained by the Company in connection with any registration, but shall not include fees and disbursements of counsel for the Holders, underwriting discounts, selling commissions and stock transfer taxes applicable to the sales of Registrable Securities (all such expenses being herein called "Registration Expenses"), will be borne by the Company whether or not the Shelf Registration Statement or Piggy-Back Registration to which such expenses relate becomes effective. 7. INDEMNIFICATION AND CONTRIBUTION. (a) Indemnification by the Company. The Company agrees to indemnify and hold harmless, to the full extent permitted by law, each Holder, its partners, officers, directors, trustees, beneficiaries, stockholders, employees, agents and investment advisers, and each Person who controls such Holder within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act, or is under common control with, or is controlled by, such Holder, together with the partners, officers, directors, trustees, beneficiaries, stockholders, employees, agents and investment advisors of such controlling Person (collectively, the "Controlling Persons"), from and against all losses, claims, damages, liabilities and expenses (including without limitation any legal or other fees and expenses incurred by any Holder or any such Controlling Person in connection with defending or investigating any action or claim in respect thereof) (collectively, the "Damages") to which such Holder, its partners, officers, directors, trustees, stockholders, employees, agents and investment advisers, and any such Controlling Person may become subject under the Securities Act or otherwise, insofar as such Damages (or proceedings in respect thereof) arise out of or are based upon any untrue or alleged untrue statement of material fact contained in any Registration Statement (or any amendment thereto) pursuant to which Registrable Shares were registered under the Securities Act, including all documents incorporated therein by reference, or caused by any omission or alleged omission to state therein a material fact necessary to make the statements therein in light of the circumstances under which they were made not misleading, or caused by any untrue statement or alleged untrue statement of a material fact contained in any Prospectus (as amended or supplemented if the Company shall have furnished any amendments or supplements thereto), or caused by any omission or alleged omission to state therein a material fact necessary to make the statements therein in light of the circumstances under which they were made not misleading, except insofar as such Damages arise out of or are based upon any such untrue statement or omission based upon information relating to such Holder furnished in writing to the Company by such Holder expressly for use therein; provided, however, that the Company shall not be liable to any Holder under this Section 7(a) to the extent that any such Damages were caused by the fact that such Holder sold Shares to a Person as to whom it shall be established that there was not sent or given, or deemed sent or given pursuant to Rule 153 under the Securities Act, at or prior to the written confirmation of such sale, a copy of the Prospectus as then amended or supplemented if, and only if, (i) the Company has previously furnished copies of such amended or supplemented Prospectus to such Holder and (ii) such Damages were caused by any untrue statement or omission or alleged untrue statement or omission contained in the Prospectus so delivered which was corrected in such amended or supplemented Prospectus. In connection with an underwritten offering, the Company will indemnify the underwriters thereof, their officers and directors and each Person who controls such underwriters (within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act) to the same extent as provided above with respect to the indemnification of the Holders of Registrable 16 Shares except with respect to information provided by the underwriter specifically for inclusion therein. (b) Indemnification by the Holders. Each Holder agrees, severally and not jointly, to indemnify and hold harmless the Company, its directors, officers and each Person, if any, who controls the Company within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act to the same extent as the foregoing indemnity from the Company to such Holder, but only with reference to information relating to such Holder furnished to the Company in writing by such Holder expressly for use in any Registration Statement (or any amendment thereto) or any Prospectus (or any amendment or supplement thereto); provided, however, that such Holder shall not be obligated to provide such indemnity to the extent that such Damages result from the failure of the Company to promptly amend or take action to correct or supplement any such Registration Statement or Prospectus on the basis of corrected or supplemental information provided in writing by such Holder to the Company expressly for such purpose. In no event shall the liability of any Holder of Registrable Shares hereunder be greater in amount than the amount of the proceeds received by such Holder upon the sale of the Registrable Shares giving rise to such indemnification obligation. (c) Indemnification Procedures. In case any proceeding (including any governmental investigation) shall be instituted involving any Person in respect of which indemnity may be sought pursuant to either paragraph (a) or (b) above, such Person (the "indemnified party") shall promptly notify the Person against whom such indemnity may be sought (the "indemnifying party") in writing and the indemnifying party, upon request of the indemnified party, shall retain counsel reasonably satisfactory to the indemnified party to represent the indemnified party and any others the indemnifying party may designate in such proceedings and shall pay the fees and disbursements of such counsel relating to such proceeding. The failure of an indemnified party to notify an indemnifying party with respect to a particular proceeding shall not relieve the indemnifying party from any obligation or liability (i) which it may have pursuant to this Agreement if the indemnifying party is not substantially prejudiced by the failure to notify or (ii) which it may have otherwise than pursuant to this Agreement. In any such proceeding, any indemnified party shall have the right to retain its own counsel, but the fees and expenses of such counsel shall be at the expense of such indemnified party unless (A) the indemnifying party and the indemnified party shall have mutually agreed to the retention of such counsel or (B) the indemnifying party fails promptly to assume the defense of such proceeding or fails to employ counsel reasonably satisfactory to such indemnified party or parties or (C) (I) the named parties to any such proceeding (including any impleaded parties) include both such indemnified party or parties and any indemnifying party or an Affiliate of such indemnified party or parties or of any indemnifying party, (II) there may be one or more defenses available to such indemnified party or parties or such Affiliate of such indemnified party or parties that are different from or additional to those available to any indemnifying party or such Affiliate of any indemnifying party and (III) such indemnified party or parties shall have been advised by such counsel that there may exist a conflict of interest between or among such indemnified party or parties or such Affiliate of such indemnified party or parties and any indemnifying party or such Affiliate of any indemnifying party, in which case, if such indemnified party or parties notifies the indemnifying party or parties in writing that it elects to employ separate counsel of its choice at the expense of the indemnifying parties, the indemnifying parties shall not have the right to assume the defense thereof and such counsel shall be at the expense of the indemnifying parties, it being understood, however, that unless there exists a conflict among indemnified parties, the indemnifying parties shall not, in connection with any one such proceeding 17 or separate but substantially similar or related proceedings in the same jurisdiction, arising out of the same general allegations or circumstances, be liable for the fees and expenses of more than one separate firm of attorneys (together with appropriate local counsel) at any time for such indemnified party or parties. The indemnifying party shall not be liable for any settlement of any proceeding effected without its written consent but, if settled with such consent or if there be a final judgment for the plaintiff, the indemnifying party agrees to indemnify the indemnified party or parties from and against any loss or liability by reason of such settlement or judgment. No indemnifying party shall, without the prior written consent of the indemnified party, effect any settlement of any pending or threatened proceeding in respect of which such indemnified party is a party, and indemnity could have been sought hereunder by such indemnified party, unless such settlement includes an unconditional release of such indemnified party from all liability on claims that are the subject matter of such proceeding. (d) Contribution. To the extent that the indemnification provided for in paragraph (a) or (b) of this Section 7 is unavailable to an indemnified party or insufficient in respect of any Damages, then each indemnifying party under such paragraph, in lieu of indemnifying such indemnified party thereunder, shall contribute to the amount paid or payable by such indemnified party as a result of such Damages (i) in such proportion as is appropriate to reflect the relative benefits received by the Company on the one hand and the Holders on the other hand from the offering of such Registrable Shares, or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the Company on the one hand and the Holders on the other hand in connection with the statements or omissions that resulted in such Damages, as well as any other relevant equitable considerations. The relative fault of the Company on the one hand and of the Holders on the other hand shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company or by the Holders and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. Notwithstanding the provisions of this Section 7(d), no Holder shall be required to contribute any amount in excess of the amount by which the total price at which the Registrable Shares of such Holder were offered to the public (less any underwriting discounts and commissions) exceeds the amount of any damages which such Holder has otherwise been required to pay by reason of such untrue statement or omission. Each Holder's obligation to contribute pursuant to this Section 7(d) is several in the proportion that the proceeds of the offering received by such Holder bears to the total proceeds of the offering received by all the Holders and not joint. If indemnification is available under paragraph (a) or (b) of this Section 7, the indemnifying parties shall indemnify each indemnified party to the full extent provided in such paragraphs without regard to the relative fault of said indemnifying party or indemnified party or any other equitable consideration provided for in this Section 7(d). The Company and each Holder agrees that it would not be just or equitable if contribution pursuant to this Section 7(d) were determined by pro rata allocation or by any other method of allocation that does not take account of the equitable considerations referred to herein. The amount paid or payable by an indemnified party as a result of the Damages referred to in this Section 7 shall be deemed to include, subject to the limitations set forth above, any legal or other expenses 18 reasonably incurred (and not otherwise reimbursed) by such indemnified party in connection with investigating or defending any such action or claim. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The remedies provided for in this Section 7 are not exclusive and shall not limit any rights or remedies which may otherwise be available to any indemnified party at law or in equity. 8. RULE 144. The Company covenants that it will file any reports required to be filed by it under the Securities Act and the Exchange Act (or, if the Company is not required to file such reports, it will, upon the request of any Holder, make publicly available other information so long as necessary to permit sales under Rule 144 under the Securities Act), and it will take such further action as any Holder may request, all to the extent required from time to time to enable such Holder to sell Registrable Shares without registration under the Securities Act within the limitation of the exemptions provided by (a) Rule 144 under the Securities Act, as such Rule may be amended from time to time, or (b) any similar rule or regulation hereafter adopted by the Commission. Upon the request of any Holder, the Company will deliver to such Holder a written statement as to whether it has complied with such requirements. 9. RULE 144A. The Company covenants that it will file all reports required to be filed by it under the Securities Act and the Exchange Act, and the rules and regulations adopted by the Commission thereunder (or if the Company is not required to file such reports, it will, upon the request of any Holder, make available other information so long as necessary to permit sales of the Registrable Shares pursuant to Rule 144A under the Securities Act), all to the extent as may be required from time to time to enable such Holder to sell Registrable Shares without registration under the Securities Act within the limitation of the exemptions provided by (a) Rule 144A, as such rule may be amended from time to time, or (b) any similar rule or regulation hereafter adopted by the Commission. 10. RESTRICTIONS ON SALE BY THE COMPANY AND OTHERS. The Company agrees and it shall use its best efforts to cause its Affiliates to agree (i) not to effect any public sale or distribution of any securities similar to those being registered in accordance with Sections 2 or 3 hereof, or any securities convertible into or exchangeable into or exchangeable or exercisable for such securities, during the 14 days prior to, and during the 180-day period beginning on, the effective date of any Registration Statement (except as part of such Registration Statement) if, and to the extent, requested by the managing underwriter or underwriters in the case of an underwritten public offering and (ii) to use their best efforts to ensure that any agreement entered into after the date of this Agreement pursuant to which the Company issues or agrees to issue any privately placed securities (other than to officers or employees) shall contain a provision under which holders of such securities agree not to effect any sale or distribution of any such securities during the periods described in (i) above, in each case including a sale pursuant to Rule 144 or Rule 144A under the Securities Act (except as part of any such registration, if permitted); provided, however, that the provisions of this Section 10 shall not prevent the conversion or exchange of any securities pursuant to their terms into or for other securities. 19 11. MISCELLANEOUS. (a) No Inconsistent Agreements. Except with respect to the Warrants, the Company has not entered into nor will the Company on or after the date of this Agreement enter into any material agreements which are inconsistent with the rights granted to the Holders of Registrable Shares in this Agreement or otherwise conflicts with the provisions hereof. In the event of any inconsistency or discrepancy between the provisions of this Agreement and the provisions of the Warrants, the terms of this Agreement shall control. The rights granted to the Holders hereunder do not in any way conflict with and are not inconsistent with the rights granted to the holders of the Company's other issued and outstanding securities under any material agreements. (b) Amendments and Waivers. The provisions of this Agreement, including the provisions of this sentence, may not be amended, modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given unless the Company has obtained the written consent of Holders of at least 66-_% of the outstanding Registrable Shares affected by such amendment, modification, supplement, waiver or consent; provided, however, that, no amendment, modification, supplement, waiver or consent to any departure from the provisions of Section 5 hereof (other than any immaterial amendment, modification, supplement, waiver or consent) shall be effective as against any Holder of Registrable Shares unless consented to in writing by such Holder. (c) Notices. All notices and other communications provided for or permitted hereunder shall be in writing and shall be deemed to have been duly given if delivered personally or sent by telecopier, registered or certified mail (return receipt requested), postage prepaid or by a nationally recognized overnight courier, postage prepaid, to the parties at their respective addresses set forth on the signature pages hereof (or at such other address for any party as shall be specified by like notice, provided that notices of a change of address shall be effective only upon receipt thereof). All such notices and communications shall be deemed to have been duly given: at the time delivered by hand, if personally delivered; five Business Days after being deposited in the mail, postage prepaid, if mailed; by confirmed receipt of transmission, if telecopied; and on the next Business Day if timely delivered to a courier guaranteeing overnight delivery. (d) Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon the successors, assigns and transferees of each of the parties, including, without limitation and without the need for an express assignment, subsequent Holders. If any transferee of any Holder shall acquire Registrable Shares in any manner, whether by operation of law or otherwise, such Registrable Shares shall be held subject to all of the terms of this Agreement, and by taking and holding such Registrable Shares such person shall be conclusively deemed to have agreed to be bound by and to perform all of the terms and provisions of this Agreement and such person shall be entitled to receive the benefits hereof. (e) Counterparts. This Agreement may be executed in any number of counterparts and by the parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. 20 (f) Headings. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof. (g) Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of California without regard to principles of conflicts of law. (h) Severability. In the event that any one or more of the provisions contained herein, or the application thereof in any circumstances, is held invalid, illegal or unenforceable in any respect for any reason, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions contained herein shall not be in any way impaired thereby, it being intended that all of the rights and privileges of the Holders shall be enforceable to the fullest extent permitted by law. Entire Agreement. This Agreement is intended by the parties as a final expression of their agreement and is intended to be the complete and exclusive statement of the agreement and understanding of the parties hereto in respect of the subject matter contained herein. There are no restrictions, promises, warranties or undertakings, other than those set forth or referred to herein. This Agreement supersedes all prior agreements and understandings between the parties with respect to such subject matter. (j) Attorneys' Fees. In any action or proceeding brought to enforce any provision of this Agreement or where any provision hereof is validly asserted as a defense, the successful party shall, to the extent permitted by applicable law, be entitled to recover reasonable attorneys' fees in addition to any other available remedy. (k) Further Assurances. Each party shall cooperate and take such action as may be reasonably requested by another party in order to carry out the provisions and purposes of this Agreement and the transactions contemplated hereby. (l) Remedies. In the event of a breach or a threatened breach by any party to this Agreement of its obligations under this Agreement, any party injured or to be injured by such breach will be entitled to specific performance of its rights under this Agreement or to injunctive relief, in addition to being entitled to exercise all rights provided in this Agreement and granted by law. The parties agree that the provisions of this Agreement shall be specifically enforceable, it being agreed by the parties that remedies at law for violations hereof (including monetary damages) are inadequate and that the right to object in any action for specific performance or injunctive relief hereunder on the basis that a remedy at law would be adequate is waived. 21 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above. CHECKERS DRIVE-IN RESTAURANTS, INC. By: Name: Title: Notice Information: Checkers Drive-In Restaurants, Inc. 600 Cleveland Street Suite 800 Clearwater, Florida 34615 Facsimile: Attention: with a copy to: 22 REGISTRATION RIGHTS AGREEMENT HOLDER SIGNATURE PAGE CKE RESTAURANTS, INC. By: Name: Title: 1200 North Harbor Boulevard Anaheim, California 92801 Attention: Robert A. Wilson, Esq. Telecopier number: (714) 520-4485 Confirmation number: (714) 774-5796 KCC DELAWARE By: Name: Title: Attention: Telecopier No.: ( ) Telephone No.: ( ) FIDELITY NATIONAL FINANCIAL, INC. By: Name: Title: 17911 Von Karman Avenue, Suite 300 Irvine, California 92714 Telecopier number: (714) 622-4333 Confirmation number: (714) 622-4116 23 THE TRAVELER'S INDEMNITY COMPANY By: Name: Title: Attention: Telecopier No.: ( ) Telephone No.: ( ) WILLIAM P. FOLEY II Attention: Telecopier No.: ( ) Telephone No.: ( ) BURT SUGARMAN Attention: Telecopier No.: ( ) Telephone No.: ( ) CARL LEO KARCHER Attention: Telecopier No.: ( ) Telephone No.: ( ) 24 FRANK P. WILLEY Attention: Telecopier No.: ( ) Telephone No.: ( ) STEPHEN MAHOOD Attention: Telecopier No.: ( ) Telephone No.: ( ) THE GALILEO FUND, L.P. By: DDJ Galileo, LLC, its General Partner By: Name: Title: 141 Linden Street Suite 4 Wellesley, MA 02181 Attention: Robert L. Hockett Telecopier number: (617) 283-8555 Telephone number: (617) 283-8518 25 FOOTHILL CAPITAL CORPORATION By: Name: Title: 1111 Santa Monica Blvd. Suite 1500 Los Angeles, CA 90025 Attention: Dennis Ascher Telecopier number: (310) 479-0461 Telephone number: (310) 996-7156 CANPARTNERS INVESTMENTS IV, LLC By: Name: Title: c/o Canyon Partners 9665 Wilshire Boulevard Suite 200 Beverly Hills, CA 90212 Attention: Scott Imbach Telecopier number: (310) 247-2701 Telephone number: (310) 247-2700 EX-99.03 5 JOINT FILING AGREEMENT 1 EXHIBIT 99.03 JOINT FILING AGREEMENT This Agreement dated as of this _____ day of December, 1996 by and among CKE Restaurants, Inc., a Delaware corporation ("CKE"), Fidelity National Financial, Inc., a Delaware corporation ("Fidelity"), William P. Foley II ("Foley"), Carl Leo Karcher ("Karcher"), Stephen Mahood ("Mahood"), William A. Imparato ("Imparato"), Frank P. Willey ("Willey"), C. Thomas Thompson ("Thompson"), Andrew F. Puzder ("Puzder") and Carl A. Strunk ("Strunk") (collectively, the "Reporting Lender Group"). W I T N E S S E T H: WHEREAS, the Reporting Lender Group may be required to file a statement, and amendments thereto, containing the information required by Schedule 13D pursuant to Section 13(d) of the Securities Exchange Act of 1934 (the "Exchange Act"), and Rule 13d-1 promulgated thereunder, in connection with the investment activities of the Lender Group with respect to Checkers Drive-In Restaurants, Inc., a Delaware corporation ("Checkers"); and WHEREAS, pursuant to Paragraph (f) of Rule 13d-1, the undersigned desire to satisfy any Schedule 13D filing obligation under Rule 13d-1 by a single joint filing. NOW, THEREFORE, in consideration of the premises, the undersigned hereto agree as follows: 1. The undersigned agree that any Statement on Schedule 13D to which this Agreement is attached, and any Amendments to such Statement, are filed on behalf of each one of them. This Agreement may be executed in any number of counterparts and all of such counterparts taken together shall be deemed to constitute one and the same instrument. 2 IN WITNESS WHEREOF, the undersigned have caused this Agreement to be duly executed and delivered on the date above indicated. CKE RESTAURANTS, INC., in its capacity as a Lender and as the Agent By: _______________________________ Name: Title: FIDELITY NATIONAL FINANCIAL, INC. By: _______________________________ Name: Title: ___________________________________ William P. Foley II ___________________________________ Carl Leo Karcher ___________________________________ Stephen Mahood ___________________________________ William A. Imparato ___________________________________ Frank P. Willey 3 _____________________________ C. Thomas Thompson _____________________________ Andrew F. Puzder _____________________________ Carl A. Strunk EX-99.04 6 PRESS RELEASE DATED NOVEMBER 22, 1996 1 EXHIBIT 99.04 Contacts: William P. Folley, II, Chairman and CEO CKE Restaurants, Inc. (714) 778-7105 Andrew F. Puzder, Executive Vice President Fidelity National Financial, Inc. (714) 622-5000 Terry N. Christensen KCC Delaware (310) 282-6200 FOR IMMEDIATE RELEASE CKE RESTAURANTS, INC. ANNOUNCES COMPLETION OF RESTRUCTURING OF $35.8 MILLION OF CHECKERS DRIVE-IN RESTAURANTS DEBT Anaheim, Calif., November 22, 1996 -- CKE Restaurants, Inc., (NYSE:CKR) announced today that Checkers Drive-In Restaurants, Inc. (Nasdaq:CHKR) and its senior secured lenders, including CKE, KCC Delaware, a wholly owned subsidiary of Giant Group Ltd., Fidelity National Financial, Inc. and certain other investors, have completed the restructuring of $35.8 million aggregate principal amount of indebtedness of Checkers under its existing credit agreement. Pursuant to the restructuring, the term of the credit agreement has been extended by one year until July 31, 1999 and the fixed interest rate on such indebtedness has been reduced to 13.0%. In addition, no principal payments are scheduled through the fourth reporting period of fiscal 1997. In reporting periods five through eleven of fiscal 1997, Checkers will be required to make principal -more- 2 CKE RESTAURANTS, INC. ANNOUNCES COMPLETION OF RESTRUCTURING OF $35.8 MILLION OF CHECKERS DRIVE-IN RESTAURANTS DEBT Page 2-2-2-2 payments of $200,000 per period. Those payments will increase to $275,000 per period in reporting periods twelve in fiscal 1997 through reporting period three in fiscal 1998, and to $350,000 per period until July 31, 1999. The lenders agreed to modify certain financial covenants under the credit agreement. The lenders also agreed to provide a short term revolving line of credit of up to $2,500,000 to Checkers. In connection with the restructuring, Checkers issued warrants to purchase an aggregate of 20,000,000 shares of common stock of Checkers at an exercise price of $.75 per share. Further, in the event that up to three monthly extensions of the revolving line of credit are requested and extended the lenders will receive 333,333 additional warrants per each month of extension provided. The lenders also have received representation on Checker's Board of Directors. Three members of the board have been selected by the lenders in addition to the four current members of the Board. The new board members include William P. Foley, II, Chairman and Chief Executive Officer of CKE and of Fidelity National Financial, Inc., Thomas Thompson, President and Chief Operating Officer of CKE and Terry N. Christensen, a director of Giant Group, Ltd. and KCC Delaware. -more- 3 CKE RESTAURANTS, INC. ANNOUNCES COMPLETION OF RESTRUCTURING OF $35.8 MILLION OF CHECKERS DRIVE-IN RESTAURANTS DEBT Page 3-3-3-3 William P. Foley, II stated that, "The lenders are excited about the opportunity for cooperation and coordination between CKE, Rallys and Checkers in the areas of purchasing and product development." CKE is the parent of Carl Karcher Enterprises, Inc., Casa Bonita Incorporated and Summit Family Restaurants Inc. Carl Karcher Enterprises, Inc., along with its franchisees and licensees, operates 661 Carl's Jr., and 27 Rally's quick-service restaurants, primarily located in California, Nevada, Oregon, Arizona, Mexico and the Pacific Rim. Casa Bonita Incorporated operates 108 Taco Bueno quick-service restaurants in Texas and Oklahoma. Summit Family Restaurants Inc. has restaurant operations in nine western states, including 73 Company-operated and 24 franchised JB's Restaurants, 16 HomeTown Buffet restaurants and six Galaxy Diner restaurants. ### -----END PRIVACY-ENHANCED MESSAGE-----